Exhibit 10(a)
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CREDIT AGREEMENT
among
KNIGHT TRANSPORTATION, INC.
and its Significant Subsidiaries
THE BANKS NAMED HEREIN
XXXXX FARGO BANK, NATIONAL ASSOCIATION
as Administrative Agent
and
as Issuing Bank, as Arranger, as Swing Line Lender
and
as a Bank
and
THE NORTHERN TRUST COMPANY
as a Bank
Dated as of April 6, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS....................................................2
SECTION 1.1 Defined Terms..................................................2
SECTION 1.2 Terms Generally...............................................10
ARTICLE II THE RLC FACILITY..............................................11
SECTION 2.1 The RLC Commitment............................................12
SECTION 2.2 [Intentionally left blank]....................................12
SECTION 2.3 Procedures for Borrowings Under the RLC Facility..............12
SECTION 2.4 Revolving Loans...............................................13
SECTION 2.5 Reborrowings..................................................14
SECTION 2.6 Fees..........................................................14
SECTION 2.7 Notes; Repayment of Revolving Loans...........................15
SECTION 2.8 Interest on Revolving Loans...................................15
SECTION 2.9 Default Interest..............................................15
SECTION 2.10 Termination and Reduction of Commitments......................16
SECTION 2.11 Conversion and Continuation of Borrowings.....................16
SECTION 2.12 Prepayment....................................................17
SECTION 2.13 Reserve Requirements; Change in Circumstances.................17
SECTION 2.14 Change in Legality............................................19
SECTION 2.15 Redeployment Loss.............................................20
SECTION 2.16 Pro Rata Treatment............................................21
SECTION 2.17 Sharing of Setoffs............................................21
SECTION 2.18 Payments......................................................22
SECTION 2.19 Taxes.........................................................22
SECTION 2.20 Termination or Assignment of Commitments Under Certain
Circumstances.................................................24
SECTION 2.21 Security Interest.............................................25
SECTION 2.22 Swing Line Loans..............................................25
ARTICLE IIA LETTERS OF CREDIT.............................................28
SECTION 2A.1 Letters of Credit.............................................28
SECTION 2A.2 Notice........................................................28
SECTION 2A.3 Letter of Credit Participations...............................28
SECTION 2A.4 Disbursement and Reimbursement................................29
SECTION 2A.5 Existing Letters of Credit....................................30
ARTICLE III REPRESENTATIONS AND WARRANTIES................................32
SECTION 3.1 Organization; Corporate Powers; Etc...........................32
SECTION 3.2 Authorization; Etc............................................32
SECTION 3.3 Enforceability................................................32
SECTION 3.4 Financial Condition and Information...........................32
SECTION 3.5 No Material Adverse Change....................................33
SECTION 3.6 Litigation....................................................33
SECTION 3.7 Federal Reserve Regulations...................................33
SECTION 3.8 Investment Company Act........................................33
SECTION 3.9 Public Utility Holding Company Act............................33
SECTION 3.10 Tax Returns...................................................34
SECTION 3.11 ERISA.........................................................34
SECTION 3.12 Title to Properties: Possession...............................34
SECTION 3.13 Use of Proceeds...............................................34
SECTION 3.14 Environmental Matters.........................................34
SECTION 3.15 Subsidiaries..................................................34
SECTION 3.16 No Subordination..............................................34
SECTION 3.17 Permits, Franchises...........................................35
SECTION 3.18 Other Obligations.............................................35
ARTICLE IV CONDITIONS TO CREDIT EVENTS...................................36
SECTION 4.1 Credit Events.................................................36
SECTION 4.2 First Credit Event............................................36
ARTICLE V AFFIRMATIVE COVENANTS.........................................38
SECTION 5.1 Corporate Existence...........................................38
SECTION 5.2 Insurance.....................................................38
SECTION 5.3 Taxes and other Liabilities...................................38
SECTION 5.4 Financial Statements; Reports, etc............................38
SECTION 5.5 Litigation and Other Notices..................................39
SECTION 5.6 Maintaining Records: Access to Premises and Records...........40
SECTION 5.7 Use of Proceeds...............................................40
SECTION 5.8 Punctual Payments.............................................40
SECTION 5.9 Compliance....................................................40
SECTION 5.10 Facilities....................................................40
SECTION 5.11 Financial Covenants...........................................40
SECTION 5.12 New Subsidiaries; Co-Borrower.................................41
ARTICLE VI NEGATIVE COVENANTS............................................42
SECTION 6.1 Liens.........................................................42
SECTION 6.2 Indebtedness..................................................42
SECTION 6.3 Merger, Consolidation, Transfer of Assets.....................42
SECTION 6.4 Accounting Change.............................................43
SECTION 6.5 Guarantee.....................................................43
SECTION 6.6 ERISA Liabilities.............................................43
SECTION 6.7 Capital Expenditures..........................................43
SECTION 6.8 Loans, Advances, Investments..................................43
SECTION 6.9 Dividend, Distributions.......................................43
ARTICLE VII EVENTS OF DEFAULT.............................................44
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ARTICLE VIII THE ADMINISTRATIVE AGENT......................................47
SECTION 8.1 Appointment...................................................47
SECTION 8.2 Liability.....................................................47
SECTION 8.3 Action by Administrative Agent................................48
SECTION 8.4 Resignation...................................................48
SECTION 8.5 Agent as Bank.................................................48
SECTION 8.6 Determinations................................................48
SECTION 8.7 Indemnification...............................................49
SECTION 8.8 Independent Credit Analysis...................................49
ARTICLE IX MISCELLANEOUS.................................................50
SECTION 9.1 Notices.......................................................50
SECTION 9.2 Survival of Agreement.........................................50
SECTION 9.3 Binding Effect; Beneficiaries.................................50
SECTION 9.4 Successors and Assigns........................................51
SECTION 9.5 Expenses; Indemnity...........................................53
SECTION 9.6 Right of Setoff...............................................54
SECTION 9.7 Applicable Law................................................55
SECTION 9.8 Waivers; Amendment............................................55
SECTION 9.9 Interest Rate Limitation......................................55
SECTION 9.10 Entire Agreement..............................................56
SECTION 9.11 Severability..................................................56
SECTION 9.12 Counterparts and Signature Pages..............................56
SECTION 9.13 Headings......................................................56
SECTION 9.14 Arbitration...................................................56
SECTION 9.15 Jurisdiction; Consent to Service of Process...................58
SECTION 9.16 Waiver of Jury Trial..........................................59
SECTION 9.17 Non-Debtor Borrower Provisions................................59
SECTION 9.18 Confidentiality...............................................60
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LIST OF EXHIBITS AND SCHEDULES
Exhibit "A" - Form of Assignment and Acceptance
Exhibit "B" - Form of Borrowing Notice
Exhibit "C" - Revolving Credit Note (RLC Facility)
Exhibit "C-1" - Swing Line Note
Exhibit "D" - Administrative Details Reply Form
Exhibit "E" - Matters to be Covered by the Legal Opinion of Counsel
Exhibit "F" - Form of Quarterly Compliance Certificate
Exhibit "G" - Assumption Agreement
Exhibit "H" - Security Agreement
Schedule 2.1 - Commitments of Banks
Schedule 2A.5 - Existing Letters of Credit
Schedule 3.15 - Borrower's Subsidiaries
Schedule 6.1 - Permitted Liens
Schedule 6.2 - Existing Indebtedness
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CREDIT AGREEMENT
BY THIS CREDIT AGREEMENT (together with any amendments or modifications,
the "Agreement"), entered into as of April 6, 2001 by and among KNIGHT
TRANSPORTATION, INC., an Arizona corporation (the "Company"), all present and
future Significant Subsidiaries (as hereinafter defined) of the Company
(together with the Company, the "Borrower"), the banks listed in Schedule 2.1
(the "Banks"), XXXXX FARGO BANK, NATIONAL ASSOCIATION, as administrative agent
for the Banks (in such capacity, together with any successor agent appointed
hereunder, the "Administrative Agent"), as Issuing Bank (as hereinafter
defined), as Arranger, as a Bank and as the Swing Line Lender, and THE NORTHERN
TRUST COMPANY, an Illinois banking corporation, as a Bank, in consideration of
the mutual promises herein contained and for other valuable consideration, the
parties hereto do agree as follows:
RECITALS
A. The Borrower has asked that the Banks provide a revolving credit
facility (the "RLC Facility") in the maximum principal amount of $50,000,000.00
to Borrower for working capital purposes, of which an amount up to the Letter of
Credit Commitment may be applied to the issuance of one or more Letters of
Credit.
B. The Banks are willing to extend such credits to the Borrower on the
terms and subject to the conditions herein set forth.
C. Effective as of the delivery of this Agreement, the Credit Agreement
dated November 24, 1999 between the Borrower and Xxxxx Fargo Bank, National
Association (the "1999 Agreement") will be terminated and replaced by this
Agreement.
Accordingly, the Borrower, the Banks, the Administrative Agent and the
Issuing Bank agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. Although terms may be defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the
meanings specified below:
"Administrative Agent" shall have the meaning assigned to such term in the
Preamble, and any successor thereto.
"Administrative Details Reply Form" shall mean an Administrative Details
Reply Form in the form of Exhibit "D".
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Agreement" shall mean this Credit Agreement, as amended or modified from
time to time.
"Applicable Interest Rate" with respect to a given Borrowing shall mean the
interest rate in effect for that Borrowing as determined pursuant to Section 2.8
herein.
"Applicable Margin" shall mean the following:
LIBOR Base Rate
Borrowing Borrowing
--------- ---------
62.5 basis points 0 basis points
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Bank and an assignee, accepted by the Administrative Agent, in the
form of Exhibit "A".
"Average Adjusted Daily Undrawn Balance" shall equal the average daily
unused amount of the Total Commitment during the preceding calendar quarter. For
this purpose, the Letter of Credit Balance shall be deemed to be a use of the
Total Commitment.
"Banks," each a "Bank": See the Preamble.
"Base Rate" shall mean the Prime Rate.
"Base Rate Borrowing" shall mean a Borrowing bearing interest at a rate
determined by reference to the Base Rate.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
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"Borrower": See the Preamble.
"Borrowing" shall mean an outstanding principal amount of one of the
Revolving Loans as to which a single Interest Period is in effect and with
respect to which a single Applicable Interest Rate applies.
"Borrowing Notice" shall mean a notice given pursuant to Section 2.3, as
therein described.
"Business Day" shall mean any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of Arizona or in the State of California)
on which commercial banks are open for business in Phoenix, Arizona; PROVIDED,
HOWEVER, that, when used in connection with a LIBOR Borrowing, the term
"Business Day" shall exclude any day on which banks are not open for dealings in
Dollar deposits in the London interbank market.
"Capital Lease" shall mean any lease of any property (whether real,
personal or mixed) required by GAAP to be accounted for as a capital lease on
the balance sheet of the lessee.
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if, after the date
hereof, (a) any person or group (within the meaning of Rule 13d-3, as in effect
on the date hereof, promulgated by the SEC under the 1934 Act), shall acquire,
directly or indirectly, beneficially or of record, shares representing more than
50% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Borrower; (b) a majority of the seats (other
than vacant seats) on the board of directors become occupied by persons not
members of said board on the date hereof that were neither (i) nominated by the
board of directors of the Borrower, nor (ii) appointed by directors so
nominated; or (c) any person or group shall otherwise directly or indirectly
Control the Borrower.
"Closing Date" shall mean the date of the first Credit Event hereunder.
"Co-Borrowers," each a "Co-Borrower," shall mean the Significant
Subsidiaries that are a party to this Agreement from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" shall mean all property of the Borrower subject to the
Security Documents.
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"Commitment" shall mean, with respect to each Bank, the commitment of such
Bank as to each Facility hereunder as set forth in Schedule 2.1, as such Bank's
Commitment may be permanently terminated or reduced from time to time pursuant
to Sections 2.10 or 2.20. Each Bank's Commitment shall fully, automatically and
permanently terminate on the RLC Maturity Date.
"Commitment Fee" shall have the meaning assigned to such term in Section
2.6(a).
"Company": See the Preamble.
"Control" shall mean the power to direct or cause the direction of the
management or policies of a person, whether through rights of ownership under
voting securities, under contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Credit Event" shall have the meaning given such term in Article IV.
"Default Rate" shall mean a rate per annum (computed as provided in Section
2.8(b)) equal to the Base Rate plus three percent (3%) and changing in
conformity with each change in the Base Rate.
"Designated Officer" shall mean any of the Chairman of the Board,
President, any Vice President, the Chief Financial Officer, and the Chief
Accounting Officer of the Borrower.
"Dollars" or "$" shall mean lawful money of the United States of America.
"Equipment" shall mean tangible personalty that is not "inventory," "farm
equipment" or "fixtures," as the immediately preceding terms in quotations are
defined in Article Nine of the Uniform Commercial Code as in effect in and for
the State of Arizona.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"ERISA Liabilities" shall mean at any time the minimum liability with
respect to Plans that would be required to be reflected at such time as a
liability on the consolidated balance sheet of the Borrower under GAAP.
"Eurodollar Lending Office," with respect to any Bank (or transferee) or
the Administrative Agent, shall mean such office or branch as such Bank (or
transferee) or the Administrative Agent has designated to the Borrower herein in
Schedule "2.1" as the office or branch of such Bank (or transferee) or the
Administrative Agent which shall constitute the Lending Office thereof for LIBOR
Borrowings.
"Event of Default" shall have the meaning assigned to such term in Article
VII.
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"Existing Letters of Credit" shall mean the letters of credit outstanding
on the Closing Date issued under the 1999 Agreement, which letters of credit are
listed on Schedule 2A.5 attached hereto.
"Facility" shall mean the RLC Facility.
"Federal Funds Rate" shall mean, 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 San Francisco, 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.
"Fees" shall mean the Commitment Fees and all other fees and charges, if
any, (other than interest) payable hereunder or otherwise payable in connection
with the Facility.
"Financial Covenants": See Section 5.11.
"Financial Officer" of any Person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such Person.
"GAAP" shall mean generally-accepted accounting principles in the United
States.
"Governmental Authority" shall mean any federal, state, tribal, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "Primary Obligor") in any
manner, whether directly or indirectly, and including without limitation any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the Primary Obligor so as
to enable the Primary Obligor to pay such Indebtedness; PROVIDED, HOWEVER, that
the term Guarantee shall not include endorsements for collection or deposit, in
either case in the ordinary course of business.
"Indebtedness" of a Person shall mean each of the following (without
duplication) that, individually, is in excess of $100,000.00 in outstanding
amount (in Dollars or the equivalent at market exchange rates) on the date such
obligation is incurred: (a) obligations of that Person to any other Person for
payment of borrowed money, (b) Capital Lease Obligations, (c) notes and drafts
drawn or accepted by that Person payable to any other Person, whether or not
representing obligations for borrowed money (but without duplication of
indebtedness for borrowed money), (d) any obligation for the purchase price of
property the payment of which is deferred for more than one year or evidenced by
5
a note or equivalent instrument, (e) Guarantees of Indebtedness of third
parties, and (f) a recourse or non-recourse payment obligation of any other
Person that is secured by a Lien on any property of the first Person, whether or
not assumed by the first person, up to the fair market value (from time to time)
of such property (absent manifest evidence to the contrary, the fair market
value of such property shall be the amount determined under GAAP for financial
reporting purposes).
"Information" shall have the meaning defined in Section 9.17 hereof.
"Interest Payment Date" shall mean (a) with respect to a Base Rate
Borrowing, the first day of each month in arrears, and (b) with respect to any
LIBOR Borrowing, the last day of the Interest Period applicable thereto and, in
the case of a LIBOR Borrowing with an Interest Period of more than three months'
duration (if at any time made available under this Agreement), each day that
would have been an Interest Payment Date for such Borrowing had successive
Interest Periods of three months' duration been applicable to such Borrowing
and, in addition, (c) each of (i) the date of any conversion of a Borrowing with
or to a Borrowing of a different Type, (ii) the date of prepayment of a
Borrowing, and (iii) the RLC Maturity Date.
"Interest Period" shall mean (a) as to any LIBOR Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one, two, three or six months thereafter, as
the Borrower may elect, or, if earlier, on the RLC Maturity Date and (b) as to
any Base Rate Borrowing, the period commencing on the date of such Borrowing and
ending on the RLC Maturity Date, the date such Borrowing is converted to a
Borrowing of a different Type in accordance with Section 2.11 or the date of
repayment or prepayment of such Borrowing in accordance with Section 2.5 or
2.12; PROVIDED, HOWEVER, that if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of LIBOR Borrowings only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Issuing Bank" shall have the meaning assigned to such term in the
Preamble, and any successor thereto.
"Lending Office," with respect to any Bank or any transferee of the Loans
or the Administrative Agent, shall mean such office or branch as such Bank or
such transferee or the Administrative Agent has designated to the Borrower
herein as the office or branch of that Bank or such transferee or the
Administrative Agent from which Loans are to be made.
"Letter of Credit Balance" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such time plus
(b) the aggregate amount which has been drawn under Letters of Credit but for
which the Issuing Bank or the Banks, as the case may be, have not been
reimbursed by the Borrower.
"Letter of Credit Commitment" shall mean $4,000,000.00.
6
"Letter of Credit Disbursement" shall mean any payment or disbursement made
by the Issuing Bank under or pursuant to a Letter of Credit.
"Letters of Credit" shall mean letters of credit issued by the Issuing Bank
for the account of the Borrower pursuant to Article IIA as well as the Existing
Letters of Credit.
"LIBOR Rate" shall mean, with respect to any LIBOR Borrowing for any
Interest Period, the average of the interest rate per annum (except as to the
Swap Amount, rounded upwards, if necessary, to the next 1/8 of 1%) equal to the
composite London interbank offered rate for Dollar deposits approximately equal
in principal amount to such LIBOR Borrowing and for a maturity comparable to
such Interest Period for delivery on the first day of the Interest Period,
adjusted for reserve requirements.
"LIBOR Borrowing" shall mean a Borrowing bearing interest at a rate
determined by reference to the LIBOR Rate.
"Lien" shall mean any mortgage, pledge, security interest or similar lien.
"Loans" shall mean the loans made available by the Banks to Borrower, in
the form of Revolving Loans under the RLC Facility.
"Loan Documents" shall mean this Agreement, the Notes, the Swing Line Note,
the Security Documents and all other documents, instruments and agreements of
every kind and description at any time undertaken by any Person for the benefit
of the Banks in connection with the Loans.
"Margin Stock" shall have the meaning given such term under Regulation U.
"Maximum RLC Commitment" shall mean $50,000,000.00.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section
414 of the Code) is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an obligation to
make contributions.
"1934 Act" shall mean the United States Securities Exchange Act of 1934, as
amended.
"1999 Agreement": See the Recitals.
"Note" and "Notes" shall mean, severally and collectively, revolving credit
notes of the Borrower executed and delivered as provided in Section 2.7 as such
Notes might be amended, modified, extended and restated from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
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"Permitted Lien" shall mean a Lien permitted under Section 6.1.
"Person" shall mean any natural person (whether or not acting in a
representative capacity), corporation, limited liability company, business
trust, joint venture, association, sole proprietorship, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any pension plan (other than a Multiemployer Plan) that
is (1) a qualified plan under Section 401(a) of the Code, (ii) subject to the
provisions of Title IV of ERISA or Section 412 of the Code and (iii) maintained
for employees of the Borrower or any ERISA Affiliate.
"Potential Default" shall mean any act, event or condition which upon
notice, lapse of time or both would constitute an Event of Default.
"Prime Rate" shall mean at any time the rate of interest per annum most
recently announced within the Administrative Agent at its principal office in
San Francisco as its prime rate, with the understanding that the prime rate of
the Administrative Agent is one of its base rates and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as the Administrative
Agent may designate; each change in the Prime Rate shall be effective on the
date such change is announced within the Administrative Agent.
"Quarterly Certificate" shall mean that Quarterly Compliance Certificate in
the form of Exhibit F.
"Redeployment Loss": See Section 2.15.
"Refunded Swing Line Loan": See Section 2.22(c).
"Register": See Section 9.4(d).
"Regulation D" shall mean Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Reportable Event" shall mean any reportable event as defined in Section
4043(b) of ERISA or the regulations issued thereunder with respect to a Plan
(other than a Plan maintained by an ERISA Affiliate which is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).
8
"Required Banks" shall mean, at any time, Banks having Commitments
representing at least:
(a) 100% of the Total Commitment if there are only two Banks.
(b) 66 and 2/3% of the Total Commitment if there are more than two
Banks.
"Revolving Loans" shall mean the revolving lines of credit loans made
available by the Banks to the Borrower pursuant to Article II. Each Revolving
Loan shall be composed of one or more LIBOR Borrowings and/or Base Rate
Borrowings.
"RLC Balance" means the outstanding aggregate principal amount of all
Borrowings.
"RLC Commitment" shall mean, with respect to each Bank, its share of the
Maximum RLC Commitment, based on its Commitment percentage as shown on Schedule
2.1.
"RLC Facility": See Recital A, which Facility consists of the Revolving
Loans and the Letters of Credit.
"RLC Maturity Date" shall mean June 15, 2003.
"SEC" shall mean the United States Securities and Exchange Commission.
"Security Documents": See Section 2.21.
"Significant Subsidiary" shall have the meaning given such term under SEC
Regulation S-X, 17 C.F.R. ss.210.1-02.
"Subsidiary" of a Person shall mean any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
stock entitled to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person, by one or more of the other Subsidiaries of that Person, or by any
combination thereof.
"Subordinated Debt" shall mean Indebtedness of Borrower whose payment is
subordinated in writing to the payment of the Loans and the other obligations of
Borrower under this Agreement, to the satisfaction of all of the Banks.
