<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-23192
CELADON GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3361050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9503 East 33rd Street
One Celadon Drive
Indianapolis, IN 46235-4207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 972-7000
Indicate by check mark whether the Registrant (1) has filed all reports required
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 Common Stock ($.033 par value) of the
Registrant as of the close of business on November 12, 1999 was 7,786,430.
<PAGE>
CELADON GROUP, INC.
Index to
September 30, 1999 Form 10-Q
Part I. Financial Information
<TABLE>
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet at September 30, 1999
and June 30, 1999......................................................................................3
Condensed Consolidated Statement of Operations - For the three months
ended September 30, 1999 and 1998......................................................................4
Condensed Consolidated Statement of Cash Flows - For the three months ended
September 30, 1999 and 1998............................................................................5
Notes to Condensed Consolidated Financial Statements ..................................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................................11
Part II. Other Information
Item 5. Other..........................................................................................15
Item 6. Exhibits and Reports on Form 8-K...............................................................15
</TABLE>
2
<PAGE>
Part I - Financial Information
CELADON GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
---- ----
(unaudited)
A S S E T S
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................. $ 1,032 $ 695
Trade receivables, net of allowance ................................... 52,343 43,884
Accounts receivable - other ........................................... 5,652 5,336
Prepaid expenses and other current assets ............................. 9,649 6,941
Tires in service ...................................................... 4,863 4,179
Income tax recoverable ................................................ -- 29
Deferred income tax ................................................... 6,067 4,847
--------- ---------
Total current assets ........................... 79,606 65,911
--------- ---------
Property and equipment, at cost ............................................ 147,883 141,213
Less accumulated depreciation and amortization ........................ 32,901 33,629
--------- ---------
Net property and equipment .................................. 114,982 107,584
--------- ---------
Tires in service ........................................................... 2,373 2,331
Goodwill, net of accumulated amortization .................................. 20,749 10,967
Other assets ............................................................... 2,605 1,966
--------- ---------
Total assets .......................................................... $ 220,315 $ 188,759
========= =========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Current liabilities:
Accounts payable ...................................................... $ 6,080 $ 5,505
Accrued expenses ...................................................... 20,253 17,953
Bank borrowings and current maturities of long-term debt .............. 5,452 7,239
Current maturities of capital lease obligations ....................... 13,259 15,099
Income tax payable .................................................... 1,381 --
--------- ---------
Total current liabilities ....................................... 46,425 45,796
--------- ---------
Long-term debt, net of current maturities .................................. 51,723 18,613
Capital lease obligations, net of current maturities ....................... 51,145 52,967
Deferred income tax ........................................................ 14,068 14,065
--------- ---------
Total liabilities ..................................................... 163,361 131,441
--------- ---------
Minority interest .......................................................... 12 12
Commitments and contingencies .............................................. -- --
Stockholders' equity:
Preferred stock, $1.00 par value, authorized 179,985 shares, issued and
outstanding zero shares ............................................. -- --
Common stock, $.033 par value, authorized 12,000,000 shares;
issued 7,786,430 shares at September 30, 1999 and June 30, 1999 ....... 257 257
Additional paid-in capital ............................................ 56,632 56,679
Retained earnings ..................................................... 731 1,319
Accumulated other comprehensive income ................................ (581) (605)
Treasury stock, at cost, 9,873 and 34,773 shares at September 30, 1999
and June 30, 1999, respectively ..................................... (97) (344)
--------- ---------
Total stockholders' equity ...................................... 56,942 57,306
--------- ---------
Total liabilities and stockholders' equity ...................... $ 220,315 $ 188,759
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
September 30,
---------------------------------
1999 1998
---- ----
<S> <C> <C>
Operating revenue ........................ $ 82,665 $ 72,113
----------- -----------
Operating expenses:
Salaries, wages and employee benefits 23,315 19,190
Fuel ................................ 7,930 6,954
Operating costs and supplies ........ 6,053 6,588
Insurance and claims ................ 2,255 1,569
Depreciation and amortization ....... 3,243 3,567
Rent and purchased transportation ... 29,691 25,141
Professional and consulting fees .... 402 305
Communications and utilities ........ 1,155 1,004
Permits, licenses and taxes ......... 1,509 1,344
General, administrative and selling . 2,697 2,156
----------- -----------
Total operating expenses .......... 78,250 67,818
----------- -----------
Operating income ......................... 4,415 4,295
----------- -----------
Other (income) expense:
Interest income ..................... (28) (95)
Interest expense .................... 2,030 1,995
Other expense, net .................. 89 (62)
Loss on disposition of equipment .... 3,266 --
----------- -----------
Income before income taxes .......... (942) 2,457
Provision for income taxes (benefit) (353) 925
----------- -----------
Net income (loss) ................. $ (589) $ 1,532
=========== ===========
Earnings (loss) per common share:
Diluted earnings per share ........ $ (0.08) $ 0.20
Basic earnings per share .......... $ (0.08) $ 0.20
Average shares outstanding:
Diluted ........................... 7,775,783 7,851,186
Basic ............................. 7,771,956 7,726,663
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
September 30,
---------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ....................................... $ (589) $ 1,532
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ....................... 3,243 3,567
Loss on disposition of equipment ....................... 3,266 --
Provision for deferred income taxes .................... (1,217) 284
Provision for doubtful accounts ........................ 179 187
Changes in assets and liabilities:
Trade receivables ................................... (4,048) (1,412)
Accounts receivable -- other ........................ (220) (362)
Income tax recoverable .............................. 67 656
Tires in service .................................... (854) (633)
Prepaid expenses and other current assets ........... (2,041) (390)
Other assets ........................................ (78) (115)
Accounts payable and accrued expenses ............... (1,835) (2,013)
Income taxes payable ................................ 1,381 --
-------- --------
Net cash provided by (used for) operating activities (2,746) 1,301
-------- --------
Cash flows from investing activities:
Proceeds on sale of property and equipment ............. 5,681 676
Purchase of property and equipment ..................... (5,277) (5,134)
Purchase of business, net of cash ...................... (25,554) --
Deposits ............................................... (7) 37
-------- --------
Net cash used for investing activities ............. (25,157) (4,421)
Cash flows from financing activities:
Proceeds from issuances of common stock ................ -- 51
Proceeds from issuance treasury stock .................. 200 --
Proceeds from bank borrowings and debt ................. 35,066 6,553
Payments of bank borrowings and debt ................... (3,742) (2,231)
Principal payments under capital lease obligations ..... (3,284) (3,446)
-------- --------
Net cash provided by financing activities .............. 28,240 927
-------- --------
Increase (decrease) in cash and cash equivalents ......... 337 (2,193)
Cash and cash equivalents at beginning of year ........... 695 2,537
-------- --------
Cash and cash equivalents at end of period ............... $ 1,032 $ 344
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial reporting and the general
instructions to Form 10-Q of Regulation S-X. Accordingly, they do not
include certain information and note disclosures required by generally
accepted accounting principles for annual financial reporting and
should be read in conjunction with the consolidated financial
statements and notes thereto of Celadon Group, Inc. (the "Company") as
of and for each of the three years in the period ended June 30, 1999.
The unaudited interim financial statements reflect all
adjustments (all of a normal recurring nature) which management
considers necessary for a fair presentation of the financial condition
and results of operations for these periods. The results of operations
for the interim period are not necessarily indicative of the results
that may be reported for the full year.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
(2) Geographical Information and Significant Customers
The Company predominately operates and provides its transportation
services in the truckload transportation segment of the transportation
industry. The Company generates revenue from its truckload operations
in the United States, Canada and Mexico.
6
<PAGE>
Information as to the Company's operations by geographic area is summarized
below (in thousands):
<TABLE>
<CAPTION>
For the three months ended
September 30,
---------------------------
1999 1998
---- ----
<S> <C> <C>
Operating revenue:
United States ............. $ 66,236 $ 56,753
Canada .................... 13,442 12,044
Mexico .................... 2,987 3,316
--------- ---------
Total .............. $ 82,665 $ 72,113
========= =========
Income (loss) before income taxes:
United States ............. $ (2,496) $ 1,277
Canada .................... 1,112 843
Mexico .................... 442 337
--------- ---------
Total .............. $ (942) $ 2,457
========= =========
Total assets:
United States ............. $ 194,631 $ 175,908
Canada .................... 18,224 14,835
Mexico .................... 7,460 4,316
--------- ---------
Total .............. $ 220,315 $ 195,059
========= =========
</TABLE>
Revenue from DaimlerChrysler accounted for 23%, and 24% of the Company's
total revenue for the three months ended September 30, 1999 and 1998,
respectively. The Company transports DaimlerChrysler after-market replacement
parts and accessories within the United States and DaimlerChrysler original
equipment automotive parts primarily between the United States and the Mexican
border, which accounted for 28% and 72%, respectively, of the Company's revenue
from DaimlerChrysler for the three months ended September 30, 1999 and 1998.
DaimlerChrysler business is covered by three agreements, one of which covers the
United States-Mexican business for the Chrysler division, one of which covers
the United States-Mexican business for the Freightliner division and the last of
which covers domestic movements. The international contract, which covers the
Chrysler division, expires in December 1999. The international contract, which
covers the Freightliner division, expires in April 2001. The contract applicable
to domestic movements expires in October 2000.
Revenue from General Electric accounted for approximately 4% and 6% of
the Company's total revenue for the three months ended September 30, 1999 and
1998, respectively. General Electric business is covered by a contract, which
expires in August 2002, and that covers all loads shipped for General Electric
Industrial Control Systems ("GEICS").
7
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS -- (CONTINUED)
(Dollar amounts in thousands)
(Unaudited)
(3) Income Taxes
The effective tax rates for continuing operations for both the
three-month periods ending September 30, 1999 and 1998 was 38%. The Company's
effective tax rate differs from the statutory federal tax rate of 35% due to
state income taxes and certain expenses, which are not deductible for income tax
purposes.
(4) Comprehensive Income
Total comprehensive income (loss) was $(0.6) million and $1.1 million
for the three months ended September 30, 1999 and 1998, respectively. The
difference between the total comprehensive loss and net income (loss) is foreign
currency translation adjustments.
(5) Acquisitions
Effective July 1,1999, the Company acquired the assets and assumed
certain liabilities of Zipp Express, Inc. for approximately $26 million. The
Company accounted for the transaction as a purchase.
Assuming the transaction described above was consummated as of the
beginning of the three month period ended September 30, 1998, and after giving
effect to certain pro forma adjustments, the pro forma consolidated results of
operations for the three months ended September 30, 1998 would be as follows:
<TABLE>
<CAPTION>
For the three
months ended
September 30, 1998
------------------
(Dollar amounts in thousands except per share data)
<S> <C>
Operative revenue.................................... $81,247
Net income........................................... $ 1,645
Net income per common share.......................... $ 0.21
</TABLE>
In addition, as a result of this acquisition, the Company disposed of a
group of its own older equipment and related items that will no longer be
required. The effect of upgrading the Company's fleet through this disposition
resulted in a non-cash charge of approximately $3.2 million in the three months
ended September 30, 1999.
(6) Lines of Credit
In August 1999, the Company completed a new $60 million banking
facility with ING Barings. The new arrangement includes a $30 million revolving
loan and a $30 million term loan. The new banking arrangement was obtained to
finance the $26 million asset purchase of Zipp Express, Inc.
8
<PAGE>
(7) Hedging Activities, Commitments and Contingencies
The Company has outstanding commitments to purchase approximately
$13.2 million of revenue equipment at September 30, 1999.
Standby letters of credit, not reflected in the accompanying
consolidated financial statements, aggregated approximately $1.8 million at
September 30, 1999.
The Company, from time-to-time, has entered into arrangements to
protect against fluctuations in the price of the fuel used by its trucks. As of
September 30, 1999, the Company had contracts to purchase fuel for future
physical delivery in the months of October 1999 through March 2000. These
contracts represent approximately 6% of the anticipated fuel requirements for
those months. Additionally, the Company has periodically acquired
exchange-traded petroleum futures contracts and has engaged in various commodity
collar transactions. Gains and losses on transactions, not designated as hedges,
are recognized based on market value at the date of the financial statements.
Effective December 31, 1998, the Company liquidated all of its remaining hedge
positions. During the three months ended September 30, 1998, losses of $267,000
on futures contracts and commodity collar transactions were included in fuel
expense.
There are various claims, lawsuits and pending actions against the
Company and its subsidiaries incidental to the operation of its businesses. The
Company believes many of these proceedings are covered in whole or in part by
insurance and that none of these matters will have a material adverse effect on
its consolidated financial position.
The Company has been assessed approximately $750,000 by the State of
Texas for Interstate Motor Carrier Sales and Use Tax for the period from April
1988 through June 1992. The Company disagrees with the State of Texas over the
method used by the state in computing such taxes and intends to vigorously
pursue all of its available remedies. On October 30, 1996, the company made a
payment of $1.1 million, under protest, which includes interest to the date of
payment and enables the Company to pursue resolution of the matter with the
State of Texas Attorney General. In fiscal 1997, the Company filed its Original
Petition against representatives of the State of Texas. The state responded and
denied the Company=s claims. As of September 30, 1999, the parties to the
litigation were exchanging discovery requests and documentation. The Company has
accrued an amount that management estimates is due based upon methods they
believe are appropriate. While there can be no certainty as to the outcome, the
Company believes that the ultimate resolution of this matter will not have a
material adverse effect on its consolidated financial position.
9
<PAGE>
CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
September 30, 1999
(Dollar amounts in thousands)
(Unaudited)
(8) Supplemental Cash Flow Information
During the three months ended September 30, 1999 and 1998, lease
obligations in the amount of $2.6 million and $3.9 million, respectively, were
incurred in connection with the purchase of, or option to purchase, revenue
equipment and the associated tires in service.
During the three months ended September 30, 1999 and 1998, the Company
made interest payments of $1.9 million and $1.5 million, respectively.
(9) Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
For the three months ended
September 30,
1999 1998
---- ----
<S> <C> <C>
Numerator for basic and
diluted earnings (loss) per share, net income $ (589,000) $ 1,532,000
=========== ===========
Denominator:
Denominator for basic earnings
per share-weighted-average shares ............ 7,771,956 7,726,663
Effect of dilutive securities:
Employee stock options ......................... 3,827 120,125
Warrants ....................................... -- 4,398
----------- -----------
Dilutive potential common shares ............... 3,827 124,523
----------- -----------
Denominator for diluted earnings
per share-adjusted weighted-
average shares and assumed
conversions ............................... 7,775,783 7,851,186
Basic earnings (loss) per share ................ $ (0.08) $ 0.20
=========== ===========
Diluted earnings (loss) per share .............. $ (0.08) $ 0.20
=========== ===========
</TABLE>
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
This Report on Form 10-Q contains forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
comments are based upon information currently available to management and
management's perception thereof as of the date of this report being filed.
Actual results of the Company=s operations could materially differ from those
forward looking statements. Such differences could be caused by a number of
factors including, but not limited to, potential adverse affects of regulation
and litigation; changes in competition and the effects of such changes;
increased competition; change in fuel prices; changes in economic, political or
regulatory environments; changes in the availability of a stable labor force;
ability of the Company to hire drivers meeting Company standards; changes in
management strategies; environmental or tax matters; viability to obtain and
implement year 2000 ("Y2K") hardware and software; and risks described from time
to time in reports filed by the Company with the Securities and Exchange
Commission. Readers should take these factors into account in evaluating any
such forward looking statements.
Acquisition History
Effective July 1, 1999 the Company acquired the assets and assumed
certain liabilities of Zipp Express, Inc. for approximately $26 million. The
Company believes that Zipp will further strengthen its position in the market
between the U.S. and Mexico as well as within the Midwest region. Zipp is a
major carrier to and from Mexico and also maintains a strong base of business in
the Midwest. In calendar year 1998, Zipp had $38 million in revenue and an
operating ratio of 89.8%. Zipp operates a relatively new fleet of about 270
tractors and 800 trailers. As a result of this acquisition, the Company disposed
of a group of its own older equipment and related items that will no longer be
required. The effect of upgrading the Company's fleet through this disposition
resulted in a non-cash charge of approximately $3.2 million in the three months
ended September 30, 1999.
Results of Operations
Three months ended September 30, 1999 compared with the three months ended
September 30, 1998
Revenue. Consolidated revenue increased by $10.6 million or 14.7%, to
$82.7 million for fiscal 2000 from $72.1 million for fiscal 1999. This increase
in revenue was due to the acquired operations of Zipp, as well as an increase in
rate per mile and billings to customers for the Mexican portion of their
transportation. The increase in rates reflected price increases and the
Company's continued efforts to focus on its core routes as well as an
improvement in the Company's overall business mix. The number of tractors
operated by the Company, including 856 owner-operated tractors, increased to
2,374 at September 30, 1999, compared to 2,186, including 556 owner-operated
tractors, at September 30, 1998.
11
<PAGE>
Operating Income. Operating income increased by $0.1 million, or
2.3%, to $4.4 million in fiscal 2000 from $4.3 million in fiscal 1999. The
Company's operating ratio, which expresses operating expenses as a percentage of
operating revenue increased from 94.0% in fiscal 1999 to 94.7% in fiscal 2000.
Net Interest Expense. Net interest expense increased by $0.1 million
or 5.3%, to $2.0 million in fiscal 2000 from $1.9 million in fiscal 1999. The
increase was the result of borrowings under the Company's credit facilities
partially offset by reduced borrowings under capital leases.
Income Taxes. Income taxes decreased by $1.3 million, to a benefit of
$0.4 million in fiscal 2000 from an expense of $0.9 million in fiscal 1999. The
decrease in income tax expense reflects the Company's pre-tax loss. The
Company's effective tax rate was 37.5% in fiscal 2000 and 37.7% in fiscal 1999.
Liquidity and Capital Resources
The Company's primary capital requirements in fiscal 2000 will be for
the acquisition of revenue equipment. The Company has financed its capital
requirements by obtaining lease financing on revenue equipment. At September 30,
1999, the Company had an aggregate of $64.4 million in capital lease financing
at interest rates ranging from 5.3% to 10.0%, maturing at various dates through
2004. Of this amount, $13.3 million is due prior to September 30, 2000. The
Company has historically met its capital investment requirements with a
combination of internally generated funds, bank financing, equipment lease
financing (both capitalized and operating) and the issuance of common stock.
As of September 30, 1999, the Company had on order revenue equipment
representing an aggregate capital commitment of $13.2 million. A commitment for
lease financing on these units has been obtained. Management believes that there
are presently adequate sources of secured equipment financing together with its
existing credit facilities and cash flow from operations to provide sufficient
funds to meet the Company's anticipated working capital requirements. Additional
growth in the tractor and trailer fleet beyond the Company's existing orders
will require additional sources of financing.
In August 1999, the Company completed a new $60 million banking
facility with ING Barings. The new arrangement includes a $30 million revolving
loan and a $30 million term loan. The new banking arrangement was obtained to
finance the $26 million asset purchase of Zipp Express, Inc. At September 30,
1999, $52.7 million was utilized as outstanding borrowings and $1.8 million was
utilized for standby letters of credit.
Seasonality
To date, the Company's revenues have not shown any significant
seasonal pattern. However, because the Company's primary traffic lane is between
the Midwest United States and Mexico, winter may have an unfavorable impact upon
the Company's results of operations. Also, many manufacturers close or curtail
their operations during holiday periods, and observe vacation shutdowns, which
may impact the Company's operations in any particular period.
12
<PAGE>
Inflation
Many of the Company's operating expenses, including fuel costs and
related fuel taxes, are sensitive to the effects of inflation, which could
result in higher operating costs. The effects of inflation on the Company's
business during fiscal 2000 and 1999 generally were not significant.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities,
which is required to be adopted in years beginning after June 15, 2000. Because
of the Company's minimal use of derivatives, management does not anticipate that
the adoption of the new Statement will have a significant effect on earnings or
the financial position of the Company.
