Exhibit 10.06
SEVENTH AMENDMENT TO SECURITIZATION AGREEMENTS
THIS SEVENTH AMENDMENT TO SECURITIZATION AGREEMENTS (this
"Amendment"), is made and entered into as of February 19, 2002
(the "Effective Date"), by and among CONSOLIDATED FREIGHTWAYS
FUNDING LLC, a Delaware limited liability company (the
"Borrower"), CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, a
Delaware corporation ("CFCD"; the Borrower and CFCD are referred
to herein individually as a "Company" and collectively as the
"Companies"), and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation ("GE Capital"), in its capacities (i) as
Conduit Lender (in such capacity, the "Conduit Lender"), (ii) as
Committed Lender (in such capacity, the "Committed Lender"; in
its dual capacities as Conduit Lender and Committed Lender, GE
Capital is herein referred to as "Lender"), and (iii) as
Administrative Agent for the Lender (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, CFCD and the Borrower are parties to a certain
Receivables Sale and Contribution Agreement, dated as of April
27, 2001 (as amended to the date hereof, the "Sale Agreement";
capitalized terms used herein and not otherwise defined herein
shall have the meanings given such terms in Annex X to the Sale
Agreement as amended by this Amendment), whereby CFCD has agreed
to sell, contribute or otherwise transfer to the Borrower, and
the Borrower has agreed to purchase or otherwise acquire from
CFCD, all of the right, title and interest of CFCD in the
Receivables; and
WHEREAS, CFCD, the Borrower, the Lender and the
Administrative Agent, are parties to a certain Servicing
Agreement, dated as of April 27, 2001 (as amended to the date
hereof, the "Servicing Agreement"), whereby the Borrower has
appointed CFCD to service, administer and collect the Transferred
Receivables pursuant to the Funding Agreement (defined below) on
the terms and conditions set forth therein;
WHEREAS, the Parent, certain Subsidiaries of Parent
signatory thereto, the Borrower, the Lender, the Conduit Lender
and the Administrative Agent are parties to a certain Guaranty
Agreement, dated as of April 27, 2001 (as amended to the date
hereof, the "Guaranty Agreement"); and
WHEREAS, the Borrower, the Lender and the Administrative
Agent are parties to a certain Receivables Funding Agreement,
dated as of April 27, 2001 (as amended to the date hereof, the
"Funding Agreement") (the Sale Agreement, the Servicing
Agreement, the Guaranty Agreement and the Funding Agreement,
together with all exhibits and annexes thereto, are referred to
herein collectively as the "Securitization Agreements"), pursuant
to which, among other things, the Lender has agreed, subject to
certain terms and conditions, to make Advances to the Borrower to
fund its purchases of the Receivables; and
WHEREAS, the Companies have requested that the
Securitization Agreements be amended in certain respects, and GE
Capital (in its various capacities) is willing to agree to such
amendments subject to the terms and conditions of this Amendment.
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Waiver. Subject to the terms and conditions of this
Amendment, including without limitation the fulfillment of the
conditions to effectiveness specified in Section 7 below, any
Incipient Termination Event or Termination Event resulting from
any failure of the Parent to meet the Minimum EBITDA financial
covenant in paragraph (c) to Annex 4.02(p) to the Sale Agreement
solely for the Fiscal Quarter ending December 31, 2001, as such
financial covenant is in effect immediately prior to the date of
this Amendment; provided, however that any such Incipient
Termination Event or Termination Event shall automatically be
restored if the Parent shall fail or have failed to satisfy the
financial covenant as amended hereby.
2. Amendments of Securitization Agreements. Subject to the
terms and conditions of this Amendment, including without
limitation the fulfillment of the conditions to effectiveness
specified in Section 7 below, the parties signatory to each of
the Funding Agreement, the Sale Agreement and the Servicing
Agreement hereby agree to amend the Securitization Agreements as
follows:
(A) Amendment to Sale Agreement. The parties
signatory to the Sale Agreement hereby agree that the Sale
Agreement shall be amended as follows:
(1) Schedule 4.01 to the Sale Agreement is hereby
amended by adding the following subsidiaries of
Consolidated Freightways Corporation of Delaware under
the listing at subsection I:
CF ▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware
corporation
CFCD 2002 Member LLC, a Delaware limited
liability company
CFCD 2002 LLC, a Delaware limited liability
company
CFL Holding Ltd., and Alberta corporation
(2) Annex 4.02(p) to the Sale Agreement is hereby
deleted in its entirety and the replacement Annex
4.02(p) attached to this Amendment as Exhibit A shall
be substituted in lieu thereof.
