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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 03, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________
TO ______________.
Commission file number 0-19791
USFREIGHTWAYS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3790696
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9700 Higgins Rd., Ste. 570, Rosemont, Il. 60018
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (847) 696-0200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange of which registered
Common Stock $.01 Par Value NASDAQ
Preferred Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act:
6 5/8 % Notes Due May 1, 2000
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. __X____ Yes________No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will
not be contained, to the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to the Form 10-K ___.
The number of shares of common stock outstanding at March 24, 1998 was
26,129,509. The aggregate market value of the voting stock of the registrant as
of March 24, 1998 was approximately $996,187,531.
DOCUMENTS INCORPORATED BY REFERENCE
1) 1997 Annual Report to Shareholders for the Fiscal Year Ended
January 03, 1998 (Only those portions referenced herein are incorporated
in this Form 10-K).
2) Proxy Statement dated March 25, 1998 (Only those portions referenced herein
are incorporated in this Form 10-K).
Page 2
USFreightays Corporation
Form 10-K
Fiscal Year Ended January 03, 1998
PART I
Item 1. Business
Background
USFreightways Corporation, (hereafter referred to as the "Company"),
operates five regional less than truckload ("LTL") general commodities motor
carriers. The main focus of the Company's regional trucking subsidiaries
is on overnight and second day delivery of general commodities throughout the
United States and into Canada. The Company's logistics subsidiaries provide
solutions to customers' logistics and distribution requirements. The Company's
freight forwarding subsidiaries provide domestic and international air and
ocean freight service through both exclusive and non-exclusive agents.
The Company traces its origins to 1984 when TNT Limited, through its wholly
owned subsidiary TNT Transport Group ("Transport Group"), embarked on a strategy
to establish, through acquisition, a nationwide network of quality regional LTL
carriers. During the same period, the group of businesses that now constitute
the Company also grew as a result of internal expansion and increased
penetration of existing markets. In April 1991 the Company was incorporated as a
holding company for regional trucking companies of Transport Group.
During February 1992 the shareholders of the Company sold 19,593,750 shares
of common stock through an initial public offering for which the proceeds were
paid to Transport Group. In a subsequent transaction, the Company purchased from
Transport Group all its remaining shares in the Company.
On May 6, 1993 the Company issued, through a public offering, 6 5/8% Notes
in the principal amount of $100,000,000 due May 1, 2000. The proceeds from this
issuance were, in part, used to repay borrowings under existing revolving lines
of credit which were partially used to acquire the common stock from Transport
Group.
In February 1997, the Company sold 3,105,000 of its shares in a public
offering. The net proceeds from the sale, amounting to approximately
$69,431,000 were initially used to repay outstanding debt under the Company's
revolving credit facility.
During 1997, under the purchase method of accounting, the Company acquired
all of the outstanding shares of USF Seko Worldwide Inc., an airfreight
forwarding company and the general commodities business of Mercury Distribution
Carriers, Inc. for an aggregate amount of $26,779,000 of cash and debt incurred.
Following is a table depicting revenue by LTL trucking and Logistics and
other segments for each of the most recent three fiscal years:
Revenue ($ in millions)
Fiscal Year 1995 % 1996 % 1997 %
______ ___ ______ ___ ______ ___
LTL trucking $1,076 94.1 $1,231 92.5 $1,409 90.0
Logistics and other 68 5.9 100 7.5 156 10.0
______ ____ ______ ____ ______ ____
Total $1,144 100.0 $1,331 100.0 $1,565 100.0
______ _____ ______ _____ ______ _____
PAGE 3
Regional LTL Trucking
LTL shipments are defined as shipments of less than 10,000 pounds.
Typically, LTL carriers transport freight along scheduled routes from multiple
shippers to multiple consignees utilizing a network of terminals together with
fleets of line-haul and pickup and delivery tractors and trailers. Freight is
picked up from customers by local drivers and consolidated for shipment. The
freight is then loaded into intercity trailers and transferred by line-haul
drivers to the terminal servicing the delivery area. There, the freight is
transferred to local trailers and delivered to its destination by local drivers.
LTL operators are generally categorized as either regional, interregional
or long-haul carriers, depending on the distance freight travels from pickup to
final delivery. Regional carriers usually have average lengths of haul of 500
miles or less and tend to provide either overnight or second day service.
Regional LTL carriers usually are able to load freight for direct transport to a
destination terminal, thereby avoiding the costly and time-consuming use of
breakbulk terminals (where freight is rehandled and reloaded to its ultimate
destination). In contrast, long-haul LTL carriers (average lengths of haul in
excess of 1,000 miles) operate networks of breakbulk and satellite terminals
(hub-spoke systems) and rely heavily on interim handling of freight.
Interregional carriers (500 to 1,000 miles per average haul) also rely on
breakbulk terminals but to a lesser degree than long-haul carriers.
Regional LTL carriers, including the Company's trucking subsidiaries,
principally compete against other regional LTL carriers. To a lesser extent,
they compete against interregional and long-haul LTL carriers. To an even lesser
degree, regional LTL transporters compete against truckload carriers, overnight
package companies, railroads and airlines. Significant barriers to entry into
the regional LTL market exist as a result of the substantial capital
requirements for terminals and revenue equipment and the need for a large,
well-coordinated and skilled work force.
In the competitive environment of each of the Company's trucking
subsidiaries, most LTL carriers have adopted discounting programs that severely
reduce prices paid by some shippers. Additionally, when new LTL competitors
enter a geographic region, they often utilize discounted prices to lure
customers away from the Company's trucking subsidiaries. Such attempts to gain
market share through price reduction programs exert downward pressure on the
industry's price structure and profit margins and have caused many LTL carriers
to cease operations.
The Trucking Subsidiaries
The following is a brief description of the Company's LTL regional trucking
subsidiaries. Statistical information for subsidiary's operations is reported in
the Company's 1997 Annual Report to the Shareholders, and is incorporated by
reference in this Form 10-K as page F20 of Exhibit 13.
USF Holland is the largest of the Company's operating subsidiaries,
transporting LTL shipments interstate throughout the central United States and
into the Southeast. USF Holland uses predominantly single 48 foot trailers. The
average length of line-haul in the year ended January 3, 1998 was
approximately 384 miles.
USF Red Star operates in the eastern United States, as well as to and from
eastern Canada. USF Red Star uses a combination of single and double trailers.
The average length of line-haul in the year ended January 3, 1998 was
approximately 293 miles. USF Red Star operates in an environment characterized
by intense price competition.
USF Bestway operates throughout the southwest region of the United States
from Texas to California. USF Bestway uses double trailers in its operations.
For the year ended January 3, 1998 the average length of line-haul for USF
Bestway was approximately 420 miles.
USF Reddaway provides LTL carriage along the I-5 corridor from California
to Washington, throughout the northwest United States and into western Canada
and Alaska. The average length of line-haul for the year ended January 3, 1998
was approximately 599 miles. USF Reddaway operates double trailers and, where
possible, triple trailer combinations.
USF Dugan provides service to the Plains states and into the southern
states from Texas to Florida. USF Dugan operates with double and triple
trailers, and the average length of line-haul for the year ended January 3,
1998 was approximately 543 miles.
PAGE 4
The Logistics Subsidiaries
The Company is engaged in business of providing logistics, interregional
and distribution services. These activities are conducted through USF Logistics,
which provides complete supply chain management services from supplying raw
materials to delivering products to customers, Interamerican which provides
contract warehousing services and USF Distribution Services which collects
and ships components to manufacturers and receives, sorts and moves merchandise
from suppliers to retail stores.
Freight Forwarding
The Company is engaged, through its subsidiary USF Seko Worldwide, in
providing domestic and international air and ocean freight service through both
exclusive and non-exclusive agents.
The Company is also engaged, through its subsidiaries USF Coast
Consolidators and USF Caribbean Services, in providing direct freight
transportation service from the mainland to all points in Hawaii/ Guam and
Puerto Rico, respectively.
Terminals for Regional LTL Trucking
The Company's 217 terminals are a key element in the operation of its
regional trucklines. The terminals vary significantly in size according to the
markets served. Sales personnel at each terminal are responsible for soliciting
new business. Each terminal maintains a team of dispatchers who communicate with
customers and coordinate local pickup and delivery drivers. Terminals also
maintain teams of dock workers, line-haul drivers and administrative personnel.
The larger terminals also have maintenance facilities and mechanics. Each
terminal is directed by a terminal manager who has general supervisory
responsibilities and also plays an important role in monitoring costs and
service quality.
Revenue Equipment
At January 3, 1998 the Company operated 7,561 tractors and 17,198
trailers. Each trucking subsidiary selects its own revenue equipment to suit the
conditions prevailing in its region, such as terrain, climate, and average
length of line-haul. Tractors and trailers are built to standard specifications
and generally are not modified to fit special customer situations.
Each trucking subsidiary has a comprehensive preventive maintenance program
for its tractors and trailers to minimize equipment downtime and prolong
equipment life. Repairs and maintenance are performed regularly at the
subsidiaries' facilities and at independent contract maintenance facilities.
The Company replaces tractors and trailers based on factors such as age and
condition, the market for equipment and improvements in technology and fuel
efficiency. At January 3, 1998 the average age of the Company's line-haul
tractors was 2.7 years and the average age of its line-haul trailers was 6.0
years. Older line-haul tractors are often assigned to pickup and delivery
operations, which are generally operated at lower speeds and over shorter
distances, allowing the Company to extend the life of line-haul tractors and
improve asset utilization. The average age of the Company's pickup and delivery
tractors at January 3, 1998 was 6.9 years.
PAGE 5
Sales and Marketing
Sales personnel as well as senior management at each subsidiary are
responsible for soliciting new business and maintaining good customer relations.
In addition, the Company maintains a national account sales department
consisting of 21 professionals who are assigned major accounts within specified
geographic regions of the continental United States. These national account
managers solicit business for the regional trucklines from distribution and
logistics executives of large shippers. In many cases, targeted corporations
maintain centralized control of multiple shipping and receiving locations.
Seasonality
The Company's results, consistent with the trucking and air freight
industry in general, show seasonal patterns with tonnage and revenue declining
during the winter months and, to a lesser degree, during vacation periods in
the summer. Furthermore, inclement weather in the winter months can further
negatively affect the Company's results.
Customers
The Company is not dependent upon any particular industry and provides
services to a wide variety of customers including many large, publicly held
companies. During the year ended January 3, 1998 no single customer accounted
for more than two percent of the Company's operating revenue and the Company's
ten largest customers as a group accounted for approximately nine percent of
total operating revenue. Many of the national account customers use more than
one of the Company's regional trucklines for their transportation requirements.
Cooperation Among Trucklines
The Company's subsidiaries cooperate with each other to market and provide
services along certain routes running between their regions. In such
circumstances, the trucklines jointly price their service and then divide
revenue in proportion to the amount of carriage provided by each company or
based on predetermined formulae.
Information Technology
Each of the Company's operating subsidiaries maintains its own management
information systems and freight tracking and data processing capabilities. These
systems vary in sophistication in accordance with the size of each operation
and the demands of its customers. Software systems are shared among the regional
trucklines where sharing is efficient and appropriate.
Fuel
The motor carrier industry is dependent upon the availability of diesel
fuel. Shortages of fuel, increases in fuel costs or fuel taxes, or rationing of
petroleum products could have a material adverse effect on the profitability of
the Company. The Company maintained a fuel surcharge, which was implemented
during Fiscal 1996, throughout most of Fiscal 1997 to partially offset an
increase in fuel price. The Company has not experienced any difficulty in
maintaining fuel supplies sufficient to support its operations.
PAGE 6
Regulation
In August 1994, two pieces of legislation passed the Congress and were
signed into law that greatly affected the trucking industry. The Trucking
Industry Regulatory Reform Act ("TIRRA") reduced the ICC's authority over motor
carriers by eliminating the tariff-filing requirement for motor common carriers
using individually determined rates, classifications, rules or practices. Under
TIRRA, motor carriers are still required to provide shippers, if requested, with
a copy of the rate, classification, rules or practices of the carrier. Also,
Title VI of the Federal Aviation Administration Authorization Act of 1994 ("the
1994 Act") effectively prohibited state economic regulation of all trucking
operations for motor carriers. The 1994 Act does allow the states to continue
regulation of safety and insurance programs, including carrier inspections.
On December 29, 1995, President Clinton signed the Interstate Commerce
Commission Termination Act of 1995 ("ICCTA") which abolished the ICC as of
January 1, 1996 and transferred its residual functions to the Federal Highway
Administration and a newly created Surface Transportation Board within the U. S.
Department of Transportation. Congress has prescribed a transition period during
which regulations implementing the ICCTA including insurance and safety issues
must be promulgated by the Secretary of Transportation.
The trucking industry remains subject to the possibility of regulatory and
legislative changes that can influence operating practices and the demands for
and the costs of providing services to shippers.
Interstate motor carrier operations are subject to safety requirements
prescribed by the U.S. Department of Transportation ("DOT"), while such matters
as the weight and dimensions of equipment are also subject to Federal and state
regulations. Effective April 1, 1992, truck drivers were required to be
commercial vehicle licensed in compliance with the DOT, and legislation subjects
them to strict drug testing standards. These requirements increase the safety
standards for conducting operations, but add administrative costs and have
affected the availability of qualified, safety conscious drivers throughout the
trucking industry.
The Company uses underground storage tanks at certain terminal facilities and
maintains a comprehensive policy of testing, upgrading, replacing or eliminating
these tanks to protect the environment and comply with various Federal and state
laws. Whenever any contamination is detected, the Company takes prompt remedial
action to remove the contaminants.
Insurance and Safety
One of the risk areas in the Company's businesses is cargo loss and
damage, bodily injury, property damage and workers' compensation. The Company is
effectively self-insured on its significant operations up to $2 million per
occurrence for cargo loss and damage, bodily injury and property damage. The
Company is also predominantly self-insured for workers' compensation for amounts
to $1 million per occurrence. Additionally, the Company insures workers'
compensation for amounts in excess of $1 million per occurrence and all other
losses in excess of $2 million.
Each operating subsidiary employs safety specialists and maintains safety
programs designed to meet its specific needs. In addition, the Company employs
specialists to perform compliance checks and conduct safety tests throughout the
Company's operations. The Company's safety record to date has been good.
Employees
At January 3, 1998 the Company employed 16,843 persons, of whom 10,443
were drivers, 1,351 were dock workers, and the balance support personnel,
including office workers, managers and administrators. Approximately 53 percent
of all employees were members of unions. Approximately 89 percent of these union
workers were employed by USF Holland or USF Red Star and belonged to the
International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of
America (the "IBT"). Members of the IBT at USF Holland and USF Red Star are
presently working under the terms of a four-year, industry-wide labor agreement
that expires in March 1998. USF Holland and USF Red Star (which have negotiated
with the Teamsters National Freight Industry Negotiating Committee - TNFINC -
separately from other national long-haul LTL trucking companies) have agreed,
upon ratification of the successor National Master Freight Agreement (NMFA)
by the union membership, to accept the terms, conditions, and provisions of
the recently negotiated successor five year NMFA between TNFINC
and the other national long-haul unionized LTL trucking companies .
PAGE 7
Item 2. Properties
The Company's executive offices are located at 9700 Higgins Road, Suite
570, Rosemont, IL 60018. The Company's 16,000 square foot facility is occupied
under a lease terminating in November 2002.
Each of the Company's operating subsidiaries also maintains a head office
as well as numerous operating facilities. Of the 217 regional LTL trucking
terminal facilities used by the Company as of January, 1998, 80 were owned and
137 were leased. These facilities range in size according to the markets served.
The Company has not experienced and does not anticipate difficulties in renewing
existing leases on favorable terms or obtaining new facilities as and when
required.
Item 3. Legal Proceedings
The Company is a party to a number of proceedings brought under the
Comprehensive Environmental Response, Compensation and Liability Act, (CERCLA).
The Company has been made a party to these proceedings as an alleged generator
of waste disposed of at hazardous waste disposal sites. In each case, the
Government alleges that the parties are jointly and severally liable for the
cleanup costs. Although joint and several liability is alleged, these
proceedings are frequently resolved on the basis of the quantity of waste
disposed of at the site by the generator. The Company's potential liability
varies greatly from site to site. For some sites the potential liability is de
minimis and for others the costs of cleanup have not yet been determined. While
it is not feasible to predict or determine the outcome of these proceedings or
similar proceedings brought by state agencies or private litigants, in the
opinion of management, the ultimate recovery or liability, if any, resulting
from such litigation, individually or in the aggregate, will not materially
adversely affect the Company's financial condition or results of operations and,
to the Company's best knowledge, such liability, if any, will represent less
than 1% of its revenues.
Steven Mark Whitworth v. TNT Bestway Transportation, Inc. n/k/a TNT
Bestway Inc. and William Orr, Case No. 96-3935-A, 14th Judicial District
Court, Dallas County, Texas.
On or about November 1, 1996, a judgment was entered against the Company's
subsidiary, USF Bestway Inc. for $3,500,000 in actual damages and $1,750,000 in
attorneys fees together with court costs and interest. USF Bestway Inc. has
appealed the judgment to the Dallas Court of Appeals.
Management of the Company believes that it has good grounds for obtaining a
reversal of the judgment on appeal because it believes, among other reasons,
that the judgment entered on the basis of the procedural technicality of
counsel's failure to comply with the requirements of Texas law concerning the
signature of pleadings by counsel will not be sustained by a reviewing court.
The Company further believes the judgment will be vacated and the matter
remanded for a trial on the merits and that, in any event, the judgment, if
sustained, will not have a material adverse effect on the Company's financial
condition. In the event the judgment is sustained on appeal, management of the
Company's subsidiary, USF Bestway Inc. intends to pursue potential causes of
action against all appropriate parties.
Also, the Company is involved in other litigation arising in the ordinary course
of business, primarily involving claims for bodily injuries and property
damages. The Company maintains insurance coverage to insure against these types
of claims. Accordingly, in the opinion of management, the ultimate recovery or
liability, if any, resulting from such litigation, individually or in the
aggregate, will not materially adversely affect the Company's financial
condition or results of operations.
PAGE 8
PART II
Item 5. Market for the Company's Common Stock and related
Stockholder Matters
The Company's common stock trades on The NASDAQ Stock Market under the
symbol: USFC. On March 10, 1998 there were approximately 9,000 beneficial
holders of the Company's common stock. For the high and low sales prices for the
common stock for each full calendar quarterly period for fiscal year 1996 and
1997, see page F19 of Exhibit 13 (incorporated by reference under
Item 14 herein).
Since July 2, 1992, the Company has paid a quarterly dividend of $.093333
per share. Although it is the present intention of the Company to continue
paying quarterly dividends, the timing, amount and form of future dividends will
be determined by the board of directors and will depend, among other things, on
the Company's results of operations, financial condition, cash requirements,
certain legal requirements and other factors deemed relevant by the board of
directors. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" (incorporated by
reference under Item 14 herein).
Item 6. Selected Financial Data
The information set forth under the caption "Selected Consolidated
Financial Data" on page F1 of Exhibit 13 is incorporated by
reference under Item 14 herein.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on pages F2 through F5 of Exhibit 13, is
incorporated by reference under Item 14 herein.
Item 8. Financial Statements and Supplementary Data
The Financial Statements and Supplementary Data Appearing on pages F7
through F19 of Exhibit 13, are incorporated by reference
under Item 14 herein.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
KPMG Peat Marwick LLP was previously engaged as the principal
accountant to audit the Company's financial statements for the Company's two
fiscal years ending on December 28, 1996. On September 18, 1997, their
appointment as principal accountants was terminated.
In each of the past two years ended December 28, 1996 and December 30,
1995, and during the subsequent interim period through September 18, 1997, KPMG
Peat Marwick LLP's reports on the financial statements of the Company did not
contain an adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope, or accounting principles. The decision
to terminate the relationship with the accountants was approved by the Company's
Audit Committee on September 18, 1997. There were no disagreements with KPMG
Peat Marwick LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure during the Company's last
two fiscal years.
The Company requested KPMG Peat Marwick LLP to furnish a letter
addressed to the Commission stating whether it agrees with the statements made
by the Company, and, if not, stating the respects in which it does not agree. A
letter from KPMG Peat Marwick LLP stating its agreement with the statements made
by the Company was included as Exhibit 16 in a Report on Form 8-K dated
September 18, 1997.
On September 18, 1997, the Company engaged Arthur Andersen LLP as its
principal accountant to audit the Company's financial statements for the fiscal
year ending January 3, 1998. Arthur Andersen LLP was not engaged by the Company
during the Company's two fiscal years ending December 28, 1996.
The Company requested Arthur Andersen LLP to review the disclosure
required in a Report on Form 8-K dated September 18, 1997 before it was filed
with the Commission and provided Arthur Andersen LLP with the opportunity to
furnish the Company with a letter addressed to the Commission containing any new
information, clarification of the Company's expressions of its views, or the
respects to which it did not agree with the statements made in the Report on
Form 8-K dated September 18, 1997. Before the Company filed the Report on Form
8-K dated September 18, 1997, Arthur Andersen LLP informed the Company that it
had reviewed the disclosures and did not intend and was not required to furnish
the Company with such letter.
PAGE 9
PART III
Item 10. Directors and Executive Officers of the Company
The information for directors is reported in the Company's definitive proxy
statement filed pursuant to Regulation 14A, and is incorporated by reference.
The following table sets forth certain information as of January 3, 1998
concerning the registrant's executive officers:
Name Age Position
John Campbell Carruth 67 Chairman of the Board, Chief Executive
Officer and Director
James G. Connelly III 52 President, Chief Operating Officer
and Director
Robert V. Fasso 44 President-Regional Carrier Group
Christopher L. Ellis 52 Senior Vice President, Finance &
CFO
John Campbell Carruth, 67, the Company's Chief Executive Officer
since June 1991, was elected the Company's Chairman of the Board on
January 23, 1998, and has been a director of the Company since December 1991.
He was President of the Company from June 1991 until January 1998.
James G. Connelly III, 52, was appointed as the Company's
President and Chief Operating Officer on January 5, 1998 and has been a
director of the Company since January 23, 1998. Mr. Connelly was
President and Chief Operating Officer of Caremark International Inc. from
1992 until 1997. Prior to that, he was an officer of Baxter
International, Inc.
Robert V. Fasso, 44, was appointed as the Company's President-Regional
Carrier Group in September 1997. Since July 1993, Mr. Fasso has been President
and CEO of the Company's subsidiary USF Bestway Inc. Prior to that date, he was
with Yellow Freight System.
Christopher L. Ellis, 52, has been Senior Vice President, Finance and
Chief Financial Officer of the Company since June 1991.
Item 11. Executive Compensation
This information is reported in the Company's definitive proxy statement
entitled "Management Compensation" and "Compensation Committee Interlocks and
Insider Participation" respectively which was filed pursuant to Regulation
14A, and is incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is reported in the Company's definitive proxy statement
entitled "Security Ownership of Principal Holders and Management" which was
filed pursuant to Regulation 14A, and is incorporated by reference.
Item 13. Certain Relationships and Related Party Transactions
This information is reported in the Company's definitive proxy statement
entitled "Certain Relationships and Related Transactions" which was filed
pursuant to Regulation 14A, and is incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statements Schedules, and Reports on Form 8-K
(a) (1) Financial Statements
The following consolidated financial statements appearing in
the 1997 Annual Report to the Shareholders is incorporated by
reference in this Annual Report on Form 10-K as Exhibit 13:
Page Number of Exhibit 13
Selected Consolidated Financial Data F1
Management's Discussion and Analysis of F2
Financial Condition and Results of Operations
Independent Auditors' Report F6
Consolidated Financial Statements F7
Notes to Consolidated Financial Statements F11
PAGE 10
(2) Financial Statement Schedule:
Independent Auditors' Report
The Board of Directors and Stockholders
USFreightways Corporation:
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements of USFreightways Corporation and issued
our report thereon dated January 21, 1998. Our audit was made for the purpose
of forming an opinion on the basic financial statements taken as a whole. The
schedule of Valuation and Qualifying Accounts is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Chicago, Illinois
January 21, 1998
The Board of Directors and Stockholders
USFreightways Corporation:
Under date of January 22, 1997, we reported on the consolidated balance sheet
of USFreightways Corporation and subsidiaries as of December 28, 1996 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the two-year period ended December 28, 1996.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year ended
January 3, 1998. In connection with our audit of the aforementioned
consolidated financial statements, we also have audited the related financial
statement schedule as listed in the accompanying index. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audit.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
January 22, 1997
Schedule II - Valuation and Qualifying Accounts
USFreightways Corporation
Three Years ended January 3, 1998
(dollars in thousands)
Additions
_________________________
Description Balance at Charges to Charged to Deductions(1) Balance at
Beginning Costs and Other End of
of Period Expenses Accounts Period
___________ _________ __________ ___________ __________ _________
Fiscal year ended December 30,1995
Accounts receivable allowances $5,767 $2,843 $0 $3,004 $5,606
for revenue adjusmtents and doubtful accounts
Fiscal year ended December 28, 1996
Accounts receivable allowances $5,606 $4,868 $0 $3,288 $7,186
for revenue adjusmtents and doubtful accounts
Fiscal year ended January 3, 1998
Accounts receivable allowances $7,186 $6,717 $0 $3,836 $10,067
for revenue adjusmtents and doubtful accounts
(1) Primarily uncollectible accounts written off net of recoveries.
PAGE 11
(3) Exhibits
Exhibit Document
Number Description
3(a) Amended and Restated Certificate of
Incorporation of USFreightways Corporation
(incorporated by reference from Exhibit 3.1
to USFreightways Corporation Transition
Report on Form 10-K, from June 29, 1991 to
December 28, 1991); Certificate of
Designation for Series A Junior
Participating Cumulative Preferred Stock
(incorporated by reference from Exhibit
3(a) to USFreightways Corporation Annual
Report on Form 10-K for the year ended
January 1, 1994); Certificate of Amendment
of Restated Certificate of Incorporation of
USFreightways Corporation (incorporated by
reference from Exhibit 3(i) to
USFreightways Corporation Report on Form
10-Q for the quarter ended June 29, 1996).
3(b) Bylaws of USFreightways Corporation, as restated
January 23, 1998 (filed with this Annual Report
on Form 10-K).
Exhibit Document
Number Description
4(a) Form of Rights Agreement, dated as of February
4, 1994, between USFreightways Corporation
and Harris Trust and Savings Bank, as
Rights Agent (incorporated by reference to
USFreightways Corporation's registration
statement on Form 8-A filed with the
Securities and Exchange Commission on March
18, 1994).
4(b) Form of Indenture, dated as of May 1, 1993
between USFreightways Corporation and
Harris Trust and Savings Bank, as Trustee
(incorporated by reference from
USFreightways Corporation's Registration
Statement on Form S-1, filed on April 16,
1993, Registration No. 33-61134).
10(d) USFreightways Stock Option Plan (incorporated by
reference from Exhibit 10.18 to USFreightways
Corporation Transition Report on Form 10-K from
June 29, 1991 to December
28, 1991).
10(e) Agreement dated March 5, 1993 Supplementing the
Tax Indemnification Agreement between
USFreightways Corporation and TNT Transport Group
(incorporated by reference from Exhibit 10 to
USFreightways Corporation Annual Report on Form
10-K for the year ended January 2, 1993).
10(f) Stock Option Plan for Non-Employee Directors
dated October 29, 1993 (incorporated by reference
from Exhibit 10(f) to USFreightways Corporation
Annual Report on Form 10-K for the year ended
January 1,
1994).
PAGE 12
Exhibit Document
Number Description
10(g) Employment Agreement of Christopher L. Ellis
dated December 16, 1991 (incorporated by
reference from Exhibit 10(g) to
USFreightways Corporation Annual Report on
Form 10-K for the year ended January 1,
1994).
10(i) Form of Election of Deferral (incorporated by
reference from Exhibit 10(h) to
USFreightways Corporation Annual Report on
Form 10-K for the year ended December 31,
1994).
10(j) USFreightways Long-Term Incentive Plan
(incorporated by reference from Exhibit
10.1 to USFreightways Corporation Report on
Form 10-Q for the quarter ended March 29,
1997).
10(k) Stock Option Plan for Non-Employee Directors
amended and restated as of January 1, 1997
(incorporated by reference from Exhibit 3(ii) to
USFreightways Corporation Report on Form 10-Q for
the quarter ended March
29, 1997).
10(l) Employment Agreement of Robert V. Fasso dated
December 12, 1997 (filed with this Annual Report
on Form 10-K).
10(m) $200,000,000 Credit Agreement dated as of
November 26, 1997 among USFreightways
Corporation, the banks named therein and
NBD Bank, N. A. as agent (filed with this
Annual Report on Form 10-K).
10(n) Form of Irrevocable Guaranty and Indemnity
relating to the Credit Agreement described in
Exhibit 10(m) (filed with this Annual Report on
Form 10-K).
10(o) Employment Offer Letter with James G. Connelly
III, dated December 19, 1997 (filed with this
Annual Report on Form 10-K).
13 1997 USFreightways Corporation Annual Report to
Shareholders.
21 Subsidiaries of USFreightways Corporation
23 Consent of KPMG Peat Marwick LLP.
24 Powers of Attorney
27 Financial Data Schedule
Exhibits 2, 9, 11, 12, 16, 18, 22 and 28 are not applicable to
this filing.
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the last quarter of fiscal year
1997.
PAGE 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized. Dated
March 30, 1998.
USFREIGHTWAYS CORPORATION
By: /s/Christopher L. Ellis
Christopher L. Ellis
Senior Vice President, Finance and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title Date
/s/ John Campbell Carruth *
_____________________ Chairman of the Board March 30, 1998
John Campbell Carruth Chief Executive Officer
and Director
/s/ James G. Connelly III *
_____________________
President and Chief March 30, 1998
James G. Connelly III Operating Officer
and Director
/s/ Morley Koffman * Director March 30, 1998
______________
Morley Koffman
/s/ William N. Weaver, Jr. * Director March 30, 1998
______________________
William N. Weaver, Jr.
