Document:

exh10_1.htm

EXHIBIT 10.1

 SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

AMONG

 

COMERICA BANK,

 

as Administrative Agent for itself and other Banks,

 

and

 

 

FFE TRANSPORTATION SERVICES, INC.,

 

as Borrower,

 

and certain of its affiliates

 

 

as of September 2, 2009

 

 

 

  

  

  

TABLE OF CONTENTS

 

PAGE

 

 

ARTICLE I  DEFINITIONS

 

	
  
	
Section 1.1
	
Definitions
	
1

	
  
	
Section 1.2
	
UCC Changes
	
16

 

ARTICLE II  AMOUNTS AND TERMS OF CREDIT COMMITMENTS

 

	
  
	
Section 2.1
	
Commitments; Loans
	
16

	
  
	
Section 2.2
	
The Notes
	
17

	
  
	
Section 2.3
	
Repayment of Loans
	
17

	
  
	
Section 2.4
	
Interest and Fees.
	
17

	
  
	
Section 2.5
	
Borrowing Procedure
	
18

	
  
	
Section 2.6
	
Optional Prepayments
	
18

	
  
	
Section 2.7
	
Mandatory Prepayments.
	
18

	
  
	
Section 2.8
	
Minimum Amounts
	
19

	
  
	
Section 2.9
	
Certain Notices
	
19

	
  
	
Section 2.10
	
Use of Proceeds.
	
19

	
  
	
Section 2.11
	
Fees
	
20

	
  
	
Section 2.12
	
Computations
	
20

	
  
	
Section 2.13
	
Termination or Reduction of Commitments.
	
20

	
  
	
Section 2.14
	
Letters of Credit.
	
21

	
  
	
Section 2.15
	
Method of Payment
	
24

	
  
	
Section 2.16
	
Pro Rata Treatment
	
25

	
  
	
Section 2.17
	
Sharing of Payments, Etc.
	
25

	
  
	
Section 2.18
	
Non-Receipt of Funds by Administrative Agent
	
25

	
  
	
Section 2.19
	
Withholding Taxes.
	
26

	
  
	
Section 2.20
	
Withholding Tax Exemption
	
27

	
  
	
Section 2.21
	
Reinstatement of Obligations
	
28

	
  
	
Section 2.22
	
Capital Adequacy
	
28

 

ARTICLE III  CONDITIONS PRECEDENT

 

	
  
	
Section 3.1
	
Conditions Precedent to Initial Loans and Letters of Credit
	
28

	
  
	
Section 3.2
	
Conditions of Subsequent Advances
	
30

	
  
	
Section 3.3
	
Effect of Request for any Subsequent Advance or Request for Letter of Credit
	
31

 

 

i

 

ARTICLE IV  CERTAIN REPRESENTATIONS AND WARRANTIES

 

	
  
	
Section 4.1
	
Corporate Existence and Authority; Names
	
31

	
  
	
Section 4.2
	
Financial Statements
	
32

	
  
	
Section 4.3
	
Compliance with Laws and Documents; Existing Defaults; Litigation
	
32

	
  
	
Section 4.4
	
Enforceability
	
32

	
  
	
Section 4.5
	
Payment of Taxes
	
33

	
  
	
Section 4.6
	
Plan Obligations
	
33

	
  
	
Section 4.7
	
Purpose of Advances and Letters of Credit
	
33

	
  
	
Section 4.8
	
Ownership of the Companies
	
33

	
  
	
Section 4.9
	
Existing Indebtedness
	
33

	
  
	
Section 4.10
	
Rights in Properties; Existing Liens
	
34

	
  
	
Section 4.11
	
Material Agreements
	
34

	
  
	
Section 4.12
	
Environmental Matters.
	
34

	
  
	
Section 4.13
	
Common Enterprise
	
34

	
  
	
Section 4.14
	
Workers’ Compensation
	
34

	
  
	
Section 4.15
	
Solvency
	
35

 

ARTICLE V  CERTAIN COVENANTS OF THE COMPANIES

 

	
  
	
Section 5.1
	
Affirmative Covenants
	
35

	
  
	
Section 5.2
	
Negative Covenants
	
43

 

ARTICLE VI  DEFAULT

 

	
  
	
Section 6.1
	
Payment of Obligations
	
46

	
  
	
Section 6.2
	
Covenants.
	
46

	
  
	
Section 6.3
	
Misrepresentation
	
46

	
  
	
Section 6.4
	
Voluntary Debtor Relief
	
46

	
  
	
Section 6.5
	
Involuntary Debtor Relief
	
47

	
  
	
Section 6.6
	
Judgments
	
47

	
  
	
Section 6.7
	
Attachment
	
47

	
  
	
Section 6.8
	
Default of Other Debt
	
47

	
  
	
Section 6.9
	
Other Agreements
	
47

	
  
	
Section 6.10
	
Change in Control
	
47

 

ARTICLE VII  REMEDIES

 

	
  
	
Section 7.1
	
Acceleration
	
48

	
  
	
Section 7.2
	
Loans and Letters of Credit
	
48

	
  
	
Section 7.3
	
Judgment
	
48

	
  
	
Section 7.4
	
Rights
	
48

	
  
	
Section 7.5
	
Default with Respect to Loans
	
48

	
  
	
Section 7.6
	
Reserved.
	
48

	
  
	
Section 7.7
	
Default with Respect to Letters of Credit
	
48

	
  
	
Section 7.8
	
Automatic Acceleration Due to Certain Defaults
	
48

 

 

ii

 

ARTICLE VIII AGENTS

 

	
  
	
Section 8.1
	
Administrative Agent Appointment and Authorization; Administration; Duties
	
49

	
  
	
Section 8.2
	
Collateral Agent Appointment and Authorization; Administration; Duties.
	
50

	
  
	
Section 8.3
	
Advances and Payments
	
51

	
  
	
Section 8.4
	
Sharing of Setoffs
	
52

	
  
	
Section 8.5
	
Liability of Agents.
	
52

	
  
	
Section 8.6
	
Reimbursement and Indemnification
	
53

	
  
	
Section 8.7
	
Rights of Administrative Agent and Collateral Agent
	
54

	
  
	
Section 8.8
	
Independent Investigation and Credit Decision by Banks
	
54

	
  
	
Section 8.9
	
Successor Agents
	
54

 

ARTICLE IX  MISCELLANEOUS

 

	
  
	
Section 9.1
	
Performance by Agents and the Banks
	
55

	
  
	
Section 9.2
	
Waivers
	
55

	
  
	
Section 9.3
	
Cumulative Rights
	
55

	
  
	
Section 9.4
	
Other Rights and Remedies
	
55

	
  
	
Section 9.5
	
Expenditures of Administrative Agent and Banks
	
56

	
  
	
Section 9.6
	
Form and Number of Documents
	
56

	
  
	
Section 9.7
	
Accounting Terms
	
56

	
  
	
Section 9.8
	
Money
	
56

	
  
	
Section 9.9
	
Headings
	
56

	
  
	
Section 9.10
	
Articles, Sections, Exhibits and Schedules
	
56

	
  
	
Section 9.11
	
Number and Gender of Words
	
57

	
  
	
Section 9.12
	
Business Day
	
57

	
  
	
Section 9.13
	
Notices
	
57

	
  
	
Section 9.14
	
Parties Bound
	
57

	
  
	
Section 9.15
	
Exceptions to Covenants
	
58

	
  
	
Section 9.16
	
Successors and Assigns.
	
58

	
  
	
Section 9.17
	
Effect of Investigations
	
60

	
  
	
Section 9.18
	
GOVERNING LAW; VENUE; SERVICE OF PROCESS.
	
60

	
  
	
Section 9.19
	
Maximum Interest Rate.
	
61

	
  
	
Section 9.20
	
Invalid Provisions
	
62

	
  
	
Section 9.21
	
Entirety and Amendments
	
62

	
  
	
Section 9.22
	
Survival
	
63

	
  
	
Section 9.23
	
Setoff
	
63

	
  
	
Section 9.24
	
Multiple Counterparts
	
63

	
  
	
Section 9.25
	
Term of Agreement
	
63

	
  
	
Section 9.26
	
Limitation of Liability
	
63

	
  
	
Section 9.27
	
No Fiduciary Relationship
	
64

	
  
	
Section 9.28
	
Construction
	
64

	
  
	
Section 9.29
	
Waiver and Release
	
64

	
  
	
Section 9.30
	
NO ORAL AGREEMENTS
	
64

	
  
	
Section 9.31
	
Joint and Several Obligations
	
64

	
  
	
Section 9.32
	
WAIVER OF JURY TRIAL
	
64

	
  
	
Section 9.33
	
Restatement
	
65

 

 

  

iii

  

INDEX TO EXHIBITS AND SCHEDULES

 

 

Schedules

 

1.1           Commitments

 

4.3           Litigation

 

4.6           Plans

 

4.9           Existing Indebtedness

 

4.11           Material Agreements

 

5.1           Insurance

 

 

Exhibits

 

A.           Reserved

 

B.           Notice of Activity

 

C.           Revolving Credit Note

 

D.           Compliance Certificate

 

E.           New Entity Agreement

 

F.           Assignment and Acceptance

 

G.           Security Agreement

 

H.           Vehicles Security Agreement

 

 

 

 

  

iv

  

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of September 2, 2009 (this “Agreement”), among FFE TRANSPORTATION SERVICES, INC., a Delaware corporation (“Borrower”), FROZEN FOOD EXPRESS INDUSTRIES, INC., a Texas corporation (“Parent”),
CONWELL CORPORATION, a Delaware corporation (“Conwell”), FX HOLDINGS, INC., a Delaware corporation (“FX”), LISA MOTOR LINES, INC., a Delaware corporation (“LML”), COMPRESSORS PLUS, INC., a Texas corporation (“CPI”), FFE LOGISTICS, INC., a Delaware corporation (“Logistics”),
CONWELL LLC, a Delaware limited liability company (“Conwell LLC”), COMERICA BANK, a Texas banking association (“Comerica”), each other entity which may from time to time become party hereto as a lender hereunder or any successor or assignee thereof (such lenders and the Issuing Bank, collectively, the “Banks”),
and Comerica as Administrative Agent, Collateral Agent and Issuing Bank.

 

For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1 Definitions

 

.  As used herein, meanings indicated the following terms shall have the meanings indicated:

 

 “Administrative Agent” means Comerica in its capacity as administrative agent for the Banks under this Agreement, and its successors and assigns in such capacity; provided,
however, that until such time as a Bank other than Comerica becomes a party hereto, “Administrative Agent” shall mean Comerica, individually.

 

“Advance” means the disbursement of an amount or amounts loaned or to be loaned by any Bank to Borrower hereunder.

 

“Affiliate” means, as to any Person, any other Person (a) that directly or indirectly,   through one or more intermediaries, Controls or is Controlled by, or is under common Control with, such first Person, (b) that directly or indirectly beneficially
owns or holds five percent or more of any class of voting capital stock of such first Person, or (c) five percent or more of the voting capital stock of which is directly or indirectly beneficially owned or held by such first Person; provided, however, in no event shall any Agent or any Bank be deemed an Affiliate of Borrower, Parent or any Subsidiaries.

 

“Agents” means collectively, Administrative Agent and Collateral Agent, and “Agent” shall mean any one of them.

 

“Agreement” means this Amended and Restated Credit Agreement, as it may be amended, renewed, extended, or restated from time to time.

 

1

 

 

“Applicable Lending Office” means for each Bank, the lending office of such Bank designated below its name on the signature pages hereof (or, with respect to a Bank that becomes a party to this Agreement pursuant to an assignment made in accordance with Section
9.16, in the Assignment and Acceptance executed by it) or such other office of such Bank as such Bank may from time to time specify to Administrative Agent.

 

“Applicable Rate” shall have the meaning set forth in Section 2.4(a).

 

 “Article(s)” shall have the meaning set forth in Section 9.10.

 

“Assignee” shall have the meaning set forth in Section 9.16(b).

 

“Assigning Bank” shall have the meaning set forth in Section 9.16(b).

 

“Assignment and Acceptance” means an Assignment and Acceptance in substantially the form of Exhibit F.

 

“Banks” means as defined in the introductory paragraph.

 

“Base Rate” means the higher of (i) the Daily Adjusting LIBOR Rate or (ii) two percent (2.00%) per annum, with each change in the Base Rate to become effective, without notice to Borrower, as of the opening of business on the effective date of each change in the
Base Rate.  If, at any time, Bank determines that it is unable to determine or ascertain the Daily Adjusting LIBOR Rate for any day, the Base Rate for each such day shall be the Prime Rate in effect at such time, but not less than two and one-half percent (2.50%) per annum.

 

“Base Rate Margin” means, on any date, the rate per annum set forth below, based on the amount of the Outstanding Revolving Credit, at the close of business on such day:

 

	 	
Tier
	
 

 

Outstanding Revolving Credit
	
Base

Rate

Margin
	 	 
	 	 I	
Equal to or less than $10,000,000
	1.875	%	 
	 	
II
	
Greater than $10,000,000
	2.875	%	 

 

“Borrower” means FFE Transportation Services, Inc., a Delaware corporation.

 

“Borrowing Base” means the sum of:

 

(a) an amount equal to (i) eighty-five percent (85%) of the aggregate Eligible Accounts; plus

 

2

 

 

(b) so long as any Vehicles are included in the Borrowing Base in accordance with Section 5.1(q), an amount equal to the lesser of (i) $15,000,000, or (ii) sixty-five percent (65%) of the Orderly Liquidation Value of Vehicle Collateral
in which the Collateral Agent, for the benefit of the Banks, has a valid, perfected Lien and which is not subject to any Lien other than Liens in favor of Collateral Agent and the Banks;

 

all calculated in accordance with GAAP based upon consolidated financial information of Parent and the Subsidiaries.  The Borrowing Base shall be determined by Administrative Agent from time to time in its good faith judgment.

 

“Borrowing Base Availability” means (a) the Borrowing Base, minus (b) the Outstanding Revolving Credit.

 

“Borrowing Base Report” means a report prepared and executed by Borrower, appropriately completed, in form and substance satisfactory to Administrative Agent evidencing the calculation of the Borrowing Base.

 

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Comerica is open for all or substantially all
of its domestic and international business (including dealings in foreign exchange) in Dallas, Texas, and, in respect of notices and determinations relating to the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.

 

“Capital Expenditure” means any and all expenditures by a Person for (i) an asset which will be used in a year or years subsequent to the year in which the expenditure is made and which asset is properly classified in relevant financial statements of such Person
as equipment, real property or improvements, fixed assets or a similar type of capitalized asset in accordance with GAAP, (ii) an asset relating to or acquired in connection with an acquired business, and (iii) any and all acquisition costs related to (i) and (ii) above.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, as the same may be amended from time to time.

 

“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof), other than the Stubbs Group and the Weller Group, of shares representing more than 30% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding capital stock of the Parent; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were neither (i) nominated by the board of directors of the Parent nor (ii) appointed by directors so nominated; or (c) the
acquisition of direct or indirect Control of the Parent by any Person or group.

 

3

 

 

“Closing Date” means September 2, 2009.

 

“Code” means the Uniform Commercial Code of Texas.

 

“Collateral” means any and all property or assets in which a security interest, pledge or other such interest has been or from time to time may be granted to Administrative Agent, Collateral Agent and the Banks to secure the Obligations; provided that the Collateral
does not include any real estate and does not include any equipment except for Vehicles to the extent set forth in the Loan Papers.

 

“Collateral Agent” means Comerica in its capacity as collateral agent for the Banks under this Agreement, and its successors and assigns in such capacity.

 

“Commitment” means, with respect to each Bank, the obligation of such Bank, in accordance with this Agreement, to make or continue Loans and to make or participate in Letter of Credit Liabilities in an aggregate principal amount at any one time outstanding up
to but not exceeding the amount set forth opposite the name of such Bank on Schedule 1.1 or, if such Bank is party to an Assignment and Acceptance, as set forth in the most recent Assignment and Acceptance of such Bank, and as the same may be increased or decreased pursuant to this Agreement or as otherwise set forth in this Agreement.

 

“Companies” means Parent, Borrower and the Other Subsidiaries, and a “Company” means any of Parent, Borrower or an Other Subsidiary.

 

“Compliance Certificate” means a certificate in the form of Exhibit D hereto with the blanks completed accurately and signed by the Chief Financial Officer or Treasurer of Parent and the Chief Financial
Officer of Borrower.

 

“Consolidated Tangible Net Worth” means, at any time, all amounts which in conformity with GAAP would be included as stockholders’ equity or owners’ equity on a consolidated balance
sheet of the Companies; provided, however, there shall be excluded therefrom (a) any amount at which shares of capital stock of any Person appear as an asset on the balance sheet of such Person, (b) goodwill, including any amounts, however designated, that represent the excess of the purchase price paid for assets or stock over the value assigned thereto, (c) patents, trademarks, trade names and copyrights, (d) deferred expenses, (e) loans and advances to any stockholder, director, officer, partner, or employee
of any Company or any Affiliate of any Company, (f) Operating Rights, and (g) all other assets which are properly classified as intangible assets.

 

“Consolidated Total Liabilities” means, at any time, all liabilities that, in accordance with GAAP, should be classified as such on a consolidated balance sheet of the Companies.

 

“Contract Rate” shall have the meaning set forth in Section 9.19(a).

 

4

 

 

“Control” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

 

“Current Financials” shall have the meaning set forth in Section 4.2.

 

“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:

 

 

(a) for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service
as of 11:00 a.m. (Dallas, Texas time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the "Daily Adjusting LIBOR Rate" for such day shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected
by Bank, or, in the absence of such other service, the "Daily Adjusting LIBOR Rate" for such day shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Dallas, Texas time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the principal amount of the Indebtedness hereunder and for a period of one
(1) month; divided by

 

 

(b) 1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on "Euro-currency Liabilities" as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve
System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

 

“Debtor Relief Laws” means any applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization, or similar debtor relief laws affecting the rights of creditors generally from time to time in effect.

 

“Default” shall have the meaning set forth in Article VI.

 

5

 

 

“Default Rate” shall have the meaning set forth in Section 2.4(a).

 

“Demo Vehicles” shall have the meaning specified in the definition of “Permitted Liens”.

 

“Deposit” shall have the meaning set forth in Section 7.7.

 

“Dollars” or “$” have the meaning set forth in Section 9.8.

 

“EBITDAR” shall have the meaning set forth in Section 5.1(f).

 

“Eligible Accounts” means, as of any date, an amount equal to the aggregate net invoice or ledger amount owing on all trade accounts receivable of the Companies, on a consolidated basis, for goods sold or leased (provided such goods have been shipped) or services
rendered, after deducting (without duplication): (i) each such account that is unpaid 90 days after the original invoice date thereof, (ii) all such accounts in which a Person (other than the Banks specifically as security for the Obligations) has a Lien, (iii) the amount of all discounts, allowances, rebates, credits and adjustments to such accounts, (iv) all contra accounts, setoffs, defenses or counterclaims asserted by or available to the Persons obligated on such accounts, provided, however, that with respect
to freight claims which constitute a part of accrued claims liability, only the current or short-term portion thereof shall be so deducted, (v) all accounts with respect to which goods are placed on consignment, guaranteed sale or other terms by reason of which the payment by the account debtor may be conditional, (vi) the amount billed for or representing retainage, if any, until all prerequisites to the immediate payment of retainage have been satisfied, (vii) the amount of all revenue arising from freight
charges derived from freight in transit, (viii) all such accounts owed by account debtors which are known to any officer of any Company, Administrative Agent or any Bank to be insolvent, (ix) all such accounts owing by Affiliates of a Company, (x) all accounts in which the account debtor is not a resident of the United States unless such accounts are supported by a letter of credit issued by a bank acceptable to Administrative Agent or by foreign credit insurance issued by a Person acceptable to Administrative
Agent (xi) all accounts in which the account debtor is the United States or any department, agency or instrumentality of the United States, except to the extent acknowledgment of assignment to the Banks, specifically as security for the Obligations, of such account in compliance with the Federal Assignment of Claims Act and other applicable Law has been received by Administrative Agent, (xii) all accounts not evidenced by evidence of billing acceptable to the Required Banks, (xiii) all accounts evidenced by any
note, trade acceptance, draft or other instrument or chattel paper, (xiv) any account which is not a valid, legally enforceable obligation of the account debtor thereunder, and (xv) all accounts in which Administrative Agent does not have a first priority, perfected Lien.

 

“Eligible Assignee” shall have the meaning set forth in Section 9.1(b)

 

“ERISA” shall have the meaning set forth in Section 4.6.

 

“Exhibits” shall have the meaning set forth in Section 9.10.

 

6

 

 

“Existing Credit Documents” means that certain Amended and Restated Credit Agreement dated as of October 12, 2006 among Borrower, Parent, certain affiliates of Borrower, and Banks, as amended by (i) that certain First Amendment to Amended and Restated Credit Agreement
dated as of April 25, 2007, (ii) that certain Second Amendment to Amended and Restated Credit Agreement dated as of July 30, 2007, (iii) that certain Third Amendment to Amended and Restated Credit Agreement dated as of March 3, 2008, (iv) that certain Fourth Amendment to Amended and Restated Credit Agreement dated as of August 4, 2008, and (v) that certain Fifth Amendment to Amended and Restated Credit Agreement dated as of February 27, 2009 (as amended to the date hereof, the “Existing
Agreement”), together with the promissory notes made by Borrower thereunder.

 

“Existing Indebtedness” means all Indebtedness outstanding under the Existing Credit Documents on the date hereof.

 

“Existing Letters of Credit” means all letters of credit pursuant to the Existing Credit Documents that remain outstanding on the date hereof.

 

“Facility Fee Rate” means 0.375% per annum.

 

“Federal Funds Rate” means, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers (“Overnight
Transactions”) transacted on the immediately preceding Business Day, as published by the Federal Reserve Bank of New York, or, if such interest rate is not so published for any Business Day, the average of the per annum interest rate quotations for Overnight Transactions received by Comerica (or other applicable Bank referred to in the definition of “Base Rate” for such Business Day from three Federal funds brokers of recognized
standing selected by Comerica (or such other applicable Bank).

 

“Financial Statements” includes, but is not necessarily limited to, balance sheets, profit and loss statements, reconciliations of capital and surplus, statements of cash flows prepared on a consolidated basis, and the footnotes thereto.

 

“Financing Lease” means any lease of property which shall, in accordance with GAAP, be capitalized on a balance sheet of a Company.

 

“Fixed Charge Coverage Ratio” shall have the meaning set forth in Section 5.1(f).

 

“Fixed Charges” shall have the meaning set forth in Section 5.1(f).

 

“Funded Debt” shall have the meaning set forth in Section 5.1(k).

 

“GAAP” means accounting principles generally accepted in the United States of America, applied on a consistent basis, set forth in authoritative pronouncements issued by the American Institute of Certified Public Accounts, the Financial Accounting Standards Board,
the Securities and Exchange Commission, the International Accounting Standards Board, and any other comparable body, which are applicable in the circumstances as of the date in question, and the requisite that such principles are applied on a consistent basis means that the accounting principles observed in a current period are comparable in all material respects to those applied in a preceding period.

 

7

 

 

“Governmental Requirement” means any Law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement of any federal, state, county, municipal, parish,
or other Tribunal or any department, commission, board, court, agency or any other instrumentality of any of them.

 

“Group Member” means any Person which is a member with any Company in an “affiliated service group” as defined in Section 414(m) of the IRC, a “controlled group of corporations”
as defined in Section 1563 of the IRC, or any “trades or businesses . . . which are under common control” as defined by Section 414(c) of the IRC.

 

“Guaranty Agreement” means a guaranty agreement, in form and substance satisfactory to the Banks, pursuant to which a Company (other than Borrower) guarantees prompt payment and performance of the Obligations, and “Guaranty
Agreements” means all of such agreements.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof,
(c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

 

“Hazardous Materials” means “hazardous substances,” “hazardous waste” or “hazardous constituents” in CERCLA, RCRA or any other federal, state or local environmental statute or regulation.

 

“Hedge Agreement” means, with respect to Borrower or any other Company, any and all transactions, agreements, documents, or arrangements between Borrower or any other Company and one or more Banks, now existing or hereafter entered into, which provide for an interest
rate, credit, commodity, or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or other similar transactions, for the purpose of hedging exposure to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency valuations, or commodity prices or other similar risks.

 

8

 

 

“Highest Lawful Rate” means, with respect to any Bank, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received with respect to the particular Obligations as to which such
rate is to be determined, payable to such Bank pursuant to this Agreement or any other Loan Paper, under Laws applicable to such Bank which are presently in effect or, to the extent allowed by law, under such applicable Laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable Laws now allow.  The Highest Lawful Rate shall be calculated in a manner that takes into account any and all fees, payments and other charges in respect of the Loan Papers
that constitute interest under applicable Law.  Each change in any interest rate provided for herein based upon the Highest Lawful Rate resulting from a change in the Highest Lawful Rate shall take effect without notice to Borrower or any other Person at the time of such change in the Highest Lawful Rate.  For purposes of determining the Highest Lawful Rate under Texas law, the applicable rate ceiling shall be the weekly rate ceiling described in, and computed in accordance with, Sections
303.003 and 303.009 of the Texas Finance Code, as amended and in effect from time to time, or any successor or replacement statute; provided, however, that, to the extent permitted by applicable Law, Administrative Agent shall have the right to change the applicable rate ceiling from time to time in accordance
with applicable Law.

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding trade accounts payable incurred in the ordinary course of business which are not more than 90 days past due), (f) all obligations secured by (or for which the holder of such obligations
has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all obligations of such Person under Financing Leases, (i) all obligations, contingent or otherwise, of such Person in respect of letters of credit, letters of guaranty, bankers’ acceptances, surety or other bonds and similar instruments, (j) all liabilities
of such Person in respect of unfunded vested benefits under any Plan, and (k) payment obligations with respect to Hedge Agreements, provided that for purposes of this definition, the amount of the obligation of any Person under any Hedge Agreement shall be the amount determined, in respect thereof as of the end of the most recently ended fiscal quarter of such Person, based on the assumption that such Hedge Agreement has terminated at the end of such fiscal quarter, and in making such determination, if such Hedge
Agreement provides for the netting of amounts payable by and to each party thereto or if any Hedge Agreement provides for the simultaneous payment of amounts by and to each party, then in each such case, the amount of such obligation shall be the net amount so determined; provided, however, that notwithstanding the foregoing, Indebtedness shall not include deposits, escrows or bonds of such Person pursuant to an independent contractor agreement not to exceed $2,500,000 in the aggregate at any time.  The
Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

9

 

 

“IRC” shall mean the Internal Revenue Code of 1986, as amended.

 

“Issuing Bank” means Comerica, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.14(g).

