EXHIBIT 10.5
GUARANTY
THIS GUARANTY ("GUARANTY") is executed as of April 30, 2002 by CENTRAL
FREIGHT LINES, INC., a Nevada corporation (the "GUARANTOR"), in favor of
SUNTRUST BANK, a Georgia state banking corporation (the "LENDER").
RECITALS:
A. Central Freight Lines, Inc., a Texas corporation (the
"BORROWER"), and Lender are concurrently herewith entering into a Revolving
Credit Loan Agreement of even date herewith (as such may be amended and/or
restated from time to time, the "LOAN AGREEMENT"), and pursuant to the Loan
Agreement, Borrower issued to the order of Lender that certain $8,000,000
Revolving Credit Note (as such may be amended and/or restated from time to time,
the "NOTE") of even date herewith. Capitalized terms not otherwise defined
herein shall have such meaning as set forth in the Loan Agreement.
B. The Lender has required, as one of the conditions to making
Advances to Borrower in accordance with the Loan Agreement and the Note, that
the Guarantor guarantee payment of the "Indebtedness" (as defined herein).
NOW, THEREFORE, in order to induce Lender to extend credit under the
Loan Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:
ARTICLE 1
DEFINED TERMS
SECTION 1.1 Defined Terms. Terms not defined herein shall have
the meanings ascribed to such terms in the Loan Agreement. The following terms
shall have the following meanings herein, unless the context expressly requires
otherwise:
"INDEBTEDNESS" means any and all indebtedness and obligations
of Borrower under the Loan Agreement, the Note or any of the Loan
Documents, and any and all extensions, renewals and replacements
thereof regardless of:
(a) whether such indebtedness is presently
existing or hereafter incurred or arising;
(b) whether such indebtedness is from time to
time reduced and thereafter increased or entirely extinguished
and thereafter reincurred; and/or
(c) whether such indebtedness arises with or
without notice to Guarantor.
"OBLIGOR(S)" means any and all indorsers, accommodation
parties, guarantors (other than Guarantor) and other Persons who are
now or in the future become liable or contingently liable for payment
of any of the Indebtedness.
"PERSON" means any natural person, individual, corporation,
partnership, joint venture, limited liability company, association,
joint stock company, trust, unincorporated organization, securities
exchange, government, or any agency or political subdivision thereof,
or any other form of entity, whether acting in an individual, fiduciary
or other capacity.
SECTION 1.2 General Construction; Captions. All definitions and
other terms used in this Guaranty shall be equally applicable to the singular
and plural forms thereof, and all references to any gender shall include all
other genders. The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Guaranty shall refer to this Guaranty as a whole and
not to any particular provision of this Guaranty, and Section, subsection,
schedule and exhibit references are to this Guaranty unless otherwise specified.
The captions in this Guaranty are for convenience only, and in no way limit the
provisions hereof.
ARTICLE 2
GUARANTY
SECTION 2.1 GUARANTY OF PAYMENT. Guarantor hereby unconditionally
and irrevocably guarantees the timely payment and performance of the
Indebtedness as and when due.