/s/ Robert P. Neuschel * Director March 30, 1998
__________________
Robert P. Neuschel
/s/ Neil A. Springer * Director March 30, 1998
________________
Neil A. Springer
/s/ Robert V. Delaney * Director March 30, 1998
_________________
Robert V. Delaney
/s/ John W. Puth * Director March 30, 1998
____________
John W. Puth
/s/ Anthony J. Paoni * Director March 30, 1998
________________
Anthony J. Paoni
/s/ Christopher L. Ellis Chief Financial Officer March 30, 1998
____________________
Christopher L. Ellis
/s/ Robert S. Owen
______________ Controller and Principal March 30, 1998
Robert S. Owen Accounting Officer
/s/ Christopher L. Ellis
* By: Christopher L. Ellis
Attorney-in-Fact
PAGE 14
EXHIBIT 3(b)
USFREIGHTWAYS CORPORATION
BY-LAWS
OF
USFREIGHTWAYS CORPORATION
AS ADOPTED JANUARY 23, 1998
PAGE 15
BY-LAWS
of
USFreightways Corporation
Dated January 23, 1998
ARTICLE I
Offices
SECTION 1.1 Offices. USFreightways Corporation (the
"Corporation") may have offices either within or without the State of Delaware.
The registered office of the Corporation and the name of the registered agent
of the Corporation are as is set forth in the Restated Certificate of
Incorporation of the Corporation, or as may subsequently be or have been
changed by resolution of the Board of Directors (the "Board").
ARTICLE II
Meetings of Stockholders
SECTION 2.1 Annual Meetings. An annual meeting of the
stockholders of the Corporation for the election of directors and for the
transaction of such other business as may properly come before the meeting shall
be held on such date and at such time as the Board may from time to time
determine, or, if not so designated, then at 10:00 a.m., on the third Tuesday
in April in each year if not a legal holiday, and, if a legal holiday, at the
same hour on the next succeeding work day, and at such place as shall be
designated by the Board in the notice thereof.
At any annual meeting of stockholders, only such business
shall be conducted as shall have been brought before the annual meeting (i) by
or at the direction of the chairman of the meeting or (ii) by any stockholder
who complies with the procedures set forth in this Section 2.1.
For business properly to be brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
proper written form to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 30 days nor more
than 60 days prior to the annual meeting; provided, however, that in the event
that less than 40 days' notice or prior public disclosure of the date of the
annual meeting is given or made to stockholders, notice by the stockholder to be
timely must be received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. To be in proper written form, a
stockholder's notice to the Secretary shall set forth in writing as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting; (ii) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business; (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder; and (iv) any material interest
of the stockholder in such business. Notwithstanding anything in the By-laws to
the contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 2.1.
SECTION 2.2 Special Meetings. A special meeting of the
stockholders for any purpose or purposes may be called at any time by the Board,
or by any committee of the Board which has been duly designated by the Board and
whose powers and authority, as expressly provided in a resolution of the Board,
include the power to call such meetings, and such meeting shall be held on such
date and at such place and hour as shall be designated in the notice thereof
Upon written request of any stockholder or stockholders holding in the aggregate
one-fifth of the voting power of all stockholders delivered in person or sent
by registered mail to the Chairman of the Board, the Chief Executive Officer,
the President or the Secretary of the Corporation, the Secretary shall call a
special meeting of stockholders to be held at such time and place as the board
my fix; provided, however, that no stockholder may request a Special Meeting
pursuant to this Section 2.2 on more than two occasions during any twelve month
period. Only such business as is specified in the notice of any special meeting
of the stockholders shall come before such meeting.
PAGE 16
SECTION 2.3 Notice of Meetings. Notice of each meeting of the
stockholders shall be given not less than 10 nor more than 60 days before the
date of the meeting to each stockholder of record entitled to notice of, or to
vote at, such meeting by delivering a typewritten or printed notice thereof to
such stockholder personally or by depositing such notice in the United States
mail, postage prepaid, directed to such stockholder at such person's address as
it appears on the stock record of the Corporation. Every such notice shall state
the place, date and hour of the meeting and, in the case of a special meeting
is called. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, either before or after such meeting, and will be
waived by any stockholder by such person's attendance thereat, in person or by
proxy (unless such stockholder protests, prior to or at the commencement of the
meeting, the lack of proper notice to such stockholder). Any stockholder waiving
notice of a meeting shall be bound by the proceedings of any such meeting in all
respects as if due notice thereof had been given.
SECTION 2.4 Adjournments. Any meeting of stockholders, annual
or special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 2.5 Quorum and Manner of Acting. The presence in
person or by proxy of stockholders holding of record a majority of the shares
of stock of the Corporation entitled to be voted shall constitute a quorum for
the transaction of business at any meeting of the stockholders. In the absence
of a quorum at any such meeting or any adjournment or adjournments thereof, a
majority in voting interest of those present in person or by proxy and entitled
to vote, or, in the absence therefrom of all the stockholders, any officer
entitled to preside at, or to act as secretary of, such meeting, may adjourn
such meeting from time to time in the manner provided in Section 2.4 until
stockholders holding the amount of stock requisite for a quorum shall be present
in person or by proxy. The absence from any meeting in person or by proxy of
stockholders holding the number of shares of stock of the Corporation required
for action upon any given matter which may properly come before the meeting if
there shall be present there at, in person or by proxy of stockholders holding
the number of shares of stock of the Corporation required
for action upon any given matter shall be present there at, in person or by
proxy, stockholders holding the number of shares of stock of the Corporation
required in respect of such other matter. The stockholders present at a duly
called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 2.6 Organization of Meetings. At each meeting of the
stockholders, one of the following shall act as chairman of the meeting and
preside there at, in the following order of precedence:
(a) the Chairman of the Board, or, if such person is
not present or if no person holds such office, any officer or director of
the Corporation designated by the Board; or
(b) any officer or director of the Corporation
designated by a majority in voting interest of the stockholders present in
person or by proxy and entitled to vote there at.
The person whom the chairman of the meeting shall appoint,
shall act as secretary of the meeting and keep the minutes thereof.
2.7 Order of Business. The order of business at each meeting
of the stockholders shall be determined by the chairman of the meeting, but
such order of business may be changed by a majority in voting interest of those
present in person or by proxy at such meeting and entitled to vote there at. The
chairman of the meeting shall have the right and authority to prescribe such
acts and things as are necessary or desirable for the proper conduct of the
meeting, including, without limitation, the establishment of procedures for th
maintenance of order and safety, limitations on the time allotted to questions
or comments on the affairs of the Corporation, restrictions on entry to such
meeting after the time prescribed for the commencement thereof, and the opening
and closing of the voting polls.
The chairman of any meeting shall, if the facts warrant,
determine and declare to such meeting that business was not properly brought
before the annual meeting in accordance with the provisions of Sections 2.1 or
2.2 hereof and, if such person should so determine, such person shall so declare
to the meeting and any such business not properly brought before the meeting
shall not be transacted.
PAGE 17
SECTION 2.8 Voting. Each stockholder shall, at each meeting
of the stockholders, be entitled to one vote in person or by proxy for each
share of stock of the Corporation which has voting power on the matter in
question held by such person and registered in such person's name on the stock
record of the Corporation:
(a) on the date fixed pursuant to the provisions of Section
8.6 of Article VIII of these By-laws as the record date for the determination of
stockholders who shall be entitled to receive notice of and to vote at such
meeting; or
(b) if no record date shall have been so fixed, then at the
close of business on the day next preceding the day on which notice of the
meeting shall be given or, if notice of the meeting shall be waived, at the
close of business on the day next preceding the day on which the meeting shall
be held, or, if no record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting shall have been fixed,
the day on which the first written consent is expressed.
Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Any vote of stock of the Corporation may be given at any meeting of
the stockholders by the person entitled to vote the same in person or by proxy
(who need not be a stockholder) appointed by an instrument in writing delivered
to secretary of the meeting; provided, however, that no proxy shall be voted or
acted upon after three years from its date unless such proxy provides for a
longer period. The attendance at any meeting of a stockholder who may
theretofore have given a proxy shall not have the effect of revoking the same
unless such person shall in writing so notify the secretary of the meeting prior
to voting of the proxy. Shares standing in the names of two or more persons
shall be voted or represented in accordance with the determination of the
majority of such persons, or, if only one of such persons is present in person
or represented by proxy, such person shall have the right to vote such shares
and such shares shall be deemed to be represented for the purpose of determining
a quorum. At all meetings of stockholders for the election of directors a
plurality of the votes cast shall be sufficient to elect. All other elections
and questions shall, unless otherwise provided by law, the Certificate of
Incorporation or these By-laws, be decided by the vote which could be cast by
the holders of all shares of stock entitled to vote thereon which are present in
person or represented by proxy at the meeting. Unless otherwise required by law
or directed by the chairman of the meeting, the vote at any meeting of the
stockholders on any question need not be by ballot. On a vote by ballot, each
ballot shall be signed by the stockholder voting, or by such person's proxy if
there be such proxy, and shall state the number of shares voted.
SECTION 2.9 Consent in Lieu of Meeting. Anything herein to
the contrary notwithstanding, any action required to be taken at any annual or
special meeting of stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken at
any annual or special meeting of such stockholders or may be taken without a
meeting, without prior notice and without a vote if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by stockholders who have not consented in
writing and any certificate filed with respect to such matter shall state tha
such written notice has been given.
PAGE 18
SECTION 2.10 List of Stockholders. It shall be the duty of the
officer of the Corporation who shall have charge of the stock ledger of record,
either directly or through another officer of the Corporation or agent thereof,
to prepare and make, at least 10 days before every meeting of the stockholders,
a complete list of the stockholders entitled to vote there at, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least 10 days prior to the
meeting, either at the place where the meeting is to be held or at such other
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting. Such list shall also be produced and
kept at the time and place of the meeting during the whole time thereof and may
be inspected by any stockholder who is present. The stock record shall be the
only evidence as to who are the stockholders entitled to examine the stock
record, such list or the books of the Corporation or to vote in person or by
proxy at any meeting of the stockholders.
Section 2.11 Inspectors. Either the Board or, in the absence
of a designation of inspectors by the Board, the chairman of the meeting may,
in its or such person's discretion, appoint two or more inspectors, who need not
be stockholders, who shall receive and take charge of ballots and proxies and
decide all questions relating to the qualification of those asserting the right
to vote and the validity of ballots and proxies. In the event of the failure or
refusal to serve of any inspector designated by the Board, the chairman of the
meeting shall appoint an inspector to act in place of each such inspector
designated by the Board. In the absence of a designation of inspectors by the
Board and the chairman of the meeting, the secretary of the meeting shall
perform the duties which would otherwise have been performed by the inspectors.
ARTICLE III
Board of Directors
SECTION 3.1 General Powers. The property, business, affairs
and policies of the Corporation shall be managed by or under the direction of
the Board.
SECTION 3.2 Number and Term of Office. The Board shall consist
of not less than three nor more than twenty-one directors. The exact number of
directors shall be determined from time to time by a resolution or resolutions
adopted by the affirmative vote of a majority of the total number of directors
which the corporation would have if there were no vacancies (the "entire
Board"). The directors shall be divided into three classes. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board. If the classes of directors are not
equal in number, the Board shall determine which class shall contain an unequal
number of directors.
Upon, or as soon as practicable following, the filing of the
Restated Certificate of Incorporation, the first class of directors shall be
elected for a term to expire at the annual meeting next ensuing, the second
class until the second annual meeting thereafter, and the third class until the
third annual meeting thereafter. At each succeeding annual meeting of
stockholders, successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term. If the number of
directors is changed in accordance with the terms of the Certificate of
Incorporation and this Section 3.2, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible and any additional director of any class
elected to fill a vacancy resulting from an increase in such class shall hold
office for a term that shall coincide with the remaining term of that class, but
in no case will a decrease in the number of directors shorten the term of any
incumbent director. A director shall hold office until the annual meeting for
the year in which his or her term expires and until his or her successor shall
be elected and shall qualify, subject, however, to the director's prior death,
resignation, disqualification or removal from office.
PAGE 19
SECTION 3.3 Nomination and Election of Directors. Nominations
of persons for election to the Board may be made at any annual meeting of
stockholders by or at the direction of the Board or by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting who
was a stockholder of record at the time of giving of notice provided for in this
Section 3.3 and who complies with the notice procedures set forth in this
Section 3.3. Any such nomination by a stockholder shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely
notice for an annual meeting, a stockholder's notice shall be delivered to and
received by the Secretary of the Corporation not less than 60 days nor more
than 90 days prior to the first anniversary of the preceding year's annual
meeting; provided that, in the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, notice by the stockholder to be timely must be so delivered
and received not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting and the 10th day following the day on which a public announcement
of the date of such meeting is first made. Notwithstanding anything in the
foregoing sentence to the contrary, in the event that the number of directors to
be elected to the Board is increased and there is no public announcement naming
all of the nominees for director or specifying the size of the increased Board
made by the Corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this Section
3.3 shall also be considered timely, but only with respect to nominees for any
new positions created by such increase, if it shall be delivered to the
Secretary of the Corporation at the principal executive office of the
Corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the Corporation.
Nominations of persons for election to the Board may be made
at a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting (i) by or at the direction of
the Board or (ii) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this Section 3.3, who
shall be entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 3.3. In the event the Corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the Board, any such stockholder may nominate a person or persons
(as the case may be) for election to such position(s) as specified in the
Corporation's notice of meeting, if the stockholder's notice shall be delivered
to and received by the secretary of the Corporation at the principal executive
offices of the Corporation not earlier than the 90th day prior to such special
meeting and not later than the close of business on the later of the 60th day
prior to such special meeting and the 10th day following the day on which a
public announcement is first made of the date of the special meeting and of the
nominees proposed by the Board to be elected at such meeting.
Any stockholder's notice delivered pursuant to this Section
3.3 shall set forth in writing (i) as to each person whom the stockholder
proposes to nominate for election or re-election as a director (A) the name,
age, business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the number of shares of stock of
the Corporation which are beneficially owned by such person, and (D) any other
information relating to such person that is required to be disclosed in
connection with the solicitation of proxies for election of directors, or as
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (the "Exchange Act") (including, without limitation, such
person's written consent to being named in proxy statement as a nominee and to
serving as a director if elected), and any other applicable laws or rules or
regulations of any governmental authority or of any national securities exchange
or similar body overseeing any trading market on which shares of the Corporation
are traded; and (ii) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination is made (A) the name and address
of such stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (B) the class and number of shares of the Corporation which
are owned beneficially and of record by such stockholder and such beneficial
owner.
At the request of the Board, any person nominated by the Board
for election as a director shall furnish to the Secretary of the Corporation
that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible for
election as a director of the Corporation unless nominated in accordance with
the procedures set forth in this Section 3.3. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by these By-Laws and in
that event the defective nomination shall be disregarded. In addition to the
provisions of this Section 3.3, a stockholder shall also comply with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder, and any other applicable laws or rules or regulations of an
governmental authority or any national securities exchange or similar body
overseeing any trading market on which shares of the Corporation are traded,
with respect to the matters set forth herein.
At each meeting of the stockholders for the election of
directors, provided a quorum is present, the directors nominated in accordance
with this Section 3.3 for election at such meeting shall be elected by a
plurality of the votes validly cast in such election. Directors need not be
stockholders of the Corporation or residents of the State of Delaware.
PAGE 20
Section 3.4 Meetings. (a) Regular Meetings(a) Regular
Meetings. Regular meetings of the Board or any committee thereof shall be held
as the Board or such committee thereof shall from time to time determine. If
any day fixed for a regular meeting shall be a legal holiday
at the place where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be postponed until the next succeeding
business day.
(b) Notice of Meetings(b) Notice of Meetings.
Special meetings of the Board, at which any and all business may be
transacted, shall be held whenever called by the Chief Executive Officer,
the President, the Chairman of the Board or a majority of the Board.
(c) Notice of Meetings(c) Notice of Meetings. No notice of
regular meetings of the Board or of any committee thereof or of any adjourned
meeting thereof need be given. Notice shall be given to each special meeting of
the Board or adjournment thereof, including the time and place thereof. Notice
of each such meeting shall be mailed to each director, addressed to such person
at such person's residence or usual place of business, at lease two days before
the day on which such meeting is to be held, or shall be sent to such person at
such place by facsimile, telegraph, cable, wireless or other form of recorded
communication, or be delivered personally or by telephone not later than the day
before the day on which such meeting is to be held, but notice need not be given
to any director who shall attend meeting. A written waiver of notice, signed by
the person entitled thereto, whether before or after the time of the meeting
stated therein, shall be deemed equivalent to notice. The purposes of a meeting
of the Board or any committee thereof need not be specified in the notice
thereof.
(d) Time and Place of Meetings(d) Time and Place of Meetings.
Regular meetings of the Board or any committee thereof shall be held at such
time or times and place or places as the Board or such committee may from time
to time determine. Each special meeting of the Board or any committee thereof
shall be held at such time and place as the caller or callers thereof may
determine. In the absence of such a determination, each regular meeting or
special meeting of the Board or any committee thereof shall be held at such time
and place as shall be designated in the notices or waivers of notice thereof.
(e) Quorum and Manner of Acting(e) Quorum and Manner of
Acting. A majority of the directors then in office and a majority of the members
of any committee shall be present in person at any meeting thereof in order to
constitute a quorum for the transaction of business at such meeting and the vote
of a majority of the directors present at any such meeting at which a quorum is
present shall be necessary for the passage of any resolution or for an act to be
the act of the Board or such committee. In the absence of a quorum, a majority
of the directors present thereat may adjourn such meeting from time to time
until a quorum shall be present there at. Notice of any adjourned meeting need
not be given.
(f) Organization of Meetings(f) Organization of Meetings. At
each meeting of the Board, the Chairman of the Board or, if such person is not
present or if no person holds such office, any director chosen by a majority of
the directors present there at shall act as chairman of the meeting and preside
thereat. The person whom the chairman of the meeting shall appoint shall act as
secretary of such meeting and keep the minutes thereof. The order of business at
each meeting of the Board shall be determined by the chairman of such meeting.
(g) Consent in Lieu of Meetings(g) Consent in Lieu of
Meetings. Anything herein to the contrary notwithstanding, any action required
or permitted to be taken at any meeting of the Board or any committee thereof
may be taken without a meeting if all members of the Board or such committee, as
the case may be, consent thereto in a writing or writings and such writing or
writings are filed with the minutes of the proceedings of the Board or such
committee.
(h) Action by Communications Equipment(h) Action by
Communications Equipment. The directors may participate in a meeting of the
Board or any committee thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting.
PAGE 21
SECTION 3.5 Compensation. Each director who is not also a
salaried employee of the Company or any of its affiliates, in consideration of
he or she serving as such, shall be entitled to receive from the Corporation
such amount per annum and such fees for attendance at meetings of the Board or
of any committee, or both, as the Board shall from to time determine. The Board
may provide that the Corporation shall reimburse each director or member of a
committee, including any director who is a salaried employee of the Company or
any of its affiliates, for any expenses incurred by such person on account of
such person's attendance at any such meeting.
SECTION 3.6 Resignation, Removal and Vacancies. Any director
may resign at any time by giving written notice of such person's resignation to
the Board. Any such resignation shall take effect at the time specified therein
or, if the time when it shall become effective shall not be specified therein,
when accepted by the Board. Except as aforesaid, the acceptance of such
resignation shall not be necessary to make it effective.
Any director may be removed at any time for cause by vote of
the holders of a majority in voting interest of shares then entitled to vote at
an election of directors; provided, however, that for as long as TNT Limited, or
any affiliate of TNT Limited, owns a majority of such outstanding shares of
capital stock, any director or the entire Board of Directors may be removed in
the manner described above with or without cause. The vacancy in the Board
caused by any such removal may be filled by the stockholders at such meeting or
as provided in the next paragraph of these By-laws.
In the case of any vacancy on the Board or in the case of any
newly created directorship, a director to fill the vacancy or the newly created
directorship for the unexpired portion of the term being filled may be elected
by a majority of the directors of the Corporation then in office, though less
than a quorum, or by a sole remaining director. The director elected to fill
such vacancy shall hold office for the unexpired term in respect of which such
vacancy occurred and until such person's successor shall be elected and shall
qualify or until such person's earlier death or resignation or removal in the
manner herein provided.
ARTICLE IV
Committees
SECTION 4.1 Number, Appointment, Term of Office. etc. The
Board, by resolution or resolutions passed by a majority of the Board, may
designate one or more committees, each committee to consist of one or more
directors then in office. Each member of any such committee shall continue as
such only so long as such person remains a director and may be removed at any
time, with or without cause, by a majority of the Board. Any vacancy on any
committee may be filled at any time by the vote of a majority of the Board.
In the absence or in case of the disqualification of a member
or members of any such committee, the member or members of such committee
present and not disqualified from voting at a meeting of such committee, whether
or not such person or they constitute a quorum, may unanimously appoint another
member of the Board to act at such meeting in place of any absent or
disqualified member.
SECTION 4.2 Functions and Powers. Each committee shall have
such functions and powers as the Board shall deem advisable and, subject to any
limitations or restrictions which may be prescribed by resolution of the Board,
if an Executive Committee is designated, it shall have and may exercise all the
powers and authority of the Board in the management of the property, business,
affairs and policies of the Corporation,
including the power and authority to declare dividends and to authorize the
issuance of stock of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; provided, however,
that no committee shall have the power of authority to: approve amendments to
the Certificate of Incorporation of the Corporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board as provided in Section 151(a)
of the Delaware General Corporation Law, fix the designations and any of the
preferences or rights of such shares or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series);
adopt agreements of merger or consolidation; recommend to the stockholders the
sale, lease or exchange of all or substantially all the property and assets of
the Corporation; recommend to the stockholders the dissolution of the
Corporation or the revocation of such a dissolution; or amend these By-laws.
SECTION 4.3 Rules. Subject to the provisions of these By-laws,
each committee by resolution adopted by a majority of all the members thereof
shall fix its rules of procedure.
PAGE 22
ARTICLE V
Officers
SECTION 5.1 Election and Appointment and Term of Office. The
Corporation shall have such officers with such titles as shall be stated in a
resolution of the Board, and with such duties as shall be given them as
hereinafter provided or as may otherwise be specifically given them by the
Board, but such officers shall include at least (a) a Chairman of the Board or
one or more Vice-Chairmen of the Board or a Chief Executive Officer or a
President, or any or all the foregoing, and (b) a Secretary or one or more
Assistant Secretaries or a Treasurer or one or more Assistant Treasurers, or
any or all of the foregoing. One of such officers shall have the duty to record
the proceedings of the meetings of stockholders and directors in a book to be
kept for that purpose. Any number of offices may be held by the same person
except that at least one person who holds an office referred to in clause (a)
of the second preceding sentence shall not be the same as at least one person
who holds any office referred to in clause (b) of the second preceding sentence.
SECTION 5.2 Resignation, Removal and Vacancies. Any officer
may resign at any time by giving written notice of such person's resignation to
the Board. Any such resignation shall take effect at the time specified therein
or, if the time when it shall become effective shall not be specified therein
when accepted by the Board. Except as aforesaid, the acceptance of such
resignation shall not be necessary to make it effective.
Any officer, agent or employee elected or appointed by the
Board may be removed, with or without cause, at any time by the Board. Any agent
or employee appointed by an officer may be removed, with or without cause, at
any time by such officer.
A vacancy in any office may be filled for the unexpired
portion of the term in the same manner as provided in these By-laws for election
or appointment to such office.
SECTION 5.3 Duties and Functions. If any of the following
offices is created and a person appointed or elected thereto, and unless the
Board otherwise provides, such offices and persons shall have the following
duties and functions:
(a) Chairman(a) Chairman. If a Chairman of the Board is
appointed or elected, such person shall be a member of the Board, shall preside
at meetings of the Board and of the stockholders at which such person shall be
present, shall perform such duties as are incident to the office of the Chairman
of the Board, and shall perform such other duties as may from time to time be
prescribed by the Board.
(b) Vice-Chairman(b) Vice-Chairman. If any Vice-Chairman or
Vice-Chairmen of the Board are appointed or elected, they shall be members of
the Board, shall perform such duties as are incident to the office of the
Vice-Chairman of the Board, and shall perform such other duties as may from time
to time be prescribed by the Board.
(c) Chairman of the Executive Committee(c) Chairman of the
Executive Committee. If a Chairman of the Executive Committee is appointed or
elected, such person shall be a member of the Board, shall preside at meetings
of the Executive Committee, shall when requested consult with and advise the
other officers of the Corporation, and shall perform such other duties as may be
agreed upon with them or as the Board or the Executive Committee may from time
to time determine.
(d) Chief Executive Officer(d) Chief Executive Officer. If a
Chief Executive Officer is appointed or elected, such person shall, subject to
the control of the Board, have general charge and management of the property,
business and affairs of the Corporation and shall have the direction of, and may
assign duties to, all other officers (other than the Chairman and any
Vice-Chairman, if either or both is appointed or elected), agents and employees.
PAGE 23
(e) President(e) President. If a President is
appointed or elected, such person shall have such powers and duties as
shall be prescribed by the Chief Executive Officer, if one is appointed or
elected, or the Board. The President shall report to the Chief Executive
Officer.
(f) Chief Operating Officer(f) Chief Operating Officer. If any
Chief Operating Officer is appointed or elected, such person shall have such
powers and duties as shall be prescribed by the Chief Executive Officer or the
President, if either or both is appointed or elected, or the Board.
(g) Chief Financial Officer(g) Chief Financial Officer. If any
Chief Financial Officer is appointed or elected, such person shall perform all
the powers and duties of the offices of the chief financial officer and chief
accounting officer and in general shall have overall supervision of the
financial operations of the Corporation. The Chief Financial Officer shall also
perform such other duties as the Chief Executive Officer, the President or the
Board may from time to time determine.
(h) Vice Presidents(h) Vice Presidents. If any Vice President
or Vice Presidents are appointed or elected, they shall have such powers and
duties as shall be prescribed by the Chief Executive Officer or the President,
if either or both is appointed or elected, or the Board. Vice Presidents for
this purpose shall include Senior, Executive, Assistant and all other categories
or types of Vice Presidents.
(i) Secretary(i) Secretary. If a Secretary is appointed or
elected, such person shall attend and keep the records of all meetings of the
stockholders and the Board in one or more books kept for that purpose, shall
give or cause to be given due notice of all meetings in accordance with these
By-laws and as required by law, shall notify the several officers of the
Corporation of all action taken by the Board concerning matters relating to
their duties, shall transmit to the proper officers copies of all contracts and
resolutions approved by the Board or any committees of the Board, shall be
custodian of the seal of the Corporation and of all contracts, deeds, documents
and other corporate papers, records (except accounting records) and indicia of
title to properties owned by the Corporation as shall not be committed to the
custody of another officer by the Chief Executive Officer or the President, if
either or both is appointed or elected, or the Board, shall affix or cause to be
affixed the seal of the Corporation to instruments requiring the same when the
same have been signed on behalf of the corporation by a duly authorized officer,
shall perform all duties and have all powers incident to the office of
Secretary, and shall perform such other duties as shall be assigned to such
person by the Chief Executive Officer or the President, if either or both is
appointed or elected, or the Board. One or more Assistant Secretaries may be
appointed or elected, who shall perform all the duties and have all the powers
of the Secretary in the absence of or in case of a failure to appoint or elect
or when so delegated by the Secretary, and as the Chief Executive Officer or the
President, if either or both is appointed or elected, or the Board may direct.
(j) Treasurer(j) Treasurer. If a Treasurer is appointed or
elected, such person shall perform the duties incident to the office of
Treasurer and such other duties as shall be assigned to such person by the Chief
Executive Officer or the President, if either or both is appointed or elected,
or the Board. One or more Assistant Treasurers may be appointed or elected who
shall perform all the duties and have all the powers of the Treasurer in the
absence of, or in the case of a failure to appoint or elect, or when so
delegated by the Treasurer, and as the Chief Executive Officer or the President,
if either or both is appointed or elected, or the Board may direct.
(k) Controller(k) Controller.If a Controller is appointed or
elected, such person shall perform all the duties incident to the office of
Controller and such other duties as may be assigned to such person by the Chief
Executive Officer or the President, if either or both is appointed or elected.,
or the Board. One or more Assistant Controllers may be appointed or elected who
shall perform all the duties and have all the powers of the Controller in the
absence of, or in the case of a failure to appoint or elect, or when so
delegated by, the Controller, and as the Chief Executive Officer or the
President, if either of both is appointed or elected, or the Board may direct.
PAGE 24
ARTICLE VI
Waiver of Notices; Place of Meetings
SECTION 6.1 Waiver of Notices. Anything herein to the contrary
notwithstanding, whenever notice is required to be given to any director or
member of a committee or stockholder, a waiver thereof in writing, signed by the
person entitled to such notice shall be deemed equivalent to notice, whether
given before or after the time specified therein
and, in the case of a waiver of notice of a meeting, whether or not such waiver
specifies the purpose of or business to be transacted at such meeting.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except where the person attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, and does so object.
SECTION 6.2 Place of Meetings. Any meeting of the
stockholders, the Board or any committee may be held within or without the
State of Delaware.
ARTICLE VII
Execution and Delivery of Documents; Deposits; Proxies; Books and Records
SECTION 7.1 Execution and Delivery of Documents; Delegation.