Impact of the Year 2000
An issue exists for all companies that rely on computers as the year
2000 approaches. The "Year 2000" problem is the result of the past practice in
the computer industry of using two digits rather than four to identify the
applicable year. This practice may result in incorrect results when computers
perform arithmetic operations, comparisons or data field sorting involving years
later than 1999. In an effort to assess its state of readiness for the
technological challenges posed by the Year 2000 problem the Company has
performed a complete inventory assessment of both its information technology
("IT") and non-IT systems. In assessing its level of readiness the Company
considered the following to be the most important factors: (i) the level of
compliance of the Company's central computer systems; (ii) the level of
compliance of the software used in the Company's ongoing operations; (iii) the
level of readiness of the Company's largest vendors; (iv) the level of readiness
of the Company's largest customers; and (v) the level of compliance of the
Company's non-IT systems. The Company's non-IT systems are Year 2000 compliant
in all material respects.
The Company's central computer systems are Year 2000 compliant, with
the exception of minimal numbers of desktop personal computers ("PC's"). These
PC's are scheduled for replacement with newer models by the Company as part of
its ongoing technology maintenance. The Company relies on prepackaged,
non-modified software systems for approximately 95% of its software needs. These
software systems have been upgraded and have been recognized as being Year 2000
compliant by the respective vendor.
The Company has taken steps to encourage its suppliers and customers to
become Year 2000 compliant in a timely manner, but there can be no assurances
that such suppliers and customers will be Year 2000 compliant. The Company has
received certifications from most of its suppliers indicating that they have
taken, or will on a timely basis take, such measures as are necessary to become
Year 2000 compliant. Failure of the Company's suppliers to become Year 2000
compliant on a timely basis may cause the Company to utilize more labor
intensive means to place orders and make payments.
13
<PAGE>
The Company's largest customer, DaimlerChrysler, is currently doing
business with the Company using Year 2000 compliant technology. The Company does
not know the extent to which all of its customers have completed or initiated
Year 2000 remediation programs. In the event that the Company's customers do not
install Year 2000 compliant systems, the Company may need additional clerical
staff to perform certain tasks, such as order entry and cash posting, and to
provide the information currently provided to customers electronically.
The Company has and is continuing to develop contingency plans to
address the process necessary to maintain critical business functions should a
significant third party system or critical internal system fail. These
contingency plans generally include the repair of existing systems and, in some
instances, the use of alternative systems or procedures. The Company is
developing business continuity plans specific to Year 2000 issues that are based
on these existing plans. The Company has contingency plans in place as of
September 30, 1999.
The costs of the Company's Year 2000 efforts are based upon
management's best estimates, which are derived using numerous assumptions
regarding future events, including the continued availability of certain
resources, third-party remediation plans and other factors. There can be no
assurance that these estimates will prove to be accurate, and actual results
could differ materially from those currently anticipated. The Company currently
estimates it will spend approximately $150,000 over the life of the program and
that approximately 95 percent of the anticipated costs were incurred by the end
September 30, 1999. Expenses associated with addressing the Year 2000 issues are
being recognized as incurred. The failure to correct a material Year 2000
problem could result in an interruption in, or a failure of, certain normal
business activities or operations. Such failures could materially and adversely
affect the Company's results of operations.
Due to the uncertainty inherent in the Year 2000 problem, the Company
is unable to determine, at this time, whether the consequences of Year 2000
failures will have a material impact on the Company's results of operations. The
Company's Year 2000 projects are expected to significantly reduce the Company's
level of uncertainty about the Year 2000 problem and, in particular, about the
Year 2000 compliance and readiness of its vendors, service suppliers and
customers. The Company believes that, with the completion of the project as
scheduled, the possibility of a material interruption of normal operations
should be reduced.
14
<PAGE>
Part II - Other Information
Item 5. Other
On October 29, 1999, the Company solicited proxies for its annual
meeting of stockholders to be held at the Company's Corporate Headquarters
located at One Celadon Drive, Indianapolis, Indiana 46235 on Friday, November 22
at 10:00 am (local time) for stockholders of record as of October 8, 1999.
Item 6. Exhibits and Reports on Form 8K
<TABLE>
<S> <C> <C>
(a) Exhibits
Exhibit 10.61 - $60,000,000 Credit Agreement dated
August 11, 1999 between Celadon Group, Inc.,
and Celadon Trucking
Services, Inc., and ING (U.S.) Capital LLC.
Exhibit 27 - Financial Data Schedule
(b) Form 8-K Report on Form 8-K dated August 10, 1999 with
respect to the Acquisition of Zip Express,
Inc., dated July 1, 1999.
</TABLE>
15
<PAGE>
SIGNATURES
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, thereunto duly authorized.
Celadon Group, Inc.
(Registrant)
/s/ Stephen Russell
-------------------
Stephen Russell, Chief Executive Officer
/s/ Paul A. Will
----------------
Paul A. Will
Chief Financial Officer
Date: November 15, 1999
16
<PAGE>
EXHIBIT 10.61
EXECUTION COPY
===============================================================================
CREDIT AGREEMENT
among
CELADON GROUP, INC. and
CELADON TRUCKING SERVICES, INC.,
as Co-Borrowers,
The Several Lenders
from Time to Time Parties Hereto,
and
ING (U.S.) CAPITAL LLC,
as Administrative Agent and Arranger
Dated as of August 11, 1999
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
SECTION 1.........DEFINITIONS 1
1.1 Defined Terms...................................................................................1
1.2 Other Definitional Provisions..................................................................23
SECTION 2.........AMOUNT AND TERMS OF TERM LOAN COMMITMENTS 23
2.1 Term Loan Commitments..........................................................................23
2.2 Term Notes.....................................................................................23
2.3 Procedure for Term Loan Borrowing..............................................................24
SECTION 3.........AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS 24
3.1 Revolving Credit Commitments...................................................................24
3.2 Revolving Credit Notes.........................................................................25
3.3 Procedure for Revolving Credit Borrowing.......................................................25
3.4 Commitment Fee.................................................................................26
3.5 Termination or Reduction of Revolving Credit Commitments.......................................26
SECTION 4.........LETTERS OF CREDIT 26
4.1 L/C Commitment.................................................................................26
4.2 Procedure for Issuance of Letters of Credit....................................................27
4.3 Fees, Commissions and Other Charges............................................................27
4.4 L/C Participations.............................................................................28
4.5 Reimbursement Obligations of the Borrowers.....................................................29
4.6 Obligations Absolute...........................................................................29
4.7 Letter of Credit Payments......................................................................30
4.8 Application....................................................................................30
SECTION 5.........GENERAL PROVISIONS APPLICABLE TO LOANS 30
5.1 Interest Rates and Payment Dates...............................................................30
5.2 Conversion and Continuation Options............................................................31
5.3 Minimum Amounts and Maximum Number of Tranches.................................................32
5.4 Optional Prepayments...........................................................................32
5.5 Mandatory Prepayments..........................................................................32
5.6 Computation of Interest and Fees...............................................................34
5.7 Inability to Determine Interest Rate...........................................................34
5.8 Pro Rata Treatment and Payments................................................................35
5.9 Illegality.....................................................................................36
5.10 Requirements of Law............................................................................36
5.11 Taxes..........................................................................................37
5.12 Indemnity......................................................................................39
5.13 Lending Offices; Change of Lending Office......................................................39
SECTION 6.........REPRESENTATIONS AND WARRANTIES 40
6.1 Financial Condition............................................................................40
6.2 No Change......................................................................................41
6.3 Existence; Compliance with Law.................................................................41
6.4 Power; Authorization; Enforceable Obligations..................................................41
6.5 No Legal Bar...................................................................................42
6.6 No Material Litigation.........................................................................42
6.7 No Default.....................................................................................42
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.8 Ownership of Property; Liens...................................................................42
6.9 Intellectual Property..........................................................................42
6.10 No Burdensome Restrictions.....................................................................42
6.11 Taxes..........................................................................................43
6.12 Federal Regulations............................................................................43
6.13 ERISA..........................................................................................43
6.14 Investment Company Act; Other Regulations......................................................43
6.15 Subsidiaries...................................................................................43
6.16 Security Documents.............................................................................44
6.17 Accuracy and Completeness of Information.......................................................44
6.18 Labor Relations................................................................................45
6.19 Insurance......................................................................................45
6.20 Solvency.......................................................................................45
6.21 Purpose of Loans...............................................................................46
6.22 Environmental Matters..........................................................................46
6.23 Regulation H...................................................................................47
6.24 Year 2000 Compliance...........................................................................47
SECTION 7.........CONDITIONS PRECEDENT 48
7.1 Conditions to Initial Loans....................................................................48
7.2 Conditions to Each Loan........................................................................54
SECTION 8.........AFFIRMATIVE COVENANTS 55
8.1 Financial Statements...........................................................................55
8.2 Certificates; Other Information................................................................55
8.3 Payment of Obligations.........................................................................56
8.4 Conduct of Business and Maintenance of Existence...............................................56
8.5 Maintenance of Property; Insurance.............................................................57
8.6 Inspection of Property; Books and Records; Discussions.........................................57
8.7 Notices........................................................................................57
8.8 Environmental Laws.............................................................................58
8.9 Changes to Advance Rates, Standards of Eligibility and Reserves................................58
8.10 Periodic Audit of Accounts Receivable and Inventory............................................58
8.11 Additional Collateral; Additional Guarantors...................................................59
8.12 Year 2000 Covenants............................................................................59
8.13 Interest Rate Protection Arrangements..........................................................60
SECTION 9.........NEGATIVE COVENANTS 60
9.1 Financial Condition Covenants..................................................................60
9.2 Limitation on Indebtedness.....................................................................61
9.3 Limitation on Liens............................................................................62
9.4 Limitation on Guarantee Obligations............................................................63
9.5 Limitation on Fundamental Changes..............................................................63
9.6 Limitation on Sale of Assets...................................................................63
9.7 Limitation on Dividends........................................................................64
9.8 Limitation on Capital Expenditures.............................................................64
9.9 Limitation on Investments, Loans and Advances..................................................64
9.10 Limitation on Optional Payments and Modifications of Debt Instruments..........................65
9.11 Limitation on Transactions with Affiliates.....................................................65
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<PAGE>
9.12 Limitation on Changes in Fiscal Year...........................................................65
9.13 Limitation on Negative Pledge Clauses..........................................................65
9.14 Limitation on Lines of Business................................................................65
9.15 Governing Documents............................................................................65
9.16 Limitation on Subsidiary Formation.............................................................65
9.17 Limitation on Acquisitions.....................................................................66
SECTION 10........EVENTS OF DEFAULT 66
SECTION 11........THE ADMINISTRATIVE AGENT 69
11.1 Appointment....................................................................................69
11.2 Delegation of Duties...........................................................................69
11.3 Exculpatory Provisions.........................................................................70
11.4 Reliance by Administrative Agent...............................................................70
11.5 Notice of Default..............................................................................70
11.6 Non-Reliance on Administrative Agent and Other Lenders.........................................71
11.7 Indemnification................................................................................71
11.8 Administrative Agent in Its Individual Capacity................................................72
11.9 Successor Administrative Agent.................................................................72
11.10 Arranger.......................................................................................72
SECTION 12........MISCELLANEOUS 72
12.1 Amendments and Waivers.........................................................................72
12.2 Notices........................................................................................73
12.3 No Waiver; Cumulative Remedies.................................................................74
12.4 Survival of Representations and Warranties.....................................................74
12.5 Payment of Expenses and Taxes..................................................................74
12.6 Successors and Assigns; Participations and Assignments.........................................75
12.7 Adjustments; Set-off...........................................................................77
12.8 Counterparts...................................................................................78
12.9 Severability...................................................................................78
12.10 Integration....................................................................................78
12.11 GOVERNING LAW..................................................................................78
12.12 Submission To Jurisdiction; Waivers............................................................78
12.13 Acknowledgements...............................................................................79
12.14 WAIVERS OF JURY TRIAL..........................................................................79
12.15 Confidentiality................................................................................79
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Schedules:
- -----------
<S> <C>
Schedule 1.1 Lenders, Commitments and Lending Offices
Schedule 2.2 Term Loan Payments
Schedule 6.15 Subsidiaries
Schedule 6.16 Filing Jurisdictions
Schedule 6.19 Insurance
Schedule 7.1(a)(viii) Mortgage Locations
Schedule 7.1(a)(ix) Leasehold Mortgage Locations
Schedule 9.2 Existing Indebtedness
Schedule 9.3 Existing Liens
Schedule 9.4 Existing Guarantee Obligations
Schedule 9.5 Subsidiaries Permitted to Dissolve
Exhibits:
- ----------
Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Revolving Credit Note
Exhibit B Form of Assignment of Zipp Acquisition Documents
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Guarantee
Exhibit E Form of Leasehold Mortgage
Exhibit F Form of Mortgage
Exhibit G Form of Pledge Agreement
Exhibit H Form of Security Agreement
Exhibit I Form of Vehicle Security Agreement
Exhibit J Form of Borrowing Request
Exhibit K Form of Non-Bank Status Certificate
Exhibit L Form of Secretary's Certificate
Exhibit M-1 Form of Legal Opinion
Exhibit M-2 Form of Local Counsel Legal Opinion
Exhibit M-3 Form of Foreign Counsel Legal Opinion
Exhibit N Form of Assignment and Acceptance
</TABLE>
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<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of August 11, 1999, among CELADON
GROUP, INC., a Delaware corporation ("Group") and CELADON TRUCKING SERVICES,
INC., a New Jersey corporation ("Trucking"; together with Group, each a
"Borrower", collectively, the "Borrowers"), the lenders from time to time
parties to this Agreement (the "Lenders") and ING (U.S.) CAPITAL LLC, as
administrative agent for the Lenders hereunder and as arranger.
RECITALS
The Borrowers have requested that (a) the Lenders make a term
loan to the Borrowers in the aggregate principal amount of $30,000,000, the
proceeds of which would be used to partially finance the acquisition (the "Zipp
Acquisition") of substantially all of the assets of Zipp-Express, Inc., a
Indiana corporation (formerly Zipp Express, Inc.) and Zipp Logistics, LLC, an
Indiana limited liability company (collectively, "Zipp"), to refinance
substantially all bank indebtedness of the Borrowers, Zipp and each of their
subsidiaries and to pay fees and expenses incurred in connection herewith and
therewith, and (b) the Lenders make available to the Borrowers revolving credit
loans in an aggregate principal amount at any one time outstanding not to exceed
$30,000,000, the proceeds of which would be used to partially finance the Zipp
Acquisition, to refinance substantially all bank indebtedness of the Borrowers,
Zipp and each of their subsidiaries, to finance the working capital requirements
of the Borrowers and each of their subsidiaries in the ordinary course of
business and to pay fees and expenses incurred in connection herewith and
therewith. The Lenders are willing to make such credit available to the
Borrowers, but only on these terms, and subject to the conditions, set forth in
this Agreement.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Adjusted Consolidated Net Income": Consolidated Net Income;
provided, that in the case of the period of four fiscal quarters ending with the
fiscal quarter in which the Closing Date occurred and for each period of four
fiscal quarters ending with each of the three following fiscal quarters,
Consolidated Net Income shall be calculated on a pro forma basis as if the Zipp
Acquisition had occurred on the first day of such period.
"Adjusted Leverage Ratio": as of any date of determination,
for the period of four consecutive fiscal quarters most recently ended, the
ratio of (i) Consolidated Funded Obligations to (ii) Consolidated EBITDAR for
such period.
<PAGE>
"Administrative Agent": ING (U.S.) Capital LLC, together with
its affiliates, as the arranger of the Commitments and as the Administrative
Agent for the Lenders under this Agreement and the other Loan Documents.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person (including, with its correlative meanings, "controlled by"
and "under common control with") means the power, directly or indirectly, either
to (a) vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Aggregate Outstanding RC Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding and
(b) such Lender's Revolving Credit Commitment Percentage of the L/C Obligations
then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Applicable Commitment Fee Rate": (a) during the period
commencing on the Closing Date and ending on the date on which the
Administrative Agent receives the financial statements of Group for the fiscal
quarter ending September 30, 1999 in accordance with Section 8.1(b), 0.50%; and
(b) at any time following the date on which the Administrative
Agent receives the financial statements of Group for the fiscal quarter ending
September 30, 1999 in accordance with Section 8.1(b) on which the Leverage
Ratio, as most recently determined as of the date the certificate containing
such Leverage Ratio is delivered pursuant to Section 8.2(b), is within any of
the ranges set forth below, the rate per annum set forth under the relevant
column heading opposite the applicable range below; provided, that any changes
in such rate shall be effective as of the date which is five (5) days following
the date on which the certificate containing such Leverage Ratio is delivered:
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<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------
Leverage Ratio Commitment Fee Rate
- ----------------------------------------------------
Greater than 3.0 0.50%
- ----------------------------------------------------
Less than or equal 0.375%
to 3.0 but greater
than 2.5
- ----------------------------------------------------
Less than or equal 0.25%
to 2.5
- ----------------------------------------------------
</TABLE>
provided, that in the event that the certificate containing
the determination of the Leverage Ratio is not delivered by the date specified
and otherwise in accordance with to Section 8.2(b) hereof, the applicable margin
shall be the highest rate per annum for such Type of Loan set forth above from
the date on which such certificate was required to be delivered in accordance
with Section 8.2(b) until such time as such certificate is delivered to the
Lenders.
"Applicable Lending Office": for each Lender and for each Type
of Loan, the lending office of such Lender designated for such Type of Loan on
Schedule 1.1 hereto (or any other lending office from time to time notified to
the Administrative Agent by such Lender) as the office at which its Loans of
such Type are to be made and maintained.
"Applicable Margin": (a) for any Term Loan or any Revolving
Credit Loan of any Type, during the period commencing on the Closing Date and
ending on the date on which the Administrative Agent receives the financial
statements of Group for the fiscal quarter ending September 30, 1999 in
accordance with Section 8.1(b), the rate per annum set forth under the relevant
column heading below:
<TABLE>
<S> <C>
- ----------------------------------------------------
Base Rate Loans Eurodollar Loans
- ----------------------------------------------------
1.00% 2.00%
- ----------------------------------------------------
</TABLE>
(b) for any Term Loan or Revolving Credit Loan of any Type at
any time following the date on which the Administrative Agent receives the
financial statements of Group for the fiscal quarter ending September 30, 1999
in accordance with Section 8.1(b) on which the Leverage Ratio, as most recently
determined as of the date the certificate containing such Leverage Ratio is
delivered pursuant to Section 8.2(b), is within any of the ranges set forth
below, the rate per annum set forth under the relevant column heading opposite
the applicable range below; provided, that any changes in such rate shall be
effective as of the date which is five (5) days following the date on which the
certificate containing such Leverage Ratio is delivered:
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<PAGE>
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------
Leverage Ratio Base Rate Loans Eurodollar Loans
- -------------------------------------------------------------------
Greater than 4.0 1.50% 2.50%
- -------------------------------------------------------------------
Less than or equal 1.25% 2.25%
to 4.0 but greater
than 3.5
- -------------------------------------------------------------------
Less than or equal 1.00% 2.00%
to 3.5 but greater
than 3.0
- -------------------------------------------------------------------
Less than or equal 0.75% 1.75%
to 3.0 but greater
than 2.5
- -------------------------------------------------------------------
Less than or equal 0.50% 1.50%
to 2.5
- -------------------------------------------------------------------
</TABLE>
provided, that in the event that the certificate containing
the determination of the Leverage Ratio is not delivered by the date specified
and otherwise in accordance with to Section 8.2(b) hereof, the applicable margin
shall be the highest rate per annum for such Type of Loan set forth above from
the date on which such certificate was required to be delivered in accordance
with Section 8.2(b) until such time as such certificate is delivered to the
Lenders.