 

“Laws” means any and all applicable laws, statutes, ordinances, rules, regulations, orders, writs, injunctions, and/or decrees of the United States, any state or commonwealth, any territory or possession, any foreign country, or any Tribunal.

 

“Letter of Credit” shall have the meaning assigned to such term in Section 2.14.

 

“Letter of Credit Liabilities” means, at any time, the aggregate undrawn face amounts of all outstanding Letters of Credit and all Reimbursement Obligations.

 

“Leverage Ratio” shall have the meaning set forth in Subsection 5.1(k).

 

“Lien” means any security interest, mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement, lessor’s interest under a Financing Lease or analogous instrument, in, of or on any of the Companies’ property (or any other Person’s
property if the context so requires).

 

“Litigation” means any proceeding, claim, lawsuit and/or investigation conducted or threatened by or before any Tribunal, including, but not limited to, proceedings, claims, lawsuits and/or investigations under or pursuant to any environmental, occupational safety
and health, antitrust, unfair competition, securities, taxation or other Law, or under or pursuant to any contract, agreement or other instrument.

 

“Litigation Schedule” shall have the meaning set forth in Section 4.3.

 

“Loans” shall have the meaning set forth in Section 2.1.

 

“Loan Papers” means this Agreement, the Notes, the Guaranty Agreements and any and all certificates, mortgages, deeds of trust, security agreements and other documents and agreements executed and/or delivered in connection with the making of Loans or the issuing
of Letters of Credit or otherwise pursuant to the terms of this Agreement and any future amendments and supplements thereto and restatements thereof.

 

“Margin Regulations” means Regulations T, U and X of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“Margin Stock” means “margin stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

10

 

 

“Material Adverse Effect” means any effect which might reasonably be expected to be material and adverse to the financial condition or business operations of the Companies as a whole on a consolidated basis.

 

“Net Income” means, for any period and any Person, the sum of the following (calculated without duplication): (a) such Person’s consolidated net income (or loss) determined in conformity with GAAP; minus (b)
nonrecurring, extraordinary gains, including, without limitation, any nonrecurring death benefits under life insurance policies.

 

“New Entity” shall have the meaning set forth in Section 9.14.

 

“Notes” means the Revolving Credit Notes.

 

“Notice of Activity” means the written notice given by Borrower to Administrative Agent of an Advance or issuance of a Letter of Credit, which shall be substantially in the form of Exhibit B attached.

 

“Obligations” means all present and future obligations and liabilities, and all renewals and extensions thereof, or any part thereof, of Borrower or any other Company to any one or more of the Agents and/or any one or more of the Banks and created or evidenced
by or existing or arising out of or pursuant to this Agreement, the Revolving Credit Notes or any one or more of the other Loan Papers (including, without limitation, the Principal Obligation, the Reimbursement Obligation arising pursuant to any Letters of Credit, and all other indebtedness, obligations, fees and liabilities arising pursuant to this Agreement, or otherwise) and pursuant to or under any Hedge Agreement that Borrower or any other Company may enter into with the express written consent of Administrative
Agent and the Required Banks, and all interest accruing thereon and costs, expenses and attorneys’ fees incurred in the enforcement or collection thereof, regardless of whether such obligations and liabilities are direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including, but not limited to, the obligations and liabilities arising pursuant to any of the Loan Papers, and all renewals and extensions thereof, or any part thereof, and all present and future
amendments thereto.

 

“Operating Rights” means the operating rights, franchises, certificates, authorizations, permits and licenses of Borrower and the other Companies.

 

“Orderly Liquidation Value” with respect to each Vehicle, means (a) with respect to any Vehicle acquired after the Closing Date, the Purchase Price of such Vehicle, which amount shall be reduced each month by an amount equal to 1% of the Purchase Price of such
Vehicle as previously so reduced, to reflect depreciation, until such time as a Vehicle Appraisal for such Vehicle shall have been delivered to Collateral Agent or Administrative Agent, and thereafter the orderly liquidation value attributed to such Vehicle in the most recent Vehicle Appraisal for such Vehicle; and (b) with respect to any other Vehicle, the orderly liquidation value attributed to such Vehicle in the most recent Vehicle Appraisal.  Notwithstanding the foregoing, the term “Orderly
Liquidation Value” shall not include the value of any Vehicle which is no longer owned by a Company or which has been (i) destroyed, confiscated by a governmental authority, stolen, or lost, or (ii) restricted from use, attached by legal process, or immobilized due to lack of repair for a period of forty-five (45) consecutive calendar days.

 

11

 

 

“Other Subsidiary” means any Person of which an aggregate of 50% or more of the issued and outstanding voting stock, or 50% or more of the equity interests, at the time at which any determination is being made, is owned of record or beneficially, directly or indirectly,
by any Company.

 

“Outstanding Revolving Credit” means, at any particular time, the sum of (a) the aggregate outstanding principal amount of the Loans, plus (b) all Letter of Credit Liabilities.

 

“Parent” means Frozen Food Express Industries, Inc., a Texas corporation.

 

“Permitted Investments” means investments in (i) indebtedness, evidenced by notes maturing not more than one hundred eighty (180) days after the date of issue, issued or guaranteed by the federal government of the United States of America, or any agency thereof,
(ii) certificates of deposit, maturing not more than one hundred eighty (180) days after the date of issue, issued by commercial banking institutions, each of which is a member of the Federal Reserve System and which has combined capital and surplus and undivided profits of not less than $100,000,000.00, or any other financial institution if the amount on deposit is fully insured by The Federal Deposit Insurance Corporation, (iii) commercial paper, maturing not more than one hundred eighty (180) days after the
date of issue, issued by a corporation (other than an Affiliate of the Companies) with a rating of “P-1” (or its then equivalent) according to Moody’s Investors Service, Inc., “A-1” (or its then equivalent) according to Standard & Poor’s Corporation or “F-1” (or its then equivalent) according to Fitch’s Investors Service, Inc., or issued by any Bank with a rating of “P-3” (or its then equivalent) according to Moody’s Investors Service
Inc., or “A-3” (or its then equivalent) according to Standard & Poor’s Corporation, (iv) money market funds that invest only in securities which mature within one (1) year after the date of purchase and which have ratings meeting the standard of (iii) above, or (v) securities issued or guaranteed by an agency of the United States of America.

 

“Permitted Liens” means with respect to any asset or property (or any interest therein),

 

a. Liens (if any) securing the Notes in favor of Administrative Agent, Collateral Agent and/or the Banks;

 

b. The following, if the validity and amount thereof are being contested in good faith and by appropriate legal proceedings and so long as (i) levy and execution thereon have been stayed and continue to be stayed, (ii) they do not in
the aggregate materially detract from or threaten the value of the asset or property, or materially impair the use thereof in the operation of any Company’s business, and (iii) a reserve therefor, if appropriate, has been established in accordance with GAAP: claims and Liens for taxes due and payable; claims and Liens upon and defects of title to real and personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits; claims
and Liens of mechanics, materialmen, warehousemen, landlords or carriers, or similar Liens; and adverse judgments on appeal;

 

12

 

 

c. Liens for taxes not past due;

 

d. Mechanics’, materialmen’s, warehousemen’s, landlords’ or carriers’ Liens for services or materials for which payment is not past due;

 

e. Liens in favor of the lessor on the assets being leased under any operating lease or Financing Lease;

 

f. Encumbrances consisting of minor easements, zoning restrictions, or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially
impair the ability of Borrower or the other Companies to use such assets in their respective businesses, and none of which is violated in any material respect by existing or proposed structures or land use;

 

g. Liens resulting from good faith deposits to secure payments of workmen’s compensation or other social security programs or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, and contracts
(other than for payment of borrowed money); and

 

h. Liens at any time existing on up to fifty (50) tractors and fifty (50) trailers that are purchased for a nominal amount from vehicle vendors and that are required to be sold by the owner back to such vendors for a nominal amount (collectively,
“Demo Vehicles”).

 

“Person” means any individual, firm, corporation, association, partnership, joint venture, trust, other entity or Tribunal.

 

“Plan” means all (present, prior (including terminated and transferred) and future) plans, programs agreements, arrangements and methods of contribution or compensation providing any remuneration or benefits other than current cash compensation to any current
or former employee of any Company or any other Group Member or to any other Person who provides services to any Company or any other Group Member whether or not subject to ERISA; and includes, but is not limited to, pension, retirement, profit sharing, stock bonus, nonqualified deferred compensation, disability, medical, dental, workers compensation, health insurance, life insurance, incentive plans, vacation benefits and fringe benefits.

 

“Potential Default” means the occurrence of an event or condition that with notice or lapse of time would become a Default.

 

“Prime Rate” means the per annum interest rate established by Comerica as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Comerica at any such time.

 

13

 

 

        “Principal Obligation” means, as of the date of any determination thereof, the aggregate unpaid principal balance of all Loans and Reimbursement Obligations made by any Bank up to the time in question.

 

“Pro Rata Share” means, with respect to each Bank and from time to time, an amount equal to the quotient obtained by dividing such Bank’s Commitment by the aggregate amount of the Commitments or, if all the Commitments are terminated, the quotient obtained
by dividing such Bank’s outstanding Loans by the aggregate outstanding Loans of all Banks.

 

“Purchase Price” means, in the case of a Vehicle, the bona fide price which the purchaser actually pays to the seller for such Vehicle, including (i) trade-in allowance, (ii) seller’s delivery and handling charges; (iii) excise tax on the Vehicle; (iv) any
sales and use tax; (v) freight charges; and (vi) other expenses required to effect delivery of the Vehicle to the purchaser.

 

“Quarterly Payment Date” means the last Business Day of each March, June, September and December.

 

“RCRA” means the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984, as the same may be amended from time to time.

 

“Regulatory Change” means, with respect to any Bank, any change after the Closing Date in any U.S. federal or state, or any foreign, Laws or regulations or the adoption or making after such date of any interpretations, directives or requests applying to a class
of lenders including such Bank of or under any U.S. federal or state, or any foreign, Laws or regulations (whether or not having the force of law) by any Tribunal charged with the interpretation or administration thereof.

 

“Reimbursement Obligation” shall have the meaning assigned to such term in Section 2.14(d).

 

“Reportable Event” has the meaning assigned to that term in Title IV of ERISA.

 

“Required Banks” means, as of the date of any determination thereof, any two or more of the Banks, that hold, in the aggregate, sixty-six and two-thirds of one percent (66-2/3%) or more of the sum of the Principal Obligation then outstanding plus the
aggregate face amount of the Letters of Credit then outstanding, or, if no Principal Obligation or Letter of Credit is then outstanding, any two or more of the Banks, that hold, in the aggregate, sixty-six and two-thirds of one percent (66-2/3%) or more of the Commitments; provided that, at any time there are two or fewer Banks, “Required Banks” shall mean Banks that hold, in the aggregate, one hundred percent (100%) of the Commitments.  For
purposes of this definition, the effects of rounding to the nearest cent shall not be taken into account.

 

“Revolving Credit Notes” shall have the meaning set forth in Section 2.2, and “Revolving Credit Note” shall mean any of
such promissory notes.

 

14

 

 

“Schedules” shall have the same meaning set forth in Section 9.10.

 

“Section(s)” shall have the meaning set forth in Section 9.10.

 

“Security Agreements” means (a) security agreements, pledge agreements and other agreements, documents or instruments executed by the Borrower, Parent or any Subsidiary dated the Closing Date (or such other date as any such Person may execute such Security Agreement),
(b) any such agreement, document or instrument at any time executed pursuant to Section 3.1(a) hereof, evidencing or creating a Lien as security for the Obligations and in form and substance reasonably satisfactory to Administrative Agent and Collateral Agent, and (c) any and all amendments, modifications, supplements, renewals, extensions, restatements or replacements thereof.

 

“Solvent” means, as to any Person, that (a) the aggregate fair market value of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable it to pay its Indebtedness as such Indebtedness matures, and (c) it does not have unreasonably small capital
to conduct its business.

 

“Stubbs Group” means any one or more of the following Persons:  Stoney M. Stubbs, Jr., Julia B. Stubbs, Timothy L. Stubbs, Julia S. Howard, J. Bain Howard Trust, Jackson R. Howard Trust, Stubbs Family Partnership, Ltd., Stubbs II Family Partnership,
Ltd., S. Russell Stubbs, D. Dawn Stubbs, S. Reese Stubbs Trust, J. Corby Hill Stubbs Trust, John D. Prickett, Lucile E. Prickett, Barbara L. Stubbs, Sarah M. Daniel, Lucile B. Knight, Weller Investment, Ltd., Frances E. Fielder TXUGMA, Kiirstin L. Daniel TXUGMA, Arthur L. Daniel, Jr., D & R Stubbs Management LLC, Stephanie B. Stubbs, D. Dawn Stubbs Irrevocable 1996 Trust, Timothy Reed Stubbs Trust, Walker Gage Stubbs Trust and Two Sisters LLC.

 

“Subsidiaries” means Borrower, Conwell, FX, LML, Logistics, CPI and Conwell LLC, and shall also mean and include any New Entity which has executed and delivered a Guaranty Agreement and letter as provided in Section
9.14 and has not been released or otherwise discharged from its obligations thereunder.

 

“Taxes” means any and all present and future taxes, levies, imposts, deductions, withholdings, assessments, fees or other charges from time to time or at any time imposed by any Laws or by any Tribunal (excluding taxation of the income of the Banks).

 

“Termination Date” shall mean September 2, 2011, or such earlier date upon which the obligation
of the Banks to make Loans is terminated pursuant to the terms of this Agreement.

 

“Tribunal” means any state, commonwealth, federal, foreign, territorial, or other court or governmental department, commission, board, bureau, agency or instrumentality.

 

“Vehicle Appraisal” means an appraisal of any or all of the Vehicles, performed on behalf of the Administrative Agent or the Collateral Agent and the Banks, by an appraisal firm reasonably satisfactory to the Administrative Agent and the Collateral Agent, dated
a recent date satisfactory to the Administrative Agent and the Collateral Agent and in all respects satisfactory to the Administrative Agent and the Collateral Agent in their respective sole and absolute discretion.

 

15

 

 

“Vehicles” means any and all of the following, whether now owned or hereafter acquired by Parent, Borrower, or any Subsidiary:  (a) all tractors and trailers registered in accordance with any Law for public roadway use in the operation of Parent’s,
Borrower’s or any Subsidiary’s motor carrier business, and (b) all equipment and accessories permanently attached to any such Vehicles, including without limitation all refrigeration units, tires and tubes; provided, that (i) “Vehicles” shall include such equipment and accessories only so long as they are so permanently attached and shall not include any spare parts inventory; (ii) Vehicles shall not include any such property
described in the foregoing clauses (a) and (b) that (1) is leased to any Company by any Person other than another Company, (2) is a vehicle which is intended for use, and is in fact used, solely on location at Parent’s, Borrower’s or any Subsidiary’s place of business (commonly known as “yard hosses”), (3) constitutes “inventory” as such term is defined in Chapter 9 of the Code, or (4) is a Demo Vehicle.

 

“Vehicle Collateral” means, collectively, all of the Vehicles (if any) which are included in the Collateral.

 

“W&B Note” means that certain Subordinated Term Note dated as of December 26, 2001, made by W&B Service Company, LP, f/k/a W&B Newco, L.P., payable to the order of FX in the original principal amount of $4,134,785.00, and all renewals, extensions,
amendments, modifications, replacements, substitutions and rearrangements thereof.

 

“Weller Group” means any one or more of the following Persons:  Weller Investment, Ltd., Sarah M. Daniel, Lucile B. Knight, and Two Sisters LLC.

 

Section 1.2 UCC Changes

 

.  All terms used herein which are defined in the UCC shall, unless otherwise provided, have the meanings ascribed to them in the UCC both as in effect on the date of this Agreement and as hereafter amended.  The parties intend that the terms used herein which are defined in the UCC have, at all times, the broadest and
most inclusive meanings possible.  Accordingly, if the UCC shall in the future be amended or held by a court to define any term used herein more broadly or inclusively than the UCC in effect on the date of this Agreement, then such term as used herein shall be given such broadened meaning.  If the UCC shall in the future be amended or held by a court to define any term used herein more narrowly, or less inclusively, than the UCC in effect on the date of this Agreement, such amendment or holding
shall be disregarded in defining terms used in this Agreement.

 

ARTICLE II

 

AMOUNTS AND TERMS OF CREDIT COMMITMENTS

 

Section 2.1 Commitments; Loans

 

.  Subject to the terms and conditions of this Agreement (including, without limitation, Section 2.13), each Bank severally agrees to make one or more revolving credit loans to Borrower from time to time from and including the Closing Date to but excluding the Termination Date in an aggregate principal amount outstanding not to
exceed the positive remainder of (i) the amount of such Bank’s Commitment as then in effect, minus (ii) such Bank’s Pro Rata Share of the Letter of Credit Liabilities then outstanding (such revolving credit loans referred to in this Section 2.1 now or hereafter made by the Banks to Borrower from and including and after the Closing Date are hereinafter collectively called the “Loans”); provided, however, that the Outstanding Revolving Credit shall not at any time exceed the lesser of (i)
the Borrowing Base then most recently determined, or (ii) the aggregate amount of the Commitments.  Subject to the foregoing limitations and the other terms and conditions of this Agreement, Borrower may borrow, repay and re-borrow the Loans hereunder prior to the Termination Date.  The Borrowing Base shall be determined in good faith by Administrative Agent in connection with the delivery of the Borrowing Base Report to be delivered in accordance with Section 5.1(l), subject to Administrative
Agent’s right to re-determine the Borrowing Base in accordance with the immediately succeeding sentence.  In addition, the Borrowing Base may be re-determined at any time and from time to time by Administrative Agent in good faith upon the occurrence and during the continuation of a Potential Default.

 

16

 

 

Section 2.2 The Notes

 

.  The Loans made by each Bank shall be evidenced by a single promissory note (each a “Revolving Credit Note”) of Borrower in substantially the form of Exhibit C hereto, dated the Closing
Date, payable to the order of such Bank in a principal amount equal to its Commitment as originally in effect, and otherwise duly completed.  Each Bank is hereby authorized by Borrower to endorse on the schedule (or a continuation thereof) attached to each Note of such Bank the date and amount of each Loan made by such Bank to Borrower and the amount of each payment or prepayment of principal of such Loan received by such Bank, provided that any failure by such Bank to make any such endorsement shall
not affect the obligations of Borrower, Parent or any other Subsidiary under such Note or this Agreement in respect of such Loan.

 

Section 2.3 Repayment of Loans

 

.  Borrower shall pay the outstanding principal amount on all Loans on the Termination Date.  If any payment of principal becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and interest shall be payable at the then applicable rate during
such extension.

 

Section 2.4 Interest and Fees.

 

(a) Interest Rate.  Borrower shall pay to the Administrative Agent for the account of each Bank interest on the unpaid principal amount of each Loan made by such
Bank for the period commencing on the date of such Loan to but excluding the date such Loan is due, at a fluctuating rate per annum equal to the Applicable Rate.  The term “Applicable Rate” means with respect to all Loans outstanding from day to day, the lesser of (A) the Highest Lawful Rate or (B) the Base Rate plus the Base Rate Margin. Notwithstanding the foregoing,
subject to Section 9.19, (1) all principal outstanding after the occurrence of a Default which has not been cured to the satisfaction of the Administrative Agent and the Required Banks or waived in writing by the Administrative Agent and the Required Banks shall bear interest at the Default Rate, which shall be due and payable on demand, and (2) past due principal, interest, fees and other amounts shall bear interest at the Default Rate, which shall
be payable on demand.  The term “Default Rate” means a rate per annum equal to the lesser of (A) the Highest Lawful Rate, or (B) 2% plus the rate otherwise applicable to such Loan as provided above.

 

17

 

 

(b)   Facility Fees.  In consideration of each Bank’s commitment to make Loans, Borrower will pay to Administrative Agent for the account of each
Bank a facility fee determined on a daily basis by applying the Facility Fee Rate to such Bank’s Commitment.  This facility fee shall be due and payable in arrears on the last day of each fiscal quarter of Borrower and on the Termination  Date.

 

(c) Computation of Interest and Fees.  All interest and fees shall be calculated on the basis of actual days elapsed, but computed as if each calendar year consisted
of 360 days, subject to limitations of the Highest Lawful Rate.  Each determination by Administrative Agent of the Base Rate shall, in the absence of manifest error, be conclusive and binding.

 

(d) Recapture of Interest Lost as a Result of Interest Limitations.  If at any time the rate of interest applicable to any Loan exceeds the Highest Lawful Rate,
the rate of interest which such Loan bears shall be limited to the Highest Lawful Rate, but, notwithstanding any subsequent reductions in the Applicable Rate, the rate of interest which such Loan bears shall not thereafter be reduced below the Highest Lawful Rate until such time as the total amount of interest accrued on such Loan equals the amount of interest which would have accrued if the Applicable Rate had at all times been in effect.

 

(e) Payment Dates.  Accrued interest on the Loans shall be due and payable in arrears on the first Business Day of each calendar month and on the Termination
Date.

 

Section 2.5 Borrowing Procedure

 

.  Borrower shall give Administrative Agent notice of each borrowing of Loans hereunder in accordance with Section 2.9.  Not later than 12:00 noon (Dallas, Texas time) on the date specified for each Advance hereunder, each Bank will make available the
amount of the Loan to be made by it on such date to Administrative Agent, at the Applicable Lending Office of Administrative Agent, in immediately available funds, for the account of Borrower.  The amount so received by Administrative Agent shall, subject to the terms and conditions of this Agreement, be made available to Borrower promptly by wire transfer of immediately available funds to a deposit account .maintained by Borrower and reasonably acceptable to Administrative Agent.

 

Section 2.6 Optional Prepayments

 

.  Subject to Section 2.7, Borrower shall have the right from time to time to prepay the principal of the Loans; provided that Borrower shall give Administrative Agent notice of each such prepayment as provided in Section
2.9.

 

Section 2.7 Mandatory Prepayments.

 

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(a) Loans.  If at any time the Outstanding Revolving Credit exceeds an amount equal to the lesser of the aggregate Commitments then in effect or the Borrowing
Base then most recently determined or redetermined, Borrower shall either (i) within one Business Day after the occurrence thereof, pay to Administrative Agent the amount of such excess as a prepayment of the Loans, or (ii) within ten (10) Business Days after the occurrence thereof, grant to the Collateral Agent, for the benefit of the Banks, a valid, perfected First Priority Lien in Vehicles having an aggregate Orderly Liquidation Value in an amount necessary to increase the Borrowing Base by the amount of such
excess, subject to any and all limitations specified in the definition of “Borrowing Base”, pursuant to documentation satisfactory to the Collateral Agent and the Required Banks as provided in Section 5.1(r).

 

(b) Application of Mandatory Prepayments.  Any prepayments hereunder shall be applied to the remaining Loans as set forth in Section
2.17.

 

Section 2.8 Minimum Amounts

 

.  Each Advance of principal of the Loans shall be in an amount at least equal to $100,000 or an integral multiple of $100,000 in excess thereof.  Furthermore, all optional prepayments of principal of the Loans shall be in an amount equal to $500,000 or an integral multiple of $100,000 in excess thereof.

 

Section 2.9 Certain Notices

 

.  Notices by Borrower to Administrative Agent of terminations or reductions of Commitments, of Advances, and of prepayments of Loans shall be irrevocable and shall be effective only if received by Administrative Agent not later than 12:00 noon (Dallas, Texas time) on the Business Day prior to the date of the relevant termination,
reduction, Advance or prepayment as specified below:

 

	 	
 

Notice
	
Number of

Business Days

Prior
	 
	 	
Terminations or Reductions of Commitments
	
5
	 
	 	
Borrowings of Loans
	
1
	 
	 	
Prepayments of Loans
	
1
	 

 

Each such notice of termination or reduction shall specify the amount of the Commitments to be terminated or reduced.  Each such notice of Advance or prepayment shall specify the Loans to be borrowed or prepaid and the amount of Loans (subject to Section 2.8 hereof)
to be borrowed or prepaid and the date of Advance or prepayment (which shall be a Business Day).  Notices of Advances or prepayments shall be in the form of Exhibit B hereto, appropriately completed as applicable.  Administrative Agent shall promptly notify the Banks of the contents of each such notice.

 

Section 2.10 Use of Proceeds.

 

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(a) Borrower agrees with Administrative Agent and the Banks that (i) the proceeds of the Loans to be made on and after the Closing Date shall be used by Borrower, Parent and the Subsidiaries for working capital and general corporate
purposes and to refinance existing Indebtedness and (ii) the Letters of Credit requested to be issued pursuant to this Agreement shall be used only to support transactions and obligations entered into in the ordinary course of any Company’s business.

 

(b) None of the proceeds of any Loan have been or will be used to acquire any security in any transaction that is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended, or to purchase or carry any margin stock (within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System).

 

Section 2.11 Fees

 

.  Borrower agrees to pay the following fees in connection with each Bank’s commitment to make Loans and Issuing Bank’s commitment to issue Letters of Credit:

 

(a) A Letter of Credit fee is payable to the Administrative Agent for the account of the Banks in accordance with their respective Pro Rata Shares, for the term of each Letter of Credit at Base Rate Margin.  Letter of Credit
fees shall be payable quarterly in arrears on each Quarterly Payment Date;

 

(b) An issuance fee is payable to Administrative Agent for the account of the Issuing Bank for the term of each Letter of Credit in an amount equal to $150, which fee is payable upon issuance of each Letter of Credit and on each anniversary
of the issuance of such Letter of Credit, together with such other standard issuance, negotiation, processing and/or administration fees as may be charged by the Issuing Bank;

 

(c) Upon any amendment or modification of a Letter of Credit, a Letter of Credit amendment fee shall be paid to the Issuing Bank, for its own account, as determined pursuant to the Issuing Bank’s customary procedures; and

 

(d) Facility Fee of 0.375% per annum, payable quarterly in arrears.

 

Section 2.12 Computations

 

.  Interest and fees payable by Borrower hereunder and under the other Loan Papers on all Loans shall be computed on the basis of a year of 360 days and the actual number of days elapsed (including the first day but excluding the last day) occurring in the period for which payable unless, in the case of interest, such calculation
would result in a usurious rate, in which case interest shall be calculated on the basis of a year of 365 or 366 days, as the case may be.

 

Section 2.13 Termination or Reduction of Commitments.

 

(a) Notwithstanding anything to the contrary contained in this Agreement, the Commitments shall automatically terminate at 8:00 a.m.  (Dallas, Texas time) on the Termination Date.

 

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(b) Borrower shall have the right to terminate or reduce in part the unused portion of the Commitments at any time and from time to time, provided that (i) it shall give
notice of each such termination or reduction as provided in Section 2.9 and (ii) each partial reduction shall be in an aggregate amount at least equal to $5,000,000 or an integral multiple of $100,000 in excess thereof.  The Commitments may not be reinstated after they have been terminated or increased after they have been reduced.