(B) Amendments to Guaranty Agreement. The parties
signatory to the Guaranty Agreement hereby agree to amend
Section 2.01(f) of the Guaranty Agreement by amending and
restated the first sentence of said Section to read in its
entirety as follows:
Except as set forth in Schedule 2.01(f) to
this Agreement, the Guarantors do not have
any Subsidiaries (other than CFCD 2002 Member
LLC, a Delaware limited liability company,
and CFCD 2002 LLC, a Delaware limited
liability company), and the Guarantors are
not engaged in any joint venture or
partnership with any other Person, under
which any Guarantor is liable for any debts
or liabilities of such Person, or as of the
Closing Date or is an Affiliate of any other
Person.
(C) Amendments to Annex X. The parties signatory to
each of the Funding Agreement, the Sale Agreement and the
Servicing Agreement hereby agree to amend Annex X to the
Funding Agreement, the Sale Agreement and the Servicing
Agreement as follows:
The definitions of the term "Subsidiary Guarantor"
set forth in Annex X to the Funding Agreement, the Sale
Agreement and the Servicing Agreement is hereby deleted
in its entirety and the following definition of such
term is substituted in lieu thereof:
"Subsidiary Guarantors" shall mean the each
domestic Subsidiary of the Parent (other than the
Originator, the Borrower, CFCD 2002 Member LLC, a
Delaware limited liability company, and CFCD 2002
LLC, a Delaware limited liability company).
3. No Other Amendments. Except for the waiver expressly set
forth and referred to in Section 1 and the amendments expressly
set forth and referred to in Section 2, the Securitization
Agreements shall remain unchanged and in full force and effect.
4. Representations and Warranties. Each Company hereby
represents and warrants to the Lender and the Administrative
Agent that (a) this Amendment has been duly authorized, executed
and delivered by such Company, (b) after giving effect to this
Amendment, no Termination Event, Incipient Termination Event,
Event of Servicer Termination or Incipient Servicer Termination
Event in respect of such Company has occurred and is continuing
as of this date, and (c) after giving effect to this Amendment,
all of the representations and warranties made by such Company in
the Securitization Agreements are true and correct in all
material respects on and as of the date of this Amendment (except
to the extent that any such representations or warranties
expressly referred to a specific prior date). Any breach in any
material respect by any Company of any of its representations and
warranties contained in this Section 4 shall be a Termination
Event and an Event of Servicer Termination for all purposes of
the Securitization Agreements. Any Advances made on the Effective
Date shall be deemed to have been requested and funded after
giving effect to this Amendment.
5. Ratification. Each Company hereby ratifies and reaffirms
each and every term, covenant and condition set forth in the
Securitization Agreements and all other documents delivered by
such Company in connection therewith (including without
limitation the other Related Documents to which each Company is a
party), effective as of the date hereof.
6. Estoppel. To induce GE Capital (in its various capacities)
to enter into this Amendment, each Company hereby acknowledges
and agrees that, as of the date hereof, there exists no right of
offset, defense or counterclaim in favor of any Company as
against GE Capital (in its various capacities) with respect to
the obligations of any Company to GE Capital (in its various
capacities) under the Securitization Agreements or the other
Related Documents, either with or without giving effect to this
Amendment.
7. Conditions to Effectiveness. This Amendment shall become
effective, as of the Effective Date, upon receipt by the
Administrative Agent, in form and substance satisfactory to
Administrative Agent, of (i) this Amendment, duly executed,
completed and delivered by each of the Companies and by GE
Capital in its various capacities, and (ii) the Seventh Amendment
to Securitization Agreements/Fee Letter dated of even date
herewith between GE Capital and Borrower, duly executed by
Borrower.
8. Reimbursement of Expenses. Each Company hereby agrees that
it shall reimburse the Administrative Agent on demand for all
costs and expenses (including without limitation reasonable
attorney's fees) incurred by the Administrative Agent in
connection with the negotiation, documentation and consummation
of this Amendment and the other documents executed in connection
herewith and therewith and the transactions contemplated hereby
and thereby.