"Application": an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"Arranger": ING (U.S.) Capital LLC, in its capacity as
arranger.
"Assignee": as defined in Section 12.6(c).
"Assignment and Acceptance": as defined in Section 12.6(c).
"Assignment of Zipp Acquisition Documents": the assignment of
the Zipp Acquisition Documents, in the form of Exhibit B attached hereto.
"Available RC Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's Revolving
Credit Commitment at such time over (b) the Aggregate Outstanding RC Extensions
of Credit by such Lender at such time.
"Base Rate": for any day, the rate per annum (rounded upward,
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the average of
the prime commercial lending interest rates publicly announced by The Chase
Manhattan Bank (National Association), Citibank, N.A. and
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<PAGE>
Morgan Guaranty Trust Company of New York, as announced from time to time at
their respective head offices (the base rate not being intended to be the lowest
rate of interest charged by such banks in connection with extensions of credit
to debtors).
"Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.
"Borrower": as defined in the heading to this Agreement.
"Borrowing Base": at any time, the sum of (a) 85% (or such
other percentage as the Administrative Agent or the Required Lenders shall
determine in accordance with Section 8.9) of the then Eligible Domestic
Accounts, (b) 65% (or such other percentage as the Administrative Agent or the
Required Lenders shall determine in accordance with Section 8.9) of Eligible
Mexican Accounts, (c) 80% (or such other percentage as the Administrative Agent
or the Required Lenders shall determine in accordance with Section 8.9) of
Eligible Canadian Accounts and (d) 90% (or such other percentage as the
Administrative Agent or the Required Lenders shall determine in accordance with
Section 8.9) of the net book value of all Eligible Tires. The Borrowing Base in
effect at any time shall be the Borrowing Base as shown on the Borrowing Base
Certificate most recently delivered by the Borrowers pursuant to this Agreement;
provided, however, that if the Borrowers shall fail to deliver a Borrowing Base
Certificate when required pursuant to Section 8.2(c), the Borrowers shall not be
permitted to make any new borrowings hereunder until such Borrowing Base
Certificate is delivered and, from and after the date which is five (5) days
following the date on which such Borrowing Base Certificate was required to be
delivered pursuant to 8.2(c), the Borrowing Base in effect shall be zero until
such Borrowing Base Certificate is delivered.
"Borrowing Base Certificate": a certificate, substantially in
the form of Exhibit C, with appropriate insertions, showing the Borrowing Base
as of the date set forth therein, and executed on behalf of the Borrower by a
duly authorized officer thereof.
"Borrowing Date": any Business Day specified in a notice
pursuant to Section 2.3 or 3.3 as a date on which any Borrower requests the
Lenders to make Loans hereunder.
"Borrowing Request": as defined in Section 3.3.
"Business": as defined in Section 6.22.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Indianapolis, Indiana are
authorized or required by law to close, and, if such day relates to a borrowing
of, a payment or prepayment of principal of or interest on, or a Conversion of
or into, or an Interest Period for, a Eurodollar Loan or a notice by any
Borrower with respect to any such borrowing, payment, prepayment, Conversion or
Interest Period, which is also a day on which dealings in Dollar deposits are
carried out in the London interbank market.
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<PAGE>
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of deposit
and eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than seven days with respect
to securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or the
equivalent thereof by Standard and Poor's Ratings Group ("S&P") or P-1 or the
equivalent thereof by Moody's Investors Service, Inc. ("Moody's") and in either
case maturing within 90 days after the day of acquisition, (e) securities with
maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares of
money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"Change of Control": any transaction or event occurring on or
after the date hereof as a direct or indirect result of which (a) any Person or
group shall (i) beneficially own (directly or indirectly) in the aggregate
Capital Stock of Group having 35% or more of the aggregate voting power of all
Capital Stock of Group at the time outstanding or (ii) have the right or power
to appoint a majority of the board of directors of Group, (b) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the board of directors of Group (together with any new directors
whose election by such board of directors or whose nomination for election by
the shareholders of Group was approved by a vote of a majority of the directors
of Group then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so approved)
cease for any reason to constitute at least a majority of the board of directors
of Group then in office or (c) Group ceases to own 100% of the issued and
outstanding Capital Stock of Trucking. For purposes of this definition, the
terms "beneficially own" and "group" shall have the respective meanings ascribed
to them pursuant to Section 13(d) of the Securities Exchange Act of 1934, as
amended, except that a Person or group shall be deemed to beneficially own all
securities that such Person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time.
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<PAGE>
"Closing Date": the date on which the conditions precedent set
forth in Section 7.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all property and interests in property of the
Loan Parties, now owned or hereinafter acquired, upon which a Lien is purported
to be created by any Security Document.
"Commercial Letter of Credit": as defined in Section 4.1(b).
"Commitments": the collective reference to the Revolving
Credit Commitments and the Term Loan Commitments.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with any Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes any Borrower and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Current Assets": at a particular date, all
amounts which would, in conformity with GAAP, be included under current assets
on a consolidated balance sheet of Group and its Subsidiaries as at such date;
provided, however, that such amounts shall not include (a) any amounts for any
Indebtedness owing by an Affiliate of Group, unless such Indebtedness arose in
connection with the sale of goods or other property in the ordinary course of
business and would otherwise constitute current assets in conformity with GAAP,
(b) any shares of stock issued by an Affiliate of Group, or (c) the cash
surrender value of any life insurance policy.
"Consolidated Current Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be included under current
liabilities on a consolidated balance sheet of Group and its Subsidiaries as at
such date.
"Consolidated EBIT": for any period, Consolidated EBITDA minus
the provisions for depreciation and amortization expense used in determining
Adjusted Consolidated Net Income for such period.
"Consolidated EBITDA": for any period, the sum for such period
of (a) Adjusted Consolidated Net Income for such period, (b) the sum of
provisions for such period for income taxes, interest expense, and depreciation
and amortization expense used in determining such Adjusted Consolidated Net
Income, (c) amounts deducted in such period in respect of non-cash expenses in
accordance with GAAP, (d) the amount of any aggregate net loss (or minus the
amount of any gain) during such period arising from the sale, exchange or other
disposition of capital assets, (e) non-cash expenses deducted in such period in
connection with any earn-out agreements, stock appreciation rights, "phantom"
stock plans, employment agreements, non-competition agreements, subscription and
stockholders agreements and other incentive and bonus plans and similar
arrangements made in connection with acquisitions of
-7-
<PAGE>
Persons or businesses by Group or its Subsidiaries or the retention of
executives, officers or employees by Group or its Subsidiaries, including (but
without duplication) any Person that has become a Subsidiary during such period,
on a pro forma basis as if such acquisition had occurred on the first day of
such period, (f) historical merger related expenses for the fiscal quarter ended
December 31, 1998 in an amount equal to $1,200,000 and (g) historical expenses
or charge-offs actually incurred relating to the Zipp Acqusition for the fiscal
quarter ended June 30, 1999 or September 30, 1999 in an aggregate amount not to
exceed $3,200,000; provided, that Consolidated EBITDA shall in any event
exclude, from and after the Closing Date, (x) the effect of any write-up of any
assets acquired in the Zipp Acquisition or any other permitted acquisitions and
(y) the amount of any non-cash income recognized during any period for which
Consolidated EBITDA is determined.
"Consolidated EBITDAR": for any period, Consolidated EBITDA
plus the amount of all rents and other payments (exclusive of property taxes,
property and liability insurance premiums, maintenance costs and residual
payments required by the terminal rental adjustment clause set forth in leases
of tractors and trailers) paid by Group and its Subsidiaries during such period
under any lease (other than Financing Leases), determined in accordance with
GAAP; provided, that in the case of the period of four fiscal quarters ending
with the fiscal quarter in which the Closing Date occurred and for each period
of four fiscal quarters ending with each of the three following fiscal quarters,
Consolidated EBITDAR shall be calculated on a pro forma basis as if the Zipp
Acquisition had occurred on the first day of such period.
"Consolidated Fixed Charges": for any period, the sum, without
duplication, of (a) interest paid or payable during such period by Group and its
Subsidiaries on Indebtedness of Group or any of its Subsidiaries, (b) all
payments of principal or other sums paid or payable during such period by Group
and its Subsidiaries with respect to Indebtedness of Group or any of its
Subsidiaries having a final maturity more than one year from the date of
creation of such Indebtedness (which shall not include payments of principal on
Revolving Credit Loans outstanding hereunder), (c) all debt discount and expense
amortized or required to be amortized during such period by Group and its
Subsidiaries, (d) all obligations of Group and its Subsidiaries in respect of
any interest rate or currency swap, rate cap or similar transaction paid or
required to be paid or during such period by Group or any of its Subsidiaries,
(e) the maximum amount of all rents and other payments (exclusive of property
taxes, property and liability insurance premiums, maintenance costs and residual
payments required by the terminal rental adjustment clause set forth in leases
of tractors and trailers) paid or required to be paid by Group and its
Subsidiaries during such period under any lease of real or personal property in
respect of which Group or any of its Subsidiaries is obligated as lessee or user
and all rents paid or required to be paid by Group or any of its Subsidiaries in
connection with any sale/leaseback transaction of any property, (f) all
dividends and other distributions paid or payable or otherwise accumulating
during such period on any Capital Stock of Group and (g) the amount of cash
income taxes paid during such period by Group and its Subsidiaries.
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"Consolidated Funded Debt": for any period of four consecutive
fiscal quarters, the sum of (a) the sum of (i) the aggregate outstanding
principal amount of the Term Loans as of the last day of such period and (ii)
the outstanding principal amount of the Revolving Credit Loans on the last day
of such period and (b) the outstanding principal amount of all other
Indebtedness (excluding Indebtedness under clause (d) of the definition thereof)
of Group and its Subsidiaries on the last day of such period, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Funded Obligations": at any time, the sum of (i)
Consolidated Funded Debt and (ii) all obligations of Group or any of its
Subsidiaries in respect of any lease of real or personal property, including,
without limitation, residual payments required pursuant to terminal rental
adjustment clauses set forth in leases of tractors and trailers the term of
which is more than one year from such time, in respect of which Group or any of
its Subsidiaries is obligated as lessee or a user, which lease obligations shall
be discounted, for purposes of this definition, at a rate equal to the rate set
forth in such lease pursuant to a schedule of leases and rates which shall have
been provided to and approved by the Administrative Agent, determined on a
consolidated basis in accordance with GAAP; provided, that in the case of the
period of four fiscal quarters ending with the fiscal quarter in which the
Closing Date occurred and for each period of four fiscal quarters ending with
each of the three following fiscal quarters, Consolidated Funded Obligations
shall be calculated on a pro forma basis as if the Zipp Acquisition had occurred
on the first day of such period.
"Consolidated Interest Expense": for any period, the amount
which, in conformity with GAAP, would be set forth opposite the caption
"interest expense" or any like caption (including without limitation, imputed
interest included in payments under Financing Leases) on a consolidated income
statement of Group and the Subsidiaries for such period excluding the
amortization of any original issue discount.
"Consolidated Net Income": for any period, the consolidated
net income (or deficit) of Group and the Subsidiaries for such period (taken as
a cumulative whole), determined in accordance with GAAP; provided that there
shall be excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with Group or any
Subsidiary, (b) the income (or deficit) of any Person (other than a Subsidiary)
in which Group or any Subsidiary has an ownership interest, except to the extent
that any such income has been actually received by Group or such Subsidiary in
the form of dividends or similar distributions, (c) the undistributed earnings
of any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the
terms of any Contractual Obligation, Governing Document or Requirement of Law
applicable to such Subsidiary, (d) any restoration to income of any material
contingency reserve (excluding adjustments to non-material contingency reserves
established in the ordinary course of business), except to the extent that
provision for such reserve was made out of income accrued during such period,
(e) any write-up of any asset, (f) any net gain from the collection of the
proceeds of life insurance policies, (g) any gain arising from the acquisition
of any securities, or the extinguishment, under GAAP, of any Indebtedness, of
Group or any Subsidiary, (h) in the case of a successor to Group by
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consolidation or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets,
and (i) any deferred credit representing the excess of equity in any Subsidiary
at the date of acquisition over the cost of the investment in such Subsidiary.
"Consolidated Tangible Net Worth": as of any date of
determination,
(a) all items, which in conformity with GAAP, would
be included under shareholders' equity on a consolidated balance sheet
of Group; minus
(b) intangible assets, determined in accordance with
GAAP.
"Continue", "Continuation" and "Continued" shall refer to the
continuation of a Eurodollar Loan from one Interest Period to the next Interest
Period.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert", Conversion" and "Converted" shall refer to a
conversion of Base Rate Loans into Eurodollar Loans or of Eurodollar Loans into
Base Rate Loans, which may be accompanied by the transfer by a Lender (at its
sole discretion) of a Loan from one Applicable Lending Office to another.
"Credit Exposure": as to any Lender at any time, the sum of
(a) its Revolving Credit Commitment (or, if the Revolving Credit Commitments
shall have expired or been terminated, the sum of (i) the aggregate unpaid
principal amount of its Revolving Credit Loans and (ii) its Revolving Credit
Commitment Percentage of the aggregate outstanding L/C Obligations) and (b) the
unpaid principal amount of its Term Loans.
"Credit Exposure Percentage": as to any Lender at any time,
the fraction (expressed as a percentage), the numerator of which is the Credit
Exposure of such Lender at such time and the denominator of which is the
aggregate Credit Exposures of all of the Lenders at such time.
"Default": any of the events specified in Section 10, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary organized under the laws
of the United States or any political subdivision thereof.
"Eligible Canadian Accounts": Eligible Foreign Accounts which
relate to obligors principally located in Canada.
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"Eligible Domestic Accounts": as to Trucking, Gerth and Zipp
Express, at a particular date, the total outstanding balance of accounts
receivable which relate to obligors principally located in the United States
("Domestic Accounts") of Trucking, Gerth and Zipp Express, minus (without
duplication) the sum of: (a) Domestic Accounts which are not bona fide, valid
and legally enforceable obligations of the obligor in respect thereof that arise
from the actual sale and delivery of goods or rendition and acceptance of
services to such obligor in the ordinary course of business of such Loan Party;
(b) Domestic Accounts which have not been documented in a customary form used by
Trucking, Gerth or Zipp Express and reasonably acceptable to the Administrative
Agent (it being agreed by the Administrative Agent that the invoice forms
currently used by Trucking, Gerth or Zipp Express are acceptable to the
Administrative Agent); (c) Domestic Accounts which contravene, or arise from
sales which contravene, any Requirement of Law applicable thereto, where such
contravention could be reasonably expected to affect adversely the
collectibility or value of such Domestic Accounts; (d) Domestic Accounts which
have been invoiced by Trucking, Gerth or Zipp Express which have been
outstanding and unpaid for 90 days or more from the date of invoice thereof
("Past Due Receivables"); (e) if more than 50% of the Domestic Accounts of any
obligor constitute Past Due Receivables, the Domestic Accounts of such obligor;
(f) Domestic Accounts which arise from a bill and hold sale prior to the
shipment of the goods that are the subject thereof; (g) Domestic Accounts of any
obligor which is an Affiliate or Subsidiary of Trucking, Gerth or Zipp Express;
(h) Domestic Accounts of the United States of America or any instrumentality
thereof, unless Trucking, Gerth or Zipp Express duly assigns its rights to
payment of such Domestic Accounts to the Administrative Agent for the ratable
benefit of the Lenders pursuant to the Assignment of Claims Act of 1940, as
amended from time to time (31 U.S.C. 'SS'3723 et seq.); (i) Domestic Accounts
which are not denominated and payable in Dollars in the United States of
America; (j) Domestic Accounts which are not subject to a perfected first
priority security interest in favor of the Administrative Agent for the ratable
benefit of the Lenders pursuant to the Security Agreement; (k) Domestic Accounts
which do not conform in all material respects to the representations and
warranties contained in the Security Agreement with respect thereto; (l)
Domestic Accounts of obligors which are the subject of any bankruptcy or
insolvency proceeding of any kind (unless such obligor has debtor-in-possession
financing or credit support reasonably acceptable to the Administrative Agent
and such Domestic Account (to the extent not covered by credit insurance or
supported by a letter of credit in favor of Trucking, Gerth or Zipp Express, as
the case may be) constitutes a post-petition claim against such obligor); and
(m) such other Domestic Accounts as the Administrative Agent and/or the Majority
Lenders, in their reasonable judgment, believes will not be paid in full within
90 days of the date of invoice thereof (as promptly notified by the
Administrative Agent to the Borrowers).
"Eligible Foreign Accounts": as to Trucking, Gerth and Zipp
Express, at a particular date, the total outstanding balance of foreign accounts
receivable ("Foreign Accounts") of Trucking, Gerth and Zipp Express, minus
(without duplication) the sum of: (a) Foreign Accounts which are not bona fide,
valid and legally enforceable obligations of the obligor in respect thereof that
arise from the actual sale and delivery of goods or rendition and acceptance of
services to such obligor in the ordinary course of business of Trucking, Gerth
or Zipp Express; (b) Foreign Accounts which have not been documented in a
customary form
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used by Trucking, Gerth or Zipp Express and reasonably acceptable to the
Administrative Agent (it being agreed by the Administrative Agent that the
invoice forms currently used by Trucking, Gerth or Zipp Express are acceptable
to the Administrative Agent); (c) Foreign Accounts which contravene, or arise
from sales which contravene, any Requirement of Law applicable thereto, where
such contravention could be reasonably expected to affect adversely the
collectibility or value of such Foreign Accounts; (d) Foreign Accounts which
have been invoiced by Trucking, Gerth or Zipp Express which have been
outstanding and unpaid for 90 days or more from the date of invoice thereof
("Past Due Foreign Receivables"); (e) if more than 50% of the Accounts of any
obligor constitute Past Due Foreign Receivables, the Foreign Accounts of such
obligor; (f) Foreign Accounts which arise from a bill and hold sale prior to the
shipment of the goods that are the subject thereof; (g) Foreign Accounts of any
obligor which is an Affiliate or Subsidiary of Trucking, Gerth or Zipp Express;
(h) Foreign Accounts which are not denominated and payable in Dollars in the
United States of America or Canadian dollars; provided, that for the purposes of
calculating the Borrowing Base, Foreign Accounts which are denominated in
Canadian dollars shall be converted into Dollars based on the applicable rate of
exchange as of the last day of the calendar month most recently ended; (i)
Foreign Accounts which do not conform in all material respects to the
representations and warranties contained in the Security Agreement with respect
thereto; (j) Foreign Accounts of obligors which are the subject of any
bankruptcy or insolvency proceeding of any kind (unless such obligor has
debtor-in-possession financing or credit support reasonably acceptable to the
Administrative Agent and such Foreign Accounts (to the extent not covered by
credit insurance or supported by a letter of credit in favor of Trucking, Gerth
or Zipp Express, as the case may be) constitutes a post-petition claim against
such obligor); (k) such other Foreign Accounts as the Administrative Agent
and/or the Majority Lenders, in their reasonable judgment, believes will not be
paid in full within 90 days of the date of invoice thereof (as promptly notified
by the Administrative Agent to Borrowers) and (l) such other Foreign Accounts
as, in the reasonable business judgment of the Administrative Agent and/or the
Majority Lenders, are not creditworthy in relation to the amount of credit
extended to such customer by Trucking, Gerth or Zipp Express.
"Eligible Mexican Accounts": Eligible Foreign Accounts which
relate to obligors principally located in Mexico which are subject to a
perfected first priority security interest in favor of the Administrative Agent
for the ratable benefit of the Lenders pursuant to the Security Agreement.
