AMENDMENT NO. 4 TO
LOAN AND SECURITY AGREEMENT
This Amendment No. 4 to Loan and Security
Agreement (this "Amendment") is made as of the 2nd day of
July, 1998 by and among each of the undersigned and amends
that certain Loan and Security Agreement, dated as of
November 27, 1996 (as amended by Amendment No. 1 dated as of
February 28, 1997, Amendment No. 2 dated as of June 27,
1997, Amendment No. 3 dated as of November 1, 1997 and by
this Amendment, the "Loan Agreement"), among the financial
institutions listed on the signature pages thereof as
lenders (such financial institutions, together with their
respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively
as the "Lenders"), BankAmerica Business Credit, Inc., a
Delaware corporation, as agent for the Lenders (in its
capacity as agent, the "Agent"), NationsBank of Texas, N.A.,
as the L/C Issuer and as co-syndication agent for the
Lenders, Credit Agricole Indosuez, as co-agent for the
Lenders, Consolidated Freightways Corporation of Delaware, a
Delaware corporation, (the "Borrower"), Consolidated
Freightways Corporation (the "Parent"), Xxxxxx Xxxxx Xxxxxxx
Corporation ("Xxxxxx") and Redwood Systems, Inc.
("Redwood"). Capitalized terms used herein without
definition have the meanings assigned thereto in the Loan
Agreement.
RECITALS
A. The Borrower has requested that certain provisions
of the Loan Agreement be amended as more fully described
below.
B. On the terms and subject to the conditions set
forth in this Amendment, the parties to the Loan Agreement
have agreed to amendments to the Loan Agreement, including,
without limitation, (i) a reduction of the Total Facility
from $225,000,000 to $150,000,000, (ii) a reduction of the
interest rate payable on Revolving Loans, (iii) a reduction
of the Letter of Credit Fee, (iii) a reduction of the Unused
Line Fee, (iv) elimination of the early termination fee, (v)
release of all Revenue Equipment from the Agent's Liens,
(vi) modifications to the requirement of weekly delivery of
Borrowing Base Certificates, (vii) modifications to various
financial covenants, and (viii) various modifications
relating to or corresponding to the foregoing, all as set
forth more fully below.
AGREEMENT
In consideration of the foregoing, and for good and
valuable consideration, the receipt of which is hereby
acknowledged, the undersigned hereby agree as follows:
ARTICLE 1
AMENDMENTS TO LOAN AND SECURITY AGREEMENT
1.1 Amendments to Section 1.1 - Definitions. Each
of the following definitions set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its
entirety as follows:
"`Availability' means at any time the lesser of:
(a) the Total Facility or
(b) the Net Amount of Eligible Accounts
multiplied by the Account Advance Rate;
Less, in the case of each of (a) and (b) above, the sum
of (without duplication of amounts which have become
ineligible):
(A) the Aggregate Revolver Outstandings;
(B) following the occurrence and during
the continuance of any Event of Default, reserves for
accrued interest on the Obligations;
(C) the Environmental Compliance Reserve;
(D) ACH Settlement Risk Reserve; and
(E) all other reserves which the Agent
deems necessary or desirable in the exercise of its
reasonable credit judgment to maintain with respect to
the Borrower's account, including, without limitation,
reserves for any amounts which the Agent or any Lender
may be obligated to pay in the future for the account
of the Borrower."
"`Borrowing Base Certificate' means the
certificate by a Responsible Officer of the Borrower,
substantially in the form of Exhibit A (or another form
acceptable to the Agent) which (a) is required to be
delivered pursuant to Section 6.7 (it being understood
and agreed that if such certificate is required to be
delivered on a weekly basis, information included
therein with respect to the Accounts will be updated
weekly, and that other information included therein
with respect to Accounts of the type described in
Accounts Dilution Rate will be updated as of the end of
each month), (b) sets forth the calculation of the
Availability, including a calculation of each component
thereof, and is dated, as of the close of business on
the last Business Day of the month (or the last
Business Day of the week, if applicable) covered by the
certificate, and (c) if required to be delivered weekly
pursuant to Section 6.7, is to be delivered prior to
the end of the third Business Day of the following
week; all in such detail as shall be reasonably
satisfactory to the Agent. All calculations of
Availability in connection with the preparation of any
Borrowing Base Certificate shall originally be made by
the Borrower and certified to the Agent; provided, that
the Agent shall have the right to review and adjust, in
the exercise of its reasonable credit judgment, any
such calculation (1) to reflect its reasonable estimate
of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is
not in accordance with this Agreement."