The Board shall designate the officers, employees and agents of the Corporation
who shall have power to execute and deliver deeds, contracts, mortgages, bonds,
debentures, checks, drafts and other orders for the payment of money and other
documents for and in the name of the Corporation and may authorize such
officers, employees and agents to delegate such power (including authority to
redelegate) by written instrument to other officers, employees or agents of the
Corporation. Such delegation may be by resolution or otherwise and the authority
granted shall be general or confined to specific matters, all as the Board may
determine. In the absence of such designation referred to in the first sentence
of such designation referred to in the first sentence of this Section, the
officers of the Corporation shall have such power so referred to, to the extent
incident to the normal performance of their duties.
SECTION 7.2 Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation or otherwise as the Board or any officer of the Corporation to whom
power in that respect shall have been delegated by the Board shall select.
SECTION 7.3 Proxies in Respect of Stock or Other Securities
of Other Corporations. Unless otherwise provided by the Board, any officer of
the Corporation shall have the authority from time to time to appoint an agent
or agents of the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation, to vote or consent in
respect of such stock or securities and to execute or cause to be executed in
the name and on behalf of the Corporation and under its corporate seal or
otherwise, such written proxies, powers of attorney or other instruments as such
person may deem necessary or proper in order that the Corporation may exercise
such powers and rights. Such officer may instruct any person or persons
appointed as aforesaid as to the manner of exercising such powers and rights.
SECTION 7.4 Books and Records. The books and records of the
Corporation may be kept at such places within or without the State of Delaware
as the proper officers of the Corporation may from time to time determine.
PAGE 25
ARTICLE VIII
Certificates; Stock Record; Transfer and Registration; New Certificates;
Record Date, etc.
SECTION 8.1 Certificates for Stock. Every holder of stock of
the Corporation shall be entitled to have a certificate certifying the number
of shares owned by such person in the Corporation and designating the class of
stock to which such shares belong, which shall otherwise be in such form as the
Board shall prescribe. Each such certificate shall be signed by, or in the name
of the Corporation by, the Chairman, a Vice-Chairman, the Chief Executive
Officer, the President or a Vice President of the Corporation and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Corporation. Any of or all such signatures may be facsimiles. In case any
authorized officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer or authorized agent
before such certificate is issued, it may nevertheless be issued by the
Corporation with the same effect as if such person were such officer or
authorized agent on the date of issue. Every certificate
surrendered to the Corporation for exchange or transfer shall be canceled and a
new certificate or certificates shall not be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except
in cases provided for in Section 8.4 of this Article.
SECTION 8.2 Stock Record. A stock record in one or more
counterparts shall be kept of the name of the person, firm
or corporation owning the stock represented by each certificate for stock of the
Corporation issued, the number of shares represented by each such certificate,
the date of issue thereof and, in the case of cancellation, the date of
cancellation. The person in whose name shares of stock stand on the stock record
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation.
SECTION 8.3 Transfer and Registration of Stock.(a) Transfer(a)
Transfer. The transfer of stock and certificates of stock which represent the
stock of the corporation shall be governed by Article 8 of Subtitle I of Title
6 of the Delaware Code.
(b) Registration(b) Registration. Registration of transfers of
shares of the Corporation shall be made only on the books of the Corporation by
the registered holder thereof, or by such person's attorney thereunto authorized
by power of attorney duly executed and filed with an officer of the Corporation,
and on the surrender of the certificate or certificates for such shares properly
endorsed or accompanied by a stock power duly executed.
SECTION 8.4 New Certificates. (a) Lost, Stolen or
Destroyed Certificates(a) Lost, Stolen or Destroyed Certificates. Where a
stock certificate has been lost, apparently destroyed or wrongfully taken, the
issuance of a new stock certificate or the claims based on such certificate
shall be governed by Article 8 of Subtitle I of Title 6 of the Delaware Code.
(b) Mutilated Certificates(b) Mutilated Certificates. Where
the holder of any certificate for stock of the Corporation notifies the
Corporation of the mutilation of such certificate within a reasonable time after
such person has notice of it, the Corporation will issue a new certificate for
stock in exchange for such mutilated certificate theretofore issued by it.
(c) Bond(c) Bond. The Board may, in its discretion, require
the owner of the lost, stolen, destroyed or mutilated certificate to give the
Corporation a bond in such sum, limited or unlimited, in such form and with such
surety or sureties sufficed to indemnify the Corporation against any claim that
may be made against it on account of the loss, theft, destruction or mutilation
of any such certificate or the issuance of any such new certificate.
SECTION 8.5 Regulations. The Board may make such rules and
regulations as it may deem expedient, concerning the issue, transfer and
registration of certificates for stock of the Corporation.
PAGE 26
SECTION 8.6 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than 60 nor less than 10 days before the date of such meeting, nor more than 60
days prior to any other action. If no record date is fixed: (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (2) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board is
necessary, shall be the day on which the first written consent is expressed;
(3) the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board adopts the resolution
relating thereto. A determination of stockholders entitled to notice of or to
vote at a meeting of the stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.
ARTICLE IX
Seal
SECTION 9.1 Seal. The Corporate seal shall consist of a die
bearing the full name of the Corporation in the outer circle and the legend
"Corporate Seal 1991 Delaware" in the inner circle. This seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE X
Fiscal Year
SECTION 10.1 Fiscal Year. The fiscal year of the Corporation
shall end on the Saturday closest to December 31 in each year, or such other
date as the Board determines.
ARTICLE XI
Amendments
SECTION 11.1 Amendments.These By-laws may be amended, altered
or repealed by the vote of a majority of the Board, subject to the power of the
holders of a majority of the outstanding stock of the Corporation entitled to
vote in respect thereof, by their vote given at an annual meeting or at any
special meeting, to amend, alter or repeal any By-law made by the Board.
ARTICLE XII
Subject to Law
SECTION 12.1 Subject to Law. All provisions of these By-Laws
are subject to requirements of applicable law and the Certificate of
Incorporation of the Corporation.
PAGE 27
ARTICLE XIII
Indemnification
SECTION 13.1 Power to Indemnify in Actions, Suits or
Proceedings Other Than Those by or in the Right of the Corporation. Subject to
Section 13.3 of this Article XIII, the Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law, any person who is
or was a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the Corporation, or with respect
to any criminal action or proceeding, that such person had reasonable cause to
believe that such person's conduct was unlawful.
SECTION 13.2 Power to Indemnify in Action s, Suits or
Proceedings by or in the Right of the Corporation. Subject
to Section 13.3 of this Article XIII, the Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law, any person who is
or was a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to produce a
judgment in its favor by reason of the fact that he is or was a director or
officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 13.3 Authorization of Indemnification. Any
indemnification under this Article XIII (unless ordered by a court) shall be
made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 13.1 or Section 13.2 of this
Article XIII, as the case may be. Such determination shall be made (i) by the
Board by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (ii) by a committee of such
directors designated by a majority vote of such directors even though less than
a quorum, or (iii) if such a quorum is not obtainable, or, even if it is
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iv) by the stockholders. To the extent,
however, that a director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
PAGE 28
SECTION 13.4 Good Faith Defined. For purposes of any
determination under Section 13.3 of this Article XIII, a person shall be deemed
to have acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the
Corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe such person's conduct was unlawful, if such
person's action is based on the records or books of account of the Corporation
or another enterprise, or on information supplied to such person by the officers
of the Corporation or another enterprise in the course of their duties, or on
the advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
the expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 13.4 shall
mean any other corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise of which such person is or was serving at the
request of the Corporation as a director, officer, employee or agent. The
provisions of this Section 13.4 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
applicable standard of conduct set forth in Sections 13.1 or 13.2 of this
Article XIII, as the case may be.
SECTION 13.5 Indemnification by a Court. Notwithstanding
any contrary determination in the specific case under Section 13.3 of this
Article XIII, and notwithstanding the absence of any determination
thereunder, any director, officer, employee or
agent may apply to any court of competent jurisdiction in the State of Delaware
for indemnification to the extent otherwise permissible under Sections 13.1 and
13.2 of this Article XIII. The basis of such indemnification by a court shall be
a determination by such court that indemnification of the director, officer,
employee or agent is proper in the circumstances because such person has met the
applicable standards of conduct set forth in Sections 13.1 or 13.2 of this
Article XIII, as the case may be. Neither a contrary determination in the
specific case under Section 13.3 of this Article XIII nor the absence of any
determination thereunder shall be a defense to such application or create a
presumption that the director, officer, employee or agent seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 13.5 shall be given to
the Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director, officer, employee or agent seeking
indemnification shall also be entitled to be paid the expenses of prosecuting
such application.
PAGE 29
SECTION 13.6 Expenses Payable in Advance. Expenses incurred
by a director or officer in defending or investigating a threatened or
pending action, suit or proceeding may be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Article XIII.
SECTION 13.7 Nonexclusivity of Indemnification and
Advancement of Expenses. The indemnification and advancement of expenses
provided by or granted pursuant to this Article XIII shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-Law, agreement, contract,
vote of stockholders or disinterested directors or pursuant to the direction
(howsoever embodied) of any court of competent jurisdiction or otherwise, both
as to action in their official capacity and as to action in another capacity
while holding such office, it being the policy of the Corporation that
indemnification of the persons specified in Sections 13.1 and 13.2 of this
Article XIII shall be made to the fullest extent permitted by law. The
provisions of this Article XIII shall not be deemed to preclude the
indemnification of any person who is not specified in Section 13.1 or 13.2 of
this Article XIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the Delaware General Corporation Law, or
otherwise.
SECTION 13.8 Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the Delaware General
Corporation Law or the provisions of this Article XIII.
SECTION 13.9 Certain Definitions. For purposes of
this Article XIII references to "the Corporation" shall include, in
addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, shall stand in the same position under the provisions of this
Article XIII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued. For purposes of this Article XIII, references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involved services by, such
director, officer, employee or agent with respect to an employee benefit plan,
its participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article XIII.
SECTION 13.10 Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article XIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 13.11 Limitation on Indemnification. Notwithstanding
anything contained in this Article XIII to the contrary, except for proceedings
to enforce rights to indemnification (which shall be governed by Section 13.5
hereof), the Corporation shall not be obligated to indemnify any director,
officer, employee or agent in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) wa
authorized or consented to by the Board.
PAGE 30
ARTICLE XIV
Interested Directors
SECTION 14.1 Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors
or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one
or more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if: (1) the
material facts as to such person's relationship or interest and as to the
contract or transaction are disclosed or are known to the Board or the
committee, and the Board or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or (2)
the material facts as to such person's relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (3) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board, a committee thereof, or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board or of a committee which authorizes the contract or
transaction.
PAGE 31
EXHIBIT 10(l)
USFREIGHTWAYS CORPORATION
EMPLOYMENT AGREEMENT
This Employment Agreement dated December 12, 1997, (the "Agreement"),
made by and between USFreightways Corporation, a Delaware corporation with its
principal place of business in Rosemont, Illinois (the "Company"), and Robert V.
Fasso, hereinafter called "Employee".
W I T N E S S E T H:
Section 1
Employment Duties of Employee
The Company hereby hires Employee to serve the Company as
President-Regional Carrier Group. Employee does hereby accept such employment
and agrees to perform the duties required of him in such capacity faithfully,
industriously and to the best of his ability as such duties pertaining to such
capacity are from time to time established by the Board of Directors of the
Company; provided, however, that such duties shall specifically provide for
Employee to be the President-Regional Carrier Group of the Company.
Section 2
Place of Employment
Employee shall perform the duties required of him at his current
location in Phoenix, Arizona until it is solely determined by the Chief
Executive Officer of the Company that the Employee should relocate to the
principal place of business of the Company in Rosemont, Illinois or other such
places within the United States of America to which the principal place of
business of the Company may be relocated on a permanent basis, subject, however,
to the hereinafter stated provisions relating to reimbursed expenses.
Section 3
Time to be Devoted to Company Business
Employee shall give his best endeavors to the discharge of his duties
hereunder with undivided loyalty, devoting substantially all of his business
time, attention, knowledge, energy and skills to such employment. Employee shall
not permit his employment or association by any other person, firm or
corporation, other than the Company, to interfere with the performance of his
duties to the Company.
Section 4
Base Compensation of Employee
As base compensation for the services to be performed by Employee as
herein provided, the Company agrees to pay Employee an annual salary of
$235,000.00, payable in accordance with the payment practices of the Company,
but not less than one pro-rated payment monthly. Employee's base compensation
may be increased but may not be decreased, by merit raises in an amount to be
determined annually by the Board of Directors of the Company, and to be based
upon an annual review of Employee's performance by the Chief Executive Officer
of the Company.
PAGE 32
Section 5
Performance Bonus
As additional compensation to Employee for the services to be performed
by Employee as herein provided, Employee shall be eligible to participate in the
annual discretionary bonus plan as set forth on Appendix A, attached hereto and
incorporated herein. Employee shall not be guaranteed any discretionary annual
bonus for any year or partial year of this Agreement, and Employee must be in
the regular employment of the Company on the last day of the fiscal year to
qualify for any such bonus.
Section 6
Term of Agreement
(i) The Term of this Agreement shall commence on January 1, 1998 (the
Commencement Date). The Term of this Agreement shall terminate on the third
anniversary of the Commencement Date unless sooner terminated in accordance with
Section 6(ii) or Section 7 of this Agreement or extended pursuant to the
following sentence. It is agreed that: on the anniversary of the Commencement
Date in any year commencing with the second anniversary of the Commencement
Date, the Term of this Agreement shall be extended by one year beyond the
termination date of the Term of this Agreement then in effect.
(ii) Employee may be terminated "at will" without any cause upon two
(2) years' notice given at any time after the first anniversary of the
Commencement Date. If notice is given, no automatic extension will be granted,
but in no event will Employee receive less than two (2) years' notice for
termination at will from the date such notice is given. At the Company's option,
Employee may be terminated immediately at any time after the first anniversary
of the Commencement Date upon payment of two years' salary at the then current
level from the date Employee ceases employment. The removal of Employee as
President-Regional Carrier Group of the Company, or a material adverse change in
his responsibilities, shall constitute a termination "at will" for purposes of
this Agreement (it being understood that any such termination could be with or
without cause).
(iii) If Employee would, except for this Section, be subject to a tax
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any successor provision that may be in effect, as a result of
"parachute payments" (as that term is defined in Section 280G(b) (2) (A) and (d)
(3) of the Code) made pursuant to this Agreement, or a deduction would not be
allowed to the Company for all or any part of such payments by reason of Section
280 (G) (a) of the Code, or any successor provision that may be in effect, such
payments shall be reduced, eliminated, or postponed in such amounts as are
required to reduce the aggregate "present value" (as that term is defined in
Section 280G (d) (4) of the Code) of such payments to one dollar less than an
amount equal to three times Employee's "base amount" (as that term is defined in
Section 280G (b) (3) (a) and (d) (1) and (2) of the Code). To achieve such
required reduction in aggregate present value, Employee shall determine what
item(s) constituting the parachute payments shall be reduced, eliminated, or
postponed, the amount of each such reduction, elimination, or postponement, and
the period of each such postponement. To enable Employee to make such
determination, the Company shall be required to provide Employee with such
information as is reasonably necessary for such determination.
Prior to the making of any payment under the preceding paragraph of
this Section, either party may request a determination as to whether such
payment would constitute a "parachute payment," and, if so, the amount by which
the payment must be reduced in accordance with this Section. If such a
determination is requested, it shall be made promptly, at the Company's expense,
by tax counsel selected by the Company and approved by Employee (which approval
shall not unreasonably be withheld), and such determination shall be conclusive
and binding on the parties. The Company shall provide such information as such
counsel may reasonably request, and such counsel may engage accountants or other
experts at the Company's expense to the extent that it deems it necessary to
reach a determination.
PAGE 33
Section 7
Termination of Employment
Except as provided in Section 6 above, this Agreement may be terminated
by the Company only (i) upon the mutual written consent of both parties, or (ii)
retirement of the Employee in accordance with the policies of the Company, or
(iii) in the event of the death of the Employee, or (iv) if the Employee is
unable to perform his duties due to "illness, or other physical or mental
disability", as herein defined, or (v) for "good cause" as herein defined. In
the event of termination of this Agreement for any of the reasons provided for
in this Section 7, all compensation provided to be paid to the Employee shall be
pro-rated to the date of termination in full satisfaction of all compensation
arrangements.
For purposes of this Agreement, "illness, or other physical or mental
disability" shall be defined as Employee's inability to perform his duties
hereunder for an aggregate period of six (6) months during any twelve (12) month
period or an aggregate period of nine (9) months in any period of twenty-four
(24) months as determined by the Board of Directors of the Company after
consultation with an independent licensed physician approved by the Company and
the Employee.
For purposes of this Agreement, "good cause" shall be defined as (i)
Employee's commission of a felony criminal offense or other crime involving
moral turpitude, or (ii) Employee's grossly negligent, reckless or willful
failure to carry out the duties of his employment as set forth in Sections 1, 2
and 3 above, or (iii) Employee's misappropriation or embezzlement of Company
assets or usurpation to his own benefit, directly or indirectly, of a material
Company corporate opportunity.
Section 8
Vacation, Insurance and Benefits
Employee shall be entitled and the Company shall provide to Employee
the following:
(i) Vacations, holidays and sick leave consistent
with Company policy existing from time to time during the term of this
Agreement;
(ii) Qualified and non-qualified employment plans, such as the
401(K) Plan, hospitalization and major medical benefits, disability benefits,
and life insurance benefits, and life insurance benefits coverage consistent
with Company policy existing from time to time during the term of this
Agreement.
(iii) Social club memberships when such membership is of
benefit to the Company and has been approved by the Chief Executive Officer of
the Company;
(iv) Company car benefits customary and in accordance
with Company policy for a position such as the Employee's;
(v) Any other benefits which may be added by the Company, from
time to time, for the Employee, including but not limited to the grant of stock
options and other similar programs.
Section 9
Reimbursed Expenses
The Company shall reimburse Employee for ordinary and necessary
expenses incurred by Employee in the pursuit and discharge of Company business.
Employee shall maintain records and accounts of such expenses on a current basis
and permit the examination thereof by the Company's auditors or accounting
personnel and shall deliver to the Company such records and receipts as are
required by the Internal Revenue Service in the filing of the Company's tax
returns.
PAGE 34
Section 10
Indemnification
The Company shall indemnify and hold Employee harmless from and against
any and all claims, demands, suits, expenses (including attorneys' fees),
judgments, fines, amounts paid in settlement of claims of any kind, and all
other liabilities of any kind which arise by reason of the fact that Employee is
or was an officer, director, employee or agent of the Company, or is or was
serving on behalf of the Company as a director, officer, employee or agent of
any other corporation, partnership, joint venture, trust or other enterprise,
during any period of time from and after January 1, 1998. Such indemnification
by the Company shall extend to the full extent permitted by law so long as
Employee acted in good faith. Such indemnification shall not extend to acts of
Employee which constitute bad faith or a willful breach of trust in the
performance of his duties hereunder or acts of the Employee which are criminally
illegal or which are committed in reckless disregard of the rights of others.
The indemnification provided herein is in addition to and not in substitution
for, any indemnification provided Employee by any other document executed by the
Company or any other person or entity.
Section 11
Working Facilities
During the term of this Agreement, the Employee shall maintain his
current office in Phoenix Arizona. When the Employee relocates to the Company's
principal place of business, the Company shall maintain an office mutually
agreeable to Employee and the Company at the Company's principal business
location currently in Rosemont, Illinois. Further, when the Employee relocates
to Rosemont, Illinois, the Company shall furnish Employee secretarial,
professional and other services and facilities suitable to his position as an
executive officer of the Company and adequate for the performance of his duties
as such.
Section 12
Deduction and Withholding
Employee agrees that the Company and/or its subsidiaries or affiliates
shall withhold from any and all payments required to be made to Employee
pursuant to this Agreement all federal, state, local and/or other taxes which
are required to be withheld in accordance with applicable statutes and/or
regulations from time to time in effect.
Section 13
Notices
All notices, requests, demands and other communications provided for by
this Agreement shall be in writing and shall be deemed to have been given when
mailed at any general or branch office of the United States Postal Service
enclosed in a certified postage paid envelope and addressed to the address of
the respective parties stated below or to such changed address as the party may
have fixed by notice:
To the Company:
USFreightways Corporation
c/o J. C. Carruth
9700 Higgins Road, Suite 570
Rosemont, IL 60018
To the Employee:
Mr. Robert V. Fasso
13431 E. Wethersfield Road
Scottsdale, AZ 85259
PAGE 35
Section 14
General Provisions
This Agreement constitutes the entire agreement between the Company and
the Employee with respect to the Employee's employment by the Company. No prior
written or prior contemporaneous oral promises or representations shall be
binding. This Agreement shall not be amended or changed except by written
instrument signed by both parties; however, nothing herein shall prohibit or
prevent the Company from establishing rules and regulations as above provided.
This Agreement supersedes all prior employment agreements, if any,
between the Company and the Employee.
At any time herein the Employee is referred to, such term shall also
mean Employee's heirs, devises, executors and administrators as the case may be.
This Agreement and any and all rights hereunder shall not be assignable
by the Company or Employee.
This Agreement is executed and delivered in, and shall be construed and
enforced in accordance with the laws of the State of Illinois
EXECUTED in multiple counterparts this 12th day of December, 1997
USFREIGHTWAYS CORPORATION EMPLOYEE
By: /s/ J. C. Carruth /s/ Robert V. Fasso
_____________ _______________
J. C. Carruth Robert V. Fasso
Title: Chief Executive Officer
PAGE 36
APPENDIX A
CONSOLIDATED OPERATING RATIO
REGIONAL CARRIER GROUP
The Employee's bonus shall be calculated based on the combined operating ratios
of all LTL companies in the USFreightways Group based on total operating revenue
and total operating income as follows:
Operating Ratio Bonus as a % of
Base Salary
Above 96 0
At and below 96 16
At and below 95 32
At and below 94 48
At and below 93 72
At and below 92 100
For operating ratios between the above stated ratios, the bonus percentage will
be increased to reflect the spread between each ratio indicated for every point
reduction in the operating ratio. For example, a 92.7 operating ratio would pay
a 80.4% bonus. A 94.5 operating ratio would pay a 40% bonus.
Employee shall not be guaranteed the above bonus for any year or partial year of
this Agreement, and Employee must be in the regular employment of the Company on
the last day of the fiscal year to qualify for this bonus.
Signed this 12th day of December, 1997
USFREIGHTWAYS CORPORATION EMPLOYEE
By: /s/ J. C. Carruth /s/ Robert V. Fasso
_____________ _______________
J. C. Carruth Robert V. Fasso
Title: Chief Executive Officer
PAGE 37
EXHIBIT 10(m)
USFREIGHTWAYS CORPORATION
THIS CREDIT AGREEMENT, dated as of November 26, 1997 (this
"Agreement"), is by and among USFreightways Corporation, a Delaware corporation
(the "Company"), the Banks set forth on the signature pages hereof
(collectively, the "Banks" and individually, a "Bank") and NBD Bank, a Michigan
banking corporation, as agent for the Banks (in such capacity, the "Agent").
INTRODUCTION
The Company desires to obtain a revolving credit facility,
including letters of credit, in the aggregate principal amount of $200,000,000
in order to provide funds and other financial accommodations for dividend
payments, working capital, equipment financing and its other corporate purposes,
including acquisitions, and the Banks are willing to establish such a credit
facility in favor of the Company on the terms and conditions herein set forth.
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms shall
have the following respective meanings:
"Adjusted Cash Flow" of any person shall mean, for any period
the net income before deduction for Interest Charges and for income taxes and
other taxes of such person determined by reference to income or profits of such
person for such period plus, to the extent deducted in computation of such net
income, the sum of (a) the amount of depreciation and amortization expense, and
(b) the amount of all rental expense under operating leases.
"Advance" shall mean any Loan or any Letter of Credit Advance.
"Affiliate", when used with respect to any person, shall mean
(a) if such person is a corporation, any officer or director thereof and any
person which is, directly and indirectly, the beneficial owner of more than 10%
of any class of any equity security (as defined in the Securities and Exchange
Act of 1934) thereof, and if such beneficial owner is a partnership, any partner
thereof, or, if such beneficial owner is a corporation, any person controlling,
controlled by or under common control with such beneficial owner, or any officer
or director of any such beneficial owner or of any corporation occupying any
such control relationship, (b) if such person is a partnership, any partner
thereof and (c) any other person which, directly or indirectly, controls or is
controlled by or is under common control with such person. For purposes of this
definition "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), with respect to any person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Applicable Debt Rating" shall mean the applicable ratings
issued by Moody's Investors Service ("Moody's") and Standard & Poors Corporation
("S&P") from time to time with respect to the senior long-term unsecured debt of
the Company. For purposes of this Agreement, (a) if only one of such rating
agencies rates such debt, such rating shall be the Applicable Debt Rating, and
(b) if the ratings fall within different levels in the Applicable Rate grid, the
higher rating shall be applicable unless the ratings differential between the
S&P rating and Moody's rating is greater than one grade, in which case, the
Applicable Rate shall be determined as if the Applicable Debt Rating were one
(1) rating's grade below the higher of the then effective S&P rating and Moody's
rating.
PAGE 38
"Applicable Rate" shall mean with respect to any Eurodollar
Rate Loan, CD Rate Loan, facility fee, or Letter of Credit fee, as the case may
be, the applicable percentage set forth in the applicable table below as
adjusted (upward or downward), if necessary, three (3) Business Days after a
change in any Applicable Debt Rating and shall remain in effect until the next
change to be effected pursuant to this definition:
Applicable Rate
======================== ------------------ ------------------ =================
Applicable Debt Rating Eurodollar Rate CD Rate Loan Facility Fee
Loan/ Letter of
Credit Fee
======================== ------------------ ------------------ =================
A2 or A or better 0.14% 0.265% 0.07%
======================== ------------------ ------------------ =================
A3 or A- 0.16% 0.285% 0.08%
- ------------------------ ------------------ ------------------ =================
Baa1 or BBB+ 0.18% 0.305% 0.10%
- ------------------------ ------------------ ------------------ =================
Baa2 or BBB 0.225% 0.35% 0.125%
======================== ================== ================== =================
Baa3 or BBB- 0.30% 0.425% 0.15%
======================== ================== ================== =================
Ba1 or BB+ or lower or 0.40% 0.525% 0.20%
no rating
======================== ================== ================== =================
"Bid Rate Letter of Credit" shall mean each Letter of Credit issued by
any Bank pursuant to Section 2.10.
"Bid Rate Letter of Credit Advance" shall mean any issuance of a
Letter of Credit by a Bank under Section 2.10, pursuant to which such Bank bears
the entire risk without allocation of a risk participation to any other Bank.
"Bid Rate Letter of Credit Quote Request" shall have the meaning set
forth in Section 2.10(b).
"Bid Rate Letter of Credit Usage Ratio" shall have the meaning set
forth in Section 2.10(f)(iv).
"Bid Rate Quote" shall have the meaning set forth in Section 2.10(c).
"Borrowing" shall mean the aggregate of Advances, including each
Letter of Credit issuance, of the Banks made to the Company, or conversions of
any Loans, pursuant to Article II on a single date and, in the case of any Fixed
Rate Loans, for a single Interest Period, which Borrowings may be classified for
purposes of this Agreement by reference to the type of Loans or the type of
Advances comprising the related Borrowing, e.g., a "Eurodollar Rate Borrowing"
is a Borrowing comprised of Eurodollar Rate Loans and a "Letter of Credit
Borrowing" is an Advance comprised of a single Letter of Credit.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which banks in Detroit, Chicago or New York are authorized by law to
close.
"Capital Lease" of any person shall mean any lease which, in
accordance with generally accepted accounting principles, is or should be
capitalized on the books of such person.
"CD Interest Period" shall mean, with respect to any CD Rate Loan, the
period commencing on the day such Loan is made or converted to a CD Rate Loan
and ending on the date 30, 60, 90 or 180 days thereafter, as the Company may
elect under Section 2.4 or 2.7; provided, however, that (a) each succeeding
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day, and (b) no CD Interest Period
which would end after the Termination Date shall be permitted.
PAGE 39
"CD Rate" shall mean, with respect to any CD Rate Loan and the related
CD Interest Period, the per annum rate that is equal to the sum of:
(a) the Applicable Rate in effect from time to time during such CD
Interest Period, plus
(b) the rate per annum obtained by dividing (i) the arithmetic mean of
secondary market bid rates per annum (expressed as a percentage) quoted at
approximately 10:00 a.m. New York time (or as soon thereafter as practicable) on
the first day of the related CD Interest Period by two or more New York
certificate of deposit dealers of recognized standing selected by the Agent for
the purchase from the Agent at face value of negotiable certificates of deposit
of the Agent with a term comparable to such CD Interest Period in an aggregate
amount comparable to the related CD Rate Loan to be made by the Agent in its
capacity as a Bank hereunder, by (ii) an amount equal to one minus the stated
maximum rate (expressed as a decimal) of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) under any regulations of the Board of Governors of the Federal Reserve
System (or any successor agency thereto) applicable on the first day of the
related CD Interest Period to a negotiable certificate of deposit of the Agent
with a term comparable to such CD Interest Period in an aggregate amount
comparable to the related CD Rate Loan, plus
(c) the annual assessment rate (expressed as a percentage) estimated
by the Agent on the first day of the related CD Interest Period to be payable by
the Agent to the Federal Deposit Insurance Corporation (or any successor agency
thereto) for such Corporation's (or such successor's) insuring Dollar deposits
of the Agent in the United States during the related CD Interest Period;
all as conclusively determined by the Agent, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%); which CD Rate shall change simultaneously with any change in such
Applicable Rate.
"CD Rate Loan" shall mean any Loan which bears interest at the CD
Rate.
"Change in Control" means any of the following events or circumstances:
(a) any Person or two or more Persons acting in concert (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) shall
after the Effective Date either (i) acquire beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 30% or more of the outstanding shares of
voting stock of the Company or (ii) obtain the power (whether or not exercised)
to elect a majority of the Company's directors or (b) Continuing Directors shall
cease to constitute a majority of the board of directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder.