SECTION 2.2 GUARANTY UNCONDITIONAL. Guarantor's guarantee of the
Indebtedness is absolute and unconditional. Without limiting the foregoing, the
validity of this Guaranty and Guarantor's obligations hereunder shall not be
impaired by any event whatsoever, including without limitation any of the
following, whether or not with notice to or consent of Guarantor:
(a) any change in the time, place or manner of payment or
performance, or any release, waiver, indulgence, compromise,
settlement, increase, decrease, extension, renewal, acceleration,
impairment or termination (voluntary or otherwise) with respect to the
Indebtedness;
(b) any release, exchange, indulgence, compromise, or
settlement with respect to Borrower, any other Obligor, or any failure
to take, perfect or protect any lien or interest intended as collateral
for the Indebtedness;
(c) any modification, amendment, restatement or
replacement (in whole or in part) of any documents, agreements or
instruments evidencing, comprising, securing, guarantying or otherwise
relating to the Indebtedness;
(d) any failure by Lender to exercise diligence in the
collection of the Indebtedness or perfect its interest in any
collateral for the Indebtedness, or any action, omission or delay on
the part of Lender or any other Person to assert or enforce any claim,
demand, right, power or remedy referred to, conferred in or arising
under this Guaranty or any of the other instruments, agreements,
contracts or documents evidencing,
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comprising, securing, guarantying or otherwise relating to, executed or
delivered in connection with the Indebtedness;
(e) the voluntary or involuntary liquidation of, sale or
other disposition of all or substantially all the assets of, cessation
of business of, marshalling of assets and liabilities of, receivership
of, financial decline of, insolvency of, bankruptcy of, assignment for
the benefit of creditors of, reorganization of, arrangement of,
composition with creditors or readjustment of, or other similar
proceedings affecting the Borrower;
(f) the merger, consolidation or dissolution of the
Borrower or a change in a Borrower's form, business, operations or
management; and/or
(g) the termination of any relationship between Guarantor
and any Borrower.
SECTION 2.3 GUARANTY IRREVOCABLE. Guarantor's guarantee of the
Indebtedness is irrevocable. This Guaranty cannot be canceled by Guarantor and
shall remain in full force and effect until full and final payment and discharge
of the Indebtedness.
SECTION 2.4 PRIMARY LIABILITY OF GUARANTOR. This Guaranty
constitutes a guarantee of payment and performance and not of collection.
Accordingly, Lender may enforce this Guaranty against Guarantor without first
making demand on any other Person, or taking action against any collateral for
the Indebtedness, or instituting collection proceedings upon the Indebtedness.
Guarantor's liability for the Indebtedness is primary, and not secondary.
Guarantor's liability for the Indebtedness is joint and several with all
Obligors, and Guarantor shall not be entitled to satisfy this Guaranty by
contributing ratably with any Obligor or otherwise paying less than the entire
unpaid Indebtedness. If any event occurs that would allow Lender to accelerate
all or any part of the Indebtedness, but such acceleration is prevented by law
or otherwise, Guarantor agrees that for purposes of this Guaranty the
Indebtedness shall be deemed accelerated, and Guarantor shall make payment on
demand to Lender as required hereunder.
SECTION 2.5 BANKRUPTCY AND INSOLVENCY. Without limitation,
Guarantor's obligations hereunder shall not be limited by: (a) the filing of a
petition in bankruptcy by or against Borrower or the appointment of a trustee,
receiver, custodian, conservator, or other similar appointment over a Borrower
or any of the Borrower's assets under any jurisdiction, or (b) any order,
ruling, or action taken by any Person in any such proceeding.
SECTION 2.6 RECOVERY OF AVOIDED PAYMENTS. If any amount applied
by Lender to the Indebtedness is subsequently challenged by a bankruptcy trustee
or debtor-in-possession, or any other Person asserting standing to seek
avoidance, as an avoidable transfer on the grounds that the payment constituted
a preferential payment or a fraudulent conveyance under state law or the
Bankruptcy Code or any successor statute thereto or on any other grounds, Lender
may, at its option and in its sole discretion, elect whether and to what extent
to contest such challenge. If Lender contests the avoidance action, all costs of
the proceeding, including Lender's attorneys' fees, will become part of the
Indebtedness. If any of the contested amounts are successfully avoided (whether
through settlement or otherwise), the avoided amount will become part of the
Indebtedness hereunder. If Lender elects not to contest the avoidance action,
Lender may tender
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the amount subject to the avoidance action to the bankruptcy court, trustee,
debtor-in-possession or other appropriate Person, and the amount so advanced
shall become part of the Indebtedness guaranteed hereunder.