"`Commitment' means, at any time with respect to a
Lender, the principal amount set forth beside such
Lender's name under the heading "Commitment" on the
signature pages of Amendment No. 4 to this Agreement
dated as of July 2, 1998 or on the signature page of
the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the
provisions of Section 13.3, as such Commitment may be
adjusted from time to time in accordance with the
provisions of Section 13.3 or Section 2.1(b) and
"Commitments" means, collectively, the aggregate amount
of the commitments of all of the Lenders."
"`Excluded Property' means Real Estate (and any
fixtures and intangible property (such as permits,
maintenance contracts, blueprints and designs) which
are in each case directly and specifically related to
the particular parcel of Real Estate if covered by a
mortgage of such Real Estate), the Revenue Equipment
and stock of Subsidiaries of the Borrower existing as
of the Closing Date other than the 65% of the stock of
Canadian Freightways Limited pledged to the Agent for
the benefit of the Lenders pursuant to the Stock Pledge
Agreement."
"`Triggering Event' means the occurrence of any
one of the following events: (a) an Event of Default,
(b) Availability is $25,000,000 or less, (c) the
average daily Dollar amount of Revolving Loans
outstanding for the immediately preceding thirty (30)
day period exceeds $20,000,000, or (d) the aggregate
Dollar amount of Revolving Loans outstanding on any
date exceeds $25,000,000."
1.2 Deletion of Definitions. Each of the following
definitions set forth in Section 1.1 of the Loan Agreement
is hereby deleted:
"Applicable Margin"
"Appraised Value of Revenue Equipment"
"Eligible Revenue Equipment"
"Eligible Revenue Equipment Value"
"Fixed Charge Coverage Ratio"
"Maximum Revolver Equipment Advance"
"Revenue Equipment Advance Rate"
1.3 Amendment to Section 2.1 - Credit Facility.
Section 2.1 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"2.1 Credit Facility. Subject to all of the
terms and conditions of this Agreement, the Lenders
severally agree to make available a total credit
facility of up to $150,000,000 (the "Total Facility")
for the Borrower's use from time to time during the
term of this Agreement. The Total Facility shall be
comprised of a revolving line of credit consisting of
revolving loans and letters of credit, as described in
Sections 2.2 and 2.3."
1.4 Amendment to Section 3.1(a) - Interest Rate on
Revolving Loans. The fourth sentence of Section 3.1(a) of
the Loan Agreement is hereby amended and restated to read in
its entirety as follows:
"Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(i) for all Base Rate Revolving Loans and other
Obligations (other than LIBOR Revolving Loans) at a
fluctuating per annum rate equal to the Base Rate minus
one-quarter of one percent (0.25%), and (ii) for all
LIBOR Revolving Loans at a per annum rate equal to the
LIBOR Rate plus seven-eighths of one percent (0.875%)."
1.5 Amendment to Section 3.5 - Unused Line Fee.
The first sentence of Section 3.5 of the Loan Agreement is
hereby amended and restated to read in its entirety as
follows:
"3.5 Unused Line Fee. Until the Obligations have
been paid in full and the Agreement terminated, the
Borrower agrees to pay, on the first day of each month
and on the Termination Date, to the Agent, for the
ratable account of the Lenders, an unused line fee (the
"Unused Line Fee") equal to one-quarter of one percent
(0.25%) per annum on the average daily amount by which
the Total Facility exceeded the sum of the average
daily outstanding amount of Revolving Loans and the
undrawn face amount of all outstanding Letters of
Credit, during the immediately preceding month or
shorter period if calculated on the Termination Date."