 

Section 2.14 Letters of Credit.

 

(a) Subject to the terms and conditions of this Agreement, Borrower may utilize the Commitments by requesting that the Issuing Bank issue standby letters of credit (each such letter of credit and each Existing Letter of Credit is herein
called a “Letter of Credit”); provided, that no Letter of Credit shall be issued if, after giving effect to the issuance thereof, (i) the Outstanding Revolving Credit would exceed the amount equal to the lesser of the aggregate Commitments then in effect or the Borrowing Base then most recently determined, or (ii) the Letter of Credit Liabilities would exceed $10,000,000.  Upon
the date of issue of each Letter of Credit, the Issuing Bank shall be deemed, without further action by any party hereto, to have sold to each Bank, and each Bank shall be deemed, without further action by any party hereto, to have purchased from the Issuing Bank, a participation to the extent of such Bank’s Pro Rata Share of the Commitments.

 

(b) Borrower shall give the Issuing Bank (with a copy to Administrative Agent) at least three (3) Business Days prior notice (effective upon receipt and irrevocable unless appropriately revoked sufficiently prior to issuance of the Letter
of Credit) specifying the date of each Letter of Credit and the nature of the transactions or obligations to be supported thereby.  Upon receipt of such notice and confirmation by the Issuing Bank with Administrative Agent that such Letter of Credit may be issued in compliance with this Agreement, the Issuing Bank shall promptly notify Administrative Agent of the contents thereof and of each such Bank’s Pro Rata Share of the amount of the proposed Letter of Credit, and Administrative Agent shall
promptly thereupon notify the Bank’s of such information.  In addition, the Issuing Bank shall promptly deliver to the Administrative Agent an electronic copy of such Letter of Credit.  Each Letter of Credit shall have an expiration date that does not exceed one year from the date of issuance (unless specifically consented to by Administrative Agent, the Issuing Bank and the Required Banks) and that does not extend beyond the Termination Date, shall be payable in Dollars, shall support
a transaction entered into in the ordinary course of business of Borrower, Parent or a Subsidiary, shall be satisfactory in form and substance to the Issuing Bank, and shall be issued pursuant to such agreements, documents and instruments as the Issuing Bank may reasonably require, none of which shall be inconsistent with this Agreement (and to the extent they irreconcilably conflict with this Agreement, the terms of this Agreement shall control).  Each Letter of Credit shall (i) provide for the payment
of drafts presented for, on or thereunder by the beneficiary in accordance with the terms thereof, when such drafts are accompanied by the documents (if any) described in the Letter of Credit and (ii) to the extent not inconsistent with the terms hereof, be subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600 (together with any subsequent revision thereof approved by a Congress of the International Chamber of Commerce and adhered
to by the Issuing Bank, the “UCP”), and shall, as to matters not governed by the UCP, be governed by, and construed and interpreted in accordance with, the Laws of the State of Texas.

 

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(c) Upon receipt from any Letter of Credit beneficiary of any demand for payment or other drawing under such Letter of Credit, the Issuing Bank shall promptly notify Borrower and each Bank as to the amount to be paid as a result of such
demand or drawing and the respective payment date.  If at any time the Issuing Bank shall make a payment to a beneficiary of a Letter of Credit pursuant to a drawing under such Letter of Credit, each Bank will pay to the Issuing Bank, immediately upon the Issuing Bank’s demand at any time commencing after such payment until reimbursement therefor in full by Borrower, an amount equal to such Bank’s Pro Rata Share of such payment, together with interest on such amount for each day from the
date of such payment to the date of payment by such Bank of such amount at a rate of interest per annum equal to the Federal Funds Rate.

 

(d) Borrower shall be irrevocably and unconditionally obligated to immediately reimburse the Issuing Bank for any amounts paid by the Issuing Bank upon any drawing under any Letter of Credit, without presentment, demand, protest or other
formalities of any kind (each such reimbursement obligation, herein a “Reimbursement Obligation”).  The Issuing Bank will pay to each Bank such Bank’s Pro Rata Share of all amounts received from or on behalf of Borrower for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Letter of Credit, but only to the extent such Bank has made payment to the Issuing Bank in respect of
such Letter of Credit pursuant to Subsection (c) above.  Outstanding Reimbursement Obligations shall bear interest at the rate per annum equal to two percent (2.00%) above the sum of the Base Rate plus the Base Rate Margin but in no event to exceed the Highest Lawful Rate, and such interest shall be payable on demand.

 

(e) The Reimbursement Obligations of Borrower under this Agreement and the other Loan Papers shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement and the other
Loan Papers under all circumstances whatsoever, including, without limitation, the following circumstances:

 

(i) Any lack of validity or enforceability of any Letter of Credit or any other Loan Papers;

 

(ii) Any amendment or waiver of or any consent to departure from any Loan Papers;

 

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(iii) The existence of any claim, setoff, counterclaim, defense or other right which Borrower or any other Person may have at any time against any beneficiary of any Letter of Credit, Administrative Agent, the Issuing Bank, the Banks
or any other Person, whether in connection with this Agreement or any other Loan Papers or any unrelated transaction;

 

(iv) Any statement, draft or other document presented under any 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 whatsoever;

 

(v) Payment by the Issuing Bank under any Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, provided,
that such payment shall not have constituted gross negligence or willful misconduct of the Issuing Bank; and

 

(vi) Any other circumstance whatsoever, whether or not similar to any of the foregoing, provided that such other circumstance or event shall not have been the result of the gross negligence or willful misconduct of the Issuing Bank.

 

(f) Borrower assumes all risks of the acts or omissions of any beneficiary of any Letter of Credit with respect to its use of such Letter of Credit.  Neither Administrative Agent, the Issuing Bank, the Banks nor any of their
respective officers or directors shall have any responsibility or liability to Borrower or any other Person for: (a) the failure of any draft to bear any reference or adequate reference to any Letter of Credit, or the failure of any documents to accompany any draft at negotiation, or the failure of any Person to surrender or to take up any Letter of Credit or to send documents apart from drafts as required by the terms of any Letter of Credit, or the failure of any Person to note the amount of any instrument
on any Letter of Credit, (b) errors, omissions, interruptions or delays in transmission or delivery of any messages, (c) the validity, sufficiency or genuineness of any draft or other document, or any endorsement(s) thereon, even if any such draft, document or endorsement should in fact prove to be in any and all respects invalid, insufficient, fraudulent or forged or any statement therein is untrue or inaccurate in any respect, (d) the payment by the Issuing Bank to the beneficiary of any Letter of Credit against
presentation of any draft or other document that does not comply with the terms of the Letter of Credit, or (e) any other circumstance whatsoever in making or failing to make any payment under a Letter of Credit; provided, however, that, notwithstanding the foregoing, Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to Borrower, to the extent
of any direct, but not indirect or consequential, damages suffered by Borrower which Borrower proves in a final nonappealable judgment were caused by (i) the Issuing Bank’s willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit complied with the terms thereof or (ii) the Issuing Bank’s willful failure to pay under any Letter of Credit after presentation to it of documents strictly complying with the terms and conditions of such Letter of Credit.  The
Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

 

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(g) The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Banks
of any such replacement of the Issuing Bank.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(c).  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit
to be issued thereafter, and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of all Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.

 

Section 2.15 Method of Payment

 

.  All payments of principal, interest, fees and other amounts to be made by Borrower, Parent or any Subsidiary under this Agreement or any other Loan Paper shall be made via wire transfer of funds to Administrative Agent for the account of each Bank’s Applicable Lending Office in Dollars and in immediately available funds,
without setoff, deduction or counterclaim, not later than 12:00 noon (Dallas, Texas time) on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).  Borrower or such other Person shall, at the time of making each such payment, specify to Administrative Agent the sums payable by such Person under this Agreement or the other Loan Document to which each such payment is to be applied (and
in the event that such Person fails to so specify, or if an Default has occurred and is continuing or if a Potential Default would exist after the making of such payment, Administrative Agent may apply such payment to such Person’s Loans, Reimbursement Obligations and other Obligations in such order and manner as Administrative Agent may elect, subject to Section 2.16).  Upon the occurrence and during the continuation of a Default,
all proceeds of any Collateral and all other funds of Borrower, Parent or any Subsidiary in the possession of Administrative Agent or any Bank may be applied by Administrative Agent to the Obligations in such order and manner as Administrative Agent may elect, subject to the provisions of Section 2.16.  Notwithstanding the foregoing, if a Default has occurred and is continuing, Administrative Agent and the Banks agree among themselves
that all such payments, proceeds and funds, shall be applied (or, in the case of Letter of Credit Liabilities consisting of the undrawn face amount of Letters of Credit, held by Administrative Agent as cash collateral for application against) pro rata to the Outstanding Revolving Credit.  Each payment received by Administrative Agent under this Agreement or any other Loan Paper for the account of the Bank shall be paid promptly to such Bank, in immediately available funds, for the account of such Bank’s
Applicable Lending Office.  Whenever any payment under this Agreement or any other Loan Paper shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest and commitment fee, as the case may be.

 

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Section 2.16 Pro Rata Treatment

 

.  Except to the extent otherwise provided in this Agreement: (a) each Loan shall be made by the Banks under Section 2.1, each payment of commitment fees under Section 2.11 shall be made for the account
of the Banks, and each termination or reduction of the Commitments under Section 2.13 shall be applied to the appropriate Commitments of the applicable Banks, pro rata according to the respective unused Commitments; (b) the making of Loans shall be made pro rata among the Banks according to the amounts of their respective Commitments; (c) each payment and prepayment by Borrower of principal of or interest on Loans shall be made to Administrative
Agent for the account of the Banks pro rata in accordance with the respective unpaid principal amounts of such Loans held by such Banks; and (d) the Banks (other than the Issuing Bank) shall purchase participations in the Letters of Credit pro rata in accordance with their respective Pro Rata Share.

 

Section 2.17 Sharing of Payments, Etc.

 

  If a Bank shall obtain payment of any principal of or interest on any of the Obligations due to such Bank hereunder through the exercise of any right of setoff, banker’s lien, counterclaim or similar right, or otherwise, it shall promptly purchase from the other Banks participations in the Obligations held by the other
Banks in such amounts, and make such adjustments from time to time, as shall be equitable to the end that all Banks shall share pro rata in accordance with the unpaid principal and interest on the Obligations then due to each of them.  To such end, all Banks shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if all or any portion of such excess payment is thereafter rescinded or must otherwise be restored.  Each of Borrower, Parent and the
Subsidiaries agrees, to the fullest extent it may effectively do so under applicable Law, that any Bank so purchasing a participation in the Obligations by the other Banks may exercise all rights of setoff, banker’s lien, counterclaim or similar rights with respect to such participation as fully as if such Bank were a direct holder of Obligations in the amount of such participation.  Nothing contained herein shall require any Bank to exercise any such right or shall affect the right of any Bank
to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness, liability or obligation of Borrower, Parent or any of the Subsidiaries.

 

Section 2.18 Non-Receipt of Funds by Administrative Agent

 

.  Unless Administrative Agent shall have been notified by a Bank or Borrower (“Payor”) prior to the date on which such Bank is to make payment to Administrative Agent of the proceeds of a Loan to be made by it hereunder or Borrower is to make a payment
to Administrative Agent for the account of one or more of Banks, as the case may be (such payment being herein called the “Required Payment”), which notice shall be effective upon receipt, that Payor does not intend to make the Required Payment to Administrative Agent, Administrative Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof
available to the intended recipient on such date and, if Payor has not in fact made the Required Payment to Administrative Agent, the recipient of such payment shall, on demand, pay to Administrative Agent the amount made available to it together with interest thereon in respect of the period commencing on the date such amount was so made available by Administrative Agent until the date Administrative Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such period.

 

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Section 2.19 Withholding Taxes.

 

(a) All payments by Borrower of principal of and interest on the Loans and the Letter of Credit Liabilities and of all fees and other amounts payable under the Loan Papers shall be made free and clear of, and without deduction by reason
of, any present or future taxes, levies, duties, imposts, assessments or other charges levied or imposed by any Tribunal (other than any taxes imposed on the taxable income of Administrative Agent or any Bank or any lending office of Administrative Agent or such Bank by any jurisdiction in which Administrative Agent or such Bank or any such lending office is located).  If any such taxes, levies, duties, imposts, assessments or other charges are so levied or imposed, upon Borrower receiving written notice
of the detailed calculation of same  Borrower will (i) make additional payments in such amounts so that every net payment of principal of and interest on the Loans and the Letter of Credit Liabilities and of all other amounts payable by it under the Loan Papers, after withholding or deduction for or on account of any such present or future taxes, levies, duties, imposts, assessments or other charges (including any tax imposed on or measured by taxable income of a Bank attributable to payments made to
or on behalf of a Bank pursuant to this Section 2.19 and any penalties or interest attributable to such payments), will not be less than the amount provided for herein or therein absent such withholding or deduction (provided that Borrower shall not have any obligation to pay such additional amounts to any Bank to the extent that such taxes, levies, duties, imposts, assessments or
other charges are levied or imposed by reason of the failure of such Bank to comply with the provisions of Section 2.20), (ii) make such withholding or deduction, and (iii) remit the full amount deducted or withheld to the relevant Tribunal in accordance with applicable Law.  Without limiting the generality of the foregoing, Borrower will, upon written request of any Bank, reimburse each such Bank for the amount of (A) such taxes, levies,
duties, imports, assessments or other charges so levied or imposed by any Tribunal and paid by such Bank as a result of payments made by Borrower under or with respect to the Loans, other than such taxes, levies, duties, imports, assessments and other charges previously withheld or deducted by Borrower which have previously resulted in the payment of the required additional amount to Bank, and (B) such taxes, levies, duties, assessments and other charges so levied or imposed with respect to any Bank reimbursement
under the foregoing clause (A), so that the net amount received by such Bank (net of payments made under or with respect to the Loans and the Letter of Credit Liabilities) after such reimbursement will not be less than the net amount such Bank would have received if such taxes, levies, duties, assessments and other charges on such reimbursement had not been levied or imposed.  Borrower shall furnish promptly to Administrative Agent
for distribution to each affected Bank, upon request of each such Bank, official receipts evidencing any such payment, withholding or reduction.

 

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(b) Upon Borrower receiving written notice of the charging of same (including a detailed calculation of same), Borrower will indemnify Administrative Agent and each Bank (without duplication) against, and reimburse Administrative Agent
and each Bank for, all present and future taxes, levies, duties, imposts, assessments or other charges (including interest and penalties) levied or collected (whether or not legally or correctly imposed, assessed, levied or collected), excluding, however, any taxes imposed on the overall taxable income of Administrative Agent or such Bank or any lending office of Administrative Agent or such Bank by any jurisdiction in which Administrative Agent or such Bank or any such lending office is located, on or in respect
of this Agreement, any of the Loan Papers or the Obligations or any portion thereof (“reimbursable taxes”).  Any such indemnification shall be on an after-tax basis, taking into account any such reimbursable taxes imposed on the amounts paid as indemnity.

 

(c) If and to the extent actually known by such Bank, each Bank will use reasonable efforts to notify Borrower and Administrative Agent, in a reasonably prompt fashion after such assignment is made, of any assignment of the Commitment
or the Loans by such Bank to an Eligible Assignee which is subject to a withholding tax that will impose any payment obligation upon Borrower pursuant to this Section 2.19.  Each Bank will use reasonable efforts to notify Borrower and Administrative Agent of any amounts to be paid by Borrower pursuant to this Section 2.19 in a reasonably prompt fashion after such Bank becomes
aware of the circumstances which require the payment of such amounts by Borrower.

 

Section 2.20 Withholding Tax Exemption

 

.  Each Bank that is not incorporated or otherwise formed under the Laws of the U.S.  or a state thereof agrees that it will, prior to or on or about the Closing Date or the date upon which it becomes a party to this Agreement, deliver to Borrower and Administrative Agent two duly completed copies of U.S.  Internal
Revenue Service Form 1001, 4224 or W-8, as appropriate, certifying in any case that such Bank is entitled to receive payments from Borrower under any Loan Paper without deduction or withholding of any U.S.  federal income taxes.  Each Bank which so delivers a Form 1001, 4224 or W-8 further undertakes to deliver to Borrower and Administrative Agent two additional copies of such form (or a successor form) on or before the date 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 requested by Borrower or Administrative Agent, in each case certifying that such Bank is entitled to receive payments from Borrower under any Loan Paper without deduction or withholding of any U.S.  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 Borrower and Administrative Agent that it is not capable of receiving such payments without any deduction or withholding of U.S.  federal income tax.

 

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Section 2.21 Reinstatement of Obligations

 

.  Notwithstanding anything to the contrary contained in this Agreement or any other Loan Paper, if the payment of any amount of principal of or interest with respect to the Loans, the Reimbursement Obligations or any other amount of the Obligations, or any portion thereof, is rescinded, voided or must otherwise be refunded by
Administrative Agent, any Bank or Issuing Bank upon the insolvency, bankruptcy or reorganization of Borrower or any of the Subsidiaries or otherwise for any reason whatsoever, then each of (a) the Obligations, (b) the Loan Papers (including, without limitation, this Agreement, the Notes, the Guaranty Agreements and the Security Agreement), (c) the indebtedness, liabilities and obligations of Borrower, Parent and the Subsidiaries under the Loan Papers, and (d) all Liens for the benefit of Administrative Agent
and the Banks created under or evidenced by the Loan Papers, will be automatically reinstated and become automatically effective and in full force and effect, all to the extent that and as though such payment so rescinded, voided or otherwise refunded had never been made.

 

Section 2.22 Capital Adequacy

 

.  If, after the Closing Date, any Bank shall have determined that the adoption or implementation of any applicable Law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any central bank or other Tribunal charged with the interpretation or administration
thereof, or compliance by such Bank (or its parent) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any central bank or other Tribunal, has or would have the effect of reducing the rate of return on such Bank’s (or its parent’s) capital as a consequence of its obligations hereunder or the transactions contemplated hereby to a level below that which such Bank (or its parent) could have achieved but for such adoption, implementation, change
or compliance (taking into consideration such Bank’s policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within ten Business Days after demand by such Bank (with a copy to Administrative Agent), Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its parent) for such reduction.  A certificate of such Bank claiming compensation under this Section
2.22, and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive absent manifest error, provided that the determination thereof is made on a reasonable basis.  In determining such amount or amounts, such Bank may use any reasonable averaging and attribution methods.

 

ARTICLE III

 

CONDITIONS PRECEDENT

 

Section 3.1 Conditions Precedent to Initial Loans and Letters of Credit

 

.  The obligation of the Banks to make the initial Loans and to issue the initial Letter of Credit shall be subject to the fulfillment of the following conditions precedent on or before the Closing Date in a manner satisfactory to the Banks:

 

(a) Each Bank shall have received the following:

 

(i) A copy of resolutions approving this Agreement and authorizing the transactions contemplated in this Agreement and the other Loan Papers, duly adopted by the Board of Directors of each of the Companies, accompanied by a certificate
of the Secretary or Assistant Secretary of the respective Company, dated the date hereof, that such copy is a true and correct copy of resolutions duly adopted at a meeting (which may be held if permitted by applicable Law and, if required by such Law, by the bylaws of the respective Company, by conference telephone or similar communications equipment by means of which all persons participating in a meeting can hear each other) of, or by the unanimous written consent of (if permitted by applicable Law and, if
required by such Law, by the bylaws of the respective Company), the Board of Directors of the respective Company, and that such resolutions have not been amended, modified, repealed, or revoked in any respect, and are in full force and effect as of the date hereof:

 

28

 

 

(ii) A certificate of incumbency of all officers of Borrower and each Company who will be authorized to execute or attest this Agreement or any document delivered pursuant hereto on behalf of Borrower or such Company, dated the date
hereof; executed by the Secretary or Assistant Secretary of Borrower or such Company.

 

(iii) The articles of incorporation of Borrower and each Company certified by the Secretary of State of the state of its incorporation and dated a current date.

 

(iv) The bylaws of Borrower and each Company certified by its Secretary or Assistant Secretary.

 

(v) Certificates of the appropriate government officials of the state of incorporation of Borrower and each Company as to its existence and, to the extent applicable, good standing and certificates of the appropriate government officials
of each state in which Borrower and each Company is required to qualify to do business and where failure to so qualify could reasonably be expected to have a Material Adverse Effect, as to such Person’s qualification to do business and good standing in such state, all dated a current date.

 

(vi) Its Revolving Credit Note duly executed by Borrower.

 

(vii) A Guaranty Agreement (or ratification thereof, if applicable), in form and substance satisfactory to the Required Banks, appropriately executed and delivered by each of the Companies other than Borrower.

 

(viii) The fees due on the Closing Date in accordance with this Agreement.

 

(ix) A payoff letter from Bank of America, N.A. with respect to the payment in full of its loans under the Existing Credit Documents and the termination of its commitment thereunder.

 

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(x) Such other documents as Administrative Agent or any Bank may reasonably request.

 

(b) The representations and warranties contained in Article IV of this Agreement shall be true and correct in all material respects on and as of such date with the same
effect as if made on and as of such date.

 

(c) No Default or Potential Default, shall be in existence on such date or after giving effect to such initial Loans or Letter of Credit.

 

(d) All corporate and legal proceedings and all documents required to be completed and executed by the provisions of, and all instruments to be executed in connection with the transactions contemplated by this Agreement and any related
agreements shall be satisfactory in form and substance to Administrative Agent and the Required Banks, and Administrative Agent and the Banks shall have received all information and copies of all documents, including records of corporate proceedings, required by this Agreement and any related agreements to be executed or which Administrative Agent or any Bank may reasonably have requested in connection therewith, such documents, where appropriate, to be certified by proper corporate or governmental authorities.

 

(e) No legal proceeding shall be pending or threatened against Borrower or any other Company by or before any, Tribunal which could reasonably be expected to have a Material Adverse Effect.

 

(f) The consummation of such Loans or issuance of such Letter of Credit shall not violate any applicable provision of any Law.

 

Section 3.2 Conditions of Subsequent Advances

 

.  The obligation of the Banks to make any Advance requested to be made by it prior to the Termination Date, or issue any Letter of Credit, shall be subject to the fulfillment of each of each following conditions precedent on or before the date of such Advance or issuance of Letter of Credit in a manner satisfactory to Administrative
Agent, the Issuing Bank and the Banks, as applicable:

 

(a) Administrative Agent and such Bank shall have received the notice regarding such Advance in compliance with this Agreement and Issuing Bank shall have received notice regarding such Letter of Credit pursuant to this Agreement.

 

(b) The representations and warranties contained in Article IV of this Agreement shall be true and correct in all material respects when made and as of the date of such
Advance or Letter of Credit, as the case may be, with the same effect as if made on and as of such date.

 

(c) No Default or Potential Default, shall be in existence on the date of any Advance or Letter of Credit, or after giving effect to such Advance or Letter of Credit.

 

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(d) With regard to a Letter of Credit (i) the Issuing Bank shall have received an application and agreement for issuance of letter of credit, promissory note and/or reimbursement agreement relating to such Letter of Credit duly executed
by Borrower with respect thereto, on the Issuing Bank’s standard form; and (ii) the form and substance of the Letter of Credit shall be reasonably satisfactory to the Issuing Bank.

 

(e) All corporate and legal proceedings and all documents required to be completed and executed by the provisions of, and all instruments to be executed in connection with the transactions contemplated by, this Agreement and any other
Loan Paper shall be satisfactory in form and substance to Administrative Agent and the Banks and shall remain valid and effective and shall not have been revoked or attempted to be revoked and Administrative Agent and the Banks shall have received all information and copies of all documents, including records of corporate proceedings, required by this Agreement and any related agreements to be executed or which Administrative Agent or any Bank may reasonably have requested in connection therewith, such documents,
where appropriate, to be certified by proper corporate or governmental authorities.

 

(f) No legal proceeding shall be pending or threatened against Borrower or any other Company by or before any Tribunal which could reasonably be expected to have a Material Adverse Effect.

 

(g) The consummation of such Advance or issuance of such Letter of Credit shall not violate any applicable provisions of any Law.

 

(h) Any Bank’s obligations to make any Advance or issue any Letter of Credit hereunder shall not have been terminated pursuant to any provision of this Agreement.

 

(i) There shall not have occurred any event or series of events that has had or is likely to have a Material Adverse Effect on the financial performance or business activities of Parent or any Subsidiary.

 

Section 3.3 Effect of Request for any Subsequent Advance or Request for Letter of Credit

 

.  Each notice requesting an Advance and each request for issuance of a Letter of Credit, shall be deemed to be a representation and warranty that the matters set forth in Subsections 3.2(b) and (c) and
in Article IV are true and correct as of the date of the requested Advance or Letter of Credit.

 

ARTICLE IV

 

CERTAIN REPRESENTATIONS AND WARRANTIES

 

Borrower and each other Company jointly and severally represent and warrant to Administrative Agent and the Banks that:

 

Section 4.1 Corporate Existence and Authority; Names

 

.  Each Company (i) is a corporation duly organized, validly existing, and in good standing under the Laws of its State of incorporation (ii) is duly qualified to transact business as a foreign corporation in each jurisdiction where the nature and extent of its business and properties require the same, and (iii) possesses all
requisite authority, power, licenses, permits, and franchises to conduct its business and execute, deliver, and comply with the terms of the Loan Papers, which have been duly authorized and approved by all necessary corporate action and for which no approval or consent of any Tribunal is required.

 

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Section 4.2 Financial Statements

 

.  The consolidated Financial Statements of Parent as of December 31, 2008 and as of June 30, 2009 (collectively the “Current Financials”) were prepared in accordance with GAAP and fairly present the consolidated financial conditions and the results
of operations of the Companies as of, and for the portion of the fiscal year ending on, such dates.  There were no material liabilities, direct or indirect, fixed or contingent, of the Companies as of the date of the Current Financials which are not reflected therein or in the notes thereto.  Except for transactions directly related to, or specifically contemplated by, this Agreement and transactions heretofore disclosed in writing to the Banks, there have been no material adverse changes
in the respective financial conditions of the Companies from those shown in the Current Financials between such date and the date hereof, nor has any Company incurred any material liability, direct or indirect, fixed, or contingent, except for the Existing Indebtedness.

 

Section 4.3 Compliance with Laws and Documents; Existing Defaults; Litigation

 

.  None of the Companies is, nor will the execution, delivery and the performance of and compliance with the terms of the Loan Papers cause any of the Companies to be: (i) in violation of any Laws or the Certificates or Articles of Incorporation or Bylaws of any of the Companies in any respect which could have any effect whatsoever
upon the validity, performance or enforceability of any of the terms of the Loan Papers or which could reasonably be expected to have a Material Adverse Effect; or (ii) in default (nor has any event occurred which, with notice or lapse of time or both, could constitute a default) under any material agreement or instrument to which any Company is a party or under which any Company or any of its property is bound.  Except as set forth on Schedule
4.3 attached hereto, which Schedule shall be updated as provided in Section 5.1(t) (“Litigation Schedule”), none of the Companies is involved in, nor is any Company aware of the threat of, any Litigation where the maximum aggregate potential loss to the Borrower, the Parent and the Companies is greater than $250,000; none of the Litigation described on the Litigation
Schedule could reasonably be expected to have a Material Adverse Effect; and, except as set forth on the Litigation Schedule, there are no outstanding or unpaid judgments against any of the Companies.