"Eligible Tires": as to Trucking and Zipp Express, at a
particular date, pre-paid tires owned by Trucking or Zipp Express in which
Trucking or Zipp Express has granted to Administrative Agent for the benefit of
the Lenders, a first-priority perfected security interest pursuant to the
Security Agreement, valued at the net book value of such inventory, but not
including any such inventory (a) that is not useable in the ordinary course of
business of Trucking or Zipp Express, (b) that is subject to, or any accounts or
other proceeds resulting from the sale or other disposition thereof could be
subject to, any Lien (except for other than Liens permitted by Section 9.3
hereof and those in favor of Administrative Agent for the benefit of the
Lenders, under the Security Documents), (c) that is not in the possession of
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Trucking or Zipp Express, and (d) with respect to which any insurance proceeds
are not payable to the Administrative Agent as a loss payee.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the
corresponding rate appearing at page 3750 of the Dow Jones Telerate Service at
or about 11:00 A.M., London time, two Business Days prior to the beginning of
such Interest Period, or if such rate no longer so appears, the average of the
rates per annum at which each of The Chase Manhattan Bank (National
Association), Citibank, N.A. and Morgan Guaranty Trust Company of New York is
offered Dollar deposits at or about 10:00 a.m., local time, two Business Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery on the
first day of such Interest Period for the number of days comprised therein and
in an amount comparable to the amount of its Eurodollar Loan to be outstanding
during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable
to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
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<PAGE>
"Event of Default": any of the events specified in Section 10;
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Excess Cash Flow": as to Group for each fiscal year:
(a) Consolidated EBITDA for such fiscal year;
plus (b) the decrease (if any) in the amount of the excess of
Consolidated Current Assets (excluding cash and Cash Equivalents) over
Consolidated Current Liabilities at the end of such fiscal year
compared to the amount of the excess of Consolidated Current Assets
(excluding cash and Cash Equivalents) over Consolidated Current
Liabilities at the end of the immediately preceding fiscal year of
Group;
minus (c) the sum of (i) the amount of (A) all regularly
scheduled payments of principal of the Term Loans actually made during
such fiscal year, (B) any voluntary prepayment of principal of the Term
Loans made during such fiscal year, (C) any permanent reduction in the
Revolving Credit Commitments made during such fiscal year to the extent
that, before giving effect to such reduction, the average outstanding
principal balance of the Revolving Credit Loans for the thirty (30)
days prior to such reduction exceeds the aggregate Revolving Credit
Commitments after giving effect to such reduction, (D) any voluntary
prepayment of other permitted Indebtedness to the extent not subject to
reborrowing, made during such fiscal year and (E) all scheduled
payments made under Financing Leases actually made during such fiscal
year, (ii) the amount of all interest payments actually made in cash
during such fiscal year by Group and its consolidated Subsidiaries,
(iii) the amount of capital expenditures (other than capital
expenditures in respect of Financing Leases) actually made during such
fiscal year by the Loan Parties to the extent permitted by Section 9.8,
(iv) cash income taxes paid by the Loan Parties during such fiscal year
and (v) the increase (if any) in the amount of the excess of
Consolidated Current Assets (excluding cash and Cash Equivalents) over
Consolidated Current Liabilities at the end of such fiscal year
compared to the amount of the excess of Consolidated Current Assets
(excluding cash and Cash Equivalents) over Consolidated Current
Liabilities at the end of the immediately preceding fiscal year of
Group.
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.
"Fee Letter": the Fee Letter, dated July 19, 1999, between the
Administrative Agent and Group, as the same may be amended, supplemented or
otherwise modified from time to time.
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"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Pledge Agreement": with respect to any Foreign
Subsidiary, the pledge agreement to be executed and delivered by the Loan
Parties, in form and substance satisfactory to the Administrative Agent, as the
same may be amended, supplemented or otherwise modified from time to time.
"Foreign Subsidiary": any Subsidiary of any Borrower which is
organized under the laws of a jurisdiction outside of the United States.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Gerth": Gerth Transport, Ltd., an Ontario corporation.
"Governing Documents": as to any Person, its articles or
certificate of incorporation and by-laws, its partnership agreement, its
certificate of formation and operating agreement, and/or the other
organizational or governing documents of such Person.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Group": as defined in the Heading hereto.
"Guarantee": the Guarantee to be executed and delivered by the
Subsidiaries, substantially in the form of Exhibit D, as the same may be
amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term
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Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The terms "Guarantee" and
"Guaranteed" used as a verb shall have a correlative meaning. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrowers in good
faith.
"Guarantor": any Person delivering a Guarantee pursuant to
this Agreement.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under Financing Leases, (d) all obligations of such Person in respect of letters
of credit, acceptances or similar instruments issued or created for the account
of such Person and (e) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": as defined in Schedule 6.9 hereof.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each calendar month, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
and (c) as to any Eurodollar Loan having an Interest Period longer than three
months, (i) each day which is three months or a whole multiple thereof, after
the first day of such Interest Period, and (ii) the last day of such Interest
Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
Conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrowers in its notice of borrowing or notice of Conversion,
as the case may be, given with respect thereto; and
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(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrowers by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment is
due on the Term Loans shall end on the Revolving Credit Termination
Date or such date of final payment, as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month; and
(4) the Borrowers shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Issuing Lender": ING (U.S.) Capital LLC or any other Lender
appointed by the Administrative Agent and acceptable to the Borrowers, in its
capacity as issuer of any Letter of Credit.
"L/C Commitment": $10,000,000.
"L/C Fee Payment Date": the last Business Day of each March,
and June, September and December.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed.
"L/C Participants": the collective reference to all the
Lenders other than the Issuing Lender.
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"Leasehold Mortgage": each Leasehold Mortgage to be executed
and delivered by the Loan Parties, substantially in the form of Exhibit E, as
the same may be amended, supplemented or otherwise modified from time to time.
"Lenders": as defined in the heading hereto, which shall
include in any event the Issuing Lender.
"Letters of Credit": as defined in Section 4.1(a).
"Leverage Ratio": as of any date of determination, for the
period of four consecutive fiscal quarters most recently ended, the ratio of (i)
Consolidated Funded Debt to (ii) Consolidated EBITDA for such period.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing), and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect of any of the
foregoing.
"Loan": any Term Loan or Revolving Credit Loan made by any
Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Guarantee,
the Security Documents and the Fee Letter.
"Loan Parties": each Borrower and each Subsidiary of any
Borrower which is a party to a Loan Document.
"Majority Lenders": at any time, Lenders the Credit Exposure
Percentages of which aggregate more than 50%.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise) or
prospects of the Borrowers and their Subsidiaries taken as a whole or (b) the
validity or enforceability of this or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Material Environmental Amount": an amount payable by any
Borrower and/or their Subsidiaries in excess of $1,000,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties or
any combination thereof.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law,
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including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Mortgage": each Mortgage to be executed and delivered by the
Loan Parties, substantially in the form of Exhibit F, as the same may be
amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": (i) the aggregate cash consideration received
by any Borrower or a Subsidiary in connection with any transaction referred to
in Section 5.5(c) less (ii) the expenses (including out-of-pocket expenses)
incurred by any Borrower or such Subsidiary in connection with such transaction
(including, in the case of any issuance of debt or equity securities,
underwriters' commissions and fees) and the amount of any federal and state
taxes incurred in connection with such transaction, in each case as certified by
a Responsible Officer to the Administrative Agent at the time of such
transaction.
"Non-Bank Status Certificate": as defined in Section
5.11(b)(i)(B).
"Non-Excluded Taxes": as defined in Section 5.11.
"Notes": the collective reference to the Revolving Credit
Notes and the Term Notes.
"Obligations": the unpaid principal amount of, and interest
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to any Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) on the Loans, and all other obligations
and liabilities of the Loan Parties to the Administrative Agent and the Lenders,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, or out of or in
connection with this Agreement, the Notes, the Guarantees, the Security
Documents and any other Loan Documents and any other document made, delivered or
given in connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by a Loan
Party pursuant to the terms of the Loan Documents) or otherwise.
"Participant": as defined in Section 12.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
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"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which any Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement": the Pledge Agreement to be executed and
delivered by the Loan Parties relating to all Domestic Subsidiaries of the
Borrowers, substantially in the form of Exhibit G, as the same may be amended,
supplemented or otherwise modified from time to time.
"Pro Forma Balance Sheet": as defined in Section 6.1(b).
"Properties": as defined in Section 6.22.
"Reimbursement Obligation": the obligation of the Borrowers to
reimburse the Issuing Bank pursuant to Section 4.5(a) for amounts drawn under a
Letter of Credit.
"Register": as defined in Section 12.6(d).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived under Sections .21, .22, .23, .26, .27 or .28 of PBGC Reg.
'SS.' 4043.
"Required Lenders": (a) at any time when two or fewer Lenders
hold Commitments hereunder, Lenders the Credit Exposure Percentages of which
aggregate at least 80%, and (b) at any time when more than two Lenders hold
Commitments hereunder, Lenders the Credit Exposure Percentages of which
aggregate at least 66 2/3%.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or Governing Documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": with respect to any Borrower, its chief
executive officer and the president or, with respect to financial matters, its
chief financial.
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"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the Borrowers
pursuant to Section 3.1 and/or to issue or participate in Letters of Credit
issued on behalf of the Borrowers hereunder in an aggregate principal amount at
any one time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 1.1 under the caption "Revolving Credit Commitment" or
in an Assignment and Acceptance, as such amount may be reduced from time to time
in accordance with the provisions of this Agreement.
"Revolving Credit Commitment Percentage": as to any Lender at
any time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any time after
the Revolving Credit Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such Lender's Revolving
Credit Loans then outstanding constitutes of the aggregate principal amount of
the Revolving Credit Loans then outstanding).
"Revolving Credit Commitment Period": the period from and
including the date hereof to but not including the Revolving Credit Termination
Date or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"Revolving Credit Loans": as defined in Section 3.1.
"Revolving Credit Note": as defined in Section 3.2.
"Revolving Credit Termination Date": August 11, 2004.
"Security Agreement": the Security Agreement to be executed
and delivered by the Loan Parties, substantially in the form of Exhibit H, as
the same may be amended, supplemented or otherwise modified from time to time.
"Security Documents": the collective reference to the
Assignment of Zipp Acquisition Documents, the Foreign Pledge Agreements, the
Leasehold Mortgages, the Mortgages, the Pledge Agreement, the Security
Agreement, the Vehicle Security Agreement and all other security documents
hereafter delivered to the Administrative Agent granting a Lien on any asset or
assets of any Person to secure any of the Obligations or to secure any guarantee
of any such Obligations.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Standby Letter of Credit": as defined in Section 4.1(b).
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is
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otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of a Borrower.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, its obligation to
make a Term Loan to the Borrowers pursuant to Section 2.1 in the amount set
forth opposite such Lender's name on Schedule 1.1 under the caption "Term Loan".
"Term Loan Commitment Percentage": as to any Lender, the
percentage equal to the quotient of such Lender's Term Loan Commitment divided
by the aggregate Term Loan Commitments.
"Term Note": as defined in Section 2.2.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day); Tranches may be identified as "Eurodollar
Tranches".
"Transaction Parties": the Loan Parties and Zipp.
"Transferee": as defined in Section 12.6(f).
"Trucking": as defined in the Heading hereto.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Vehicle Security Agreement": the Vehicle Security Agreement
to be executed and delivered by the Loan Parties, substantially in the form of
Exhibit I, as the same may be amended, supplemented or otherwise modified from
time to time.
"Year 2000 Problem": the risk that computer applications used
by any Borrower or any of their Subsidiaries may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to, and
any date on or after, December 31, 1999.
"Zipp": as defined in the Recitals hereto.
"Zipp Acquisition": as defined in the Recitals hereto.
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"Zipp Acquisition Agreement": the Asset Purchase Agreement,
dated August 11, 1999, among Group, Trucking, Zipp and the shareholders of Zipp,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Zipp Acquisition Documents": the collective reference to the
Zipp Acquisition Agreement and any other documents executed in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time.
"Zipp Express": Zipp Express, Inc., an Indiana corporation and
successor to Zipp Acquisition Corp.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in any Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrowers and their Subsidiaries not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) 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, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, each Lender severally agrees to make a term loan (a "Term Loan") to the
Borrowers on the Closing Date in an amount not to exceed the amount of the Term
Loan Commitment of such Lender then in effect; provided, that the Term Loan
Commitments shall terminate at 3:00 p.m., New York City time, on September 30,
1999, if the Term Loans have not been made prior to that time. The Term Loans
may from time to time be (a) Eurodollar Loans, (b) Base Rate Loans or (c) a
combination thereof, as determined by the Borrowers and notified to the
Administrative Agent in accordance with Sections 2.3 and 5.2.
2.2 Term Notes. The Term Loan of each Lender shall be
evidenced by a promissory note of the Borrowers, substantially in the form of
Exhibit A-1 with appropriate insertions as to payee, date and principal amount
(a "Term Note"), payable to the order of such Lender and representing the
obligation of the Borrowers to pay, jointly and severally, the amount of the
Term Loan made by such Lender. Each Lender is hereby authorized to record
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the date, Type and amount of its Term Loan and the date and amount of each
payment or prepayment of principal thereof and each Conversion of all or a
portion thereof to another Type and, and in the case of Eurodollar Loans, the
Interest Period with respect thereto, on the schedule annexed to and
constituting a part of its Term Note, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded; provided,
that the failure of such Lender to make any such recordation shall not impair or
otherwise affect the validity or enforceability of its Term Note. Each Term Note
shall (a) be dated the Closing Date, (b) be stated to mature in installments in
amounts equal to such Lender's Term Loan Commitment Percentage of the amounts,
and payable on the dates, set forth on Schedule 2.2, and (c) bear interest for
the period from the date thereof on the unpaid principal amount thereof at the
applicable interest rates per annum specified in Section 5.1. Interest on the
Term Notes shall be payable on the dates specified in Section 5.1(d).
2.3 Procedure for Term Loan Borrowing. The Borrowers shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 11:00 a.m., New York City time, (a) three
Business Days prior to the Closing Date, if all or any part of the Term Loans
are to be initially Eurodollar Loans, or (b) one Business Day prior to the
Closing Date, otherwise) requesting that the Lenders make the Term Loans on the
Closing Date and specifying (i) the Closing Date, (ii) the amount to be
borrowed, (iii) whether the Term Loans are to be initially Eurodollar Loans,
Base Rate Loans or a combination thereof, and (iv) if the Term Loans are to be
entirely or partly Eurodollar Loans, the respective amounts of each such Type of
Loan and the respective lengths of the initial Interest Periods therefor. Upon
receipt of such notice the Administrative Agent shall promptly notify each
Lender thereof. Not later than 12:00 noon, New York City time, on the Closing
Date each Lender shall make available to the Administrative Agent at its office
specified in Section 12.2 the amount of such Lender's pro rata share of such
borrowing in immediately available funds. The Administrative Agent shall on such
date credit the account of the Borrowers on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 Revolving Credit Commitments.
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans ("Revolving Credit Loans") to
the Borrowers from time to time during the Revolving Credit Commitment Period in
an aggregate principal amount at any one time outstanding not to exceed the
lesser of (i) the amount of such Lender's Revolving Credit Commitment then in
effect and (ii) such Lender's Revolving Credit Commitment Percentage of the
Borrowing Base then in effect; provided, that the Revolving Credit Commitments
shall terminate at 3:00 p.m., New York City time, on September 30, 1999, if the
Term Loans have not been made prior to that time. During the Revolving Credit
Commitment Period, the Borrowers may use the Revolving Credit Commitments by
borrowing, prepaying the
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Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Borrowers and notified to the Administrative Agent in
accordance with Sections 3.3 and 5.2, provided, that no Revolving Credit Loan
shall be made as a Eurodollar Loan after the day that is one month prior to the
Revolving Credit Termination Date.
3.2 Revolving Credit Notes. The Revolving Credit Loans made by
each Lender shall be evidenced by a promissory note of the Borrowers,
substantially in the form of Exhibit A-2 with appropriate insertions as to
payee, date and principal amount (a "Revolving Credit Note"), payable to the
order of such Lender and evidencing the obligation of the Borrowers to pay,
jointly and severally, a principal amount equal to the lesser of (a) the amount
of the Revolving Credit Commitment of such Lender and (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by such Lender. Each Lender
is hereby authorized to record the date, Type and amount of each Revolving
Credit Loan made or Converted by such Lender, the date and amount of each
payment or prepayment of principal thereof, and, in the case of Eurodollar
Loans, the Interest Period with respect thereto, on the schedule annexed to and
constituting a part of its Revolving Credit Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded.
Each Revolving Credit Note shall (x) be dated the Closing Date, (y) be stated to
mature on the Revolving Credit Termination Date and (z) bear interest on the
unpaid principal amount thereof from time to time outstanding at the applicable
interest rate per annum determined as provided in Section 5.1. Interest on each
Revolving Credit Note shall be payable on the dates specified in Section 5.1(d).
3.3 Procedure for Revolving Credit Borrowing. The Borrowers
may borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day in an aggregate principal amount not
exceeding the lesser of (A) the aggregate Available RC Commitments then in
effect and (B) the Borrowing Base then in effect; provided, that the Borrowers
shall give the Administrative Agent irrevocable notice in the form of a
Borrowing Request in the form of Exhibit J hereto (a "Borrowing Request") (which
notice must be received by the Administrative Agent prior to (a) 12:00 noon, New
York City time, three Business Days prior to the requested Borrowing Date, if
all or any part of the requested Revolving Credit Loans are to be initially
Eurodollar Loans or (b) 12:00 noon, New York City time, on the day of the
requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Revolving Credit Commitments
shall be in an amount equal to (x) in the case of Base Rate Loans, $250,000 or a
whole multiple of $50,000 in excess thereof (or, if the then Available RC
Commitments are less than $250,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any
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such notice from the Borrowers, the Administrative Agent shall promptly notify
each Lender thereof. Each Lender will make the amount of its pro rata share of
each borrowing available to the Administrative Agent for the account of the
Borrowers at the office of the Administrative Agent specified in Section 12.2
prior to 1:00 p.m., New York City time, on the Borrowing Date requested by the
Borrowers in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrowers by the Administrative
Agent crediting the account of the Borrowers on the books of such office with
the aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent.
3.4 Commitment Fee. Each Borrower agrees to pay, jointly and
severally, to the Administrative Agent for the account of each Lender a
commitment fee for the period from and including the first day of the Revolving
Credit Commitment Period to the Revolving Credit Termination Date, computed at a
rate per annum equal to the Applicable Commitment Fee Rate on the average daily
amount of the Available RC Commitment of such Lender during the period for which
payment is made, calculated on the basis of the actual days elapsed over a 360
day year, payable quarterly in arrears on the last Business Day of each calendar
fiscal quarter of Group and on the Revolving Credit Termination Date or such
earlier date as the Revolving Credit Commitments shall terminate as provided
herein, commencing on the first of such dates to occur after the date hereof.
3.5 Termination or Reduction of Revolving Credit Commitments.
The Borrowers shall have the right, upon not less than five Business Days'
notice to the Administrative Agent, to terminate or reduce the Revolving Credit;
provided, that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Credit Loans made
on the effective date thereof, the Aggregate Outstanding RC Extensions of Credit
would exceed the Revolving Credit Commitments then in effect. Any such reduction
shall be in an amount equal to $1,000,000 or a whole multiple thereof and shall
reduce permanently the Revolving Credit Commitments then in effect.