"Commitment" shall mean, with respect to each Bank, the commitment of
each such Bank to make Loans and to participate in Letter of Credit Advances
made through the Agent pursuant to Section 2.1, in amounts not exceeding in
aggregate principal amount outstanding at any time the respective commitment
amounts for each such Bank set forth next to the name of each such Bank in the
signature pages hereof, as such amounts may be reduced from time to time
pursuant to Section 2.2.
"Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more persons
of the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Contingent Liabilities" of any person shall mean, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor or in any other capacity, or in respect of which
obligations such person assures a creditor against loss or agrees to take any
action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
any letters of credit, surety bonds or similar obligations and all obligations
of such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person.
"Continuing Director" means any member of the Company's board of
directors who either (i) is a member of such board as of the Effective Date or
(ii) is thereafter elected to such board, either (A) by the shareholders after
being duly nominated by the board of directors, or (B) by the board of directors
to fill a vacancy on the board of directors created by (1) an increase in the
size of the board of directors, or (2) a resignation of a Continuing Director;
provided that an individual who is so elected or nominated in connection with a
merger, consolidation, acquisition or similar transaction shall not be a
Continuing Director unless such individual was a Continuing Director prior
thereto.
PAGE 40
"Default" shall mean any of the events or conditions described in
Section 6.1 which might become an Event of Default with notice or lapse of time
or both.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Environmental Laws" shall mean any law, statute or ordinance enacted
by the United States of America or any foreign government, or by any state,
province, municipality or any other political subdivision thereof or therein,
concerning Hazardous Materials or the protection of, or regulating the discharge
of substances into, the environment, and any rules, regulations or standards
promulgated thereunder by any agency, regulatory authority or commission of any
of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which, together with the Company, would be treated as a single
employer under Section 414 of the Code.
"Eurodollar Business Day" shall mean, with respect to any Eurodollar
Rate Loan, a day which is both a Business Day and a day on which dealings in
Dollar deposits are carried out in the London interbank market.
"Eurodollar Interest Period" shall mean, with respect to any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate Loan
is made or converted to a Eurodollar Rate Loan and ending on the date one, two,
three or six months or one year thereafter, as the Company may elect under
Section 2.4 or 2.7, provided, however, that (a) any Eurodollar Interest Period
which commences on the last Eurodollar Business Day of a calendar month (or on
any day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month, (b) each Eurodollar Interest Period which
would otherwise end on a day which is not a Eurodollar Business Day shall end on
the next succeeding Eurodollar Business Day or, if such next succeeding
Eurodollar Business Day falls in the next succeeding calendar month, on the next
preceding Eurodollar Business Day, and (c) no Eurodollar Interest Period which
would end after the Termination Date shall be permitted.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Rate Loan
and the related Eurodollar Interest Period, the per annum rate that is equal to
the sum of:
(a) the Applicable Rate in effect from time to time during such
Eurodollar Interest Period, plus
(b) the rate per annum obtained by dividing (i) the per annum rate of
interest at which deposits in Dollars for such Eurodollar Interest Period and in
an aggregate amount comparable to the amount of such Eurodollar Rate Loan to be
made by the Agent in its capacity as a Bank hereunder are offered to the Agent
by other prime banks in the interbank market selected in the Agent's discretion,
at approximately 11:00 a.m. London time, as the case may be, on the second
Eurodollar Business Day prior to the first day of such Eurodollar Interest
Period by (ii) an amount equal to one minus the stated maximum rate (expressed
as a decimal) of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that is specified
on the first day of such Eurodollar Interest Period by the Board of Governors of
the Federal Reserve System (or any successor agency thereto) for determining the
maximum reserve requirement with respect to eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System;
all as conclusively determined by the Agent, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%); which Eurodollar Rate shall change simultaneously with any change
in such Applicable Rate.
"Eurodollar Rate Loan" shall mean any Loan which bears interest at the
Eurodollar Rate.
"Event of Default" shall mean any of the events or conditions
described in Section 6.1.
"Existing Credit Agreement" shall mean the credit agreement dated as
of January 13, 1992, as amended, among the Company, the Banks named therein and
NBD Bank, as agent.
PAGE 41
"Federal Funds Rate" shall mean the per annum rate established and
announced by the Agent from time to time as the opening federal funds rate paid
by the Agent in its regional federal funds market for overnight borrowings from
other banks; all as conclusively determined by the Agent, such sum to be rounded
up, if necessary, to the nearest whole multiple of one one-hundredth of one
percent (1/100 of 1%), which Federal Funds Rate shall change simultaneously with
any change in such announced rates.
"Fixed Rate Loan" shall mean any CD Rate Loan or Eurodollar Rate
Loan.
"Floating Rate" shall mean the per annum rate equal to the greater of
(a) the Prime Rate in effect from time to time, and (b) the sum of one-half of
one percent (1/2 of 1%) per annum plus the Federal Funds Rate in effect from
time to time; which Floating Rate shall change simultaneously with any change in
such Prime Rate or Federal Funds Rate, as the case may be.
"Floating Rate Loan" shall mean any Loan which bears interest at the
Floating Rate.
"Funded Debt" of any person shall mean all outstanding Indebtedness of
such person, provided, however, there shall be excluded from the calculation of
Funded Debt the aggregate face amount of letters of credit, up to $25,000,000,
which are issued for the purpose of guaranteeing accrued vacation pay to achieve
tax deductibility of such vacation pay.
"generally accepted accounting principles" shall mean generally
accepted accounting principles as in effect in the United States applied on a
basis consistent with that reflected in the audited financial statements for the
fiscal year of the Company ended December 28, 1996.
"Guaranty" shall mean the guaranty entered into by each of the
Guarantors for the benefit of the Banks and the Agent pursuant to this Agreement
in substantially the form of Exhibit A hereto, as amended or modified from time
to time.
"Guarantors" shall mean each Significant Subsidiary of the Company and
each person becoming a Significant Subsidiary of the Company, or otherwise
entering into a Guaranty, from time to time, and "Guarantor" shall mean any one
of the Guarantors.
"Hazardous Materials" shall mean any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic substances
or related materials defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 6901, et seq.) and in the regulations adopted and
publications promulgated pursuant thereto, or any other applicable federal,
state, local or foreign government law, statute, ordinance, rule, regulation or
standard.
"Indebtedness" of any person shall mean, without duplication, as of
any date, (a) all obligations of such person for borrowed money, (b) all
obligations of such person as lessee under any Capital Lease or under any
operating lease (valued at Net Present Value), (c) all obligations which are
secured by any Lien existing on any asset or property of such person whether or
not the obligation secured thereby shall have been assumed by such person, (d)
all obligations of such person for the unpaid purchase price for goods, property
or services acquired by such person, except for trade accounts payable arising
in the ordinary course of business that are not past due, (e) all obligations of
such person to purchase goods, property or services where payment therefor is
required regardless of whether delivery of such goods or property or the
performance of such services is ever made or tendered (generally referred to as
"take or pay contracts"), (f) all obligations of such person in respect of any
interest rate or currency swap, rate cap or other similar transaction (valued in
an amount equal to the highest termination payment, if any, that would be
payable by such person upon termination for any reason on the date of
determination), (g) all obligations in respect of letters of credit, whether
drawn or undrawn, and (h) all obligations of others similar in character to
those described in clauses (a) through (g) of this definition for which such
person is contingently liable, as obligor, guarantor, surety or in any other
capacity, or in respect of which obligations such person assures a creditor
against loss or agrees to take any action to prevent any such loss (other than
endorsements of negotiable instruments for collection in the ordinary course of
business), including without limitation all obligations of such person in
respect of surety bonds or similar obligations and all obligations of such
person to advance funds to, or to purchase assets, property or services from,
any other person in order to maintain the financial condition of such other
person.
PAGE 42
"Interest Charges" of any person shall mean, for any period, the sum,
without duplication, of (a) interest paid, payable or accrued during such period
by such person on Indebtedness of such person, plus (b) all debt discount and
expense amortized or required to be amortized during such period by such person,
plus (c) the maximum amount of all rents and other payments (exclusive of
property taxes, property and liability insurance premiums and maintenance costs)
paid, payable or accrued during such period by such person under any Capital
Lease attributable to interest or finance charges thereunder, plus (d) all
amounts paid, payable or accrued during such period by such person in respect of
any interest rate or currency swap, rate cap or other similar transaction.
"Interest Payment Date" shall mean (a) with respect to any Fixed Rate
Loan, the last day of each Interest Period with respect to such Fixed Rate Loan
and, in the case of any Interest Period exceeding three months or ninety days,
as the case may be, those days that occur during such Interest Period at
intervals of three months or ninety days, as the case may be, after the first
day of such Interest Period, and (b) in all other cases the last Business Day of
each March, June, September and December occurring after the date hereof,
commencing with the first such Business Day occurring after the date of this
Agreement.
"Interest Period" shall mean any CD Interest Period or Eurodollar
Interest Period, or all of them as the context may require.
"Invitation for Bid Rate Letter of Credit Quotes" shall have the
meaning set forth in Section 2.10(c).
"Letter of Credit" shall mean a standby letter of credit having a
stated expiry date not later than the earliest to occur of (a) one year after
the date of issuance thereof, and (b) the fifth Business Day before the
Termination Date, issued by the Agent on behalf of the Banks pursuant to Section
2.4 or by any Bank pursuant to Section 2.10, in each case for the account of the
Company and, in the case of each Syndicated Letter of Credit, under an
application and related documentation acceptable to the Agent requiring, among
other things, immediate reimbursement by the Company to the Agent in respect of
all drafts and other demands for payment on or thereunder and all expenses paid
or incurred by the Agent relative thereto.
"Letter of Credit Advance" shall mean any Bid Rate Letter of Credit
Advance and any Syndicated Letter of Credit Advance.
"Letter of Credit Documents" shall have the meaning ascribed thereto
in Section 3.3(b).
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any lease, subordination of any claim or
right, or any other type of lien, charge, encumbrance, preferential arrangement
or other claim or right.
"Loans" shall mean the Revolving Credit Loans and "Loan" shall mean
any Revolving Credit Loan. Any such Loan or portion thereof may also be
denominated as a Floating Rate Loan or a Fixed Rate Loan (which may be further
denominated as a CD Rate Loan or Eurodollar Rate Loan), and such Floating Rate
Loans and Fixed Rate Loans (including such CD Rate Loans and Eurodollar Rate
Loans) are referred to herein as "types" of Loans.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"Net Present Value" shall mean the present value, using a discount
rate equal to 10%, of the Company's future minimum rental payments on leases
that have initial or remaining non-cancelable lease terms in excess of one year.
In the event that the Company's lease commitments change materially as a result
of acquisitions or a significant change in business operations, then the Net
Present Value will be recalculated on an interim quarterly basis.
"Net Worth" of any person, shall mean, as of any date, the amount of
any capital stock, paid in capital and similar equity accounts plus (or minus in
the case of a deficit) the capital surplus and retained earnings of such person
and the amount of any foreign currency translation adjustment account shown as a
capital account of such person.
PAGE 43
"Note" shall mean any Revolving Credit Note.
"Overdue Rate" shall mean(a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of two percent (2%) per annum
plus the Floating Rate, (b) in respect of principal of Fixed Rate Loans, a rate
per annum that is equal to the sum of two percent (2%) per annum plus the per
annum rate in effect thereon until the end of the then current Interest Period
for such Loan and, thereafter, a rate per annum that is equal to the sum of two
percent (2%) per annum plus the Floating Rate, and (c) in respect of other
amounts payable by the Company hereunder (other than interest), a per annum rate
that is equal to the sum of two percent (2%) per annum plus the Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean Liens permitted by Section 5.2(c) hereof.
"Person" or "person" shall include an individual, a corporation, an
association, a partnership, a limited liability company, a trust or estate, a
joint stock company, an unincorporated organization, a joint venture, a trade or
business (whether or not incorporated), a government (foreign or domestic) and
any agency or political subdivision thereof, or any other entity.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to Title IV of ERISA or to the minimum funding standards of Section 412
of the Code which has been established or maintained by the Company or any ERISA
Affiliate, or by any other person if the Company or any ERISA Affiliate could
have liability with respect to such pension plan.
"Predecessor Company" shall mean any trade or business (whether or not
incorporated), and the shareholders, partners, and owners of any trade or
business, from which or of which the Company, any Subsidiary of the Company or
any ERISA Affiliate has purchased any assets or securities or other equity
interest in connection with any merger, acquisition or similar transaction.
"Prime Rate" shall mean the per annum rate announced by the Agent from
time to time as its "prime rate" (it being acknowledged that such announced rate
may not necessarily be the lowest rate charged by the Agent to any of its
customers), which Prime Rate shall change simultaneously with any change in such
announced rate.
"Prohibited Transaction" shall mean any transaction involving any Plan
which is proscribed by Section 406 of ERISA or Section 4975 of the Code and not
exempt under Section 408 of ERISA or Section 4975 of the Code.
"Reportable Event" shall mean a reportable event as described in
Section 4043(c) of ERISA including those events as to which the thirty (30) day
notice period is waived under the regulations promulgated by the PBGC under
ERISA.
"Required Banks" shall mean Banks holding not less than sixty-six and
two-thirds percent (66-2/3%) of the Commitments or, if the Commitments have
terminated, the Banks holding not less than sixty-six and two-thirds percent
(66-2/3%) of the aggregate principal amount of the Advances then outstanding.
"Restricted Payment" shall mean, with respect to any Person, such
Person (a) making loans or advances to, (b) purchasing debt or equity securities
issued by, (c) making contributions to the capital accounts of, or (d) assuming
any obligation, contingent or otherwise, as obligor, guarantor, or in any other
capacity, with respect to Indebtedness of, another Person (which other Person
shall be deemed the Person to whom the "Restricted Payment" is made).
"Revolving Credit Advance" shall mean any Revolving Credit Loan and
any Letter of Credit Advance.
PAGE 44
"Revolving Credit Loan" shall mean any borrowing under Section 2.4
evidenced by the Revolving Credit Notes and made pursuant to Section 2.1.
"Revolving Credit Note" shall mean any promissory note of the Company
evidencing the Revolving Credit Loans, in substantially the form annexed hereto
as Exhibit B, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"Significant Subsidiary" shall mean any Subsidiary of the Company
which has Total Assets which equal or exceed 3% of the Consolidated Total Assets
of the Company and its Subsidiaries.
"Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof.
"Syndicated Letter of Credit" shall mean each Letter of Credit issued
by the Agent on behalf of the Banks pursuant to Section 2.4.
"Syndicated Letter of Credit Advance" shall mean any issuance of a
Letter of Credit by the Agent under Section 2.4 made pursuant to Section 2.1 in
which each Bank acquires a pro rata risk participation.
"Termination Date" shall mean the earlier to occur of (a) November 24,
2002, and (b) the date on which the Commitments shall be terminated pursuant to
Section 2.2 or 6.2.
"Total Assets" of any person shall mean, as of any date, all assets
which, in accordance with generally accepted accounting principles, are or
should be classified as assets on a balance sheet of such person.
"Unfunded Benefit Liabilities" shall mean, with respect to any Plan as
of any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
"Utilization Amount" shall mean an amount equal to the sum of (i) the
outstanding principal balance of all Loans, (ii) the undrawn face amount of all
Syndicated Letters of Credit, and (iii) the amount of all unreimbursed draws
under all Syndicated Letters of Credit.
1.2 Other Definitions; Rules of Construction1.2 Other Definitions; 1.2
Other Definitions; Rules of Construction. As used herein, the terms "Agent",
"Banks", "Company" and "this Agreement" shall have the respective meanings
ascribed thereto in the introductory paragraph of this Agreement. Such terms,
together with the other terms defined in Section 1.1, shall include both the
singular and the plural forms thereof and shall be construed accordingly. All
computations required hereunder and all financial terms used herein shall be
made or construed in accordance with generally accepted accounting principles
unless such principles are inconsistent with the express requirements of this
Agreement. On the date of this Agreement, the fiscal year of the Company ends on
that Saturday closest to December 31 in each year (comprising a 52 or 53 week
period), and each fiscal quarter of the Company ends on that Saturday closest to
the last day of the related calendar quarter (comprising a 13 or 14 week period,
with any 14 week period occurring during the fourth fiscal quarter). Use of the
terms "herein", "hereof", and "hereunder" shall be deemed references to this
Agreement in its entirety and not to the Section or clause in which such term
appears. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
PAGE 45
ARTICLE II
THE COMMITMENTS AND THE ADVANCE
===============================================================================
2.1 Commitment of the Banks. Each Bank agrees, for itself only,
subject to the terms and conditions of this Agreement, to make Revolving Credit
Loans to the Company pursuant to Section 2.4 and Section 3.3 and to participate
in Syndicated Letter of Credit Advances to the Company pursuant to Section 2.4,
from time to time from and including the Effective Date to but excluding the
Termination Date, not to exceed in aggregate principal amount at any time
outstanding the amount of its respective Commitment as of the date any such
Advance is made, provided, however, that the aggregate principal amount of
Advances (including Bid Rate Letter of Credit Advances) outstanding to all
Banks at any time shall not exceed the aggregate Commitments of all Banks; and
provided, further, that the aggregate principal amount of Letter of Credit
Advances outstanding at any time shall not exceed an amount equal to
$100,000,000, less the aggregate principal amount of all outstanding letters of
credit issued for the account of the Company or any of its Subsidiaries which
are not Letter of Credit Advances under this Agreement whether issued by any
Bank or by any other person not a party to this Agreement, provided, however,
there shall be excluded from such $100,000,000 aggregate limitation (but not
for purposes of calculating the $100,000,000 Letter of Credit limitation
hereunder) the aggregate face amount of letters of credit, up to $25,000,000,
which are issued for the purpose of guaranteeing accrued vacation pay to achieve
tax deductibility of such vacation pay.
===============================================================================
2.2 Termination and Reduction of Commitments. (a) The Company shall
have the right to terminate or reduce the Commitments at any time and from time
to time, provided that (i) the Company shall give notice of such termination or
reduction to the Agent (with sufficient executed copies for each Bank)
specifying the amount and effective date thereof, (ii) each partial reduction of
the Commitments shall be in a minimum amount of $5,000,000 and in an integral
multiple of $1,000,000 and shall reduce the Commitments of all of the Banks
proportionately in accordance with the respective commitment amounts for each
such Bank set forth in the signature pages hereof next to the name of each such
Bank, (iii) no such termination or reduction shall be permitted with respect to
any portion of the Commitments as to which a request for a Borrowing pursuant to
Section 2.4 is then pending, or as to which a request for conversion of a
Floating Rate Borrowing to a Fixed Rate Borrowing pursuant to Section 2.7 is
pending, and (iv) the Commitments may not be terminated if any Advances are then
outstanding and may not be reduced below the principal amount of Advances then
outstanding. The Commitments or any portion thereof terminated or reduced
pursuant to this Section 2.2, whether optional or mandatory, may not be
reinstated.
PAGE 46
(b) For purposes of this Agreement, a Letter of Credit Advance
(i) shall be deemed outstanding in an amount equal to the sum of the maximum
amount available to be drawn under the related Letter of Credit on or after the
date of determination and on or before the stated expiry date thereof plus the
amount of any draws under such Letter of Credit that have not been reimbursed as
provided in Section 3.3 and (ii) shall be deemed outstanding at all times on and
before such stated expiry date or such earlier date on which all amounts
available to be drawn under such Letter of Credit have been fully drawn, and
thereafter until all related reimbursement obligations have been paid pursuant
to Section 3.3. As provided in Section 3.3, upon each payment made by the Agent
in respect of any draft or other demand for payment under any Letter of Credit,
the amount of any Letter of Credit Advance outstanding immediately prior to such
payment shall be automatically reduced by the amount of each Revolving Credit
Loan deemed advanced in respect of the related reimbursement obligation of the
Company.
2.3 Fees. (a) Facility Fees. The Company agrees to pay to the Banks a
facility fee on the daily average aggregate amount of the Commitments, whether
used or unused, for the period from the Effective Date to but excluding the
Termination Date at a daily rate equal to the Applicable Rate in effect from
time to time during such period.
Accrued facility fees shall be payable quarterly in arrears on the
last Business Day of each March, June, September and December, commencing on the
first such Business Day occurring in December, 1997, and on the Termination
Date.
(b) Utilization Fees. The Company also agrees to pay to the
Banks a utilization fee during any calendar quarter during the period from the
Effective Date to but excluding the Termination Date when the average daily sum
of the Utilization Amount during such quarter exceeds 50% of the average daily
Commitments during such quarter, which utilization fee shall be in an amount
equal to 0.05% per annum times the average daily Utilization Amount during such
quarter.
Accrued utilization fees shall be payable quarterly in arrears on the
last Business Day of each March, June, September and December, commencing on the
first such Business Day occurring in December, 1997, and on the Termination
Date.
(c) Letter of Credit Fees. The Company agrees to pay to the
Bank issuing any Bid Rate Letter of Credit a fee on the maximum amount available
to be drawn from time to time under each Bid Rate Letter of Credit, such fees as
may be agreed by the Company and the Bank issuing such Bid Rate Letter of
Credit. The Company further agrees to pay to the Banks a fee on the maximum
amount available to be drawn from time to time under each Syndicated Letter of
Credit, for the period from and including the date of issuance of such
Syndicated Letter of Credit to and including the earlier of the stated expiry
date of such Letter of Credit or earlier termination date, computed at a rate
per annum equal to the Applicable Rate in effect from time to time while such
Syndicated Letter of Credit is outstanding. All fees payable pursuant to this
Section 2.3(c) with respect to Syndicated Letters of Credit shall be payable
quarterly in arrears on the last Business Day of each March, June, September and
December, and on the Termination Date. Notwithstanding anything hereunder to the
contrary, the minimum fee payable by the Company in respect of any Syndicated
Letter of Credit shall be $500. The Company further agrees to pay to the Agent,
on demand, such other customary administrative fees, charges and expenses of the
Agent in respect of the issuance, negotiation, acceptance, amendment, transfer
and payment of such Syndicated Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Syndicated Letter of
Credit is issued.
(d) Agent's Fees. The Company agrees to pay to the Agent
agency fees for its services as Agent under this Agreement in such amounts and
at such times as may from time to time be agreed upon by the Company and the
Agent.
PAGE 47
2.4 Disbursement of Advances. (a) The Company shall give the Agent
notice of its request for each Borrowing (other than a Bid Rate Letter of Credit
Advance) in substantially the form of Exhibit C hereto (with sufficient executed
copies for each Bank) not later than 11:00 a.m. Detroit time (i) three
Eurodollar Business Days prior to the date such Borrowing is requested to be
made if such Borrowing is to be made as a Eurodollar Rate Borrowing, (ii) two
Business Days prior to the date such Borrowing is requested to be made if such
Borrowing is to be made as a CD Rate Borrowing, (iii) five Business Days (or
such shorter period as may be acceptable to the Agent) prior to the date any
Letter of Credit Advance is requested to be made, and (iv) one Business Day
prior to the date such Borrowing is requested to be made in all other cases,
which notice shall specify whether a CD Rate Borrowing, Eurodollar Rate
Borrowing, Floating Rate Borrowing, or a Letter of Credit Borrowing is requested
and, in the case of each requested Fixed Rate Borrowing, the Interest Period to
be initially applicable to such Borrowing and, in the case of each Letter of
Credit Borrowing, such information as may be necessary for the issuance thereof
by the Agent. The Agent, on the day such notice is given, shall provide notice
of such requested Advance to each Bank. Subject to the terms and conditions of
this Agreement, the proceeds of each such requested Loan shall be made available
to the Company by depositing the proceeds thereof, in immediately available
funds, in an account maintained and designated by the Company at the principal
office of the Agent. In the case of any Fixed Rate Loan, the Agent shall
promptly provide notice to the Company and the Banks of the initial CD Rate or
Eurodollar Rate, as the case may be, applicable thereto. Subject to the terms
and conditions of this Agreement, the Agent shall, on the date any Letter of
Credit Borrowing is requested to be made, issue the related Letter of Credit on
behalf of the Banks for the account of the Company. Notwithstanding anything
herein to the contrary, the Agent may decline to issue any requested Letter of
Credit on the basis that the beneficiary, the purpose of issuance or the terms
or the conditions of drawing violate any applicable law or regulation, could
expose the Agent or the Banks to any liability or could have other material
adverse impact on the Agent or the Banks.
(b) Each Bank, on the date any Borrowing in the form of a Loan is
requested to be made, shall make its pro rata share of such Borrowing available
in immediately available funds at the principal office of the Agent for
disbursement to the Company. Unless the Agent shall have received notice from
any Bank prior to the date such Borrowing is requested to be made under this
Section 2.4 that such Bank will not make available to the Agent such Bank's pro
rata portion of such Borrowing, the Agent may assume that such Bank has made
such portion available to the Agent on the date such Borrowing is requested to
be made in accordance with this Section 2.4. If and to the extent such Bank
shall not have so made such pro rata portion available to the Agent, the Agent
may (but shall not be obligated to) make such amount available to the Company,
and such Bank and the Company severally agree to pay to the Agent forthwith on
demand such amount together with interest thereon, for each day from the date
such amount is made available to the Company by the Agent until the date such
amount is repaid to the Agent, at a rate per annum equal to, if paid by the
Company, the interest rate applicable to such Borrowing during such period and,
if paid by such Bank, equal to the Federal Funds Rate for the first two Business
Days such amount shall be outstanding and, thereafter, at the interest rate
applicable to such Borrowing during such period. If such Bank shall pay such
amount to the Agent together with such interest, such amount so paid shall
constitute a Loan by such Bank as a part of such Borrowing for purposes of this
Agreement, effective as of the date such amount is made available to the Company
by the Agent. The failure of any Bank to make its pro rata portion of any such
Borrowing available to the Agent shall not relieve any other Bank of its
obligation to make available its pro rata portion of such Borrowing on the date
such Borrowing is requested to be made, but no Bank shall be responsible for
failure of any other Bank to make such pro rata portion available to the Agent
on the date of any such Borrowing.
(c) All Revolving Credit Loans made under this Section 2.4 shall be
evidenced by the Revolving Credit Notes, and all such Loans shall be due and
payable and bear interest as provided in Article III. Each Bank is hereby
authorized by the Company to record on the schedule attached to the Notes, or in
its books and records, the date, and amount and type of each Loan and the
duration of the related Interest Period (if applicable), the amount of each
payment or prepayment of principal thereon, and the other information provided
for on such schedule, which schedule or books and records, as the case may be,
shall constitute prima facie evidence of the information so recorded, provided,
however, that failure of any Bank to record, or any error in recording, any such
information shall not relieve the Company of its obligation to repay the
outstanding principal amount of the Revolving Credit Loans, all accrued interest
thereon and other amounts payable with respect thereto in accordance with the
terms of the Notes and this Agreement. Subject to the terms and conditions of
this Agreement, the Company may borrow Revolving Credit Loans under this Section
2.4 and under Section 3.3, repay and prepay Revolving Credit Loans pursuant to
Section 3.1, and reborrow Revolving Credit Loans under this Section 2.4 and
under Section 3.3.
PAGE 48
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Syndicated Letter of Credit, it being recognized
that the Agent has the sole obligation under this Agreement to issue Syndicated
Letters of Credit on behalf of the Banks, and the Commitment of each Bank with
respect to Syndicated Letter of Credit Advances is expressly conditioned upon
the Agent's performance of such obligations. Upon such issuance by the Agent,
each Bank shall automatically acquire a pro rata risk participation interest in
such Syndicated Letter of Credit Advance based on its respective Commitment, and
the unused Commitments shall be reduced by the maximum amount available to be
drawn thereunder from time to time. If the Agent shall honor a draft or other
demand for payment presented or made under any Syndicated Letter of Credit, the
Agent shall provide notice thereof to the Company on the date such draft or
demand is honored, and to each Bank on such date unless the Company shall have
satisfied its reimbursement obligation under Section 3.3 by payment to the Agent
on such date. The Agent shall further use reasonable efforts to provide notice
to the Company prior to honoring any such draft or other demand for payment, but
such notice, or the failure to provide such notice, shall not affect the rights
or obligations of the Agent with respect to any Syndicated Letter of Credit or
the rights and obligations of the parties hereto, including without limitation
the obligations of the Company under Section 3.3 hereof. Each Bank, on the date
such draft or demand is honored, provided the Agent provides the notice referred
to above on or before 2:00 p.m. Detroit time, otherwise on the next Business
Day, shall make its pro rata share of the amount paid by the Agent, and not
reimbursed by the Company on such day, available in immediately available funds
at the principal office of the Agent for the account of the Agent. If and to the
extent such Bank shall not have made such pro rata portion available to the
Agent, such Bank and the Company severally agree to pay to the Agent forthwith
on demand such amount together with interest thereon, for each day from the date
such amount was paid by the Agent until such amount is so made available to the
Agent at a per annum rate equal to, if paid by the Company, the interest rate
applicable during such period to the related Loan disbursed under Section 3.3 in
respect of the reimbursement obligation of the Company and, if paid by such
Bank, equal to the Federal Funds Rate for the first two Business Days such
amount shall be outstanding and, thereafter, at the interest rate applicable
during such period to the related loan disbursed under Section 3.3 in respect of
the reimbursement obligation of the Company. If such Bank shall pay such amount
to the Agent together with such interest, such amount so paid shall constitute a
Revolving Credit Loan by such Bank as part of the Borrowing disbursed in respect
of the reimbursement obligation of the Company under Section 3.3 for purposes of
this Agreement, effective as of the date such amount was paid by the Agent. The
failure of any Bank to make its pro rata portion of any such amount paid by the
Agent available to the Agent shall not relieve any other Bank of its obligation
to make available its pro rata portion of such amount, but no Bank shall be
responsible for failure of any other Bank to make such pro rata portion
available to the Agent.