 

Section 4.4 Enforceability

 

.  The execution, delivery and performance of the Loan Papers to which each of the Companies is a party have been duly authorized by resolutions of the board of directors of such Company.  The Loan Papers have been duly and validly executed and delivered by each of the Companies that is a party thereto and constitute
the legal, valid and binding obligations of the Companies, enforceable against the Companies in accordance with their respective terms, except as limited by bankruptcy, insolvency or other Laws of general application relating to the enforcement of creditors’ rights and general principles of equity.

 

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Section 4.5 Payment of Taxes

 

.  Borrower and the other Companies have filed all federal, state and other tax returns and reports required to be filed, and have paid all Taxes required by them to the extent that such Taxes have become due (except to the extent that the same are being contested in good faith by appropriate proceedings diligently prosecuted
and as to which adequate reserves have been set aside in conformity with GAAP).

 

Section 4.6 Plan Obligations

 

.  Schedule 4.6 lists each Plan which is maintained, established or contributed to by any Company or any other Group Member as of the Closing Date.  Without limiting the generality of the foregoing, no Company or other Group Member has maintained, established
or contributed to (i) an “employee pension benefit plan” as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended, and the regulations and rulings thereunder (“ERISA”) which is subject to the provisions of Title IV of ERISA, or (ii) a “multiemployer plan” as such term is defined in Section
4001 of ERISA.  No Company has provided, or agreed to provide, benefits under any health Plan to any former employee or dependent of such employee for periods subsequent to the severance of such employee’s employment, other than as specifically required under Section 4980B of the IRC.  There has been no Reportable Event or prohibited transaction (within the meaning of Section
486 of ERISA and Section 4975 of the IRC) with respect to any Plan, all contributions to any Plan have been made in cash or stock and, there have been no loans or other extensions of credit, except loans to participants in Plans, which loans are and have been in compliance with Section 408 of ERISA.

 

Conwell, FX, Borrower and LML have adopted, and all participating employees are covered by, the Conwell Voluntary Employees Injury Benefit Plan identified on Schedule 4.6.  The Conwell Voluntary Employees Injury Benefit Plan is an “Employee
Welfare Benefit Plan” as defined in Section 3(1) of ERISA.  All provisions of the Conwell Voluntary Employees Injury Benefit Plan are governed by ERISA.

 

Section 4.7 Purpose of Advances and Letters of Credit

 

.  The proceeds of the Advances hereunder will be used for working capital purposes of the Companies, to pay Reimbursement Obligations, for Capital Expenditures permitted by Section 5.2(h) and for other general corporate purposes.  None of the proceeds
of the Loans will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock and none of such proceeds will be used in violation of applicable Law (including, without limitation, the Margin Regulations).  The Letters of Credit will be issued in the ordinary course of the Companies’ businesses, primarily in connection with potential insurance claims.

 

Section 4.8 Ownership of the Companies

 

.  (i) Parent owns all of the issued and outstanding capital stock of Borrower, Conwell, FX, Logistics and LML, (ii) FX owns all of the issued and outstanding capital stock of CPI, and (iii) except as provided in this Section 4.8, none of the Companies has any Other
Subsidiary.

 

Section 4.9 Existing Indebtedness

 

.  Except as fully described in Schedule 4.9 attached hereto (the “Existing Indebtedness”), none of the Companies is directly, indirectly or contingently obligated with respect to any Indebtedness.

 

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Section 4.10 Rights in Properties; Existing Liens

 

.  Each of the Companies has good indefeasible title to or valid leasehold interests in its properties and assets, real and personal, including the properties, assets and leasehold interests reflected in the Financial Statements described in Section 4.2, and none
of such properties or assets is subject to a Lien other than Permitted Liens .

 

Section 4.11 Material Agreements

 

.  Attached hereto as Schedule 4.11, is a description of all material agreements to which any Company is a party or its assets may be bound or affected.

 

Section 4.12 Environmental Matters.

 

(a) Each of the Companies is in compliance in all material respects with all federal, state and local Laws now applicable to its business and operations or which (to its knowledge) will be applicable thereto relating to pollution control
and environmental contamination, including, but not limited to, all Laws and regulations governing the generation, use, collection, treatment, storage, transportation, recovery, removal, discharge or disposal of Hazardous Materials.

 

(b) To the best of each Company’s knowledge, there are no presently outstanding allegations that any Company is now or at any time prior hereto was in material violation of such Laws; there are no material administrative or judicial
proceedings presently pending against any Company pursuant to such Laws or regulations; and there is no material claim presently outstanding against any Company which was asserted pursuant to such Laws.

 

(c) There are no facts or circumstances known to any Company that could reasonably be expected to form the basis for the assertion of any material claim against any Company relating to environmental matters, including, but not limited
to, any claim arising from past or present environmental practices asserted under CERCLA, RCRA or any other federal, state or local environmental statute.

 

Section 4.13 Common Enterprise

 

.  Each Company expects to derive benefit from this Agreement, both on its separate capacity and as a member of an affiliated and integrated corporate group.

 

Section 4.14 Workers’ Compensation

 

.  Neither Borrower nor any of the other Companies are subscribers to the Texas Workers’ Compensation Act.  Borrower and each other Company has taken all reasonable precautions that may be necessary or appropriate to minimize the risk of loss associated with claims that would otherwise be covered by the Texas
Workers’ Compensation Act.  Such precautions include, as appropriate and in consideration of the nature of each employee’s duties, without limitation, (i) the implementation of safety programs, employee training programs, drug screening of employees and pre-employment physicals, and (ii) the purchasing of insurance with substantial and reasonable adequate coverage available for such risks.

 

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Section 4.15 Solvency

 

.  On the Closing Date and on the date of each Loan and the date of issuance of each Letter of Credit, each of the Companies is, and after giving effect to the transactions contemplated hereby and the requested Loan or Letter of Credit, will be, Solvent.

 

ARTICLE V

 

CERTAIN COVENANTS OF THE COMPANIES

 

Section 5.1 Affirmative Covenants

 

.  Until the Obligations have been paid and performed in full and the obligation of the Banks to make Loans or issue Letters of Credit have been irrevocably terminated, the Companies shall:

 

(a) Compliance Certificate.  On or before the forty-fifth (45th) day after the
end of the first, second and third quarters of each fiscal year of Parent, and on or before ninetieth (90th) day after the fourth quarter of each fiscal year of Parent, deliver to each Bank a Compliance Certificate.

 

(b) Financial Statements.  Deliver to each Bank, as soon as practicable, and (i) in any event within one hundred twenty (120) days after the end of each fiscal
year of Parent, complete and detailed Financial Statements (prepared on a consolidated basis), including balance sheet, operating statement, reconciliation of  earned surplus and such supporting schedules as any Bank may request, accompanied by the certificate of a firm of independent public accountants reasonably acceptable to the Banks that such statements have been prepared in accordance with GAAP and fairly present the consolidated financial condition of the Companies during the fiscal year just
ended, and that during the course of their audit of the Companies, nothing came to their attention that caused them to believe the Companies were not in compliance with the terms of Subsections 5.1(f), 5.1(k), 5.2(a) and 5.2(f),
(ii) in any event within forty-five (45) days after the end of the first, second and third calendar quarter of each fiscal year, consolidated balance sheets of the Companies as of the close of such quarter, and consolidated operating statements of the Companies for the part of the fiscal year ended at the close of such quarter, accompanied by the certificate of the Chief Financial Officer or Treasurer of Parent that such statements are true and correct, were prepared in accordance with GAAP and fairly present
the consolidated financial conditions and results of operations of the Companies, and (iii) after a request by any Bank, such other information pertaining to the Companies and their affairs as such Bank shall from time to time request in writing.

 

(c) Insurance.  (i) Maintain the insurance described in Schedule 5.1 and (ii) deliver to the Administrative Agent certificates evidencing such insurance
(other than self-insurance) and, within ninety (90) days after the close of each fiscal year of Borrower, a report certified by the Chief Financial Officer or Vice President of Finance of Borrower describing all insurance of the Companies in force as of the close of the fiscal year just ended.

 

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(d) Taxes.  Pay and discharge, and cause each other Company to pay and discharge, before delinquent, all Taxes assessed upon any Company or any of the assets
of any Company, or any part thereof; provided, however, that any Company may defer the payment of any Taxes (i) which are being diligently contested in good faith by appropriate proceedings, and (ii) for which reserves deemed adequate by the Banks have been set aside to the satisfaction of the Banks for the payment thereof; and further provided, that, if and to the extent any such contested Taxes are finally adjudicated to be valid, Borrower or a Company will promptly discharge them and for such purpose may use
the reserve related thereto.

 

(e) Operating Rights, etc.  Maintain and preserve, and cause each other Company to maintain and preserve, its Operating Rights, licenses, franchises, certificates,
corporate qualification and good standing in all appropriate states and other appropriate authorities necessary to carry on its businesses, as an interstate and intrastate motor carrier or otherwise, in all states in which it does business.

 

(f) Fixed Charge Coverage Ratio.  Maintain a Fixed Charge Coverage Ratio equal to or greater than 1.25 to 1.00.   “Fixed
Charge Coverage Ratio” shall mean, as of the date of any determination thereof for the twelve (12) month period ending as of the date of any determination, the ratio of (i) the amount of the Companies’ consolidated EBITDAR to (ii) the amount of the Companies’ consolidated Fixed Charges; all as determined in conformity with GAAP.  “EBITDAR” means, for any period and any Person the total of the following,
each calculated without duplication, for such Person on a consolidated basis for such period:  (a) Net Income; plus (b) any provision for (or minus any benefit from) income or franchise taxes included in determining Net Income; plus (c) interest expense deducted in determining Net Income; plus (d) amortization
and depreciation expense deducted in determining Net Income; plus (e) lease and rental expenses paid under operating leases or rental agreements involving assets that are intended to produce income and deducted in determining Net Income.  “Fixed Charges” means for any period the total of the following: all interest expenses, the amount of lease and rental expenses
associated with all operating leases and rental agreements that are not cancelable within the immediately subsequent 12-month period, taxes actually paid, the portion of long-term debt actually paid or due but not paid lease expenses under capitalized leases, all dividends paid by Parent to its shareholders and all monies paid by Parent to its shareholders for the repurchase or redemption of its stock.

 

(g) Information and Other Documents, New Entities.  Except as otherwise may be provided in Section 9.14,
cause each New Entity to execute and deliver to Administrative Agent (i) a Guaranty Agreement, (ii) an agreement in the form of Exhibit E attached hereto with the blanks completed accurately, (iii) a Security Agreement in substantially the form of Exhibit G hereto, and (iv) a Vehicles Security Agreement in substantially the form of Exhibit
H hereto and deliver, and cause each Company to deliver, to the Banks such information (not otherwise required to be furnished herein) respecting the business affairs, assets, and liabilities of any of the Companies, and such opinions, certifications and documents, in addition to those herein mentioned, as any Bank may reasonably request, and allow, and cause each other Company to allow, the Banks or their agents to inspect any of the records and properties of any Company, from time to time, during reasonable
business hours.

 

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(h) Payment of Debts.  Pay and discharge, and cause each other Company to pay and discharge, when due all debts, liabilities and obligations of Borrower and each
other Company; provided that the covenant contained in this Subsection is solely for the benefit of the Banks and their successors and assigns; and provided further that neither Borrower nor any other Company shall be required to pay any such debt, liability or obligation if the validity thereof is being diligently contested in good faith and reserves deemed adequate by the Banks have been recorded therefor in accordance with GAAP.

 

(i) Maintenance of Existence, Assets.  Maintain, and cause each other Company to maintain, its corporate and legal existence, and keep, and cause each other Company
to keep, all assets in good repair, working order and condition, and from time to time make all necessary and proper repairs, renewals, replacements, additions, betterments and improvements thereto, to the end that the business of Borrower and each other Company may be properly, efficiently and advantageously conducted at all times in accordance with sound and prudent standards of business management.

 

(j) Expenses.

 

(i) Pay (A) all reasonable expenses incurred by the Administrative Agent, the Collateral Agent and their respective Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent and the
Collateral Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement, the other Loan Papers or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (B) all reasonable expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment
thereunder, (C) all expenses incurred by the Administrative Agent, the Collateral Agent, the Issuing Bank, and, after a Default, any Bank, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Collateral Agent, the Issuing Bank or any Bank in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Papers, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder,
including all such expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, and including all costs and expenses in connection with the repossession, storage, or sale of Vehicles or other Collateral and the collection of accounts, (D) all transfer, stamp, documentary, or other similar taxes, assessments or charges levied by any Tribunal in respect of this Agreement or any of the other Loan Papers, (E) all costs, expenses, assessments and other charges
incurred in , connection with any filing, registration, recording, or perfection of any security interest or Lien contemplated by this Agreement or any other Loan Paper, and (F) all other costs and expenses incurred by the Administrative Agent or the Collateral Agent in connection with this Agreement, any other Loan Paper or the Collateral, including without limitation costs, fees, expenses and other charges incurred in connection with performing or obtaining any audit or appraisal in respect of the Collateral
or for any title searches, filing fees, recording costs and lien searches.

 

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(ii) WHETHER OR NOT ANY LOAN IS EVER FUNDED, INDEMNIFY ADMINISTRATIVE AGENT, COLLATERAL AGENT AND THE BANKS AND HOLD ADMINISTRATIVE AGENT, COLLATERAL AGENT AND THE BANKS HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES,
COSTS AND EXPENSES OF ANY KIND (INCLUDING, WITHOUT LIMITATION, EXPENSES OF LITIGATION, COURT COSTS AND THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR ADMINISTRATIVE AGENT, COLLATERAL AGENT AND THE BANKS (OR OF ANY OTHER PERSON ENGAGED BY ADMINISTRATIVE AGENT, COLLATERAL AGENT OR ANY BANK) IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT ADMINISTRATIVE AGENT, COLLATERAL AGENT OR ANY BANK SHALL BE DESIGNATED A PARTY THERETO) WHICH MAY BE INCURRED BY ADMINISTRATIVE
AGENT, COLLATERAL AGENT OR ANY BANK, RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN PAPERS OR ANY ACTUAL OR PROPOSED USE OF PROCEEDS OF THE LOANS HEREUNDER; PROVIDED, THAT, ADMINISTRATIVE AGENT, COLLATERAL AGENT AND THE BANKS SHALL NOT HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR THEIR OWN OR THEIR REPRESENTATIVE’S OR ADMINISTRATIVE AGENT’S OR COLLATERAL AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.  IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT THE INDEMNITY PROVIDED FOR HEREIN IS INTENDED TO AND SHALL INDEMNIFY AND PROTECT ADMINISTRATIVE AGENT, COLLATERAL AGENT AND THE BANKS FROM THE CONSEQUENCES OF THEIR OWN NEGLIGENCE (AS OPPOSED TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE OR CONCURRING CAUSE OF ANY LIABILITY, LOSS, DAMAGE, COST OR EXPENSE OF ANY KIND.

 

(iii) Any amount to be paid under this Subsection to Administrative Agent, Collateral Agent or any Bank shall be a demand obligation owing by Borrower and if not paid within fifteen (15) days of demand by Administrative Agent, Collateral
Agent or such Bank thereof shall bear interest from the date of expenditure by Administrative Agent, Collateral Agent or such Bank until paid at the Highest Lawful Rate.

 

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(iv) The obligations of Borrower under this Subsection shall survive payment of the Obligations and assignment of any right hereunder.

 

(k) Leverage Ratio.  Maintain a Leverage Ratio equal to or less than 2.50 to 1.00.  The term “Leverage
Ratio” means, as of the date of any determination thereof, the ratio of (i) Funded Debt of the Companies on a consolidated basis as of such measurement date to (ii) EBITDAR of the Companies on a consolidated basis for the twelve (12) month period then ending, all as determined in conformity with GAAP.  “Funded Debt” means as to any Person at any time (without duplication) (a) all obligations of such Person for
borrowed money, including without limitation any notes payable to the seller in connection with any acquisition and the Loans; (b) all obligations of such Person evidenced by bonds, notes, debentures, or other similar instruments; (c) the aggregate minimum amount of all lease or rental payments to be paid under operating leases or rental agreements that are not cancelable; (d) all capitalized lease obligations of such Person; (e) all obligations of others, which such Person has Guaranteed or given surety for
or for which such Person has otherwise personally secured or indemnified such others; (f) all obligations secured by a Lien existing on property owned by such Person, whether or not the obligations secured thereby have been assumed by such Person or are non-recourse to the credit of such Person; (g) all reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances, surety or other bonds and similar instruments (including the Reimbursement
Obligations).

 

(l) Borrowing Base Reports.  Deliver to each Bank, as soon as possible, and in any event on or before the thirtieth (30th)
day after and as of the end of each calendar month, a Borrowing Base Report dated as of the end of such calendar month.

 

(m) ERISA.  Immediately upon becoming aware of the occurrence of any event or condition which has the result that any of the representations or warranties contained
in Section 4.6, if made on and again as of any date on or after the date of this Agreement, cease to be true, Borrower shall give the Banks a written notice specifying (i) the nature of such events or condition, (ii) what action Borrower and the other Companies are taking or propose to take with respect thereto, and (iii) when known, any action taken by the.  Internal Revenue Service or the Department of Labor with respect thereto.  With
respect to any Plan maintained or adopted by any Company, such Company will at all times make prompt payments of contributions required to be made to meet the minimum funding standards of ERISA.

 

(n) Laws.  Each Company will comply with the provisions of any and all Laws, and with the provisions of all agreements, documents and instruments material to
its business and operations, and maintain its ability to perform its obligations under all such agreements, documents and instruments.

 

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(o) Workers’ Compensation.  Any Company that is or becomes a nonsubscriber to the Texas Workers’ Compensation Act shall take all reasonable precautions
that may be necessary or appropriate from time to time to minimize the risk of loss to Borrower and the other Companies associated with claims that would otherwise be covered by the Texas Workers’ Compensation Act if such, Company had continued to Subscribe to such Act.  Such precautions shall include, without limitation, (i) the implementation of safety programs, employee training programs, drug screening of employee and pre-employment physical (unless prohibits by law), (ii) the purchasing of
insurance with substantial and reasonably adequate coverage available for such risks and (iii) the maintenance of a welfare benefit plan, identical or similar to the Injury Benefit Plan, that is governed by ERISA in all respects.

 

(p) Projections.  As soon as available and in any event before December 15 of each fiscal year of Parent, Borrower will deliver (i) a forecasted consolidated
balance sheet and statements of income and cash flow of Parent and the Subsidiaries on a quarterly basis, including the assumptions utilized in the preparation of such projections (in narrative form) for the two (2) forthcoming fiscal years and a proforma projection of Parent’s compliance with the financial covenants in this Agreement for the same period.

 

(q) Further Assurances and Collateral Matters.  The Parent will, and will cause each other Company to execute and deliver such further documentation and take
such further action as may be requested by the Administrative Agent or the Collateral Agent to carry out the provisions and purposes of the Loan Papers and to create, preserve, protect and perfect the Liens of Administrative Agent and Collateral Agent, respectively, for the benefit of itself and the Banks in the Collateral.  In the event the Outstanding Revolving Credit exceeds an amount equal to the lesser of the aggregate Commitments then in effect or the Borrowing Base then most recently determined
or redetermined (in this Section such lesser amount is called the “Maximum Credit Amount”), if applicable, pursuant to Section 2.7(a)(ii), Parent shall and shall cause each of the Subsidiaries to cause the perfection of the Lien of the Collateral Agent, for the benefit of the Banks, in Vehicles having an aggregate Orderly Liquidation Value such the Outstanding Revolving Credit no longer exceeds the Maximum Credit Amount.  In such event or in the event Borrower otherwise elects to include
any of the Vehicles in the Borrowing Base, Parent will cause such Lien in such Vehicles to be so perfected pursuant to documentation acceptable to the Required Banks, and will execute and deliver, and will cause the Subsidiaries to execute and deliver, to Collateral Agent and the Banks such documents, in form and substance satisfactory to Collateral Agent and its counsel and the Required Banks, as may be necessary or appropriate to evidence and provide for the same, including without limitation the original certificates
of title for such Vehicles, applications for notation of Lien, and any and all other documentation and action necessary to cause the Lien of the Collateral Agent in each such Vehicle to be recorded and noted (in accordance with the applicable recording and notation requirements and other Governmental Requirements of each appropriate state and other jurisdiction) on the certificate of title of each such Vehicle.  Parent and the Subsidiaries shall pay all fees, costs, expenses and taxes relating to the
foregoing.  (iii) Upon written request from Borrower, Collateral Agent shall, from time to time, take all steps necessary to release the Lien in favor of Collateral Agent and the Banks against any one or more Vehicles; provided, Collateral Agent shall not be obligated to release any such Lien unless (A) the Vehicle being released from the Lien is being sold or otherwise disposed in the ordinary course of business and for fair market value;
(B) after giving effect to the Lien release, the outstanding amount of the Obligations will not be greater than the Maximum Credit Amount; and (C) no Default or Potential Default exists or would result therefrom.

 

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(r) Accounts Receivable Report.  As soon as available, and in any event on or before the thirtieth (30th)
day after the end of each calendar month a summary accounts receivable aging report for Borrower showing the aggregate amount of all accounts receivable of Borrower that are 1-30, 31-60, 61-90, and over 90 days past the invoice date.

 

(s) Inspections; Collateral Audits; Appraisals.  Upon reasonable notice (which may be telephonic notice), at all reasonable times and as often as the Administrative
Agent or the Collateral Agent may request, permit any authorized representative designated by the Administrative Agent or the Collateral Agent, including without limitation any Dallas area-based consultant engaged by the Administrative Agent or the Collateral Agent, together with any authorized representatives of any Bank desiring to accompany the Administrative Agent or the Collateral Agent, to visit and inspect the financial records of the Companies and to make extracts from such financial records and permit
any Dallas area-based authorized representative designated by the Administrative Agent or the Collateral Agent (together with any accompanying representatives of any Bank) to discuss the affairs, finances and condition of the Companies with the appropriate financial officer and such other officers as the Parent or other Company shall deem appropriate; and the Companies will cooperate with the Administrative Agent and the Collateral Agent and exert its best efforts to arrange for the Administrative Agent or the
Collateral Agent, their respective Dallas area-based authorized representatives (including consultants) and any accompanying authorized representative of any Bank to meet with the Companies’ independent public accountants and each Company agrees to permit such accountants to discuss the affairs, finances and condition of the Companies with the Administrative Agent, the Collateral Agent and such representatives.  The Administrative Agent agrees that it shall schedule any meeting with any such independent
public accountant through the Parent, and an officer of the Parent shall have the right to be present at any such meeting.  The Administrative Agent, the Collateral Agent and any such consultant of the Administrative Agent or the Collateral Agent shall each have the right to examine (and any authorized representatives of any Bank shall have the right to accompany the Administrative Agent or the Collateral Agent during any such examination), as often as the Administrative Agent or the Collateral Agent
may request, the existence and condition of the Collateral, books and records of the Companies and to review their compliance with the terms and conditions of this Agreement and the other Loan Papers, subject to governmental confidentiality requirements.  After the occurrence of a Default or Potential Default, the Administrative Agent and the Collateral Agent shall each also have the right to verify with any and all customers of the Companies the existence and condition of the accounts receivable of
the Companies, as often as the Administrative Agent or the Collateral Agent may require, without prior notice to or consent of any of the Companies.  Without in any way limiting the foregoing, (a) the Administrative Agent and the Collateral Agent shall each have the joint right to conduct joint accounts receivable audits at the Companies’ expense as often as the Administrative Agent, the Collateral Agent or any Bank may request (but initially scheduled for once per year prior to the occurrence
of a Default or Potential Default), and (b) the Administrative Agent or the Collateral Agent shall have the right to order and obtain Vehicle Appraisals, at the Companies’ expense, not to exceed four (4) Vehicle Appraisals during the two (2) year period following the Closing Date, prior to the occurrence of a Default or Potential Default, and as often as the Administrative Agent or Collateral Agent may request at any time after such period or after the occurrence of a Default or Potential Default.  Without
in any way limiting the foregoing, each Company agrees to cooperate in all respects with the Administrative Agent, the Collateral Agent and their respective representatives and consultants in connection with any and all inspections, examinations and other actions taken by the Administrative Agent, the Collateral Agent or any of their respective representatives or consultants pursuant to this Section.  The Companies hereby jointly and severally agree to promptly pay, upon demand by the Administrative
Agent, the Collateral Agent or the applicable Bank, any and all reasonable fees and expenses incurred by the Administrative Agent, the Collateral Agent or any Bank in connection with any inspection, examination or review permitted by the terms of this Section.

 

 

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(t) Notices of Material Events.  Furnish to the Administrative Agent and each Bank prompt written notice of the following:

 

(i) the occurrence of any Default or Potential Default;

 

(ii) the filing or commencement of any action, suit or proceeding by or before any Tribunal or arbitrator against or affecting any Company or any Affiliate thereof that, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect; and

 

(iii) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of a financial officer or other executive officer of the Parent setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

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Section 5.2 Negative Covenants

 

.  Until the Obligations have been paid and performed in full and the obligation of the Banks to make Loans and to issue Letters of Credit have been irrevocably terminated, none of the Companies shall, directly or indirectly, without the prior written consent of the Banks:

 

(a) Minimum Consolidated Tangible Net Worth.  Permit, as of the last day of any fiscal quarter, Parent's Consolidated Tangible Net Worth to be less than $85,000,000.

 

(b) Transfer of Operating Rights.  Create, incur, grant, assume or suffer to exist any Lien on, nor sell, transfer or otherwise dispose of, any present or future
Operating Rights of any Company, including but not limited to franchises, certificates, authorizations, permits and licenses.