1.6 Amendment to Section 3.6 - Letter of Credit
Fee. The first sentence of Section 3.6 of the Loan
Agreement is hereby amended and restated to read in its
entirety as follows:
"3.6 Letter of Credit Fee. The Borrower agrees to
pay to the Agent, for the ratable account of the
Lenders, for each Letter of Credit, a fee (the "Letter
of Credit Fee") equal to seven-eighths of one percent
(0.875%) per annum of the undrawn face amount of each
Letter of Credit issued for the Borrower's account at
the Borrower's request, plus all out-of-pocket costs,
fees and expenses incurred by the Agent in connection
with the application for, issuance of, or amendment to
any Letter of Credit."
1.7 Amendment to Section 4.2 - Termination of
Facility. Section 4.2 of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
"4.2 Termination of Facility. The Borrower may
terminate this Agreement upon at least thirty (30)
Business Days' notice to the Agent and the Lenders,
upon (a) the payment in full of all outstanding
Revolving Loans, together with accrued interest
thereon, and the cancellation of all outstanding
Letters of Credit, (b) the payment in full in cash of
all other Obligations together with accrued interest
thereon, and (c) with respect to any LIBOR Revolving
Loans prepaid in connection with such termination prior
to the expiration date of the Interest Period
applicable thereto, the payment of the amounts
described in Section 5.5."
1.8 Amendment to Section 6.2(b) - Perfection and
Protection of Security Interests - Revenue Equipment.
Section 6.2(b) of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"(b) Intentionally Omitted."
1.9 Amendment to Section 6.5 - Appraisals.
Section 6.5 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"6.5 Intentionally Omitted."
1.10 Amendment to Section 6.7 - Collateral Reporting.
Section 6.7 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"6.7 Collateral Reporting. The Borrower shall
provide the Agent with the following documents at the
following times in form satisfactory to the Agent:
(a) if the daily average Availability for
the preceding month is $25,000,000 or less or if a
Default or Event of Default arising under Section 9.21,
Section 9.22 or Section 9.23 has occurred and is
continuing, on a weekly basis, a Borrowing Base
Certificate and, at the same time, such supporting
documentation as the Agent may request;
(b) on a monthly basis, as of the end of
each month, and received by the end of the 20th day of
the following month, a Borrowing Base Certificate and,
at the same time, such supporting documentation as the
Agent may request;
(c) on a monthly basis, as of the end of
each month, and received by the Agent no later than the
20th day of the following month, an aging of the
Borrower's Accounts, together with a reconciliation to
the Borrower's general ledger, and the Borrower's
computation of ineligible Accounts and reserves against
Availability, certified as accurate and correct by a
Responsible Officer of the Borrower;
(d) on a monthly basis, as of the end of
each month, and received by the Agent no later than the
20th day of the following month, an aging or open item
listing of all Borrower's accounts payable to the
fifteen Account Debtors with the highest amount of
Accounts owed to the Borrower; provided that such
accounts payable information shall not be required with
respect to the Account Debtors to which the Borrower is
indebted in an amount not in excess of $50,000;
(e) such other reports as to the
Collateral of the Borrower as the Agent shall
reasonably request from time to time; and
(f) with the delivery of each of the
foregoing, a certificate of an officer of the Borrower
certifying as to the accuracy and completeness of the
foregoing.
If any of the Borrower's records or reports of the
Collateral are prepared by an accounting service or
other agent, the Borrower hereby authorizes such
service or agent to deliver such records, reports, and
related documents to the Agent, for distribution to the
Lenders. Any report required to be delivered pursuant
to this Section 6.7 on a day that is not a Business Day
may be delivered on the next Business Day after such
report was due."
1.11 Amendment to Section 6.10 - Equipment. Section
6.10 of the Loan Agreement is hereby amended and restated to
read in its entirety as follows:
"6.10 Equipment.
(a) The Borrower represents and warrants
to the Agent and the Lenders and agrees with the Agent
and the Lenders that all of the Equipment owned by the
Borrower is and will be used or held for use in the
Borrower's business, and is and will be fit for such
purposes. The Borrower shall keep and maintain its
Equipment in good operating condition and repair
(ordinary wear and tear excepted) and shall make all
necessary replacements thereof.