"Swap Agreement" shall mean that Interest Rate Swap Agreement dated
February 13, 2001 between the Company and Xxxxx Fargo, as it may be amended,
modified or restated from time to time.
"Swap Amount" shall mean the aggregate amount of LIBOR Borrowings
outstanding at any one time that has been designated by the Borrower to be
subject to the Swap Agreement.
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"Swap Amount Maximum" shall mean $12,200,000.00. At the termination of the
Swap Agreement, the Maximum shall mean zero.
"Swing Line Balance": See Section 2.22(a).
"Swing Line Commitment": See Section 2.22(a).
"Swing Line Lender" shall mean Xxxxx Fargo.
"Swing Line Loan" shall mean the loans made available by the Swing Line
Lender to Borrower pursuant to Article IIB.
"Swing Line Note": See Section 2.22(b).
"Termination" shall mean the payment in full of the principal amount of all
Loans, all accrued interest thereon and all fees with respect thereto, coupled
with termination of the Facility and all other obligations (if any) of all of
the Banks to advance funds or extend credit to or for the benefit of Borrower
pursuant to this Agreement.
"Termination Date" shall mean the date of the occurrence of the last event
to occur required for Termination to occur.
"Total Commitment" shall mean at any time the aggregate amount of the
Banks' Commitments, as in effect from time to time, which amount shall not
exceed the Maximum RLC Commitment.
"Type," when used in respect of any Borrowing, shall refer to the rate by
reference to which interest on such Borrowing is determined. For purposes
hereof, "rate" shall mean the LIBOR Rate or the Base Rate.
"Xxxxx Fargo" shall mean Xxxxx Fargo Bank, National Association.
SECTION 1.2 TERMS GENERALLY. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of this
Agreement, and Exhibits and Schedules to this Agreement, unless the context
shall otherwise require. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance with
GAAP as in effect in the United States of America from time to time; PROVIDED,
HOWEVER, that, for purposes of determining compliance with any covenant set
forth in Article VI, such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement.
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ARTICLE II
THE RLC FACILITY
SECTION 2.1 THE RLC COMMITMENT.
(a) Subject to the terms and conditions herein set forth, each Bank,
severally and not jointly, agrees to make advances of its Revolving Loans to the
Borrower, at any time and from time to time on and after the date hereof and
until the earlier of (i) the RLC Maturity Date or (ii) the termination of the
RLC Commitment of said Bank, in an aggregate principal amount at any time
outstanding not to exceed such Bank's RLC Commitment, subject, however, to the
conditions that (A) at no time shall the outstanding aggregate principal amount
of all Borrowings made by all Banks pursuant to their Revolving Loans, together
with the Swing Line Balance and the Letter of Credit Balance, exceed the Maximum
RLC Commitment, and (B) at all times the outstanding aggregate principal amount
of all Borrowings advanced by each Bank pursuant to its Revolving Loans shall
equal the product of (y) the percentage which its RLC Commitment represents of
the Maximum RLC Commitment times (z) the outstanding aggregate principal amount
of all Borrowings advanced by all Banks pursuant to their Revolving Loans. Such
RLC Commitments may be terminated or reduced from time to time pursuant to
Sections 2.10 and 2.20. Within the foregoing limits, the Borrower may borrow,
pay or prepay and reborrow hereunder, on and after the date hereof and prior to
the RLC Maturity Date, subject to the terms, conditions and limitations set
forth herein.
(b) Each advance of the proceeds of the Revolving Loans shall
constitute a single Borrowing. Each LIBOR Borrowing shall be in a principal
amount which is an integral multiple of $100,000.00 and not less than
$1,000,000.00 (or, if less, a principal amount equal to the remaining balance of
the available RLC Commitments).
SECTION 2.2 [Intentionally left blank]
SECTION 2.3 PROCEDURES FOR BORROWINGS UNDER THE RLC FACILITY.
(a) Each advance under the Revolving Loans shall be a single LIBOR
Borrowing or a single Base Rate Borrowing, as the Borrower may request.
Borrowings of more than one Type may be outstanding at the same time; PROVIDED,
HOWEVER, that (i) the Borrower shall not be entitled to request any Borrowing
which, if made, would result in an aggregate of more than five (5) separate
LIBOR Borrowings being outstanding collectively under the Revolving Loans at any
one time and (ii) each LIBOR Borrowing shall be in a principal amount which is
an integral multiple of $100,000.00 and not less than $1,000,000.00. For
purposes of the foregoing, Borrowings having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Borrowings.
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(b) In order to request a Borrowing, the Borrower shall give to the
Administrative Agent written or telecopy notice (or telephone notice confirmed
in writing on the same Business Day) in the form of Exhibit "B" (a "Borrowing
Notice") not later than 9:00 a.m., California time, (a) in the case of a LIBOR
Borrowing, three Business days before a proposed Borrowing and (b) in the case
of a Base Rate Borrowing, on the day of a proposed Borrowing. Each Borrowing
Notice shall be irrevocable and shall in each case specify (i) whether the
Borrowing then being requested is to be a LIBOR Borrowing or a Base Rate
Borrowing; (ii) the date of such Borrowing (which shall be a Business Day) and
the amount thereof; (iii) if such Borrowing is to be a LIBOR Borrowing, the
Interest Period with respect thereto; (iv) if such Borrowing is to reborrow all
or any part of any outstanding Borrowing, the identity and amount of such
Borrowing that the Borrower requests to be refinanced; and (v) if such Borrowing
is to be a LIBOR Borrowing, whether such Borrowing is to be included in the Swap
Amount. If no election as to the Type of Borrowing is specified in any Borrowing
Notice, then the requested Borrowing shall be a Base Rate Borrowing. If no
Interest Period with respect to any LIBOR Borrowing is specified in any
Borrowing Notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. Subject to Section 2.11, if the Borrower shall
not have given notice in accordance with this Section of its election to
reborrow a LIBOR Borrowing prior to the end of the Interest Period in effect for
such Borrowing, then the Borrower (unless such Borrowing is repaid at the end of
such Interest Period) shall be deemed to have given notice of an election to
reborrow such Borrowing with a Base Rate Borrowing.
(c) If a LIBOR Borrowing has been designated by the Borrower to be
included in the Swap Amount, the Interest Period of such LIBOR Borrowing (i)
shall commence on the 15th day of each month thereafter (or if not a Business
Date, the next Business Day), (ii) shall at all times be of one's month
duration, and (iii) shall terminate on the 15th day of each month thereafter (or
if not a Business Date, the next Business Day). The Swap Amount outstanding at
any time may not exceed the Swap Amount Maximum unless otherwise consented to by
all the Banks.
SECTION 2.4 REVOLVING LOANS.
(a) Each Loan shall be made as part of a Borrowing made by the Banks
ratably in accordance with their Commitments; PROVIDED, HOWEVER, that the
failure of any Bank to make any Loan shall not in itself relieve any other Bank
of its obligation to lend hereunder (it being understood, however, that no Bank
shall be responsible for the failure of any other Bank to make any Loan required
to be made by such other Bank).
(b) Each Bank shall make any LIBOR Borrowing by causing either at its
option any domestic branch or the Eurodollar Lending Office of such Bank to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement and the Note.
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(c) Subject to Section 2.3, each Bank shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Administrative Agent in Phoenix, Arizona, not later than
11:00 a.m., California time, and the Administrative Agent shall by 2:00 p.m.,
California time, credit the amounts so received to the general deposit account
of the Borrower with the Administrative Agent (or such other account as the
Borrower may designate) or, if a Borrowing shall not occur on such date because
any condition precedent herein specified shall not have been met, return the
amounts so received to the respective Banks. Loans shall be made by the Banks
pro rata in accordance with Section 2.16. Unless the Administrative Agent shall
have received notice from a Bank prior to the date of any Borrowing that such
Bank will not make available to the Administrative Agent such Bank's portion of
such Borrowing, the Administrative Agent may assume that such Bank has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with this paragraph (c) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have made
such portion available to the Administrative Agent, such Bank and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay
to the Administrative Agent such corresponding amount, such amount shall
constitute such Bank's Loan as part of such Borrowing for purposes of this
Agreement.
SECTION 2.5 REBORROWINGS. Subject to Section 2.11, the Borrower may
reborrow all or any part of any Borrowing with a Borrowing of the same or a
different Type made pursuant to Section 2.3, subject to the conditions and
limitations set forth herein and elsewhere in this Agreement. Any Borrowing or
part thereof so reborrowed or combined shall be deemed to have been repaid in
accordance with Section 2.7 with the proceeds of a new Borrowing hereunder, and
the proceeds of the new Borrowing (except to the extent, if any, they exceed the
principal amount of the Borrowing(s) being reborrowed) shall not be disbursed to
the Borrower pursuant to Section 2.4(c).
SECTION 2.6 FEES.
(a) The Borrower agrees to pay to each Bank, through the
Administrative Agent, (i) quarterly in arrears for each calendar quarter ending
each March 31, June 30, September 30 and December 31, on the last Business Day
of each calendar quarter, commencing June 30, 2001 and (ii) on the date on which
the respective Commitment of such Bank shall be terminated as provided herein,
for the period from the end of the preceding calendar quarter to the date of
such termination, a commitment fee (each a "Commitment Fee") on a prorated basis
at a rate per annum equal to 6.25 basis points (.0625%) on the Average Adjusted
Daily Undrawn Balance during the preceding calendar quarter (or shorter period
(1) commencing with the date hereof or (2) ending with the RLC Maturity Date or
any other date on which the respective Commitment of such Bank shall be
terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Commitment Fees due to each
Bank shall commence to accrue on the date hereof and shall cease to accrue on
the earlier of the RLC Maturity Date and the termination of the respective
Commitment of Bank as provided herein.
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(b) All Fees shall be paid to each Bank on the dates due, in Dollars
in immediately available funds to the Administrative Agent for distribution, if
and or appropriate, among the Banks. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.7 NOTES; REPAYMENT OF REVOLVING LOANS. The Revolving Loan made by
each Bank shall be evidenced by a separate Note duly completed and executed on
behalf of the Borrower, dated the date of said Bank's Commitment, in the form of
Exhibit C hereto, and payable to the order of such Bank in a principal amount
equal to said Bank's Commitment. Each Note shall bear interest from the date
thereof on the outstanding principal balance thereof as set forth in Section
2.8. Each Bank may (and is hereby authorized by the Borrower, at said Bank's
discretion, to) endorse on a schedule attached to the Note held by such Bank (or
on a continuation of such schedule attached to each such Note and made a part
thereof), or otherwise to record in such Bank's internal records, an appropriate
notation evidencing the date and amount of each Borrowing under the Revolving
Loan of such Bank, each payment or prepayment of principal of any such Borrowing
and the other information provided for on such schedule; PROVIDED, HOWEVER, that
the failure of any Bank to make such a notation or any error therein shall not
in any manner affect the obligation of the Borrower to repay each Borrowing
under the Revolving Loans in accordance with the terms of the Notes.
SECTION 2.8 INTEREST ON REVOLVING LOANS.
(a) Subject to the provisions of Sections 2.9 and 2.11, each LIBOR
Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to, the LIBOR
Rate for the Interest Period in effect for such LIBOR Borrowing plus the
Applicable Margin. Interest on each LIBOR Borrowing shall be payable on each
applicable Interest Payment Date. The LIBOR Rate for each Interest Period shall
be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error. The Administrative Agent shall promptly advise
the Borrower and each Bank of such determination.
(b) Subject to the provisions of Sections 2.9 and 2.11, each Base Rate
Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days, as the case may be) at a rate per annum
equal to the Base Rate plus the Applicable Margin. Interest on each Base Rate
Borrowing shall be payable on each applicable Interest Payment Date. The Base
Rate shall be determined by the Administrative Agent and such determination
shall be conclusive absent manifest error. The Administrative Agent shall
promptly advise the Borrower and each Bank of such determination.
SECTION 2.9 DEFAULT INTEREST. If the Borrower shall default in the payment
of the principal of or interest on any Revolving Loan or Swing Ling Loan or any
other amount becoming due hereunder, whether by scheduled maturity, notice of
prepayment, acceleration or otherwise, the Borrower shall on demand from time to
time pay interest, to the extent permitted by law, on such defaulted amount up
to (but not including the date of actual payment (after as well as before
judgment) at the Default Rate.
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SECTION 2.10 TERMINATION AND REDUCTION OF COMMITMENTS.
(a) The RLC Commitment shall be automatically terminated on the RLC
Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, each
such Commitment; PROVIDED, HOWEVER, that each partial reduction of the Maximum
RLC Commitment shall be in an integral multiple of $100,000.00 and in a minimum
principal amount of $1,000,000.00; and PROVIDED FURTHER, that the Borrower shall
not be permitted to terminate or reduce the Maximum RLC Commitment if, as a
result respectively, the aggregate principal amount of the Revolving Loans
together with the Letter of Credit Balance outstanding hereunder would exceed
such reduced amount of the Maximum RLC Commitment.
SECTION 2.11 CONVERSION AND CONTINUATION OF BORROWINGS. The Borrower shall
have the right at any time upon prior irrevocable notice to the Administrative
Agent not later than 9:00 a.m., California time, (i) on the day of conversion,
to convert any LIBOR Borrowing into a Base Rate Borrowing, (ii) three Business
Days prior to conversion or continuation, to convert any Base Rate Borrowing
into a LIBOR Borrowing or to continue any LIBOR Borrowing as a LIBOR Borrowing
for an additional Interest Period, and (iii) three Business Days prior to
conversion, to convert the Interest Period with respect to any LIBOR Borrowing
to another permissible Interest Period, subject in each case to the following:
(a) if less than all the outstanding principal amount of any Borrowing
shall be converted or continued, the aggregate principal amount of such
Borrowing converted or continued shall be an integral multiple of $100,000.00
and not less than $1,000,000.00;
(b) each conversion shall be effected by the Banks by applying the
proceeds of the new Borrowing resulting from such conversion to the Borrowing
(or portion thereof) being converted; accrued interest on a Borrowing (or
portion thereof) being converted shall be paid by the Borrower at the time of
conversion;
(c) any LIBOR Borrowing may be converted only at the end of the
Interest Period applicable thereto;
(d) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a LIBOR Borrowing;
(e) any portion of a LIBOR Borrowing which cannot be continued as a
LIBOR Borrowing by reason of clauses (c) and (d) above shall be automatically
converted at the end of the Interest Period in effect for such Borrowing into a
Base Rate Borrowing; and
(f) each conversion or continuation shall be made pro rata among the
Banks in accordance with the respective principal amounts of the converted or
continued Borrowings.
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(g) Each notice pursuant to this Section shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a LIBOR Borrowing or a Base
Rate Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a LIBOR Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect to
any conversion to or continuation as a LIBOR Borrowing, the Borrower shall be
deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall advise the other Banks of any notice given pursuant
to this Section and of each Bank's portion of any converted or continued
Borrowing. If the Borrower shall not have given notice in accordance with this
Section to continue any LIBOR Borrowing into a subsequent Interest Period (and
shall not otherwise have given notice in accordance with this Section to convert
such Borrowing), such Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued as a Base Rate Borrowing.
SECTION 2.12 PREPAYMENT.
(a) The Borrower shall have the right at any time and from time to
time to prepay any Borrowing, in whole or in part, upon written or telecopy
notice (or telephone notice promptly confirmed by written or telecopy notice) to
the Administrative Agent, such notice to be three Business Days with respect to
a LIBOR Borrowing and one Business Day with respect to a Base Rate Borrowing;
provided, however, that each partial prepayment shall be in an amount which is
an integral multiple of $100,000.00 and not less than $1,000,000.00.
(b) On the date of any termination or reduction of the Maximum RLC
Commitment pursuant to Section 2.10, the Borrower shall pay or prepay an amount
of the Revolving Loan such that the sum of the aggregate principal amount of
such Loan outstanding together with the Letter of Credit Balance will not exceed
the respective Commitment after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower to prepay such Borrowing (or
portion thereof) by the amount stated therein on the date stated therein. All
prepayments under this Section shall be subject to Section 2.15 but otherwise
without premium or penalty. All prepayments under this Section shall be
accompanied by a payment of accrued interest on the amount being prepaid to the
date of payment.
SECTION 2.13 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) If any Bank shall have determined that the adoption after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy,
special deposit, insurance or any change after the date hereof in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or any
Lending Office of such Bank) or any Bank's holding company with any request or
directive promulgated after the date hereof regarding capital adequacy (whether
16
or not having the force of law) of any such Governmental Authority, central bank
or comparable agency, has or would have the effect of reducing the rate of
return on such Bank's or on the capital of such Bank's holding company, if any,
as a consequence of this Agreement or the Revolving Loan made by such Bank to a
level below that which such Bank or such Bank's holding company could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank's policies and the policies of such Bank's holding company with
respect to capital adequacy) by an amount deemed by such Bank in good faith to
be material, then from time to time the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank or such Bank's holding
company for any such reduction suffered.
(b) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation (either by way of
changes in existing laws or regulations or the introductions of new laws or
regulations) or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration thereof
(whether or not having the force of law) shall change the basis of taxation of
payments to any Bank of the principal of or interest on any LIBOR Borrowing made
by such Bank, Fees or other amounts payable hereunder (other than changes in
respect of taxes imposed on the net income of such Bank), or shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of or credit extended by
such Bank, including without limitation any reserve requirement that may be
applicable to "eurocurrency liabilities" under and as defined in Regulation D,
or shall impose on such Bank or the London interbank market any other condition
affecting this Agreement or any LIBOR Borrowing made by such Bank, and the
result of any of the foregoing shall be to increase the cost to such Bank of
making or maintaining any LIBOR Borrowing or to reduce the amount of any sum
received or receivable by such Bank hereunder or under its Note (in respect of
LIBOR Borrowing only), whether of principal, interest or otherwise, by an amount
deemed by such Bank in good faith to be material, then, the Borrower will pay to
such Bank upon demand such additional amount or amounts as will compensate such
Bank for such additional costs incurred or reduction suffered.
(c) A certificate of a Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank or its holding company as specified
in paragraph (a) or (b) above, as the case may be, and setting forth in
reasonable detail the manner in which such amount or amounts shall have been
determined shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay each Bank the amount shown as due on any
such certificate delivered by it within 10 days after its receipt of the same.
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(d) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable with respect to
any period shall not constitute a waiver of said Bank's right to demand
compensation with respect to such period or any other period. The protection of
this Section shall be available to any Bank regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed, provided that if such Bank is compensated for such increased costs or
reduction by any Governmental Authority or third party in the event such
invalidity or inapplicability is finally determined, then such Bank shall return
to Borrower the respective compensation paid by Borrower, up to the lesser of
such amount as is received by such Bank or such amount as was paid by Borrower.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
Termination, provided that Borrower shall have no further obligation to the
Banks under this Section unless a certificate setting forth the amount of such
obligation shall have been delivered by the Banks pursuant to paragraph (c)
above within ninety (90) calendar days after the Termination Date.
(f) Each Bank or the Administrative Agent on behalf of the Banks shall
give notification to the Borrower of any event or prospective event which will
give rise to the operation of paragraphs (a) or (b) of this Section, such
notification to be sent within thirty (30) days of the date of the public
promulgation of the effective date of any such law, rule, regulation, guidelines
or change therein.
SECTION 2.14 CHANGE IN LEGALITY.
(a) Notwithstanding any other provision herein, if any change in any
law or regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Bank to make or maintain any LIBOR Borrowing or to give effect to its
obligations as contemplated hereby with respect to any LIBOR Borrowing, then by
written notice to the Borrower setting forth in reasonable detail the relevant
circumstances and the effect thereof, such Bank may:
(i) declare that LIBOR Borrowings will not thereafter be made by
such Bank hereunder, whereupon any request by the Borrower for a LIBOR
Borrowing shall be deemed a request for a Base Rate Borrowing unless such
declaration shall be subsequently withdrawn; and
(ii) require that all outstanding LIBOR Borrowings made by it be
converted to Base Rate Borrowings, in which event all such LIBOR Borrowings
shall be automatically converted to Base Rate Borrowings as of the
effective date of such notice as provided in paragraph (b) below.
In the event any Bank shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the LIBOR Borrowings that would have been made by such Bank or the
converted LIBOR Borrowings of such Bank shall instead be applied to repay the
Base Rate Borrowings made by such Bank in lieu of, or resulting from the
conversion of, such LIBOR Borrowings.
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(b) For purposes of this Section, a notice to the Borrower by any Bank
shall be effective as to each LIBOR Borrowing, if lawful, on the last day of the
Interest Period currently applicable to such LIBOR Borrowing; in all other cases
such notice shall be effective on the date of receipt by the Borrower.
(c) Each Bank shall use its best efforts to give prompt notification
to the Borrower of any event or prospective event which will give rise to the
operation of paragraph (a) of this Section.
SECTION 2.15 REDEPLOYMENT LOSS. The Borrower shall pay to each Bank on
demand against any Redeployment Loss (defined below) arising as a consequence of
any payment, prepayment (optional or mandatory) or conversion of a LIBOR
Borrowing required by any other provision of this Agreement or otherwise made or
deemed made on a date other than the last day of the Interest Period applicable
thereto, or failure to borrow, convert or extend a LIBOR Borrowing after giving
notice. "Redeployment Loss" shall mean, in each circumstance, a fee which is the
sum of the discounted monthly differences for each month from the month of
prepayment through the month in such Interest Period matures, calculated as
follows for each such month:
(i) DETERMINE the amount of interest which would have accrued
each month on the amount prepaid at the interest rate applicable to such
amount had it remained outstanding until the last day of the Interest
Period applicable thereto.
(ii) SUBTRACT from the amount determined in (i) above the amount
of interest which would have accrued for the same month on the amount
prepaid for the remaining term of such Interest Period at the LIBOR Rate in
effect on the date of prepayment for new loans made for such term and in a
principal amount equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater
than zero, discount that difference by the LIBOR Rate used in (ii) above.