 

(c) Loans, Investments, and Mergers.  Make any loan to or investment in, nor purchase stock or other securities of, nor merge or consolidate with, nor purchase
all or substantially all of the assets of, any Person other than Borrower or another Company, except (i) mergers and consolidations of two or more Companies or acquisitions of a Company by another Company, provided no Default or Potential Default exists; (ii) secured loans to owner-operators who have independent contractor agreements with Borrower or any other Company not to exceed $2,000,000 in the aggregate outstanding at any time; (iii) the W&B Note; (iv) indebtedness of purchasers to the Companies
for the purchase price of Vehicles sold by the Companies to such purchasers, provided that such Indebtedness together with loans made pursuant to clause (v) of this Subsection (c) shall not exceed $2,000,000 in the aggregate outstanding at any time; (v) loans, other than the foregoing, provided that such loans together with indebtedness pursuant to clause (iv) of this Subsection (c) shall not exceed $2,000,000 in the aggregate outstanding at any time; (vi) Permitted Investments, (vii) other investments
from time to time in an amount outstanding at any time less than or equal to $100,000; and (viii) expenditures for acquisitions involving a Person other than a Company in an amount not to exceed $10,000,000 during any fiscal year of Borrower.

 

(d) Contingent Liabilities.  Assume, Guarantee, purchase, agree to purchase or suffer to exist any other liability, direct or indirect, for the payment of any
Indebtedness, except to the Banks, of any Person, other than Borrower or another Company, in an aggregate amount in excess of $10,000,000 at any time outstanding.

 

(e) Dividends and Distributions.  Declare, order, pay, make or set apart any sum for (a) any dividend or other distribution, direct or indirect, on account of
any shares of any class of stock of Parent or any other Company now or hereafter outstanding; (b) any redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Parent or any other Company now or hereafter outstanding; or (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Parent or any other
Company now or hereafter outstanding except:

 

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(i) So long as either the Fixed Charge Coverage Ratio as of the end of the most recent fiscal quarter of Parent is equal to or greater than 1.5 to 1.0, or the Net Income of the Companies (after deduction for taxes) for the most recent
fiscal quarter of Parent is a positive number, Parent may make the payments described in clauses (A) and (B) below if no Default or Potential Default exists at the time any such payment is made and, if after giving effect to any such payment, Parent and each other Company will be in compliance with all financial covenants contained in this Agreement:

 

(A)           Parent may declare and pay cash dividends in an aggregate amount not to exceed $2,500,000 during each fiscal year of Parent; and

 

(B)           Parent may redeem its capital stock; provided that the amount paid to shareholders for such redemptions shall not exceed $2,000,000 during any fiscal year of Parent and the amount of shares redeemed shall not exceed 500,000 shares during any fiscal year of Parent.

 

(ii) The Companies may make, declare or pay other dividends and make other distributions with respect to their capital stock to the extent necessary to permit the Borrower to pay the Obligations and to pay expenses and taxes incurred
in the ordinary course of business.

 

(iii) Borrower and any other Company may declare and pay any dividends on their common stock payable solely in shares of common stock (provided that fractional shares may be paid in cash).

 

(f) Indebtedness.  Assume, create or suffer to exist any Indebtedness except (i) Indebtedness owed to the Banks pursuant to the Existing Credit Documents
and this Agreement, (ii) additional Indebtedness not for borrowed money incurred in the ordinary course of business constituting trade payables not more than 90 days past due and accrued liabilities, including, without limitation, accrued Taxes and payroll obligations, (iii) Indebtedness under Hedge Agreements, and (iv) additional Indebtedness for borrowed money incurred in the ordinary course of business not to exceed $5,000,000 in the aggregate outstanding at any time with respect to all Companies.

 

(g) Sales of Assets.  Be a party to any sale, transfer, or other disposition of all or any part of Borrower’s or any other Company’s property, assets
or business, except (i) sales of Vehicles and other equipment in the ordinary course of business and for fair market value, or pursuant to vehicle repurchase agreements with manufacturers not to exceed $2,000,000 in the aggregate during any period of twelve consecutive calendar months, so long as (x) after giving effect to such sale, the outstanding amount of the Obligations will not be greater than the Borrowing Base, and (y) no Default or Potential Default exists or would result therefrom, and (ii) property
owned by Borrower located at 200 S. Inman Avenue, Avenel, New Jersey 07001, and (iii) the property owned by Lisa Motor Lines, Inc. located at 1801 Mony Street, Fort Worth, Texas 76102.  In no event will any of the Companies sell, transfer or otherwise dispose of any of Parent’s or any other Company’s interest in the Subsidiaries (including, without limitation, any of the stock of the Subsidiaries).

 

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(h) Capital Expenditures.  Permit the aggregate amount of all Capital Expenditures made by the Companies, during any twelve (12) month period (net of the proceeds
of the sale or exchange of any fixed assets), to exceed $25,000,000.

 

(i) Negative Pledge.  Borrower and each of the other Companies will not create, assume or suffer to exist any Lien on any asset or property (or any interest therein)
now owned or hereafter acquired by Borrower or any other Company, except: (i) any Lien existing pursuant to any order of attachment, distraint or similar legal process arising in connection with court proceedings so long as the execution or other enforcement thereof is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings, and (ii) Permitted Liens.

 

(j) Transactions with Affiliates.  The Companies will not enter into any transaction with any Affiliate except in the ordinary course and pursuant to the reasonable
requirements of their businesses and upon fair and reasonable terms no less favorable to the Companies than would result in a comparable arm’s length transaction with a Person who is not an Affiliate; provided, however, that the Companies may enter into lease agreements, as lessee, with Affiliates for tractors or trailers with lease payments less than or equal to the aggregate amount of $200,000 per month.

 

(k) ERISA.  No Company or other Group Member will (i) establish, maintain or participate in any way in a Plan that is subject to the provisions of Title IV of
ERISA, or (ii) provide benefits under any health plan to former employees in excess of those provided on the date hereof, without the prior written consent of the Banks.

 

(l) Restrictive Agreements.  Enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (i)
the ability of any Company to create, incur or permit to exist any Lien upon any of its property or assets, or (ii) the ability of any Company to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to any other Company or to guarantee Indebtedness of any other Company; provided that (A) the foregoing shall not apply to restrictions and conditions imposed by law or by any of the
Loan Papers, (B) clause (i) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, and (C) clause (i) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof.

 

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(m) Nature of Business.  Engage to any material extent in any business other than businesses of the type conducted by the Companies on the Closing Date and businesses
reasonably related thereto.

 

ARTICLE VI

 

DEFAULT

 

As used herein, the term “Default” means the occurrence of any one or more of the following events:

 

Section 6.1 Payment of Obligations

 

.  The failure of Borrower to pay to any Agent or any Bank, as required, when due the Principal Obligation, or interest thereon, or any part thereof, or any Reimbursement Obligation or other amount owing under this Agreement or any of the Loan Papers (including without limitation Subsections
2.4, 2.7(a), 2.11, 2.14(d) and 5.1(j)), and such failure continues for a period of five (5) Business Days after the due date.

 

Section 6.2 Covenants.

 

(a) A breach of any of the covenants in Subsections 5.1(a), 5.1(b), 5.1(e), 5.1(f), 5.1(i), 5.1(k), 5.1(l), 5.1(m), 5.1(n), 5.1(q), 5.1(s), 5.1(t) or Section
5.2.

 

(b) The failure of Borrower or any other Company to punctually and properly observe, keep and perform each of its covenants and agreements in Subsections 5.1(c), 5.1(d), 5.1(g), 5.1(h),
or 5.1(r) and such failure continues for a period of ten (10) days after the discovery of the breach by a Company or after notice from Administrative Agent or any Bank.

 

(c) The failure of Borrower or any other Company punctually and properly to observe, keep and perform each of its covenants and agreements (other than the agreements and covenants specified in Section
6.1 and Subsections 6.2(a) and 6.2(b)) contained herein or in any of the other Loan Papers, and such failure continues for a period of thirty (30) days after the discovery of the breach by a Company or after Administrative Agent notifies Borrower of the breach.

 

Section 6.3 Misrepresentation

 

.  The discovery by Administrative Agent or any Bank that any statement, representation or warranty in this Agreement, any other Loan Paper or in any.  writing ever delivered to Administrative Agent or any Bank pursuant to the provisions hereof, is false, misleading, or erroneous in any material respect, and the reason
giving rise to such situation is not corrected to the satisfaction of the Banks within thirty (30) days after notice thereof has been given by Administrative Agent to Borrower.

 

Section 6.4 Voluntary Debtor Relief

 

.  Borrower or any other Company shall (i) have entered voluntarily against it an order for relief under any Debtor Relief Laws, (ii) execute an assignment for the benefit of creditors, or (iii) not pay, or admit in writing its inability to pay, its debts generally as they become due, or (iv) apply for or consent to the appointment
of a receiver, trustee, custodian or liquidator of it, or of all or a substantial part of its assets, or (v) file a voluntary petition in bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors or seeking to take advantage of, or any other relief under, any Debtor Relief Laws, or (vi) file an answer admitting the material allegations of, or consenting to, or default in, a petition filed against it in any Debtor Relief Laws proceeding, or (vii) institute or voluntarily be or
become a party to any other judicial proceedings intended to effect a discharge of its debts, in whole or in part, or a postponement of the maturity or the collection thereof, or a suspension of any of the remedial rights of Bank granted in this Agreement or under any Law.

 

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Section 6.5 Involuntary Debtor Relief

 

.  An order, judgment or decree shall be entered by any court of competent jurisdiction approving a petition seeking reorganization of Borrower.  or any other Company, or appointing a receiver, trustee, custodian or liquidator of Borrower or any other Company, or of all or any substantial part of the assets of Borrower
or any other Company, and such order, judgment or decree is not appealed from within the time allowed by Law, with a stay of proceedings or supersedes, or, if appealed from in the manner aforesaid, when such order, judgment or decree becomes final, and in any event, if and when such reorganization, receivership, trusteeship, custodianship or liquidation proceedings shall have been in force for sixty (60) days.

 

Section 6.6 Judgments

 

.  Any of the Companies fails to pay any money judgment or judgments against it in an amount greater than $250,000 in the aggregate at least ten (10) days prior to the date on which any of the assets of any of the Companies may be lawfully sold to satisfy such judgment.

 

Section 6.7 Attachment

 

.  The failure to have discharged within a period of thirty (30) days after the commencement thereof any attachment, sequestration or similar proceedings against any of the assets of Borrower or any other Company having an aggregate fair market value of $100,000 or more.

 

Section 6.8 Default of Other Debt

 

.  The default under any promissory note or other evidence of Indebtedness in an amount equal to or greater than $500,000 executed by Borrower or any other Company, or the default by any obligee under any Indebtedness or any other obligation in an amount equal to or greater than $500,000 under any credit or other agreement under
which Borrower or any other Company is an obligor.

 

Section 6.9 Other Agreements

 

.  The occurrence of any event which would constitute, or with notice or lapse of time or both could constitute, a default under any chattel mortgage, assignment, security agreement, deed of trust, mortgage or other agreement delivered to Administrative Agent, Collateral Agent or any Bank or under any Loan Paper.

 

Section 6.10 Change in Control

 

.  The occurrence of any Change in Control.

 

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ARTICLE VII

 

REMEDIES

 

If a Default occurs and is continuing, Administrative Agent may, at its election, and, at the request of the Required Banks, Administrative Agent shall do any one or more of the following:

 

Section 7.1 Acceleration

 

.  Declare the entire unpaid balance of the Obligations and all other Indebtedness of any one or more of Borrower or the other Companies to the Banks and the Agents, or any of them, or any part thereof, immediately due and payable, whereupon it shall be due and payable.

 

Section 7.2 Loans and Letters of Credit

 

.  Refuse to make additional Loans or issue additional Letters of Credit, and thereafter the Banks shall have no obligation whatsoever to make additional Loans or issue additional Letters of Credit.  If any Bank or the Issuing Bank refuses to make additional Loans or issue additional Letters of Credit, all duties and
obligations of Borrower and the other Companies, and all rights and powers of Administrative Agent and the Banks, under this Agreement shall continue in full force and effect until the full and final payment and performance of the Obligations.

 

Section 7.3 Judgment

 

.  Reduce any claim to judgment.

 

Section 7.4 Rights

 

.  Exercise any and all rights and remedies which Administrative Agent, the Issuing Bank or any Bank may have under any Loan Paper, at Law, or in equity, or otherwise.

 

Section 7.5 Default with Respect to Loans

 

.  If a Default under the Agreement shall occur and the same shall have been declared by Administrative Agent, then Borrower shall immediately prepay the outstanding Loans and all interest accrued thereon if and to the extent the same is then due and payable.

 

Section 7.6 Reserved.

 

Section 7.7 Default with Respect to Letters of Credit

 

.  If a Default under the Agreement shall occur and the same shall have been declared by Administrative Agent, then, upon the request of Administrative Agent, Borrower shall be required to deposit immediately with Administrative Agent, in immediately available funds, an amount equal to (i) the aggregate amount of all then outstanding
Letters of Credit; plus (ii) the aggregate amount of all other sums due and payable under any of the Loan Papers regarding the Letters of Credit (the “Deposit”), Borrower’s obligation to pay the Deposit to be absolute and unconditional, the Deposit to be deposited in a special interest bearing account with Administrative Agent to ensure reimbursement of any drawings under such Letters of Credit and payment of all other amounts
due and payable under any of the Loan Papers regarding the Letters of Credit.

 

Section 7.8 Automatic Acceleration Due to Certain Defaults

 

.  Notwithstanding anything to the contrary contained herein, if a Default referred to in Section 6.4 or Section 6.5 occurs and is continuing, then the entire unpaid balance
of the Obligations and all other Indebtedness of any one or more of Borrower or the other Companies to the Banks and the Agents, or any of them, shall immediately, and concurrently with the occurrence of such Default, become due and payable in full without any further action or notification of any kind required of any of the Agents or any of the Banks, including, without limitation, presentment, demand, protest or notice.  of protest, dishonor, intention to accelerate or acceleration, all of which are
expressly hereby waived by Borrower and the other Companies. 

 

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ARTICLE VIII

 

AGENTS

 

Section 8.1 Administrative Agent Appointment and Authorization; Administration; Duties

 

(a) The general administration of the Loan Papers and any other documents contemplated by this Agreement shall be by Comerica or its designees, and each Bank hereby appoints Comerica as its agent hereunder and under the other Loan Papers
with such powers as are specifically delegated to the Administrative Agent by the terms of the Loan Papers, together with such other powers as are reasonably incidental thereto.  Administrative Agent shall not be required to take any action with respect to any Default except as directed by the Required Banks.  In the event the Required Banks so direct Administrative Agent to take any action hereunder, Administrative Agent agrees to commence taking such action within a reasonable period of
time and to diligently pursue such action or to submit its resignation pursuant to Section 8.9.  Except as otherwise provided herein or otherwise agreed to by the Banks and Administrative Agent, each of the Banks hereby irrevocably authorizes Administrative Agent, at its discretion, to take or refrain from taking such actions as Administrative Agent on its behalf and to exercise or refrain from exercising such powers under the Loan Papers
and any other documents contemplated by this Agreement as are delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto.  Notwithstanding the foregoing or any term or provision of this Agreement, Administrative Agent shall have no duties or responsibilities except as expressly set forth in this Agreement or the other Loan Papers.

 

(b) Each Bank irrevocably appoints and authorizes Administrative Agent to hold the Collateral, other than the Vehicle Collateral (if any), and enforce the Liens granted to the Banks as security for the Obligations and to take such action
as Administrative Agent on its behalf and to exercise such powers under this Agreement and the other Loan Papers as are delegated to Administrative Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto, provided, however, that, as between and among the Banks, Administrative Agent will not prosecute, settle or compromise any claim against Borrower or any other Company or release or institute enforcement or foreclosure proceedings against any Collateral or guaranty
securing the Obligations, except with the consent of the Required Banks.  Without limiting the generality of the foregoing, each Bank authorizes Administrative Agent to (i) enter into any Loan Papers securing payment of the Obligations in the capacity of agent for and on behalf of the Banks and (ii) to administer all of the Collateral (other than the Vehicle Collateral (if any)) and to enforce the interests of the Banks therein in accordance with the Loan Papers.  Any action for enforcement
of the interests of the Banks under the Loan Papers shall be taken either as Administrative Agent for the Banks or directly in the respective names of the Banks, as counsel to Administrative Agent may at the time advise.  Subject to Section 9.21, the Banks consent and agree that any action taken by Administrative Agent or with the consent or at the direction of the Required Banks as provided herein shall be taken for and on behalf of all
Banks, including those who may not have so consented or directed, in order to protect or enforce the Liens securing the Obligations; provided that any Bank may direct Administrative Agent not to act for or on its behalf in any such proceeding if such Bank executes in favor of Administrative Agent a release of its rights to share in the benefits of any such action and a release of its legal and beneficial interest in the Lien created by the Loan Papers on the Collateral (other than the Vehicle Collateral) which
is the subject of such action.  Each Bank, Borrower and the other Companies agree that Administrative Agent is not a fiduciary for the Banks or for Borrower or any other Company but simply is acting in the capacity described herein to alleviate administrative burdens for all parties hereto and that Administrative Agent has no duties or responsibilities to the Banks, Borrower or any other Company except those expressly set forth herein.

 

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Section 8.2 Collateral Agent Appointment and Authorization; Administration; Duties.

 

(a) IF VEHICLES ARE PLEDGED AS COLLATERAL FROM TIME TO TIME, the general administration of the Vehicle Collateral, the notation of Liens on applicable certificates of title and
any other documents contemplated by that pledge shall be by Comerica, and each Bank hereby appoints Comerica as its agent with respect to the Vehicle Collateral (if any) hereunder and under the other Loan Papers with such powers as are specifically delegated to the Collateral Agent by the terms of the Loan Papers, together with such other powers as are reasonably incidental thereto.  Collateral Agent shall not be required to take any action with respect to any Default except as directed by the Required
Banks.  In the event the Required Banks so direct Collateral Agent to take any action hereunder, Collateral Agent agrees to commence taking such action within a reasonable period of time and to diligently pursue such action or to submit its resignation pursuant to Section 8.9.  Except as otherwise provided herein or otherwise agreed to by the Banks and Collateral Agent, each of the Banks hereby irrevocably authorizes Collateral Agent, at its discretion, to take or refrain from taking such
actions with respect to the Vehicle Collateral (if any) as Collateral Agent on its behalf and to exercise or refrain from exercising such powers under the Loan Papers and any other documents contemplated by this Agreement as are delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto with respect to the Vehicle Collateral (if any).  Notwithstanding the foregoing or any term or provision of this Agreement, Collateral Agent shall have no duties
or responsibilities except as expressly set forth in this Agreement or the other Loan Papers.

 

50

 

 

(b) Each Bank irrevocably appoints and authorizes Collateral Agent to hold the Vehicle Collateral (if any) and enforce the Liens (if any) granted to the Banks as security for the Obligations and to take such action as Collateral Agent
on its behalf and to exercise such powers under this Agreement and the other Loan Papers as are delegated to Collateral Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto, provided, however, that, as between and among the Banks, Collateral Agent will not prosecute, settle or compromise any claim against Borrower or any other Company or release or institute enforcement or foreclosure proceedings against any Vehicle Collateral, except with the consent of the
Required Banks.  Without limiting the generality of the foregoing, each Bank authorizes Collateral Agent to (i) enter into any Loan Papers concerning the Vehicle Collateral (if any) securing payment of the Obligations in the capacity of agent for and on behalf of the Banks and (ii) to administer all of the Vehicle Collateral (if any) and to enforce the interests of the Banks therein in accordance with the Loan Papers.  Any action for enforcement of the interests of the Banks under the Loan
Papers shall be taken either as Collateral Agent for the Banks or directly in the respective names of the Banks, as counsel to Collateral Agent may at the time advise.  Subject to Section 9.21, the Banks consent and agree that any action taken by Collateral Agent or with the consent or at the direction of the Required Banks as provided herein shall be taken for and on behalf of all Banks, including those who may not have so consented or directed, in order to protect or enforce the Liens securing the
Obligations; provided that any Bank may direct Collateral Agent not to act for or on its behalf in any such proceeding if such Bank executes in favor of Collateral Agent a release of its rights to share in the benefits of any such action and a release of its legal and beneficial interest in the Lien (if any) created by the Loan Papers on the Vehicle Collateral (if any) which is the subject of such action.  Each Bank, Borrower and the other Companies agree that Collateral Agent is not a fiduciary for
the Banks or for Borrower or any other Company but simply is acting in the capacity described herein to alleviate administrative burdens for all parties hereto and that Collateral Agent has no duties or responsibilities to the Banks, Borrower or any other Company except those expressly set forth herein.

 

Section 8.3 Advances and Payments

 

.  On the date of each Advance, Administrative Agent shall be authorized, but not obligated, to advance, for the account of each of the Banks making such Advance, the amount of the Advance to be made by it in accordance with its Commitment hereunder if and to the extent that such Bank does not make such amount timely available
to Administrative Agent for advance to Borrower pursuant to this Agreement.  Each of the Banks agrees to immediately reimburse Administrative Agent in immediately available funds for any amount so advanced on its behalf by Administrative Agent.  If any such reimbursement is not made in immediately available funds on the same day on which Administrative Agent shall have made any such amount available on behalf of any Bank, such Bank shall pay interest to Administrative Agent at a rate per annum
equal to Administrative Agent’s cost of obtaining overnight funds in the Dallas Federal Funds market.  All amounts to be paid to any of the Banks by Administrative Agent shall be credited to the Banks, forthwith after collection by Administrative Agent, in immediately available funds either by wire transfer or deposit in such Bank’s account with Administrative Agent, or as such Bank and the Administrative Agent shall from time to time agree.

 

51

 

 

Section 8.4 Sharing of Setoffs

 

.  Each of the Banks agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against Borrower or any other Company, including, but not limited to, a secured claim under the Bankruptcy Code or other security interest arising with respect to or in lieu of such secured claim and received
by such Bank under any applicable bankruptcy, insolvency or other similar Law, or otherwise obtain payment in respect of any obligation owing to such Bank as a result of which the unpaid portion of its Loans is proportionately less than the unpaid portion of the Loans of other Banks (based.  upon the respective Commitment of the Banks), (i) it shall promptly purchase at par (and shall be deemed to have thereupon purchased) from such other Banks a participation in the Loans of such other Banks, so that
the aggregate unpaid principal amount of each of the Banks’ Loans shall be in the same proportion to the aggregate unpaid principal amount of all Loans then outstanding as the principal of its Loans prior to the obtaining of such payment was to the principal amount of all Loans outstanding prior to the obtaining of such payment, (ii) it shall pay interest calculated at the Federal Funds Rate to such other Banks on the amount purchased from the date it received such payment until the date of the purchase
of such participation; and (iii) such other adjustments shall be made from time to time as shall be equitable to ensure that the Banks share such payment pro rata.  Notwithstanding anything to the contrary contained herein, if a Bank shall obtain payment under any circumstances contemplated herein while any Obligations shall remain outstanding, such Bank shall promptly turn over such payment to Administrative Agent for distribution to the Banks on account of the Obligations as provided herein.  Borrower
and the Companies expressly consent to the foregoing arrangements and agree that any Bank or Banks holding (or deemed to be holding) a participation in any of the Loans or other Obligations may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all monies owing by Borrower or any other Company to such Bank.

 

Section 8.5 Liability of Agents.

 

(a) Each Agent, when acting on behalf of the Banks, may execute any of its duties under this Agreement by or through its officers, directors, employees, attorneys or agents.  All such officers, directors, employees, attorneys
and agents, when exercising the rights or performing the duties of such Agent, shall be deemed to be included in the term “Agent.”

 

Neither Administrative Agent nor Collateral Agent nor their respective officers, directors, employees, attorneys or agents shall be liable to the Banks or any of them for any action taken or omitted to be taken in good faith, or be responsible to the Banks or to any of them for the consequences of any oversight or error of judgment, or
for any loss, unless the same shall happen through its gross negligence or willful misconduct.  Each Agent and its officers, directors, employees, attorneys and agents shall in no event be liable to any Bank for any action taken or omitted to be taken by it pursuant to instructions received by it from such Bank or from the Required Banks or in reliance upon the advice of counsel selected by it.  Without limiting the foregoing, neither Administrative Agent nor Collateral Agent nor any of their
respective officers, directors, employees, attorneys or agents shall be responsible to any of the Banks for the due execution, validity, genuineness, effectiveness, sufficiency or enforceability of, or for any statement, warranty or representation in, or for the perfection of any Lien contemplated by, this Agreement or any other Loan Paper, or shall be required to ascertain or to make any inquiry concerning the performance or observance by Borrower or any Company of any of the terms, conditions, covenants or
agreements of this Agreement or any other Loan Paper.

 

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(b) Neither Administrative Agent nor Collateral Agent nor any of their respective officers, directors, employees, attorneys or agents shall have any responsibility to Borrower or any other Company on account of the failure or delay in
performance or breach by any of the Banks, Borrower or any other Company of any of their respective obligations under this Agreement or any other Loan Paper.

 

(c) Each Agent, as an agent hereunder, shall be entitled to rely on any communication, instrument or document reasonably believed by it to be genuine or correct and to have been signed or sent by a person or persons believed by it to
the proper person or persons, and it shall be entitled to rely on advice of legal counsel, independent public accountants and other professional advisers and experts selected by it.

 

Section 8.6 Reimbursement and Indemnification

 

.  EACH OF THE BANKS AGREES TO REIMBURSE ADMINISTRATIVE AGENT AND COLLATERAL AGENT, IN ACCORDANCE WITH SUCH BANK’S PRO RATA SHARE, FOR (A) EXPENSES, (B) INTERNAL CHARGES APPROVED BY THE REQUIRED BANKS OR (C) FEES INCURRED FOR THE BENEFIT OF THE BANKS UNDER THE LOAN PAPERS, INCLUDING COUNSEL FEES AND COMPENSATION OF REPRESENTATIVES
AND EMPLOYEES PAID FOR SERVICES RENDERED ON BEHALF OF THE BANKS, AND ANY OTHER EXPENSE INCURRED IN CONNECTION WITH THE PREPARATION, EXECUTION, ADMINISTRATION, MONITORING OR ENFORCEMENT THEREOF, (II) TO INDEMNIFY AND HOLD HARMLESS ADMINISTRATIVE AGENT AND COLLATERAL AGENT AND ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS OR ADMINISTRATIVE AGENTS, ON DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS
OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY OF THEM IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN PAPER OR ANY ACTION TAKEN OR OMITTED BY IT OR ANY OF THEM UNDER THIS AGREEMENT OR ANY OTHER LOAN PAPER (EXCEPT SUCH AS SHALL RESULT FROM SUCH INDEMNITEE’S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) TO THE EXTENT NOT REIMBURSED BY BORROWER OR THE OTHER COMPANIES AND (III) THAT ADMINISTRATIVE AGENT AND COLLATERAL AGENT MAY OFFSET
DISTRIBUTIONS OF PRINCIPAL, INTEREST AND FEES DUE TO A BANK BY THE AMOUNT OF UNREIMBURSED AMOUNTS DUE AND OWING IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 8.6 IF SUCH BANK HAS NOT REIMBURSED OR INDEMNIFIED ADMINISTRATIVE AGENT AND/OR COLLATERAL AGENT UPON A WRITTEN REQUEST BY SAID AGENT FOR SUCH REIMBURSEMENT OR INDEMNIFICATION.