9. Certain Other Covenants. Borrower hereby covenants and
agrees to deliver to the Administrative Agent on or before
February 28, 2002, a copy of the audit report in respect of
Borrower's financial statements, as prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, which report shall be in form and substance reasonably
satisfactory to GE Capital. Borrower further agrees that any
default or breach by Borrower of the covenant set forth in the
immediately preceding sentence shall constitute an immediate
Termination Event.
10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
FOR CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SAID STATE.
11. Severability of Provisions. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To
the extent permitted by Applicable Law, each Company hereby
waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
12. Counterparts. This Amendment may be executed in any number
of several counterparts, all of which shall be deemed to
constitute but one original and shall be binding upon all
parties, their successors and permitted assigns.
13. Entire Agreement. The Securitization Agreements as amended
by this Amendment embody the entire agreement between the parties
hereto relating to the subject matter hereof and supersedes all
prior agreements, representations and understandings, if any,
relating to the subject matter hereof.
14. Originators' and GE Capital's Capacities. CFCD is executing
and delivering this Amendment both in its capacity as an
Originator under the Sale Agreement and as a Servicer under the
Servicing Agreement, and all references herein to "CFCD" shall be
deemed to include CFCD in both such capacities unless otherwise
expressly indicated. GE Capital is executing and delivering this
Amendment in its various capacities as Lender and the
Administrative Agent, and all references herein to "GE Capital"
shall be deemed to include it in all such capacities unless
otherwise expressly indicated.
[Remainder of page intentionally blank; next page is signature
page]
IN WITNESS WHEREOF, the parties have caused this Seventh
Amendment to Securitization Agreements be duly executed by their
respective officers thereunto duly authorized, as of the date
first above written.
CONSOLIDATED FREIGHTWAYS FUNDING LLC, as
Borrower
By
Name:
Title:
CONSOLIDATED FREIGHTWAYS CORPORATION OF
DELAWARE, as Originator and Servicer
By
Name:
Title:
CONSOLIDATED FREIGHTWAYS CORPORATION
By:
Name:
Title:
CF AIRFREIGHT CORPORATION
By:
Name:
Title:
CF ▇▇▇▇▇▇.▇▇▇ INCORPORATED
By:
Name:
Title:
REDWOOD SYSTEMS, INC.
By:
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
By:
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Conduit Lender, Committed Lender and
Administrative Agent
By
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its Duly Authorized Signatory
EXHIBIT A
ANNEX 4.02(p)
to
RECEIVABLES SALE AND CONTRIBUTION AGREEMENT
FINANCIAL COVENANTS
(a) Minimum Fixed Charge Coverage Ratio. The Parent and
its Subsidiaries shall have on a consolidated basis, as of the
end of each Fiscal Quarter set forth below, a Fixed Charge
Coverage Ratio for the period set forth below of not less than
the following:
Fiscal Quarter Minimum Fixed
Charge
Coverage Ratio
for the Rolling Period 0.20 to 1.00
ending September 30,
2001
for the Rolling Period 0.01 to 1.00
ending December 31, 2001
for the three month -1.00 to 1.00
period ending March 31,
2002
for the sixth month -0.10 to l.00
period ending June 30,
2002
for the nine month 0.50 to 1.00
period ending September
30, 2002
for the Rolling Period 0.80 to 1.00
ending December 31, 2002
for the Rolling Period 1.70 to 1.00
ending on each Fiscal
Quarter thereafter
(b) Minimum Tangible Net Worth. Parent and its
Subsidiaries on a consolidated basis shall have a Tangible Net
Worth, (i) as of the Closing Date and as of the end of each of
the second and third Fiscal Quarters of the Fiscal Year ending
December 31, 2001, of not less than $180,000,000, (ii) as of the
end of the fourth Fiscal Quarter of the Fiscal Year ending
December 31, 2001, of not less than $150,000,000, (iii) as of the
end of each of the first, second and third Fiscal Quarters of the
Fiscal Year ending December 31, 2002, of not less than
$120,000,000, and (iv) as of the end of the fourth Fiscal Quarter
of the Fiscal Year ending December 31, 2002 and as of the end of
each of the first, second and third Fiscal Quarters of the Fiscal
Year ending December 31, 2003, of not less than $130,000,000.