2.5 Conditions for First Disbursement. This Agreement shall not become
effective and the Banks shall have no obligation to disburse or extend the first
Borrowing hereunder until receipt by each Bank and the Agent of the following
documents and completion of the following matters, in form and substance
satisfactory to each Bank and the Agent:
(a) Charter Documents. Certificates (of recent date with respect to
the Company) of the appropriate authority or official of the Company's and each
Guarantor's state of incorporation listing all charter documents of the Company
and each Guarantor, respectively, on file in that office and certifying as to
the good standing and corporate existence of the Company and each Guarantor,
respectively, together with copies of such charter documents of the Company and
each Guarantor, certified (as of a recent date with respect to the Company) by
such authority or official and certified as true and correct as of a date on or
after the Effective Date and on or before the date of such disbursement by a
duly authorized officer of the Company and each Guarantor, respectively;
(b) By-Laws and Corporate Authorizations. Copies of the by-laws of the
Company and each Guarantor together with all authorizing resolutions and
evidence of other corporate action taken by the Company and each Guarantor to
authorize the execution, delivery and performance by the Company of this
Agreement and the Notes and the execution, delivery and performance by each
Guarantor of their Guaranty and the consummation by the Company and each
Guarantor, respectively, of the transactions contemplated hereby, certified as
true and correct as of a date on or after the Effective Date and on or before
the date of such disbursement by a duly authorized officer of the Company and
each Guarantor, respectively;
(c) Incumbency Certificate. Certificates of incumbency of the Company
and each Guarantor containing, and attesting to the genuineness of, the
signatures of those officers authorized to act on behalf of the Company and such
Guarantor in connection with this Agreement, the Notes and the Guaranties and
the consummation by the Company and such Guarantor of the transactions
contemplated hereby, certified as true and correct as of a date on or after the
Effective Date and on or before the date of such disbursement by a duly
authorized officer of the Company and each Guarantor, respectively;
PAGE 49
(d) Notes. The Revolving Credit Notes duly executed on behalf of
the Company for each Bank;
(e) Legal Opinions. The favorable written opinion of Sachnoff &
Weaver, Ltd., general counsel for the Company and the Guarantors, dated on or
after the Effective Date and on or before the date of such disbursement, with
respect to the subject matter of Sections 4.1, 4.2, 4.3, 4.4, 4.5 and 4.8 hereof
and paragraph 18 of the Guaranties, and such matters as the Banks and the Agent
may reasonably request;
(f) Consents, Approvals, Etc. Copies of all governmental and
nongovernmental consents, approvals, authorizations, declarations, registrations
or filings, if any, required on the part of the Company or any Guarantor in
connection with the execution, delivery and performance of this Agreement, the
Notes or any Guaranty or the transactions contemplated hereby or as a condition
to the legality, validity or enforceability of this Agreement, the Notes or any
Guaranty, certified as true and correct and in full force and effect as of a
date on or after the Effective Date and on or before the date of such
disbursement by a duly authorized officer of the Company or such Guarantor, as
the case may be, or if none is required, a certificate of such officer to that
effect dated on or after the Effective Date and on or before the date of such
disbursement;
(g) Fees. The Company shall have paid on the Effective Date the
fees referred to in Section 2.3;
(h) Existing Credit Agreement. All bid rate letters of credit issued
by Comerica Bank under the Existing Credit Agreement shall be addressed in
accordance with Section 8.14 hereof and Comerica Bank shall have executed and
delivered a payoff letter in favor of, and in form and substance satisfactory
to, the Agent; and
(i) Guaranties. A Guaranty duly executed on behalf of each
Significant Subsidiary of the Company as a Guarantor.
2.6 Further Conditions for Disbursement. The obligation of the
Banks to make, or to convert, any Advance (including the first Advance) is
further subject to the satisfaction of the following conditions precedent:
(a) The representations and warranties contained in Article IV hereof
and in the Guaranties (other than the representations and warranties contained
in the penultimate sentence of Section 4.6 and in Section 4.5 in the case of an
Advance which, after application of the proceeds thereof, results in no net
increase in the aggregate outstanding principal balance of the Advances) shall
be true and correct in all material respects on and as of the date such Advance
is made (both before and immediately after such Advance is made) as if such
representations and warranties were made on and as of such date;
(b) No Event of Default or Default shall exist or shall have occurred
and be continuing on the date such Advance is made (whether before or
immediately after such Advance is made); and
(c) In the case of any Letter of Credit Advance, the Company shall
have delivered to the Agent an application for the related Letter of Credit and
other related documentation requested by and acceptable to the Agent
appropriately completed and duly executed on behalf of the Company, provided
however, that in the case of any Bid Rate Letter of Credit Advance, such
documentation shall be delivered to the respective Bank issuing such Letter of
Credit.
The Company shall be deemed to have made a representation and warranty to the
Banks at the time of the making of, and the conversion of, each Advance to the
effects set forth in clauses (a) and (b) of this Section 2.6. For purposes of
this Section 2.6 the representations and warranties contained in Section 4.6
hereof shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Borrowings. The Company may elect to
convert a Floating Rate Borrowing, or a portion thereof, to a Fixed Rate
Borrowing, in each case by giving notice thereof to the Agent (with sufficient
executed copies for each Bank) in substantially the form of Exhibit D hereto not
later than 11:00 a.m. Detroit time (a) three Eurodollar Business Days prior to
the date any such conversion to a Eurodollar Rate Borrowing is to be effective
and (b) two Business Days prior to the date such conversion to a CD Rate
Borrowing is to be effective, provided that such notice shall also specify the
Interest Period to be applicable thereto upon such conversion. The Agent, on the
day such notice is given, shall provide notice of such election to the Banks.
The proceeds of such Floating Rate Borrowing shall be deemed to be applied on
the date such conversion is effective toward payment of such Fixed Rate
Borrowing, or portion thereof maturing on such day.
PAGE 50
2.8 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Fixed Rate Borrowing pursuant to Section 2.4, or a request for conversion of a
Floating Rate Borrowing to a Fixed Rate Borrowing pursuant to Section 2.7, (a)
in the case of any Fixed Rate Borrowing, deposits in Dollars for periods
comparable to the Interest Period elected by the Company are not available to
any Bank in the relevant interbank or secondary market, or (b) the applicable
interest rate will not adequately and fairly reflect the cost to any Bank of
making, funding or maintaining the related Fixed Rate Borrowing, or (c) by
reason of national or international financial, political or economic conditions
or by reason of any applicable law, treaty, rule or regulation (whether domestic
or foreign) now or hereafter in effect, or the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank with any guideline, request or
directive of such authority (whether or not having the force of law), including
without limitation exchange controls, it is impracticable, unlawful or
impossible for any Bank (i) to make or fund the relevant Fixed Rate Borrowing or
(ii) to convert a Floating Rate Borrowing to such a Fixed Rate Borrowing, then
the Company shall not be entitled, so long as such circumstances continue, to
request a Fixed Rate Borrowing of the affected type pursuant to Section 2.4, or
a conversion to a Fixed Rate Borrowing of the affected type pursuant to Section
2.7. In the event that such circumstances no longer exist, the Banks shall again
consider requests for Fixed Rate Borrowings of the affected type pursuant to
Section 2.4 and requests for conversions to Fixed Rate Borrowings of the
affected type pursuant to Section 2.7. The Agent agrees to notify the Company as
soon as practicable, after receiving the request of the Company for a Fixed Rate
Loan, of the existence of any of the circumstances described in this Section
2.8.
2.9 Minimum Amounts; Limitation on Number of Borrowings. Except for
(a) Loan Borrowings and conversions thereof which exhaust the entire remaining
amount of the Commitments and (b) payments required pursuant Section 3.8, (i)
each Fixed Rate Loan Borrowing, each conversion thereof pursuant to Section 2.7,
and each prepayment thereof shall be in a minimum amount of $5,000,000 and in an
integral multiple of $1,000,000 and (ii) each Floating Rate Loan Borrowing and
each prepayment thereof shall be in a minimum amount of $1,000,000 and in an
integral multiple of $100,000. No minimum amounts shall be applicable to
Syndicated Letter of Credit Borrowings. The aggregate number of Fixed Rate
Borrowings outstanding at any one time under this Agreement may not exceed ten.
No more than ten Interest Periods shall be permitted to exist at any one time
with respect to all Fixed Rate Loan Borrowings outstanding hereunder from time
to time. The aggregate number of Syndicated Letter of Credit Borrowings
outstanding at any time under this Agreement may not exceed twenty.
2.10 Bid Rate Letters of Credit.
(a) The Bid-Option. In addition to Syndicated Letters of Credit but
subject to the terms and conditions of this Agreement (including, without
limitation, the limitation set forth in Section 2.1) as to the maximum aggregate
principal amount of all outstanding Advances hereunder, the Company may, as set
forth in this Section, from time to time from the Effective Date to but
excluding the date that is one year before the Termination Date request the
Banks to offer to make Bid Rate Letter of Credit Advances to the Company. Each
Bank may, but shall have no obligation to, make such offers and the Company may,
but shall have no obligation to, accept any such offers, in the manner set forth
in this Section.
(b) Bid Rate Letter of Credit Quote Requests. When the Company wishes
to request offers to make Bid Rate Letter of Credit Advances under this Section,
it shall deliver to the Agent by facsimile a request substantially in the form
attached hereto as Exhibit E (a "Bid Rate Letter of Credit Quote Request") no
later than 11:00 a.m. (Detroit time) five Business Days preceding the proposed
date of issuance of the requested Letter of Credit Advance, specifying:
(A) the proposed date of the Advance, which shall
be a Business Day;
(B) the aggregate amount of such Advance, which
shall be at least $500,000; and
(C) the beneficiary and purpose thereof and
such other information as may be necessary
for the issuance thereof.
PAGE 51
(c) Invitation for Bid-Option Quotes. Promptly upon receipt of a Bid
Rate Letter of Credit Quote Request, the Agent shall send to the Banks by
facsimile (or by telephone promptly confirmed by facsimile) an invitation to bid
in substantially the form attached hereto as Exhibit F (an "Invitation for Bid
Rate Letter of Credit Quotes"), which shall constitute an invitation by the
Company to each Bank to submit a quotation for such requested Bid Rate Letter of
Credit (each being a "Bid Rate Quote") offering to make the related Bid Rate
Letter of Credit Advance to which such Bid Rate Letter of Credit Quote Request
relates in accordance with this Section 2.10.
(d) Submission and Contents of Bid Rate Letter of Credit Quotes. (i)
Each Bank may submit an offer to make such Bid Rate Letter of Credit Advance in
response to any Invitation for Bid Rate Letter of Credit Quotes. Each Bid Rate
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Agent by facsimile not later than (A) 4:00 p.m. (Detroit time)
on the Business Day after the related Bid Rate Letter of Credit Quote Request is
made, provided that Bid Rate Quotes submitted by the Agent in its capacity as a
Bank may be submitted, and may only be submitted, if the Agent notifies the
Company of the terms of the offer or offers contained therein not later than (A)
3:30 p.m. (Detroit time) on the Business Day after the related Bid Rate Letter
of Credit Quote Request is made. All Bid Rate Quotes shall be for the entire
amount of the requested Bid Rate Letter of Credit Advance. Subject to Section
2.10(e), any Bid Rate Quote so made shall be irrevocable except with the written
consent of the Agent given on the instructions of the Company.
(ii) Each Bid Rate Quote shall be in substantially the form
attached hereto as Exhibit G hereto and shall in any case specify:
(A) the proposed date of the Advance;
(B) the rate offered with respect to the proposed
Bid Rate Letter of Credit Advance, expressed
as a per annum rate, on the maximum amount
available to be drawn from time to time under
the requested Letter of Credit, together with
an itemization of all other fees which will be
charged by such Bank in respect of such Letter
of Credit Advance; and
(C) the identity of the quoting Bank.
(iii) Any Bid Rate Quote shall be disregarded if it:
(A) is not substantially in the form of Exhibit G
hereto or does not specify all of the
information required by subsection (d)(ii)
above;
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation
for Bid Rate Letter of Credit Quotes (other
than a requirement that the Company execute
any such Bank's standard Letter of Credit
Application form); or
(D) arrives after the time set forth in subsection
(d)(i).
(e) Notice to Company. The Agent shall promptly notify the Company of
the terms (i) of any Bid Rate Quote submitted by a Bank that is in accordance
with subsection (d) of this Section and (ii) of any Bid Rate Quote that amends,
modifies or is otherwise inconsistent with a previous Bid Rate Quote submitted
by such Bank with respect to the same Bid Rate Letter of Credit Quote Request.
Any such subsequent Bid Rate Quote shall be disregarded by the Agent unless such
subsequent Bid Rate Quote is submitted solely to correct a manifest error in
such former Bid Rate Quote.
PAGE 52
(f) Acceptance and Notice by Borrower. Not later than 12:00 noon
(Detroit time) on (i) the second Business Day preceding the proposed date of the
Bid Rate Letter of Credit Advance, the Company shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to Section
2.10(e). In the case of acceptance, such notice shall specify the accepted
offer. The Company may accept any Bid Rate Quote, provided that:
(i) acceptance of an offer may only be made on the basis
of the lowest bid by the Banks (giving consideration
to all fees specified in the Bid Rate Quote);
(ii) the Company may not accept any offer of a type
described in clause (iii) of Section 2.10(d) or that
otherwise fails to comply with the requirements of
this Agreement;
(iii) the Company may accept only one bid and only for the
entire amount of the proposed Letter of Credit
Advance; and
(iv) in the case of a tie for the lowest bid between one
or more Banks, the Company may only accept the bid of
that Bank with the lowest Bid Rate Letter of Credit
Usage Ratio. For purposes of this Agreement, the "Bid
Rate Letter of Credit Usage Ratio" of any Bank shall
be the ratio of (i) the sum of the maximum amount
available to be drawn under all then outstanding Bid
Rate Letters of Credit issued by such Bank to (ii)
an amount equal to the percentage of the Commitments
of all of the Banks represented by the Commitment of
such Bank. In the event that two or more such Banks
have the same Bid Rate Letter of Credit Usage Ratio,
the Company may accept the bid of any of such Banks
in its discretion.
(g) Notice to Banks; Funding of Advances. (i) The Agent shall
promptly notify the Bank whose Bid Rate Quote has been accepted thereof.
(ii) Such Bank, not later than the date any such Bid Rate
Letter of Credit Advance is requested to be made, shall issue such Bid Rate
Letter of Credit for the account of the Company.
ARTICLE III
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments. (a) Each Fixed Rate Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing,
and if earlier payment is not made under this Agreement, the Company shall pay
to the Banks on the Termination Date the entire outstanding principal amount of
all Floating Rate Loans and all Fixed Rate Loans.
PAGE 53
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(b) The Company may at any time and from time to time prepay all or a
portion of the Loans, without premium or penalty, provided that (i) the Company
may not prepay any portion of a Floating Rate Loan as to which an election for a
conversion to a Fixed Rate Loan is pending pursuant to Section 2.7, and (ii)
unless earlier payment is otherwise required under this Agreement, any Fixed
Rate Loan may only be paid on the last day of the then current Interest Period
with respect to such Loan, and provided, that such prepayment shall only be
permitted if the Company shall have given notice thereof to the Agent specifying
the Borrowing or portion thereof to be so prepaid and shall have paid to the
Banks, together with such prepayment of principal, all accrued interest to the
date of payment on such Borrowing or portion thereof so prepaid and all amounts
owing to the Banks under Section 3.9 in connection with such prepayment. Upon
the receipt of such notice, the Agent shall promptly notify each Bank thereof,
and the aggregate principal amount of such Borrowing or portion thereof so
specified in such notice, together with such accrued interest and other amounts,
shall become irrevocably due and payable on the specified prepayment date.
3.2 Interest Payments. The Company shall pay interest to the Banks on
the unpaid principal amount of each Loan, for the period commencing on the date
such Loan is made until such Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum:
(a) During such periods that such Loan is a Floating Rate Loan, the
Floating Rate or Floating Rates applicable to such Loan from time to time.
(b) During such periods that such Loan is a CD Rate Loan, the CD Rate
applicable to such Loan for the related CD Interest Period from time to time.
(c) During such periods that such Loan is a Eurodollar Rate Loan, the
Eurodollar Rate applicable to such Loan for the related Eurodollar Interest
Period from time to time.
Notwithstanding the foregoing paragraphs (a) through (c), the Company
shall pay interest on demand at the Overdue Rate on the outstanding principal
amount of any Loan and any other amount payable by the Company hereunder (other
than interest) which is not paid in full when due (whether at stated maturity,
by acceleration or otherwise) for the period commencing on the due date thereof
until the same is paid in full.
3.3 Syndicated Letter of Credit Reimbursement Payments. (a) The
Company agrees to pay to the Agent, on the day on which the Agent shall honor a
draft or other demand for payment presented or made under any Syndicated Letter
of Credit, an amount equal to the amount paid by the Agent in respect of such
draft or other demand under such Syndicated Letter of Credit and all expenses
paid or incurred by the Agent relative thereto. Unless the Company shall have
made such payment to the Agent on such day, upon each such payment by the Agent,
the Agent shall be deemed to have disbursed to the Company, and the Company
shall be deemed to have elected to satisfy its reimbursement obligation by, a
Revolving Credit Loan made on such day bearing interest at the Floating Rate for
the account of the Banks in an amount equal to the amount so paid by the Agent
in respect of such draft or other demand under such Syndicated Letter of Credit.
Such Revolving Credit Loan shall be disbursed notwithstanding any failure to
satisfy any conditions for disbursement of any Loan set forth in Article II
hereof and, to the extent of the Revolving Credit Loan so disbursed, the
reimbursement obligation of the Company under this Section 3.3 shall be deemed
satisfied.
(b) The reimbursement obligation of the Company under this Section 3.3
shall be absolute, unconditional and irrevocable and shall remain in full force
and effect until all obligations of the Company to the Banks hereunder shall
have been satisfied, and such obligations of the Company shall not be affected,
modified or impaired upon the happening of any event, including without
limitation, any of the following, whether or not with notice to, or the consent
of, the Company:
PAGE 54
(i) Any lack of validity or enforceability of any Syndicated
Letter of Credit or any documentation relating to any Syndicated Letter of
Credit or to any transaction related in any way to such Syndicated Letter of
Credit (the "Letter of Credit Documents");
(ii) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
(iii) The existence of any claim, setoff, defense or other
right which the Company may have at any time against any beneficiary or any
transferee of any Syndicated Letter of Credit (or any persons or entities for
whom any such beneficiary or any such transferee may be acting), the Agent or
any Bank or any other person or entity, whether in connection with any of the
Letter of Credit Documents, the transactions contemplated herein or therein or
any unrelated transactions;
(iv) Any draft or other statement or document presented under
any Syndicated Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(v) Payment by the Agent to the beneficiary under any
Syndicated Letter of Credit against presentation of documents which do not
comply with the terms of the Syndicated Letter of Credit, including failure of
any documents to bear any reference or adequate reference to such Syndicated
Letter of Credit;
(vi) Any failure, omission, delay or lack on the part of the
Agent or any Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred upon the Agent,
any Bank or any such party under this Agreement or any of the Letter of Credit
Documents, or any other acts or omissions on the part of the Agent, any Bank or
any such party; or
(vii) Any other event or circumstance that would, in the
absence of this clause, result in the release or discharge by operation of law
or otherwise of the Company from the performance or observance of any
obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Syndicated Letter of Credit shall be available hereunder to
the Company against the Agent or any Bank.
3.4 Payment Method. (a) All payments to be made by the Company
hereunder will be made in Dollars and in immediately available funds to the
Agent for the account of the Banks or the Agent, as the case may be, at its
address set forth in Section 8.2 not later than 1:00 p.m. Detroit time on the
date on which such payment shall become due. Payments received after 1:00 p.m.
Detroit time shall be deemed to be payments made prior to 1:00 p.m. Detroit time
on the next succeeding Business Day. The Company hereby authorizes the Agent to
charge its account with the Agent in order to cause timely payment of amounts
due hereunder to be made (subject to sufficient funds being available in such
account for that purpose).
(b) At the time of making each such payment, the Company shall,
subject to the other terms and conditions of this Agreement, specify to the
Agent that Loan or other obligation of the Company hereunder to which such
payment is to be applied. In the event that the Company fails to so specify the
relevant obligation or if an Event of Default shall have occurred and be
continuing, the Agent may apply such payments as it may determine in its sole
discretion to obligations of the Company to the Banks and the Agent arising
under this Agreement or otherwise.
(c) On the day such payments are deemed received, the Agent shall
remit to the Banks their pro rata shares of such payments in immediately
available funds, at the respective addresses set forth on the signature pages
hereof, (i) in the case of payments of principal and interest on any Borrowing
(other than amounts payable to any Bank under Section 3.8), determined with
respect to each such Bank by the ratio which the outstanding principal balance
of its Loan included in such Borrowing bears to the outstanding principal
balance of the Loans of all the Banks included in such Borrowing and (ii) in the
case of fees paid pursuant to Section 2.3 and other amounts payable hereunder
(other than the Agent's fees payable pursuant to Section 2.3(d) and amounts
payable to any Bank under Section 3.7), determined with respect to each such
Bank by the ratio which the Commitment of such Bank bears to the Commitments of
all the Banks, provided, that all reimbursement payments received by the Agent
pursuant to Section 3.3 shall be retained by the Agent.
(d) All payments to be made by the Company in respect of Bid Rate
Letters of Credit shall be made directly to such Bank as provided by agreement
between the Company and any Bank issuing such Bid Rate Letter of Credit.
PAGE 55
3.5 No Setoff or Deduction. All payments of principal and interest on
the Loans and other amounts payable by the Company hereunder shall be made by
the Company without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority.
3.6 Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any installment of principal, interest shall be payable thereon at the rate
per annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days (or 365 or 366 days, as the case may be,
when determining the Floating Rate) for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period.
3.7 Additional Costs. (a) In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Bank or the Agent, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank or
the Agent with any guideline, request or directive of any such authority
(whether or not having the force of law), shall (i) affect the basis of taxation
of payments to any Bank or the Agent of any amounts payable by the Company under
this Agreement (other than taxes imposed on the overall net income of such Bank
or the Agent, by the jurisdiction, or by any political subdivision or taxing
authority of any such jurisdiction, in which such Bank or the Agent, as the case
may be, has its principal office), or (ii) 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 any Bank or the
Agent, or (iii) shall impose any other condition with respect to this Agreement,
the Commitments, the Notes, the Loans or any Letter of Credit, and the result of
any of the foregoing is to increase the cost to any Bank or the Agent, as the
case may be, of making, funding or maintaining any Fixed Rate Loan or any Letter
of Credit or to reduce the amount of any sum receivable by any Bank or the
Agent, as the case may be, thereon, then the Company shall pay to such Bank or
the Agent, as the case may be, from time to time, upon request by such Bank
(with such request to be provided through the Agent) or by the Agent, additional
amounts sufficient to compensate such Bank or the Agent, as the case may be, for
such increased cost or reduced sum receivable, but only to the extent, in the
case of any Fixed Rate Loan, such Bank or the Agent is not compensated therefor
in the computation of the interest rate applicable to such Fixed Rate Loan. A
statement as to the amount of such increased cost or reduced sum receivable,
prepared in good faith and in reasonable detail by such Bank or the Agent, as
the case may be, shall be submitted by such Bank (through the Agent) or by the
Agent, as the case may be, to the Company, reasonably promptly after becoming
aware of any event described in this Section 3.7(a).
(b) In the event that after the Effective Date the adoption of or any
change in any applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or not presently applicable to
any Bank or the Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Bank or the Agent with any guideline, request or
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects or would affect the amount
of capital required or expected to be maintained by such Bank or the Agent (or
any corporation controlling such Bank or the Agent) and such Bank or the Agent,
as the case may be, determines that the amount of such capital is increased by
or based upon the existence of such Bank's or the Agent's obligations or
Advances hereunder and such increase has the effect of reducing the rate of
return on such Bank's or the Agent's (or such controlling corporation's) capital
as a consequence of such obligations or Advances hereunder to a level below that
which such Bank or the Agent (or such controlling corporation) could have
achieved but for such circumstances (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Bank or the Agent to be
material, then the Company shall pay to such Bank or the Agent, as the case may
be, from time to time, upon request by such Bank (with such request to be
provided through the Agent) or by the Agent, additional amounts sufficient to
compensate such Bank or the Agent (or such controlling corporation) for any
increase in the amount of capital and reduced rate of return which such Bank or
the Agent reasonably determines to be allocable to the existence of such Bank's
or the Agent's obligations or Advances hereunder. A statement as to the amount
of such compensation, prepared in good faith and in reasonable detail by such
Bank or the Agent, as the case may be, shall be submitted by such Bank (through
the Agent) or by the Agent to the Company, reasonably promptly after becoming
aware of any event described in this Section 3.7(b).
PAGE 56
3.8 Illegality and Impossibility. In the event that any applicable
law, treaty, rule or regulation (whether domestic or foreign) now or hereafter
in effect and whether or not presently applicable to any Bank, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, shall
make it unlawful or impossible for any Bank to maintain any Fixed Rate Loan
under this Agreement, the Company shall upon receipt of notice thereof from such
Bank (with such notice to be provided through the Agent), repay in full the then
outstanding principal amount of each Fixed Rate Loan so affected, together with
all accrued interest thereon to the date of payment, and all amounts owing to
such Bank under Section 3.9, (a) on the last day of the then current Interest
Period applicable to such Loan if such Bank may lawfully continue to maintain
such Loan to such day, or (b) immediately if such Bank may not lawfully continue
to maintain such Loan to such day.
3.9 Indemnification. If the Company makes any payment of principal
with respect to any Fixed Rate Loan on any other date than the last day of an
Interest Period applicable thereto (whether pursuant to Section 3.8, Section 6.2
or otherwise), or if the Company fails to borrow any Fixed Rate Loan after
notice has been given to the Banks in accordance with Section 2.4 or Section
2.7, or if the Company fails to make any payment of principal or interest in
respect of a Fixed Rate Loan when due, the Company shall reimburse each Bank on
demand for any resulting loss or expense incurred by each such Bank, including
without limitation any loss incurred in obtaining, liquidating or employing
deposits from third parties, whether or not such Bank shall have funded or
committed to fund such Loan. A statement as to the amount of such loss or
expense, prepared in good faith and in reasonable detail by such Bank and
submitted by such Bank to the Company, shall be conclusive and binding for all
purposes absent manifest error in computation. Calculation of all amounts
payable to such Bank under this Section 3.9 shall be made as though such Bank
shall have actually funded or committed to fund the relevant Fixed Rate Loan
through the purchase of an underlying deposit in an amount equal to the amount
of such Loan and having a maturity comparable to the related Interest Period
and, in the case of any Eurodollar Rate Loan, through the transfer of such
deposit from an offshore office of such Bank to a domestic office of such Bank
in the United States of America; provided, however, that such Bank may fund any
Fixed Rate Loan in any manner it sees fit and the foregoing assumption shall be
utilized only for the purpose of calculation of amounts payable under this
Section 3.9.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Banks and the Agent that:
4.1 Corporate Existence and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to do business, and is in good standing, in all
additional jurisdictions where the failure to so qualify could have a material
adverse effect on the Company. The Company has all requisite corporate power to
own or lease the properties used in its business and to carry on its business as
now being conducted and as proposed to be conducted, and to execute and deliver
this Agreement and the Notes and to engage in the transactions contemplated by
this Agreement.
PAGE 57
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===============================================================================
4.2 Corporate Authority. The execution, delivery and performance by
the Company of this Agreement and the Notes have been duly authorized by all
necessary corporate action and are not in contravention of any law, rule or
regulation, or of any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Company's
charter or by-laws, or of any contract or undertaking to which the Company is a
party or by which the Company or its property may be bound or affected, and will
not result in the imposition of any Lien except for Permitted Liens.
4.3 Binding Effect. This Agreement is, and the Notes when delivered
hereunder will be, legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors
rights generally.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation and ownership of each Subsidiary
of the Company and indicates each Subsidiary which qualifies as a Significant
Subsidiary. Each Subsidiary of the Company (including each corporation becoming
a Subsidiary of the Company after the date hereof) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business in each
additional jurisdiction where the failure to so qualify could have a material
adverse effect on such Subsidiary. Each Subsidiary of the Company has all
requisite corporate power to own or lease the properties used in its business
and to carry on its business as now being conducted and as proposed to be
conducted. All outstanding shares of capital stock of each class of each
Subsidiary of the Company have been validly issued and are fully paid and
nonassessable and, except as otherwise indicated in Schedule 4.4 hereto or
disclosed in writing to the Banks and the Agent from time to time, are and will
be owned, beneficially and of record, by the Company or another Subsidiary of
the Company free and clear of any Liens.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is
no action, suit or proceeding pending or, to the best of the Company's
knowledge, threatened against or affecting the Company or any of its
Subsidiaries before or by any court, governmental authority or arbitrator, which
if adversely decided might result, either individually or collectively, in any
material adverse change in the business, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole or
in any material adverse effect on the legality, validity or enforceability of
this Agreement or the Notes and, to the best of the Company's knowledge, there
is no basis for any such action, suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of the Company
and its Subsidiaries and the consolidated statements of income, retained
earnings and cash flows of the Company and its Subsidiaries for the fiscal year
ended December 28, 1996, reported on by KPMG Peat Marwick, LLP, independent
certified public accountants, and the interim consolidated balance sheet and
interim consolidated statements of income, retained earnings and cash flows of
the Company and its Subsidiaries, as of or for the six-month period ended on
June 28, 1997, copies of which have been furnished to the Banks, fairly present,
and the financial statements of the Company and its Subsidiaries delivered
pursuant to Section 5.1(d) will fairly present, the consolidated financial
position of the Company and its Subsidiaries as at the respective dates thereof,
and the consolidated results of operations of the Company and its Subsidiaries
for the respective periods indicated, all in accordance with generally accepted
accounting principles consistently applied (subject, in the case of said interim
statements, to year-end audit and subject, in the case of such statements
delivered pursuant to Section 5.1(d), to the proviso of the definition of
generally accepted accounting principles adjustments). There has been no
material adverse change in the business, properties, operations or condition,
financial or otherwise, of the Company and any of its Subsidiaries taken as a
whole since June 28, 1997. Except as otherwise disclosed in Schedule 4.5, there
is no material Contingent Liability of the Company that is not reflected in such
financial statements or in the notes thereto.