 

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Section 8.7 Rights of Administrative Agent and Collateral Agent

 

.  It is understood and agreed that Administrative Agent and Collateral Agent shall each have the same rights, powers and obligations hereunder (including the right to give such instructions) as the other Banks and may exercise such rights and powers, as well as its rights and powers under other agreements and instruments to
which it is or may be party, and engage in other transactions with Borrower or any other Company, as though it were not the Administrative Agent or the Collateral Agent under this Agreement.

 

Section 8.8 Independent Investigation and Credit Decision by Banks

 

.  Each Bank acknowledges and agrees that it has decided to enter into this Agreement and to make extensions of credit hereunder based on its own analysis of (i) the transactions contemplated hereby, (ii) the creditworthiness of Borrower and the other Companies, (iii) this Agreement and the other Loan Papers and (iv) the business,
legal and other issues relating thereto, and further acknowledges and agrees that Administrative Agent and Collateral Agent shall bear no responsibility therefor.  Each Bank acknowledges and agrees that it will, independently and without reliance upon Administrative Agent or Collateral Agent or any other Bank, continue to make its own credit decisions and other decisions regarding the taking or not taking of any action under this Agreement or the other Loan Papers.

 

Section 8.9 Successor Agents

 

.  Subject to the appointment and acceptance of a successor Agent as provided in this Section, any Agent may resign at any time by giving notice thereof to the Banks and Borrower.  Upon any such resignation, the Required Banks shall have the right to appoint a successor Agent from among the Banks.  If no successor
Agent shall have been so appointed by the Required Banks and shall have accepted such appointment within sixty (60) days after the retiring Agent’s giving of notice of resignation, the retiring Agent may, on behalf of the Banks but with the consent of the Required Banks, which consent shall not be unreasonably withheld, appoint a successor Agent, which shall be either a Bank, or a commercial bank reasonably acceptable to Borrower (provided that Borrower’s approval shall not be required if any Default
or Potential Default exists) organized under the Laws of the United States of America or of any State thereof.  If no such successor Agent is appointed due to a proposed successor Agent’s reasonable unacceptability to Borrower or due to the failure of the Required Banks to consent to such proposed successor Agent, then said Agent may appoint a successor Agent from among the Banks after consulting with Borrower and the Banks.  Upon the acceptance of any appointment as an Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement.  After any retiring Agent’s resignation hereunder as Agent, the applicable provisions of this Article VIII and Section
5.1(l) shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement.

 

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ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1 Performance by Agents and the Banks

 

.  Should any covenant, duty or agreement of Borrower or any other Company fail to be performed in accordance with the terms of the Loan Papers, Administrative Agent, Collateral Agent or any Bank may, at its option, perform, or attempt to perform, such covenant, duty or agreement on behalf of any of the Companies.  In
such event, Borrower shall, at the request of Administrative Agent, promptly pay any amount expended by Administrative Agent, Collateral Agent or any such Bank in such performance or attempted performance to Administrative Agent, at Administrative Agent’s principal office, together with interest thereon at the Highest Lawful Rate from the date of such expenditure by Administrative Agent, Collateral Agent or any such Bank until paid; provided that neither Administrative Agent nor Collateral Agent nor any
Bank assumes or shall ever, except by its express written consent, have any liability for the performance of any duties or obligations of Borrower or any of the Companies hereunder, or under or in connection with all or any part of the Collateral.  Also in such event, Administrative Agent shall use its reasonable efforts to promptly notify Borrower of Borrower’s or any other Company’s failure to so perform, but Administrative Agent’s failure to do so shall not result in any liability
to it hereunder or affect the rights of Administrative Agent, Collateral Agent or any Bank under this Section 9.1.

 

Section 9.2 Waivers

 

.  The acceptance by Administrative Agent or any Bank at any time and from time to time of part payment on the Obligations shall not be deemed to be a waiver of any Default then existing.  No waiver by Administrative Agent or any Bank of any Default shall be deemed to be a waiver of any other then .existing or subsequent
Default.  No delay or omission by Administrative Agent or any Bank in exercising any Right under the Loan Papers shall impair such Right, or be construed as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise thereof, or the exercise of any other Right, preclude other or further exercise thereof, or the exercise of any other Right under the Loan Papers or otherwise.

 

Section 9.3 Cumulative Rights

 

.  All rights hereunder shall be cumulative and in addition to all other rights granted to Administrative Agent or any Bank at Law, or in equity, or otherwise, and may be exercised from time to time, and as often as may be deemed expedient by Administrative Agent or any Bank, whether or not the Obligations are due and payable
and whether or not Administrative Agent or any Bank has taken other action in connection with the Loan Papers.

 

Section 9.4 Other Rights and Remedies

 

.  Administrative Agent and any Bank may, as between or among it and Borrower or any other Company, at any time and from time to time, at its discretion and with or without valuable consideration, allow substitution or withdrawal of Collateral without impairing or diminishing the obligations of Borrower and the other Companies
under the Loan Papers.  The exercise by Administrative Agent or any Bank of any right or remedy conferred on it by any collateral agreement, mortgage, deed of trust, chattel mortgage, assignment or other security instrument shall be wholly discretionary with it, and the exercise or failure to exercise any such right or remedy shall in no way impair or diminish the obligation of Borrower and the other Companies under the Loan Papers..  Neither Administrative Agent nor any Bank shall be liable
for failure to use diligence in the collection of the Obligations or in preserving the liability of any Person liable on the Obligations, and Borrower and each other Company hereby waive notice of nonpayment and diligence in bringing suits against any Person liable on the Obligations, or any part thereof.  Borrower and each other Company agree that Administrative Agent or any Bank, in its discretion as between or among it and Borrower or any other Company, may: (i) bring suit against Borrower and the
other Companies jointly and severally or against any one or more of them; (ii) compound or settle with any one or more of Borrower and the other Companies for such consideration as it may deem proper; and (iii) release one or more of Borrower and the other Companies from liability under all or any part of the Obligations, and that no such action shall impair the rights of Administrative Agent or any Bank to collect the Obligations (or any part thereof) from Borrower or any other Company not so sued, compounded
or settled with, or released.

 

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Section 9.5 Expenditures of Administrative Agent and Banks

 

.  Any sums spent by Administrative Agent or any Bank pursuant to the exercise of any right provided herein shall become part of the Obligations and shall bear interest at the Highest Lawful Rate from the date spent until the date repaid by Borrower.

 

Section 9.6 Form and Number of Documents

 

.  Each opinion, certificate, resolution, deed of trust, mortgage, chattel mortgage, security agreement, assignment, lease, agreement, document, instrument or other writing or evidence to be furnished Administrative Agent or any Bank under any provision of this Agreement must be in form and substance and in such number of counterparts
as may be satisfactory to Administrative Agent and its counsel and the Banks.

 

Section 9.7 Accounting Terms

 

.  All accounting.  and financial terms used herein, and the compliance with each covenant contained herein which relates to accounting or financial matters, shall be determined in accordance with GAAP, except to the extent that a deviation therefrom is expressly stated herein.

 

Section 9.8 Money

 

.  Unless stipulated otherwise, all references herein to “Dollars,” “$,” “money,” “payments,” or other similar financial or monetary terms, are references to currency of the United States of America.

 

Section 9.9 Headings

 

.  The table of contents, headings, captions and arrangements used in any of the Loan Papers are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of the Loan Papers, nor affect the meaning thereof.

 

Section 9.10 Articles, Sections, Exhibits and Schedules

 

.  All references to “Article,” “Articles,” “Section,” “Sections,” “Subsection” or “Subsections” contained herein are, unless specifically indicated otherwise, references to articles, sections and subsections of this Agreement.  All references to
“Exhibits” and “Schedules” contained herein are references to exhibits or schedules, as the case may be, attached hereto, all of which are made a part hereof for all purposes, the same as if set forth herein verbatim, it being understood that if any exhibit or schedule attached hereto, which is to be executed and delivered, contains blanks, the same shall be completed correctly and in accordance with the terms and provisions contained and as contemplated herein prior to or at the time
of the execution and delivery thereof.

 

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Section 9.11 Number and Gender of Words

 

.  Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate.

 

Section 9.12 Business Day

 

.  Except as may otherwise be expressly provided herein to the contrary, where a payment of principal or interest on the Obligations is due on a day other than a Business Day, Borrower shall be entitled to delay such payment until the next succeeding Business Day, but interest shall continue to accrue until the payment is, in
fact, made.

 

Section 9.13 Notices

 

.  All notices, requests and other communications to any party hereunder and under the other Loan Papers (except as may be expressly stated to the contrary therein) shall be in writing and shall be given to such party at its address set forth on the signature pages hereof or such other address as such party may hereafter specify
for the purpose of notice to the other party.  Each such notice, request or other communication shall be effective (i) if given by mail, forty-eight (48) hours after such communication is deposited in the mail with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means, when delivered at the address specified in this Section; provided that any communications to any Agent or any Bank shall not be deemed effective until actually received by it.

 

Section 9.14 Parties Bound

 

.  This Agreement shall be binding upon, and inure to the benefit of, Administrative Agent, the Banks, Borrower and the other Companies and their respective successors and assigns; provided that Borrower and the other Companies may not assign their rights or obligations under this Agreement without the prior written consent of
Administrative Agent and the Banks.  Each corporation, firm or other entity in which Borrower or any other Company hereafter acquires or otherwise owns a direct or indirect controlling interest (a “New Entity”) shall automatically (unless otherwise agreed or determined unilaterally by Administrative Agent and the Banks in writing) be and become a “subsidiary,” as that term is used in this Agreement, for all purposes,
contemporaneously with such acquisition.  Borrower shall promptly, and in any event within ten (10) days, after such acquisition, cause each New Entity to execute and deliver to Administrative Agent a Guaranty Agreement and an agreement in the form of Exhibit E (Agreement of New Entity) attached hereto.  Borrower may thereafter request the Administrative Agent to release such New Entity from this Agreement, but each such release
shall be wholly discretionary with Administrative Agent and the Banks.  If Administrative Agent does, however, grant any such release or does not require such New Entity to execute and deliver the aforesaid documents, such New Entity shall thereafter, for the purposes of this Agreement, be treated as though it were not a Subsidiary hereunder and not affiliated in any manner whatsoever with Borrower or any other Company (except as may relate to such New Entity’s status as an “Affiliate”
hereunder), except to the extent specifically stated in such release or other agreement of Administrative Agent.

 

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Section 9.15 Exceptions to Covenants

 

.  The Companies shall not be deemed to be permitted to take any action or fail to take any action which is permitted or not prohibited by any of the covenants contained herein if such action or omission would result in the breach of any other covenant contained herein or in the other Loan Papers.

 

Section 9.16 Successors and Assigns.

 

(a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Neither Borrower nor any Company may assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent and all of the Banks.  Any Bank may sell participations to one or more banks or other institutions in or to all or a portion of its rights and obligations under the Loan Papers (including, without limitation, all or a portion of its Commitment, the Loans owing to it and its interest in the Letters of Credit which it has made or in which it has a participating interest); provided, however, that (i) such Bank’s obligations under
the Loan Papers (including, without limitation, its Commitment) shall remain unchanged, (ii) such Bank shall remain solely responsible to Borrower for the performance of such obligations, (iii) such Bank shall remain the holder of its Notes and owner of its participation or other interests in Letter of Credit Liabilities for all purposes of any Loan Paper, (iv) Borrower shall continue to deal solely and directly with such Bank in connection.  with such Bank’s rights and obligations under the Loan
Papers, (v) prior or concurrent written consent of Administrative Agent and Collateral Agent shall be required for any such participation, and (vi) such Bank shall not sell a participation that conveys to the participant the right to vote or give or withhold consents under any Loan Papers, other than the right to vote upon or consent to (1) any increase of such Bank’s Commitment, (2) any reduction of the principal amount of, or interest to be paid on, the Loans or other Obligations of such Bank, (3) any
reduction of any commitment fee, letter of credit fee, or other amount payable to such Bank under any Loan Paper, or (4) any postponement of any date for the payment of any amount payable in respect of the Loans or other Obligations of such Bank.

 

(b) Any Bank (the “Assigning Bank”) may at any time assign to one or more commercial banks, savings and loan association, savings bank, finance company, insurance
company, pension fund, mutual fund, or other financial institution (whether a corporation, partnership, or other entity) (herein an “Eligible Assignee”) all, or a proportionate part of all, of its rights and obligations under the Loan Papers (including, without limitation, its obligations under Section 2.1 and its Loans and participation interests) (each an “Assignee”);
provided, however, that (i) each such assignment shall be of a consistent, and not a varying, percentage of all of the Assigning Bank’s rights and obligations under the Loan Papers, (ii) except in the case of an assignment of all of a Bank’s rights and obligations under the Loan Papers, the amount of the Commitment of the assigning Bank being assigned pursuant to each assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than
Five Million Dollars ($5,000,000), (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent for its acceptance and recording in the Register (as defined below), an Assignment and Acceptance, together with the Notes subject to such assignment, and a processing and recordation fee of up to $5,000 payable by the assignor or assignee (and not any Company); (iv) prior or concurrent written consent of Administrative Agent and Collateral Agent shall be required for any such assignment;
and (v) prior or concurrent written consent of Parent shall be required for any such assignment, which consent of Parent shall not be unreasonably withheld, with such consents to be evidenced by the Parent’s and, the Administrative Agent’s and the Collateral Agent’s execution of the Assignment and Acceptance, provided that any consent of the Parent otherwise required by this Subsection shall not be required if a Default or Potential
Default has occurred and is continuing.  Upon such execution, delivery, acceptance, and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, or, if so specified in such Assignment and Acceptance, the date of acceptance thereof by Administrative Agent, (x) the Assignee thereunder shall be a party hereto as a “Bank” 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 under the Loan Papers and (y) the Assigning Bank 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 the Loan Papers (and, in the case of an Assignment and Acceptance covering all or the remaining portion of a Bank’s rights and obligations under
the Loan Papers, such Bank shall cease to be a party thereto).

 

58

 

 

(c) Administrative Agent shall maintain 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 Commitments of, and principal amount
of the Loans owing to and Letters of Credit participated in by, 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 Borrower, Administrative Agent, and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes under the Loan Papers.  The Register shall be available for
inspection by Parent or any Bank at any reasonable time and from time to time upon reasonable prior notice.

 

(d) Upon its receipt of an Assignment and Acceptance executed by an Assigning Bank and Assignee representing that it is an Eligible Assignee, together with any Notes subject to such assignment, Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit F hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register, and (iii) give prompt written notice thereof to Parent.  Within five (5) Business Days after its receipt of such notice Borrower, at their expense, shall execute and deliver to Administrative Agent in exchange for the surrendered Notes (including
(if applicable) new Revolving Credit Notes to the order of such Eligible 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, a Revolving Credit Note to the order of the Assigning Bank in an amount equal to the Commitment retained by it hereunder (each such promissory note shall constitute a “Revolving Credit Note” for purposes of
the Loan Papers).  Such new Revolving Credit Notes shall be in an aggregate principal amount of the surrendered Revolving Credit Note, shall be dated the effective date of such Assignment and Acceptance, and shall otherwise be in substantially the form of Exhibit C hereto.

 

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(e) Any Bank may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section, disclose to the assignee or participant or proposed assignee or participant, any information relating
to Borrower and the Companies furnished to such Bank by or on behalf of such Company.

 

(f) Any Bank may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Bank, including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Bank from any of its obligations hereunder or substitute any such pledgee or assignee for such Bank as a party hereto.

 

Section 9.17 Effect of Investigations

 

.  All covenants, agreements, undertakings, representations and warranties.  made in any of the Loan Papers shall survive all closings under the Loan Papers and, except as otherwise indicated, shall not be affected by any investigation made by any party.

 

Section 9.18 GOVERNING LAW; VENUE; SERVICE OF PROCESS.

 

(a) THE LOAN PAPERS ARE BEING EXECUTED AND DELIVERED, AND ARE INTENDED TO BE PERFORMED, IN THE STATE OF TEXAS, AND THE LAWS OF SUCH STATE SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THE LOAN PAPERS, EXCEPT
TO THE EXTENT OTHERWISE SPECIFIED IN ANY OF THE LOAN PAPERS.

 

(b) CHAPTER 346 OF THE TEXAS FINANCE CODE SHALL NOT APPLY TO THE REVOLVING CREDIT LOANS.

 

(c) ANY ACTION OR PROCEEDING AGAINST ANY COMPANY UNDER OR IN CONNECTION WITH ANY OF THE LOAN PAPERS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS.  EACH COMPANY HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM.  EACH COMPANY AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9.13.  NOTHING
HEREIN OR IN ANY OF THE OTHER LOAN PAPERS SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE ISSUING BANK OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL .  LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE COLLATERAL BANK, THE ISSUING BANK OR ANY BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR WITH RESPECT TO ANY OF ITS RESPECTIVE PROPERTY IN COURTS IN OTHER JURISDICTIONS.  ANY ACTION OR PROCEEDING BY ANY COMPANY AGAINST
THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE ISSUING BANK, OR ANY BANK SHALL BE BROUGHT ONLY IN A COURT LOCATED IN DALLAS COUNTY, TEXAS.

 

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Section 9.19 Maximum Interest Rate.

 

(a) No interest rate specified in this Agreement or any other Loan Paper shall at any time exceed the Highest Lawful Rate.  If at any time the interest rate (the “Contract
Rate”) for any Obligation shall exceed the Highest Lawful Rate, thereby causing the interest accruing on such Obligation to be limited to the Highest Lawful Rate, then any subsequent reduction in the Contract Rate for such Obligation shall not reduce the rate of interest on such Obligation below the Highest Lawful Rate until the aggregate amount of interest accrued on such Obligation equals the aggregate amount of interest which would have accrued on such Obligation if the Contract Rate for such
Obligation had at all times been in effect.

 

(b) Notwithstanding anything to the contrary contained in this Agreement or the other Loan Papers, none of the terms and provisions of this Agreement or the other Loan Papers shall ever .be construed to create a contract or obligation
to pay interest at a rate in excess of the Highest Lawful Rate; and neither any Agent nor any Bank shall ever charge, receive, take, collect, reserve or apply, as interest on the Obligations, any amount in excess of the Highest Lawful Rate.  The parties hereto agree that any interest, charge, fee, expense or other obligation provided for in this Agreement or in the other Loan Papers which constitutes interest under applicable Law shall be, ipso facto and
under any and all circumstances, limited or reduced to an amount equal to the lesser of (i) the amount of such interest, charge, fee, expense or other obligation that would be payable in the absence of this Section 9.19(b) or (ii) an amount, which when added to all other interest payable under this Agreement and the other Loan Papers, equals the Highest Lawful Rate.  If, notwithstanding the foregoing, any Agent or any Bank ever contracts
for, charges, receives, takes, collects, reserves or applies as interest any amount in excess of the Highest Lawful Rate, such amount which would be deemed excessive interest shall be deemed a partial payment or prepayment of principal of the Obligations and treated hereunder as such; and if the Obligations, or applicable portions thereof, are paid in full, any remaining excess shall promptly be paid to the Borrower, Parent or Subsidiary (as appropriate).  In determining whether the interest paid or
payable, under any specific contingency, exceeds the Highest Lawful Rate, the parties hereto shall, to the maximum extent permitted by applicable Law, (i) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the Obligations, or applicable portions thereof, so that the
interest rate does not exceed the Highest Lawful Rate at any time during the term of the Obligations; provided that, if the unpaid principal balance is paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exc eeds the Highest Lawful Rate, the Agents and/or the Banks, as appropriate,
shall refund to the applicable Person the amount of such excess and, in such event, the Agents and the Banks shall not be subject to any penalties provided by any Laws for contracting for, charging, receiving, taking, collecting, reserving or applying interest in excess of the Highest Lawful Rate.

 

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Section 9.20 Invalid Provisions

 

.  If any provision of any of the Loan Papers is held to be illegal, invalid or unenforceable under present or future Laws effective during the term thereof, such provision shall be fully severable; the appropriate Loan Papers shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised
a part thereof; and the remaining provisions thereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance therefrom.  Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of such Loan Papers a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

 

Section 9.21 Entirety and Amendments

 

.  This Agreement embodies the entire agreement between or among the parties relating to the subject matter hereof, supersedes all prior term sheets, discussions, agreements and understandings, if any, relating to the subject matter hereof, and, except as provided below, neither this Agreement nor any provision hereof or of any
of the Loan Papers may be waived, amended or modified except by an agreement in writing executed jointly by any authorized officer of each Company party thereto and Required Banks, and the same may be supplemented only by documents delivered or to be delivered in accordance with the express terms hereof, provided however, that, without the prior written consent of each of the Banks, no such agreement shall (i) reduce the principal amount of, or extend the maturity of or any date for the payment of any principal
of or interest on any Loan or Letter of Credit, or waive or excuse any such payment or any part thereof, or reduce the rate of interest on any Loan or Letter of Credit (other than any such reduction in the rate of interest resulting from a change in the Base Rate in accordance with the definition of such term), (iii) reduce or increase the Commitment of any Bank, (iv) change or amend the provisions of this Section, or the definition of the “Required
Banks”, (v) waive any condition precedent to the making of any Loan or the issuance of any Letter of Credit, (vi) release any Guaranty Agreement or any Collateral securing any of the Obligations, except releases expressly provided for or permitted by this Agreement, or (vii) reduce any fee payable to any Bank; provided, further, that no such agreement shall amend, modify or otherwise affect the rights or duties of any Agent hereunder without the prior written consent of such Agent.  Each
Bank and each holder of a Note shall be bound by any waiver, amendment or modification authorized by this Section regardless of whether its Note shall have been marked to make reference thereto, and any consent by any Bank or holder of a Note pursuant to this Section shall bind any person subsequently acquiring a Note from it, whether or not such Note shall have been so marked.

 

62

 

 

Section 9.22 Survival

 

.  All representations and warranties of Borrower and the other Companies contained in this Agreement shall survive the making of the Loans, Advances and Letters of Credit herein contemplated.  The provisions of Sections 2.19, 2.22, 2.26 and 5.1(j) and Article
VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

 

Section 9.23 Setoff

 

.  In addition to, and without limitation of, any rights of the Agents and the Banks under applicable Law (including other rights of setoff), if Borrower or any other Company becomes insolvent or any Default occurs, the Agents and the Banks, or any of them, may apply any and all money or property held for or owed to any of the
Companies (including without limitation any and all deposits, whether time or demand, provisional or final) against all or any portion of the Obligations owed to the Agents and the Banks, or any of them.

 

Section 9.24 Multiple Counterparts

 

.  This Agreement may be executed in a number .of identical counterparts, each of which, for all purposes, is to be deemed an original and all of which constitute, collectively, one agreement; however, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.  Delivery
of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section 9.25 Term of Agreement

 

.  This Agreement shall continue until the Notes and all other Obligations shall have each been paid and performed in full and until all other liabilities and obligations of Borrower and the other Companies under this Agreement and the other Loan Papers shall have been fully satisfied and the Banks shall have no further obligation
to make Loans or issue Letters of Credit hereunder.

 

Section 9.26 Limitation of Liability

 

.  No Agent, Bank, or any Affiliate, officer, director, employee, attorney, or agent thereof shall have any liability with respect to, and each Company (by its execution or ratification of a Guaranty Agreement or an Agreement of New Entity) hereby waives, releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by any Company in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Papers, or any of the transactions contemplated by this Agreement or any of the other Loan Papers.  Each Company (by its execution or ratification of a Guaranty Agreement or an Agreement of New Entity) hereby waives, releases, and agrees not to sue any Agent or any Bank or any of their respective Affiliates, officers,
directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Papers, or any of the transactions contemplated by this Agreement or any of the other Loan Papers.

 

63

 

 

Section 9.27 No Fiduciary Relationship

 

.  The relationship between each Company and each Agent and Bank with respect to the Loan Papers.  and the transactions contemplated hereby and thereby is solely that of debtor and creditor, and neither any Agent nor any Bank has any fiduciary or other special relationship with any Company with respect to the Loan Papers
and such transactions, and no term or condition of any of the Loan Papers shall be construed so as to deem the relationship between any Company and any Bank with respect to the Loan Papers and such transactions to be other than that of debtor and creditor.

 

Section 9.28 Construction

 

.  Each Company, each Agent and each Bank acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Papers with its legal counsel and that this Agreement and the other Loan Papers shall be construed as if jointly drafted
by the parties hereto.

 

Section 9.29 Waiver and Release

 

.  Each Company hereby waives and releases all Agents and all Banks from any and all claims or causes of action which any Company may own, hold or claim in respect of any of them as of the date hereof.

 

Section 9.30 NO ORAL AGREEMENTS

 

.  THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN PAPERS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS AMONG AGENTS, THE BANKS, BORROWER AND THE OTHER COMPANIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR
AMONG AGENTS AND BORROWER OR ANY OTHER COMPANY, OR BETWEEN OR AMONG ANY BANK AND BORROWER OR ANY OTHER COMPANY.

 

Section 9.31 Joint and Several Obligations

 

.  Notwithstanding anything to the contrary contained herein or in any other Loan Papers, the Companies are jointly and severally responsible for their respective agreements, covenants, representations, warranties and obligations contained and set forth in this Agreement or in any other Loan Paper to which they are a party.

 

Section 9.32 WAIVER OF JURY TRIAL

 

.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

64

 

 

Section 9.33 Restatement

 

.  This Agreement amends and restates in its entirety the Existing Agreement, and from and after the date hereof, the terms and provisions of the Existing Agreement shall be superseded by the terms and provisions of this Agreement.  Borrower hereby agrees that (i) the Existing Indebtedness, all accrued and unpaid interest
thereon, and all accrued and unpaid fees under the Existing Agreement shall be deemed to be Indebtedness of Borrower outstanding under and governed by this Agreement, and (ii) all letters of credit issued under the Existing Agreement shall continue in full force and effect, and (iii) all Liens securing the Existing Indebtedness shall continue in full force and effect to secure the Obligations.

 

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

 

 

  

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EXECUTED as of the day and year first herein stated.

 

COMERICA BANK,

as a Bank, as Issuing Bank, as Administrative Agent

and as Collateral Agent

 

By:/s/ Robert Clouse

Robert Clouse

Vice President

8828 Stemmons Freeway, Suite 441

 

Dallas, Texas 75247

 

Fax: (214) 589-4419

 

Attention: Robert Clouse

 

Applicable Lending Office:

 

8828 Stemmons Freeway, Suite 441

 

Dallas, Texas 75247

 

 

 

 

 

 

 

 

 

                         FFE
TRANSPORTATION SERVICES, INC.