SECTION 4. LETTERS OF CREDIT
4.1 L/C Commitment.
(a) Subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Lenders set forth in Section
4.4(a), agrees to issue letters of credit ("Letters of Credit") for the account
of any Borrower on any Business Day during the Revolving Credit Commitment
Period in such form as may be approved from time to time by the Issuing Lender;
provided that the Issuing Lender shall have no obligation to issue any Letter of
Credit if, after giving effect to such issuance, (1) the L/C Obligations would
exceed the L/C Commitment or (2) the aggregate Available RC Commitments would be
less than zero.
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(b) Each Letter of Credit shall:
(1) be denominated in Dollars and shall be either (A) a standby letter
of credit issued to support obligations of any or all of the Borrowers,
contingent or otherwise, in respect of insurance obligations, to workman's
compensation board or similar Governmental Authority for workman's
compensation liabilities of a Borrower, for general corporate purposes in
the ordinary course of business and for such other purposes as may be
approved by the Issuing Lender and the Administrative Agent (such consent
not to be unreasonably withheld) (a "Standby Letter of Credit"), or (B) a
commercial letter of credit issued in respect of the purchase of goods or
services by the Borrowers in the ordinary course of business (a "Commercial
Letter of Credit"); and
(2) expire no later than the earlier of (i) five Business Days prior
to the Revolving Credit Termination Date and (ii) 364 days from the date of
issuance (subject to renewal).
(c) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the state of relevant origin.
(d) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
4.2 Procedure for Issuance of Letters of Credit. The Borrowers may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may reasonably request. Upon receipt of any Application, the
Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and the Borrowers. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrowers promptly following the issuance thereof.
4.3 Fees, Commissions and Other Charges.
(a) The Borrowers shall pay, jointly and severally, to the Administrative
Agent, for the account of the Issuing Lender and the L/C Participants, a letter
of credit commission with respect to each Letter of Credit, computed for the
period from the date of such payment to the date upon which the next such
payment is due hereunder at a rate equal to the Applicable Margin for Revolving
Credit Loan which are Eurodollar Loans then in effect, calculated on the basis
of the actual days elapsed over a 360 day year, of the aggregate amount
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available to be drawn under such Letter of Credit on the date on which such fee
is calculated and shall be payable to the L/C Participants and the Issuing
Lender to be shared ratably among them in accordance with their respective
Revolving Credit Commitment Percentages. Such commissions shall be payable in
arrears on each L/C Fee Payment Date to occur after the issuance of each Letter
of Credit and shall be nonrefundable. Additionally, the Borrowers shall pay,
jointly and severally, to the Administrative Agent, solely for the account of
the Issuing Lender, a fronting fee of one-quarter of one percent (.25%) of the
aggregate amount available to be drawn under each Letter of Credit. Such
fronting fee shall be nonrefundable and shall be payable (i) in advance upon
issuance of the related Letter of Credit, in the case of Commercial Letters of
Credit and (ii) in arrears on each L/C Fee Payment Date to occur after the
issuance of each Letter of Credit, in the case of Standby Letters of Credit.
(b) In addition to the foregoing fees and commissions, the Borrowers shall
pay or reimburse, jointly and severally, the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing Lender in
issuing, effecting payment under, amending or otherwise administering any Letter
of Credit.
(c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
4.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk,
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrowers
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Revolving Credit
Commitment Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the Issuing
Lender pursuant to Section 4.4(a) in respect of any unreimbursed portion of any
payment made by the Issuing Lender under any Letter of Credit is paid to the
Issuing Lender within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Lender on demand an amount equal
to the product of (1) such amount, times (2) the daily average Federal funds
rate, as quoted by the Issuing Lender, during the period from and including the
date such payment is required to the date on which such payment is immediately
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available to the Issuing Lender, times (3) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any L/C Participant pursuant
to Section 4.4(a) is not in fact made available to the Issuing Lender by such
L/C Participant within three Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans hereunder. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with Section 4.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrowers or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
4.5 Reimbursement Obligations of the Borrowers.
(a) Each Borrower agrees to reimburse the Issuing Lender on each date on
which the Issuing Lender notifies the Borrowers of the date and amount of a
draft presented under any Letter of Credit and paid by the Issuing Lender or, if
later, on each date on which such draft is paid by the Issuing Lender for the
amount of (1) such draft so paid and (2) any taxes and any reasonable fees,
charges or other costs or expenses incurred by the Issuing Lender at its address
for notices specified herein in lawful money of the United States of America and
in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrowers under this Section from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding Base Rate Loans which were
then overdue.
(c) Each drawing under any Letter of Credit shall constitute a request by
the Borrowers to the Administrative Agent for a borrowing pursuant to Section
4.3 of Base Rate Loans in the amount of such drawing. The Borrowing Date with
respect to such borrowing shall be the date of such drawing.
4.6 Obligations Absolute.
(a) The Borrowers' obligations under this Section 4 shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which any Borrower may have or have had
against the Issuing Lender or any beneficiary of a Letter of Credit.
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(b) Each Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and such Borrower's Reimbursement
Obligations under Section 4.5(a) shall not be affected by, among other things,
(1) the validity or genuineness of documents or of any endorsements thereon,
even though such documents shall in fact prove to be invalid, fraudulent or
forged, or (2) any dispute between or among the Borrowers and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit may be
transferred or (3) any claims whatsoever of the Borrowers against any
beneficiary of such Letter of Credit or any such transferee.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct.
(d) Each Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on each Borrower and shall not
result in any liability of the Issuing Lender to any Borrower.
4.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrowers of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrowers in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
4.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 4, the provisions of this Section 4 shall apply.
SECTION 5. GENERAL PROVISIONS APPLICABLE TO LOANS
5.1 Interest Rates and Payment Dates.
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any interest
payable thereon, (iii) any commitment fee or (iv) any other amount payable
hereunder shall not
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be paid when due (whether at the stated maturity, by acceleration or otherwise),
the principal of the Loans and any such overdue interest, commitment fee or
other amount shall bear interest at a rate per annum which is (x) in the case of
principal, the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this Section plus 2% or (y) in the case of any such
overdue interest, commitment fee or other amount, the rate described in
paragraph (b) of this Section plus 2%, in each case from the date of such
non-payment until such overdue principal, interest, commitment fee or other
amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.
5.2 Conversion and Continuation Options.
(a) The Borrowers may elect from time to time to Convert Eurodollar Loans
to Base Rate Loans by giving the Administrative Agent at least two Business
Days' prior irrevocable notice of such election, provided, that any such
Conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Borrowers may elect from time to time to
Convert Base Rate Loans to Eurodollar Loans by giving the Administrative Agent
at least three Business Days' prior irrevocable notice of such election. Any
such notice of Conversion to Eurodollar Loans shall specify the length of the
initial Interest Period or Interest Periods therefor. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof. All
or any part of outstanding Eurodollar Loans and Base Rate Loans may be Converted
as provided herein, provided that (i) no Loan may be Converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined that such a
Conversion is not appropriate, (ii) any such Conversion may only be made if,
after giving effect thereto, Section 5.3 shall not have been contravened, and
(iii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Revolving Credit Termination Date (in the case of Conversions
of Revolving Credit Loans) or the date of the final installment of principal (in
the case of Conversions of Term Loans).
(b) Any Eurodollar Loans may be Continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrowers giving
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest Period" set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided, that no
Eurodollar Loan may be Continued as such (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined that such a Continuation is not appropriate, (ii) if,
after giving effect thereto, Section 5.3 would be contravened or (iii) after the
date that is one month prior to the Revolving Credit Termination Date (in the
case of Continuations of Revolving Credit Loans) or the date of the final
installment of principal (in the case of Continuations of Term Loans) and
provided, further, that if the Borrowers shall fail to give such notice or if
such
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Continuation is not permitted such Loans shall be automatically converted to
Base Rate Loans on the last day of such then expiring Interest Period.
5.3 Minimum Amounts and Maximum Number of Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or
a whole multiple of $100,000 in excess thereof. In no event shall there be more
than six Eurodollar Tranches outstanding at any time.
5.4 Optional Prepayments. The Borrowers may at any time and from time to
time prepay the Loans, in whole or in part, subject to payments of any amounts
required pursuant to Section 5.12 hereof, without premium or penalty, upon, in
the case of Term Loans, at least four Business Days' irrevocable notice to the
Administrative Agent and, in the case of Revolving Credit Loans, irrevocable
notice to the Administrative Agent no later than 1 p.m., New York City time on
the date of such prepayment, specifying the date and amount of prepayment and
whether the prepayment is of Eurodollar Loans, Base Rate Loans or a combination
thereof, and, if of a combination thereof, the amount allocable to each. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with any
amounts payable pursuant to Section 5.12 and, in the case of prepayments of the
Term Loans only, accrued interest to such date on the amount prepaid. Partial
prepayments of the Term Loans pursuant to this Section shall be applied to the
installments of principal thereof in the inverse order of their scheduled
maturities. Amounts prepaid on account of the Term Loans may not be reborrowed.
Partial prepayments of the Term Loans pursuant to this Section shall be in an
aggregate principal amount of $1,000,000 or a whole multiple thereof. Partial
prepayments of the Revolving Credit Loans pursuant to this Section shall be in
an aggregate principal amount of $250,000 or a whole multiple of $50,000 in
excess thereof.
5.5 Mandatory Prepayments.
(a) Subject to Section 5.12, if on any date on which a Borrowing Base
Certificate is delivered pursuant to Section 8.2(c), the Aggregate Outstanding
RC Extensions of Credit exceeds the Borrowing Base, the Borrowers shall prepay
the Revolving Credit Loans and/or cash collateralize or replace Letters of
Credit in an amount equal to the amount of such excess no later than the
Business Day immediately following the date of delivery of such Borrowing Base
Certificate.
(b) Subject to Section 5.12, if on any date the Aggregate Outstanding RC
Extensions of Credit exceeds the Revolving Credit Commitments, the Borrowers
shall immediately prepay the Revolving Credit Loans and/or cash collateralize or
replace Letters of Credit in an amount equal to the amount of such excess.
(c) The Borrowers shall prepay the Loans and reduce the Commitments in an
amount equal to (i) 100% of the Net Proceeds from the termination of any pension
plans of
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any Borrower or any Subsidiary, (ii) 100% of the Net Proceeds of any sale or
issuance of debt securities, (iii) 100% of the Net Proceeds of any sale or
issuance of any equity securities, in either case by any Borrower or any
Subsidiary, whether in a public offering, a private placement or otherwise and
(iv) 100% of the Net Proceeds of any sale, lease, assignment, exchange or other
disposition for cash of any asset or group of assets (including, without
limitation, but subject to clause (e) of this Section 5.5, insurance proceeds
paid as a result of any destruction, casualty or taking of any property of any
Borrower or any Subsidiary), not made in the ordinary course of business, by any
Borrower or any Subsidiary, in any such case no later than three Business Days
following receipt by such Borrower or such Subsidiary of such proceeds, together
with accrued interest to such date on the amount prepaid; provided, that, during
any fiscal year, no such prepayment shall be required pursuant to subclause (iv)
of this Section 5.5(c) unless the aggregate amount of such Net Proceeds received
by the Borrowers and their Subsidiaries and not previously applied to prepayment
of the Term Loans and the reduction of the Commitments pursuant to Section
5.5(c)(iv) is at least $250,000 for such fiscal year. Amounts prepaid pursuant
to this Section 5.5(c) shall be applied first to installments of principal of
the Term Loans until paid in full, and second to the reduction of the Revolving
Credit Commitments and the prepayment of the Revolving Credit Loans and/or to
cash collateralize or replace Letters of Credit. Prepayments of installments of
Term Loans shall be applied in the inverse order of maturity and such amounts so
prepaid may not be reborrowed; provided, that the first $10,000,000 of Net
Proceeds of any sale/leaseback transactions relating to assets acquired in
connection with the Zipp Acquisition which are consummated on or prior to the
first anniversary of the Closing Date shall be applied to prepayments of the
Term Loans as follows: (i) $250,000 to each of the scheduled payments of
principal 5-8, (ii) $750,000 to each of the scheduled payments 9-20. Nothing in
this Section 5.5(c) shall be construed to derogate any restriction or limitation
contained in any Loan Document imposed on any transaction of the types described
in this Section 5.5(c), including without limitation the restrictions set forth
in Sections 9.2, 9.5 and 9.6 hereof.
(d) If at the end of any fiscal year of Group the Leverage Ratio is greater
than 3.0 to 1.0, within three (3) days following the earlier of the date on
which the financial statements referred to in Section 8.1(a) are required to be
delivered in respect of such fiscal year of Group, beginning with the fiscal
year ending June 30, 2000, and the date on which such financial statements are
actually delivered, the Borrowers shall prepay the Term Loans and permanently
reduce the Commitments in the amount of 50% of Excess Cash Flow for such fiscal
year covered by such financial statements, together with accrued interest to
such date on the amount prepaid. Amounts prepaid pursuant to this Section 5.5(d)
shall be applied first to installments of principal of the Term Loans until paid
in full, second to the prepayment of the Revolving Credit Loans and third to
cash collateralize or replace Letters of Credit. Prepayments of installments of
Term Loans shall be applied in the inverse order of maturity and such amounts so
prepaid may not be reborrowed.
(e) Net Proceeds received by any Borrower or any Subsidiary as proceeds of
insurance upon any destruction, casualty or taking with respect to any property
of any Borrower or any Subsidiary need not be applied as set forth in Section
5.5(c) to the extent that such Net Proceeds are applied to the repair,
rebuilding, replacement or satisfaction of the lease
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obligation of the property which was the subject of such destruction, casualty
or taking within 60 days after the receipt of such Net Proceeds. If required by
the Administrative Agent, such Net Proceeds shall be held in a special
collateral account, subject to the sole dominion and control of the
Administrative Agent and in a manner reasonably satisfactory to the
Administrative Agent, as additional Collateral for the Obligations and the
Guarantees, until such time as it is to be applied to such repair, rebuilding or
replacement.
5.6 Computation of Interest and Fees.
(a) Interest, whenever it is calculated on the basis of the Base Rate,
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed; and, interest, whenever it is calculated on
the basis of the Eurodollar Rate, and Commitment Fees shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrowers and the Lenders of each
determination of a Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate, the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such
change becomes effective. The Administrative Agent shall as soon as practicable
notify the Borrowers and the Lenders of the effective date and the amount of
each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrowers, deliver to the
Borrowers a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 5.1(a) or (b).
5.7 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:
(a) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrowers) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the Majority
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans that were to
have been Converted on the first day of such Interest Period to Eurodollar Loans
shall be Converted to or Continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans shall be Converted, on the first day of such Interest Period,
to Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no
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further Eurodollar Loans shall be made or Continued as such, nor shall the
Borrowers have the right to Convert Loans to Eurodollar Loans.
5.8 Pro Rata Treatment and Payments.
(a) Each borrowing by the Borrowers from the Lenders hereunder, each
payment by the Borrower on account of any commitment fee hereunder and any
reduction of the Term Loan Commitments or the Revolving Credit Commitments of
the Lenders shall be made pro rata according to the respective Term Loan
Commitment Percentages or Revolving Credit Commitment Percentages, as
applicable, of the Lenders. Each payment (including each prepayment) by the
Borrowers on account of principal of and interest on the Term Loans or the
Revolving Credit Loans shall be made pro rata according to the respective
outstanding principal amounts of the Term Loans or the Revolving Credit Loans,
as applicable, then held by the Lenders. All payments (including prepayments) to
be made by the Borrowers hereunder, whether on account of principal, interest,
fees or otherwise, shall be made without set-off or counterclaim and shall be
made prior to 1:00 p.m., New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in Section 12.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on Eurodollar Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month in which event such payment shall be made on the
immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its Term Loan Commitment Percentage or Revolving Credit
Commitment Percentage, as applicable, of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error. If such Lender's Term Loan Commitment Percentage or
Revolving Credit Commitment Percentage, as applicable, of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall
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also be entitled to recover such amount with interest thereon at the rate per
annum applicable to Base Rate Loans hereunder, on demand, from the Borrowers.
5.9 Illegality. Notwithstanding any other provision herein, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans and Continue Eurodollar Loans as such
shall forthwith be cancelled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be Converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
Conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 5.12.
5.10 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 5.11 and changes in the
rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, Converting into,
Continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrowers shall
promptly pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any
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request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof shall
have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, the Borrowers
shall promptly pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts pursuant
to this Section, it shall promptly notify the Borrowers (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
A certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender to the Borrowers (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. The agreements in
this Section shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
5.11 Taxes.
(a) All payments made by the Borrowers under this Agreement and any Notes
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or
former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any Note). If any such non-excluded taxes, levies,
imposts, duties, charges, fees deductions or withholdings ("Non-Excluded Taxes")
are required to be withheld from any amounts payable to the Administrative Agent
or any Lender hereunder or under any Note, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided, however, that the
Borrowers shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the requirements of clause (b)
of this Section. Whenever any Non-Excluded Taxes are payable by the Borrowers,
as promptly as possible thereafter the Borrowers shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrowers showing payment thereof. If the Borrowers fail to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the
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Administrative Agent the required receipts or other required documentary
evidence, the Borrowers shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this Section shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) (A) if such Lender is a "bank" within the meaning of Section
881(c)(3)(A) of the Code, deliver to the Borrowers and the Administrative
Agent (x) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as the case may
be, and (y) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be, or (B) if such Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver
either Internal Revenue Service Form 1001 or 4224, deliver (x) a
certificate substantially in the form of Exhibit K (a "Non-Bank Status
Certificate") and (y) two completed and signed copies of Internal Revenue
Service Form W-8 or successor applicable form;
(ii) deliver to the Borrowers and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrowers or
the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrowers and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, (ii) in the
case of a Non-Bank Status Certificate, that it is not a "bank" as such term is
defined in Section 881(c)(3)(A) of the Code, and (iii) in the case of a Form W-8
or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to Section 12.6 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms and statements required pursuant to this
Section, provided that in the case of a Participant such Participant shall
furnish all such
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required forms and statements to the Lender from which the related participation
shall have been purchased.
5.12 Indemnity. Each Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrowers in making a borrowing of,
Conversion into or Continuation of Eurodollar Loans after the Borrowers have
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrowers in making any prepayment after the
Borrowers have given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, Converted or Continued, for the period from the date of such
prepayment or of such failure to borrow, Convert or Continue to the last day of
such Interest Period (or, in the case of a failure to borrow, Convert or
Continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Bank on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
5.13 Lending Offices; Change of Lending Office.
(a) Loans of each Type made by any Lender shall be made and maintained at
such Lender's Applicable Lending Office for Loans of such Type.
(b) Each Lender agrees that if it makes any demand for payment under
Section 5.10 or 5.11(a), or if any adoption or change of the type described in
Section 5.9 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrowers to make payments
under Section 5.10 or 5.11(a), or would eliminate or reduce the effect of any
adoption or change described in Section 5.9.