The Borrower acknowledges that prepayment of such amount may result in the Banks
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. The Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of the Banks. If the Borrower
fails to pay any prepayment fee when due, the amount of such prepayment fee
shall thereafter bear interest until paid at the Default Rate.
A certificate of any Bank setting forth in reasonable detail any amount or
amounts which Bank is entitled to receive pursuant to this Section and setting
forth in reasonable detail the manner in which such amounts shall have been
determined shall be delivered to the Borrower and shall be conclusive absent
manifest error. Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section shall
survive Termination provided that Borrower shall have no further obligation to
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any Bank under this Section unless a certificate setting forth the amount of
such obligation shall have been delivered by such Bank pursuant to the preceding
sentence within ninety (90) calendar days after the Termination Date.
SECTION 2.16 PRO RATA TREATMENT. Except as required under Section 2.14 or
Section 2.22, or permitted by Section 2.20, each Borrowing, each payment or
prepayment of principal of any Borrowing, each payment of interest on the Loans,
each payment of the Fees, each reduction of the Commitments and each refinancing
of any Borrowing with a Borrowing of any Type, shall be allocated pro rata among
the Banks in accordance with their respective Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans). Each Bank agrees that
in computing such Bank's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Bank's percentage of
such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.17 SHARING OF SETOFFS. Each Bank agrees that if it shall, through
the exercise of a right of banker's lien, setoff or counterclaim against the
Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans as a result
of which the unpaid principal portion of the Loans of such Bank shall be
proportionately less than the unpaid principal portion of the Loans of any other
Bank, it shall be deemed simultaneously to have purchased from such other Bank
at face value, and shall promptly pay to such other Bank the purchase price for,
a participation in the Loans of such other Bank, so that the aggregate unpaid
principal amount of the Loans and participations in the Loans held by each Bank
shall be in the same proportion to the aggregate unpaid principal amount of all
Loans then outstanding as the principal amount of its Loans prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Loans outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event; PROVIDED, HOWEVER, that, if any
such purchase or purchases or adjustments shall be made pursuant to this Section
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Bank holding a participation in a Loan deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Bank by reason
thereof as fully as if such Bank had made a Loan directly to the Borrower in the
amount of such participation.
SECTION 2.18 PAYMENTS.
(a) The Borrower shall make each payment (including without limitation
principal of or interest on any Borrowing or any Fees or other amounts)
hereunder and under any other Loan Document no later than 11:00 a.m., California
time, on the date when due in Dollars to the Administrative Agent at its offices
at 100 West Washington, Phoenix, Arizona, or at such other location as it may
direct the Borrower in writing to use, in immediately available funds.
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(b) Whenever any payment (including without limitation principal of or
interest on any Borrowing or any Fees or other amounts) hereunder or under any
other Loan Document shall become due, or otherwise would occur, on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of interest or Fees, if applicable.
(c) The Borrower authorizes the Administrative Agent to collect all
principal and interest due under each Loan by charging Borrower's demand deposit
account number 4159-518950 with the Administrative Agent, or any other demand
deposit account maintained by Borrower with the Administrative Agent, for the
full amount thereof. Should there be insufficient funds in any such demand
deposit account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by the Borrower.
SECTION 2.19 TAXES.
(a) All payments by the Borrower under this Agreement shall be made
without setoff or counterclaim and in such amounts as may be necessary in order
that all such payments after deduction or withholding for or on account of any
present or future taxes, levies, imposts, duties, withholdings or other charges
of whatsoever nature and all liabilities with respect thereto, other than any
taxes on or measured by the gross or net income of a Bank pursuant to (i) the
income and/or franchise tax laws of the jurisdictions in which such Bank is
incorporated or organized or in which the principal office of such Bank or the
branch that is a party to this Agreement of that Bank is located, and (ii) the
income and/or franchise tax laws of the jurisdictions in which the Lending
Office or the Eurodollar Lending Office of that Bank are then located (all such
nonexcluded taxes, levies, imposts, duties, withholdings and liabilities being
hereinafter referred to as "Taxes"), shall not be less than the amounts
otherwise specified to be paid by the Borrower to or for the account of the
Administrative Agent or Bank (or any transferee or assignee (each, a
"Transferee")) under this Agreement. Upon request of the Borrower in writing,
each Bank shall designate a different Lending Office or Eurodollar Lending
Office, as the case may be, if such designation will avoid the imposition of
Taxes and if such designation will not, in the sole judgment of such Bank, be
otherwise disadvantageous to such Bank. With respect to each deduction or
withholding for or on account of any Taxes of the Administrative Agent or any
Bank (or Transferee), Borrower shall promptly (and in any event not later than
45 days thereafter) furnish to such Administrative Agent or Bank (or Transferee)
a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Stamp Taxes").
Each Bank that is organized outside the United States represents and warrants
that as of the Closing Date, it is not aware of any Stamp Tax imposed by the
jurisdiction in which it is incorporated that applies to this Agreement or any
payment made to such Bank hereunder.
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(c) The Borrower will indemnify each Bank (or Transferee) and the
Administrative Agent for the full amount of Taxes and Stamp Taxes (including
without limitation any Taxes or Stamp Taxes imposed by any jurisdiction on
amounts payable under this Section) paid by such Bank (or Transferee) or the
Administrative Agent, as the case may be, and any liability (including without
limitation penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Stamp Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Bank (or
Transferee) or the Administrative Agent, as the case may be, makes written
demand therefor. If a Bank, as the result of any Tax with respect to which the
Borrower is required to make a payment pursuant to this Section shall realize a
tax credit or refund in its country or other jurisdiction of incorporation or
organization or in the jurisdiction in which its principal office or Lending
Office or Eurodollar Lending Office is then located, which tax credit or refund
would not have been realized but for the Borrower's payment of such Tax, such
Bank shall pay to the Borrower an amount equal to such tax credit or refund (to
the extent of amounts that have been paid by the Borrower under this Section
with respect to such credit or refund) net of all out-of-pocket expenses of such
Bank; PROVIDED that the Borrower, upon the request of the Bank, agrees to return
such credit or refund (plus penalties, interest or other charges) to such Bank
in the event such Bank is required to repay such credit or refund to the
relevant taxing authority. Any amount required to be calculated pursuant to this
Section shall be calculated in good faith by the Bank (or Transferee) or the
Administrative Agent, and such calculation shall be conclusive and binding upon
the parties hereto.
(d) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
Termination, provided that Borrower shall have no further obligation to the
Banks under this Section unless a certificate setting forth the amount of such
obligation shall have been delivered by the Banks to the Borrower within ninety
(90) calendar days after the Termination Date.
(e) Each Bank (or Transferee) that is organized outside the United
States (i) on or before the date it becomes a party to this Agreement and (ii)
with respect to each Lending Office or Eurodollar Lending Office located outside
the United States of such Bank (or Transferee), on or before the date such
office or branch becomes a Lending Office or Eurodollar Lending Office, shall
deliver to the Borrower and the Administrative Agent such certificates,
documents or other evidence, as required by the Code or Treasury Regulations
issued pursuant thereto, properly completed and duly executed by such Bank (or
Transferee) establishing that payments received hereunder are (i) not subject to
withholding under the Code because such payment is effectively connected with
the conduct by such Bank (or Transferee) of a trade or business in the United
States or (ii) totally exempt from United States Federal withholding tax under a
provision of an applicable tax treaty. In addition, each such Bank (or
Transferee) shall, if legally able to do so, thereafter deliver such
certificates, documents or other evidence from time to time establishing that
payments received hereunder are not subject to such withholding upon receipt of
a written request therefor from the Borrower or the Administrative Agent. Unless
the Borrower and the Administrative Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under the Notes are
not subject to United States Federal withholding tax, the Borrower or the
Administrative Agent shall withhold such taxes from such payments at the
applicable statutory rate.
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(f) The Borrower shall not be required to pay any additional amounts
to any Bank (or Transferee) or the Administrative Agent in respect to United
States Federal withholding tax pursuant to paragraph (a) above if the obligation
to pay such additional amounts would not have arisen but for a failure by such
Bank (or Transferee) or the Administrative Agent to deliver the certificates,
documents or other evidence specified in the preceding paragraph (e) unless such
failure is attributable to (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment or modification to or a
revocation of any applicable tax treaty or a change in official position
regarding the application or interpretation thereof, in each case on or after
the date such Bank (or Transferee) or the Administrative Agent becomes a party
to this Agreement (or, if applicable, on or after the date a Lending Office or
Eurodollar Lending Office of such Bank (or Transferee) or Administrative Agent
became a Lending Office or Eurodollar Lending Office hereunder).
(g) Nothing contained in this Section shall require any Bank (or
Transferee) or the Administrative Agent to make available any of its tax returns
(or any other information relating to its taxes) which it deems to be
confidential.
(h) Each Bank or the Administrative Agent on behalf of the Banks shall
give notification to the Borrower of any event or prospective event which will
give rise to the operation of paragraphs (a), (b) or (c) of this Section, such
notification to be sent within thirty (30) days of the date of the public
promulgation of the effective date of any such Taxes or Stamp Taxes.
SECTION 2.20 TERMINATION OR ASSIGNMENT OF COMMITMENTS UNDER CERTAIN
CIRCUMSTANCES.
(a) If any Bank (or Transferee) or the Administrative Agent claims any
additional amounts payable pursuant to Section 2.13 or Section 2.19 or exercises
its rights under Section 2.14, it shall (consistent with legal and regulatory
restrictions) (i) promptly notify the Borrower (through the Administrative
Agent) of the circumstances giving rise to such additional amounts or the
exercise of such rights and (ii) file any certificate or document requested by
the Borrower or change the jurisdiction of its applicable Lending Office or take
any other action if the making of such a filing or change or the taking of such
action would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue or avoid the circumstances giving rise to
such exercise and would not, in the sole determination of such Bank (or
Transferee), be otherwise disadvantageous to such Bank (or Transferee).
(b) In the event that any Bank shall have delivered a notice or
certificate pursuant to Section 2.13 or 2.14, or the Borrower shall be required
to make additional payments to any Bank under Section 2.19, the Borrower shall
have the right, at its option and own expense, upon notice to such Bank and the
Administrative Agent, (i) in the case of Sections 2.13, 2.14 or 2.19 only, to
terminate the Commitment of such Bank or (ii) in all cases described in this
paragraph, to require such Bank to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 9.4) all
its interests, rights and obligations under this Agreement to another financial
institution reasonably acceptable to the Administrative Agent which shall assume
such obligations; PROVIDED that (i) no such termination or assignment shall
conflict with any law, rule or regulation or order of any Governmental Authority
and (ii) the Borrower or the assignee, as the case may be, shall pay to the
23
affected Bank in immediately available funds on the date of such termination or
assignment the principal of and interest accrued to the date of payment on the
Loans made by it hereunder and all other amounts accrued for its account or owed
to it hereunder, including without limitation amounts payable and owed to it
pursuant to Sections 2.13, 2.14 and 2.19.
(c) Each Bank represents and warrants to the Borrower that as of the
date hereof it is not aware of any claims available to it under Section 2.13,
2.14 or 2.19 or any circumstances which it has determined will enable it to make
any such claims.
SECTION 2.21 SECURITY INTEREST.
(a) At all times prior to Termination, Borrower shall cause the Loans
and Borrower's obligations under this Agreement to be secured by a valid and
effective security agreement (the "Security Agreement"), duly executed and
delivered by or on behalf of Borrower, granting the Administrative Agent on
behalf of the Bank a valid and enforceable security interest in all of the kinds
and categories of personal property described in the Security Agreement,
including without limitation its accounts receivable and other rights to
payment, general intangibles, inventory and equipment, wherever located, in, to,
or under which Borrower now has or hereafter acquires any right, title, or
interest, whether present, future, or contingent, and in Borrower's expectancy
to acquire such property, subject to no prior Liens except for Permitted Liens.
(b) All of the documents required by this Section shall be in form
satisfactory to the Administrative Agent and its counsel, and, together with any
UCC financing statements for filing and/or recording, and any other items
required by the Administrative Agent to fully perfect and effectuate the liens
and security interests of the Administrative Agent contemplated by the Security
Agreement and this Agreement, may heretofore or hereinafter be referred to as
the "Security Documents."
SECTION 2.22 SWING LINE LOANS.
(a) In lieu of making Revolving Loans, the Swing Line Lender may, in
its sole discretion, on the terms and subject to the conditions of this
Agreement, make available to the Borrower upon its request, from time to time
until the RLC Maturity Date, Swing Line Loans. Subject to the provisions of
Section 2.1 hereof, the aggregate outstanding principal amount of all Swing Line
Loans (the "Swing Line Balance") will not exceed the lesser of (i) $5,000,000.00
(the "Swing Line Commitment") or (ii) together with the RLC Balance and the
Letter of Credit Balance, the Maximum RLC Commitment. Until the RLC Maturity
Date, the Borrower may from time to time borrow, repay and reborrow under this
Section 2.22. Each Swing Line Loan will be made either (i) upon telephonic
notice from the Borrower to the Swing Line Lender on the date of receipt of such
telephonic notice if such day is a Business Day and if such notice is received
before 1:00 p.m. California time, or if received after 1:00 p.m. California
time, such Swing Line Loan shall be made on the next Business Day, or (ii) via
an automated sweep under the Swing Line Lender's automated four-way sweep
product. Unless otherwise provided pursuant to Section 2.9, each Swing Line Loan
will bear interest at the Base Rate. The Borrower will repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand by the
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Administrative Agent or via an automated sweep under the Swing Line Lender's
automated four-way sweep product. Each Swing Line Loan will be made at the San
Francisco Office of the Swing Line Lender by depositing the amount thereof in
United States Dollars to the general account of the Borrower with the
Administrative Agent. In connection with each such Swing Line Loan, the Borrower
will furnish to the Administrative Agent a Borrowing Notice. (b) The Swing Line
Commitment will be evidenced by a single promissory note, in the principal
amount of $5,000,000.00, dated of even date herewith, substantially in the form
attached hereto as Exhibit "C-1" (the "Swing Line Note"). Borrower shall execute
the Swing Line Note and deliver the same to the Administrative Agent on behalf
of the Swing Line Lender. The Swing Line Note will represent the obligation of
Borrower to pay the amount of the aggregate unpaid principal amount of all Swing
Line Loans made to the Borrower together with interest thereon as provided
herein. The entire unpaid balance of the Swing Line Loans shall be immediately
due and payable in full in immediately available funds on the RLC Maturity Date
if not sooner paid in full.
(c) The Swing Line Lender, at any time and from time to time in its
sole and absolute discretion will, on behalf of the Borrower (and the Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf),
request each Bank (including the Swing Line Lender) to make a Revolving Loan to
the Borrower (which shall be a Base Rate Loan) in an amount equal to such Bank's
pro rata share of the Total Commitment of the aggregate principal amount of the
Borrower's Swing Line Loans (the "Refunded Swing Line Loans") outstanding on the
date such notice is given. Unless an Event of Default under Article VII(e) or
(f) exists and regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Loan are then satisfied, each Bank will
disburse directly to the Administrative Agent its pro rata share of the
Revolving Loan prior to 9:00 a.m. California time, in immediately available
funds on the Business Day next succeeding the date such notice is given. The
proceeds of such Revolving Loans shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loans of the Borrower, as
requested by the Swing Line Lender.
(d) If, prior to refunding a Swing Line Loan with a Revolving Loan
pursuant to Section 2.22(c), an Event of Default under Article VII(e) or (f)
exists, then each Bank shall, on the date such Revolving Loan was to have been
made for the benefit of the Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan. Upon request, each Bank
shall promptly transfer to the Swing Line Lender, in immediately available
funds, the amount of its participation.
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ARTICLE IIA
LETTERS OF CREDIT
SECTION 2A.1 LETTERS OF CREDIT.
(a) Provided that the Borrower has satisfied the conditions precedent
contained in Section 2A.1(b) hereof, the Issuing Bank agrees, from time to time,
to issue and/or renew Letters of Credit on behalf of the Borrower so long as (i)
upon such issuance or renewal, an issuance fee is paid by Borrower to the
Issuing Bank in an amount equal to ninety basis points (0.9%) per annum
(computed on the basis of the actual number of days elapsed in a year of 360
days) of the amount of each Letter of Credit, (ii) the Letter of Credit Balance,
after giving effect to such Letter of Credit, will not exceed the Letter of
Credit Commitment, and (iii) the outstanding aggregate principal amount of all
Borrowings made by all Banks pursuant to their Revolving Loan, together with the
Swing Line Balance and the Letter of Credit Balance, after giving effect to such
Letter of Credit, will not exceed the Maximum RLC Commitment.
(b) The obligation of the Issuing Bank to issue and/or renew any
Letters of Credit on behalf of the Borrower shall be subject to the following
conditions precedent on the date of issuance or renewal of each such Letter of
Credit:
(i) The Borrower shall execute and deliver to the Issuing Bank an
application for letter of credit, specifying the amount of the requested
letter of credit, the requested term thereof, which term may not exceed one
year, and the beneficiary thereof; and
(ii) No Event of Default shall exist and no event or condition
shall exist that after notice or lapse of time, or both would constitute an
Event of Default.
SECTION 2A.2 NOTICE. The Issuing Bank shall give the Administrative Agent,
which shall in turn give to each Bank, prompt written or telecopy advice of any
notice received from the Borrower pursuant to this paragraph.
SECTION 2A.3 LETTER OF CREDIT PARTICIPATIONS.
(a) By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or the Banks in respect thereof, the
Issuing Bank hereby grants to each Bank, and each Bank hereby acquires from the
Issuing Bank, a participation in such Letter of Credit equal to such Bank's RLC
Commitment percentage, based upon the RLC Commitments in effect at the time of
any drawing thereunder (or, if the RLC Commitments shall have been terminated
pursuant to Article VII, the RLC Commitments in effect immediately prior to such
termination), of the face amount of such Letter of Credit, effective upon the
issuance of such Letter of Credit; PROVIDED, HOWEVER, that no Bank shall be
required to acquire participations in Letters of Credit that would result in its
pro rata percentage, based upon its RLC Commitment, of the Letter of Credit
Balance exceeding its RLC Commitment. In consideration and in furtherance of the
foregoing, each Bank hereby absolutely and unconditionally agrees to pay to the
26
Administrative Agent, for the account of the Issuing Bank, in accordance with
Section 2A.4 below, such Bank's pro rata percentage of each unreimbursed Letter
of Credit Disbursement made by the Issuing Bank.
(b) Each Bank acknowledges and agrees that its acquisition of
participations pursuant to paragraph (a) above in respect of Letters of Credit
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including without limitation the occurrence and continuance of any
Event of Default hereunder, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever; PROVIDED that nothing
herein shall constitute a waiver of any rights a Bank may have by reason of the
gross negligence or willful misconduct of the Issuing Bank.
SECTION 2A.4 DISBURSEMENT AND REIMBURSEMENT.
(a) Promptly after it shall have ascertained that any draft and any
accompanying documents presented under a Letter of Credit appear to be in
conformity with the terms and conditions of such Letter of Credit, the Issuing
Bank shall give written or telecopy notice to the Borrower and the
Administrative Agent of the receipt and amount of such draft and the date on
which payment thereon will be made. If the Administrative Agent shall not have
received from the Borrower the payment required pursuant to paragraph (b) below
by 10:00 a.m., Arizona time, one Business Day after the date on which payment of
a draft presented under any Letter of Credit has been made, the Administrative
Agent shall promptly so notify the Issuing Bank and each Bank, specifying in the
notice to each Bank such Bank's pro rata percentage, based upon the RLC
Commitments, of such Letter of Credit Disbursement. Each Bank shall pay to the
Administrative Agent, not later than 1:00 p.m., Arizona time, on such date, such
Bank's percentage of such Letter of Credit Disbursement, which the
Administrative Agent shall promptly pay to the Issuing Bank. The Administrative
Agent will promptly remit to each Bank such Bank's percentage of any amounts
subsequently received by the Administrative Agent from the Borrower in respect
of such Letter of Credit Disbursement; PROVIDED that (i) amounts so received for
the account of any Bank prior to payment by such Bank of amounts required to be
paid by it hereunder in respect of any Letter of Credit Disbursement and (ii)
amounts representing interest on any Letter of Credit Disbursement for the
period prior to the payment by such Bank of such amounts shall in each case be
remitted to the Issuing Bank.
(b) If the Issuing Bank shall pay any draft presented under a Letter
of Credit, the Borrower shall pay to the Issuing Bank or to the administrative
Agent for the account of the Issuing Bank or, if the Administrative Agent shall
have received the payments provided in paragraph (a) above with respect to such
drawing, for the accounts of the Banks, an amount equal to the amount of such
draft before 10:00 a.m., Arizona time, on the Business Day immediately following
the date of payment of such draft, together with interest on such amount at a
rate per annum equal to the interest rate in effect for Base Rate Borrowings
from (and including) the date of payment of such draft to (but excluding) the
date of such payment by the Borrower. The obligation of the Borrower to pay the
amounts referred to above in this paragraph (b) shall be absolute, unconditional
and irrevocable and shall be satisfied strictly in accordance with their terms
irrespective of:
27
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any other Person may at any time have against the
beneficiary under any Letter of Credit, the Administrative Agent, any
Issuing Bank or any Bank (other than the defense of payment in accordance
with the terms of this Agreement or a defense based on the gross negligence
or willful misconduct of the Issuing Bank) or any other Person in
connection with this Agreement or any other transaction;
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect; PROVIDED that
payment by the Issuing Bank under such Letter of Credit against
presentation of such draft or document shall not have constituted gross
negligence or willful misconduct;
(iv) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply in any
immaterial respect with the terms of such Letter of Credit; PROVIDED that
such payment shall not have constituted gross negligence or willful
misconduct; or
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; PROVIDED that such other circumstance or
event shall not have been the result of gross negligence or willful
misconduct of the Issuing Bank.