 

 

By:/s/ Ronald J. Knutson

Ronald J. Knutson

Senior Vice President and Chief Financial Officer

Address for Borrower and all other companies listed below:

 

1145 Empire Central Place

 

Dallas, Texas 75247

 

Attention: President

 

 

FROZEN FOOD EXPRESS INDUSTRIES, INC.

 

By: /s/ Ronald J. Knutson

Ronald J. Knutson

Senior Vice President and Chief Financial Officer

 

CONWELL CORPORATION

 

By:/s/ Leonard W. Bartholomew

Leonard W. Bartholomew

Secretary

 

 

 

  

  

  

FX HOLDINGS, INC.

 

By:/s/ Leonard W. Bartholomew

Leonard W. Bartholomew

Secretary

LISA MOTOR LINES,  INC.

 

By:/s/ Leonard W. Bartholomew

Leonard W. Bartholomew

Secretary

 

 

COMPRESSORS PLUS, INC.

 

By:/s/ Leonard W. Bartholomew

Leonard W. Bartholomew

Secretary

 

 

FFE LOGISTICS, INC.

 

By:/s/ Leonard W. Bartholomew

Leonard W. Bartholomew

Secretary

 

 

CONWELL LLC

 

By: :/s/ Leonard W. Bartholomew

Leonard W. Bartholomew

Secretary

 

 

 

  

  

  

 

SCHEDULE 1.1

 

to

 

Credit Agreement

 

FFE TRANSPORTATION SERVICES, INC.

 

 

Commitments

 

Comerica Bank                                                                                                              
    $35,000,000

 

Total                                                                                                          
    $35,000,000

 

 

 

 

  

  

  

SCHEDULE 4.3

 

 

LITIGATION

 

 

(See attached.)

 

 

  

  

  

SCHEDULE 4.6

 

to

 

Credit Agreement

 

FFE TRANSPORTATION SERVICES, INC.

 

 

Plans

 

Frozen Food Express Industries, Inc. 1992 Incentive and Nonstatutory Stock Option Plan

 

Frozen Food Express Industries, Inc. 2002 Incentive and Nonstatutory Stock Option Plan.

 

FFE Transportation Services, Inc. 1994 Incentive Bonus Plan

 

FFE Transportation Services, Inc. Executive Bonus and Phantom Stock Plan

 

Frozen Food Express Industries, Inc. 401(k) Savings Plan

 

FFE Transportation Services, Inc. Restated Wrap Plan

 

Frozen Food Express Industries, Inc. 1995 Non-Employee Director Stock Plan

 

Amended and Restated Frozen Food Express Industries, Inc. 2005 Non-Employee Director Restricted Stock Plan

 

Frozen Food Express Industries, Inc. Amended 2005 Executive Bonus and Restricted Stock Plan

 

Frozen Food Express Industries, Inc. 2005 Stock Incentive Plan

 

Key Employee supplemental Medical Plan

 

Frozen Food Express Industries and Affiliates Medical and Life Plan

 

Conwell Voluntary Employee Injury Benefit Plan (the name is being changed to FFE Transportation Services, Inc. Voluntary Employee Injury Benefit Plan) (the “Injury Benefit Plan”)

 

 

  

  

  

SCHEDULE 4.9

 

to

 

Credit Agreement

 

FFE TRANSPORTATION SERVICES, INC.

 

 

Existing Indebtedness

 

1.           Existing Amended and Restated Credit Agreement dated as of October 12, 2006 among Borrower, Parent, certain affiliates of Borrower, and Banks, as amended by (i) that certain First Amendment to Amended and Restated Credit Agreement dated as of April 25, 2007, (ii) that
certain Second Amendment to Amended and Restated Credit Agreement dated as of July 30, 2007, (iii) that certain Third Amendment to Amended and Restated Credit Agreement dated as of March 3, 2008, (iv) that certain Fourth Amendment to Amended and Restated Credit Agreement dated as of August 4, 2008, and (v) that certain Fifth Amendment to Amended and Restated Credit Agreement dated as of February 27, 2009 (as amended to the date hereof, the “Existing
Agreement”), together with the promissory notes made by Borrower thereunder.

 

 

  

  

  

 

SCHEDULE 4.11

 

 

To

 

 

Credit Agreement

 

 

FFE TRANSPORTATION SERVICES, INC.

 

MATERIAL AGREEMENTS

 

 

· Frozen Food Express Industries, Inc. 1995 Non-Employee Director Stock Plan

 

	
·  
	
First Amendment to Frozen Food Express Industries, Inc, 1995 Non-Employee Director Stock Plan

	
·  
	
Second Amendment to Frozen Food Express Industries, Inc. 1995 Non-Employee Director Stock Plan

	
·  
	
Form of Stock Option Agreement for Use  in Connection with the Frozen Food Express Industries, Inc. Non-Employee Director Stock Plan

	
·  
	
Second Amended and Restated Credit Agreement among Comerica Bank as administrative agent and as collateral agent for itself and other banks and FFE Transportation Services, Inc, as Borrower and certain of its affiliates of even date herewith

	
·  
	
Frozen Food Express Industries, Inc., 1992 Incentive and Non-statutory Stock Option Plan

	
·  
	
Amendment No. 1 to Frozen  Food Express Industries, Inc. 1992 Incentive and Non-statutory Stock Option Plan

	
·  
	
Amendment No. 2 to Frozen Food Express Industries, Inc. 1992 Incentive and Stock Option Plan

	
·  
	
Amendment No. 3 to Frozen Food Express Industries, Inc. 1992 Incentive and Non-statutory Stock Option Plan

	
·  
	
Form of Stock Option Agreement for use in connection with the Frozen Food Express Industries, Inc. 1992 Incentive and Stock Option Plan

	
·  
	
FFE Transportation Services, Inc. 1994 Incentive Bonus Plan, as amended

	
·  
	
FFE Transportation Services, Inc. 1999 Executive Bonus and Phantom Stock Plan

	
·  
	
Frozen Food Express Industries, Inc. 401(k) Savings Plan

	
·  
	
First Amendment to the Frozen Food Express Industries, Inc. 401(k) Saving Plan

	
·  
	
Second Amendment to the Frozen Food Express Industries, Inc. 401(k) Savings Plan

	
·  
	
Third Amendment to the Frozen  Food Express Industries, Inc. 401(k) Savings Plan

	
·  
	
Frozen Food Express Industries, Inc.  Employee Stock Option Plan

	
·  
	
Amendment to the Frozen Food Express Industries, Inc. Employee Stock Option  Plan

	
·  
	
FFE Transportation Services, Inc. Restated Wrap Plan

	
·  
	
Form of Amended and Restated Change in Control Agreement

	
·  
	
Frozen Food Express Industries, Inc. 2002 Incentive and Non-statutory Stock Option Plan

	
·  
	
First Amendment to Frozen Food Express Industries, Inc. 2002 Incentive and Non-Statutory Stock Option Plan

 

  

  

  

 

	
·  
	
Form of Stock Option Agreement used in connection with the Frozen Food Express Industries, Inc. 2002 Incentive and Non-Statutory Stock Option Plan

	
·  
	
Split Dollar Agreement between Registrant and Stoney Russell Stubbs, as Trustee of the Stubbs Irrevocable 1995 Trust

	
·  
	
First Amendment to Split Dollar Agreement between Registrant and Stoney Russell Stubbs, as

Trustee of the Stubbs Irrevocable 1995 Trust

	
·  
	
Split Dollar Agreement between Registrant and Michele Diane Godfrey, as Trustee of the Stubbs

	
  
	
    Irrevocable 1995 Trust

	
·  
	
First Amendment to Split Dollar Agreement between Registrant and Michele Diane Godfrey, as Trustee of the Robertson Irrevocable 1995 Trust

	
·  
	
Amended and Restated Frozen Food Express Industries, Inc. 2005 Non-Employee Director Restricted Stock Plan

	
·  
	
Form of Restricted Stock Agreement for use with Frozen Food Express Industries, Inc. Non-­Employee Director Restricted Stock Plan

	
·  
	
FFE Transportation Services, Inc. Amended 2005 Executive Bonus and Restricted Stock Plan

	
·  
	
Frozen Food Express Industries, Inc. 2005 Stock Incentive Plan

	
·  
	
Form of  Incentive Stock Option Agreement for use with Frozen Food Express Industries, Inc. Stock Incentive Plan

	
·  
	
Form of Key Employee Supplemental Medical Plan

	
·  
	
FFE Transportation Services, Inc. Management Phantom Stock Plan

 

  

  

  

SCHEDULE 5.1

The Companies are responsible for the first $4.0 million on personal injury and property damage liability claims and 25% of the claim amount between $4.0 million and $10.0 million.  The Companies have excess coverage from $10.0 million to $50.0 million.

 

  

  

  

EXHIBIT A

 

Reserved

 

 

  

  

  

EXHIBIT B

 

 

NOTICE OF ACTIVITY

 

TO:           Comerica Bank, as Administrative Agent

8828 Stemmons Freeway, Suite 441

Dallas, Texas 75247

Attn: Robert Clouse

FAX: (214) 589-1318

 

FROM:                      FFE Transportation Services, Inc. (“Borrower’’)

 

Reference is made to that certain Second Amended and Restated Credit Agreement dated as of September 2, 2009, among the Banks party thereto, Comerica Bank, as Administrative Agent, as Issuing Bank, and as Collateral Agent, Borrowers, the Parent and the Other Subsidiaries (as the same may be renewed, extended, amended, modified and/or restated
from time to time, the “Agreement”). All terms defined in the Agreement shall have the same meanings herein.

 

The undersigned is an authorized officer of the Borrower and is authorized to make and deliver this request pursuant to the Agreement. Borrower hereby makes this request in accordance with the Agreement:

 

In connection with the foregoing and pursuant to the terms and provisions of the Agreement, the undersigned hereby certifies that:

 

a. The representations and warranties contained in Article IV of the Agreement are true and correct in all respects with the same force and effect on and as of the date hereof as though made on and as of the date hereof.

 

b. No Default or Potential Default presently exists or will exist after giving effect to the Advance herein requested.

 

c. There is no legal proceeding pending or, to our knowledge, threatened against Borrower or any other Company by or before any Tribunal which, in the event of an unfavorable outcome, could reasonably be expected to have a Material Adverse
Effect.

 

d. The aggregate amount of the Advance herein requested, plus the aggregate principal amount of all other outstanding Loans, shall not exceed (i) the lesser of (A) the Borrowing Base in effect on the date hereof or (B) the Commitments, minus (ii) the
Letters of Credit Liabilities.

 

e. The consummation of the Advance herein requested will not violate any applicable provision of any Law.

 

f. No material adverse change has occurred in the business, financial condition or operations of Borrower, Parent or any Other Subsidiary.

 

g. Attached hereto as Schedule 1 is a true, correct and complete request for a Loan or Letter of Credit and Borrower hereby requests that the Banks initiate the transactions
described therein.

 

h. Attached hereto as Schedule 2 is a true, correct and complete reconciliation of current borrowings.

 

Very truly yours,

 

FFE TRANSPORTATION SERVICES, INC.

 

By: 

        Ronald J. Knutson

        Senior Vice President and Chief

        Financial Officer

 

  

  

  

Schedule 1

 

Please use this correspondence as an official request on behalf of the Borrower to initiate the following transaction(s):

 

ADVANCES

 

	  	
Advance $________________________

 

Please credit this advance to account number __________________________.

 

 

PAYDOWNS

 

	  	
Paydown $_____________________

 

LETTER OF CREDIT ISSUANCES

 

Please issue a letter of credit in the amount of $____________________ benefiting _____________ __________________________ for a period of time up to ____/____/____.

 

LETTER OF CREDIT CONTINUATIONS

 

Please extend the Letter of Credit numbered ________________ in the amount of $______________ through the new maturity date of ____/____/____.  There are no other amendments to this credit.

 

 

  

  

  

Schedule 2

 

The following is the Borrower’s reconciliation of current borrowings under the above-referenced facility and is adjusted to reflect the requested activity as follows:

 

	
Total Available Line of Credit (lesser of Commitments or Borrowing Base)
	
$__________

	
Cash Outstandings before activity this date
	
$__________

	
Total of Cash Outstandings
	
$__________

	
Activity of this date
	  
	
Less Paydowns
	
(-) $__________

	
Plus Advances
	
(+) $__________

	
Letters of Credit Outstanding before activity this date                 

	  	
Maturity Date
	
Beneficiary
	
Amounting Outstanding
	  
	  	
(                      )
	  	
$_____________
	  
	  	
(                      )
	  	
$_____________
	  
	  	
(                      )
	  	
$_____________
	  
	  	
(                      )
	  	
$_____________
	  
	  	
(                      )
	  	
$_____________
	  
	  	
(                      )
	  	
$_____________
	  
	  	
(                      )
	  	
$_____________
	  
	  	
Less Letters of Credit Expired
	
(-) $_____________
	  
	  	
Plus New Letters of Credit Issued
	
(+) $_____________
	  
	
Total of Letters of Credit Outstanding
	
(+) $

	
Total Outstanding Under the Facility
	
(-) $

	
(b+c+d) must not exceed (a)
	  

 

 

  

  

  

EXHIBIT C

 

 

REVOLVING CREDIT NOTE

 

 

 

 

$35,000,000                                                      Dallas,
Texas                                                            September 2, 2009

 

 

 

FOR VALUE RECEIVED, the undersigned, FFE TRANSPORTATION SERVICES, INC. (“Borrower”), a Delaware corporation, hereby unconditionally promises to pay to the order of COMERICA BANK (“Bank”),
at the principal offices of Comerica Bank, in Dallas, Texas or at such other address in Dallas County, Texas, as may be designated by Administrative Agent from time to time, the lesser of (i) the principal sum of THIRTY FIVE MILLION AND 00/100 Dollars ($35,000,000), or (ii) the aggregate unpaid principal amount of all Loans made by Bank to Borrower pursuant to Article II of the Agreement (as such term is defined below), together with interest on the unpaid principal balance from the date hereof until maturity
at such varying rates per annum (but in no event in excess of the Highest Lawful Rate) as determined in accordance with the provisions of Article II of the Agreement.  Borrower promises to pay such principal of, and interest on, this Note on the dates and in the manner provided in the Agreement.  If not sooner paid, the unpaid principal balance of this Note and all accrued interest hereon shall be due and payable in full on the Termination Date.  All such payments of both principal
and interest shall be made in lawful money of the United States of America and in immediately available funds.

 

All Loans made by Bank to Borrower pursuant to the Agreement and all payments of the principal thereof may be noted by Bank on schedules from time to time attached hereto, or on a continuation of such schedules or otherwise recorded in Bank’s records; provided, however, that the failure of Bank to make any such notation shall not
limit or otherwise affect the obligations of Borrower hereunder or under the Agreement.

 

This Note has been executed and delivered pursuant to the terms of that certain Second Amended and Restated Credit Agreement of even date herewith, among Comerica Bank, as Administrative Agent and as Collateral Agent, Borrower, Frozen Food Express Industries, Inc., Conwell Corporation, FX Holdings, Inc., Lisa Motor Lines, Inc.,  Compressors
Plus, Inc., FFE Logistics, Inc., and Conwell LLC (as the same may be renewed, extended, amended, modified and/or restated from time to time, the “Agreement”), and is one of the “Revolving Credit Notes” referred to therein.  The holder of this Note is entitled to the benefits of the Agreement and may enforce the agreements contained therein and exercise
the remedies provided for thereby, and reference is hereby made to the Agreement for a statement of the payment and prepayment rights and obligations of Borrower and for a statement of the events upon which and the terms and conditions under which the maturity of this Note may be accelerated.

 

 

 

 

All defined terms used herein shall have the meanings respectively assigned to them in the Agreement.

 

If this Note is placed in the hands of an attorney for collection, or if it is collected through any legal proceedings, at law or in equity, or in bankruptcy, receivership or other court proceedings, Borrower agrees to pay all costs of collection, including, but not limited to, court costs and reasonable attorneys’ fees.

 

Borrower and each surety, endorser, guarantor and other party ever liable for payment of any sums of money payable on this Note, jointly and severally waive presentment and demand for payment, protest, notice of protest, intention to accelerate, acceleration and nonpayment, or other notice of default, and all other notices other than as
expressly provided in the Agreement, and agree that their liability under this Note shall not be affected by any renewal or extension in the time of payment hereof, or by any indulgences, or by any release or change in any security for the payment of this Note, and each such Borrower, surety, endorser, guarantor and other party hereby consents to any and all renewals, extensions, indulgences, releases or changes directly affecting any such party other than itself, regardless of the number of such renewals, extensions,
indulgences, releases or changes.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND THE LAWS OF THE STATE OF TEXAS.

 

It is the intention of the parties hereto to conform strictly to usury laws applicable to Bank.  Accordingly, if the transactions contemplated hereby would be usurious under applicable law (including the laws of the United States of America and the State of Texas or any other jurisdiction whose laws may be mandatorily applicable
notwithstanding the provisions of the Agreement), then in the event, notwithstanding anything to the contrary in this Note, the Agreement or in any agreement entered into in connection with or as security for this Note, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to Bank that is contracted for, taken, reserved, charged or received under this Note, the Agreement or under any of the other aforesaid agreements or otherwise in connection with this
Note shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be credited by Bank on the principal amount of the Obligations (or, if the principal amount of the Obligations shall have been paid in full, refunded to Borrower); and (ii) in the event that the maturity of this Note is accelerated by reason of an election of Administrative Agent or any Bank resulting from any Default under the Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to Bank may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Note, the Agreement or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by Bank on the principal amount of the Obligations (or, if the principal amount of the obligations shall have been paid in full, refunded by Bank to
Borrower).

 

 

 

 

The indebtedness evidenced by this Note is in renewal, extension and modification, but not in extinguishment or novation, of the principal indebtedness evidenced by that certain promissory note dated October 12, 2006, in the original principal amount of $25,000,000 executed by the undersigned payable to the order of the Bank.

 

 

FFE TRANSPORTATION SERVICES, INC.

By:                                                                

Ronald J. Knutson

Senior Vice President and Chief Financial Officer

 

 

 

  

  

  

EXHIBIT D

 

COMPLIANCE  CERTIFICATE

 

As of ________________, 20____

To:           Comerica Bank, as Administrative Agent

 

8828 Stemmons Freeway, Suite 441

 

Dallas, Texas  75247

 

Attention: Robert Clouse

 

 

Ladies and Gentlemen:

 

This report is delivered pursuant to Subsection 5.1(a) of that certain Second Amended and Restated Credit Agreement dated as of September 2, 2009, among certain lenders, Comerica Bank, as Administrative Agent, as Issuing Bank, and as Collateral Agent, FFE Transportation Services,
Inc., the Parent and the Other Subsidiaries (as the same thereafter was or hereafter may be renewed, extended, amended, modified and/or restated from time to time, the “Agreement”).  Terms to which meanings are ascribed in the Agreement are used herein with such meanings.

 

A.           Financial Ratios and Restrictions.  Except as otherwise stated, the following calculations are made as of _______________, 20___.

 

 

 

  

  

  

	
1. 

 
	
Subsection 5.1(f); Fixed Charge Coverage Ratio
	  
	
(a) 
	
EBITDAR of the Companies on a consolidated basis
	  
	  	
EBITDAR
	
$_______________

	
(b) 

 
	
Fixed Charges
	  
	  	
(i)      interest expenses
	
$_______________

	  	
(ii)      plus lease/rental expense (operating leases)
	
$_______________

	  	
(iii)                 plus taxes paid
	
$_______________

	  	
(iv)                 plus current portion of long-term debt (including capital leases)
	
$_______________

	  	
      (v) plus all dividends paid by Parent to its

           shareholders and all monies paid by Parent to

           its shareholders for the repurchase or

          redemption of its stock

 
	
$_______________

	  	
Fixed Charges
	
$_______________

	
Actual Fixed Charge Coverage Ratio [Line 1(a) divided by Line (1(b)]
	
________:1.00

	
Minimum Required Ratio
	
1.25:1.00

	
Covenant Satisfied _____________
	
Covenant Not Satisfied______

	  	  	  
	
2. 

 
	
Subsection 5.1(k): Leverage Ratio
	  
	
(a) 

 
	
Funded Debt
	  
	  	
(i) borrowed money

 
	
$_______________

	  	
(ii) plus minimum amount of leases/rentals

 
	
$_______________

	  	
(iii) plus Guaranteed obligations

 
	
$_______________

	  	
(iv) plus capital lease obligations

 
	
$_______________

	  	
(v) plus secured obligations

 
	
$_______________

	  	
(vi) plus reimbursement obligations

 
	
$_______________

	  	
Funded Debt
	
$_______________

	
Actual Debt Coverage Ratio [Line 2(a) divided by EBITDAR (Line 1(a) above)]
	
_______:1.00

	
Maximum Ratio
	
2.50:1.00

 

	 	
Covenant Satisfied_____________
	
Covenant Not Satisfied______

 

 

 

 

	
3. 

 
	
Subsection 5.2(a): Consolidated Tangible Net Worth
	  
	
(a) 

 
	
Consolidated Tangible Net Worth (as determined pursuant to the Agreement):
	  
	  	
(i) Total stockholders’ equity

 
	
$_______________

	  	
(ii) minus intangible assets (including equity interests)

 
	
$_______________

	  	
(iii) Consolidated Tangible Net Worth

 
	
$_______________

	
(b) 

 
	
Minimum Consolidated Tangible Net Worth
	  
	  	
(i) $85,000,000

 
	
$85,000,000

	  	
Minimum Consolidated Tangible Net Worth
	
$_______________

	
Covenant Satisfied __________
	
Covenant Not Satisfied_____

	
4. 

 
	
Subsection 5.2(d); Contingent Liabilities
	  
	
(a) 

 
	
Actual contingent liabilities
	
$_______________

	
(b) 

 
	
Maximum contingent liabilities
	
$10,000,000

	
Covenant Satisfied
	
Covenant Not Satisfied_____

	
5. 

 
	
Subsection 5.2(f); Indebtedness
	  
	  	
Indebtedness of Companies exclusive of (i)  Indebtedness owed to the Banks, (ii) trade debt not more than 90 days past due, (iii) Indebtedness under Hedge Agreements and (iv) up to $5,000,000 of additional Indebtedness
	
$_______________

	
Covenant Satisfied ____________
	
Covenant Not Satisfied_____

 

 

 

 

	
6. 

 
	
Subsection 5.2(h); Capital Expenditures
	  
	
(a) 

 
	
Capital Expenditures (as determined pursuant to the Agreement) of Companies made during 12 month period just ended:
	
 

$_______________

	
(b) 

 
	
Less proceeds of sale or exchange of fixed assets made during 12 month period just ended:
	
$_______________

	
(c) 

 
	
Net Capital Expenditures
	
$_______________

	
(d) 

 
	
Maximum Net Capital Expenditures
	
$25,000,000

	
Covenant Satisfied __________
	
Covenant Not Satisfied______

	
7. 

 
	
Subsection 5.2(i): Negative Pledge
	  
	
(a) 

 
	
Liens on any asset or property of Companies other than Permitted Liens (as determined pursuant to the Agreement) and Liens otherwise permitted by Subsection 5.2(i) of the Agreement:
	
________________________

(yes or no)

	
(b) 

 
	
Requirement of Agreement:
	
7(a) must contain a “no” response

	
Covenant Satisfied __________
	
Covenant Not Satisfied______

	
I, ___________________, the ___________________ of FFE Transportation Services, Inc., and the ____________________ of Parent, do hereby certify and represent to the Administrative Agent and the Banks that:

	
1.The foregoing calculations are true and correct as at the respective calculation dates shown.

	
2.A review of the activities of the Companies during the period from ________ _____, 20____ to ___________________, 20____, has been made under my supervisions with a view to determining whether each Company has fulfilled all its obligations under the Agreement and the other Loan Papers to which each is a party.  Each Company
has fulfilled each and every covenant and condition contained in the Agreement and the other Loan Papers to which each is a party, and at the end of the fiscal period referred to above is  not (except as described in a writing attached hereto) in default in the performance, observance or fulfillment of any of the covenants or conditions of the Agreement or the other Loan Papers to which it is a party.

	
3.All representations and warranties contained in Article IV of the Agreement are true and correct in all material respects as of the date hereof with the same force and effect as if made on and as of the date hereof.

 

  

  

  

 

	
Executed this __________ day of ________________________, 20_____.

	
FFE TRANSPORTATION SERVICES, INC.

	
By:            

         Ronald J. Knutson

         Senior Vice President and Chief Financial

                                                                                Officer

 

	
FROZEN FOOD EXPRESS INDUSTRIES, INC.

	
By:                                                      

         Ronald J. Knutson

         Senior Vice President and Chief Financial

                                                                                Officer

 

  

  

  

EXHIBIT E

 

NEW ENTITY AGREEMENT

 

 

	
To:
	
Comerica Bank, as Administrative Agent

 

	
  
	
8828 Stemmons Freeway, Suite 441

 

Dallas, Texas 75247

 

Attention:  Robert Clouse

 

Ladies and Gentlemen:

 

Reference is made to that certain Second Amended and Restated Credit Agreement (a true copy of which is in our possession) dated as of September 2, 2009, among FFE Transportation Services, Inc. as Borrower, the Parent, the Other Subsidiaries, Comerica Bank, as Administrative Agent, as Issuing Bank, and as Collateral Agent (as the same
may have been or hereafter may be renewed, extended, amended, modified and/or restated from time to time, the “Agreement”).

 

A direct or indirect controlling interest in the undersigned has been acquired by Borrower or another Company (as defined in the Agreement), and accordingly the undersigned hereby acknowledges and agrees that it is a “Subsidiary” under the Agreement for all purposes.  The undersigned hereby assumes, and agrees to
perform, all duties, obligations and liabilities of and as a “Subsidiary” under the Agreement.

 

Very truly yours,

 

 

 

For:                                                                

 

Name:                                                                

 

Title:                                                                

 

 

Date:                                                                

 

 

 

  

  

  

EXHIBIT F

 

ASSIGNMENT AND ACCEPTANCE

 

Dated September 2, 2009

 

Reference is made to the Second Amended and Restated Credit Agreement dated as of September 2, 2009 (as the same has been or may be amended and in effect from time to time, the “Credit Agreement”), among FEE TRANSPORTATION SERVICES, INC. (“Borrower”), FROZEN FOOD EXPRESS INDUSTRIES, INC. (“Parent”),
CONWELL CORPORATION, FX HOLDINGS, INC., LISA MOTOR LINES, INC., COMPRESSORS PLUS, INC., FEE LOGISTICS, INC., CONWELL LLC, the banks named therein (the “Banks”), COMERICA BANK, as administrative agent for the Banks (together with its successors in such capacity, the “Administrative Agent”), and as collateral agent for the Banks.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.  This Assignment
and Acceptance is being executed pursuant to Section 9.16 of the Credit Agreement.