Thereafter, Parent and its Subsidiaries on a consolidated basis
shall have, as of the end of each Fiscal Year ending on or after
December 31, 2003 (each such Fiscal Year herein called the
"Subject Fiscal Year") and as of the end of the first three
Fiscal Quarters of the immediately succeeding Fiscal Year, a
Tangible Net Worth of not less than the sum of (i) the minimum
Tangible Net Worth required hereunder for the Fiscal Year which
immediately preceded the Subject Fiscal Year (or, where the
Subject Fiscal Year is the Fiscal Year ending December 31, 2003,
the sum of $130,000,000) plus (ii) an amount equal to fifty
percent (50%) of the positive net income of the Parent and its
Subsidiaries on a consolidated basis for the Subject Fiscal Year
plus (iii) an amount equal to one hundred percent (100%) of the
amount of any equity raised by or capital contributed to the
Parent during the Subject Fiscal Year (in the case of equity
raised or capital contributed, net of the bona fide, reasonable
expenses, if any, relating to the raising of such equity or such
capital contribution and paid to Persons who are not Affiliates
of the Parent).
(c) Minimum EBITDA. Parent and its Subsidiaries shall have
on a consolidated basis, for each period set forth below, an
EBITDA for such period of not less than the following:
Fiscal Quarter Minimum EBITDA
for the Rolling Period $8,000,000
ending September 30,
2001
for the Rolling Period -$3,200,000
ending December 31, 2001
for the three month -$7,900,000
period ending March 31,
2002
for the sixth month $5,600,000
period ending June 30,
2002
for the nine month $24,400,000
period ending September
30, 2002
for the Rolling Period $43,800,000
ending December 31, 2002
for the Rolling Period $80,000,000
ending on each Fiscal
Quarter thereafter
(d) Maximum Capital Expenditures. Parent and its
Subsidiaries shall not make or incur any Capital Expenditures if,
after giving effect thereto, the aggregate amount of all Capital
Expenditures made or incurred by Parent and its Subsidiaries
during any period of four (4) consecutive Fiscal Quarters would
exceed the amounts set forth below for such period:
Four Consecutive Fiscal Maximum Capital
Quarters Ending Expenditures
Fiscal Quarter ending $35,000,000
June 30, 2001
Fiscal Quarter ending $36,000,000
September 30, 2001
Fiscal Quarter ending $30,000,000
December 31, 2001
Fiscal Quarter ending $25,000,000
March 31, 2002 and for
each Fiscal Quarter
thereafter
Capitalized terms used in this Annex 4.02(p) and not
otherwise defined below shall have the respective meanings
ascribed to them in Annex X. As used in this Annex 4.02(p),
"Term Debt", "Vancouver Property", "Menlo Park Property",
"Restricted Payments", "Permitted Stock Repurchases" and
"Permitted Acquisitions" shall have the meanings ascribed to such
terms in the Standby Letter of Credit Agreement. The following
terms shall have the respective meanings set forth below:
"Capital Expenditures" shall mean, with respect to any
Person, all expenditures (by the expenditure of cash or the
incurrence of Debt) by such Person during any measuring period
for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under
GAAP, but excluding (i) Capital Expenditures of the Parent, the
Originator or any Subsidiary Guarantor financed by the incurrence
of Term Debt to the extent that such Term Debt is permitted to be
incurred under Section 6.3 of the Standby Letter of Credit
Agreement, provided that on or prior to the date of incurrence of
such Term Debt, Parent has furnished to Administrative Agent a
written statement of sources and uses of such Term Debt, which
statement describes with particularity the principal amount of
the Term Debt to be used for the proposed Capital Expenditure and
the fixed assets or improvements to be acquired, replaced,
substituted or added to in connection with such proposed Capital
Expenditure, (ii) the purchase of the Vancouver Property by the
Parent, provided that to the extent the purchase price of the
Vancouver Property exceeds $25,000,000, such excess shall be
included as a Capital Expenditure for purposes of determining
compliance with the Maximum Capital Expenditure covenant set
forth in paragraph (d) of this Annex 4.02(p), (iii) any Capital
Expenditures incurred by the Parent in connection with the
refinancing of the Participation Agreement, provided that to the
extent that such Capital Expenditures exceed $22,500,000, such
excess shall be included as a Capital Expenditure for purposes of
determining compliance with the Maximum Capital Expenditure