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SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, each Borrower hereby represents and warrants to
the Administrative Agent and each Lender that:
6.1 Financial Condition.
(a) The consolidated balance sheet of Group and its consolidated
Subsidiaries as at June 30, 1998 and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on by
Ernst & Young LLP, copies of which have heretofore been furnished to each
Lender, are complete and correct and present fairly the consolidated financial
condition of Group and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended. The unaudited consolidated balance sheet of Group
and its consolidated Subsidiaries as at March 31, 1999 and the related unaudited
consolidated statements of income and of cash flows for the 9-month period ended
on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
fairly the consolidated financial condition of Group and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the 9-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein). Neither Group nor any of its consolidated Subsidiaries had, at the
date of the most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction or other
financial derivative, which is not reflected in the foregoing statements or in
the notes thereto. During the period from June 30, 1998 to and including the
date hereof there has been no sale, transfer or other disposition by Group or
any of its consolidated Subsidiaries of any material part of its business or
property and no purchase or other acquisition of any business or property
(including any Capital Stock of any other Person) material in relation to the
consolidated financial condition of Group and its consolidated Subsidiaries at
March 31, 1999
(b) The pro forma consolidated balance sheet of Group and its consolidated
Subsidiaries as at June 30, 1999 certified by a Responsible Officer of the
Borrower (the "Pro Forma Balance Sheet"), a copy of which has been provided to
the Administrative Agent and each Lender, is the unaudited consolidated balance
sheet of Group and its consolidated Subsidiaries adjusted to give effect (as if
such events had occurred on such date) to (i) the refinancing of any
Indebtedness to be made with the proceeds of Loans hereunder, (ii) the making of
the Term Loans, (iii) the making of the Revolving Credit Loans to be made on the
Closing Date, (iv) the Zipp Acquisition, (v) the application of the proceeds of
the foregoing in accordance with the terms of the Loan Documents and (vi) the
payment of all fees and
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expenses related to the foregoing transactions, as estimated in good faith as of
the date of the Pro Forma Balance Sheet. The Pro Forma Balance Sheet, together
with any notes thereto, presents fairly, on a pro forma basis, the consolidated
financial position of Group and its Subsidiaries as at June 30, 1999, assuming
that the events specified in the preceding sentence had actually occurred on
such date.
(c) The operating forecast and cash flow projections of Group and its
consolidated Subsidiaries, copies of which have heretofore been furnished to the
Lenders, have been prepared in good faith under the direction of a Responsible
Officer of Group, and in accordance with GAAP. No Borrower has any reason to
believe that as of the date of delivery thereof such operating forecast and cash
flow projections are materially incorrect or misleading in any material respect,
or omit to state any material fact which would render them misleading in any
material respect.
6.2 No Change. (a) Since June 30, 1998 there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect, and (b) during the period from June 30, 1998 to and including the date
hereof no dividends or other distributions have been declared, paid or made upon
the Capital Stock of any Borrower nor has any of the Capital Stock of any
Borrower been redeemed, retired, purchased or otherwise acquired for value by
any Borrower or any of their Subsidiaries.
6.3 Existence; Compliance with Law. Each of the Borrowers and each of their
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations. Each Borrower has the
corporate power and authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and to borrow hereunder and has taken
all necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and any Notes and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which such
Borrower is a party. This Agreement has been, and each other Loan Document to
which it is a party will be, duly executed and delivered on behalf of each
Borrower. This Agreement constitutes, and each other Loan Document to which it
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of each Borrower enforceable against such Borrower in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
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other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
6.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents to which each Borrower is a party, the borrowings hereunder and the
use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of any Borrower or of any of their Subsidiaries and will
not result in, or require, the creation or imposition of any Lien on any of its
or their respective properties or revenues pursuant to any such Requirement of
Law or Contractual Obligation (other than Liens created by the Security
Documents in favor of the Administrative Agent).
6.6 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of any Borrower, threatened by or against any Borrower or any of their
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.
6.7 No Default. No Borrower nor any of their Subsidiaries is in default
beyond any applicable period of grace under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
6.8 Ownership of Property; Liens. Each of the Borrowers and their
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by Section 9.3.
6.9 Intellectual Property. Each Borrower and each of their Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
Property"). No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does any Borrower know of
any valid basis for any such claim. The use of such Intellectual Property by
each Borrower and its Subsidiaries does not infringe on the rights of any
Person, except for such claims and infringements that, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
6.10 No Burdensome Restrictions. No existing Requirement of Law or
Contractual Obligation of any Borrower or any of their Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
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6.11 Taxes. Each of the Borrowers and each of their Subsidiaries has filed
or caused to be filed all tax returns which, to the knowledge of the Borrowers,
are required to be filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrowers or their Subsidiaries, as the case may be); no tax Lien
has been filed, and, to the knowledge of each Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge.
6.12 Federal Regulations. No part of the proceeds of any Loans will be used
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect, or for
any purpose which violates, or which would be inconsistent with, the provisions
of the regulations of such Board of Governors. If requested by any Lender or the
Administrative Agent, each Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in said Regulation U.
6.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. No Borrower nor any Commonly Controlled Entity has had a complete or
partial withdrawal from any Multiemployer Plan, and no Borrower nor any Commonly
Controlled Entity would become subject to any liability under ERISA if such
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent.
6.14 Investment Company Act; Other Regulations. No Borrower is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No
Borrower is subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
6.15 Subsidiaries. Schedule 6.15 sets forth the name of each direct or
indirect Subsidiary of each Borrower, its form of organization, its jurisdiction
of organization, the total
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number of issued and outstanding shares or other interests of Capital Stock
thereof, the classes and number of issued and outstanding shares or other
interests of Capital Stock of each such class, the name of each holder of
Capital Stock thereof and the number of shares or other interests of such
Capital Stock held by each such holder and the percentage of all outstanding
shares or other interests of such class of Capital Stock held by such holders.
6.16 Security Documents.
(a) The provisions of each Security Document are effective to create in
favor of the Administrative Agent for the ratable benefit of the Lenders a
legal, valid and enforceable security interest in all right, title and interest
of the Loan Party which is party thereto in the "Collateral" described therein.
(b) (i) When financing statements have been filed in the offices in
the jurisdictions listed in Schedule 6.16 Part A, the Security Agreement
shall each constitute a fully perfected first Lien on, and security
interest in, all right, title and interest of each Borrower in the
"Collateral" described therein, which can be perfected by such filing.
(ii) When certificates representing the Pledged Stock (as defined in
the Pledge Agreement) are delivered to the Administrative Agent, together
with stock powers endorsed in blank by a duly authorized officer of the
pledgor thereof, the Pledge Agreement shall constitute a fully perfected
first Lien on, and security interest in, all right, title and interest of
the pledgors parties thereto in the "Collateral" described therein.
(iii) When each Leasehold Mortgage and Mortgage is recorded with the
appropriate jurisdiction listed on Schedule 6.16 Part B, such Leasehold
Mortgage or Mortgage shall constitute a fully perfected first Lien on, and
security interest in, all right, title and interest of the Loan Party which
is party thereto in the "Collateral" described therein.
(c) No Borrower nor any Domestic Subsidiary owns any property, or has any
interest in any property, that is not subject to a fully perfected first
priority Lien on, or security interest in, such property in favor of the
Administrative Agent, other than any such property having an aggregate fair
market value at any one time not exceeding $250,000.
6.17 Accuracy and Completeness of Information.
(a) All factual information, reports and other papers and data with respect
to the Loan Parties (other than projections) furnished, and all factual
statements and representations made, to the Administrative Agent or the Lenders
by a Loan Party, or on behalf of a Loan Party, were, at the time the same were
so furnished or made, when taken together with all such other factual
information, reports and other papers and data previously so furnished and all
such other factual statements and representations previously so made, complete
and correct in all material respects, to the extent necessary to give the
Administrative
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Agent and the Lenders true and accurate knowledge of the subject matter thereof
in all material respects, and did not, as of the date so furnished or made,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein not misleading
in light of the circumstances in which the same were made.
(b) All projections with respect to the Loan Parties furnished by or on
behalf of a Loan Party to the Administrative Agent or the Lenders were prepared
and presented in good faith by or on behalf of such Loan Party. No fact is known
to a Loan Party which materially and adversely affects or in the future is
reasonably likely (so far as such Loan Party can reasonably foresee) to have a
Material Adverse Effect which has not been set forth in the financial statements
referred to in Section 6.1 or in such information, reports, papers and data or
otherwise disclosed in writing to the Administrative Agent or the Lenders prior
to the Closing Date.
6.18 Labor Relations. No Loan Party is engaged in any unfair labor practice
which could reasonably be expected to have a Material Adverse Effect. There is
(a) no unfair labor practice compliant pending or, to the best knowledge of each
Loan Party and each of the Subsidiaries, threatened against a Loan Party before
the National Labor Relations Board which could reasonably be expected to have a
Material Adverse Effect and no grievance or arbitration proceeding arising out
of or under a collective bargaining agreement is so pending or threatened; (b)
no strike, labor dispute, slowdown or stoppage pending or, to the best knowledge
of each Loan Party, threatened against a Loan Party; and (c) no union
representation question existing with respect to the employees of a Loan Party
and no union organizing activities are taking place with respect to any thereof.
6.19 Insurance. Each Loan Party has, with respect to its properties and
business, insurance covering the risks, in the amounts, with the deductible or
other retention amounts, and with the carriers, listed on Schedule 6.19, which
insurance meets the requirements of Section 8.5 hereof and Section 5 of the
Security Agreement and Section 6 of the Leasehold Mortgages and Mortgages as of
the date hereof and the Closing Date.
6.20 Solvency. After giving effect to the consummation of the refinancing
of existing Indebtedness, the Zipp Acquisition and to the incurrence of all
indebtedness and obligations being incurred on or prior to such date in
connection herewith and therewith and after giving effect to the making of each
Loan and the issuance of each Letter of Credit, (i) the amount of the "present
fair saleable value" of the assets of each Borrower and of the Borrowers and
their Subsidiaries, taken as a whole, will, as of such date, exceed the amount
of all "liabilities of such Borrower and of the Borrowers and their
Subsidiaries, taken as a whole, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (ii) the present
fair saleable value of the assets of each Borrower and of the Borrowers and
their Subsidiaries, taken as a whole, will, as of such date, be greater than the
amount that will be required to pay the liabilities of such Borrower and of such
Borrower and their Subsidiaries, taken as a whole, on their respective debts as
such debts become absolute and matured, (iii) neither any Borrower nor the
Borrowers and their Subsidiaries, taken as a whole, will
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have, as of such date, an unreasonably small amount of capital with which to
conduct their respective businesses, and (iv) each Borrower and the Borrowers
and their Subsidiaries, taken as a whole, will be able to pay their respective
debts as they mature. For purposes of this Section 6.20, "debt" means "liability
on a claim", "claim" means any (x) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
6.21 Purpose of Loans. The proceeds of the Loans shall be used by the
Borrowers to partially finance the Zipp Acquisition, to refinance existing bank
Indebtedness of the Borrowers, Zipp and their Subsidiaries, to pay fees,
commissions and expenses in connection herewith and therewith, and for working
capital purposes in the ordinary course of business
6.22 Environmental Matters.
(a) The facilities and properties owned, leased or operated by any Borrower
or any of their Subsidiaries (the "Properties") do not contain, and have not
previously contained during the period of time while any Borrower or any of
their Subsidiaries owned, leased or operated such Properties, any Materials of
Environmental Concern in amounts or concentrations which (i) constitute or
constituted a violation of, or (ii) could reasonably be expected to give rise to
liability under, any Environmental Law except in either case insofar as such
violation or liability, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in compliance,
and have in the last 5 years (or, if any Borrower or any of their Subsidiaries
has owned, leased or operated any Property for less than 5 years, such period of
time while any Borrower or any of their Subsidiaries owned, leased or operated
such Property) been in compliance, with all applicable Environmental Laws, and
there is no contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by any
Borrower or any of their Subsidiaries (the "Business") which could materially
interfere with the continued operation of the Properties or materially impair
the fair saleable value thereof.
(c) No Borrower nor any of their Subsidiaries has received any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does any Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened except in either case insofar as such violation or liability, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
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(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of any Borrower, threatened, under any
Environmental Law to which any Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business except in
either case insofar as such violation or liability, or any aggregation thereof,
is not reasonably likely to result in the payment of a Material Environmental
Amount.
(f) There has been no release (during the period of time while any Borrower
or any of their Subsidiaries owned, leased or operated the Properties) or threat
of release of Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of any Borrower or any Subsidiary in
connection with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could reasonably give rise to
liability under Environmental Laws except in either case insofar as such
violation or liability, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
(g) Each of the representations and warranties set forth in Sections
6.22(a) through (f) is true and correct with respect to each parcel of real
property owned or operated by any Borrower or any of their Subsidiaries (other
than the Properties) except in either case insofar as such violation or
liability, or any aggregation thereof, is not reasonably likely to result in the
payment of a Material Environmental Amount.
6.23 Regulation H. No Mortgage or Leasehold Mortgage encumbers improved
real property which is located in an area that has been identified by the
Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968.
6.24 Year 2000 Compliance. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) each Borrower's computer
systems and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others in which any Borrower's systems interface) and the
testing of all such systems and equipment, as so reprogrammed, have been
completed. The cost to the Borrowers of such reprogramming and testing and of
the reasonably foreseeable consequences of the Year 2000 Problem to the
Borrowers (including, without limitation, reprogramming errors and the failure
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of others' systems or equipment) will not result in a Default or a Material
Adverse Effect. Except for such of the reprogramming referred to in the
preceding sentence as may be necessary, the computer and management information
systems of each Borrower and its Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient to permit such Borrower to conduct its business without Material
Adverse Effect.
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Initial Loans. The agreement of each Lender to make the
initial Loan requested to be made by it and the agreement of the Issuing Lender
to issue the initial Letter of Credit is subject to the satisfaction,
immediately prior to or concurrently with the making of such Loan on the Closing
Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received:
(i) this Agreement, executed and delivered by a duly authorized
officer of each Borrower, with a counterpart for each Lender,
(ii) for the account of each Lender having a Term Loan Commitment, a
Term Loan Note of the Borrowers conforming to the requirements hereof and
executed by a duly authorized officer of each Borrower,
(iii) for the account of each Lender having a Revolving Credit
Commitment, a Revolving Credit Note of the Borrowers conforming to the
requirements hereof and executed by a duly authorized officer of each
Borrower,
(iv) the Pledge Agreement, executed and delivered by a duly authorized
officer of each party thereto, with a counterpart or a conformed copy for
each Lender,
(v) the Guarantee, executed and delivered by a duly authorized officer
of each party thereto, with a counterpart or a conformed copy for each
Lender,
(vi) the Security Agreement, executed and delivered by a duly
authorized officer of each party thereto, with a counterpart or a conformed
copy for each Lender,
(vii) the Vehicle Security Agreement, executed and delivered by a duly
authorized officer of each party thereto, with a counterpart or a conformed
copy for each Lender,
(viii) each of the Mortgages relating to the locations listed on
Schedule 7.1(a)(viii), each executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender,
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(ix) each of the Leasehold Mortgages relating to the locations listed
on Schedule 7.1(a)(ix), each executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender;
(x) the Assignment of Zipp Acquisition Documents, executed and
delivered by a duly authorized officer of each party thereto, with a
counterpart or a conformed copy for each Lender; and
(xi) each Foreign Pledge Agreement, executed and delivered by a duly
authorized officer of each party thereto, with a counterpart or a conformed
copy for each Lender.
(b) Related Agreements. The Administrative Agent shall have received, with
a copy for each Lender, true and correct copies, certified as to authenticity by
the Borrowers, of all Zipp Acquisition Documents and such other documents or
instruments as may be reasonably requested by the Administrative Agent,
including, without limitation, a copy of any debt instrument, security agreement
or other material contract to which any Borrower, Zipp or any of their
Subsidiaries may be a party.
(c) Concurrent Transactions.
(i) The Zipp Acquisition shall have been, or shall be concurrently
with the making of the initial Loans, consummated in accordance with the
terms of the Zipp Acquisition Documents for a total purchase price not
exceeding $27,000,000, without any amendment, modification or waiver
thereof except with the consent of the Required Lenders, and the
Administrative Agent shall have received evidence satisfactory to it to
that effect.
(ii) All amounts owing to the existing creditors of any Borrower, Zipp
or any of their Subsidiaries (other than Indebtedness permitted under
Section 9.2 hereof) under existing financing documents shall have been, or
shall be concurrently with the making of the initial Loans, repaid in full,
and any Liens created pursuant to such existing financing documents shall
have been or shall, concurrently with the making of the initial Loans,
released, and such existing financing documents shall terminate and be of
no further force and effect upon such repayment; in each case pursuant to
such payoff letters, Lien releases, termination statements, mortgage
satisfactions and other documents as the Administrative Agent may require,
each of which shall be in form and substance satisfactory to the
Administrative Agent.
(iii) The Administrative Agent shall have received, with a counterpart
for each Lender, a copy of the resolutions, in form and substance
satisfactory to the Administrative Agent, of the Board of Directors of Zipp
authorizing the execution, delivery and performance of the Zipp Acquisition
Documents.
(d) Borrowing Base Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a Borrowing Base Certificate
showing the
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Borrowing Base as of July 31, 1999 (provided that information relating to Zipp
Express contained in the Borrowing Base shall be as of June 30, 1999), with
appropriate insertions and dated the Closing Date, satisfactory in form and
substance to the Administrative Agent, executed by the respective President or
any Vice President of each of the Borrowers.
(e) Secretary's Certificates. The Administrative Agent shall have received,
with a counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, substantially in the form of Exhibit L, with appropriate
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Loan Party.
(f) Corporate Proceedings of the Loan Parties. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative Agent, of
the Board of Directors of each Loan Party authorizing (i) the execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party, (ii) the borrowings contemplated hereunder and (iii) the granting
by it of the Liens created pursuant to the Security Documents, certified by the
Secretary or an Assistant Secretary of such Loan Party as of the Closing Date,
which certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded.
(g) Incumbency Certificates. The Administrative Agent shall have received,
with a counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, as to the incumbency and signature of the officers of such Loan
Party executing any Loan Document satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Loan Party.
(h) Corporate Documents. The Administrative Agent shall have received, with
a counterpart for each Lender, true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the Closing Date
as complete and correct copies thereof by the Secretary or an Assistant
Secretary of such Loan Party.
(i) Good Standing Certificates. The Administrative Agent shall have
received, with a copy for each Lender, certificates dated as of a recent date
from the Secretary of State or other appropriate authority, evidencing the good
standing of each Transaction Party (i) in the jurisdiction of its organization
and (ii) in each other jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires it to qualify as a foreign
Person except, as to this subclause (ii), where the failure to so qualify would
not have a Material Adverse Effect.
(j) Consents, Licenses and Approvals. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of a Responsible
Officer of each Borrower (i) attaching copies of all consents, authorizations
and filings referred to in Section 6.4, and (ii) stating that such consents,
licenses and filings are in full force and effect,
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and each such consent, authorization and filing shall be in form and substance
satisfactory to the Administrative Agent.
(k) Fees and Expenses. The Administrative Agent shall have received the
fees to be received on the Closing Date referred to in the Fee Letter and all
expenses required to be reimbursed in accordance herewith.
(l) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Faust, Rabbach & Oppenheim, LLP,
counsel to the Borrowers and the other Loan Parties, substantially in the
form of Exhibit M-1;
(ii) the executed legal opinion of local counsel to the Borrowers with
respect to Indiana, Texas, North Carolina, substantially in the form of
Exhibit M-2; and
(iii) the executed legal opinion of local counsel to the Borrowers
with respect to Canada and Mexico, substantially in the form of Exhibit
M-3.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(m) Pledged Stock; Stock Powers.
(i) The Administrative Agent shall have received the certificates
representing the shares pledged pursuant to the Pledge Agreement, together
with an undated stock power for each such certificate executed in blank by
a duly authorized officer of the pledgor thereof.
(ii) Each Issuer referred to in the Pledge Agreement shall have
delivered an acknowledgement of and consent to such Pledge Agreement,
executed by a duly authorized officer of such Issuer, in substantially the
form appended to such Pledge Agreement.
(n) Actions to Perfect Liens. The Administrative Agent shall have received
evidence in form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the filing of
duly executed financing statements on form UCC-1, necessary or, in the opinion
of the Administrative Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed.
(o) Surveys. The Administrative Agent shall have received, and the title
insurance company issuing the policy referred to in Section 7.1(o) (the "Title
Insurance Company") shall have received, maps or plats of an as-built survey of
the sites of the property covered by each Mortgage and Leasehold Mortgage
certified to the Administrative Agent and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the
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Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative Agent and
the Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1962, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building
structures and improvements on the sites; and (vi) if the site is described as
being on a filed map, a legend relating the survey to said map.