(b) The Borrower shall promptly inform
the Agent of any material additions to or deletions
from the Equipment (other than Excluded Property). The
Borrower will not, without the Agent's prior written
consent, alter or remove any identifying manufacturers
serial number, vehicle identification number or similar
symbol or number on any of the Borrower's Equipment
consisting of Collateral.
(c) The Borrower shall not, without the
Agent's prior written consent, sell, lease as a lessor,
or otherwise dispose of any of the Borrower's Equipment
(other than Excluded Revenue Equipment); provided,
however, that the Borrower may dispose of Included
Revenue Equipment as permitted by Section 6.10(d), and
may dispose of obsolete or unusable Equipment other
than Included Revenue Equipment which is obsolete or
unusable and has a book value no greater than
$2,000,000 in the aggregate in any Fiscal Year, or
$6,000,000 in the aggregate during the term of this
Agreement, without the Agent's consent.
(d) The Borrower shall not, without the
Agent's prior written consent, sell, lease as a lessor
or otherwise dispose of any Included Revenue Equipment;
provided, however, that so long as no Event of Default
has occurred and is continuing, the Borrower may
dispose of Included Revenue Equipment having an orderly
liquidation value no greater than $4,000,000 in the
aggregate in any month and no greater than $16,000,000
in the aggregate in any Fiscal Year, if such
dispositions are made in the ordinary course of the
Borrower's business and consistent with the Borrower's
past practice."
1.12 Amendment to Section 9.21- Capital Expenditures.
Section 9.21 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"9.21 Capital Expenditures. None of the Loan
Parties shall make or incur any Capital Expenditure if,
after giving effect thereto, the aggregate amount of
all Capital Expenditures (net of proceeds from sales of
fixed assets) by the Loan Parties on a consolidated
basis would exceed $30,000,000 for Fiscal Year 1997 or
$100,000,000 for each Fiscal Year thereafter until the
Stated Termination Date; provided, however, that up to
$15,000,000 of unused permitted Capital Expenditures in
a given Fiscal Year may be carried over to the
following Fiscal Year."
1.13 Amendment to Section 9.22 - Adjusted Net Earnings.
Section 9.22 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"9.22 Adjusted Net Earnings. The Parent, the
Borrower and their Subsidiaries on a consolidated basis
will not permit the Adjusted Net Earnings for the
fiscal period specified below, measured at the end of
each fiscal quarter on a Fiscal Year to date basis for
1997 and on a rolling four quarter basis thereafter, to
be less than the amount set forth below opposite such
fiscal quarter:
Period Amount
March 1997 $5,000,000
June 1997 $15,000,000
September 1997 $27,000,000
December 1997 $40,000,000
March 1998 $43,000,000
June 1998 $50,000,000
September 1998 $52,000,000
December 1998 $55,000,000
March 1999 $54,000,000
June 1999 $56,000,000
September 1999 $58,000,000
December 1999 and $60,000,000
thereafter
1.14 Amendment to Section 9.23 - Adjusted Tangible Net
Worth. Section 9.23 of the Loan Agreement is hereby amended
and restated to read in its entirety as follows:
"9.23 Adjusted Tangible Net Worth. The Parent,
the Borrower and their Subsidiaries on a consolidated
basis will not permit Adjusted Tangible Net Worth
calculated without regard to the increase, not to
exceed $10,000,000 (after giving effect to income
taxes), in the worker's compensation accrual reserve
over and above the level of such reserve reflected in
the Latest Projections dated September 9, 1996 and
delivered to the Agent, to be less than the following
amounts:
Period Amount
December 1996 $210,000,000
March 1997 through $195,000,000
December 1997
March 1998 $190,000,000
June 1998 through $220,000,000
September 1998
December 1998 and $225,000,000
thereafter
1.15 Amendment to Section 9.24 - Fixed Charge Coverage
Ratio. Section 9.24 of the Loan Agreement is hereby amended
and restated to read in its entirety as follows:
"9.24 Intentionally Omitted."