SECTION 2.7 WAIVERS BY GUARANTOR. Guarantor hereby waives the
following rights, defenses and benefits of law or equity with respect to this
Guaranty:
(a) presentment, protest, demand, notice and proof of
reliance on this Guaranty, and the filing of claims with a court in the
event of bankruptcy of Borrower or any Obligor;
(b) any right to require Lender to marshal assets or
proceed first against Borrower, any collateral for the Indebtedness or
any Obligor, and all rights under T.C.A Section 00-00-000 or any
similar statute;
(c) all rights or setoff, counterclaim, or recoupment
with respect to the Indebtedness;
(d) any claim or defense based on impairment of
collateral or impairment of recourse or any requirement of diligence on
the part of Lender in collecting the Indebtedness or in taking,
perfecting, protecting or proceeding against any collateral for the
Indebtedness or any Obligor; and/or
(e) any right of notice or consent, including without
limitation notice of or consent to: (i) any release, addition,
exchange, sale, waiver, indulgence, compromise, settlement, increase,
decrease, extension, renewal, acceleration, impairment, or termination
of or with respect to the Indebtedness, any collateral for the
Indebtedness or any Obligor; and (ii) except for notice required under
applicable laws that cannot be waived by Guarantor, any notice of
foreclosure or disposition of any collateral for the Indebtedness.
SECTION 2.8 SUBORDINATION. Guarantor agrees that upon the
occurrence of an Event of Default under the Indebtedness, any presently existing
or hereafter arising loan or extension of credit made by Guarantor to Borrower
and any other presently existing or hereafter arising obligation of Borrower to
Guarantor (including without limitation any rights of subrogation, contribution
or similar rights) shall be fully subordinate to the Indebtedness as to both
payment and collection. Accordingly, Guarantor agrees not to accept any payment
whatsoever from Borrower or to allow any payment by Borrower on Guarantor's
behalf until this Guaranty has been satisfied in full and terminated and
released by Lender.
ARTICLE 3
GUARANTOR'S REPRESENTATIONS,
WARRANTIES AND COVENANTS
Guarantor hereby represents and warrants to Lender, and covenants with
Lender, as follows:
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SECTION 3.1 IN FURTHERANCE OF BUSINESS PURPOSES. The extension of
credit to Borrower by Lender is a direct financial benefit to Guarantor and the
execution of this Guaranty is made in furtherance of the business purposes of
Guarantor.
SECTION 3.2 EXISTENCE AND STATUS. Guarantor is a corporation duly
organized, legally existing, and in good standing under the laws of the State of
Nevada.
SECTION 3.3 CORPORATE POWER AND AUTHORIZATION. Guarantor is duly
authorized and empowered to execute, deliver, and perform under this Guaranty;
Guarantor's board of directors have authorized Guarantor to execute and perform
under this Guaranty; and all other corporate action on Guarantor's part required
for the due execution, delivery, and performance of this Guaranty has been duly
and effectively taken.
SECTION 3.4 LEGAL AND BINDING AGREEMENT. The execution, delivery
and performance of this Guaranty will not violate any provisions of the articles
of incorporation or bylaws of Guarantor or any judicial or administrative order
or governmental law or regulation applicable to Guarantor, and this Guaranty is
valid and binding in every respect according to its terms, subject to no
defense, counterclaim, set-off or objection of any kind, except, as to
enforcement only, the effect of applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and other similar laws relating to
or affecting the rights of creditors generally.
SECTION 3.5 NO CONSENT REQUIRED. Guarantor's execution and
performance of this Guaranty do not require the consent of or the giving of
notice to any other Person.
SECTION 3.6 LITIGATION. Guarantor is not presently a defendant in
any material pending counterclaim, litigation, arbitration or administrative
proceeding or the subject of any investigation; there is no material
counterclaim, litigation, arbitration, administrative proceeding or
investigation threatened against Guarantor; and Guarantor is not subject to any
outstanding court or administrative order. Guarantor covenants to give Lender
prompt written notice of any material counterclaim, litigation, administrative
proceeding or investigation that may hereafter be instituted or threatened
against Guarantor, whether or not Guarantor's liability under such proceeding
would be covered by insurance.