It is understood that in making any payment under a Letter of Credit
(1) the Issuing Bank's exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth therein, including
without limitation, reliance on the amount of any draft presented under such
Letter of Credit, whether or not the amount due to the beneficiary equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be forged, fraudulent or invalid in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (2) any noncompliance in any immaterial
respect of the documents presented under a Letter of Credit with the terms
thereof shall, in either case, not be deemed willful misconduct or gross
negligence of the Issuing Bank.
SECTION 2A.5 EXISTING LETTERS OF CREDIT. On and after the Closing Date, the
Existing Letters of Credit shall be deemed for all purposes to be Letters of
Credit outstanding under this Agreement and entitled to the benefits of this
Agreement and the other Loan Documents, and shall be governed by the
applications and agreements pertaining thereto and by this Agreement; PROVIDED,
HOWEVER, that, notwithstanding any other provision of this Agreement, no fees
with respect to the issuance of the Existing Letters of Credit shall be due
hereunder.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company and each Co-Borrower, to the extent applicable, hereby
represents and warrants to the Administrative Agent and the Banks as follows:
SECTION 3.1 ORGANIZATION; CORPORATE POWERS; ETC. (a) The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; (b) the Borrower has the corporate
power and authority to own its property and assets and to carry on its business
as now conducted and is qualified to do business in every jurisdiction where
such qualification is required except where the failure to so qualify would not
result in a material adverse effect on the business, assets, operations or
condition (financial or otherwise) of the Borrower; and (c) the Borrower has the
corporate power to execute, deliver and perform this Agreement and the other
Loan Documents and to borrow hereunder.
SECTION 3.2 AUTHORIZATION; ETC. The execution, delivery and performance by
the Borrower of this Agreement, the Borrowings hereunder, and the issuance,
execution and delivery of the Notes: (a) have been duly authorized by all
requisite corporate action; (b) will not violate (i) any provision of law, any
order of any court, or any rule, regulation or order of any other agency of
government, (ii) the Articles of Incorporation or By-laws of the Borrower or
(iii) any provision of any material indenture, agreement or other instrument to
which the Borrower is a party, or by which the Borrower or any of its properties
or assets are or may be bound; (c) will not be in conflict with, result in a
breach of or constitute (alone, with notice, with lapse of time, or with any
combination of these factors) a default under any indenture, agreement or other
instrument referred to in (b)(iii) above; and (d) will not result in the
creation or imposition of any Lien upon any property or assets of the Borrower
that is not a Permitted Lien. Except for filings which may be required under the
1934 Act, no registration with or consent or approval of, or other action by,
any Governmental Authority is required in connection with the execution,
delivery and performance of this Agreement, the execution and delivery of the
Notes or the Borrowings hereunder.
SECTION 3.3 ENFORCEABILITY. This Agreement constitutes, and each other Loan
Document when duly executed and delivered by the Borrower will constitute, the
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms, subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws of general
applicability relating to or affecting creditors' rights from time to time in
effect and to general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity).
SECTION 3.4 FINANCIAL CONDITION AND INFORMATION.
(a) The Borrower has heretofore furnished to the Banks copies of (i)
the consolidated balance sheets of the Borrower as of December 31, 2000, and the
related consolidated statements of income and shareholder's equity of the
Borrower for the year ended December 31, 2000, including without limitation the
related notes, audited by and including the opinion the independent public
accountants of the Borrower, and (ii) the Annual Report on Form 10-K for the
29
fiscal year ended December 31, 2000 of the Borrower. Such financial statements
fairly state the consolidated financial condition of the Borrower as of the
respective dates thereof and the consolidated results of the operations and
changes in financial position of the Borrower for the periods covered thereby.
All such financial statements, including related schedules and notes thereto,
have been prepared in accordance with GAAP.
(b) Borrower (both before and after giving effect to the transactions
contemplated hereby) is solvent, has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has, and will have, access to adequate capital
for the conduct of its business and the ability to pay its debts from time to
time incurred in connection therewith as such debts mature.
SECTION 3.5 NO MATERIAL ADVERSE CHANGE. There has been no material adverse
change in the business, operations, assets or condition (financial or otherwise)
of the Borrower and its Significant Subsidiaries, taken as a whole (except as
disclosed in the financial statements referred to in Section 3.4).
SECTION 3.6 LITIGATION. There are no actions, suits or proceedings at law
or in equity or by or before any governmental instrumentality or other agency
now pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any property or rights of the Borrower which would be
reasonably likely in the aggregate to (i) materially impair the ability of the
Borrower to perform its obligations under this Agreement or the Notes or
materially impair the ability of the Borrower to carry on business substantially
as now being conducted or (ii) result in any material adverse change in the
business, assets, operations, or condition (financial or otherwise) of the
Borrower.
SECTION 3.7 FEDERAL RESERVE REGULATIONS.
(a) The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or X.
SECTION 3.8 INVESTMENT COMPANY ACT. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 3.9 PUBLIC UTILITY HOLDING COMPANY ACT. The Borrower is not a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
30
SECTION 3.10 TAX RETURNS. As of the filing date of the Borrower's Form
10-K, Form 10-Q or Form 8-K most recently filed with the SEC, the Borrower has
duly filed or caused to be filed all federal, state and local tax returns which
are required to have been filed and has paid or caused to be paid all material
taxes required to be paid by it, except taxes the validity of which is being
contested in good faith by appropriate proceedings and with respect to which the
Borrower has set aside on its books such reserves as are required by GAAP.
SECTION 3.11 ERISA. As of the filing date of the Borrower's Form 10-K, Form
10-Q or Form 8-K most recently filed with the SEC, the Borrower had no material
undisclosed ERISA Liabilities under any Plans.
SECTION 3.12 TITLE TO PROPERTIES: POSSESSION. The Borrower has good and
indefeasible title to, or valid leasehold interests in, all its material
properties and assets, subject only to encumbrances, adverse claims and defects
in title which do not involve any risk of loss that is material to the Borrower
and the Subsidiaries taken as a whole. All such assets and properties are free
and clear of all Liens other than those permitted by Section 6.1. The Borrower
has all licenses and rights necessary to enable it to use all material
technology used by it in its operations.
SECTION 3.13 USE OF PROCEEDS. The Borrower will use the proceeds of any
borrowing hereunder solely for the purposes set forth in the Recitals to this
Agreement.
SECTION 3.14 ENVIRONMENTAL MATTERS. Except as disclosed by the Borrower to
the Banks in writing prior to the date hereof, the Borrower and each Subsidiary
is in compliance in all material respects with all applicable federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of the
Borrower's operations and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control
Act, as any of the same may be amended, modified or supplemented from time to
time. None of the operations of the Borrower or any Subsidiary is the subject of
any federal or state investigation evaluating whether any remedial action
involving a material expenditure is needed to respond to a release of any toxic
or hazardous waste or substance into the environment. Neither Borrower nor any
Subsidiary has material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.
SECTION 3.15 SUBSIDIARIES. All Subsidiaries are correctly identified on
Schedule "3.15" hereto.
SECTION 3.16 NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which the Borrower is a party or by which the Borrower may be
bound that requires the subordination in right of payment of any of the
Borrower's obligations subject to this Agreement to any other obligation of the
Borrower.
SECTION 3.17 PERMITS, FRANCHISES. The Borrower possesses, and will
hereafter possess, all permits, consents, approvals, franchises and licenses
required and rights to all trademarks, trade names, patents, and fictitious
names, if any, necessary to enable it to conduct the business in which it is now
engaged in compliance with applicable law.
SECTION 3.18 OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
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ARTICLE IV
CONDITIONS TO CREDIT EVENTS
The obligations of the Banks to make each and every Loan and of the Swing
Line Lender to make the initial Swing Line Loan, and to make each and every
advance of the proceeds thereof (each of the foregoing events being called a
"Credit Event") are subject to the prior or contemporaneous satisfaction of the
following conditions:
SECTION 4.1 CREDIT EVENTS. On the date of each Credit Event, including the
date of each reborrowing of a Borrowing as contemplated by Section 2.5:
(a) The Administrative Agent shall have received in respect of such
advance or reborrowing a Borrowing Notice as required by Section 2.3.
(b) The representations and warranties set forth in Article III hereof
shall have been true and correct in all material respects both (i) on the date
hereof and (ii) as of such date, except to the extent such representations and
warranties expressly relate and are limited to a different date.
(c) At the time of and immediately after such advance or reborrowing
no Event of Default or Potential Default shall have occurred and be continuing
or shall exist.
Each advance or refinancing hereunder shall be deemed to constitute a
representation and warranty by the Borrower on the date of such Credit Event as
to the satisfaction of the conditions specified in paragraphs (b) and (c) of
this Section 4.1.
SECTION 4.2 FIRST CREDIT EVENT. On the Closing Date:
(a) Each Bank and the Swing Line Lender shall have received duly
executed copies of this Agreement, the Security Documents and all other Loan
Documents.
(b) Each Bank shall have received a duly executed Note complying with
the provisions of Section 2.7 and the Swing Line Lender shall have received a
duly executed Swing Line Note complying with the provisions of Section 2.22(b).
(c) The Administrative Agent shall have received as to each Borrower
(i) a copy of its Certificate or Articles of Incorporation, including all
amendments thereto, certified as of a recent date by the Secretary of State of
the state of its organization, and a certificate from such Secretary of State as
of a recent date, as to its good standing; (ii) a certificate of its Secretary
or Assistant Secretary dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of its By-Laws as in effect on the Closing
Date and at all times since a date prior to the date of the resolutions
described in the next clause of this sentence, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by its Board of Directors,
32
authorizing the execution, delivery and performance of the Loan Documents and
the Credit Events hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that its Certificate
or Articles of Incorporation have not been amended since the date of the last
amendment thereto shown on its certificate of good standing furnished pursuant
to clause (i) above, and (D) as to the incumbency and specimen signature of each
officer executing any Loan Document or any other document delivered in
connection herewith on its behalf; and (iii) a certificate of another officer as
to the incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above.
(d) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed on behalf of the Borrower by a Financial Officer of
the Borrower, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.1.
(e) The Administrative Agent shall have received a favorable written
opinion of legal counsel to the Borrower, dated the Closing Date and addressed
to the Administrative Agent and the Banks, to the effect set forth in Exhibit
"E" hereto.
(f) The Administrative Agent shall have received all amounts due and
payable hereunder or under the other Loan Documents on or prior to the Closing
Date.
(g) The Administrative Agent shall have received payment of all
expenses owed to the Banks pursuant to Section 9.5(a).
(h) All legal matters incident to this Agreement and the first Credit
Event hereunder shall be reasonably satisfactory to the Banks and to the legal
counsel for the Administrative Agent.
(i) The Administrative Agent shall have received evidence satisfactory
to it that the 1999 Agreement has been or will be terminated and all loans and
other amounts and letters of credit outstanding thereunder have been or will be
paid in full or assumed hereunder, on or prior to the Closing Date.
(j) The Administrative Agent shall have received landlord lien waivers
as to each location where Collateral is located in premises leased to the
Borrower.
(k) The Administrative Agent shall have entered into on behalf of the
Banks an Intercreditor Agreement with Xxxxx Fargo as to the existing
Indebtedness described in Schedule 6.2.
(l) The Administrative Agent shall have received such additional
documents as the Banks and the Administrative Agent may reasonably require.
33
ARTICLE V
AFFIRMATIVE COVENANTS
The Company and each Co-Borrower, to the extent applicable, covenants and
agrees that, at all times prior to Termination, unless the Required Banks shall
otherwise consent in writing, it will:
SECTION 5.1 CORPORATE EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its corporate
existence, material rights, licenses, permits and franchises material to the
conduct of its business and that of its Subsidiaries; comply in all material
respects with all applicable laws, rules, regulations, and orders (except that
force majeure events will excuse noncompliance so long as noncompliance would
not materially impair the creditworthiness of the Borrower) whether now in
effect or hereafter enacted where the failure to so comply would be reasonably
likely to have a material adverse effect on the business, assets, operations or
condition (financial or otherwise) of the Borrower or that of its Subsidiaries;
and, at all times maintain and preserve all material property required for the
conduct of its business and that of its Subsidiaries as presently or hereafter
conducted.
SECTION 5.2 INSURANCE. Maintain adequate insurance by financially sound and
reputable insurers of all properties of a character usually insured by companies
engaged in the same or a similar business operating on a similar economic scale
as the Borrower and its Subsidiaries against loss or damage resulting from fire,
flood, property damage, workers compensation, or other risks insured against by
extended coverage and of the kind customarily insured against by such companies,
and maintain in full force and effect public liability insurance against claims
for personal injury, death or property damage occurring upon, in, about or in
connection with the use of any properties occupied or controlled by it and its
Subsidiaries in such amounts as shall be customary among companies engaged in
the same or similar businesses and similarly situated and maintain such other
insurance as may be required by law with deductibles not in excess of
$500,000.00 per occurrence for personal injury and property damage liability,
cargo liability and collision and comprehensive, and not in excess of
$250,000.00 per occurrence for worker's compensation.
SECTION 5.3 TAXES AND OTHER LIABILITIES. Pay and discharge promptly any
taxes, assessments and governmental charges or levies imposed upon the Borrower
or any of its Subsidiaries or upon their income or profits or in respect of the
Collateral or any material property (real or personal) of the Borrower or as any
of its Subsidiaries, before the same shall become delinquent; PROVIDED, HOWEVER,
that neither the Borrower nor any of the Subsidiaries shall be required to pay
and discharge or to cause to be paid and discharged any such obligation, tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower or
such Subsidiary, as appropriate, shall set aside on its books such reserves as
are required by GAAP with respect thereto.
SECTION 5.4 FINANCIAL STATEMENTS; REPORTS, ETC. Cause to be furnished to
the Administrative Agent (as Information subject to the applicable requirements
of Section 9.17 herein, if any):
34
(a) (i) within 120 days after the end of each fiscal year,
consolidated and consolidating, (A) a balance sheet, (B) a statement of income
and (C) a statement of cash flow, each showing the financial condition of the
Borrower and its Subsidiaries as of the close of such fiscal year and the
results of operations during such fiscal year, all the foregoing financial
statements to be prepared in accordance with GAAP, audited by an accounting firm
of nationally recognized standing with an unqualified opinion from such firm,
and (ii) promptly when filed by the Borrower with the SEC, Borrower's Form 10-K
for such fiscal year;
(b) within 60 days after the end of each fiscal quarter of each fiscal
year of the Borrower or, if earlier, when filed by the Borrower with the SEC,
Borrower's Form 10-Q for such fiscal quarter together with consolidating (if
applicable and if requested by the Administrative Agent) and fully consolidated
company-prepared financial statements including, without limitation,
consolidating (if applicable and if requested by the Administrative Agent) and
fully consolidated balance sheets as of the end of that fiscal quarter, and
consolidating (if applicable and if requested by the Administrative Agent) and
fully consolidated statements of income for the fiscal quarter, prepared in
accordance with GAAP by the Borrower;
(c) concurrently with each delivery of the statements referred to in
(a) and (b) above, the Quarterly Certificate certifying that to the best of its,
his or her knowledge no Event of Default or Potential Default has occurred, or,
if such an Event of Default or Potential Default has occurred, specifying the
nature and extent thereof and accompanied by a statement of a Financial Officer
of the Borrower specifying any corrective action taken or proposed to be taken
with respect thereto, and setting forth in reasonable detail in the form of
Exhibit "F" the calculation of financial measures and ratios required to
demonstrate compliance with the covenants, conditions and agreements contained
in Section 5.11 hereof, all determined as of the end of the period covered by
said statements;
(d) within 10 days of their being filed, in addition to those
delivered by Borrower to the Administrative Agent pursuant to (a) and (b) above,
copies of all reports (other than preliminary proxy statements) filed by the
Borrower with the SEC (or any Governmental Authority succeeding to any or all of
the functions of the SEC) under the requirements of the 1934 Act, or any
successor statute; and
(e) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower and its
Subsidiaries as the Administrative Agent may reasonably request.
SECTION 5.5 LITIGATION AND OTHER NOTICES. Give the Administrative Agent
prompt (but in no event more than five (5) days after the occurrence of each
such event or matter) written or telecopy notice in reasonable detail of the
following:
(a) the occurrence of any Event of Default, or any condition, event or
act which with the giving of notice or the passage of time or both would
constitute an Event of Default;
(b) any change in the name or the organizational structure of
Borrower;
35
(c) the occurrence and nature of any Reportable Event or Prohibited
Transaction, each as defined in ERISA, or any funding deficiency with respect to
any Plan;
(d) any termination or cancellation of any insurance policy which
Borrower is required to maintain, or any uninsured or partially uninsured loss
through liability or property damage, or through fire, theft or any other cause
affecting Borrower's property; or
(e) the filing or commencement of any action, suit or formal
proceeding at law or in equity or by or before any court or hearing officer of
any Governmental Authority involving amounts in excess of $5,000,000.00, or any
other event or condition, which has resulted in, or which is reasonably likely
to result in, a material adverse change in the business, operations or condition
(financial or otherwise) of the Borrower and the Subsidiaries taken as a whole
and which has not been reported in the Borrower's most recent SEC filings on
Form 10-K, 10-Q or 8-K.
SECTION 5.6 MAINTAINING RECORDS: ACCESS TO PREMISES AND RECORDS. Maintain
all financial records in accordance with GAAP, and upon reasonable notice permit
representatives of the Administrative Agent and each Bank to have access to such
financial records and the premises of the Borrower at reasonable times and to
make such excerpts from such records as such representatives may deem necessary,
provided that each person obtaining information shall hold all confidential
information obtained in accordance with the restrictions set forth in Section
9.17.
SECTION 5.7 USE OF PROCEEDS. Use the proceeds of the Loans solely for the
purposes set forth in Recitals hereto.
SECTION 5.8 PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees
or other liabilities due under any of the Loan Documents at the times and place
and in the manner specified therein.
SECTION 5.9 COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which the Borrower is organized and/or which govern the Borrower's
continued existence and with the requirements of all laws, rules, regulations
and orders of any governmental authority applicable to Borrower and/or its
business.
SECTION 5.10 FACILITIES. Keep all properties useful or necessary to
Borrower's and that its Subsidiaries business in good repair and condition, and
from time to time make necessary repairs, renewals and replacements thereto so
that such properties shall be fully and efficiently preserved and maintained.
SECTION 5.11 FINANCIAL COVENANTS. Maintain Company's financial condition as
follows using GAAP, calculated on a consolidated basis (except to the extent
modified by the definitions herein) (the "Financial Covenants"):
(a) Its Tangible Net Worth of not less than $95,000,000.00 plus 50% of
positive net income and not reduced for any net losses, measured quarterly
commencing March 31, 2001, with "Tangible Net Worth" defined as total
stockholders' equity less its intangible assets, plus its Subordinated Debt.
36
(b) Its EBITDA Coverage Ratio of not less than 3.00 to 1.0 as of each
fiscal quarter end, determined on a rolling four-quarter basis, with "EBITDA"
defined as net profit before tax plus interest expense (net of capitalized
interest expense), depreciation expense and amortization expense, and with
"EBITDA Coverage Ratio" defined as EBITDA divided by the aggregate of total
interest expense plus the prior period current maturity of long-term debt and
the prior period current maturity of subordinated debt plus dividends and
distributions.
(c) Its Funded Debt to EBITDA ratio of not at any time greater than
1.50 to 1.0, on a trailing four-quarter basis, as of each fiscal quarter end,
with "Funded Debt to EBITDA Ratio" defined as Funded Debt divided by EBITDA, and
with "Funded Debt" defined as the aggregate of both the long-term and current
portions (without duplication) of all indebtedness or liabilities resulting from
borrowings, loans or advances and capitalized lease obligations, plus the stated
amounts of any issued and outstanding Letters of Credit, and with "EBITDA" as
defined and calculated above.
(d) Its net income after tax determined at the end of each fiscal year
of not less than $1.00 for such fiscal year and its pre-tax profit as of each
fiscal quarter at the end of such fiscal quarter of not less than $1.00.
(e) Its Minimum Asset Coverage of not less than 120.0% at all times,
where "Minimum Asset Coverage" is defined as (i) the sum of its cash, net
accounts receivable, real estate book value (which may consist of no more than
$25,000,000.00) and rolling stock (such as trucks and trailers) at net book
value which are free and clear of any and all Liens (except those of the
Administrative Agent for the benefit of the Banks, those of the Banks
individually and those pursuant to Capital Leases), (ii) divided by the sum of
its accounts payable (as so described on its consolidated financial statements)
and its total outstanding Indebtedness, including without limitation the Total
Commitment and other funded and unfunded but committed Indebtedness.
SECTION 5.12 NEW SUBSIDIARIES; CO-BORROWER. Borrower shall promptly and
diligently take all actions necessary to cause any existing Significant
Subsidiary not a Co-Borrower and that subsequently undertakes to conduct any
business or operations, and any new Significant Subsidiary (each a "New
Subsidiary") to become a Co-Borrower and a "Debtor" under the Security
Documents. Within thirty (30) days of being acquired, or in the case of an
existing Significant Subsidiary within thirty (30) days of undertaking to
conduct any business or operations (the "Grace Period"), such New Subsidiary
shall deliver to the Banks an executed Assumption Agreement in the form attached
hereto as Exhibit "G", a Security Agreement in the form attached hereto as
Exhibit "H", a UCC-1 Financing Statement and such other documents as the Banks
may reasonably request. The term "Co-Borrower" shall mean that such Significant
Subsidiary shall be jointly liable, and each severally and unconditionally
liable, for the full payment and satisfaction of the Loans and all other
obligations of Borrower under this Agreement. The term "Debtor" shall have the
meaning set forth in the Security Agreement.