1.16 Amendment to Section 13.2(h) - Amendments and
Waivers. Section 13.2(h) of the Loan Agreement (which
relates to definitions which cannot be amended without the
consent of each Lender) is hereby amended and restated to
delete references to definitions which have been deleted,
and shall read in its entirety as follows:
"(h) increase the "Account Advance Rate," "Maximum
Revolver Amount," "Total Facility" or "Unused Letter of
Credit Facility"."
1.17 Amendment of Borrowing Base Certificate. Exhibit
A of the Loan Agreement is hereby amended and restated and
shall read in its entirety as Exhibit A attached hereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each Loan Party warrants and represents to the Agent
and the Lenders that:
2.1 Representations and Warranties True and
Correct. The representations and warranties contained in
the Agreement and the other Loan Documents are correct in
all material respects on and as of the date hereof except to
the extent the Agent and the Lenders have been notified by
the Borrower that any representation or warranty is not
correct and the Majority Lenders have explicitly waived in
writing compliance with such representation or warranty; and
except with respect to Schedules 8.3, 8.5, 8.9, 8.15, 8.17,
8.18, 8.29 and 8.32 to the Loan Agreement to the extent that
the Borrower has submitted to the Agent, the L/C Issuer and
each Lender an update thereto.
2.2 No Default or Event of Default. No event has
occurred and is continuing which constitutes a Default or an
Event of Default.
ARTICLE 3
CONSENT TO RELEASE OF COLLATERAL
3.1 Consent to Release of Revenue Equipment
Collateral. By its signature below, each Lender consents to
the release of all Collateral which consists of Revenue
Equipment and authorizes and directs the Agent to release
such Collateral and take all actions necessary in connection
therewith and reasonably incidental thereto.
ARTICLE 4
MISCELLANEOUS
4.1 Effective Date. This Amendment shall be
effective as of the date when the Agent has received a duly
executed counterpart of this Amendment from each of the
parties to the Loan Agreement; provided that the changes to
the pricing terms contained in Sections 1.3, 1.4, 1.5 and
1.6 of this Amendment shall be effective on July 1, 1998.
4.2 Governing Law. This Amendment shall be
interpreted and the rights and liabilities of the parties
hereto determined in accordance with the internal laws (as
opposed to the conflict of laws provisions) of the State of
California.
4.3 Counterparts. This Amendment may be executed
in any number of counterparts, and by the Agent, the L/C
Issuer, each Lender, the Borrower, Parent, Xxxxxx and
Redwood in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and
the same agreement.
IN WITNESS WHEREOF, the parties have entered into
this Amendment on the date first above written.
"BORROWER"
Consolidated Freightways
Corporation of Delaware, a
Delaware corporation
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
and CFO
"PARENT"
Consolidated Freightways
Corporation, a Delaware
corporation
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
and CFO
"XXXXXX"
Xxxxxx Xxxxx Xxxxxxx
Corporation, a Delaware
corporation
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
and CFO
"REDWOOD"
Redwood Systems, Inc., a Delaware
corporation
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
and CFO
"AGENT"
BankAmerica Business Credit,
Inc., as the Agent
By: /s/Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President
"LENDERS"
Commitment: $63,333,333.34 BankAmerica Business Credit,
Inc., as a Lender
By: /s/Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President
Commitment: $23,333,333.33 NationsBank of Texas, N.A., as a
Lender
By: /s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Assistant Vice President
Commitment: $13,333,333.33 Credit Agricole Indosuez, as a
Lender
By: /s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: First Vice President
Commitment: $23,333,333.33 Transamerica Business Credit
Corporation, as a Lender
By: /s/Xxxxxx X Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
Commitment: $16,666,666.67 Congress Financial Corporation
(Western), as a Lender
By: /s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Vice President
Commitment: $10,000,000.00 PNC Bank, National Association,
as a Lender
By:/s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Bank Officer
"L/C ISSUER"
NationsBank of Texas, N.A., as
L/C Issuer
By: /s/Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Assistant Vice President