PAGE 58
4.7 Use of Advances. The Company will use the proceeds of the Loans to
refinance existing indebtedness, and for working capital, equipment financing
and its other corporate purposes, including acquisitions mutually negotiated
between the Company and the prospective seller, and will use Letter of Credit
Advances principally for insurance purposes and for its other corporate
purposes. Neither the Company nor any of its Subsidiaries extends or maintains,
in the ordinary course of business, credit for the purpose, whether immediate,
incidental, or ultimate, of buying or carrying margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of any Advance will be used for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying any such margin stock
or maintaining or extending credit to others for such purpose. After applying
the proceeds of each Advance margin stock will not constitute more than 25% of
the value of the assets (either of the Company alone or of the Company and its
Subsidiaries on a consolidated basis) that are subject to any provisions of this
Agreement that may cause the Advance to be deemed secured, directly or
indirectly, by margin stock.
4.8 Consents, Etc. Except for such consents, approvals,
authorizations, declarations, registrations or filings delivered by the Company
pursuant to Section 2.5(f), if any, each of which is in full force and effect,
no consent, approval or authorization of or declaration, registration or filing
with any governmental authority, including without limitation the Interstate
Commerce Commission or any state authority regulating motor carriers, or any
nongovernmental person or entity, including without limitation any creditor,
lessor or stockholder of the Company or any of its Subsidiaries, is required on
the part of the Company or any of its Subsidiaries in connection with the
execution, delivery and performance of this Agreement, the Notes or the
transactions contemplated hereby or as a condition to the legality, validity or
enforceability of this Agreement or the Notes.
4.9 Taxes. The Company and its Subsidiaries have filed all material
tax returns (federal, state and local) required to be filed (including
extensions of time to file) with respect to the Company and its Subsidiaries,
and all taxes shown thereon to be due by the Company or its Subsidiaries have
been paid, including interest and penalties. The Company and its Subsidiaries
have established adequate financial reserves on their respective books and
records for payment of all material tax liabilities required to be paid by any
of them or which are otherwise attributable to the activities of the Company and
its Subsidiaries. Neither the Company nor any of its Subsidiaries knows of any
actual or proposed tax assessment or deficiency which could result, either
individually or collectively, in any material adverse effect on the business,
properties, operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole, and, except as noted above, no extension of
time for the assessment of deficiencies in any material federal or state tax has
been granted by or on behalf of the Company or any Subsidiary.
4.10 Title to Properties. Except as otherwise disclosed in the latest
financial statements or in the notes thereto delivered pursuant to Section 4.6
or 5.1(d) of this Agreement, the Company or one or more of its Subsidiaries have
good and marketable fee simple title to all of the real property, and a valid
and indefeasible ownership interest in all of the other properties and assets,
reflected in said balance sheet or subsequently acquired by the Company or any
Subsidiary. All of such properties and assets are free and clear of any Lien
except for Permitted Liens.
4.11 ERISA. (a) The Company and its ERISA Affiliates and their
respective Plans are in compliance in all material respects with those
provisions of ERISA and of the Code which are applicable with respect to any
such Plan. No Prohibited Transaction and no Reportable Event has occurred with
respect to any such Plan which has resulted in or reasonably could result in
liabilities of the Company or any ERISA Affiliate in an aggregate amount in
excess of $5,000,000 (individually or taken together with other liabilities,
payments or amounts referred to in this Section 4.11).
(b) Neither the Company nor any of its ERISA Affiliates has incurred
or reasonably expects to incur any withdrawal liability to any Multiemployer
Plan which in the aggregate would require any payments exceeding $5,000,000
(individually or taken together with other liabilities, payments or amounts
referred to in this Section 4.11), and none of them has been notified that any
Multiemployer Plan to which any of them is making or accruing an obligation to
contribute is in reorganization, is insolvent or is being terminated.
PAGE 59
(c) The Company and its ERISA Affiliates have met the minimum funding
requirements under ERISA and the Code with respect to each of their respective
Plans, if any, and have not incurred any liability to the PBGC or any Plan in an
aggregate amount which exceeds $5,000,000 (individually or taken together with
other liabilities, payments or amounts referred to in this Section 4.11). The
aggregate Unfunded Benefit Liability of all Plans of the Company and its ERISA
Affiliates does not exceed $5,000,000 (individually or taken together with other
liabilities, payments or amounts referred to in this Section 4.11). The
execution, delivery and performance of this Agreement and the Notes does not
constitute a Prohibited Transaction.
(d) The annual cost to the Company and its ERISA Affiliates for
providing benefits to current and former employees under all welfare benefit
plans (as defined in Section 3(1) of ERISA) does not and is not reasonably
expected to materially and adversely affect the financial condition of the
Company or any of its ERISA Affiliates.
(e) Neither the Company nor any of its ERISA Affiliates has filed or
reasonably expects to file a notice of intent to terminate any Plan, except in a
standard termination (as defined in Section 4041(b) of ERISA). Neither the
Company nor any of its ERISA Affiliates has any understanding or commitment,
whether binding or not, to assume any responsibilities or liabilities, whether
as Plan sponsor, employer or otherwise, of any Plan (including any Multiemployer
Plan) subject to Title IV of ERISA or to the minimum funding standards of
Section 412 of the Code (i) which has been established or maintained (or is
deemed to be or have been established or maintained) by any Predecessor Company
or (ii) to which any Predecessor Company has been required to contribute on
behalf of any of its employees, where such responsibilities or liabilities could
have a material adverse effect on the business, properties, operations or
conditions, financial or otherwise, of the Company or any ERISA Affiliate taken
as a whole.
(f) All reports and other information provided pursuant to Section
5.1(d)(v) with respect to any Plan of the Company or its ERISA Affiliates are
true and correct in all material respects as of the respective dates thereof and
fairly present the funding status of each such Plan at such date.
4.12 Disclosure. No report or other information furnished in writing
or on behalf of the Company to any Bank or the Agent in connection with the
negotiation or administration of this Agreement contains any material
misstatement of a material fact or omits to state any material fact or any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they were made. Neither this Agreement
or the Notes, nor any other document, certificate, or report or statement or
other information furnished to any Bank or the Agent by or on behalf of the
Company in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact in order
to make the statements contained herein and therein not misleading in light of
the circumstances under which they were made. There is no fact known to the
Company which materially and adversely affects, or which in the future may (so
far as the Company can now foresee) materially and adversely affect, the
business, properties, operations or condition, financial or otherwise, of the
Company or any Subsidiary, which has not been set forth in this Agreement or in
the other documents, certificates, statements, reports and other information
furnished in writing to the Banks and the Agent by or on behalf of the Company
in connection with the transactions contemplated hereby.
4.13 Environmental and Safety Matters. Except as described in Schedule
4.13 hereto or as disclosed pursuant to Section 5.1(d)(vii), (a) the Company and
each Subsidiary of the Company is in compliance in all material respects with
all applicable Environmental Laws and with all applicable laws, statutes and
ordinances enacted by the United States of America or any foreign government, or
by any state, province, municipality or other political subdivision thereof or
therein, relating to transportation or occupational safety or health and any
rules, regulations and standards promulgated pursuant thereto by any agency,
regulatory authority or commission of any of the foregoing, and (b) neither the
Company nor any of its Subsidiaries has received notice of any demand, claim,
suit, suit in equity, action, administrative proceeding, investigation or
inquiry, whether brought by any governmental authority, private person or other
entity, arising under, relating to or in connection with any Environmental Laws
(collectively, "potential environmental liabilities") and, to the best knowledge
of the Company after due inquiry, none is threatened against the Company or any
of its Subsidiaries and no basis exists therefor, except for potential
environmental liabilities which, taken together with liabilities, costs or
expenses expected to be incurred by the Company and its Subsidiaries arising
under, relating to or in connection with any Environmental Laws (collectively,
"existing environmental liabilities"), are not expected in good faith to result
in liabilities, costs, or expenses to the Company or any of its Subsidiaries in
excess of (i) $2,000,000 with respect to any single matter or (ii) $5,000,000
for all such matters in the aggregate.
PAGE 60
ARTICLE V
COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees that,
until the Termination Date and thereafter until payment in full of the principal
of and accrued interest on the Notes, termination of all Letters of Credit and
the performance of all other obligations of the Company under this Agreement,
unless the Required Banks shall otherwise consent in writing, it shall, and
shall cause each of its Subsidiaries to:
===============================================================================
===============================================================================
(a) Preservation of Corporate Existence, Etc. Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence (except to the extent permitted by Section 5.2(d) or to the
extent constituting a dissolution or liquidation of any Subsidiary of the
Company in connection with any disposition of substantially all of its business,
assets, rights, revenues and property otherwise permitted pursuant to Section
5.2(e)), and its qualification as a foreign corporation in good standing in each
jurisdiction in which such qualification is necessary under applicable law and
the rights, licenses, permits (including those required under Environmental
Laws), franchises, patents, copyrights, trademarks and trade names material to
the conduct of its businesses; and defend all of the foregoing against all
claims, actions, demands, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or regulatory authority.
(b) Compliance with Laws, Etc. (i) Comply in all material respects
with all applicable laws, rules, regulations and orders of any governmental
authority whether federal, state, local or foreign (including without limitation
ERISA, the Code and Environmental Laws), in effect from time to time, and (ii)
pay and discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income, revenues or property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
give rise to Liens upon such properties or any portion thereof, except to the
extent that payment or enforcement of any of the foregoing is then being
contested in good faith by appropriate legal proceedings and with respect to
which adequate financial reserves have been established on the books and records
of the Company or such Subsidiary.
(c) Maintenance of Properties; Insurance. Maintain, preserve and
protect all property that is material to the conduct of the business of the
Company or any of its Subsidiaries and keep such property in good repair,
working order and condition and from time to time make, or cause to be made all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times in accordance with customary and prudent
business practices for similar businesses; and maintain in full force and effect
insurance with responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as is usually carried by companies
engaged in similar businesses and owning similar properties similarly situated
and maintain in full force and effect public liability insurance, insurance
against claims for personal injury or death or property damage occurring in
connection with any of its activities or any of the properties owned, occupied
or controlled by it, in such amount as it shall reasonably deem necessary or
prudent, and maintain such other insurance as may be required by law.
(d) Reporting Requirements. Furnish to the Agent (with
sufficient copies for each Bank) the following:
(i) Promptly and in any event within three Business Days after
becoming aware of the occurrence of (A) any Event of Default or Default, (B) the
commencement of any material litigation against, by or affecting the Company or
any of its Subsidiaries, and any material developments therein, or (C) entering
into any material contract or undertaking that is not entered into in the
ordinary course of business or (D) any development in the business or affairs of
the Company or any of its Subsidiaries which has resulted in or which is likely,
in the reasonable judgment of the Company, to result in a material adverse
change in the business, properties, operations or condition, financial or
otherwise of the Company or any of its Subsidiaries, a statement of the chief
financial officer of the Company setting forth details of such Event of Default
or such Default or such litigation or such material contract or undertaking or
development and the action which the Company or such Subsidiary, as the case may
be, has taken and proposes to take with respect thereto;
PAGE 61
(ii) As soon as available and in any event within 60 days
after the end of each of the first three fiscal quarters, and 90 days after the
end of the fourth fiscal quarter, of each fiscal year of the Company, the
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter, and the related consolidated statements of income, retained
earnings and cash flows for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, setting forth in each case
in comparative form the corresponding figures for the corresponding date or
period of the preceding fiscal year, all in reasonable detail and duly certified
(subject to year-end audit adjustments) by the chief financial officer of the
Company as having been prepared in accordance with generally accepted accounting
principles, together with a certificate of the chief financial officer of the
Company stating (A) that no Event of Default or Default has occurred and is
continuing or, if an Event of Default or such Default has occurred and is
continuing, a statement setting forth the details thereof and the action which
the Company has taken and proposes to take with respect thereto, and (B) that a
computation (which computation shall accompany such certificate and shall be in
reasonable detail) showing compliance with Section 5.1(g) and Section 5.2 (a),
(b), (c) and (e) hereof is in conformity with the terms of this Agreement;
(iii) As soon as available and in any event within 120 days
after the end of each fiscal year of the Company, a copy of the consolidated
balance sheet of the Company and its Subsidiaries as of the end of such fiscal
year and the related consolidated statements of income, retained earnings and
cash flows of the Company and its Subsidiaries for such fiscal year, with a
customary audit report of KPMG Peat Marwick, or other independent certified
public accountants selected by the Company and acceptable to the Required Banks,
without qualifications unacceptable to the Required Banks, together with a
certificate of such accountants stating (A) that they have reviewed this
Agreement and stating further whether, in the course of their review of such
financial statements, they have become aware of any Default or Event of Default
of a financial nature or any other event or condition that could have a material
adverse effect on the financial condition of the Company or any of its
Subsidiaries, and, if such a Default or Event of Default or other event or
condition then exists and is continuing, a statement setting forth the nature
and status thereof, and (B) that a computation by the Company (which computation
shall accompany such certificate and shall be in reasonable detail) showing
compliance with Section 5.1(g) and Section 5.2 (a), (b), (c) and (e) hereof is
in conformity with the terms of this Agreement;
(iv) Promptly after the sending or filing thereof, copies of
all reports, proxy statements and financial statements which the Company or any
of its Subsidiaries sends to or files with any of their respective security
holders or any securities exchange or the Securities and Exchange Commission or
any successor agency thereof;
(v) Promptly and in any event within 10 calendar days
after receiving or becoming aware thereof:
(A) a copy of each notice received concerning the
imposition of withdrawal liability against the Company or any of its ERISA
Affiliates by any Multiemployer Plan; and
(B) upon request by any Bank (with such request
made through the Agent) or by the Agent, promptly after the filing thereof
pursuant to Section 104 of ERISA, copies of Schedule B (Actuarial Information)
to each annual report filed by the Company or any of its ERISA Affiliates
pursuant to said Section 104 with respect to any of their Plans;
(vi) Promptly and in any event within 10 days after receipt, a
copy of any management letter, special audit report or comparable analysis
prepared by the auditors for the Company or any of its Subsidiaries;
(vii) Promptly and in any event within ten calendar days after
becoming aware thereof, notice of all potential environmental liabilities and
existing environmental liabilities (as such terms are defined in Section 4.13),
which, taken together, are expected in good faith to result in liabilities,
costs or expenses to the Company or any of its Subsidiaries in excess of (A)
$2,000,000 with respect to any single matter or (B) $5,000,000 for all such
matters in the aggregate and, upon request of any Bank (with such request made
through the Agent) or of the Agent, copies of all investigations, studies,
sampling and testing undertaken in connection therewith; and
(viii) Promptly, such other information respecting the
business, properties, operations or condition, financial or otherwise, of the
Company or any of it Subsidiaries as any Bank (through the Agent) or the Agent
may from time to time reasonably request.
PAGE 62
(e) Accounting, Access to Records, Books, Etc. Maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in accordance with
generally accepted accounting principles and to comply with the requirements of
this Agreement; and, during normal business hours and upon at least one Business
Day's notice (which restrictions shall not apply, however, if an Event of
Default has occurred and is continuing), permit any Bank (at such Bank's
expense) or the Agent and any agents or representatives thereof to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of, the Company and its Subsidiaries, and to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with their respective
directors, officers, employees and independent auditors, and by this provision
the Company does hereby authorize such persons to discuss such affairs, finances
and accounts with any Bank or the Agent or any of their respective agents or
representatives. The Banks and the Agent agree to reasonably respect the
confidential nature of the Company's affairs, finances and accounts disclosed
pursuant to an investigation as described above. In view of the Company's
expressed intention to hold periodic meetings with the Banks on at least an
annual basis to provide further information with respect to the Company and its
Subsidiaries not otherwise provided pursuant to regular reporting requirements
of this Agreement and to provide an opportunity for the Banks to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with
responsible officers thereof, it is currently anticipated that the foregoing
visitation rights will be infrequently utilized by the Banks, except to the
extent necessary to meet applicable regulatory guidelines.
(f) Pari Passu Obligations. Ensure that all obligations and
liabilities of the Company hereunder to the Banks and the Agent will rank at
least pari passu with all of the Company's other unsecured and unsubordinated
obligations and liabilities from time to time (including Contingent
Liabilities), other than statutorily preferred indebtedness or liabilities.
(g) Additional Security. Promptly cause each person becoming a
Significant Subsidiary of the Company from time to time to execute and deliver
to the Agent (with sufficient executed copies for each Bank), within 30 days
after such person becomes a Significant Subsidiary, a Guaranty together with
other related documents described in Section 2.5(a), (b), (c), (e) and (f), and,
if at any time, the aggregate Total Assets of all Guarantors shall be less than
90% of the Consolidated Total Assets of the Company and its Subsidiaries, the
Company shall cause one or more other Subsidiaries to execute and deliver a
Guaranty to the Agent as may be necessary to reach the 90% of Consolidated Total
Assets threshold. The Company shall notify the Agent, within 10 days after the
occurrence thereof, of any person's becoming a Significant Subsidiary.
(h) Further Assurances. Execute and deliver to the Agent (with
sufficient copies for each Bank) within 30 days after request therefor by the
Agent or the Required Banks (through the Agent), all further instruments and
documents and take all further action that may be reasonably necessary or
desirable, or that the Agent or the Required Banks may reasonably request, in
order to give effect to, and to aid in the exercise and enforcement of the
rights and remedies of the Banks and the Agent under, this Agreement, the Notes
and the Guaranties. In addition, the Company agrees to deliver to the Agent
(with sufficient copies for each Bank) from time to time upon the acquisition or
creation of any Subsidiary not listed in Schedule 4.4 hereto supplements to
Schedule 4.4 such that such Schedule, together with such supplements, shall at
all times accurately reflect the information provided for thereon.
5.2 Negative Covenants. Until the Termination Date and thereafter
until payment in full of the principal of and accrued interest on the Notes,
termination of all Letters of Credit and the performance of all other
obligations of the Company under this Agreement, the Company agrees that, unless
the Required Banks shall otherwise consent in writing it shall not, and shall
not permit any of its Subsidiaries to:
(a) Net Worth. Permit or suffer Consolidated Net Worth of the
Company and its Subsidiaries at any time from and including the Effective Date
or at any time thereafter to be less than $300,000,000.
(b) Funded Debt to Adjusted Cash Flow. Permit or suffer the ratio of
Consolidated Funded Debt of the Company and its Subsidiaries to Consolidated
Adjusted Cash Flow of the Company and its Subsidiaries for the four most
recently completed fiscal quarters of the Company to be more than 3.0 to 1.0 at
any time.
PAGE 63
(c) Liens. Create, incur or suffer to exist any Lien on any of the
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, of the Company or any of
its Subsidiaries, other than Liens arising in favor of the Banks and the Agent
in connection with this Agreement or any of the following:
(i) Liens for taxes not delinquent or for taxes being
contested in good faith by appropriate proceedings and as to which
adequate financial reserves have been established on its books and
records;
(ii) Liens (other than any Lien imposed by ERISA or the Code)
created and maintained in the ordinary course of business which do not
secure obligations exceeding $5,000,000 in the aggregate and which
would not have a material adverse effect on the business or operations
of the Company or any of its Subsidiaries and which constitute (A)
pledges or deposits under worker's compensation laws, unemployment
insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which the
Company or any of its Subsidiaries is a party for a purpose other than
borrowing money or obtaining credit, including rent security deposits,
(C) Liens imposed by law, such as those of carriers, warehousemen and
mechanics, if payment of the obligation secured thereby is not yet
due, (D) Liens securing taxes, assessments or other governmental
charges or levies not yet subject to penalties for nonpayment, and (E)
pledges or deposits to secure public or statutory obligations of the
Company or any of its Subsidiaries, or surety, customs or appeal bonds
to which the Company or any of its Subsidiaries is a party;
(iii) Liens affecting real property which constitute minor
survey exceptions or defects or irregularities in title, minor
encumbrances, easements or reservations of, or rights of others for,
rights of way, sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the
use of such real property, provided that all of the foregoing, in the
aggregate, do not at any time materially detract from the value of
said properties or materially impair their use in the operation of the
businesses of the Company or any of its Subsidiaries;
(iv) Each Lien described in Schedule 5.2 hereto which may be
suffered to exist upon the same terms as those existing on the date
hereof, but no extension or renewal thereof shall be permitted;
(v) Any Lien created to secure payment of a portion of the
purchase price of, or existing at the time of acquisition of, any
tangible fixed asset acquired by the Company or any of its
Subsidiaries (including the refinancing of such acquisition cost) may
be created or suffered to exist upon such fixed asset if the
outstanding principal amount of the Indebtedness secured by such Lien
does not at any time exceed the purchase price paid by the Company or
such Subsidiary for such fixed asset, provided that such Lien does not
encumber any other asset at any time owned by the Company or such
Subsidiary, and provided, further, that not more than one such Lien
shall encumber such fixed asset at any one time;
(vi) The interest or title of a lessor under any lease,
otherwise permitted under this Agreement and incurred in the ordinary
course of business, with respect to the property subject to such lease
to the extent performance of the obligations of the Company or its
Subsidiary thereunder are not delinquent, and, without limiting the
generality of the foregoing, including such interest or title under
any qualified motor vehicle operating agreement as defined in the Code
and leases of personalty for operating purposes; and
(vii) Any Lien existing on any property of any corporation at
the time it becomes a Subsidiary of the Company, or existing prior to
the time of acquisition upon any property acquired by the Company or
any Subsidiary through purchase, merger or consolidation or otherwise
to the extent permitted by Section 5.2(d), whether or not assumed by
the Company or such Subsidiary, provided that (A) any such Lien shall
not encumber any other property of the Company or such Subsidiary, (B)
the obligations secured by Liens permitted by this Section 5.2(c)(vii)
do not secure an aggregate amount for the Company and its Subsidiaries
in excess of 10% of the Consolidated Total Assets of the Company and
its Subsidiaries at any time, and (C) such Lien is incurred in the
ordinary course of business and not in anticipation of such
corporation becoming a Subsidiary of the Company or of such property
being so acquired; and
(viii) Liens (other than those specified in subsections (i)
through (vii) above) securing an aggregate amount for the Company and
its Subsidiaries of not more than $5,000,000.
PAGE 64
(d) Merger; Purchase of Assets; Acquisitions; Etc. Purchase or
otherwise acquire, whether in one or a series of transactions, all or a
substantial portion of the business assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, of any person, or all or a
substantial portion of the capital stock of or other ownership interest in any
other person; nor merge or consolidate or amalgamate with any other person or
take any other action having a similar effect, nor enter into any joint venture
or similar arrangement with any other person, provided, however, that this
Section 5.2(d) shall not prohibit any merger, acquisition or purchase of stock
or other ownership interest to the extent otherwise permitted under this
Agreement if (i) in the case of any merger, consolidation or amalgamation, the
Company shall be the surviving or continuing corporation thereof, (ii)
immediately after such merger, acquisition or purchase, no Default or Event of
Default shall exist or shall have occurred and be continuing, and (iii) in the
event such transaction would result in the Company or any of its ERISA
Affiliates assuming new or further liability under a Multiemployer Plan
exceeding $10,000,000, the prior written consent of the Required Banks to such
transaction has been obtained, which consent shall not be unreasonably withheld.
(e) Disposition of Assets; Etc. Sell, lease, license, transfer, assign
or otherwise dispose of all or a substantial portion of its business, assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether in one or a series of transactions, other than inventory sold in the
ordinary course of business upon customary credit terms and sales of scrap or
obsolete material or equipment, provided, however, that this Section 5.2(e)
shall not prohibit any such sale, lease, license, transfer, assignment or other
disposition if made by the Company or any of its wholly-owned Subsidiaries to
the Company or one of its wholly-owned Subsidiaries or if (i) the board of
directors of the selling entity by resolution has determined that the
consideration to be received by the selling entity in respect thereof represents
the fair market value of the assets sold or the interests granted thereby, (ii)
the aggregate book value (disregarding any write-downs of such book value other
than ordinary depreciation and amortization) of all of the business, assets,
rights, revenues and property disposed of after the date of this Agreement shall
be less than five percent (5%) of such aggregate book value of the Total Assets
of the Company and its Subsidiaries on a consolidated basis on the date of this
Agreement, and (iii) immediately after each such transaction, no Default or
Event of Default shall exist or shall have occurred and be continuing.
(f) Restricted Payments. Make or otherwise authorize any Restricted
Payment to any Affiliate of the Company (other than a Subsidiary of the Company)
or any Person who engages in purchasing, selling, or leasing commercial
aircraft, provided, however, that this clause shall not prohibit the
transactions by the Company otherwise permitted pursuant to the last sentence of
Section 5.2(d).
(g) Transactions with Affiliates. Enter into, become a party to, or
become liable in respect of, any contract or undertaking with any Affiliate
except in the ordinary course of business and on terms not materially less
favorable to the Company or such Subsidiary than those which could be obtained
if such contract or undertaking were an arms length transaction with a person
other than an Affiliate, provided, however, that this clause shall not prohibit
the transactions by the Company otherwise permitted pursuant to the last
sentence of Section 5.2(d).
(h) Nature of Business. Make any substantial change in the nature of
its business from that engaged in on the Effective Date of this Agreement, or
engage in any other businesses other than those in which it is engaged on the
Effective Date of this Agreement which would result in such a substantial
change, provided, however, that this clause shall not prohibit the transactions
by the Company otherwise permitted pursuant to the last sentence of Section
5.2(d).
PAGE 65
ARTICLE VI.