SECTION 3.7 SOLVENCY. Guarantor is solvent as of the date of
execution of this Guaranty, after giving effect to this Guaranty, and is
generally paying its debts as they become due. The fair value of Guarantor's
assets substantially exceeds the sum total of Guarantor's liabilities.
SECTION 3.8 NO DEFAULT. Guarantor is not in default in any
respect that affects its business, Properties, operations, or condition,
financial or otherwise, under any material indenture, mortgage, deed of trust,
credit agreement, note, agreement, or other contract to which Guarantor is a
party or by which it or its Properties are bound.
SECTION 3.9 EXISTENCE; NO CONDUCT OF BUSINESS. Guarantor will do
or cause to be done all things necessary to preserve, renew and maintain in full
force and effect its legal existence. Guarantor will not engage in any business
or activity or hold any assets or property, other than to serve as holding
company which owns all the outstanding shares of the Borrower.
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SECTION 3.10 NEGATIVE PLEDGE. The Borrower will not create, incur,
assume or suffer to exist any Lien on any of its assets or property now owned or
hereafter acquired except in favor of Lender.
ARTICLE 4
CERTAIN EVENTS REQUIRING PERFORMANCE
SECTION 4.1 EVENTS. Upon the occurrence of any of the following
events, regardless of whether any of the Indebtedness has been accelerated, is
past due, or is in default, Guarantor shall immediately and without notice pay
to Lender an amount equal to all the outstanding Indebtedness and all other
amounts due hereunder, and Lender shall be entitled to enforce the provisions
hereof, and to exercise any other rights, powers, and remedies provided
hereunder or otherwise available in law or in equity:
(a) Guarantor fails to perform or observe any agreement,
covenant or provision contained in this Guaranty; or
(b) any warranty, representation or other statement by or
on behalf of the Guarantor contained in this Guaranty or in financial
statements or certificates provided to Lender by or on behalf of
Guarantor is false or misleading in any material respect; or
(c) any bankruptcy case, assignment for the benefit of
creditors, receivership or other state, federal or foreign insolvency
proceeding is commenced with respect to the Guarantor; or Guarantor
becomes insolvent or is generally not paying its debts as they become
due; or Guarantor discontinues its usual business or commences to
dissolve, wind-up or liquidate itself; or
(d) An Event of Default occurs under the Loan Agreement.
SECTION 4.2 CUMULATIVE REMEDIES. The remedies provided Lender in
this Guaranty are cumulative and are not exclusive of any other remedies that
may be available to Lender under any other document or at law or equity.
ARTICLE 5
MISCELLANEOUS PROVISIONS
SECTION 5.1 SURVIVAL. All warranties, representations, and
covenants made by Guarantor herein shall be deemed to have been relied upon by
Lender and the holder(s) from time to time of the Indebtedness and shall survive
the delivery to Lender of this Guaranty regardless of any investigation made by
Lender or the holder(s) from time to time of the Indebtedness.
SECTION 5.2 ASSIGNMENT. This Guaranty shall be binding upon the
heirs, successors and assigns of Guarantor, except that Guarantor shall not
assign any rights or delegate any obligations arising hereunder without the
prior written consent of Lender. Lender may assign and transfer this Guaranty in
whole or in part to any assignee of all or part of the Indebtedness,
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without notice to or consent of Guarantor. Lender's successors and assigns shall
have the right to rely upon this Guaranty with respect to the Indebtedness and
any additional transactions with a Subsidiary Borrower, its successors and
assigns, in reliance hereon, in the same manner and with the same force and
effect as if such successor or assign were specifically named as Lender herein.