(p) Title Insurance Policy. The Administrative Agent shall have received in
respect of each parcel covered by each Mortgage and Leasehold Mortgage a
mortgagee's title policy (or policies) or marked up unconditional binder for
such insurance dated the Closing Date. Each such policy shall (i) be in an
amount satisfactory to the Administrative Agent; (ii) be issued at ordinary
rates; (iii) insure that the Mortgage or Leasehold Mortgage insured thereby
creates a valid first Lien on such parcel free and clear of all defects and
encumbrances, except such as may be approved by the Administrative Agent; (iv)
name the Administrative Agent for the benefit of the Lenders as the insured
thereunder; (v) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70);
(vi) contain such endorsements and affirmative coverage as the Administrative
Agent may request and (vii) be issued by title companies satisfactory to the
Administrative Agent (including any such title companies acting as co-insurers
or reinsurers, at the option of the Administrative Agent). The Administrative
Agent shall have received evidence satisfactory to it that all premiums in
respect of each such policy, and all charges for mortgage recording tax, if any,
have been paid.
(q) Flood Insurance. If requested by the Administrative Agent, the
Administrative Agent shall have received (i) a policy of flood insurance which
(A) covers any parcel of improved real property which is encumbered by any
Mortgage (B) is written in an amount not less than the outstanding principal
amount of the indebtedness secured by such Mortgage which is reasonably
allocable to such real property or the maximum limit of coverage made available
with respect to the particular type of property under the Act, whichever is
less, and (C) has a term ending not later than the maturity of the indebtedness
secured by such Mortgage and (ii) confirmation that the Company has received the
notice required pursuant to Section 208(e)(3) of Regulation H of the Board of
Governors of the Federal Reserve System.
(r) Copies of Documents. The Administrative Agent shall have received a
copy of all recorded documents referred to, or listed as exceptions to title in,
the title policy or policies referred to in Section 7.1(o) and a copy, certified
by such parties as the Administrative
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Agent may deem appropriate, of all other documents affecting the property
covered by each Mortgage.
(s) Lien Searches. The Administrative Agent shall have received the results
of a recent search by a Person satisfactory to the Administrative Agent, of the
Uniform Commercial Code, judgment and tax lien filings which may have been filed
with respect to personal property of each Loan Party, and the results of such
search shall be satisfactory to the Administrative Agent.
(t) Insurance. The Administrative Agent shall have received evidence in
form and substance satisfactory to it that all of the requirements of Section
8.5 hereof and Section 5 of the Security Agreement and Section 6 of the
Mortgages and Leasehold Mortgages shall have been satisfied.
(u) Environmental Reports. The Administrative Agent shall have received
Phase I environmental reports, and, if requested by the Administrative Agent
based upon its review of the Phase I environmental reports, Phase II or other
environmental reports, prepared by a Person satisfactory to the Administrative
Agent, and which such Person shall have confirmed in writing that the
Administrative Agent and the Lenders shall be entitled to rely upon, with
respect to each of the Properties, and such environmental reports shall be in
form and substance satisfactory to the Administrative Agent.
(v) Landlord Estoppel Agreements. The Administrative Agent shall have
received a landlord estoppel agreement, in form and substance satisfactory to
the Administrative Agent, with respect to each parcel of real property leased by
any Loan Party as of the Closing Date, duly executed and delivered on behalf of
the lessor of such real property.
(w) Financial Statements. The Administrative Agent and each Lender shall
have received and reviewed all financial projections and financial statements
listed in Section 6.1 hereof, which shall be in form and substance satisfactory
to the Administrative Agent and the Lenders.
(x) Due Diligence. The Administrative Agent and each Lender shall have
completed to its satisfaction due diligence with respect to each Borrower, Zipp,
each of their Subsidiaries and their respective businesses and properties;
including, without limitation, review of and satisfaction with (i) the tax
assumptions of the Transaction Parties, (ii) the ownership, capital, corporate,
organization and legal structure of each Transaction Party, (iii) the value,
scope and extent of the Collateral which secures the Obligations hereunder, (iv)
all material contracts of the Transaction Parties, including without limitation
all documents relating to existing Indebtedness or Guarantee Obligations of the
Loan Parties and all material supply and purchase contracts of the Loan Parties,
(v) the structure of the Zipp Acquisition and the financings relating thereto,
(vi) all shareholder agreements, employment agreements, non-compete agreements
and any other agreements among any Transaction Party and its key personnel and
(vii) any collective bargaining agreements and employee benefit plans of the
Transaction Parties.
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(y) Solvency Letter. The Administrative Agent and the Lenders shall have
received a certificate from a responsible officer of Group in form and substance
satisfactory to the Administrative Agent and the Lenders, as to the solvency of
the Loan Parties after giving effect to all of the transactions contemplated
hereby.
7.2 Conditions to Each Loan. The agreement of each Lender to make any Loan
requested to be made by it on any date (including, without limitation, its
initial Loan) and the agreement of the Issuing Lender to issue any Letter of
Credit (including, without limitation, its initial Letter of Credit) is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Borrower and the other Loan Parties in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Loans requested to be made
on such date.
(c) Borrowing Base. In the case of any Revolving Credit Loans requested to
be made or Letters of Credit to be issued, the Administrative Agent shall have
timely received a Borrowing Base Certificate for the most recent period for
which such Borrowing Base Certificate is required to be delivered, in accordance
with Section 8.2(c).
(d) No Material Adverse Effect. No event or circumstance shall have
occurred and be continuing that has had a Material Adverse Effect.
(e) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other documents and legal opinions
in respect of any aspect or consequence of the transactions contemplated hereby
or thereby as it shall reasonably request.
Each borrowing by the Borrowers hereunder shall constitute a representation and
warranty by each Borrower as of the date thereof that the conditions contained
in this Section 7.2 have been satisfied.
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SECTION 8. AFFIRMATIVE COVENANTS
Each Borrower hereby agrees that, so long as any of the
Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document, each Borrower
shall and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
8.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of Group, a copy of the consolidated balance
sheet of Group and its consolidated Subsidiaries as at the end of such year and
the related consolidated statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, by Ernst & Young LLP or other independent certified public accountants of
nationally recognized standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of Group, the unaudited consolidated balance sheet of Group and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of Group and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 30
days after the end of each calendar month, the unaudited statements of income of
Trucking for such month and the portion of the fiscal year through the end of
such month, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
8.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 8.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
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(b) concurrently with the delivery of the financial statements
referred to in Sections 8.1(a), (b) and (c), a certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, each Borrower
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
Officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) showing in detail the calculations
supporting such Officer's certification of the Borrowers' compliance with the
requirements of Section 9.1(a) through 9.1(d);
(c) within twenty days following the end of each calendar
month, a Borrowing Base Certificate showing the Borrowing Base as of the last
day of such month, certified as complete and correct by a Responsible Officer;
(d) not later than thirty days prior to the end of each fiscal
year of Group, a copy of the projections by Group of the operating budget and
cash flow budget of Group and its Subsidiaries for the succeeding fiscal year,
such projections to be accompanied by a certificate of a Responsible Officer to
the effect that such projections have been prepared on the basis of sound
financial planning practice and that such Officer has no reason to believe they
are incorrect or misleading in any material respect;
(e) within five days after the same are sent, copies of all
financial statements and reports which Group sends to its stockholders, and
within five days after the same are filed, copies of all financial statements
and reports which Group may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(f) during the month of August in each calendar year, a report
of a reputable insurance broker with respect to the insurance maintained by the
Borrowers and their Subsidiaries in accordance with Section 8.5 of this
Agreement and Section 5 of each Security Agreement and Section 6 of each
Mortgage and Leasehold Mortgage, and such supplemental reports as the
Administrative Agent or the Required Lenders may from time to time request; and
(g) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
8.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrowers or their Subsidiaries, as the case may be.
8.4 Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as
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otherwise permitted pursuant to Section 9.5; comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.
8.5 Maintenance of Property; Insurance. Keep all property
useful and necessary in its business in good working order and condition;
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business, which insurance shall name the Administrative Agent
as lender loss payee, in the case of property or casualty insurance, and as an
additional insured, in the case of liability insurance; and furnish to each
Lender, upon written request, full information as to the insurance carried.
8.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrowers and
their Subsidiaries with officers and employees of the Borrowers and their
Subsidiaries and with its independent certified public accountants.
8.7 Notices. Promptly give notice to the Administrative Agent
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Borrower or any of their Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between any Borrower or
any of their Subsidiaries and any Governmental Authority, which in either case,
if not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Borrower or any
of their Subsidiaries in which the amount involved is $1,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) of the acquisition by any Loan Party of any property or
interest in property (including, without limitation, real property), that is not
subject to a perfected Lien in favor of the Administrative Agent pursuant to the
Security Documents;
(e) of the occurrence of any transaction or occurrence
referred to in Section 5.5(c), and the receipt of any Net Proceeds or any
insurance proceeds as a result thereof (whether or not such Net Proceeds or
proceeds are then required to be applied to the
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repayment of Loans and reduction of Revolving Credit Commitments as specified in
Section 5.5(c));
(f) the following events, as soon as possible and in any event
within 30 days after any Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or any Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan;
and
(g) any development or event which has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Borrowers propose to take with
respect thereto.
8.8 Environmental Laws.
(a) Comply in all material respects with, and ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and ensure that all
tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws.
8.9 Changes to Advance Rates, Standards of Eligibility and
Reserves. The Required Lenders shall be entitled to (a) reduce the advance
rates, increase the standards of eligibility and establish or increase any
reserves under this Agreement on thirty days' prior written notice to the
Borrowers in the event that the most recent audit of accounts receivable and/or
inventory of the Borrowers and their Subsidiaries conducted pursuant to Section
8.10 was, in the commercially reasonable judgment of the Required Lenders, as
applicable, materially different from historical performance, and (b) with the
prior written consent of the Lenders, increase the advance rates, reduce the
standards of eligibility and reduce any reserves under this Agreement, in each
case in its reasonable judgment.
8.10 Periodic Audit of Accounts Receivable and Inventory. The
Administrative Agent (at its own request or at the request of the Required
Lenders) shall be entitled to perform a periodic due diligence inspection, test
and review of the accounts receivable and inventory of the Borrowers and their
Subsidiaries on a mutually convenient
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Business Day twice during each calendar year and shall in each case be satisfied
in all material respects with the results thereof; provided however, if the
Administrative Agent or the Required Lenders in their reasonable judgment is not
satisfied that the results of any due diligence inspection, test, and review
performed pursuant to this Section 8.10 establish that the Loan Parties' most
recent determination of the Borrowing Base was made in compliance with the
applicable provisions of this Agreement, the Administrative Agent shall be
entitled to perform additional due diligence inspections, tests and reviews of
such accounts receivable on mutually convenient Business Days during the
succeeding twelve-month period until the Administrative Agent and the Required
Lenders shall be so satisfied; and provided further, that upon the occurrence
and during the continuation of an Event of Default, the Administrative Agent
shall be entitled to perform such additional due diligence inspections, tests
and review of such accounts receivable and inventory as any Lender shall deem
necessary or advisable.
8.11 Additional Collateral; Additional Guarantors.
(a) In the event that any Borrower or any Subsidiary acquires
any material property or interest in property (including, without limitation,
real property), that is not subject to a perfected Lien in favor of the
Administrative Agent pursuant to the Security Documents, the Borrowers shall,
and shall cause Subsidiary to, take such action (including, without limitation,
the preparation and filing of mortgages or deeds of trust in form and substance
satisfactory to the Administrative Agent) as the Administrative Agent shall
request in order to create and/or perfect a Lien in favor of the Administrative
Agent on such property.
(b) In the event that any Borrower is permitted to acquire or
form any additional Subsidiary, such Subsidiary shall execute a guarantee and a
security agreement, or supplements to the Guarantee and the Security Agreement,
and the Borrowers and/or any Subsidiary which is a holder of any Capital Stock
of such Subsidiary shall execute such pledge agreements or supplements to the
Pledge Agreements, each in form and substance satisfactory to the Administrative
Agent, and shall take such other action as shall be necessary or advisable
(including, without limitation, the execution of financing statements on form
UCC-1) in order to perfect the Liens granted by such Subsidiary in favor of the
Administrative Agent for the benefit of the Lenders and to effect and perfect
the pledge of all of the Capital Stock of such Subsidiary in favor of the
Administrative Agent for the benefit of the Lenders. Such Subsidiary shall
thereupon become a Guarantor for all purposes under the Loan Documents,
including, without limitation, Section 8.11(a) of this Agreement. The
Administrative Agent shall be entitled to receive legal opinions of one or more
counsel to the Borrowers and such Subsidiary addressing such matters as the
Administrative Agent or its counsel may reasonably request, including, without
limitation, the enforceability of the guaranty and the security agreement to
which such Subsidiary becomes a party and the pledge of the Capital Stock of
such Subsidiary, and the creation, validity and perfection of the Liens so
granted by such Subsidiary and the Borrowers and/or other Subsidiaries to the
Administrative Agent for the benefit of the Lenders.
8.12 Year 2000 Covenants. (a) Take all necessary action to (i)
comply with the provisions of Section 6.24 hereof and (ii) test all of its
systems and equipment supplied by
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others or with which any Borrower's systems interface to verify the absence of a
Year 2000 Problem, and (b) from time to time, at the request of the
Administrative Agent, provide to the Administrative Agent such updated
information or documentation as is requested regarding the status of their
efforts to address the Year 2000 Problem.
8.13 Interest Rate Protection Arrangements. No later than 90
days following the Closing Date, enter into interest rate protection
arrangements in form and substance acceptable to the Administrative Agent in
amounts not less than 50% of the outstanding Term Loans and having a tenor of
not less than 50% of the time to maturity of the outstanding Term Loans.
SECTION 9. NEGATIVE COVENANTS
Each Borrower hereby agrees that, so long as any of the
Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document, no Borrower
shall, and (except with respect to Section 9.1) shall nor permit any of its
Subsidiaries to, directly or indirectly:
9.1 Financial Condition Covenants.
(a) Adjusted Leverage Ratio. Permit, for any period of four
consecutive fiscal quarters ending during a period set forth below, the Adjusted
Leverage Ratio to be greater than the amount set forth opposite such period
below:
<TABLE>
<CAPTION>
Test Period Ratio
<S> <C>
Closing Date to December 31, 1999 4.25
January 1, 2000 to March 31, 2000 4.15
April 1, 2000 to March 31, 2001 4.00
April 1, 2001 to June 30, 2002 3.75
July 1, 2002 to March 31, 2004 3.50
Thereafter 3.25
</TABLE>
(b) Interest Coverage. Permit, for any period of four
consecutive fiscal quarters ending during any period set forth below, or if less
than four consecutive fiscal quarters have elapsed since the Closing Date, such
period of one, two or three consecutive fiscal quarters following the Closing
Date ending during any period set forth below, the ratio of (i) Consolidated
EBIT for such period to (ii) Consolidated Interest Expense for such period, to
be less than the amount set forth opposite such period below:
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<TABLE>
<CAPTION>
Test Period Ratio
<S> <C>
Closing Date to December 31, 1999 1.75
January 1, 2000 to March 31, 2001 2.00
April 1, 2001 to March 31, 2003 2.25
Thereafter 2.50
</TABLE>
(c) Minimum Fixed Charge Coverage. Permit, for any period of
four consecutive fiscal quarters ending during any period set forth below, or if
less than four consecutive fiscal quarters have elapsed since the Closing Date,
such period of one, two or three consecutive fiscal quarters following the
Closing Date ending during any period set forth below, the ratio of (i)
Consolidated EBITDAR to (ii) Consolidated Fixed Charges to be less than the
ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Test Period Ratio
<S> <C>
Closing Date to March 31, 2001 1.15
Thereafter 1.20
</TABLE>
(d) Maintenance of Consolidated Tangible Net Worth. Permit
Consolidated Tangible Net Worth at any time to be less than the sum of (i)
$30,000,000, (ii) the sum of 75% of Consolidated Net Income (without reduction
for any net loss) for each fiscal quarter ended prior to such time, commencing
with the fiscal quarter ended September 30, 1999 and (iii) an amount equal to
80% of the Net Proceeds received in connection with the offering of any equity
securities of Group, excluding any Net Proceeds received by Group in connection
with the exercise of any stock options so long as the stock delivered by Group
in connection with the exercise of such option is not newly issued stock of
Group.
9.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrowers under this Agreement;
(b) Indebtedness of any Borrower to any Subsidiary and of any
Subsidiary to any Borrower or any other Subsidiary;
(c) Financing Leases relating to rolling stock and other
equipment or assets used by the Borrowers or any Subsidiary in its
ordinary course of business; provided, that no Borrower nor any
Subsidiary shall enter into any such Financing Lease at a time when an
Event of Default has occurred and is continuing;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 9.2;
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(e) bona fide foreign currency or interest rate caps, swaps or
other similar agreements, entered into for hedging and not speculative
purposes;
(f) a promissory note payable to the sellers under the Zipp
Acquisition Agreement in connection with the Zipp Acquisition in an
amount not to exceed $500,000, in form and substance satisfactory to
the Administrative Agent and the Required Lenders; and
(g) Indebtedness under that certain Factoring Contract and
Security Agreement, dated as of February 20, 1991 between First Factors
Corporation and Cheetah Transportation Company, relating to the
factoring of accounts receivable of Cheetah Transportation, Inc., in an
aggregate amount at any time outstanding not to exceed $2,500,000.
9.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of such
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of such
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule
9.3, securing Indebtedness permitted by Section 9.2(d), provided that
no such Lien is spread to cover
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any additional property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) Liens pursuant to Financing Leases relating to rolling
stock; provided, that such Liens do not cover any property other than
the rolling stock subject of the related Financing Lease;
(h) Liens relating to Indebtedness permitted by Section
9.2(g); provided that no such Lien is spread to cover any additional
property other than the specific accounts receivable subject to such
agreement; and
(i) Liens created pursuant to the Security Documents.
9.4 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and
listed on Schedule 9.4;
(b) guarantees made in the ordinary course of its business by
any Borrower of obligations of any of its Subsidiaries, which
obligations are otherwise permitted under this Agreement; and
(c) the Guarantees.
9.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of any Borrower may be merged or
consolidated with or into any Borrower (provided that such Borrower
shall be the continuing or surviving corporation) or with or into any
one or more wholly owned Subsidiaries of any Borrower (provided that
the wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to any Borrower or any other wholly owned
Subsidiary of any Borrower; and
(c) each Subsidiary listed on Schedule 9.5 may be dissolved;
provided, that any assets of such Subsidiaries shall be distributed to
another Loan Party on or prior to the date of dissolution.
9.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation,
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receivables and leasehold interests), whether now owned or hereafter acquired,
or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's
Capital Stock to any Person other than any Borrower or any wholly owned
Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out
property in the ordinary course of business; provided, that the Net
Proceeds of each such transaction are applied to the prepayment of the
Loans as provided in Section 5.5(c);
(b) the sale of property acquired in the Zipp Acquisition in
connection with sale/leaseback transactions consummated on or prior to
the first anniversary of the Closing Date; provided, that the Net
Proceeds of each such transaction are applied to the prepayment of the
Loans as provided in Section 5.5(c);
(c) the sale of inventory in the ordinary course of business;
(d) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection
with the compromise or collection thereof; and
(e) as permitted by Section 9.5(b).
9.7 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of a Borrower) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of any Borrower or any warrants or
options to purchase any such Stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of any Borrower or any Subsidiary
in excess of $1,000,000 in the aggregate during any fiscal year; provided, that
no such dividend, distribution or payment shall be made following the occurrence
and during the continuation of an Event of Default.