37
ARTICLE VI
NEGATIVE COVENANTS
The Company and each Co-Borrower, to the extent applicable, covenants and
agrees that, at all times prior to Termination, IT WILL NOT, and WILL NOT PERMIT
ANY SUBSIDIARY to:
SECTION 6.1 LIENS. Incur, create, assume or permit to exist any Liens on
any of Borrower's property or assets or that of any Subsidiary, including
without limitation, "accounts" and "inventory" (each as defined in the Arizona
Uniform Commercial Code) and unencumbered fixed assets (including without
limitation tractors, trailers and real estate) or such property or assets of any
Subsidiary, whether such property or assets are now owned or hereafter acquired
by Borrower, or by a Subsidiary, or on any income or rights in respect of any
thereof, to secure any Indebtedness; PROVIDED that the foregoing shall not apply
to Liens on the property or assets of Borrower or any Subsidiary:
(i) existing on the date hereof and described in Schedule "6.1"
and any refinancing thereof;
(ii) in favor of the Administrative Agent for the benefit of the
Banks under the Security Documents; or
(iii) that secures the Indebtedness permitted pursuant to Section
6.2.
SECTION 6.2 INDEBTEDNESS. Become or remain obligated either directly or as
a guarantor or surety for any Indebtedness for borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, or for any Indebtedness incurred in connection with the
acquisition of any property, real or personal, tangible or intangible including,
but not limited to, lease purchase agreements or sale leasebacks, except:
(a) Indebtedness to the Banks hereunder;
(b) Unsecured trade, utility or accounts payable arising in the
ordinary course of its business;
(c) The Indebtedness disclosed on Schedule 6.2 attached hereto and any
other Indebtedness disclosed in the most recent financial statements of Borrower
submitted to the Banks on or prior to the date of this Agreement; and
(d) Capital purchases not to exceed $50,000,000.00, including
operating leases, capital leases and debt.
SECTION 6.3 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity without the written consent of the Banks; make
any substantial change in the nature of Borrower's business as conducted as of
the date hereof; acquire all or substantially all of the assets of any other
38
entity without the written consent of the Banks; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business, nor transfer all or a
substantial or material portion of its assets to its Subsidiaries.
SECTION 6.4 ACCOUNTING CHANGE. Change the times of commencement or
termination of its fiscal year or other accounting periods; or change its
methods of accounting other than to conform to GAAP so as to constitute sound
accounting practice.
SECTION 6.5 GUARANTEE. Except with respect to Indebtedness permitted
pursuant to Section 6.2 hereof, guarantee, directly or indirectly, or otherwise
become contingently liable or obligated for, any indebtedness or obligations of
any other person or entity (except for the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection) or pledge or
hypothecate any assets of Borrower or security for, any liabilities or
obligations of any other person or entity.
SECTION 6.6 ERISA LIABILITIES. Create or suffer to exist ERISA Liabilities
in an aggregate amount for all Plans in excess of $1,000,000.00.
SECTION 6.7 CAPITAL EXPENDITURES. Make, or permit any Subsidiary or
Affiliate, to make any purchase or acquisition of any fixed or capital assets,
if the aggregate amount of all such purchases or acquisitions shall exceed the
sum permitted pursuant to Section 6.2(d) in any calendar year. The foregoing
restrictions shall not apply to the Borrower's purchase of tractors or trailers
in the Borrower's normal course of business.
SECTION 6.8 LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or
investments in any person or entity, except any of the foregoing existing as of,
and disclosed to the Banks prior to, the date hereof.
SECTION 6.9 DIVIDEND, DISTRIBUTIONS. Declare or pay any dividend or
distribution in excess of fifty percent (50%) of Borrower's net income in any
fiscal year either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase in excess of
$15,000,000.00 in any 12 month period effective as of the date of this
Agreement, or otherwise acquire any shares of any class of Borrower's stock now
or hereafter outstanding.
39
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events (herein called
"Events of Default"):
(a) default shall be made in the payment of any principal or interest
on any Loan or any Fee, indemnification amount or any other amount due from the
Borrower under the Loan Documents whether at the due date thereof or by
acceleration thereof or otherwise, when and as the same shall become due and
payable;
(b) any representation or warranty made or deemed made by the Borrower
in connection with the Loan Documents or in any report, certificate or other
instrument furnished by the Borrower pursuant to the Loan Documents or with the
Borrowings hereunder shall prove to have been incorrect, false or misleading in
any material respect when made or delivered or when deemed made in accordance
with the terms hereof;
(c) any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in subsections (a) and (b) above), and
except with respect to any such default as to a Financial Covenant or which by
its nature can not be cured; such default shall continue for a period of twenty
(20) days from its occurrence;
(d) the Borrower or any Subsidiary shall fail to make when due any
payment (of whatever amount) on Indebtedness (whether due by scheduled maturity,
required prepayment, acceleration, demand or otherwise), including without
limitation any Indebtedness owed to any Bank and any obligations incurred by the
Borrower or any Subsidiary to any Bank or Affiliate thereof pursuant to any
agreement with respect to any interest rate swap or similar transaction; and
such failure shall continue after the applicable notice and grace period, if
any, specified in the agreement or instrument relating to such Indebtedness; or
any failure by the Borrower to perform any covenant or agreement on its part to
be performed under any agreement or instrument evidencing or security relating
to any Indebtedness shall result after the applicable notice and grace period in
the acceleration of the maturity of a portion of such Indebtedness;
(e) the Borrower shall (i) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency or similar law, (ii)
consent to the institution of, or fail to controvert in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator or
similar official for such corporation or for a substantial part of its property,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due, or (vii) take corporate action
for the purpose of effecting any of the foregoing;
40
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Borrower or of a substantial part of the property under Title
11 of the United States Code or any other Federal, state or foreign bankruptcy,
insolvency or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Borrower or for a
substantial part of its property, or (iii) the winding-up or liquidation of the
Borrower, and such proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall be
entered;
(g) either of (A) the occurrence of any one or more Reportable Events
or (B) a failure to make a "required payment" under the provisions of Section
412(n)(1) of the Code shall have occurred with respect to any Plan or Plans and
the occurrence of either (A) or (B) above shall have resulted in any of (1)
liability of the Borrower to the PBGC or to one or more Plans in an aggregate
amount exceeding $1,000,000.00, (2) the termination of the respective Plan or
Plans by the PBGC, (3) the appointment by the appropriate United States District
Court of a trustee to administer such Plan or Plans or (4) for the imposition of
a Lien in favor of such Plan or Plans;
(h) any material provision of the Loan Documents ceases to be valid
and binding on or enforceable against the Borrower;
(i) there shall have occurred a Change in Control;
(j) the liquidation, termination or dissolution of Borrower or any of
its directors, stockholders or members shall take action seeking to effect the
dissolution or liquidation of Borrower;
(k) the occurrence of any adverse change in the financial condition of
Borrower, that the Banks, in their reasonable discretion, deems material, or if
the Banks in good faith shall believe that the prospect of payment or
performance of the Loans is impaired or is likely to be substantially impaired;
or
(l) the filing of a notice of judgment lien against Borrower; or the
recording of any abstract of judgment against Borrower in any county in which
Borrower has an interest in real property; or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower; or the entry of a judgment against Borrower, in each case
for an amount in excess of $250,000.00 and subject to the right of Borrower to
contest such action pursuant to Section 5.3 hereof;
then, and in any such event, and at any time thereafter during the continuance
of such event, the Administrative Agent, shall, at the sole option of the
Required Banks and if so directed by the Required Banks, by written or telecopy
notice to the Borrower, take either or both of the following actions at the same
or different times:
(i) terminate forthwith any or all Commitments of the Banks,
including without limitation terminate any obligation of the Banks to make
any further advances under the RLC Facility.
41
(ii) declare any or all of the Loans to be forthwith due and
payable, whereupon the principal of such Loans, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of
the Borrower accrued hereunder and under the Notes, shall become forthwith
due and payable together with interest thereon as provided in Section 2.9,
without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived by the Borrower, anything contained
herein or in any Note to the contrary notwithstanding;
(iii) exercise any or all of its rights under the Security
Documents and/or available to it pursuant to applicable law; and
(iv) require that the Borrower deposit cash with the
Administrative Agent in an amount equal to the Letter of Credit Balance as
Collateral (under its sole dominion and contract) for the repayment of
drawings under outstanding Letters of Credit;
PROVIDED, HOWEVER, that in the case of an Event of Default specified in
paragraph (e) or (f) above involving the Borrower, without notice to the
Borrower or any other act by the Administrative Agent or the Banks, the
Commitments shall automatically terminate and all Loans together with all such
interest, Fees and other amounts, shall become immediately due and payable, all
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any Note to the contrary notwithstanding.
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ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.1 APPOINTMENT. In order to expedite the transactions contemplated
by this Agreement, Xxxxx Fargo Bank, National Association is hereby appointed to
act as Administrative Agent on behalf of the Banks. Each of the Banks, and each
subsequent holder of any Note by its acceptance thereof, hereby irrevocably
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are specifically delegated to the Administrative Agent
by the terms and provisions hereof and of the other Loan Documents, together
with such actions and powers as are reasonably incidental thereto. The
Administrative Agent is hereby expressly authorized by the Banks, without hereby
limiting any implied authority, (a) to receive on behalf of the Banks all
payments of principal of and interest on the Loans and all other amounts due to
the Banks hereunder, and promptly to distribute to each Bank its proper share of
each payment so received; (b) to give notice on behalf of each of the Banks to
the Borrower of any Default or Event of Default specified in this Agreement of
which the Administrative Agent has actual knowledge acquired in connection with
its agency hereunder; and (c) to distribute to each Bank copies of all notices,
financial statements and other materials delivered by the Borrower pursuant to
this Agreement as received by the Administrative Agent.
SECTION 8.2 LIABILITY. Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall be liable as such for any action
taken or omitted by any of them except for its or his own gross negligence or
willful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrower of any of the terms, conditions,
covenants or agreements contained in any Loan Document. The Administrative Agent
shall not be responsible to the Banks or the holders of the Notes for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement, the Notes or any other Loan Documents or other instruments or
agreements. The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof until it shall have received from the
payee of such Note notice, given as provided herein, of the transfer thereof.
The Administrative Agent shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Banks or if required by the provisions of this Agreement by all the
Banks, as applicable, and, except as otherwise specifically provided herein,
such instructions and any action or inaction pursuant thereto shall be binding
on all the Banks and each subsequent holder of any Note. The Administrative
Agent shall, in the absence of knowledge to the contrary, be entitled to rely on
any instrument or document believed by it in good faith to be genuine and
correct and to have been signed or sent by the proper Person or Persons. Neither
the Administrative Agent nor any of its directors, officers, employees or agents
shall have any responsibility to the Borrower on account of the failure of or
delay in performance or breach by any Bank of any of its obligations hereunder
or to any Bank on account of the failure of or delay in performance or breach by
any other Bank or the Borrower of any of their respective obligations hereunder
or under any other Loan Document or in connection herewith or therewith. The
Administrative Agent may execute any and all duties hereunder by or through
agents or employees and shall be entitled to rely upon the advice of legal
counsel selected by it with respect to all matters arising hereunder and shall
not be liable for any action taken or suffered in good faith by it in accordance
with the advice of such counsel.
43
SECTION 8.3 ACTION BY ADMINISTRATIVE AGENT. The Banks hereby acknowledge
that the Administrative Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
unless it shall be requested in writing to do so by the Required Banks.
SECTION 8.4 RESIGNATION. The Administrative Agent may not, without the
consent of the Borrower, resign at any time. Upon receiving such consent, and
subject to giving 30 days' prior written notice to the Banks, the Administrative
Agent may resign as Administrative Agent hereunder. Upon any such resignation,
the Required Banks, with the consent of the Borrower (which consent shall not be
unreasonably withheld), shall have the right to appoint from the Banks a
successor. If no successor shall have been so appointed by the Required Banks
and shall have accepted such appointment within 30 days after the Administrative
Agent gives notice of its resignation, then the Administrative Agent may, on
behalf of the Banks, appoint a successor Administrative Agent which shall be a
bank with an office in Phoenix, Arizona, having a combined capital and surplus
of at least $50,000,000.00 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and such retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.5 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as an Administrative Agent.
SECTION 8.5 AGENT AS BANK. With respect to the Loans made by it hereunder
and the Notes issued to it, the Administrative Agent in its individual capacity
and not as an Administrative Agent shall have the same rights and powers as any
other Bank and may exercise the same as though it were not the Administrative
Agent, and the Administrative Agent and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower or
any Subsidiary or other Affiliate thereof as if it were not the Administrative
Agent.
SECTION 8.6 DETERMINATIONS. Each Bank recognizes that applicable laws,
rules, regulations or guidelines of Governmental Authorities may require the
Administrative Agent to determine whether the transactions contemplated hereby
should be classified as "highly leveraged" or assigned any similar or successor
classification, and that such determination may be binding upon the other Banks.
Each Bank understands that any such determination shall be made solely by the
Administrative Agent based upon such factors (which may include, without
limitation, the Administrative Agent's internal policies and prevailing market
practices) as the Administrative Agent shall deem relevant and agrees that the
Administrative Agent shall have no liability for the consequences of any such
determination.
SECTION 8.7 INDEMNIFICATION. Each Bank agrees (i) to reimburse the
Administrative Agent, on demand, in the amount of its pro rata share (based on
its Commitment hereunder) of any expenses incurred for the benefit of the Banks
by the Administrative Agent, including counsel fees and compensation of agents
44
and employees paid for services rendered on behalf of the Banks, which shall not
have been reimbursed by the Borrower and (ii) to indemnify and hold harmless the
Administrative Agent and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as the
Administrative Agent or any of them in any way relating to or arising out of
this Agreement or any other Loan Document or any action taken or omitted by it
or any of them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Borrower; PROVIDED that no Person
shall be liable to the Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents.
SECTION 8.8 INDEPENDENT CREDIT ANALYSIS. Each Bank acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Bank and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Bank and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NOTICES. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed or sent by telecopy, graphic scanning or other telegraphic communications
equipment of the sending party, as follows:
(a) if to the Borrower, to it at 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxx,
Xxxxxxx 00000, Attention: Chief Financial Officer;
(b) if to the Administrative Agent, to it at 000 Xxxx Xxxxxxxxxx,
Xxxxxxx, Xxxxxxx 00000, Attention: Arizona RCBO;
(c) if to a Bank, to it at its address (or telecopy number) set forth
in Schedule 2.1 or in the Assignment and Acceptance pursuant to which such Bank
shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or other telegraphic communications equipment of the sender, or on the
date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section or in accordance with the latest unrevoked
direction from such party given in accordance with this Section.
SECTION 9.2 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Banks and shall survive the making by the Banks of
the Loans, and the execution and delivery to the Banks of the Notes evidencing
such Loans, regardless of any investigation made by the Banks or on their
behalf, and shall continue in full force and effect until Termination has
occurred.
SECTION 9.3 BINDING EFFECT; BENEFICIARIES.
(a) This Agreement shall become effective when it shall have been
executed by the Borrower and the Administrative Agent and when the
Administrative Agent shall have received copies hereof which, when taken
together, bear the signatures of each Bank, and thereafter shall be binding upon
and inure to the benefit of the Borrower, the Administrative Agent and each Bank
and their respective successors and assigns.
(b) This Agreement is made and entered into for the sole protection
and benefit of the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party beneficiary of, or
have any direct or indirect cause of action or claim in connection with, this
Agreement or any other of the Loan Documents to which it is not a party.
46
(c) Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.
SECTION 9.4 SUCCESSORS AND ASSIGNS.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
Borrower, the Administrative Agent or the Banks that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.
(b) Each Bank at its own expense may assign to one or more assignees
all or a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment, and the Loans at the time owing
to it and the Notes held by it); PROVIDED, HOWEVER, that (i) except in the case
of an assignment to a Bank or an Affiliate of any Bank, the Administrative Agent
and, so long as there is no Event of Default outstanding, the Borrower must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) each such assignment shall be of a constant, and
not a varying, percentage of all the assigning Bank's rights and obligations
under this Agreement, (iii) except in the case of an assignment to a Bank or an
Affiliate of any Bank, the amount of the Commitment of the assigning Bank
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000.00 or such lesser amount if such amount
is the entire Commitment of the assigning Bank, (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with the Note or Notes subject to such assignment and,
except in the case of an assignment to a Bank or an Affiliate of any Bank, a
processing and recordation fee of $3,500.00 (which fee shall not in any way be
the responsibility of the Borrower), (v) the assignee, if it shall not be a
Bank, shall deliver to the Administrative Agent an Administrative Details Reply
Form and (vi) any increased costs by reason of any such assignment will not be
borne by the Borrower. Upon acceptance and recording pursuant to paragraph (e)
of this Section 9.4, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof, (A) the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have all the rights and obligations of a Bank under this Agreement
and (B) the assigning Bank thereunder shall, to the extent of the interest
assigned by 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 Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto (but shall continue
to be entitled to the benefits of Sections 2.13, 2.15, 2.19 and 9.5, as well as
to any Fees accrued for its account hereunder and not yet paid)).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the assignee thereunder shall be deemed to confirm
to and agree with each other and the other parties hereto as follows: (i) such
assigning Bank warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment and the outstanding balances of its Loans, without giving effect to
47
assignments thereof which have not become effective, are as set forth in such
Assignment and Acceptance, (ii) except as set forth in (i) above, such assigning
Bank makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto or
the financial condition of the Borrower or any Subsidiary or the performance or
observance by the Borrower or any Subsidiary of any of its obligations under
this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and Acceptance; (iv) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements delivered pursuant to Section 5.4
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently and without reliance upon the
Administrative Agent, such assigning Bank or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (vi) such assignee appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed by
it as a Bank.
(d) The Administrative Agent shall maintain at one of its offices in
Phoenix, Arizona, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Banks, and the
Commitment of, and principal amount of the Loans owing to, each Bank pursuant to
the terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive in the absence of manifest error and the Borrower, the
Administrative Agent and the Banks may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower and any Bank, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Bank and an assignee together with the Note or Notes
subject to such assignment, an Administrative Details Reply Form completed in
respect of the assignee (unless the assignee shall already be a Bank hereunder),
the processing and recordation fee referred to in paragraph (b) above and, if
required, the written consent of the Borrower and the Administrative Agent to
such assignment, the Administrative Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower and the Banks. Within five
Business Days after receipt of notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such assigning Bank in a
principal amount equal to the applicable Commitment retained by it. Such new
Note or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes; such new Notes shall be
dated the date of the surrendered Notes which they replace and shall otherwise
be in substantially the form of Exhibit C. Canceled Notes shall be returned to
the Borrower.
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(f) Each Bank may without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it and the
Notes held by it); PROVIDED, HOWEVER, that (i) such Bank's obligations under
this Agreement shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating banks or other entities shall be entitled to the benefit
of the cost protection provisions contained in Sections 2.13, 2.15 and 2.19 to
the same extent as if they were Banks (however no participating bank or entity
shall be entitled to claim a greater amount than could have been claimed by the
Bank from whom the participation was acquired) and (iv) the Borrower, the
Administrative Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement, and such Bank shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provision of this Agreement. No entity acquiring a
participation pursuant to this paragraph (f) shall by virtue of such
participation have any direct voting rights under this Agreement.
(g) Any Bank or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.4, disclose to the assignee or participant or proposed assignee or participant
any information relating to the Borrower furnished to such Bank by or on behalf
of the Borrower; PROVIDED that, prior to any such disclosure of such
information, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree to preserve the confidentiality of such information on terms no less
restrictive than those applicable to Banks pursuant to Section 9.17.
(h) Any Bank may at any time assign all or any portion of its rights
under this Agreement and the Notes issued to it to a Federal Reserve Bank;
PROVIDED that no such assignment shall release a Bank from any of its
obligations hereunder.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Banks.
SECTION 9.5 EXPENSES; INDEMNITY.
(a) The Borrower agrees to pay all out-of-pocket expenses reasonably
incurred by the Administrative Agent in connection with the preparation of this
Agreement and the other Loan Documents or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions hereby contemplated shall be consummated) or reasonably incurred by
the Administrative Agent in connection with the enforcement or protection of the
rights of the Banks in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or the Notes issued hereunder,
including without limitation the reasonable fees, charges and disbursements of
the counsel for the Administrative Agent, and, in connection with any such
enforcement or protection, the reasonable fees, charges and disbursements of
49
counsel for the Administrative Agent. The Borrower further agrees that it shall
indemnify the Administrative Agent and any Bank from and hold them harmless
against any documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution and delivery of this Agreement or any of
the other Loan Documents.
(b) The Borrower agrees to indemnify the Administrative Agent, each
Bank and each of their respective affiliates, directors, officers, employees and
agents (each such person being called an "Indemnitee") against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including without limitation reasonable counsel fees, charges
and disbursements, incurred by or asserted against any Indemnitee arising out
of, in any way connected with, or as a result of (i) the execution or delivery
of this Agreement or any other Loan Document or any agreement or instrument
contemplated thereby, the performance by the parties thereto of their respective
obligations thereunder or the consummation of the transactions contemplated
thereby, (ii) the use of the proceeds of the Loans pursuant to the request of
the Borrower or (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
(c) The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent and any Bank. All amounts due under this Section
shall be payable on written demand therefor.