covenant set forth in paragraph (d) of this Annex 4.02(p), (iv)
any purchase by the Parent or any Subsidiary of fixed assets or
improvements to the extent that such purchase qualifies for like-
kind tax treatment under Section 1031 of the IRC, provided that
such exclusion from Capital Expenditures under this clause (iv)
shall be limited to an amount not to exceed the lesser of (x) the
cash proceeds received from the transfer of the property
relinquished in the like-kind exchange, assuming for purposes
hereof that the Parent or Subsidiary does not qualify for like-
kind tax treatment under Section 1031 of the IRC in connection
with such transfer and (y) the value of the fixed assets or
improvements purchased by the Parent in the subject transaction
which qualifies for like-kind tax treatment under Section 1031 of
the IRC, (v) any purchase by the Parent or any Subsidiary of
fixed assets or improvements with the proceeds received from the
sale of the Menlo Park Property, provided that on or prior to the
date of any such Capital Expenditures, Parent has furnished to
Administrative Agent a written statement of sources and uses of
the proceeds from the sale of the Menlo Park Property, which
statement describes with particularity the amount of the proceeds
from the sale of the Menlo Park Property to be used for the
proposed Capital Expenditure and the fixed assets or improvements
to be acquired, replaced, substituted or added to in connection
with such proposed Capital Expenditures, and (vi) such other
items as Parent and Administrative Agent may agree in writing to
exclude.
"EBITDA" shall mean, with respect to any Person for any
fiscal period, the amount equal to (a) consolidated net income of
such Person for such period, plus (b) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss
from extraordinary items for such period, (iv) depreciation and
amortization for such period, (v) amortized debt discount for
such period, (vi) the amount of any deduction to consolidated net
income as the result of any grant to any members of the
management of such Person of any Stock, and (vii) Lease Expenses,
in each case to the extent included in the calculation of
consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, minus (c) the sum
of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain
(but not any aggregate net loss) during such period arising from
the sale, exchange or other disposition of capital assets by such
Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), provided that
there shall be excluded from the amount of any aggregate net gain
under this clause (iv), in solely the Fiscal Quarter ending March
31, 2001, an amount equal to the lesser of (x) $19,200,000 and
(y) the actual gain recognized by the Parent and its Subsidiaries
from the sale of its Portland, Oregon administrative complex and
(v) any other non-cash gains that have been added in determining
consolidated net income (including LIFO adjustments), in each
case to the extent included in the calculation of consolidated
net income of such Person for such period in accordance with
GAAP, but without duplication,. For purposes of this definition,
the following items shall be excluded in determining consolidated
net income of a Person: (A) the income (or deficit) of any other
Person accrued prior to the date it became a Subsidiary of, or
was merged or consolidated into, such Person or any of such
Person's Subsidiaries; (B) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an
ownership interest, except to the extent any such income has
actually been received by such Person in the form of cash
dividends or distributions; (C) the undistributed earnings of any
Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual
obligation or requirement of law applicable to such Subsidiary;
(D) any restoration to income of any contingency reserve, except
to the extent that provision for such reserve was made out of
income accrued during such period; (E) any write-up of any asset;
(F) any net gain from the collection of the proceeds of life
insurance policies; (G) any net gain arising from the acquisition
of any securities, or the extinguishment, under GAAP, of any
Debt, of such Person, (H) in the case of a successor to such
Person by consolidation or merger or as a transferee of its
assets, any earnings of such successor prior to such
consolidation, merger or transfer of assets, and (I) any deferred
credit representing the excess of equity in any Subsidiary of
such Person at the date of acquisition of such Subsidiary over
the cost to such Person of the investment in such Subsidiary.