9.8 Limitation on Capital Expenditures. Make or commit to make
(by way of the acquisition of securities of a Person or otherwise) any
expenditure in respect of the purchase or other acquisition of fixed or capital
assets (excluding (i) any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current operations and
(ii) any expenditures in respect of the acquisition of tractors or trailors)
except for expenditures in the ordinary course of business not exceeding, in the
aggregate for Group and its Subsidiaries during any fiscal year of Group,
$4,000,000.
9.9 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except :
(a) extensions of trade credit in the ordinary course of
business;
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(b) investments in Cash Equivalents; and
(c) investments by any Borrower in any Subsidiary and
investments by such Subsidiary in any Borrower and in other
Subsidiaries of any Borrower.
9.10 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) Make any optional payment or prepayment on or redemption or
purchase of any other Indebtedness, (b) amend, modify or change, or consent or
agree to any amendment, modification or change to any of the terms of any other
Indebtedness (other than any such amendment, modification or change which would
extend the maturity or reduce the amount of any payment of principal thereof or
which would reduce the rate or extend the date for payment of interest thereon)
or any Zipp Acquisition Documents.
9.11 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of such Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to such Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
9.12 Limitation on Changes in Fiscal Year. Permit the fiscal
year of Group to end on a day other than June 30.
9.13 Limitation on Negative Pledge Clauses. Enter into with
any Person any agreement, other than (a) this Agreement and (b) any industrial
revenue bonds, purchase money mortgages or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be effective
against the assets financed thereby), which prohibits or limits the ability of
any Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
9.14 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrowers and their Subsidiaries are engaged on the date of this Agreement.
9.15 Governing Documents. Amend its certificate of
incorporation (except to increase the number of authorized shares of common
stock), partnership agreement or other Governing Documents, without the prior
written consent of the Required Lenders, which shall not be unreasonably
withheld or delayed.
9.16 Limitation on Subsidiary Formation. Form any Subsidiaries
unless, immediately upon the formation of such Subsidiary, all requirements of
Section 8.11 shall have been satisfied.
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9.17 Limitation on Acquisitions. Purchase or otherwise
acquire, whether in one or a series of transactions, all or substantially all or
a substantial portion of the business assets, rights, revenues or property,
real, personal or mixed, tangible or intangible, of any Person, or all or a
substantial portion of the Capital Stock of or other ownership interest in any
other Person, nor merge or consolidate or amalgamate with any other Person or
take any other action having a similar effect; nor enter into any joint venture
or similar arrangement with any other Person; provided, however, that this
Section shall not prohibit any merger or acquisition if (i) each of the
Borrowers shall be the surviving or continuing corporation thereof, (ii)
immediately before and after such merger or acquisition, no Default or Event of
Default shall have occurred and be continuing, (iii) the Borrowers comply with
Section 8.11 with respect to any acquired property or additional Subsidiaries
and (iv) prior to the consummation of such merger or acquisition, the Borrowers
shall have provided the Lenders with an opinion of counsel and a certificate of
the chief financial officer of the Borrowers describing such transaction
(attaching computations to demonstrate compliance with all financial covenants
hereunder), each stating that such merger or acquisition complies with this
Section 9.17 and that all other conditions contained in this Agreement to such
transaction have been satisfied.
SECTION 10. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrowers shall fail to pay any principal of any Loan
when due in accordance with the terms thereof or hereof; or the
Borrowers shall fail to pay any interest on any Loan, or any other
amount payable hereunder or under the other Loan Documents, within five
days after any such interest or other amount becomes due in accordance
with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) Any Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 9
hereof, Section 10(b) or 10(h) of the Mortgage or the Leasehold
Mortgage, Section 5(b) or 5(g) of the Pledge Agreement or Section 5(h),
5(i) or 5(p) of the Security Agreement; or
(d) Any Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; provided, that if any such
default is not cured within such period of 30 days, is capable of being
cured and
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the Borrowers are and have been diligently working to cure such
default, such 30 day cure period shall be extended by an additional 15
days; or
(e) Any Borrower or any of their Subsidiaries shall (i)
default in any payment of principal of or interest of any Indebtedness
(other than the Loans) or in the payment of any Guarantee Obligation,
beyond the period of grace (not to exceed 30 days), if any, provided in
the instrument or agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the Indebtedness
and/or Guarantee Obligations in respect of which such default or
defaults shall have occurred is at least $1,000,000; or (ii) default in
the observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or
Administrative Agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable; or
(f) (i) Any Borrower or any of their Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or any Borrower or any of their Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against any Borrower or any of their Subsidiaries
any case, proceeding or other action of a nature referred to in clause
(i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall
be commenced against any Borrower or any of their Subsidiaries any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) any Borrower or any of their Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) any Borrower or any of their Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
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(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of any Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) any Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
any Borrower or any of their Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $1,000,000 or
more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any
reason, to be in full force and effect, or any Borrower or any other
Loan Party which is a party to any of the Security Documents shall so
assert or (ii) the Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(j) Any Guarantee shall cease, for any reason, to be in full
force and effect or any Guarantor shall so assert; or
(k) A Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrowers, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrowers declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the
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Administrative Agent shall, by notice to the Borrowers, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrowers shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. Each
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrowers under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrowers hereunder and under the Notes. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrowers hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrowers. The Borrowers shall execute and deliver to the Administrative Agent,
for the account of the Issuing Lender and the L/C Participants, such further
documents and instruments as the Administrative Agent may request to evidence
the creation and perfection of the within security interest in such cash
collateral account.
SECTION 11. THE ADMINISTRATIVE AGENT
11.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the Administrative Agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
11.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through Administrative Agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence
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or misconduct of any Administrative Agents or attorneys-in-fact selected by
it with reasonable care.
11.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, Administrative Agents,
attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its or such Person's own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by any Borrower or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Borrower to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrowers.
11.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrowers or any other Loan Party), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
11.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrowers referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
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take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
11.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, Administrative Agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereinafter taken, including any review of the
affairs of any Borrower or any other Loan Party, shall be deemed to constitute
any representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrowers and the
other Loan Parties and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrowers or any other Loan Party which may come into the possession of the
Administrative Agent or any of its officers, directors, employees,
Administrative Agents, attorneys-in-fact or Affiliates.
11.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to their respective Credit Exposure Percentages in effect on
the date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross
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negligence or willful misconduct. The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder.
11.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrowers and the other
Loan Parties as though the Administrative Agent were not the Administrative
Agent hereunder and under the other Loan Documents. With respect to the Loans
made by it, the Administrative Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not the Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
11.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor Administrative Agent for the Lenders, which successor
Administrative Agent shall be approved by the Borrowers, whereupon such
successor Administrative Agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor Administrative Agent effective upon such appointment and approval, and
the former Administrative Agent's rights, powers and duties as Administrative
Agent shall be terminated, without any other or further act or deed on the part
of such former Administrative Agent or any of the parties to this Agreement or
any holders of the Loans. After any retiring Administrative Agent's resignation
as Administrative Agent, the provisions of this Section 11 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
11.10 Arranger. The Arranger shall have no duties or
obligations under this Agreement or the other Loan Documents.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 12.1. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent may, from time to time, (a) enter
into with the Borrowers written amendments, supplements or modifications hereto
and to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrowers hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) reduce the amount or extend the scheduled
date of maturity of any Loan or of any installment thereof, or reduce the stated
rate of any
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interest or fee payable hereunder or extend the scheduled date of any payment
thereof or increase the amount or extend the expiration date of any Lender's
Commitments, in each case without the consent of each Lender affected thereby,
or (ii) amend, modify or waive any provision of this Section 12.1 or reduce the
percentage specified in the definition of Required Lenders or Majority Lenders,
or consent to the assignment or transfer by any Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents or release all
or substantially all of the Collateral or release all or substantially all of
the Guarantors from their obligations under the Guarantees, in each case without
the written consent of each of the Lenders directly affected thereby, or (iii)
amend, modify or waive any provision of Section 11 without the written consent
of the then Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrowers, the Lenders, the Administrative Agent and all future holders
of the Loans. In the case of any waiver, the Borrowers, the Lenders and the
Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been electronically confirmed,
addressed as follows in the case of the Borrowers and the Administrative Agent,
and as set forth in Schedule I in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties
hereto:
The Borrowers: Celadon Group, Inc.
One Celadon Drive
9503 East 33rd Street
Indianapolis, Indiana 46236
Attention: Stephen Russell
Fax: 317-890-8099
Telephone: 317-972-7034
The Administrative Agent: ING (U.S.) Capital LLC
55 East 52nd Street
New York, New York 10055
Attention: Bill Redmond
Fax: (212) 409-5854
Telephone: (212) 409-1723
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<PAGE>
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.3, 3.3, 3.5, 5.2, 5.4 or 5.8(b) shall not
be effective until received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
12.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse, jointly and severally, the Administrative Agent for all its
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the reasonable fees and
disbursements of counsel to each Lender and of counsel to the Administrative
Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify, and hold
each Lender and the Administrative Agent harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents, the Zipp Acquisition Documents, the
Zipp Acquisition or the use of the proceeds of the Loans in connection with the
Zipp Acquisition and any such other documents, including, without limitation,
any of the foregoing relating to the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of any
Borrower, any of their Subsidiaries or any of the Properties (all the foregoing
in this clause (d), collectively, the "indemnified liabilities"), provided, that
the Borrowers shall have no
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<PAGE>
obligation hereunder to the Administrative Agent or any Lender with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Administrative Agent or any such Lender or (ii) legal
proceedings commenced against the Administrative Agent or any such Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor solely in its capacity as such.
The agreements in this Section shall survive repayment of the Loans and all
other amounts payable hereunder.
12.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Lenders, the Administrative Agent and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business, commercial lending or investment business and in accordance
with applicable law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrowers and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. Each Borrower agrees that if amounts outstanding under this Agreement
are due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in Section
12.7(a) as fully as if it were a Lender hereunder. Each Borrower also agrees
that each Participant shall be entitled to the benefits of Sections 5.10, 5.11,
and 5.12 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
of Section 5.11, such Participant shall have complied with the requirements of
said Section and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business, commercial lending or investment business and in accordance
with applicable law, at
-75-
<PAGE>
any time and from time to time assign to any Lender or any affiliate thereof or,
with the consent of the Administrative Agent and the Borrowers (which in each
case shall not be unreasonably withheld), to an additional bank or financial
institution ("an Assignee") all or any part of its rights and obligations under
this Agreement and the other Loan Documents pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit N, with appropriate completions
(an "Assignment and Acceptance"), executed by such Assignee, such assigning
Lender (and, in the case of an Assignee that is not then a Lender or an
affiliate thereof, by the Administrative Agent and the Borrowers) and delivered
to the Administrative Agent for its acceptance and recording in the Register;
provided, that no such assignment shall be permitted if the aggregate amount of
the Loans, L/C Obligations and Available RC Commitments assigned shall be less
than $5,000,000, unless otherwise agreed by the Administrative Agent. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with Commitments as set forth therein, and (y) the assigning Lender thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this paragraph (c) and paragraph
(e) of this Section, the consent of the Borrowers shall not be required, and,
unless requested by the Assignee and/or the assigning Lender, new Notes shall
not be required to be executed and delivered by the Borrowers, for any
assignment which occurs at any time when any of the events described in Section
10(f) shall have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrowers,
shall maintain at the address of the Administrative Agent referred to in Section
12.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrowers, the Administrative Agent and the
Lenders may (and, in the case of any Loan or other obligation hereunder not
evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrowers and the
Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
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<PAGE>
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrowers.
(f) Each Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning the
Borrowers and their Affiliates which has been delivered to such Lender by or on
behalf of the Borrowers pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of the Borrowers in connection with such Lender's
credit evaluation of the Borrowers and their Affiliates prior to becoming a
party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.
12.7 Adjustments; Set-off.
(a) If any Lender (a "benefited Lender") shall at any time
receive any payment of all or part of its Loans, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in Section
10(f), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans, or interest thereon, such benefited Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Loan, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefited Lender to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Lenders; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. Each
Borrower agrees that each Lender so purchasing a portion of another Lender's
Loan may exercise all rights of payment (including, without limitation, rights
of set-off) with respect to such portion as fully as if such Lender were the
direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrowers, any such notice being expressly waived by the Borrowers to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrowers hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrowers. Each
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<PAGE>
Lender agrees promptly to notify the Borrowers and the Administrative Agent
after any such set-off and application made by such Lender, provided, that the
failure to give such notice shall not affect the validity of such set-off and
application.
12.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission of signature pages hereto), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrowers and the Administrative Agent.
12.9 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.
12.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrowers, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12.12 Submission To Jurisdiction; Waivers. Each Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State
and county of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrowers at its address set forth in Section 12.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
-78-
<PAGE>
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
12.13 Acknowledgements. Each 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 Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Borrowers and the other Loan Parties, on one hand, and Administrative Agent
and Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrowers and the Lenders.
12.14 WAIVERS OF JURY TRIAL. EACH BORROWER, THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
12.15 Confidentiality. Each Lender agrees to keep confidential any written
or oral information (a) provided to it by or on behalf of any Borrower or any of
their Subsidiaries pursuant to or in connection with this Agreement or (b)
obtained by such Lender based on a review of the books and records of any
Borrower or any of their Subsidiaries; provided, that nothing herein shall
prevent any Lender from disclosing any such information (i) to the
Administrative Agent or any other Lender, (ii) to any Transferee which agrees to
comply with the provisions of this Section 12.15, (iii) to its employees,
directors, agents, attorneys, accountants and other professional advisors, (iv)
upon the request or demand of any examiner or other Governmental Authority
having jurisdiction over such Lender, (v) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
[Signature Pages Follow]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
CELADON GROUP, INC.
By: /s/ Paul Will
----------------------------------
Name: Paul Will
Title: Secretary
CELADON TRUCKING SERVICES, INC.
By: /s/ Paul Will
----------------------------------
Name: Paul Will
Title: Secretary
ING (U.S.) CAPITAL LLC,
as Administrative Agent, Arranger
and as a Lender
By: /s/ Bill Redmond
----------------------------------
Name: Bill Redmond
Title: Vice President
<PAGE>
KEYBANK NATIONAL ASSOCIATION
as a Lender
By: /s/ Joseph H. Rohs
----------------------------------
Name: Joseph H. Rohs
Title: Vice President
<PAGE>
Schedule 1.1
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
Lender and Lending Offices Term Loan Revolving Credit
Commitment Commitment
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ING (U.S.) CAPITAL LLC $20,000,000 $20,000,000
Applicable Lending Offices:
Base Rate Loans and Eurodollar Loans:
55 East 52nd Street
New York, New York 10055
Attention: Lisa H. Cummings
Telephone: 212-409-1676
Facsimile: 212-486-6341
- ------------------------------------------------------------------------------------------
KEY BANK NATIONAL ASSOCIATION $10,000,000 $10,000,000
Applicable Lending Offices:
Base Rate Loans and Eurodollar Loans:
10 West Market Street
Suite 900
Indianapolis, Indiana 46204
Attention: Kim Parks
Telephone: 317-464-8086
Facsimile: 317-464-8277
- ------------------------------------------------------------------------------------------
Total: $30,000,000 $30,000,000
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 2.2
SCHEDULED TERM LOAN REPAYMENTS
The Term Loans shall be repaid in 20 quarterly installments of principal payable
on the last day of each March, June, September and December, commencing
September 1999, each in the aggregate amount set forth below opposite such
installment (as they may be reduced in accordance with the terms of this
Agreement):
<TABLE>
<CAPTION>
Installment No. Amount
--------------- ------
<S> <C>
1-4 $1,000,000
5-8 $1,250,000
9-12 $1,750,000
13-16 $1,750,000
17-20 $1,750,000
</TABLE>
<PAGE>
Schedule 6.15
SUBSIDIARIES
See attached
<PAGE>
Schedule 6.16
FILING JURISDICTIONS
PART A. UCC FILINGS
ENTITIES LOCATIONS
Celadon Group, Inc. Indiana SOS
Celadon Trucking Services, Inc. Marion County IN
North Carolina SOS
Iredell County NC
New York SOS
NY County NY
California SOS
Los Angeles CA
Texas SOS
Webb County TX
El Paso County TX
Denton County TX
Michigan SOS
Wayne County MI
Illinois SOS
Cook County IL
Florida SOS
Orange County FL
Celadon Trucking Services of Indiana, Inc. Indiana SOS
Celadon Transportation, LLP Marion County IN
Cheetah Brokerage Co.
International Freight Holding Corp.
JML Freight Forwarding, Inc.
RIL Group, Ltd.
RIL, Inc.
Wellingmutt Holding Co.
Celadon Logistics, Inc.
Randy Express, Ltd.
RIL Acquisition Corp.
Celadon Jacky Maeder Co.
Zipp Express, Inc.
Cheetah Transportation, Inc. Indiana SOS
Marion County IN
North Carolina SOS
Iredell County NC
<PAGE>
PART B. REAL PROPERTY FILINGS
The county in which such real property is located.
<PAGE>
Schedule 6.19
SUMMARY OF INSURANCE
See Attached
<PAGE>
Schedule 7.1(a)(viii)
MORTGAGE LOCATIONS
1. Celadon Trucking Services, Inc.
2995 South Harding Street
Indianapolis, Indiana 46225
2. Celadon Trucking Services, Inc.
8401 Killiam Ind. Blvd.
Laredo, Texas 78045
3. Celadon Trucking Services, Inc.
13000 Darrington
Horizon City, Texas 79927
4. Celadon Trucking Services, Inc.
1406 I-35W
Denton, Texas ________
5. Zipp Express, Inc.
3340 S. Shelby Street
Indianapolis, Indiana 46203
[TO BE ACQUIRED FROM ZIPP--CONTINGENT UPON ENVIRONMENTAL
DILIGENCE--NOT PURCHASED AT CLOSING]
6. Zipp Express, Inc.
15200 State Road 11
South, Columbus, IN 47201
<PAGE>
Schedule 7.1(a)(viii)
LEASEHOLD MORTGAGE LOCATIONS
1. Celadon Trucking Services, Inc.
9503 E. 33rd Street
Indianapolis, Indiana 46235
2. Cheetah Transportation Co.
State Road 1109
P.O. Box 570
Mooresville, North Carolina 28115
<PAGE>
Schedule 9.2
EXISTING INDEBTEDNESS
<PAGE>
Schedule 9.3
EXISTING LIENS
<PAGE>
Schedule 9.4
EXISTING GUARANTEE OBLIGATIONS
<PAGE>
Schedule 9.5
SUBSIDIARIES PERMITTED TO DISSOLVE
RIL Group, Ltd.
RIL, Inc.
Wellingmutt Holding Co.
Celadon Logistics, Inc.
Randy Express, Ltd.
RIL Acquisition Corp.
Celadon Jacky Maeder Co.
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as.................................. 'SS'
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet of Celadon Group, Inc. at September 30,
1999 and the condensed consolidated statement of operations of Celadon Group,
Inc. for the quarter then ended and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,032
<SECURITIES> 0
<RECEIVABLES> 53,322
<ALLOWANCES> (979)
<INVENTORY> 0
<CURRENT-ASSETS> 79,606
<PP&E> 147,883
<DEPRECIATION> (32,901)
<TOTAL-ASSETS> 220,315
<CURRENT-LIABILITIES> 46,425
<BONDS> 121,579
0
0
<COMMON> 257
<OTHER-SE> 56,685
<TOTAL-LIABILITY-AND-EQUITY> 220,315
<SALES> 0
<TOTAL-REVENUES> 82,665
<CGS> 0
<TOTAL-COSTS> 78,250
<OTHER-EXPENSES> 3,355
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,002
<INCOME-PRETAX> (942)
<INCOME-TAX> (353)
<INCOME-CONTINUING> (589)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (589)
<EPS-DILUTED> (.08)
</TABLE>