DEFAULT
6.1 Events of Default. The occurrence of any one of the following
events or conditions shall be deemed an "Event of Default" hereunder unless
waived by the Required Banks pursuant to Section 8.1:
===============================================================================
===============================================================================
(a) Nonpayment. The Company shall fail to pay when due any principal
of or interest on the Notes, or any reimbursement obligation under Section 3.3
(whether by deemed disbursement of a Revolving Credit Loan or otherwise), or any
reimbursement obligation with respect to any Bid Rate Letter of Credit, or any
fees or any other amount payable hereunder, and such failure (other than failure
to pay principal or any reimbursement obligation) shall remain unremedied for
two Business Days after the date when due; or
(b) Misrepresentation. Any representation or warranty made by the
Company in Article IV hereof or by any Guarantor in any Guaranty, or any other
certificate, report, financial statement or other document furnished by or on
behalf of the Company in connection with this Agreement, shall prove to have
been incorrect in any material respect when made or deemed made; or
(c) Certain Covenants. The Company or any Subsidiary shall fail
to perform or observe any term, covenant or agreement contained in Section
5.1(a), 5.1 (d) (i) (A) or 5.2 hereof; or
(d) Other Defaults. The Company or any Subsidiary or Guarantor shall
fail to perform or observe any other term, covenant or agreement (not referred
to in subsections (a) through (c) of this Section 6.1) contained in this
Agreement or in any Guaranty, and any such failure shall remain unremedied for
15 calendar days after written notice thereof shall have been given to the
Company by the Agent; or
(e) Cross Default. The Company or any of its Subsidiaries shall fail
to pay any part of the principal of, the premium, if any, or the interest on, or
any other payment of money due under, any of its Indebtedness (other than
Indebtedness hereunder or Indebtedness for operating leases incurred in the
ordinary course of business) beyond any period of grace provided with respect
thereto, which individually or together with other such Indebtedness (or
Indebtedness for such operating leases) as to which any failure under this
paragraph exists has an aggregate outstanding principal amount in excess of
$5,000,000; or if the Company or any of its Subsidiaries fails to perform or
observe any term, covenant or agreement (including payment obligations)
contained in any agreement, document or instrument evidencing or securing any of
its Indebtedness (other than Indebtedness hereunder but including Indebtedness
for operating leases incurred in the ordinary course of business), beyond any
period of grace provided with respect thereto, which individually or together
with other such Indebtedness (including Indebtedness for such operating leases)
as to which any failure under this paragraph exists has an aggregate principal
amount in excess of $5,000,000, if the effect of such failure is to cause, or
permit the holders of such Indebtedness (or a trustee on behalf of such holders)
to cause, any payment in respect of such Indebtedness to become due prior to its
due date; or
(f) Judgments. One or more judgments or orders for the payment of
money in an aggregate amount of $6,000,000 shall be rendered against the Company
or any of its Subsidiaries, or any other judgment or order (whether or not for
the payment of money) shall be rendered against or shall affect the Company or
any of its Subsidiaries which causes or could cause a material adverse change in
the business, properties, operations or condition, financial or otherwise, of
the Company or any of its Subsidiaries or which does or could have a material
adverse effect on the legality, validity or enforceability of this Agreement,
the Notes or the Guaranties, and either (i) such judgment or order shall have
remained unsatisfied and the Company or such Subsidiary shall not have taken
action necessary to stay enforcement thereof by reason of pending appeal or
otherwise, prior to the expiration of the applicable period of limitations for
taking such action or, if such action shall have been taken, a final order
denying such stay shall have been rendered, or (ii) enforcement proceedings
shall have been commenced by any creditor upon any such judgment or order; or
PAGE 66
(g) ERISA. The occurrence of a Reportable Event that results in or
could result in liability of the Company or its ERISA Affiliates to the PBGC or
to any Plan in an aggregate amount in excess of $5,000,000 (individually or
taken together with all other liabilities, payments and amounts referred to in
this paragraph) and such Reportable Event is not corrected within thirty (30)
days after the occurrence thereof; or the occurrence of any Reportable Event
which could result in the appointment by the appropriate United States District
Court of a trustee to administer any such Plan and such Reportable Event is not
corrected within thirty (30) days after the occurrence thereof; or the filing by
the Company or any of its ERISA Affiliates of a notice of intent to terminate a
Plan or the institution of other proceedings to terminate a Plan other than a
standard termination as defined in Section 4041(b) of ERISA; or the Company or
any of its ERISA Affiliates shall fail to pay when due any liability to the PBGC
or to a Plan in an aggregate amount in excess of $5,000,000 (individually or
taken together with all other liabilities, payments and amounts referred to in
this paragraph); or the PBGC shall have instituted proceedings to terminate, or
to cause a trustee to be appointed to administer, any Plan of the Company or its
ERISA Affiliates; or the Company or any of its ERISA Affiliates engages in a
Prohibited Transaction with respect to any Plan which results in or could result
in liability of the Company or any ERISA Affiliates in an aggregate amount in
excess of $5,000,000 (individually or taken together with all other liabilities,
payments and amounts referred to in this paragraph); or the Company or any of
its ERISA Affiliates shall fail to make any required contribution when due to
any Multiemployer Plan and such failure continues for a period of thirty (30)
days after such contribution becomes due; or a proceeding is instituted by a
fiduciary or sponsor of any Multiemployer Plan to which the Company or any of
its ERISA Affiliates contributes or is required to contribute to collect
contributions from the Company or any ERISA Affiliate pursuant to Section 515 of
ERISA and such proceeding is not dismissed within thirty (30) days of the
filing; or the Company or any of its ERISA Affiliates completely or partially
withdraws from any Multiemployer Plan and the aggregate amount of withdrawal
liability to which the Company and its ERISA Affiliates become obligated to all
Multiemployer Plans requires payments in excess of $5,000,000 (individually or
taken together with all other liabilities, payments and amounts referred to in
this paragraph); or the Company or any of its ERISA Affiliates is notified by
the fiduciary or sponsor of any Multiemployer Plan that such Multiemployer Plan
is in reorganization or is being terminated or liquidated under Title IV of
ERISA and as a result of such reorganization, termination or liquidation the
aggregate contribution of the Company and its ERISA Affiliates to all
Multiemployer Plans that are being reorganized, terminated or liquidated has
been or will be increased over amounts paid in previous calendar years by an
amount exceeding $5,000,000 (individually or taken together with all other
liabilities, payments and amounts referred to in this paragraph); or failure by
the Company or any of their ERISA Affiliates to make a required installment or
other payment to any Plan within the meaning of Section 302(f) of ERISA or
Section 412(n) of the Code that results in or could result in liability of the
Company or any of its ERISA Affiliates to the PBGC or any Plan in an aggregate
amount in excess of $5,000,000 (individually or taken together with all other
liabilities, payments and amounts referred to in this paragraph); or the
withdrawal of the Company or any of its ERISA Affiliates from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; or
(h) Insolvency, Etc. The Company or any of its Subsidiaries shall be
dissolved or liquidated (other than a dissolution or liquidation of any
Subsidiary of the Company in connection with any disposition of substantially
all of its business, assets, rights, revenues and property otherwise permitted
pursuant to Section 5.2(e)), or any judgment, order or decree therefor shall be
entered, or the Company or any of its Subsidiaries shall generally not pay its
debts as they become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors, or shall institute, or there shall be instituted against the Company
or any of its Subsidiaries, any proceeding or case seeking to adjudicate it a
bankrupt or insolvent or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief or
protection of debtors or seeking the entry of an order for relief, or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its assets, rights, revenues or property, and, if
such proceeding is instituted against the Company or such Subsidiary and is
being contested by the Company or such Subsidiary, as the case may be, in good
faith by appropriate proceedings, such proceeding shall remain undismissed or
unstayed for a period of 60 days; or the Company or such Subsidiary shall take
any action (corporate or other) to authorize or further any of the actions
described above in this subsection; or
(i) Guaranty. Any material provision of any Guaranty shall at any time
for any reason cease to be valid and binding and enforceable against any obligor
thereunder, or the validity, binding effect or enforceability thereof shall be
contested by any person, or any obligor shall deny that it has any or further
liability or obligation thereunder, or any Guaranty shall be terminated,
invalidated or set aside, or be declared ineffective or inoperative or in any
way cease to give or provide to the Banks and the Agent the benefits purported
to be created thereby; or
(j) Change of Control. Any Change in Control shall occur.
PAGE 67
6.2 Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Agent may and, upon being directed to do so by the Required Banks,
shall by notice to the Company (i) terminate the Commitments or (ii) declare the
outstanding principal of, and accrued interest on, the Notes, all unpaid
reimbursement obligations in respect of drawings under Letters of Credit and all
other amounts owing under this Agreement to be immediately due and payable, or
(iii) demand immediate delivery of cash collateral, and the Company agrees to
deliver such cash collateral upon demand, in an amount equal to the maximum
amount that may be available to be drawn at any time prior to the stated expiry
of all outstanding Letters of Credit, or any one or more of the foregoing,
whereupon the Commitments shall terminate forthwith and all such amounts,
including such cash collateral, shall become immediately due and payable, as the
case may be, provided that in the case of any event or condition described in
Section 6.1(h) with respect to the Company, the Commitments shall automatically
terminate forthwith and all such amounts, including such cash collateral, shall
automatically become immediately due and payable without notice; in all cases
without demand, presentment, protest, diligence, notice of dishonor or other
formality, all of which are hereby expressly waived. The Company hereby grants
to the Banks and the Agent a lien on and security interest in such cash
collateral delivered in respect of outstanding Letters of Credit, which shall be
deposited in a special cash collateral account to be held by the Agent as
collateral security for the payment and performance of all of the Company's
obligations to the Banks and the Agent under this Agreement.
(b) The Agent may and, upon being directed to do so by the Required
Banks, shall, in addition to the remedies provided in Section 6.2(a), exercise
and enforce any and all other rights and remedies available to it or the Banks,
whether arising under this Agreement, the Notes, the Guaranties or under
applicable law, in any manner deemed appropriate by the Agent, including suit in
equity, action at law, or other appropriate proceedings, whether for the
specific performance (to the extent permitted by law) of any covenant or
agreement contained in this Agreement or in the Notes or in the Guaranties or in
aid of the exercise of any power granted in this Agreement or in the Notes or in
the Guaranties.
(c) Upon the occurrence and during the continuance of any Event of
Default, each Bank may at any time and from time to time, without notice to the
Company (any requirement for such notice being expressly waived by the Company)
set off and apply against any and all of the obligations of the Company now or
hereafter existing under this Agreement, whether owing to such Bank or any other
Bank or the Agent, when due, 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 Company and
any property of the Company from time to time in possession of such Bank,
irrespective of whether or not such deposits held or indebtedness owing by such
Bank may be contingent and unmatured. The Company hereby grants to the Banks and
the Agent a lien on and security interest in all such deposits, indebtedness and
property as collateral security for the payment and performance of all of the
obligations of the Company under this Agreement. The rights of each Bank under
this Section 6.2(c) are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Bank may have.
ARTICLE VII
THE AGENT AND THE BANKS
7.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement, the Notes and the Guaranties as
are delegated to the Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto. The provisions of this Article
VII are solely for the benefit of the Agent and the Banks, and the Company shall
not have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the Agent
shall act solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for the Company.
PAGE 68
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===============================================================================
7.2 Agent and Affiliates. NBD Bank in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent.
NBD Bank and its affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with the Company or any
Subsidiary of the Company as if it were not acting as Agent hereunder, and may
accept fees and other consideration therefor without having to account for the
same to the Banks.
7.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Bank, and no
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or shall otherwise exist against the Agent. As to any
matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement action under the Notes and the
Guaranties), the Agent shall not be required to exercise any discretion or take
any action, but may request written instructions from the Required Banks. The
Agent shall act in accordance with such written instructions and shall in all
cases be fully protected in acting, or in refraining from acting, pursuant to
the written instructions of the Required Banks, which instructions and any
action or omission pursuant thereto shall be binding upon all of the Banks;
provided, however, that the Agent shall not be required to act or omit to act
if, in the judgment of the Agent, such action or omission may expose the Agent
to personal liability or is contrary to this Agreement, the Notes or the
Guaranties or applicable law.
7.4 Reliance by Agent. The Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it to
be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder thereof.
The Agent may employ agents and may consult with legal counsel (who may be
counsel for the Company), independent public accountants and other experts
selected by it and shall not be liable to the Banks, except as to money or
property received by it or its authorized agents, for the negligence or
misconduct of any such agent selected by it with reasonable care or for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
7.5 Default. The Agent shall not be deemed to have knowledge of the
occurrence of any Default or Event of Default, unless the Agent has received
written notice from a Bank or the Company specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice, the Agent shall give written notice thereof to
the Banks.
7.6 Liability of Agent. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to the Banks for any action taken
or not taken by it or them in connection herewith with the consent or at the
request of the Required Banks or in the absence of its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (a) any recital, statement, warranty or
representation contained in this Agreement, any Note or any Guaranty, or in any
certificate, report, financial statement or other document furnished in
connection with this Agreement, (b) the performance or observance of any of the
covenants or agreements of the Company or any of its Subsidiaries or any
Guarantor, (c) the satisfaction of any condition specified in Article II hereof,
except as disclosed by documents delivered pursuant thereto, or (d) the
validity, effectiveness, legal enforceability, value or genuineness of this
Agreement, the Notes, the Guaranties or any other instrument or document
furnished in connection herewith.
PAGE 69
7.7 Nonreliance on Agent and Other Banks. Each Bank acknowledges and
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Company and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decision in
taking or not taking action under this Agreement. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Company, any of its Subsidiaries or any Guarantor of this Agreement, the Notes,
the Guaranties or any other documents referred to or provided for herein or to
inspect the properties or books of the Company or any of its Subsidiaries or any
Guarantor and, except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any
information concerning the affairs, financial condition or business of the
Company or any of its Subsidiaries which may come into the possession of the
Agent or any of its affiliates.
7.8 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Company, but without limiting any obligation of the
Company to make such reimbursement), ratably according to the respective
principal amounts of the Advances then outstanding made by each of them (or if
no Advances are at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all claims, damages,
losses, liabilities, and reasonable costs or expenses, of any kind or nature
whatsoever (including, without limitation, reasonable fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of this Agreement or the transactions
contemplated hereby or any action taken or omitted by the Agent under this
Agreement, provided, however, that no Bank shall be liable for any portion of
such claims, damages, losses, liabilities, costs or expenses resulting from the
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank agrees to reimburse the Agent promptly upon demand for its
ratable share of any reasonable out-of-pocket expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Company, but without limiting the obligation
of the Company to make such reimbursement. Each Bank agrees to reimburse the
Agent promptly upon demand for its ratable share of any amounts owing to the
Agent by the Banks pursuant to this Section. If the indemnity furnished to the
Agent under this Section shall, in the judgment of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity from the Banks and
cease, or not commence, to take any action until such additional indemnity if
furnished.
7.9 Resignation of Agent. The Agent may resign as such at any time
upon thirty days' prior written notice to the Company and the Banks. In the
event of any such resignation, the Required Banks shall, by an instrument in
writing delivered to the Company and the Agent, appoint a successor, which shall
be a commercial bank organized under the laws of the United States or any State
thereof and having a combined capital and surplus of at least $500,000,000. If a
successor is not so appointed or does not accept such appointment before the
Agent's resignation becomes effective, the resigning Agent may appoint a
temporary successor to act until such appointment by the Required Banks is made
and accepted or if no such temporary successor is appointed as provided above by
the resigning Agent, the Required Banks shall thereafter perform all the duties
of the Agent hereunder until such appointment by the Required Banks is made and
accepted. Any successor to the Agent shall execute and deliver to the Company
and the Banks an instrument accepting such appointment and thereupon such
successor Agent, without further act, deed, conveyance or transfer shall become
vested with all of the properties, rights, interests, powers, authorities and
obligations of its predecessor hereunder with like effect as if originally named
as Agent hereunder. Upon request of such successor Agent, the Company and the
resigning Agent shall execute and deliver such instruments of conveyance,
assignment and further assurance and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in such successor
Agent all such properties, rights, interests, powers, authorities and
obligations. The provisions of this Article VII shall thereafter remain
effective for such resigning Agent with respect to any actions taken or omitted
to be taken by such Agent while acting as the Agent hereunder.
PAGE 70
7.10 Sharing of Payments. If any Bank, whether by setoff or otherwise,
has payment made to it upon its share of any Advance in a greater proportion
than that received by any other Bank, such Bank agrees, promptly upon demand, to
purchase a portion of the Advance held by the other Banks so that after such
purchase each Bank will hold its ratable portion of the Advances. The Banks
further agree among themselves that if payment to a Bank obtained by such Bank
through the exercise of a right of set-off, banker's lien, counterclaim or
otherwise as aforesaid shall be rescinded or must otherwise be restored, each
Bank which shall have shared the benefit of such payment shall, by repurchase of
participations theretofore sold, return its share of that benefit to each Bank
whose payment shall have been rescinded or otherwise restored. The Company
agrees that any Bank so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including set-off,
banker's lien or counterclaim, with respect to such participation as fully as if
such Bank were a holder of such Advance or other obligation in the amount of
such participation. Except as otherwise expressly provided in this Agreement, if
any Bank or the Agent shall fail to remit to the Agent or any other Bank an
amount payable by such Bank or the Agent to the Agent or such other Bank
pursuant to this Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date such
amount is due until the date such amount is paid to the Agent or such other Bank
at a rate per annum equal to the rate at which borrowings are available to the
payee in its overnight federal funds market.
7.11 Withholding Taxes. At least five Business Days prior to the first
date on which interest or fees are payable hereunder for the account of any
Bank, each Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to each of the Company
and the Agent two duly completed copies of the United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that such Bank is entitled
to receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to each of the
Company and the Agent two additional copies of such form (or a successor form)
on or before the date that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably required by the Company or the Agent, in each case certifying that
such Bank is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
PAGE 71
ARTICLE VIII
MISCELLANEOUS
IRREVOCABLE GUARANTY AND INDEMNITY
8.1 Amendments, Etc. (a) No amendment, modification, termination or
waiver of any provision of this Agreement nor any consent to any departure
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Banks and, to the extent any rights or duties of the Agent may be
affected thereby, the Agent, provided, however, that no such amendment,
modification, termination, waiver or consent shall, without the consent of the
Agent and all of the Banks, (i) authorize or permit the extension of time for,
or any reduction of the amount of, any payment of the principal of, or interest
on, the Notes or any Letter of Credit reimbursement obligation, or any fees or
other amount payable hereunder, or (ii) amend, terminate or extend the
respective Commitments of any Bank set forth on the signature pages hereof or
modify the provisions of this Section regarding the taking of any action under
this Section or the provisions of Section 7.10, Section 8.6, Section 8.14 or the
definition of Required Banks or (iii) release any Guarantor from its liabilities
and obligations pursuant to any Guaranty.
(b) Any such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
8.2 Notices. (a) Except as otherwise provided in Section 8.2(c)
hereof, all notices and other communications hereunder shall be in writing and
shall be delivered or sent to the Company at 9700 Higgins Road, Suite 570,
Rosemont, Illinois 60018, Attention: Senior Vice President-Finance and Chief
Financial Officer, Facsimile No. (847) 696-2080, Confirmation No. (847)
696-0200, with a copy to Sachnoff & Weaver, Ltd., 30 South Wacker Drive, 29th
Floor, Chicago, Illinois 60606-7484, Attention: Austin Hirsch, Facsimile No.
(312) 207-6400, Confirmation No. (312) 207-1000, and to the Agent and the Banks
at the respective addresses and numbers for notices set forth on the signature
pages hereof, or to such other address as may be designated by the Company, the
Agent or any Bank by notice to the other parties hereto. All notices and other
communications shall be deemed to have been given at the time of actual delivery
thereof to such address, or if sent by certified or registered mail, postage
prepaid, to such address, on the third day after the date of mailing, or in the
case of telex notice, upon receipt of the appropriate answerback, provided,
however, that notices to the Agent pursuant to Sections 2.4, 2.7 or 3.1 shall
not be effective until received.
(b) Notices by the Company to the Agent with respect to terminations
or reductions of the Commitments pursuant to Section 2.2, requests for Advances
pursuant to Section 2.4, requests for conversions of Floating Rate Loans
pursuant to Section 2.7, and notices of prepayment pursuant to Section 3.1 shall
be irrevocable and binding on the Company.
(c) Any notice to be given by the Company to the Agent pursuant to
Sections 2.4, 2.7 or 3.1 and any notice to be given by the Agent or any Bank
hereunder, may be given by telephone, and all such notices must be confirmed
within two Business Days by facsimile in the manner provided in Section 8.2(a).
Any such notice given by telephone shall be deemed effective upon receipt of
such telephone notice by the party to whom such notice is to be given.
(d) The Company shall be entitled to rely upon any notice believed by
it to be genuine and correct and to have been given by the Agent on its own
behalf or on behalf of the Banks or any of them.
8.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on
the part of the Agent or any Bank, nor any delay or failure on the part of the
Agent or any Bank in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege or otherwise prejudice the
Agent's or such Bank's rights and remedies hereunder; nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other right, power or privilege. No right or remedy conferred upon or
reserved to the Agent or any Bank under this Agreement, the Notes or any
Guaranty is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any applicable law.
Every right and remedy granted by this Agreement, the Notes or any Guaranty or
by applicable law to the Agent or any Bank may be exercised from time to time
and as often as may be deemed expedient by the Agent or any Bank and, unless
contrary to the express provisions of this Agreement, or the Notes or any
Guaranty, irrespective of the occurrence or continuance of any Default or Event
of Default.
PAGE 72
8.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of the Company or any of
its Subsidiaries or any Guarantor made herein or in any Guaranty or in any
certificate, report, financial statement or other document furnished by or on
behalf of the Company, any such Subsidiary or any Guarantor in connection with
this Agreement shall be deemed to have been relied upon by the Banks,
notwithstanding any investigation heretofore or hereafter made by any Bank or on
such Bank's behalf, and those covenants and agreements of the Company set forth
in Section 3.7, 3.9 and 8.5 hereof shall survive the repayment in full of the
Advances and the termination of the Commitments.
8.5 Expenses; Indemnification. (a) The Company agrees to pay, or
reimburse the Agent for the payment of, on demand, (i) the reasonable fees and
expenses of counsel to the Agent, including without limitation the fees and
expenses of Dickinson, Wright, Moon, Van Dusen & Freeman, in connection with the
preparation, execution, delivery and administration of this Agreement, the Notes
and the Guaranties and the consummation of the transactions contemplated hereby,
and in connection with advising the Agent as to its rights and responsibilities
with respect thereto, and in connection with any amendments, waivers or consents
in connection therewith, and (ii) all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing or
recording of this Agreement, the Notes and the Guaranties and the consummation
of the transactions contemplated hereby, and any and all liabilities with
respect to or resulting from any delay in paying or omitting to pay such taxes
or fees, and (iii) all reasonable costs and expenses of the Agent and each Bank
(including reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise) in connection with any Default or
Event of Default or the enforcement of, or the exercise or preservation of any
rights under, this Agreement, the Notes or the Guaranties or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement and (iv) all reasonable costs and expenses of the Agent and each Bank
(including reasonable fees and expenses of counsel) in connection with any
action or proceeding relating to a court order, injunction or other process or
decree restraining or seeking to restrain the Agent from paying any amount
under, or otherwise relating in any way to, any Letter of Credit and any and all
costs and expenses which any of them may incur relative to any payment under any
Letter of Credit.
(b) The Company hereby indemnifies and agrees to hold harmless the
Banks and the Agent, and their respective officers, directors, employees and
agents, harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever which the Banks
or the Agent or any such person may incur or which may be claimed against any of
them by reason of or in connection with any Letter of Credit, and neither any
Bank nor the Agent or any of their respective officers, directors, employees or
agents shall be liable or responsible for: (i) the use which may be made of any
Letter of Credit or for any acts or omissions of any beneficiary in connection
therewith; (ii) the validity, sufficiency or genuineness of documents or of any
endorsement thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (iii) payment by the
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; (iv) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Company shall not be required to indemnify the Banks
and the Agent and such other persons, and the Banks shall be liable to the
Company to the extent, but only to the extent, of any direct, as opposed to
consequential or incidental, damages suffered by the Company which were caused
by (A) the Agent's wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and conditions
of such Letter of Credit, or (B) the payment by the Agent to the beneficiary
under any Letter of Credit against presentation of documents which do not
substantially comply with the terms of the Letter of Credit. It is understood
that in making any payment under a Letter of Credit the Agent will rely on
documents presented to it under such Letter of Credit as to any and all matters
set forth therein without further investigation and regardless of any notice or
information to the contrary. It is further acknowledged and agreed that the
Company may have rights against the beneficiary or others in connection with any
Letter of Credit with respect to which the Banks are alleged to be liable and it
shall be a precondition of the assertion of any liability of the Banks under
this Section that the Company shall first have exhausted all remedies in respect
of the alleged loss against such beneficiary and any other parties obligated or
liable in connection with such Letter of Credit and any related transactions.
PAGE 73
(c) The Company agrees to indemnify the Agent
and each Bank, their respective affiliates and the respective directors,
officers, agents and employees of the foregoing (each an "Indemnitee") and hold
each Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee at any time in connection with any investigative, administrative or
judicial proceeding (whether or not such Indemnitee shall be designated a party
thereto) brought or threatened relating to or arising out of the Loan Documents,
any actual or proposed use of proceeds of the Advances or any transactions
relating to any of the foregoing; provided that no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee's own gross negligence or
willful misconduct as determined by a court of competent jurisdiction.
8.6 Successors and Assigns; Participations. (a) This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that the Company may not, without
the prior consent of all of the Banks, assign its rights or obligations
hereunder or under the Notes and the Banks shall not be obligated to make any
Advance hereunder to any entity other than the Company without such consent.
(b) Any Bank may sell to any financial
institution or institutions, and such financial institution or institutions may
further sell, a participation interest (undivided or divided) in, the Advances
and such Bank's rights and benefits under this Agreement and the Notes, and to
the extent of that participation interest such participant or participants shall
have the same rights and benefits against the Company under Section 3.7, 3.9 and
6.2(c) as it or they would have had if such participant or participants were the
Bank making the Advances to the Company hereunder, provided, however, that (i)
such Bank's obligations under this Agreement shall remain unmodified and fully
effective and enforceable against such Bank, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Bank shall remain the holder of its Notes for all purposes of this
Agreement, (iv) the Company, the 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 (v) such Bank shall not grant to its
participant any rights to consent or withhold consent to any action taken by
such Bank or the Agent under this Agreement other than action requiring the
consent of all of the Banks hereunder.
(c) The Agent from time to time in its sole
discretion may appoint agents for the purpose of servicing and administering
this Agreement and the transactions contemplated hereby and enforcing or
exercising any rights or remedies of the Agent provided under this Agreement,
the Notes or otherwise. In furtherance of such agency, the Agent may from time
to time direct that the Company provide notices, reports and other documents
contemplated by this Agreement (or duplicates thereof) to such agent. The
Company hereby consents to the appointment of such agent and agrees to provide
all such notices, reports and other documents and to otherwise deal with such
agent acting on behalf of the Agent in the same manner as would be required if
dealing with the Agent itself.
(d) Each Bank may, with the prior consent of
the Company (which consent shall be given or withheld in the sole discretion of
the Company provided that consent may not be withheld during the continuance of
any Event of Default) and the Agent, assign to one or more banks or other
entities all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Advances
owing to it and the Note or Notes held by it); provided, however, that (i) each
such assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations, (ii) except in the case of an assignment of all of a
Bank's rights and obligations under this Agreement, the amount of the Commitment
of the assigning Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $10,000,000, and in integral
multiples of $1,000,000 thereafter, or such lesser amount as the Company and the
Agent may consent to, (iii) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance in the form of Exhibit H hereto (an "Assignment and
Acceptance"), together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500, and (iv) any Bank may without the
consent of the Company or the Agent, and without paying any fee, assign or sell
a participation interest to any Affiliate of such Bank that is a bank or
financial institution all or a portion of its rights and obligations under this
Agreement. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and (y) the Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all of the remaining portion
of an assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
PAGE 74
(e) By executing and delivering an Assignment
and Acceptance, the Bank assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, 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 any Guaranty or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any Guaranty or any other
instrument or document furnished pursuant hereto; (ii) such assigning Bank makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any Guarantor or the performance or
observance by the Company of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.6 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; (iv) such assignee will,
independently and without reliance upon the 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; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Bank.
(f) The Agent shall maintain at its address
designated on the signature pages hereof a copy of each Assignment and
Acceptance delivered to and accepted by 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 from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Company, the Agent and the Banks may treat each person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Company or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(g) Upon its receipt of an Assignment and
Acceptance executed by an assigning Bank and an assignee, together with any Note
or Notes subject to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Company. Within five Business Days after its receipt of
such notice, the Company, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained a
Commitment hereunder, a new Note to the order of the assigning Bank in an amount
equal to the Commitment retained by it hereunder. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit H hereto.
(h) The Banks may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 8.6, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Company and the Guarantors;
provided, that, unless a Default or Event of Default has occurred and is
continuing, the consent of the Company shall be required prior to disclosing any
non-public information relating to the Company and the Guarantors.
(i) Notwithstanding any other provision set
forth in this Agreement, any Bank may at any time create a security interest in,
or assign, all or any portion of its rights under this Agreement (including,
without limitation, the Loans owing to it and the Note or Notes held by it) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Board
of Governors of the Federal Reserve System; provided that such creation of a
security interest or assignment shall not release such Bank from its obligations
under this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
PAGE 75
8.8 Governing Law; Consent to Jurisdiction; Waiver. This Agreement is
a contract made under, and shall be governed by and construed in accordance
with, the law of the State of Michigan applicable to contracts made and to be
performed entirely within such State and without giving effect to choice of law
principles of such State. The Company further agrees that any legal action or
proceeding with respect to this Agreement, the Notes or the transactions
contemplated hereby may be brought in any court of the State of Michigan, or in
any court of the United States of America sitting in Michigan, and the Company
hereby submits to and accepts generally and unconditionally the jurisdiction of
those courts with respect to its person and property, and agrees at all times to
maintain an agent for service of process in Michigan and hereby irrevocably
appoints USF Holland, Inc., whose address in Michigan is 750 E. 40th Street,
Holland, Michigan 49423 Attention: President, Pete Neydon, as its agent for
service of process and irrevocably consents to the service of process in
connection with any such action or proceeding by personal delivery to such agent
or to the Company or by the mailing thereof by registered or certified mail,
postage prepaid to the Company at its address set forth in Section 8.2. The
Company hereby irrevocably waives any objection to the laying of venue of any
such suit or proceeding in the above described courts. Nothing in this paragraph
shall affect the right of the Banks and the Agent to serve process in any other
manner permitted by law or limit the right of the Banks or the Agent to bring
any such action or proceeding against the Company or property in the courts of
any other jurisdiction.
8.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
8.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any person, or which such person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not expressly
specified in such provision.
8.11 Integration and Severability. This Agreement embodies the entire
agreement and understanding between the Company and the Agent and the Banks, and
supersedes all prior agreements and understandings, relating to the subject
matter hereof. In case any one or more of the obligations of the Company under
this Agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Company shall not in any way be affected or impaired thereby,
and such invalidity, illegality or unenforceability in one jurisdiction shall
not affect the validity, legality or enforceability of the obligations of the
Company under this Agreement or the Notes in any other jurisdiction.
8.12 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default or any event or condition
which with notice or lapse of time, or both, could become such a Default or an
Event of Default if such action is taken or such condition exists.
8.13 Interest Rate Limitation. Notwithstanding any provision of this
Agreement or the Notes, in no event shall the amount of interest paid or agreed
to be paid by the Company exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the Notes at the
time performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Advances outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the Company
if such principal and all other obligations of the Company to the Banks have
been paid in full.
PAGE 76
8.14 Relationship of this Agreement to the Existing Credit Agreement.
This Agreement shall become effective on the Effective Date. On the Effective
Date, all loans and letters of credit outstanding under the Existing Credit
Agreement shall be considered a part of the Loans and Letters of Credit under
this Agreement for all purposes, as if made in accordance with and pursuant to
the terms of this Agreement, other than any bid rate letter of credit issued
under the Existing Credit Agreement by Comerica Bank, which bid rate letters of
credit shall, on or before the Effective Date either be canceled,
cash-collateralized or be subject to such other arrangement as may be agreed
between Comerica Bank and the Company so long as Comerica Bank issues a payoff
letter in favor of the Agent which is in form and substance satisfactory to the
Agent. On or after the Effective Date, (i) no further fees shall accrue to any
Bank under the Existing Credit Agreement and all fees accrued to (but excluding)
the Effective Date under such agreement shall be paid by the Company on the
Effective Date and (ii) the rights and obligations of the parties hereto shall
be governed solely by this Agreement, except in respect of any rights or
obligations arising prior to the Effective Date and which shall survive the
Effective Date pursuant to the terms of the Existing Credit Agreement. Except as
otherwise provided in this Section 8.14, all of the Advances and other
indebtedness, obligations and liabilities of the Company are a continuation of,
or replace and refund, as the case may be, the "Advances" and other
indebtedness, obligations and liabilities of the Company under and as defined in
the Existing Credit Agreement. This Agreement amends and restates in full the
terms and provisions of the Existing Credit Agreement and is not intended to
constitute a novation or satisfaction of or a renunciation or cancellation or
other discharge of the Advances and other indebtedness, liabilities and
obligations created under and evidenced by the Existing Credit Agreement.