"Fixed Charges" shall mean, with respect to any Person for
any fiscal period, the aggregate of, without duplication, (a) all
Interest Expense and Lease Expense paid or accrued during such
period, plus (b) all regularly scheduled payments of principal
and implied principal with respect to Debt (including any lease
payments by any Person in respect of any Capital Leases, any Sale-
Leaseback Debt, any Vancouver Secured Debt or any Bayview
Indebtedness as such terms are defined in the Standby Letter of
Credit Agreement) due or made during such period, plus (c) all
Restricted Payments made during such period (other than Permitted
Stock Repurchases covered by Section 6.14(vii) of the Standby
Letter of Credit Agreement), plus (d) any cash payments made by
such Person in connection with any Permitted Acquisitions.
"Fixed Charge Coverage Ratio" shall mean, with respect to
any Person for any fiscal period, the ratio of (i) the sum of (x)
EBITDA for such period less (y) cash taxes made during such
period to (ii) Fixed Charges for such period.
"Interest Expense" shall mean, with respect to any Person
for any fiscal period, the sum of (a) interest expense (whether
cash or non-cash) of such Person determined in accordance with
GAAP for the relevant period ended on such date, including (i)
amortization of original issue discount on any Debt and of all
fees payable in connection with the incurrence of such Debt (to
the extent included in interest expense), (ii) the interest
portion of any deferred payment obligation, (iii) the interest
component of any Capital Lease Obligation plus (b) the amount of
any Letter of Credit Fee (as such term is defined in the Letter
of Credit Agreement) paid during the relevant period ended on
such date, plus (c) the amount of any payments by such Person, as
lessee, under any sale-leaseback or synthetic lease transaction.
"Lease Expenses" shall mean, with respect to any Person for
any fiscal period, the aggregate rental obligations of such
Person determined in accordance with GAAP that are payable in
respect of such period under operating leases of equipment having
an original non-cancelable term (as determined in accordance with
GAAP) in excess of twelve months (net of income from subleases
thereof, but including taxes, insurance, maintenance and similar
expenses that the lessee is obligated to pay under the terms of
such leases), whether or not such obligations are reflected as
liabilities or commitments on a consolidated balance sheet of
such Person or in the notes thereto, excluding, however, any such
obligations under Capital Leases.
"Net Worth" shall mean, with respect to any Person as of any
date of determination, (a) the book value of the assets of such
Person, minus (b) reserves applicable thereto, minus (c) all of
such Person's liabilities on a consolidated basis (including
accrued and deferred income taxes), all as determined in
accordance with GAAP.
"Rolling Period" shall mean, as of the end of any Fiscal
Quarter, the immediately preceding four (4) Fiscal Quarters,
including the Fiscal Quarter then ending.
"Tangible Net Worth" shall mean, with respect to any Person
at any date, the Net Worth of such Person at such date, (x)
excluding, however, from the determination of the total assets at
such date, (a) all goodwill, capitalized organizational expenses,
capitalized research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses
(excluding software licenses) and rights in any thereof, and
other intangible items (other than software licenses), (b) all
unamortized debt discount and expense, (c) treasury Stock, and
(d) any write-up in the book value of any asset resulting from a
revaluation thereof, but (y) including any non-cash valuation
reserves for deferred taxes and any foregone tax benefits
provided that such reserves are established in accordance with
Financial Accounting Standard Number 109 and do not result in an
increase in such Person's future cash tax payments.
Rules of Construction Concerning Financial Covenants. Unless
otherwise specifically provided therein, any accounting term used
in any Related Document shall have the meaning customarily given
such term in accordance with GAAP, and all financial computations
thereunder shall be computed in accordance with GAAP consistently
applied. That certain items or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any Accounting Changes
occur and such changes result in a change in the calculation of
the financial covenants, standards or terms used in any Related
Document, then the parties thereto agree to enter into
negotiations in order to amend such provisions so as to equitably
reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of such Persons
and their Subsidiaries shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. If the
parties thereto agree upon the required amendments thereto, then
after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been
implemented, any reference to GAAP contained therein shall, only
to the extent of such Accounting Change, refer to GAAP
consistently applied after giving effect to the implementation of
such Accounting Change. If such parties cannot agree upon the
required amendments within 30 days following the date of
implementation of any Accounting Change, then all financial
statements delivered and all calculations of financial covenants
and other standards and terms in accordance with the Related
Documents shall be prepared, delivered and made without regard to
the underlying Accounting Change.