SECTION 9.6 RIGHT OF SETOFF. Subject to the provisions of Section 2.17, if
an Event of Default shall have occurred and be continuing and any Bank shall
have requested the Administrative Agent to declare the Loans immediately due and
payable pursuant to Article VII, each Bank is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Bank to or for
the credit or the account of the Borrower against any of and all the obligations
of the Borrower now or hereafter existing under this Agreement and any other
Loan Documents held by such Bank, irrespective of whether or not such Bank shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured; PROVIDED that such right of setoff
shall not apply to amounts which may be held in (i) trust accounts or (ii) asset
management accounts, including without limitation brokerage accounts, cash
management accounts or other money management or investment accounts of a
non-depository nature with any Bank. The rights of each Bank under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Bank may have.
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SECTION 9.7 APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
ARIZONA APPLICABLE TO CONTRACTS MADE AND TO BE ENFORCED ENTIRELY WITHIN THAT
STATE.
SECTION 9.8 WAIVERS; AMENDMENT.
(a) No failure or delay of a party hereto in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the parties hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by a party therefrom shall in any event be
effective unless the same shall be permitted by Paragraph (b) of this Section
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on a party in any case
shall entitle that party to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Banks; PROVIDED, HOWEVER, that no
such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each holder of a Note affected thereby, (ii) change or extend the
Commitment or decrease the Commitment Fees of any Bank without the prior written
consent of such Bank, or (iii) amend or modify the provisions of Sections 2.13,
2.14, 2.16, 2.19, 2.21, 5.11, 9.5 or 9.6, the provisions of this Section or the
definition of "Required Banks", without the prior written consent of each Bank;
PROVIDED FURTHER that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent hereunder without the prior
written consent of the Administrative Agent. Each Bank and each holder of a Note
shall be bound by any waiver, amendment or modification authorized by this
Section regardless of whether its Note shall have been marked to make reference
thereto, and any consent by any Bank or holder of a Note pursuant to this
Section shall bind any Person subsequently acquiring a Note from it, whether or
not such Note shall have been so marked.
SECTION 9.9 INTEREST RATE LIMITATION. Notwithstanding anything herein or in
the Notes to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively, the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Bank, shall exceed the maximum lawful rate (the
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Bank in accordance with applicable law, the rate of interest
payable under the Notes held by such Bank, together with all Charges payable to
such Bank, shall be limited to the Maximum Rate. Borrower hereby agrees to the
payment of interest with respect to the Loans and Borrowings under the Loans at
the respective applicable rates determined pursuant to this Agreement, in each
51
case as increased by any rate of interest resulting from any charges in the
nature of interest paid or payable in connection with the Loans, the Notes
and/or this Agreement.
SECTION 9.10 ENTIRE AGREEMENT. This Agreement and the other Loan Documents
constitute the entire contract between the parties relating to the subject
matter hereof. Any previous agreement among any of the parties with respect to
the subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.
SECTION 9.11 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.12 COUNTERPARTS AND SIGNATURE PAGES. This Agreement may be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract. Delivery
of an executed counterpart of a signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement. All parties hereto authorize the Administrative Agent to
gather and attach manually executed counterpart signature pages to counterpart
copies of this Agreement in order to constitute one or more counterparts bearing
evidence of manual execution by all parties.
SECTION 9.13 HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.14 ARBITRATION.
(a) ARBITRATION. The parties hereto agree, upon demand by any party,
to submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors, attorneys,
and other agents), whether in tort, contract or otherwise arising out of or
relating to in any way (i) the loan and related Loan Documents which are the
subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.
52
(b) GOVERNING RULES. Any arbitration proceeding will (i) proceed in a
location in Phoenix, Arizona selected by the American Arbitration Association
("AAA"); (ii) be governed by the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of
the documents between the parties; and (iii) be conducted by the AAA, or such
other administrator as the parties shall mutually agree upon, in accordance with
the AAA's commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000.00 exclusive of claimed interest,
arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA's optional procedures for large, complex commercial
disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to, as
applicable, as the "Rules"). If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall control.
Any party who fails or refuses to submit to arbitration following a demand by
any other party shall bear all costs and expenses incurred by such other party
in compelling arbitration of any dispute. Nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded to
it under 12 U.S.C. ss.91 or any similar applicable state law.
(c) NO WAIVER OF PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. The
arbitration requirement does not limit the right of any party to (i) foreclose
against personal property collateral; (ii) exercise self-help remedies relating
to collateral or proceeds of collateral such as setoff or repossession; or (iii)
obtain provisional or ancillary remedies such as replevin, injunctive relief,
attachment or the appointment of a receiver, before during or after the pendency
of any arbitration proceeding. This exclusion does not constitute a waiver of
the right or obligation of any party to submit any dispute to arbitration or
reference hereunder, including those arising from the exercise of the actions
detailed in sections (i), (ii) and (iii) of this paragraph.
(d) ARBITRATOR QUALIFICATIONS AND POWERS. Any arbitration proceeding
in which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators selected according to the Rules; PROVIDED, HOWEVER, that
all three arbitrators must actively participate in all hearings and
deliberations. Each arbitrator will be a neutral attorney licensed in the State
of Arizona or a neutral retired judge of the state or federal judiciary of
Arizona, in either case with a minimum of ten years experience in the
substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In any arbitration proceeding the arbitrator will decide (by
documents only or with a hearing at the arbitrator's discretion) any pre-hearing
motions which are similar to motions to dismiss for failure to state a claim or
motions for summary adjudication. The arbitrator shall resolve all disputes in
accordance with the substantive law of Arizona and may grant any remedy or
relief that a court of such state could order or grant within the scope hereof
and such ancillary relief as is necessary to make effective any award. The
arbitrator shall also have the power to award recovery of all costs and fees, to
impose sanctions and to take such other action as the arbitrator deems necessary
to the same extent a judge could pursuant to the Federal Rules of Civil
Procedure, the Arizona Rules of Civil Procedure or other applicable law.
Judgment upon the award rendered by the arbitrator may be entered in any court
53
having jurisdiction. The institution and maintenance of an action for judicial
relief or pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for
judicial relief.
(e) DISCOVERY. In any arbitration proceeding discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.
(f) CLASS PROCEEDINGS AND CONSOLIDATIONS. The resolution of any
dispute arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.
(g) PAYMENT OF ARBITRATION COSTS AND FEES. The arbitrator shall award
all costs and expenses of the arbitration proceeding.
(h) MISCELLANEOUS. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.
SECTION 9.15 JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of
Arizona State court or Federal court of the United States of America sitting in
Phoenix, Arizona, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Arizona State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any Bank may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against the
Borrower or its properties in the courts of any jurisdiction.
54
(b) Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any Arizona State or Federal court sitting in Phoenix,
Arizona. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16 WAIVER OF JURY TRIAL. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement or any of the other Loan Documents. Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement and the other Loan Documents, as applicable, by (among other
things) the mutual waivers and certifications in this Section.
SECTION 9.17 NON-DEBTOR BORROWER PROVISIONS.
(a) All advances of principal hereunder shall be made to the Company
subject to and in accordance with the terms hereof. It is not necessary for the
Banks to inquire into the powers of Borrower or the officers, directors,
partners or agents acting or purporting to act on its behalf. Each Co-Borrower
is and shall continue to be fully informed as to all aspects of the business
affairs of the Company that it deems relevant to the risks it is assuming and
hereby waives and fully discharges the Banks from any and all obligations to
communicate to the Co-Borrower any facts of any nature whatsoever regarding the
Company and the Company's business affairs.
(b) Each Co-Borrower authorizes the Banks, without notice or demand,
without affecting the obligations of the Co-Borrower hereunder or the personal
liability of any person for payment or performance of the obligations hereunder
and without affecting the lien or the priority of the Security Documents, from
time to time, at the request of any person primarily obligated therefor, to
renew, compromise, extend, accelerate or otherwise change the time for payment
or performance of, or otherwise change the terms of, all or any part of the
obligations hereunder, including increase or decrease any rate of interest
thereon. Each Co-Borrower waives and agrees not to assert: (i) any right to
require the Banks to proceed against the Company; (ii) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the benefit of Section 12-1641, ET SEQ., of the Arizona Revised
Statutes; and (iii) any defense arising by reason of any disability or other
defense of the Company or by reason of the cessation from any cause whatsoever
of the liability of the Company. The Co-Borrower shall have no right of
subrogation and hereby waives any right to enforce any remedy which the Banks
now have, or may hereafter have, against the Company.
55
SECTION 9.18 CONFIDENTIALITY. Each Bank agrees to keep confidential (and to
cause its officers, directors, employees, agents and representatives to keep
confidential) the Information (as defined below), except that any Bank shall be
permitted to disclose Information (i) to such of its officers, directors,
employees, agents and representatives (including outside counsel) as need to
know such Information; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
bank regulatory authority (provided that such Bank shall, except for Information
requested by any such bank regulatory authority, promptly notify Borrower (to
the extent practicable and lawful, notice shall be given to the Borrower before
such disclosure is made so as to permit Borrower to seek a protective order) of
the circumstances and content of each such disclosure and shall request
confidential treatment of any Information so disclosed); (iii) to the extent
such Information (A) becomes publicly available other than as a result of a
breach of this Agreement, (B) becomes available to such Bank on a
non-confidential basis from a source other than the Borrower or its Affiliates
or (C) was available to such Bank on a non-confidential basis prior to its
disclosure to such Bank by the Borrower or its Affiliates; or (iv) to the extent
the Borrower shall have consented to such disclosure in writing. As used in this
Section 9.18, as to any Bank, "Information" shall mean any financial statements,
materials, documents and other information that the Borrower or any of its
Affiliates may have furnished or may hereafter furnish to such Bank in
connection with this Agreement or any other materials prepared by any such
person from any of the foregoing.
56
IN WITNESS WHEREOF, the Borrower, the Administrative Agent and the Banks
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
KNIGHT TRANSPORTATION, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
QUAD-K LEASING, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
"Borrower"
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
"Administrative Agent and Issuing Bank"
57
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
"Bank"
THE NORTHERN TRUST COMPANY, an Illinois
banking corporation
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
"Bank"
58
EXHIBIT "A"
FORM OF ASSIGNMENT AND ACCEPTANCE
______________, 20___
Reference is made to the Credit Agreement dated as of April 6, 2001 (the
"Credit Agreement"), among KNIGHT TRANSPORTATION, INC., an Arizona corporation,
and its Significant Subsidiaries (collectively, the "Borrower"), the lenders
named therein (the "Banks"), XXXXX FARGO BANK, NATIONAL ASSOCIATION, as
Administrative Agent for the Banks (in such capacity, the "Administrative
Agent") and as Swing Line Lender, and THE NORTHERN TRUST COMPANY, an Illinois
banking corporation, as a Bank. Terms defined in the Credit Agreement and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth on the reverse
hereof, the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Credit Agreement, including,
without limitation, the interests set forth on the reverse hereof in the
Commitment of the Assignor on the Effective Date and the Loans owing to the
Assignor which are outstanding on the Effective Date, together with unpaid
interest accrued on the assigned Loans to the Effective Date and the amount, if
any, set forth on the reverse hereof of the Fees accrued to the Effective Date
for the account of the Assignor. Each of the Assignor and the Assignee hereby
makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 9.4(c) of the Credit Agreement, a copy of which
has been received by each such party. From and after the Effective Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
Loan Documents and (ii) the Assignor shall, to the extent of the interests
assigned by this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) the Notes evidencing the Loans included in the Assigned
Interest, (ii) the appropriate forms specified in Section 2.19(e) of the Credit
Agreement, duly completed and executed by such Assignee, (iii) if the Assignee
is not already a Bank under the Credit Agreement, an Administrative Details
Reply Form in the form of Exhibit "D" to the Credit Agreement and (iv) a
processing fee of $2,500.00.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Arizona.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notice:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
Percentage Assigned of Facility/
Commitment (set forth, to at least
8 decimals, as a percentage of the
Facility and the aggregate
Facility Principal Amount Assigned Commitments of all Banks thereunder)
Commitment $________________ ______________%
Assigned:
Loans:
Fees Assigned
(if any):
The terms set forth above and on the
reverse side hereof are hereby agreed to: Accepted
__________________, as Assignor ________________________________________
By __________________________ By _____________________________________
Its ______________________ Its _________________________________
________________, as Assignor ________________________________________
By __________________________ By _____________________________________
Its_______________________ Its _________________________________
2
EXHIBIT "B"
FORM OF BORROWING NOTICE
XXXXX FARGO BANK, NATIONAL ASSOCIATION
as Administrative Agent for the Banks
000 Xxxx Xxxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Arizona RCBO Date:______________
Time:______________
Dear Sir:
The undersigned, KNIGHT TRANSPORTATION, INC., an Arizona corporation
(together with its Significant Subsidiaries, "Borrower"), refers to the Credit
Agreement dated as of April 6, 2001 (as it may hereafter be amended, modified,
extended or restated from time to time, the "Credit Agreement"), among Borrower,
the Banks named therein, XXXXX FARGO BANK, NATIONAL ASSOCIATION as
Administrative Agent for the Banks and as Swing Line Lender, and THE NORTHERN
TRUST COMPANY, an Illinois banking corporation, as a Bank. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The Borrower hereby gives notice that it
requests a Borrowing pursuant to Section 2.3 of the Credit Agreement and sets
forth below the terms of such requested Borrowing:
A. Type of Borrowing(1) ____________________
B. Advance date of Borrowing ____________________
C. Principal Amount of Borrowing(2) ____________________
D. LIBOR Borrowing Interest
Period and last day thereof(3) ____________________
----------
(1) LIBOR Borrowing or Base Rate Borrowing or Swing Line Loan.
(2) Each LIBOR Borrowing under the RLC Facility shall be a principal amount
which is an integral multiple of $100,000.00 and not less than
$1,000,000.00.
(3) Which shall be subject to the definition of "Interest Period" and end not
later than the RLC Maturity Date.
E. Reborrowing Election (Identity
of Borrowing to be reborrowed)(4)
Date ____________________
Type ____________________
Amount ____________________
Last Interest Period ____________________
Included in the Swap Amount (or not) ____________________
Upon acceptance of the Borrowing to be made by the Banks in response to
this request, Borrower shall be deemed to have represented and warranted to the
Banks that, as of the date of such Credit Event, the conditions specified in
Section 4.1 of the Credit Agreement are satisfied.
Sincerely,
KNIGHT TRANSPORTATION, INC., an Arizona
corporation
By
-------------------------------------
Its
---------------------------------
An officer of Borrower duly
authorized to request Borrowings
under the Credit Agreement
----------
(4) Identity shall include the date and amount of Borrowing, the Type and, with
respect to LIBOR Borrowings, the date of the last Interest Period and
whether to be included in the Swap Amount.
2
EXHIBIT "C"
REVOLVING CREDIT NOTE
(RLC Facility)
$_____________ April 6, 2001
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned (hereinafter collectively called
"Maker"), hereby promises to pay to the order of
____________________________________________ (the "Bank"), at the office of
XXXXX FARGO BANK, NATIONAL ASSOCIATION (the "Administrative Agent"), at 000 Xxxx
Xxxxxxxxxx, Xxxxxxx, Xxxxxxx 00000 (Attention: Arizona RCBO) in Dollars in
immediately available funds, the principal sum of _________________
__________________________________ AND ____/100 DOLLARS ($_________________) or
the aggregate unpaid principal amount of all Borrowings of the Revolving Loans
(as such terms and each other capitalized term used herein are defined in the
Credit Agreement hereinafter referred to) made by the Bank pursuant to the
Credit Agreement, whichever is less, and to pay interest in like funds from the
date hereof on the unpaid balance thereof at the rates of interest per annum and
at the times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set forth
in the Credit Agreement.
Maker agrees to an effective rate of interest that is the rate stated above
plus any additional rate of interest resulting from any other charges in the
nature of interest paid or to be paid by or on behalf of Maker, or any benefit
received or to be received by the Bank, in connection with this Note.
This Note is one of the revolving credit notes referred to in Section 2.7
of the Credit Agreement dated as of April 6, 2001 by and among Maker, the Banks
named therein, the Administrative Agent and as Swing Line Lender and The
Northern Trust Company, an Illinois banking corporation, as a Bank (as the same
may be amended, modified or restated from time to time, the "Credit Agreement").
All of the terms, conditions and covenants of the Credit Agreement are expressly
made a part of this Note by reference in the same manner and with the same
effect as if set forth herein at length and Bank or any transferee of this Note
(sequentially, the "Holder") is entitled to the benefits of and remedies
provided in the Credit Agreement and any other agreements by and between Maker
and Bank. Reference is made to the Credit Agreement for provisions regarding the
maturity, payment, prepayment and acceleration of the indebtedness evidenced
hereby.
After maturity, including maturity upon acceleration, all unpaid amounts of
this Note shall bear interest at the Default Rate. Maker agrees to pay all
collection expenses, including reasonable attorneys' fees and court costs,
incurred in the collection or enforcement of all or any part of this Note in
which the Holder is the prevailing party. In the event of any court proceedings,
court costs and attorneys' fees shall be set by the court and not by jury and
shall be included in any judgment obtained by the Holder.
Failure of the Holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise same in the event of any subsequent default,
or in the event of continuance of any existing default after demand for strict
performance hereof.
This Note is entitled to the benefit of the Credit Agreement and the other
Loan Documents.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of the payee hereof, and any subsequent transferees
of this Note, and their successors and assigns.
This Note shall be governed by and construed according to the laws of the
State of Arizona.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly
authorized corporate agent as of the day and year first above written.
KNIGHT TRANSPORTATION, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
QUAD-K LEASING, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
"MAKER"
2
EXHIBIT "C-1"
SWING LINE NOTE
$5,000,000.00 April 6, 2001
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned (hereinafter collectively called
"Maker"), hereby promises to pay to the order of XXXXX FARGO BANK, NATIONAL
ASSOCIATION (the "Swing Line Lender"), at its office at 000 Xxxx Xxxxxxxxxx,
Xxxxxxx, Xxxxxxx 00000 (Attention: Arizona RCBO) in Dollars in immediately
available funds, the principal sum of FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) or the aggregate unpaid principal amount of all Swing Line Loans
(as such term and each other capitalized term used herein are defined in the
Credit Agreement hereinafter referred to) made by the Swing Line Lender pursuant
to the Credit Agreement, whichever is less, and to pay interest in like funds
from the date hereof on the unpaid balance thereof at the rates of interest per
annum and at the times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set forth
in the Credit Agreement.
Maker agrees to an effective rate of interest that is the rate stated above
plus any additional rate of interest resulting from any other charges in the
nature of interest paid or to be paid by or on behalf of Maker, or any benefit
received or to be received by the Swing Line Lender, in connection with this
Swing Line Note.
This Swing Line Note is that revolving credit note referred to in Section
2.22 of the Credit Agreement dated as of April 6, 2001 by and among Maker, the
Banks named therein, the Swing Line Lender, Xxxxx Fargo Bank, National
Association, as the Administrative Agent for the Banks (the "Administrative
Agent"), and The Northern Trust Company, an Illinois banking corporation, as a
Bank (as the same may be amended, modified or restated from time to time, the
"Credit Agreement"). All of the terms, conditions and covenants of the Credit
Agreement are expressly made a part of this Swing Line Note by reference in the
same manner and with the same effect as if set forth herein at length and Swing
Line Lender or any transferee of this Swing Line Note (sequentially, the
"Holder") is entitled to the benefits of and remedies provided in the Credit
Agreement and any other agreements by and between Maker and Swing Line Lender.
Reference is made to the Credit Agreement for provisions regarding the maturity,
payment, prepayment and acceleration of the indebtedness evidenced hereby.
After maturity, including maturity upon acceleration, all unpaid amounts of
this Swing Line Note shall bear interest at the Default Rate. Maker agrees to
pay all collection expenses, including reasonable attorneys' fees and court
costs, incurred in the collection or enforcement of all or any part of this
Swing Line Note in which the Holder is the prevailing party. In the event of any
court proceedings, court costs and attorneys' fees shall be set by the court and
not by jury and shall be included in any judgment obtained by the Holder.
Failure of the Holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise same in the event of any subsequent default,
or in the event of continuance of any existing default after demand for strict
performance hereof.
This Swing Line Note is entitled to the benefit of the Credit Agreement and
the other Loan Documents.
This Swing Line Note shall be binding upon Maker and its successors and
assigns and shall inure to the benefit of the payee hereof, and any subsequent
transferees of this Swing Line Note, and their successors and assigns.
This Swing Line Note shall be governed by and construed according to the
laws of the State of Arizona.
IN WITNESS WHEREOF, Maker has caused this Swing Line Note to be executed by
its duly authorized corporate agent as of the day and year first above written.
KNIGHT TRANSPORTATION, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
QUAD-K LEASING, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
"MAKER"
2
EXHIBIT "D"
ADMINISTRATIVE DETAILS REPLY FORM
Re: Facility for Knight Transportation, Inc., and its Significant Subsidiaries
1. NAME OF ENTITY FOR SIGNATURE PAGE: ________________________________________
2. NAME OF ENTITY AS IT SHOULD
APPEAR IN ANY PUBLICITY: __________________________________________________
(if different than above)
3. NAME OF PERSON TO RECEIVE DRAFT
LOAN AGREEMENT AT BANK: ___________________________________________________
4. NAME OF PERSON TO SIGN
LOAN AGREEMENT:
5. CONTACTS: CREDIT CONTACT OPERATIONS CONTACT LEGAL COUNSEL
------------------ ------------------ ------------------
Name: __________________ __________________ __________________
Title: __________________ __________________ __________________
Address: __________________ __________________ __________________
__________________ __________________ __________________
__________________ __________________ __________________
Telephone: __________________ __________________ __________________
Facsimile #: __________________ __________________ __________________
Telex #: __________________ __________________ __________________
Answerback: __________________ __________________ __________________
6. PAYMENT INSTRUCTIONS:
Method of Payment: Fedwire _________________ Chips ______________________
Pay to: ________________________________________________________
Name of Bank: ________________________________________________________
City, State, Zip: ________________________________________________________
ABA Number: _______________________ Reference: ___________________
Account Number: _______________________ Account Name: ________________
Attention: ________________________________________________________
2
EXHIBIT "E"
MATTERS TO BE COVERED BY
THE LEGAL OPINION OF COUNSEL
1. ____________________________________ (the "Borrower") is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Arizona, and has all corporate power and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
2. Each Subsidiary identified in Schedule "3.15" of the Credit Agreement is
a corporation duly incorporated, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, and has all corporate power
and all material governmental licenses, authorizations, consents and approvals
to carry on its business as now conducted.