8.15 Waiver of Jury Trial. The Banks, the Agent and the Company, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right any of them may have to a trial by
jury in any litigation based upon or arising out of this Agreement or any
related instrument or agreement or any of the transactions contemplated by this
Agreement or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. Neither the Banks, nor the Agent, nor the
Company shall seek to consolidate, by counterclaim or otherwise, any such action
in which a jury trial has been waived with any other action in which a jury
trial cannot be or has not been waived. These provisions shall not be deemed to
have been modified in any respect or relinquished by any Bank, the Agent or the
Company except by a written instrument executed by all of them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered on November 26, 1997, which shall be the
Effective Date of this Agreement, notwithstanding the day and year first above
written.
USFREIGHTWAYS CORPORATION
By: /s/ Christopher L. Ellis
Its: Vice President
PAGE 77
NBD BANK, as Agent and as a Bank
By: /s/ R. Ross Mathews
Its: Vice President
Address for Notices:
611 Woodward Avenue
Mail Suite 8060
Detroit, Michigan 48226
Attention: Corporate & Institutional Banking
R. Ross Mathews
Facsimile No.: (313) 225-1689
Confirmation No.: (313) 225-3289
Commitment Amount: $37,000,000
NATIONSBANK, N.A.
By: /s/ Wallace Harris, Jr.
Its: Vice President
Address for Notices:
233 South Wacker Drive
Suite 2800
Chicago, Illinois 60606-6308
Attention: Wallace Harris
Facsimile No.: (312) 234-5601
Confirmation No.: (312) 234-5626
Commitment Amount: $28,000,000
WELLS FARGO BANK, N.A.
By: /s/ Edith R. Lim
Its: Vice President
Address for Notices
707 Wilshire Blvd.
Los Angeles, California 90017
Attention: Edith Lim
Facsimile No. (213) 614-2305
Confirmation No. (213) 614-3903
Commitment Amount: $20,000,000
SUNTRUST BANK, ATLANTA
By: /s/ Margaret A. Jaketic
Its: Vice President
Address for Notices
25 Park Place, N.E., 24th Floor By: /s/ Brian Willman
Atlanta, Georgia 30303
Its: Banking Officer
Attention: Marge Jaketic
Facsimile No. (404) 588-8500
Confirmation No. (404) 588-8682
Commitment Amount: $20,000,000
PAGE 78
THE BANK OF TOKYO-MITSUBISHI,
LTD., CHICAGO BRANCH
By: /s/ Hajime Watanabe
Its: Deputy General Manager
Address for Notices
227 W. Monroe, Suite 2300
Chicago, Illinois 60606
Attention: Diane Tkach
Facsimile No. (312) 696-4535
Confirmation No. (312) 696-4663
Commitment Amount: $20,000,000
CREDIT AGRICOLE INDOSUEZ
By: /s/ David Bouhl, F. V. P.
Its: Head of Corporate Banking
Address for Notices: By: /s/ Katherine L. Abbott
55 E. Monroe Street, 47th Floor Its: First Vice President
Chicago, Illinois 60603
Attention: Phil Salter
Facsimile No. (312) 372-2830
Confirmation No. (312) 917-7417
Commitment Amount: $20,000,000
THE BANK OF NEW YORK
By: /s/ John R. Ciulla
Its: Assistant Vice President
Address for Notices:
Central Division
One Wall Street, 19th Floor
New York, New York 10286
Attention: Andrea Ayres
Facsimile No. (212) 635-1208
Confirmation No. (212) 635-1166
Commitment Amount: $20,000,000
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Bridget Garavalia
Its: Managing Director
Address for Notices:
231 South LaSalle, 10th Floor
Chicago, Illinois 60697
Attention: Sharon Burks Horos
Facsimile No. (312) 828-1997
Confirmation No. (312) 828-2149
Commitment Amount: $20,000,000
PAGE 79
HARRIS TRUST AND SAVINGS BANK
By: /s/ Patrick J. McDonnell
Its: Vice President
Address for Notices:
111 West Monroe Street
Chicago, Illinois 60690
Attention: Patrick J. McDonnell
Facsimile No.: (312) 293-4856
Confirmation No.: (312) 461-5054
Commitment Amount: $15,000,000
Total Commitment Amount of
all Banks: $200,000,000
DETROIT 7-3022 34046-9 (11/18/97)
PAGE 80
EXHIBIT 10(n)
USFREIGHTWAYS CORPORATION
IRREVOCABLE GUARANTY AND INDEMNITY
THIS IRREVOCABLE GUARANTY AND INDEMNITY, dated as of November 26, 1997
(this "Guaranty"), by _______________________, a _______________ corporation
(the "Guarantor"), in favor of the banks (the "Banks") which are parties to the
Credit Agreement hereinafter defined and NBD BANK, a Michigan banking
corporation as agent for the Banks (in such capacity, the "Agent");
WITNESSETH:
WHEREAS, USFreightways Corporation, a Delaware corporation (the
"Company"), has entered into a Credit Agreement dated as of November 26, 1997
(the "Credit Agreement") with the Banks and the Agent pursuant to which the
Banks may make Advances to the Company (terms used but not defined herein shall
have the respective meanings ascribed thereto in the Credit Agreement, and
reference herein to one or more Guarantors shall mean the Guarantor and/or one
or more of the other Guarantors, as defined in the Credit Agreement and as the
context may require);
WHEREAS, as a condition to the effectiveness of the obligations of the
Banks under the Credit Agreement, the Guarantor is required to guarantee, among
other things, the obligations of the Company in respect of the Advances and the
other obligations of the Company under the Notes and the Credit Agreement; and
WHEREAS, the Guarantor is engaged with the Company in an integrated
business group and will benefit from the credit facility established pursuant to
the Credit Agreement;
NOW, THEREFORE, for valuable consideration, the receipt of which is
hereby acknowledged, and in order to induce the Banks to extend credit to the
Company as contemplated by the Credit Agreement, the Guarantor hereby undertakes
and agrees as follows:
1. The Guarantor hereby irrevocably, absolutely and unconditionally,
guarantees to the Banks and the Agent, as primary obligor and not as surety
only, (a) the prompt and complete payment of all monies and liabilities due,
owing or incurred to the Banks or the Agent by the Company pursuant to the
Credit Agreement, any of the Notes, any Letter of Credit, any other Guaranty, or
any documents given in connection therewith (collectively referred to herein as
the "Agreements"), (b) the prompt performance of all covenants, agreements and
obligations of the Company under the Agreements, and (c) the prompt and complete
payment of all indebtedness and liabilities of the Company to the Banks and the
Agent, direct or indirect, absolute or contingent, whether as primary obligor,
surety or otherwise, due or to become due, now existing or hereafter arising, in
connection with the Agreements, including, without limitation, interest accruing
on or after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding (all of which obligations and liabilities referred to in this
sentence may be hereafter referred to herein as "Liabilities").
PAGE 81
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================================================================================
2. This Guaranty and all of the obligations of the Guarantor hereunder
shall remain in full force and effect without regard to and shall not be
affected or impaired by: (a) any amendment, modification of or addition or
supplement to any of the Agreements; (b) any extension, indulgence or other
action or inaction in respect of any of the Agreements or this Guaranty or any
acceptance of security for, or other guaranties of, any of the Agreements, or
release, exchange, or alteration of any such security or guaranties; (c) any
default by the Company under, or any lack of due execution, invalidity or
unenforceability of, or any irregularity or other defect in, any of the
Agreements; (d) any waiver by the Banks or the Agent of any required performance
of any condition precedent or waiver of any requirement imposed by any of the
Agreements; (e) any exercise or non-exercise of any right, remedy, power or
privilege in respect of this Guaranty or any of the Agreements; (f) any sale,
lease, transfer or other disposition of the assets of any one or more of the
Company or any Guarantor or any consolidation or merger of any one or more of
the Company or any Guarantor with or into any other person, corporation, or
entity, or any transfer or other disposition by any holder of any shares of
capital stock of the Company; (g) any bankruptcy, insolvency, reorganization or
similar proceedings involving or affecting any one or more of the Company or any
Guarantor; (h) any other circumstances which might otherwise constitute a legal
or equitable discharge or defense of a guarantor; or (i) any other circumstance;
in each case whether or not the Guarantor shall have notice or knowledge of any
of the foregoing. This Guaranty is an absolute, unconditional and irrevocable
guaranty of payment and not a guaranty of collection and is wholly independent
of and in addition to other rights and remedies of the Banks and the Agent, and
is not contingent upon the pursuit by the Banks or the Agent, of any such rights
and remedies, such pursuit being hereby waived by the Guarantor. The Banks and
the Agent shall have no obligation to create, protect, perfect, secure or insure
any lien or collateral at any time held by them as security for the Liabilities
or for this Guaranty or any property subject thereto. When pursuing their rights
and remedies hereunder against any Guarantor, the Banks and the Agent may, but
shall be under no obligation to, pursue such rights and remedies as they may
have against the Company or any other Guarantor or other person or against any
collateral security or guarantee for the Liabilities or any right of offset with
respect thereto, and any failure by the Banks or the Agent to pursue other
rights or remedies or to collect any payments from the Company or any other
Guarantor or other person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the Company
or any other Guarantor or other person or any such collateral security,
guarantee or right of offset, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Banks and the Agent
against the Guarantor. This Guaranty shall remain in full force and effect and
be binding in accordance with and to the extent of its terms upon the Guarantor
and its successors and assigns, and shall inure to the benefit of the Banks and
the Agent, and their respective successors, endorsees, transferees and assigns,
until all the Liabilities, and all the obligations of the Guarantor under this
Guaranty, shall have been satisfied by payment in full.
3. With respect to its obligations hereunder and the enforcement
thereof, the Guarantor unconditionally waives (a) notice of any of the matters
referred to in Paragraph 2 above; (b) all notices which may be required by
statute, rule of law or otherwise to preserve any rights of the Banks or the
Agent, including, without limitation, notice to the Guarantor of default,
presentment to and demand of payment or performance from the Company and protest
for non-payment or dishonor; (c) any right to the exercise by the Banks or the
Agent of any right, remedy, power or privilege in connection with any of the
Agreements; and (d) any requirement of diligence on the part of the Banks or the
Agent.
4. The obligations of the Guarantor hereunder shall be complete and
binding forthwith upon the execution of this Guaranty by the Guarantor and
subject to no condition whatsoever, precedent or otherwise, and notice of
acceptance hereof or action in reliance hereon shall not be required.
5. The obligations of the Guarantor hereunder shall be several and also
joint with all or any other parties now or hereafter guarantying any of the
Liabilities guarantied by the Guarantor hereunder, and such obligations of the
Guarantor may be enforced against the Guarantor or any other Guarantor
separately or against any two or more jointly, or against some separately and
some jointly.
6. All amounts payable by the Guarantor under this Guaranty shall be
paid to the Agent at its main office in Detroit, Michigan or otherwise as the
Agent may from time to time direct, free and clear of any present or future
taxes, levies, imposts, duties, charges, fees or withholdings whatsoever.
PAGE 82
7. No setoff, counterclaim, reduction or diminution of an obligation,
or any defense of any kind or nature which the Guarantor has or may have against
any Bank or the Agent, shall be available hereunder to the Guarantor against the
Banks or the Agent.
8. The Guarantor hereby grants to the Banks and the Agent, as further
security for (a) the full and punctual payment and performance by the Company of
the Liabilities, and (b) the full and punctual payment and performance of
Guarantor's obligations hereunder, a continuing lien on and security interest in
all deposits (general or special, time or demand, provisional or final) at any
time held, and other indebtedness at any time owing, by any Bank or the Agent to
the Guarantor (any requirement for such notice being expressly waived by the
Guarantor), to or for the credit or the account of the Guarantor and any
property of the Guarantor from time to time in possession of any Bank or the
Agent, whether or not such deposits held or indebtedness owing by the Banks or
the Agent may be contingent and unmatured; and the Banks and the Agent are
hereby authorized at any time and from time to time, without notice to the
Guarantor (any requirement for such notice being expressly waived by the
Guarantor), to set off and apply against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, when due, the whole or
any portion or portions of any or all such deposits, indebtedness and property.
The rights of the Banks and the Agent under this Paragraph are in addition to
other rights and remedies (including without limitation, other rights of setoff)
which any of them may have.
9. Notwithstanding any payment or payments made by the Guarantor
hereunder or any set-off or application by any Bank or the Agent, the Guarantor
shall not be entitled to be subrogated to any of the rights of any Bank or the
Agent against the Company or any other Guarantor or any collateral security or
guarantee or right of offset held by any Bank or the Agent for the payment of
the Liabilities, nor shall the Guarantor seek or be entitled to seek any
contribution, indemnity or reimbursement from the Company or any other Guarantor
in respect of payments made by the Guarantor hereunder, until all amounts owing
to the Banks and the Agent by the Company on account of the Liabilities are paid
in full, subject to no revocation or recission. If any amount shall be paid to
any Guarantor by way of subrogation, reimbursement, contribution or indemnity at
any time when all of the Liabilities shall not have been paid in full, such
amount shall be held by the Guarantor in trust for the Banks and the Agent,
segregated from other funds of the Guarantor, and shall, forthwith upon receipt
by the Guarantor, be turned over to the Agent in the exact form received by the
Guarantor (duly endorsed by the Guarantor to the Agent, if required), to be
applied against the Liabilities, whether matured or unmatured, in such order as
the Agent may determine.
10. As a separate, additional and continuing obligation, the Guarantor
unconditionally and irrevocably undertakes and agrees with the Banks and the
Agent that, should the Liabilities not be recoverable from the Guarantor as
guarantor under this Guaranty for any reason whatsoever (including, without
limitation, by reason of any provision of the Credit Agreement or any other
Agreement being or becoming void, unenforceable, or otherwise invalid under any
applicable law) then, notwithstanding any knowledge thereof by any Bank or the
Agent at any time, the Guarantor as original and independent obligor, upon
demand by the Agent, will make payment to the Agent of the Liabilities by way of
a full indemnity in such currency and otherwise in such manner as is
contemplated by the Credit Agreement and the other Agreements.
11. The obligations of the Guarantor hereunder shall be continuing and
shall continue (irrespective of any statute of limitations otherwise applicable)
until payment of all the Liabilities of the Company to the Banks and the Agent
and the termination of the Commitments under the Credit Agreement and shall
cover and include all the Liabilities of the Company to the Banks and the Agent.
If at any time after payment of the Liabilities such payment is rescinded or
avoided for whatever reason, the obligations of the Guarantor hereunder shall be
continuing and shall continue (irrespective of any statute of limitations
otherwise applicable) and cover and include all such rescinded or avoided
payments.
PAGE 83
12. THIS GUARANTY IS A CONTRACT MADE UNDER, AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MICHIGAN APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND WITHOUT GIVING
EFFECT TO CHOICE OF LAW PRINCIPLES OF SUCH STATE. THE GUARANTOR FURTHER AGREES
THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY, ANY OF THE
AGREEMENTS, OR ANY BORROWING MADE IN CONNECTION WITH ANY OF THE AGREEMENTS MAY
BE BROUGHT IN ANY COURT OF THE STATE OF MICHIGAN, OR IN ANY COURT OF THE UNITED
STATES OF AMERICA SITTING IN MICHIGAN, AND THE GUARANTOR HEREBY SUBMITS TO AND
ACCEPTS GENERALLY AND UNCONDITIONALLY THE JURISDICTION OF THOSE COURTS WITH
RESPECT TO ITS PERSON AND PROPERTY, AND AGREES AT ALL TIMES TO MAINTAIN AN AGENT
FOR SERVICE OF PROCESS IN MICHIGAN, AND HEREBY IRREVOCABLY APPOINTS USF HOLLAND,
INC., WHOSE ADDRESS IN MICHIGAN IS 750 E. 40TH STREET, HOLLAND, MICHIGAN 49423,
ATTENTION: PRESIDENT, PETE NEYDON, AS ITS AGENT FOR SERVICE OF PROCESS AND
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING BY PERSONAL DELIVERY TO SUCH AGENT OR TO THE GUARANTOR OR
BY THE MAILING THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID TO THE
GUARANTOR AT ITS ADDRESS SET FORTH AFTER THE NAME OF GUARANTOR BELOW. THE
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY
SUCH SUIT OR PROCEEDING IN THE ABOVE DESCRIBED COURTS. NOTHING IN THIS PARAGRAPH
SHALL AFFECT THE RIGHT OF THE BANKS AND THE AGENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR LIMIT THE RIGHT OF THE BANKS AND THE AGENT TO BRING
ANY SUCH ACTION OR PROCEEDING AGAINST THE GUARANTOR OR ANY OF ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.
13. Any notice or other communication which by any provision of this
Guaranty is required or provided to be given or served upon the Guarantor shall
be deemed to have been duly given or served for all purposes if sent in writing
(including telecommunications) to the Guarantor to the address or facsimile
number set forth after the name of the Guarantor below, or at such other address
or facsimile number as the Guarantor may hereafter specify to the Banks and the
Agent in writing. All such notices or other communications shall be given and
shall be deemed effective as provided in Section 8.2 of the Credit Agreement.
14. The obligations of the Guarantor under this Guaranty are continuing
obligations and a new cause of action shall arise in respect of each claim
hereunder. No course of dealing on the part of the Banks or the Agent, nor any
delay or failure on the part of the Banks or the Agent in exercising any right,
power or privilege hereunder, shall operate as a waiver of such right, power, or
privilege or otherwise prejudice the rights and remedies of the Banks and the
Agent hereunder; nor shall any single or partial exercise thereof preclude any
further exercise thereof or the exercise of any other right, power or privilege.
No right or remedy conferred upon or reserved to the Banks or the Agent under
this Guaranty is intended to be exclusive of any other right or remedy, and
every right and remedy shall be cumulative and in addition to every other right
or remedy given hereunder or now or hereafter existing under any applicable law.
Every right and remedy given by this Guaranty or by applicable law to the Banks
or the Agent may be exercised from time to time and as often as may be deemed
expedient by the Banks or the Agent.
15. If any one or more provisions of this Guaranty should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected, impaired, prejudiced or disturbed thereby. If at any time any
portion of the obligations of the Guarantor under this Guaranty shall be
determined by a court of competent jurisdiction to be invalid, unenforceable or
avoidable, the remaining portion of the obligations of the Guarantor under this
Guaranty shall not in any way be affected, impaired, prejudiced or disturbed
thereby and shall remain valid and enforceable to the fullest extent permitted
by applicable law.
16. If at any time all or any portion of the obligation of the
Guarantor under this Guaranty would otherwise be determined by a court of
competent jurisdiction to be invalid, unenforceable or avoidable under Section
548 of the Federal Bankruptcy Code or under a similar applicable law of any
jurisdiction, then notwithstanding any other provision in this Guaranty to the
contrary, the liability of the Guarantor hereunder shall be limited to the
greatest of (a) the value of any quantifiable economic benefits accruing to the
Guarantor as a result of this Guaranty or the Agreements, (b) an amount equal to
95% of the excess on the date the relevant Liabilities were incurred of the
present fair saleable value of the assets of the Guarantor over the amount of
all liabilities of the Guarantor, contingent or otherwise, and (c) the maximum
amount for which this Guaranty is determined to be enforceable. The Guarantor
agrees, however, that the Liabilities may at any time and from time to time
exceed the maximum guaranteed amount of the Guarantor or the aggregate maximum
guaranteed amounts of all of the Guarantors without impairing this Guaranty or
affecting the rights and remedies of the Banks and the Agent hereunder. No
payment or payments made by the Company or any of the other Guarantors, or any
receipt or collection by the Bank or the Agent or any setoff or appropriation or
application at any time or from time to time in reduction or in payment of the
Liabilities shall be deemed to modify, reduce, release or otherwise affect the
liability of the Guarantor hereunder, and the Guarantor shall remain liable for
the Liabilities until the full and final payment of the Liabilities.
PAGE 84
17. If any Guarantor makes a payment in respect of the Liabilities that
is smaller in proportion to its Payment Share (as hereinafter defined) than such
payments made by the other Guarantors are in proportion to the amounts of their
respective Payment Shares, the Guarantor making such proportionately smaller
payment shall, when permitted by Paragraph 9, pay to the other Guarantors an
amount such that the net payments made by the Guarantors in respect of the
Liabilities shall be shared among the Guarantors pro rata in proportion to their
respective Payment Shares. If any Guarantor receives any payment by way of
subrogation that is greater in proportion to the amount of its Payment Shares
than the payments received by the other Guarantors are in proportion to the
amounts of their respective Payment Shares, the Guarantor receiving such
proportionately greater payment shall, when permitted by Paragraph 9, pay to the
other Guarantors an amount such that the subrogation payments received by the
Guarantors shall be shared among the Guarantors pro rata in proportion to their
respective Payment Shares. Notwithstanding anything to the contrary contained in
this paragraph or in any other Guaranty, no liability or obligation of any
Guarantor that shall accrue pursuant to this paragraph shall be paid nor shall
it be deemed owed pursuant to this paragraph until all of the Liabilities shall
be paid in full.
For purposes hereof, the "Payment Share" of each Guarantor shall be the
sum of (a) the value of any quantifiable economic benefits accruing to the
Guarantor as a result of this Guaranty or the Agreements, plus (b) the product
of (i) the aggregate Liabilities remaining unpaid on the date such Liabilities
become due and payable in full, whether by stated maturity, acceleration, or
otherwise (the "Determination Date") reduced by the amount of such economic
benefits accruing to all of the Guarantors pursuant to clause (a) above, times
(ii) a fraction, the numerator of which is such the maximum guaranteed amount of
the Guarantor determined pursuant to paragraph 16 hereof, and the denominator of
which is the aggregate maximum guaranteed amount determined in accordance with
Paragraph 16 hereof for all of the Guarantors party to a Guaranty containing a
substantially similar provision. The provisions of this paragraph shall
constitute a binding and enforceable agreement among the Guarantor and each
other Guarantor of any of the Liabilities that is party to a Guaranty containing
a substantially similar provision.
18. As of the date hereof and as of the date of each Advance
made by the Banks to the Company, the Guarantor represents and warrants that:
(a) Corporate Existence and Power. The Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and is duly qualified to do business and is
in good standing in each additional jurisdiction where failure to so qualify
could have a material adverse effect on the Guarantor. The Guarantor has all
requisite corporate power to own or lease the properties used in its business
and to carry on its business as now being conducted and as proposed to be
conducted, and to execute and deliver this Guaranty and to engage in the
transactions contemplated by this Guaranty.
(b) Corporate Authority. The execution, delivery and
performance by the Guarantor of this Guaranty have been duly authorized by all
necessary corporate action and is not in contravention of any law, rule or
regulation, or of any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Guarantor's
charter or by-laws, or of any contract or undertaking to which the Guarantor is
a party or by which it or its property may be bound or affected, and will not
result in the imposition of any Lien except for Permitted Liens.
(c) Binding Effect. This Guaranty is the legal, valid
and binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms.
(d) Litigation. There is no action, suit or proceeding pending
or, to the best of the Guarantor's knowledge, threatened against or affecting
the Guarantor before or by any court, governmental authority or arbitrator,
which if adversely decided might result, either individually or collectively, in
any material adverse change in the business, properties, operations or
condition, financial or otherwise, of the Guarantor or in any material adverse
effect on the legality, validity or enforceability of this Guaranty and, to the
best of the Guarantor's knowledge, there is no basis for any such action, suit
or proceeding.
(e) Consents, Etc. No consent, approval or authorization of or
declaration, registration or filing with any governmental authority, including
without limitation the Interstate Commerce Commission or any State authority
regulating motor carriers, or any nongovernmental person or entity, including
without limitation, any creditor or stockholder of the Guarantor, is required on
the part of the Guarantor in connection with the execution, delivery and
performance of this Guaranty or the transactions contemplated hereby or as a
condition to the legality, validity or enforceability of this Guaranty.
PAGE 85
19. None of the terms and provisions of this Guaranty may be waived,
altered, modified or amended in any way except by an instrument in writing
executed by duly authorized officers of the Required Banks and the Guarantor.
20. THE BANKS, THE AGENT AND THE GUARANTOR, AFTER CONSULTING OR HAVING
HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF
CONDUCT OR DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF
THEM. NEITHER THE BANKS, NOR THE AGENT, NOR THE COMPANY SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL
HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
RESPECT OR RELINQUISHED BY ANY BANK, THE AGENT OR THE COMPANY EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE BANKS AND THE AGENT IN ENTERING INTO THE CREDIT AGREEMENT.
21. The rights and remedies of the Banks and the Agent hereunder shall
inure to the benefit of their respective successors and assigns, and the duties
and obligations of the Guarantor hereunder shall be binding upon the Guarantor
and its successors and assigns.
THIS GUARANTY is executed as of the day and year first above mentioned.
[NAME OF GUARANTOR]
By:_____________________________
Its:_________________________
Address: ______________________
Facsimile No:___________________
Confirmation No.:_______________
DETROIT 7-3022 34052-v05
PAGE 86
December 19, 1997
Mr. James G. Connelly III
1541 Heritage Court
Lake Forest, IL 60045
Dear Jim:
This letter will confirm the terms of our employment offer to you to hire you as
an employee immediately and to elect you as President and Chief Operating
Officer of USFreightways Corporation (the "Company"), effective January 5, 1998.
It is our mutual understanding that you will be the President and Chief
Operating Officer for all of 1998 and will report to me, and that, assuming a
satisfactory performance, you will assume the role of President and Chief
Executive Officer effective at the beginning of 1999. The determination with
respect to the adequacy of your performance will be made by the Board of
Directors of the Company, of which I am a member. I, on the other hand, will be
the Chief Executive Officer and Chairman of the Board for all of 1998.
The financial terms of your employment as President and Chief Operating Officer
for 1998 is as follows:
The base salary will be $500,000, reduced by legally required deductions and
payable in accordance with the regular payroll practices of the Company. You
will be entitled to participate in a bonus plan based on the consolidated
operating ratio of the Company, in accordance with the attached schedule
(Appendix A). For all of 1998, you will be guaranteed a bonus of 40% of base
salary, with the opportunity to earn up to a maximum of 75% of base salary in
accordance with the formula set out in the attachment. One-twelfth (1/12) of
your base salary will be allocated from December 19, 1997 to January 31, 1998.
Assuming you are appointed President and Chief Executive Officer commencing at
the beginning of 1999, you will be expected to sign a non-competition and
confidentiality agreement. In addition, a new bonus arrangement would be
negotiated with me and the compensation committee on the one hand, and you on
the other, which would permit bonus participation by you up to a maximum of 100%
of your then base salary.
While we did not get into specifics with respect to the bonus program when you
become President and Chief Executive Officer, we did agree in principle that
operating ratio may not be the only criteria, and there may be other
measurements, such as return on assets or return on equity, as well as an
increase in the price of the Company stock. I'm sure we will be able to work out
an equitable bonus program arrangement, which arrangement, for tax purposes,
will be subject to stockholder approval.
You will receive options on 200,000 shares of the Company stock effective
December 19, 1997 based on the then closing market price, and vesting will take
place in equal installments over a period of 5 years. Assuming you are appointed
President and Chief Executive Officer, effective with the 1999 fiscal year there
will be options on another 200,000 shares of the Company stock granted to you,
and these will vest over a five-year period in equal installments. The other
terms and conditions of the grants will be governed by the Company's Long-Term
Incentive Plan.
PAGE 87
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We agreed that in the event there is a change of control during the first year
of employment, and such change of control results in your termination or in you
not being appointed Chief Executive Officer in 1999, or, if other than for
"cause" (as defined in the Long-Term Incentive Plan), you are not appointed
President and Chief Executive Officer by the Board, there would be a settlement
equal to two (2) years of your base salary, provided you sign a release
agreeable to the Company.
It was also agreed that in lieu of a Company car, golf course or other club
memberships, you would be entitled to an allowance of $35,000 per annum which
would be included in your bimonthly paycheck and will, of course, be subject to
normal tax deductions.
I indicated to you that we currently do not have supplementary pension plans for
our executives or any form of deferred compensation and it was agreed that you
and I, together with the compensation committee, would initiate plans or
programs suitable for you and for the other senior executives of the Company,
primarily the presidents of each of the individual operating companies.
The terms of this letter do not modify your employment-at-will relationship. It
is expressly understood, therefore, that you and the Company are free to
terminate your employment relationship at any time. No employee of the Company,
other than me, has the authority to alter, orally or in writing, the terms of
the at-will status of your employment.
I believe this letter sets forth all of the terms of the agreement that we
discussed on Friday, December 19th and it supersedes any and all other
agreements, either oral or in writing, between the Company and you. No change to
this letter will be valid unless in writing and signed by the Company and you.
If the letter meets with your understanding, please sign below and return to me.
I am pleased that you are joining us and I certainly look forward to working
with you.
Regards,
/s/ J. C. Carruth
J. C. Carruth
President and Chief Executive Officer
USFreightways Corporation
JCC/rem
Attachment
Accepted and Agreed:
/s/ James G. Connelly III
James G. Connelly III
PAGE 88
APPENDIX A
CONSOLIDATED OPERATING RATIO
The Employee's bonus shall be calculated based on the combined operating ratios
of all companies in the USFreightways Group based on total operating revenue and
total operating income as follows:
Operating Ratio Bonus as a % of
Base Salary
Above 96 0
At and below 96 16
At and below 95 32
At and below 94 48
At and below 93 72
At and below 92 75
For operating ratios between the above stated ratios, the bonus percentage will
be increased to reflect the spread between each ratio indicated for every point
reduction in the operating ratio. For example, a 92.7 operating ratio would pay
a 72.9% bonus. A 94.5 operating ratio would pay a 40% bonus.
Employee shall not be guaranteed the above bonus for any year or partial year of
this Agreement, and Employee must be in the regular employment of the Company on
the last day of the fiscal year to qualify for this bonus.
Signed this 19th day of December, 1997.
USFreightways Corporation James G. Connelly III
By: /s/ J. C. Carruth /s/ James G. Connelly III
J. C. Carruth
Title: Chief Executive Officer