SECTION 5.3 NOTICES. All notices, requests, demands, directions
and other communications (collectively "notices") required under this Guaranty
shall be in writing (including communication by facsimile transmission) and
shall be sent by hand, by registered or certified mail return receipt requested,
by overnight courier service maintaining records of receipt, or by facsimile
transmission with confirmation in writing mailed first-class, in all cases with
charges prepaid. Any such properly given notice shall be effective upon the
earlier of receipt or (a) the date delivered by hand, or (b) the third Business
Day after being mailed, or (c) the following Business Day if sent by overnight
courier service, or (d) upon sender's receipt of transmission confirmation, if
sent by facsimile. All notices shall be addressed as follows:
If to Guarantor: If to Lender:
Central Freight Lines, Inc. SunTrust Bank
0000 Xxxx Xxxx Xxxxx 000 Xxxxxx Xxxxxx Xxxxx
Xxxx, XX 00000 Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx Attention: Xxxx Xxxxxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
All notices shall be sent to the applicable party at the address stated above or
in accordance with the last unrevoked written direction from such party to the
other party hereto.
SECTION 5.4 SEVERABILITY. Should any provision of this Guaranty
be invalid or unenforceable for any reason, the remaining provisions hereof
shall remain in full effect.
SECTION 5.5 APPLICABLE LAW. The validity, construction and
enforcement of this Guaranty and all other documents executed with respect to
the Indebtedness shall be determined according to the internal laws of
Tennessee.
SECTION 5.6 Jurisdiction; Venue; Service of Process. GUARANTOR
AND LENDER HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF THE COURTS LOCATED
IN DAVIDSON COUNTY, TENNESSEE, INCLUDING WITHOUT LIMITATION FEDERAL COURTS
SITTING IN THE MIDDLE DISTRICT OF TENNESSEE AND THE CHANCERY COURT FOR DAVIDSON
COUNTY, TENNESSEE, FOR ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH
THIS GUARANTY.
SECTION 5.7 Jury Waiver. GUARANTOR AND LENDER HEREBY KNOWINGLY,
WILLINGLY AND IRREVOCABLY WAIVE THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY
ACTION OR PROCEEDING INVOLVING THIS GUARANTY.
SECTION 5.8 WAIVER OF DAMAGES. In any action to enforce this
Guaranty, Guarantor hereby irrevocably and unconditionally waives any and all
rights under the laws of any state to
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claim or recover any special, exemplary, punitive, consequential or other
damages other than actual direct damages.
SECTION 5.9 COSTS AND EXPENSES. Guarantor agrees to pay all costs
and expenses, including, without limitation, fees and expenses of attorneys,
paralegals, accountants, auditors, and consultants, and compensation for time
spent by Lender's employees or consultants, that Lender may incur in enforcing
the terms of this Guaranty against Guarantor or in protecting Lender's rights
hereunder.
SECTION 5.10 INDULGENCE NOT WAIVER. Lender's indulgence in the
existence of a default with respect to the Indebtedness or under this Guaranty
or any other departure from the terms of this Guaranty shall not prejudice any
of Lender's rights, including without limitation Lender's rights to make demand
and recover from Guarantor. No waiver, amendment, release or modification of
this Guaranty shall be established by conduct, custom or course of dealing.
SECTION 5.11 AMENDMENT AND WAIVER IN WRITING. No provision of this
Guaranty can be amended or waived, except by a statement in writing signed by
the party against which enforcement of the amendment or waiver is sought.
SECTION 5.12 COUNTERPARTS. This Guaranty may be executed in any
number of counterparts (by facsimile transmission or otherwise), each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
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This Guaranty is executed as of the date first written above.
GUARANTOR:
CENTRAL FREIGHT LINES, INC.
a Nevada Corporation
By: /s/ Xxx Xxxxx
----------------------------------------
Title: Executive Vice President
LENDER:
SUNTRUST BANK
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Title: Vice President
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