3. The execution, delivery and performance by the Borrower of the Loan
Documents are within Borrower's corporate power, have been duly authorized by
all necessary corporate action, and require no action by or in respect of, or
filing with, any Governmental Authority and neither the execution and delivery
thereof nor the consummation of the transactions contemplated thereby nor
compliance by the Borrower with any, nor the Borrower's performance of all, of
the terms and provisions of the Loan Documents will contravene any law
applicable to it or conflict with, result in any breach of, or constitute any
default under, its certificate of incorporation or by-laws (both as amended to
date) or conflict with, result in any breach of, or constitute default under, or
result in the creation of a Lien under, or require the consent of any trustee or
creditor pursuant to, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, bank loan or credit agreement to which the
Borrower is a party or by which it or its assets are bound, known to us.
4. Each Loan Document has been duly authorized and delivered by the
Borrower, and is the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with its terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency or other laws or
equitable principles of general application relating to the enforcement of
creditors' rights.
5. To the best knowledge of such counsel after due inquiry, there are no
actions, suits or proceedings pending or threatened in any court or before any
regulatory commission, board or other administrative or other governmental
entity against or affecting the Borrower which could reasonably be expected to
have a material adverse effect on its ability to enter into or perform its
obligations under any of the Loan Documents or on the condition (financial or
otherwise), operations, business or prospects of the Borrower, except those
described in the Borrower's report on Form 10-K for its most recently completed
fiscal year ended ___________, _____.
6. No consent, approval, waiver, license or authorization or other action
by or filing with any governmental authority is required in connection with the
execution and delivery by the Borrower of the Loan Documents except for those
which have already been obtained and are in full force and effect.
EXHIBIT "F"
QUARTERLY COMPLIANCE CERTIFICATE
FOR FISCAL QUARTER ENDING
________________, 20__
XXXXX FARGO BANK, NATIONAL ASSOCIATION
As Administrative Agent for the Banks
000 Xxxx Xxxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Arizona RCBO Date: _________________
Dear Ladies and Gentlemen:
This Quarterly Compliance Certificate refers to the Credit Agreement dated
as of April 6, 2001 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among KNIGHT
TRANSPORTATION, INC., an Arizona corporation, and its Significant Subsidiaries
(collectively, "Borrower"), the Banks named therein, XXXXX FARGO BANK, NATIONAL
ASSOCIATION as Administrative Agent for the Banks, and THE NORTHERN TRUST
COMPANY, an Illinois banking corporation, as a Bank. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
Pursuant to Section 5.4 of the Credit Agreement, the undersigned, a
Financial Officer of Borrower, certifies that:
1. Enclosed are the required financial statements for the [quarter] [fiscal
year] (the "Reporting Period") ending for Borrower as required under Section 5.4
of the Credit Agreement.
2. To the best of the undersigned's knowledge, no "Event of Default" or
Potential Default has occurred [or if so, specifying the nature and extent
thereof and any corrective actions taken or to be taken].
3. As of the last day of the Reporting Period, the computations below were
true and correct:
I. SECTION 5.11(a) Tangible Net Worth
Initial Amount $95,000,000.00
+50% of positive net income
since March 31, 2001 $
--------------
=Tangible Net Worth Limitation $
--------------
Actual Tangible Net Worth: $
--------------
II. SECTION 5.11(b) EBITDA Coverage Ratio
(calculated on a rolling 4 quarter basis)
Numerator: Net Profit before Tax
--------------
+Depreciation & Amortization Exp.
--------------
+Interest Expense (net of capitalized
interest expense)
--------------
=EBITDA A
--------------
Divided by
Denominator: Interest expense
--------------
Current maturity of long-term
debt (prior period)
--------------
+Current maturity of subordinated
debt (prior period)
+Dividends/distributions
--------------
=Payment Requirement B
--------------
Equals: A/B
--------------
Minimum Required: 3.00X
--------------
III. SECTION 5.11(c) Funded Debt to EBITDA Ratio
(calculated on a trailing 4 quarter basis)
Numerator: Indebtedness
--------------
+Letter of Credit Balance
--------------
=Funded Debt A
--------------
Divided by
Denominator: EBITDA B
--------------
Equals: A/B
--------------
Maximum Permitted: 1.50X
--------------
2
IV. SECTION 5.11(d) (i) Net Income after Tax: actual $
--------------
Requirement => $1.00
--------------
(ii) Pre-Tax Profit: actual $
--------------
Requirement => $1.00
--------------
V. SECTION 5.11(e) Minimum Asset Coverage
Numerator: Cash
--------------
+Net accounts receivable
--------------
+real estate BV (<= $25,000,000.00)
--------------
+rolling stock NBV
--------------
=Assets A
--------------
Divided by:
Denominator: Accounts Payable
--------------
+Outstanding Indebtedness
--------------
=Total B
--------------
Equals A/B
--------------
Minimum Required 120.0%
--------------
KNIGHT TRANSPORTATION, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT "G"
ASSUMPTION AGREEMENT
BY THIS ASSUMPTION AGREEMENT (the "Agreement") made and entered into as of
the _____ day of _________________, 20__, ______________________________________
_______________________________________________________________, whose address
is _____________________________________________________________________________
(hereinafter called "Added Borrower"), in favor of XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as Administrative Agent for the Banks, whose address is 000 Xxxx
Xxxxxxxxxx, Xxxxxxx, Xxxxxxx 00000, Attn: Arizona RCBO (hereinafter called
"Administrative Agent"), in consideration of the recitals herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, confirms and agrees as follows:
SECTION 1. RECITALS.
1.1 Added Borrower is a Significant Subsidiary (as that term is defined in
the Agreement hereinafter defined) of Knight Transportation, Inc., an Arizona
corporation (the "Company"), and its then existing Significant Subsidiaries
(with the Company, the "Borrower").
1.2 As such, Added Borrower is benefitted by the financial accommodations
(the "Loans") advanced by the Banks to the Borrower pursuant to that Credit
Agreement dated April 6, 2001 among the Banks named therein, the Administrative
Agent, the Swing Line Lender and Borrower (the "Agreement").
1.3 A condition for the continuation of the Loans specified in the
Agreement is that any subsequently acquired or created Subsidiary of the Company
assume as a "Co-Borrower" within the meaning of Section 5.12 of the Agreement
the obligations of the Borrower under the Agreement, and agree to be bound by
all of the terms, conditions and provisions thereof, and agree to be jointly
liable with the Borrower for the full payment and satisfaction of the Loans and
all other obligations of the Borrower under the Agreement.
1.4 Because of the benefits derived by the Added Borrower from said
financial accommodations, which consideration is acknowledged by Added Borrower
as sufficient for its agreements herein, Added Borrower desires to so agree.
SECTION 2. ASSUMPTION.
2.1 Added Borrower hereby assumes as a "Co-Borrower" and agrees to perform
as a "Co-Borrower" all of the duties, obligations and promises of Borrower as
set forth in or arising under the Agreement, to be bound as a Co-Borrower by all
of the terms, conditions and provisions of the Agreement and to do as a
Co-Borrower any and all acts and things required under the Agreement to be done
by Borrower.
SECTION 3. MISCELLANEOUS.
3.1 Added Borrower shall execute such additional documents and do such
other acts as may be reasonably necessary to fully implement the intent of this
Agreement.
3.2 This Agreement shall be governed by and construed according to the laws
of the State of Arizona.
3.3 This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their heirs, personal representatives, successors and
assigns.
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
----------------------------------------
By:
-------------------------------------
Its:
---------------------------------
ADDED BORROWER
2
EXHIBIT "H"
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of the _____ day of
_________________, 2001, by ____________________, __________ corporation
(hereinafter called "Debtor"), whose chief executive office is located at 0000
Xxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000, in favor of XXXXX FARGO BANK,
NATIONAL ASSOCIATION, and its successors and assigns as Administrative Agent for
the Banks (as defined in the hereinafter defined Credit Agreement) and as Swing
Line Lender (hereinafter called "Secured Party"), whose address is 000 Xxxx
Xxxxxxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: Arizona RCBO.
1. SECURITY INTEREST
Debtor hereby grants to Secured Party a security interest (hereinafter
called the "Security Interest") in all of Debtor's right, title and interest in
and to the following described personal property described on Schedule A
attached hereto (the "Collateral").
2. OBLIGATION SECURED
The Security Interest shall secure, in such order of priority as Secured
Party may elect:
(a) Payment of the aggregate sum of $50,000,000.00 according to the
terms of those Revolving Promissory Notes dated April 6, 2001, made by
Knight Transportation, Inc., an Arizona corporation and its Significant
Subsidiaries (as defined in the Credit Agreement) (collectively, the
"Borrower"), payable to the order of the Banks, evidencing a revolving
lines of credit, all or any part of which may be advanced to Borrower,
repaid by Borrower and readvanced to Borrower, from time to time, subject
to the terms and conditions thereof, with interest thereon, extension and
other fees, late charges, prepayment premiums and attorneys' fees,
according to the terms thereof, and all extensions, modifications, renewals
or replacements thereof (hereinafter collectively called the "RLC Note");
(b) Payment of the sum of $5,000,000.00 according to the terms of that
Swing Line Note dated April 6, 2001, made by Borrower, payable to the order
of the Swing Line Lender, evidencing a revolving line of credit, all or any
part of which may be advanced to Borrower, repaid by Borrower and
readvanced to Borrower, from time to time, subject to the terms and
conditions thereof, with interest thereon, extension and other fees, late
charges, prepayment premiums and attorneys' fees, according to the terms
thereof, and all extensions, modifications, renewals or replacements
thereof (hereinafter with the RLC Note collectively called the "Note");
(c) Payment, performance and observance by Debtor of each covenant,
condition, provision and agreement contained herein and of all monies
expended or advanced by Secured Party or the Banks pursuant to the terms
hereof, or to preserve any right of Secured Party and the Banks hereunder,
or to protect or preserve the Collateral or any part thereof;
(d) Payment, performance and observance by Borrower of each covenant,
condition, provision and agreement contained in that Credit Agreement dated
April 6, 2001, by and between Borrower, Secured Party, the Swing Line
Lender and the Banks listed from time to time therein (hereinafter called
the "Credit Agreement") and in any other document or instrument related to
the indebtedness described in subparagraphs (a) and (b) above and of all
monies expended or advanced by Secured Party or the Banks pursuant to the
terms thereof or to preserve any right of Secured Party or the Banks
thereunder;
(e) Payment and performance of any and all other indebtedness,
obligations and liabilities of Borrower to the Banks of every kind and
character, direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter incurred, whether such indebtedness is from
time to time reduced and thereafter increased or entirely extinguished and
thereafter reincurred;
All of the indebtedness and obligations secured by this Agreement are
hereinafter collectively called the "Obligation."
3. USE; LOCATION
3.1. The Collateral is or will be used or produced primarily for business
purposes.
3.2. The Collateral will be kept at Debtor's address set forth at the
beginning of this Agreement and/or at the locations listed on Schedule B
attached hereto.
3.3. Debtor's records concerning the Collateral will be kept at Debtor's
address set forth at the beginning of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF DEBTOR
4.1. Debtor hereby represents and warrants that it (i) is qualified to do
business and is in good standing under the laws of the state in which the
Collateral is located; and (ii) is fully authorized and permitted to execute and
deliver this Agreement and to enter into any transactions evidenced by any
portion of the Collateral.
4.2. The execution, delivery and performance by Debtor of this Agreement
and all other documents and instruments relating to the Obligation will not
result in any breach of the terms and conditions or constitute a default under
any agreement or instrument under which Debtor is a party or is obligated.
2
4.3. Debtor does not conduct business under any name other than that in
which it has executed this Agreement.
4.4. FEDERAL EMPLOYER IDENTIFICATION NUMBER. The Debtor's Federal employer
identification number is ______-_______
4.5. STATE ORGANIZATION NUMBER. If the Debtor is a registered organization,
the Debtor's state organization number is _________________.
5. COVENANTS OF DEBTOR
5.1. Debtor shall not sell, transfer, assign or otherwise dispose of any
Collateral or any interest therein (except as permitted herein) except as
permitted under the Credit Agreement and shall keep the Collateral free of all
security interests or other encumbrances except the Security Interest and
Permitted Liens (as defined in the Credit Agreement).
5.2. Debtor shall keep and maintain the Collateral in good condition and
repair and shall not use the Collateral in violation of any provision of this
Agreement or any applicable statute, ordinance or regulation or any policy of
insurance insuring the Collateral.
5.3. Debtor shall provide and maintain insurance insuring the Collateral
against risks, with coverage in accordance with the Credit Agreement.
5.4. The Debtor will not sign or authorize the signing on its behalf or the
filing of any financing statement naming it as debtor covering all or any
portion of the Collateral except as permitted by the Credit Agreement.
5.5. Debtor, upon demand, shall promptly deliver to Secured Party all
instruments, documents and chattel paper included in the Collateral and all
invoices, shipping or delivery records, purchase orders, contracts or other
items related to the Collateral.
5.6. Debtor shall give Secured Party immediate written notice of any change
in the location of: (i) Debtor's chief executive office; (ii) Debtor's state of
organization; (iii) the Collateral or any material part thereof; or (iv)
Debtor's records concerning the Collateral.
5.7. Secured Party or its agents may inspect the Collateral at reasonable
times and may enter into any premises where the Collateral is or may be located.
Debtor shall keep records concerning the Collateral in accordance with generally
accepted accounting principles and, unless waived in writing by Secured Party,
shall xxxx its records and the Collateral to indicate the Security Interest.
Secured Party shall have free and complete access to Debtor's records and shall
have the right to make extracts therefrom or copies thereof.
5.8. Debtor, at its cost and expense, shall protect and defend this
Agreement, all of the rights of Secured Party hereunder, and the Collateral
against all claims and demands of other parties, including without limitation
3
defenses, setoffs, claims and counterclaims asserted by any Obligor against
Debtor and/or Secured Party. Debtor shall pay all claims and charges that in the
opinion of Secured Party might prejudice, imperil or otherwise affect the
Collateral or the Security Interest. Debtor shall promptly notify Secured Party
of any levy, distraint or other seizure by legal process or otherwise of any
part of the Collateral and of any threatened or filed claims or proceedings that
might in any way affect or impair the terms of this Agreement.
5.9. The Security Interest, at all times, shall be perfected and shall be
prior to any other interests in the Collateral. Debtor shall act and perform as
necessary and shall execute and file all security agreements, financing
statements, continuation statements and other documents requested by Secured
Party to establish, maintain and continue the perfected Security Interest.
Debtor, on demand, shall promptly pay all costs and expenses of filing and
recording, including the costs of any searches, deemed necessary by Secured
Party from time to time to establish and determine the validity and the
continuing priority of the Security Interest.
5.10. If Debtor shall fail to pay any taxes, assessments, expenses or
charges, to keep all of the Collateral free from other security interests,
encumbrances or claims, to keep the Collateral in good condition and repair, to
procure and maintain insurance thereon, or to perform otherwise as required
herein, Secured Party may advance the monies necessary to pay the same, to
accomplish such repairs, to procure and maintain such insurance or to so
perform; Secured Party is hereby authorized to enter upon any property in the
possession or control of Debtor for such purposes.
5.11. All rights, powers and remedies granted Secured Party herein, or
otherwise available to Secured Party, are for the sole benefit and protection of
Secured Party, and Secured Party may exercise any such right, power or remedy at
its option and in its sole and absolute discretion without any obligation to do
so. In addition, if under the terms hereof, Secured Party is given two or more
alternative courses of action, Secured Party may elect any alternative or
combination of alternatives at its option and in its sole and absolute
discretion. All monies advanced by Secured Party under the terms hereof and all
amounts paid, suffered or incurred by Secured Party in exercising any authority
granted herein, including reasonable attorneys' fees, shall be added to the
Obligation, shall be secured by the Security Interest, shall bear interest at
the highest rate payable on any of the Obligation until paid, and shall be due
and payable by Debtor to Secured Party immediately without demand.
6. NOTIFICATION AND PAYMENTS; COLLECTION OF COLLATERAL; USE OF COLLATERAL BY
DEBTOR
6.1. Secured Party, after the occurrence of any Event of Default, as
defined in the Credit Agreement, and without notice to Debtor, may notify any or
all Obligors of the existence of the Security Interest and may direct the
Obligors to make all payments on the Collateral to Secured Party. Until Secured
Party has notified the Obligors to remit payments directly to it, Debtor, at
Debtor's own cost and expense, shall collect or cause to be collected the
accounts and monies due under the accounts, documents, instruments and general
intangibles or pursuant to the terms of the chattel paper. Secured Party shall
not be liable or responsible for any embezzlement, conversion, negligence or
4
default by Debtor or Debtor's agents with respect to such collections; all
agents used in such collections shall be agents of Debtor and not agents of
Secured Party. Unless Secured Party notifies Debtor in writing that it waives
one or more of the requirements set forth in this sentence, any payments or
other proceeds of Collateral received by Debtor, after notification to Obligors,
shall be held by Debtor in trust for Secured Party in the same form in which
received, shall not be commingled with any assets of Debtor and shall be turned
over to Secured Party not later than the next business day following the day of
receipt. All payments and other proceeds of Collateral received by Secured Party
directly or from Debtor shall be applied to the Obligation in such order and
manner and at such time as Secured Party, in its sole discretion, shall
determine. In addition, Debtor shall promptly notify Secured Party of the return
to or possession by Debtor of goods underlying any Collateral; Debtor shall hold
the same in trust for Secured Party and shall dispose of the same as Secured
Party directs.
6.2. Secured Party, before or after the occurrence of an Event of Default
and without notice to Debtor, may demand, collect and xxx on the Collateral
(either in Debtor's or Secured Party's name), enforce, compromise, settle or
discharge the Collateral and endorse Debtor's name on any instruments,
documents, or chattel paper included in or pertaining to the Collateral; Debtor
hereby irrevocably appoints Secured Party its attorney in fact for all such
purposes.
6.3. Until the occurrence of an Event of Default, Debtor may: (i) use,
consume and sell any inventory included in the Collateral in any lawful manner
in the ordinary course of Debtor's business provided that all sales shall be at
commercially reasonable prices; and (ii) subject to Paragraphs 6.1 and 6.2
above, retain possession of any other Collateral and use it in any lawful manner
consistent with this Agreement.
7. COLLATERAL IN THE POSSESSION OF SECURED PARTY
7.1. Secured Party shall use such reasonable care in handling, preserving
and protecting the Collateral in its possession as it uses in handling similar
property for its own account. Secured Party, however, shall have no liability
for the loss, destruction or disappearance of any Collateral unless there is
affirmative proof of a lack of due care; the lack of due care shall not be
implied solely by virtue of any loss, destruction or disappearance.
7.2. Debtor shall be solely responsible for taking any and all actions to
preserve rights against all Obligors; Secured Party shall not be obligated to
take any such actions whether or not the Collateral is in Secured Party's
possession. Debtor waives presentment and protest with respect to any instrument
included in the Collateral on which Debtor is in any way liable and waives
notice of any action taken by Secured Party with respect to any instrument,
document or chattel paper included in any Collateral that is in the possession
of Secured Party.
8. EVENTS OF DEFAULT; REMEDIES
8.1. The occurrence of any of the following events or conditions shall
constitute and is hereby defined to be an "Event of Default":
5
(a) Any failure or neglect to perform or observe any of the terms,
provisions, conditions, or covenants of this Agreement.
(b) Any warranty, representation or statement contained in this
Agreement.
(c) The occurrence of any event of default under the Note, the Credit
Agreement or any other document or instrument executed or delivered in
connection with the Obligation.
8.2. Upon the occurrence of any Event of Default and at any time while such
Event of Default is continuing, Secured Party shall have the following rights
and remedies and may do one or more of the following:
(a) Without further notice or demand and without legal process, take
possession of the Collateral wherever found and, for this purpose, enter
upon any property occupied by or in the control of Debtor. Debtor, upon
demand by Secured Party, shall assemble the Collateral and deliver it to
Secured Party or to a place designated by Secured Party that is reasonably
convenient to both parties.
(b) Operate the business of Debtor as a going concern, including,
without limitation, extend sales or services to new customers and advance
funds for such operation. Secured Party shall not be liable for any
depreciation, loss, damage or injury to the Collateral or other property of
Debtor as a result of such action. Debtor hereby waives any claim of
trespass or replevin arising as a result of such action.
(c) Pursue any legal or equitable remedy available to collect the
Obligation, to enforce its title in and right to possession of the
Collateral and to enforce any and all other rights or remedies available to
it.
(d) Upon obtaining possession of the Collateral or any part thereof,
after notice to Debtor as provided in Paragraph 8.4 herein, sell such
Collateral at public or private sale either with or without having such
Collateral at the place of sale. The proceeds of such sale, after deducting
therefrom all expenses of Secured Party in taking, storing, repairing and
selling the Collateral (including reasonable attorneys' fees) shall be
applied to the payment of the Obligation, and any surplus thereafter
remaining shall be paid to Debtor or any other person that may be legally
entitled thereto. In the event of a deficiency between such net proceeds
from the sale of the Collateral and the total amount of the Obligation,
Debtor, upon demand, shall promptly pay the amount of such deficiency to
Secured Party.
6
8.3. The Banks, so far as may be lawful, may purchase all or any part of
the Collateral offered at any public or private sale made in the enforcement of
Secured Party's rights and remedies hereunder.
8.4. Any demand or notice of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the Arizona Uniform
Commercial Code or otherwise, shall be deemed to be commercially reasonable and
effective if such demand or notice is given to Debtor at least five (5) days
prior to such sale, disposition or other intended action, in the manner provided
herein for the giving of notices.
8.5. Debtor shall pay all costs and expenses, including without limitation
costs of Uniform Commercial Code searches, court costs and reasonable attorneys'
fees, incurred by Secured Party in enforcing payment and performance of the
Obligation or in exercising the rights and remedies of Secured Party hereunder.
All such costs and expenses shall be secured by this Agreement and by all deeds
of trust and other lien and security documents securing the Obligation. In the
event of any court proceedings, court costs and attorneys' fees shall be set by
the court and not by jury and shall be included in any judgment obtained by
Secured Party.
8.6. In addition to any remedies provided herein for an Event of Default,
Secured Party shall have all the rights and remedies afforded a secured party
under the Uniform Commercial Code and all other legal and equitable remedies
allowed under applicable law. No failure on the part of Secured Party to
exercise any of its rights hereunder arising upon any Event of Default shall be
construed to prejudice its rights upon the occurrence of any other or subsequent
Event of Default. No delay on the part of Secured Party in exercising any such
rights shall be construed to preclude it from the exercise thereof at any time
while that Event of Default is continuing. Secured Party may enforce any one or
more rights or remedies hereunder successively or concurrently. By accepting
payment or performance of any of the Obligation after its due date, Secured
Party shall not thereby waive the agreement contained herein that time is of the
essence, nor shall Secured Party waive either its right to require prompt
payment or performance when due of the remainder of the Obligation or its right
to consider the failure to so pay or perform an Event of Default.
8.7. Secured Party, as the Administrative Agent, shall have no obligation
to clean-up or otherwise prepare the Collateral for sale.
9. MISCELLANEOUS PROVISIONS
9.1. The acceptance of this Agreement by Secured Party shall not be
considered a waiver of or in any way to affect or impair any other security that
Secured Party may have, acquire simultaneously herewith, or hereafter acquire
for the payment or performance of the Obligation, nor shall the taking by
Secured Party at any time of any such additional security be construed as a
waiver of or in any way to affect or impair the Security Interest; Secured Party
may resort, for the payment or performance of the Obligation, to its several
securities therefor in such order and manner as it may determine.
7
9.2. Without notice or demand, without affecting the obligations of Debtor
hereunder or the personal liability of any person for payment or performance of
the Obligation, and without affecting the Security Interest or the priority
thereof, the Banks, from time to time, may: (i) extend the time for payment of
all or any part of the Obligation, accept a renewal note therefor, reduce the
payments thereon, release any person liable for all or any part thereof, or
otherwise change the terms of all or any part of the Obligation; (ii) take and
hold other security for the payment or performance of the Obligation and
enforce, exchange, substitute, subordinate, waive or release any such security;
(iii) join in any extension or subordination agreement; or (iv) release any part
of the Collateral from the Security Interest.
9.3. Debtor waives and agrees not to assert: (i) any right to require
Secured Party to proceed against any guarantor, to proceed against or exhaust
any other security for the Obligation, to pursue any other remedy available to
Secured Party, or to pursue any remedy in any particular order or manner; (ii)
the benefits of any legal or equitable doctrine or principle of marshalling;
(iii) the benefits of any statute of limitations affecting the enforcement
hereof; (iv) demand, diligence, presentment for payment, protest and demand, and
notice of extension, dishonor, protest, demand and nonpayment, relating to the
Obligation; and (v) any benefit of, and any right to participate in, any other
security now or hereafter held by Secured Party.
9.4. The terms herein shall have the meanings in and be construed under the
Uniform Commercial Code as in effect in Arizona from time to time. This
Agreement shall be governed by and construed according to the laws of the State
of Arizona. Each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be void or invalid, the same shall not affect the remainder
hereof which shall be effective as though the void or invalid provision had not
been contained herein.
9.5. No modification, rescission, waiver, release or amendment of any
provision of this Agreement shall be made except by a written agreement executed
by Debtor and a duly authorized officer of Secured Party.
9.6. This is a continuing Agreement which shall remain in full force and
effect until actual receipt by Secured Party of written notice of its revocation
as to future transactions and shall remain in full force and effect thereafter
until all of the Obligation incurred before the receipt of such notice, and all
of the Obligation incurred thereafter under commitments extended by Secured
Party before the receipt of such notice, shall have been paid and performed in
full.
9.7. No setoff or claim that Debtor now has or may in the future have
against Secured Party shall relieve Debtor from paying or performing the
Obligation.
9.8. Time is of the essence hereof. If more than one Debtor is named
herein, the word "Debtor" shall mean all and any one or more of them, severally
and collectively. All liability hereunder shall be joint and several. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their heirs, personal representatives, successors and assigns. The
term "Secured Party" shall include not only the original Secured Party hereunder
but also any future owner and holder, including pledgees, of note or notes
8
evidencing the Obligation. The provisions hereof shall apply to the parties
according to the context thereof and without regard to the number or gender of
words or expressions used.
9.9. All notices required or permitted to be given hereunder shall be in
writing and may be given in person or by United States mail, by delivery service
or by electronic transmission. Any notice directed to a party to this Agreement
shall become effective upon the earliest of the following: (i) actual receipt by
that party; (ii) delivery to the designated address of that party, addressed to
that party; or (iii) if given by certified or registered United States mail,
twenty-four (24) hours after deposit with the United States Postal Service,
postage prepaid, addressed to that party at its designated address. The
designated address of a party shall be the address of that party shown at the
beginning of this Agreement or such other address as that party, from time to
time, may specify by notice to the other parties.
9.10. A carbon, photographic or other reproduced copy of this Agreement
and/or any financing statement relating hereto shall be sufficient for filing
and/or recording as a financing statement.
10. NON-DEBTOR BORROWER PROVISIONS
10.1. All advances of principal under the Note shall be made to Borrower
subject to and in accordance with the terms thereof. If Borrower is a
corporation or partnership, it is not necessary for Secured Party to inquire
into the powers of Borrower or the officers, directors, partners or agents
acting or purporting to act on its behalf. Debtor is and shall continue to be
fully informed as to all aspects of the business affairs of Borrower that it
deems relevant to the risks it is assuming and hereby waives and fully
discharges Secured Party from any and all obligations to communicate to Debtor
any facts of any nature whatsoever regarding Borrower and Borrower's business
affairs.
10.2. Debtor authorizes Secured Party, without notice or demand, without
affecting the obligations of Debtor hereunder or the personal liability of any
person for payment or performance of the Obligation and without affecting the
lien or the priority of the Security Interest, from time to time, at the request
of any person primarily obligated therefor, to renew, compromise, extend,
accelerate or otherwise change the time for payment or performance of, or
otherwise change the terms of, all or any part of the Obligation, including
increase or decrease any rate of interest thereon. Debtor waives and agrees not
to assert: (i) any right to require Secured Party to proceed against Borrower;
(ii) the benefits of any statutory provision limiting the liability of a surety,
including without limitation the benefit of Section 12-1641, ET SEQ., of the
Arizona Revised Statutes; and (iii) any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever of the liability of Borrower. Debtor shall have no right of
subrogation and hereby waives any right to enforce any remedy which Secured
Party now has, or may hereafter have, against Borrower.
9
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
_______________________________________,
__________ corporation
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
DEBTOR
10
SCHEDULE A
COLLATERAL
All of Debtor's right, title and interest in and to all Accounts (as
defined in the Arizona UCC), Chattel Paper (as defined in the Arizona UCC),
Documents (as defined in the Arizona UCC), Equipment (as defined in the Arizona
UCC), Fixtures (as defined in the Arizona UCC), General Intangibles (as defined
in the Arizona UCC), Instruments (as defined in the Arizona UCC), Inventory (as
defined in the Arizona UCC), Investment Property(as defined in the Arizona UCC),
any Deposit Accounts (as defined in the Arizona UCC) pledged to Secure Party,
Deposits, cash, letters of credit, stock rights and other deposits, it being
intended that the Collateral include all property of the Debtor other than real
property, whether located in which the Debtor now has or hereafter acquires any
right or interest, and the proceeds, insurance proceeds and products thereof,
together with all books and records, customer lists, credit files, computer
files, programs, printouts and other computer materials and records related
thereto, together with (i) all policies or certificates of insurance covering
any of the foregoing property, and all awards, loss payments, proceeds and
premium refunds that may become payable with respect to such policies; (ii) all
property of Debtor that is now or may hereafter be in the possession or control
of Secured Party in any capacity, including without limitation all monies owed
or that become owed by Secured Party to Debtor; and (iii) all proceeds of any of
the foregoing property, whether due or to become due from any sale, exchange or
other disposition thereof, whether cash or non-cash in nature, and whether
represented by checks, drafts, notes or other instruments for the payment of
money, including, without limitation, all property, whether cash or non-cash in
nature, derived from tort, contractual or other claims arising in connection
with any of the foregoing property. The terms herein shall have the meaning in
and be construed under the Uniform Commercial Code as in effect in Arizona from
time to time (the "Arizona UCC"). All property described above is hereinafter
called the "Collateral."
SCHEDULE B
LOCATION OF COLLATERAL
SCHEDULE 2.1
COMMITMENTS OF BANKS
as to the Facility
as of XXXX, 0000
Euro Dollar
BANK % $ Lending Office
---- ------- -------------- -----------------
1. Xxxxx Fargo Bank,
National Association 70.0% $35,000,000 _________________
2. The Northern Trust
Company 30.0% $15,000,000 _________________
______________________ _______ ______________ _________________
______________________ _______ ______________ _________________
Maximum RLC
Commitment 100% $50,000,000.00 _________________
ADDRESSES:
1. 000 Xxxx Xxxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxx, Arizona RCBO
Phone: 000-000-0000
Fax: 000-000-0000
2. 00 Xxxxx Xx Xxxxx Xxxxxx, X-0
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxx Xxxxxxxx, Corporate Banking
Phone: 000-000-0000
Fax: 000-000-0000
SCHEDULE 2A.5
EXISTING LETTERS OF CREDIT
L/C NO. BENEFICIARY AMOUNT EXPIRY DATE
------- ----------- ---------- -----------
242146 Comdata Network & its subsidiaries & affiliates $ 10,000 12/31/01
000000 Xxxxxx Xxxxxx Fire Insurance Company $ 400,000 02/01/02
242260 The Industrial Commission of Arizona $ 250,000 06/30/01
272643 Self Insurance Plan State of California $ 332,000 06/18/01
282513 Liberty Mutual Insurance Company $ 250,000 10/01/01
319234 The Travelers Indemnity Company $1,300,000 03/05/02
389506 Protective Insurance Company $1,000,000 01/31/02
Sagamore Insurance Company
TOTAL $3,542,000
SCHEDULE 3.15
BORROWER'S SUBSIDIARIES
*Quad-K Leasing, Inc., an Arizona corporation
Knight Administrative Services, Inc., an Arizona corporation
KTTE Holdings, Inc., a Nevada corporation
QKTE Holdings, Inc., a Nevada corporation
Knight Management Services, Inc., an Arizona corporation
Knight Transportation Midwest, Inc., an Arizona corporation
Knight Transportation South Central Limited Partnership, a Nevada partnership
Xxxx Xxxxxx Fast Freight, Inc., a Mississippi corporation
KTE Com, L.L.C.
*Significant Subsidiary
SCHEDULE 6.1
PERMITTED LIENS
NUMBER ORIGINAL OUTSTANDING
TRACTORS DATE 3/31/01
-------- ---- -------
Pitney Xxxxx 85 Apr-00 $3,807,427
Pitney Xxxxx 83 Jun-00 4,111,918
Pitney Xxxxx 29 Oct-00 1,791,975
Pitney Xxxxx 33 Oct-00 2,203,530
Pitney Xxxxx 11 Nov-00 755,332
Pitney Xxxxx 56 Dec-00 4,099,258
Bank of America 54 Dec-00 3,681,760
SCHEDULE 6.2
EXISTING INDEBTEDNESS
1. Term Loan with the Company from Xxxxx Fargo, maturing October 1, 2003.
Current balance as of April 6, 2001: $5,528,642.84.
2. Lease financing between Quad K and Xxxxx Fargo Equipment Finance, Inc.,
dated June 1, 2000, guaranteed by the Company.
3. The Interest Rate Swap Agreement, dated February 13, 2001, between the
Company and Xxxxx Fargo.
4. The Indebtedness shown on Schedule 6.1 hereof.
MODIFICATION AGREEMENT
BY THIS MODIFICATION AGREEMENT (the "Agreement"), made and entered into as
of the 5th day of June, 2001, XXXXX FARGO BANK, NATIONAL ASSOCIATION, as
administrative agent (the "Administrative Agent") for the Banks listed in the
hereinafter defined Credit Agreement (the "Banks") and as the Issuing Bank and
the Swing Line Lender, and KNIGHT TRANSPORTATION, INC., an Arizona corporation
(the "Company") and all present and future Significant Subsidiaries of the
Company (with the Company, the "Borrower"), in consideration of the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, hereby confirm and
agree as follows:
SECTION 1. RECITALS; ACKNOWLEDGEMENTS.
1.1 The Borrower and the Administrative Agent and the Banks entered into
that Credit Agreement dated April 6, 2001 (as amended from time to time, the
"Credit Agreement") to provide financial accommodations to the Borrower as
provided therein.
1.2 Borrower and the Administrative Agent, with the consent of the Banks,
desire to modify the Credit Agreement as set forth herein.
1.3 All undefined capitalized terms used herein shall have the meaning
given them in the Credit Agreement.
SECTION 2. CREDIT AGREEMENT.
2.1 Section 2.11 of the Credit Agreement is hereby amended to read as
follows:
SECTION 2.11 CONVERSION AND CONTINUATION OF BORROWINGS. The
Administrative Agent agrees to communicate the proposed LIBOR Rate verbally
or otherwise to the Borrower on or about 8:00 a.m., California time, on any
proposed conversion or continuation date and thereupon the Borrower shall
have the right at any time upon prior irrevocable notice to the
Administrative Agent not later than 10:00 a.m., California time, (i) on the
day of conversion, to convert any LIBOR Borrowing into a Base Rate
Borrowing, (ii) on the day of conversion or continuation, to convert any
Base Rate Borrowing into a LIBOR Borrowing or to continue any LIBOR
Borrowing as a LIBOR Borrowing for an additional Interest Period, and (iii)
on the day of conversion, to convert the Interest Period with respect to
any LIBOR Borrowing to another permissible Interest Period, subject in each
case to the following:
(a) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, the aggregate principal amount
of such Borrowing converted or continued shall be an integral multiple of
$100,000.00 and not less than $1,000,000.00;
(b) each conversion shall be effected by the Banks by applying
the proceeds of the new Borrowing resulting from such conversion to the
Borrowing (or portion thereof) being converted; accrued interest on a
Borrowing (or portion thereof) being converted shall be paid by the
Borrower at the time of conversion;
(c) any LIBOR Borrowing may be converted only at the end of the
Interest Period applicable thereto;
(d) any portion of a Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a LIBOR
Borrowing;
(e) any portion of a LIBOR Borrowing which cannot be continued as
a LIBOR Borrowing by reason of clauses (c) and (d) above shall be
automatically converted at the end of the Interest Period in effect for
such Borrowing into a Base Rate Borrowing; and
(f) each conversion or continuation shall be made pro rata among
the Banks in accordance with the respective principal amounts of the
converted or continued Borrowings.
Each notice pursuant to this Section shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii)
whether such Borrowing is to be converted to or continued as a LIBOR
Borrowing or a Base Rate Borrowing, (iii) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day),
and (iv) if such Borrowing is to be converted to or continued as a LIBOR
Borrowing, the Interest Period with respect thereto. If no Interest Period
is specified in any such notice with respect to any conversion to or
continuation as a LIBOR Borrowing, the Borrower shall be deemed to have
selected an Interest Period of one month's duration. The Administrative
Agent shall advise the other Banks of any notice given pursuant to this
Section and of each Bank's portion of any converted or continued Borrowing.
If the Borrower shall not have given notice in accordance with this Section
to continue any LIBOR Borrowing into a subsequent Interest Period (and
shall not otherwise have given notice in accordance with this Section to
convert such Borrowing), such Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued as a Base Rate Borrowing.
2.2 The reference to $2,500.00 in Section 2(iv) of Exhibit A to the Credit
Agreement is hereby amended to read $3,500.00.
2
SECTION 3. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.
3.1 All references to the Credit Agreement in the other Loan Documents are
hereby amended to refer to the Credit Agreement as hereby amended.
3.2 Borrower hereby reaffirms to the Banks each of the representations,
warranties, covenants and agreements of Borrower set forth in the Credit
Agreement, with the same force and effect as if each were separately stated
herein and made as of the date hereof.
3.3 Borrower hereby ratifies, reaffirms, acknowledges, and agrees that the
Notes and the Credit Agreement represent valid, enforceable and collectible
obligations of Borrower, and that there are no existing claims, defenses,
personal or otherwise, or rights of setoff whatsoever with respect to any of
these documents or instruments. Borrower further acknowledges and represents
that no event has occurred and no condition exists that, after notice or lapse
of time, or both, would constitute a default under this Agreement, the Notes or
the Credit Agreement.
3.4 All terms, conditions and provisions of the Credit Agreement are
continued in full force and effect and shall remain unaffected and unchanged
except as specifically amended hereby. The Credit Agreement, as amended hereby,
is hereby ratified and reaffirmed by Borrower, and Borrower specifically
acknowledges the validity and enforceability thereof.
SECTION 4. GENERAL.
4.1 This Agreement in no way acts as a release or relinquishment of those
rights securing payment of the Loans. Such rights are hereby ratified,
confirmed, renewed and extended by Borrower in all respects.
4.2 The modifications contained herein shall not be binding upon the Banks
until the Administrative Agent shall have received all of the following:
(a) An original of this Agreement fully executed by the Borrower.
(b) An executed consent from each Bank.
(c) Such resolutions or authorizations and such other documents as the
Administrative Agent may require relating to the existence and good
standing of the Borrower and the authority of any person executing this
Agreement or other documents on behalf of the Borrower.
4.3 Borrower shall execute and deliver such additional documents and do
such other acts as the Banks may reasonably require to fully implement the
intent of this Agreement.
4.4 Borrower shall pay all costs and expenses, including, but not limited
to, reasonable attorneys' fees incurred by the Administrative Agent in
connection herewith, whether or not all of the conditions described in Paragraph
3
4.2 above are satisfied. Banks, at their option, but without any obligation to
do so, may advance funds to pay any such costs and expenses that are the
obligation of the Borrower, and all such funds advanced shall bear interest at
the highest rate provided in the Notes and shall be due and payable upon demand.
4.5 Notwithstanding anything to the contrary contained herein or in any
other instrument executed by Borrower, the Administrative Agent or the Banks, or
in any other action or conduct undertaken by Borrower, the Administrative Agent
or the Banks on or before the date hereof, the agreements, covenants and
provisions contained herein shall constitute the only evidence of the Banks'
consent to modify the terms and provisions of the Credit Agreement. Accordingly,
no express or implied consent to any further modifications involving any of the
matters set forth in this Agreement or otherwise shall be inferred or implied by
the Banks' consent to this Agreement. Further, the Banks' consent to this
Agreement shall not constitute a waiver (either express or implied) of the
requirement that any further modification of the Credit Agreement shall require
the express written consent of the Banks; no such consent (either express or
implied) has been given as of the date hereof.
4.6 Time is hereby declared to be of the essence hereof of the Credit
Agreement, and Banks require, and Borrower agrees to, strict performance of each
and every covenant, condition, provision and agreement hereof, of the Credit
Agreement.
4.7 This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their heirs, personal representatives, successors and
assigns.
4.8 This Agreement is made for the sole protection and benefit of the
parties hereto, and no other person or entity shall have any right of action
hereon.
4.9 This Agreement shall be governed by and construed according to the laws
of the State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
XXXXX FARGO BANK, NATIONAL
ASSOCIATION
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
ADMINISTRATIVE AGENT
4
KNIGHT TRANSPORTATION, INC.
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
QUAD-K LEASING, INC., an Arizona
corporation
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
BORROWER
5
CONSENT OF THE BANKS
Re: Knight Transportation, Inc.
The following:
(a) is a Bank named in that Credit Agreement dated April 6, 2001
between Knight Transportation, Inc., an Arizona corporation (the "Company"), all
present and future Significant Subsidiaries of the Company (the "Borrower"),
Xxxxx Fargo Bank, National Association, as administrative agent for the Banks
(the "Administrative Agent"), and the Banks; and
(b) consents to that Modification Agreement dated June 5, 2001 entered
into between the Borrower and the Administrative Agent.
THE NORTHERN TRUST COMPANY, an Illinois
banking corporation
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
"Bank"
CONSENT OF THE BANKS
Re: Knight Transportation, Inc.
The following:
(a) is a Bank named in that Credit Agreement dated April 6, 2001
between Knight Transportation, Inc., an Arizona corporation (the "Company"), all
present and future Significant Subsidiaries of the Company (the "Borrower"),
Xxxxx Fargo Bank, National Association, as administrative agent for the Banks
(the "Administrative Agent"), and the Banks; and
(b) consents to that Modification Agreement dated June 5, 2001 entered
into between the Borrower and the Administrative Agent.
XXXXX FARGO BANK, NATIONAL
ASSOCIATION
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
"Bank"