 

_________________________ (the “Assignor”) and _________________________ (the “Assignee”) agree as follows:

 

(a) The Assignor hereby sells and assigns to the Assignee without recourse, representation or warranty except as specifically set forth herein, and the Assignee hereby purchases and assumes from the Assignor, a ___% interest in and to
all the Assignor’s rights and obligations under the Credit Agreement and the other Loan Papers as of the Effective Date (as defined below) (including, without limitation, such percentage interest in the Commitment of the Assignor on the Effective Date and such percentage interest in the Loans owing to, and Letters of Credit (including participations purchased pursuant to the Credit Agreement) held by, the Assignor outstanding on the Effective Date together with such percentage interest in all unpaid interest
and fees accrued from the Effective Date).

 

(b) The Assignor (i) represents that as of the date hereof, its Commitment is $____________, the outstanding principal balance of its Loans is $____________, and the outstanding Letters of Credit (including participations purchased pursuant
to the Credit Agreement) held by it is $____________ (all as unreduced by any assignments which have not yet been effective); (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Papers or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other Loan Papers, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, the Parent or any other Company or the performance or observance by the Borrower, the Parent or any other Company of any of their obligations under the Credit Agreement or any other Loan Papers; (iv) attaches the Revolving Credit Note held by Assignor and requests that
the Administrative Agent exchange such note for a new note payable to the order of Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and the outstanding principal amount of the Loans assigned to Assignee pursuant hereto, as applicable and (v) agrees that, upon the Effective Date, each letter of credit that was deemed to be a “Letter of Credit” (as defined in the Credit Agreement) under Section 2.14(a) of the Credit Agreement shall not be a Letter of Credit
under the Credit Agreement or any other Loan Paper for any purpose.

 

 

 

 

(c) The Assignee (i) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial
statements and projections delivered pursuant to Section 5.1 thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance, (iii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor, 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 the Credit Agreement and the other Loan Papers; (iv) confirms that it is eligible to be an Assignee; (v) appoints and authorizes the Administrative Agent to take such action on its behalf and to exercise such powers under the Loan Papers as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, and (vi) agrees that it will perform in accordance with their terms all obligations which by the terms of the Credit Agreement and the other
Loan Papers are required to be performed by it as a Bank;

 

(d) The effective date for this Assignment and Acceptance shall be September 2, 2009 the date of acceptance of this Assignment and Acceptance by the Administrative Agent (the “Effective Date”).  Upon the Effective
Date of this Assignment and Acceptance, it will be recorded by the Administrative Agent.

 

(e) Upon such acceptance and recording, from and after the Effective Date, (1) the Assignee shall be a party to the Credit Agreement and shall have the rights and obligations of a Bank thereunder and under the other Loan Papers and (ii)
the Assignor shall relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Papers.

 

(f) Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the interest assigned hereby (including payments
of principal, interest, fees, and other amounts) to the Assignee.  The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Note for periods prior to the Effective Date directly between themselves.

 

(g) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

 

 

  

  

  

[NAME OF ASSIGNOR]

 

By:                                                                

Name:                                                                

Title:                                                                

 

[NAME OF ASSIGNEE]

 

By:                                                                

Name:                                                                

Title:                                                                

 

ACCEPTED AS OF ____________, 200__ BY:

 

COMERICA BANK,

as Administrative Agent

 

By:                                                                           

Name:

Title:

 

FROZEN FOOD EXPRESS INDUSTRIES, INC.,

as Parent

By:                                                                           

Ronald J. Knutson

Senior Vice President and Chief Financial Officer

 

  

  

  

EXHIBIT G

 

Form of Amended and Restated Security Agreement

 

EXHIBIT H

 

Form of Amended and Restated Vehicles Security Agreementform10q_090309exh1.htm

 

EXHIBIT 10.2

 

BUSINESS LOAN AGREEMENT (ASSET BASED)

 

	
Principal

$5,000,000.00
	
Loan Date

08-13-2009
	
Maturity

02-13-2010
	
Loan No

2000206013
	
Account

309275

	
Borrower:
	
ELECSYS CORPORATION

ELECSYS INTERNATIONAL CORPORATION

846 N. MARTWAY COURT

OLATHE, KS 66061
	  	
Lender:
	
Bank Midwest N.A.

Town Pavillion Facility

1111 Main Street

Kansas City, MO  64105

	  

THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated August 13, 2009, is made and executed between ELECSYS CORPORATION and ELECSYS INTERNATIONAL CORPORATION (“Borrower”) and Bank Midwest N.A. (“Lender”) on the following terms and conditions.  Borrower
has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement.  Borrower understands and agrees that:  (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any loan by
Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such loans shall be and remain subject to the terms and conditions of this Agreement.

 

TERM.  This Agreement shall be effective as of August 13, 2009, and shall continue in full force and effect until such time as all of Borrower’s loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and
other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.

 

ADVANCE AUTHORITY.  The following person or persons are authorized, except as provided in this paragraph, to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation
of such authority:  KARL B. GEMPERLI, President & CEO of ELECSYS CORPORATION and President & CEO of ELECSYS INTERNATIONAL CORPORATION; and TODD A. DANIELS, Vp, CFO & Secretary of ELECSYS CORPORATION and CFO of ELECSYS INTERNATIONAL CORPORATION.  FUNDS ARE TO BE DISBURSED AT BORROWER’S REQUEST AND LOAN OFFICER’S APPROVAL.

 

LINE OF CREDIT.  Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration Date, provided the aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base.  Within the foregoing
limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows:

 

Conditions Precedent to Each Advance.  Lender’s obligation to make any Advance to or for the account of Borrower under this Agreement is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required under this Agreement to be in form and substance satisfactory
to Lender:

 

(1) Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered by Borrower to Lender.

 

  

 

  

(2) Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.

 

(3) The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and shall be in full force and effect.

 

(4) All guaranties required by Lender for the credit facility(ies) shall have been executed by each Guarantor, delivered to Lender, and be in full force and effect.

 

(5) Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower’s Accounts, Inventory, books, records, and operations, and Lender shall be satisfied as to their condition.

 

(6) Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable.

 

(7) There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement, and Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled “Compliance Certificate.”

 

Making loan Advances.  Advances under this credit facility, as well as directions for payment from Borrower’s accounts, may be requested orally or in writing by authorized persons.  Lender may, but need not, require that all oral requests be confirmed in
writing.  Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (1) when credited to any deposit account of Borrower maintained with Lender or (2) when advanced in accordance with the instructions of an authorized person.  Lender, at its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested on the next succeeding Business Day.

 

Mandatory loan Repayments.  If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable Borrowing Base, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the difference between
the outstanding principal balance of the Advances and the Borrowing Base.  On the Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest, together with all other applicable fees, costs and charges, if any, not yet paid.

 

Loan Account.  Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such other debits and credits as shall be appropriate in connection with the credit facility.  Lender shall provide Borrower with periodic
statements of Borrower’s account, which statements shall be considered to be correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days after Borrower’s receipt of any such statement which Borrower deems to be incorrect.

 

COLLATERAL.  To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and duties owed by Borrower to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require.  Lender’s
Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the Collateral, including without limitation the proceeds of any insurance.  With respect to the Collateral, Borrower agrees and represents and warrants to Lender:

 

  

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Perfection of Security Interests.  Borrower agrees to execute all documents perfecting Lender’s Security Interest and to take whatever actions are requested by Lender to perfect and continue Lender’s Security Interests in the Collateral.  Upon request
of Lender, Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note Lender’s interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender.  Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements as may be required by applicable law, and Lender will file such financing statements and all such similar
statements in the appropriate location or locations.  Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any Security Interest.  Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for use as a financing statement.  Borrower will reimburse Lender for all expenses for the perfection,
termination, and the continuation of the perfection of Lender’s security interest in the Collateral.  Borrower promptly will notify Lender before any change in Borrower’s name including any change to the assumed business names of Borrower.  Borrower also promptly will notify Lender before any change in Borrower’s Social Security Number or Employer Identification Number.  Borrower further agrees to notify Lender in writing prior to any change in address or location
of Borrower’s principal governance office or should Borrower merge or consolidate with any other entity.

 

Collateral Records.  Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of which records shall be available to Lender or Lender’s representative upon demand for inspection and copying at any reasonable
time.  With respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may require, including without limitation information concerning Eligible Accounts and Account balances and agings.  Records related to Accounts (Receivables) are or will be located at 846 N. Martway Court, Olathe KS 66061.  With respect to the Inventory, Borrower agrees to keep and maintain such records as Lender may require, including without limitation information concerning Eligible
Inventory and records itemizing and describing the kind, type, quality, and quantity of Inventory, Borrower’s Inventory costs and selling prices, and the daily withdrawals and additions to Inventory.  Records related to Inventory are or will be located at 846 N. Martway Court, Olathe KS 66061.  The above is an accurate and complete list of all locations at which Borrower keeps or maintains business records concerning Borrower’s collateral.

 

Collateral Schedules.  Concurrently with the execution and delivery of this Agreement, Borrower shall execute and deliver to Lender schedules of Accounts and Inventory and schedules of Eligible Accounts and Eligible Inventory in form and substance satisfactory to the Lender.  Thereafter
supplemental schedules shall be delivered according to the following schedule:  With respect to Eligible Accounts, schedules shall be delivered within 30 days of month end.  With respect to Eligible Inventory, schedules shall be delivered within 30 days of month end.

 

Representations and Warranties Concerning Accounts.  With respect to the Accounts, Borrower represents and warrants to Lender:  (1) Each Account represented by Borrower to be an Eligible Account for purposes of this Agreement conforms to the requirements of the
definition of an Eligible Account; (2) All Account information listed on schedules delivered to Lender will be true and correct, subject to immaterial variance; and (3) Lender, its assigns, or agents shall have the right at any time and at Borrower’s expense to inspect, examine, and audit Borrower’s records and to confirm with Account Debtors the accuracy of such Accounts.

 

 

  

3

  

 

Representations and Warranties Concerning Inventory.  With respect to the Inventory, Borrower represents and warrants to Lender:  (1) All Inventory represented by Borrower to be Eligible Inventory for purposes of this Agreement conforms to the requirements of the
definition of Eligible Inventory; (2) All Inventory values listed on schedules delivered to Lender will be true and correct, subject to immaterial variance; (3) The value of the Inventory will be determined on a consistent accounting basis; (4) Except as agreed to the contrary by Lender in writing, all Eligible Inventory is now and at all times hereafter will be in Borrower’s physical possession and shall not be held by
others on consignment, sale on approval, or sale or return; (5) Except as reflected in the Inventory schedules delivered to Lender, all Eligible Inventory is now and at all times hereafter will be of good and merchantable quality, free from defects; (6) Eligible Inventory is not now and will not at any time hereafter be stored with a bailee, warehouseman, or similar party without Lender’s prior written consent, and, in such event, Borrower will concurrently at the time of bailment cause any such bailee,
warehouseman, or similar party to issue and deliver to Lender, in form acceptable to Lender, warehouse receipts in Lender name evidencing the storage of Inventory; and (7) Lender, its assigns, or agents shall have the right at any time and at Borrower’s expense to inspect and examine the Inventory and to check and test the same as to quality, quantity, value, and condition.

 

CONDITIONS PRECEDENT TO EACH ADVANCE.  Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the
Related Documents.

 

Loan Documents.  Borrower shall provide to Lender the following documents for the Loan:  (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security
Interests; (4) evidence of insurance as required below; (5) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel.

 

Borrower’s Authorization.  Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents.  In addition, Borrower
shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

 

Fees and Expenses Under This Agreement.  Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable.

 

Representations and Warranties.  The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.

 

No Event of Default.  There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.

 

MULTIPLE BORROWERS.  This Agreement has been executed by multiple obligors who are referred to in this Agreement individually, collectively and interchangeably as “Borrower.” Unless specifically stated to the contrary, the word “Borrower” as used in
this Agreement, including without limitation all representations, warranties and covenants, shall include all Borrowers.  Borrower understands and agrees that, with or without notice to anyone Borrower, Lender may (A) make one or more additional secured or unsecured loans or otherwise extend additional credit with respect to any other Borrower; (B) with respect 

 

  

4

  

 

to any other Borrower alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (C) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (D) release, substitute, agree not to
sue, or deal with anyone or more of Borrower’s or any other Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) determine how, when and what application of payments and credits shall be made on any indebtedness; (F) apply such security and direct the order or manner of sale of any Collateral, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion
may determine; (G) sell, transfer, assign or grant participations in all or any part of the Loan; (H) exercise or refrain from exercising any rights against Borrower or others, or otherwise act or refrain from acting; (I) settle or compromise any indebtedness; and (J) subordinate the payment of all or any part of any of Borrower’s indebtedness to Lender to the payment of any liabilities which may be due Lender or others.

 

REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

 

Organization.  ELECSYS CORPORATION is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Kansas.  ELECSYS CORPORATION is duly authorized to transact
business in all other states in which ELECSYS CORPORATION is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which ELECSYS CORPORATION is doing business.  Specifically, ELECSYS CORPORATION is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition.  ELECSYS CORPORATION has the full power and authority
to own its properties and to transact the business in which it is presently engaged or presently proposes to engage.  ELECSYS CORPORATION maintains an office at 846 N. MARTWAY COURT, OLATHE, KS 66061.  Unless ELECSYS CORPORATION has designated otherwise in writing, the principal office is the office at which ELECSYS CORPORATION keeps its books and records including its records concerning the Collateral.  ELECSYS CORPORATION will notify Lender prior to any change in the location of
ELECSYS CORPORATION’s state of organization or any change in ELECSYS CORPORATION’s name.  ELECSYS CORPORATION shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to ELECSYS CORPORATION and ELECSYS CORPORATION’s business activities.

 

ELECSYS INTERNATIONAL CORPORATION is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Kansas.  ELECSYS INTERNATIONAL CORPORATION is duly authorized to transact business in all other states in which ELECSYS INTERNATIONAL
CORPORATION is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which ELECSYS INTERNATIONAL CORPORATION is doing business.  Specifically, ELECSYS INTERNATIONAL CORPORATION is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition.  ELECSYS INTERNATIONAL CORPORATION has the full power and authority
to own its properties and to transact the business in which it is presently engaged or presently proposes to engage.  ELECSYS INTERNATIONAL CORPORATION maintains an office at 846 N. MARTWAY COURT, 

  

5

  

OLATHE, KS 66061.  Unless ELECSYS INTERNATIONAL CORPORATION has designated otherwise in writing, the principal office is the office at which ELECSYS INTERNATIONAL CORPORATION keeps its books and records including its records concerning the Collateral.  ELECSYS
INTERNATIONAL CORPORATION will notify Lender prior to any change in the location of ELECSYS INTERNATIONAL CORPORATION’s state of organization or any change in ELECSYS INTERNATIONAL CORPORATION’s name.  ELECSYS INTERNATIONAL CORPORATION shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to ELECSYS INTERNATIONAL CORPORATION and ELECSYS INTERNATIONAL CORPORATION’s business activities.

 

Assumed Business Names.  Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower.  Excluding the name of Borrower, the following is a complete list of all assumed business names under which
Borrower does business:  None.

 

Authorization.  Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision
of (a) Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties.

 

Financial Information.  Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition
subsequent to the date of the most recent financial statement supplied to Lender.  Borrower has no material contingent obligations except as disclosed in such financial statements.

 

Legal Effect.  This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective
terms.

 

Properties.  Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good
title to all of Borrower’s properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties.  All of Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.

 

Hazardous Substances.  Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that:  (1) During the period of Borrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment,
disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral.  (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or
threatened litigation or claims of any kind by any person relating to such matters.  (3) Neither 

  

6

  

 

Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws.  Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement.  Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any other person.  The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances.  Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and
hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral.  The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of
the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

 

Litigation and Claims.  No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial
condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.

 

Taxes.  To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to
be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

 

Lien Priority.  Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing
repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral.

 

Binding Effect.  This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

 

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

 

Notices of Claims and Litigation.  Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting
Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

 

  

7

  

Financial Records.  Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower’s books and records at all reasonable times.

 

Financial Statements.  Furnish Lender with the following:

 

Annual Statements.  As soon as available, but in no event later than ninety (90) days after the end of each fiscal year, Borrower’s balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender.

 

Interim Statements.  As soon as available after the end of each fiscal quarter, Borrower’s balance sheet and profit and loss statement for the period ended, prepared by Borrower.

 

Additional Requirements.  Monthly Financial Statements, Accounts Receivable Aging report, Accounts Payable Aging report, Inventory report and Borrowing Base Certificate are required.

 

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.

 

Additional Information.  Furnish such additional information and statements, as Lender may request from time to time.

 

Financial Covenants and Ratios.  Comply with the following covenants and ratios:

 

Additional Requirements.  Financial covenants are tested quarterly on a trailing twelve month basis.

 

1)  Minimum EBITDA to Debt Service - 1.5x

 

2)  Maximum Funded Debt to EBITDA - 3.5x, stepping down to 3.0x by September 30, 2009

 

3)  Maximum Funded Debt to Tangible Net Worth - 2.0x

 

4)  Minimum Tangible Net Worth - $4,000,000.00

 

DEFINED TERMS

 

The following financial metrics are defined with respect to Borrower.  Static metrics reported on the balance sheet shall be defined as the figure reported as at the effective date of calculation unless otherwise specified; cumulative metrics reported on the income statement shall be defined as amounts accrued during the 12 consecutive
calendar months immediately prior to the effective date of calculation.  Accounting terms not specifically defined herein are assumed to have the meaning used in GAAP.

 

Debt Service means, with respect to the Borrower for any period, the aggregate amount of scheduled principal and interest expense payments made by Borrower on all Funded Debt.

 

EBITDA means, with respect to Borrower for any period, (i) the sum of (a) net income, (b) cash interest expense, (c) depreciation and amortization expense, (d) federal, state, and local income or

 

  

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franchise taxes, and (e) any losses incurred from the sale of fixed assets, minus (ii) any gains realized from the sale of fixed assets, in each case for such period, computed and calculated, without duplication.

 

For purposes of calculating the financial covenants herein, EBITDA shall not include the EBITDA of any acquired company or division for any period prior to the date of such acquisition.

 

Funded Debt means, as to Borrower at any particular time, the sum of (a) all obligations for borrowed money (whether as a direct obligor on a promissory note, bond, debenture, or other similar instrument, as a reimbursement obligor with respect to an issued letter of credit or similar
instrument, as an obligor under a guaranty in respect of borrowed money, or as any other type of direct or contingent obligor), and (b) all capitalized lease obligations (other than the interest component of such obligations), calculated without duplication.

 

Tangible Net Worth means the additive and subtractive result of (a) total equity as determined in accordance with GAAP, consistently applied plus (b) Subordinated Debt minus (c) total intangible assets as determined by Lender in its sole discretion on a consistent basis including
without limitation:  (i) receivables from directors, officers, employees, agents, subsidiaries, or affiliates of Borrower, (ii) deferred financing costs - net, (iii) returned checks or drafts, (iv) capitalized product development or R&D costs, (v) deferred fees and customer charges, (vi) deposits held by entities and under terms other than by financial institutions as demand and time deposits and instruments held in the normal course of business, (vii) prepaid expenses and other
prepaid accounts, (viii) investments in closely-held businesses that are not consolidated with Borrower, (ix) goodwill, (x) other intangible assets.

 

Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct.

 

Insurance.  Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender.  Borrower,
upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender.  Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person.  In connection with all
policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require.

 

Insurance Reports.  Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following:  (1) the name of the insurer; (2) the risks insured;
(3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy.  In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral.  The cost of such appraisal shall
be paid by Borrower.

 

  

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Other Agreements.  Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.

 

Loan Proceeds.  Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing.

 

Taxes, Charges and Liens.  Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits.  Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with respect
to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.

 

Performance.  Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender.  Borrower shall notify Lender immediately
in writing of any default in connection with any agreement.

 

Operations.  Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.

 

Environmental Studies.  Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance
defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.

 

Compliance with Governmental Requirements.  Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of
the Collateral, including without limitation, the Americans With Disabilities Act.  Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sale opinion, Lender’s interests in the Collateral are not jeopardized.  Lender may require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender’s interest.

 

Inspection.  Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of
Borrower’s books, accounts, and records.  If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender,

 

  

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shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense.

 

Compliance Certificates.  Unless waived in writing by Lender, provide Lender within fifteen (15) days after the end of each Month End, with a certificate executed by Borrower’s chief financial officer, or other officer or person acceptable to Lender, certifying that
the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement.

 

Environmental Compliance and Reports.  Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on
property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality
concerning any intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

 

Additional Assurances.  Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence
and secure the Loans and to perfect all Security Interests.

 

LENDER’S EXPENDITURES.  If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s
failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral.  All
such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower.  All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy;
or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity.

 

NEGATIVE COVENANTS.  Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

 

Capital Expenditures.  Make or contract to make capital expenditures, including leasehold improvements, in any fiscal year in excess of $1,000,000.00 or incur liability for rentals of property (including both real and personal property) in an amount which, together with
capital expenditures, shall in any fiscal year exceed such sum.

 

  

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Indebtedness and Liens.  (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign,
pledge, lease, grant a security interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender.

 

Continuity of Operations.  (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer
or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower’s stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from
time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capital structure.

 

Loans, Acquisitions and Guaranties.  (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in
the ordinary course of business.

 

Agreements.  Borrower will not enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower’s obligations under this Agreement or in connection herewith.

 

CESSATION OF ADVANCES.  If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if:  (A) Borrower or any Guarantor
is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor
seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender.

 

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and
all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.

 

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

 

Payment Default.  Borrower fails to make any payment when due under the Loan.

 

  

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Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.

 

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s
or any Grantor’s property or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.

 

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.

 

Insolvency.  The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout,
or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Defective Collateralization.  This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan.  This
includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Change in Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse Change.  A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.

 

Right to Cure.  If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case
may be, after receiving written notice from Lender demanding cure of such default: (1) cure the default within ten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiate steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continue and

 

  

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complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

 

EFFECT OF AN EVENT OF DEFAULT.  If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will
terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional.  In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law,
in equity, or otherwise.  Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently.  Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies.

 

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of this Agreement:

 

Amendments.  This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement.  No alteration of or amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses.  Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement.  Lender
may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement.  Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction) and appeals.  Borrower also shall pay all court costs and such additional fees as may be directed
by the court.

 

Caption Headings.  Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.

 

Consent to Loan Participation.  Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender.  Lender may provide, without
any limitation whatsoever, to anyone or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters.  Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests.  Borrower also agrees that the purchasers of any
such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests.  Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation
under the Loan irrespective of the failure or insolvency of any holder of any interest in

 

  

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the Loan.  Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.

 

Governing Law.  This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Missouri without regard to its conflicts of law provisions.  This Agreement has been accepted by Lender
in the State of Missouri.

 

Choice of Venue.  If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Jackson County, State of Missouri.

 

Joint and Several Liability.  All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shall mean each and every Borrower.  This means that each Borrower signing below is responsible for all obligations in this
Agreement.  Where anyone or more of the parties is a corporation, partnership, limited liability company or similar entity, it is not necessary for Lender to inquire into the powers of any of the officers, directors, partners, members, or other agents acting or purporting to act on the entity’s behalf, and any obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Agreement.

 

No Waiver by Lender.  Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender.  No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right
or any other right.  A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement.  No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any future
transactions.  Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Notices.  Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier,
or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement.  Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address.  For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current
address.  Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.

 

Severability.  If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person
or circumstance.  If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable.  If the offending provision cannot be so modified, it shall be considered deleted from this Agreement.  Unless otherwise required by law, the illegality, invalidity, or unenforceability

 

  

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of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

 

Subsidiaries and Affiliates of Borrower.  To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all
of Borrower’s subsidiaries and affiliates.  Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates.

 

Successors and Assigns.  All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns.  Borrower
shall not, however, have the right to assign Borrower’s rights under this Agreement or any interest therein, without the prior written consent of Lender.

 

Survival of Representations and Warranties.  Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement or the Related Documents.  Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall be paid in full,
or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

 

Time is of the Essence.  Time is of the essence in the performance of this Agreement.

 

DEFINITIONS.  The following capitalized words and terms shall have the following meanings when used in this Agreement.  Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America.  Words
and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require.  Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code.  Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

 

Account.  The word “Account” means a trade account, account receivable, other receivable, or other right to payment for goods sold or services rendered owing to Borrower (or to a third party grantor acceptable to Lender).

 

Account Debtor.  The words “Account Debtor” mean the person or entity obligated upon an Account.

 

Advance.  The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf under the terms and conditions of this Agreement.

 

Agreement.  The word “Agreement” means this Business Loan Agreement (Asset Based), as this Business Loan Agreement (Asset Based) may be amended or modified from time to time,

 

  

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together with all exhibits and schedules attached to this Business Loan Agreement (Asset Based) from time to time.

 

Borrower.  The word “Borrower” means ELECSYS CORPORATION and ELECSYS INTERNATIONAL CORPORATION and includes all co-signers and co-makers signing the Note and all their successors and assigns.

 

Borrowing Base.  The words “Borrowing Base” mean, as determined by Lender from time to time, the lesser of (1) $5,000,000.00 or (2) the sum of (a) 80.000% of the aggregate amount of Eligible Accounts, plus (b) 50.000% of the aggregate amount of Eligible Inventory.

 

Business Day.  The words “Business Day” mean a day on which commercial banks are open in the State of Missouri.

 

Collateral.  The word “Collateral” means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security
interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.  The word Collateral also includes without limitation all collateral described in the
Collateral section of this Agreement.

 

Eligible Accounts.  The words “Eligible Accounts” mean at any time, all of Borrower’s Accounts which contain selling terms and conditions acceptable to Lender.  The net amount of any Eligible Account against which Borrower may borrow shall exclude
all returns, discounts, credits, and offsets of any nature.  Unless otherwise agreed to by Lender in writing, Eligible Accounts do not include:

 

(1)  Accounts with respect to which the Account Debtor is employee or agent of Borrower.

 

(2)  Accounts with respect to which the Account Debtor is a subsidiary of, or affiliated with Borrower or its shareholders, officers, or directors.

 

(3)  Accounts with respect to which goods are placed on consignment, guaranteed sale, or other terms by reason of which the payment by the Account Debtor may be conditional.

 

(4)  Accounts with respect to which Borrower is or may become liable to the Account Debtor for goods sold or services rendered by the Account Debtor to Borrower.

 

(5)  Accounts which are subject to dispute, counterclaim, or setoff.

 

(6)  Accounts with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the Account Debtor.

 

(7)  Accounts with respect to which Lender, in its sole discretion, deems the creditworthiness or financial condition of the Account Debtor to be unsatisfactory.

 

  

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(8)  Accounts of any Account Debtor who has filed or has had filed against it a petition in bankruptcy or an application for relief under any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or receiver for the assets of such Account Debtor; or
who has made an assignment for the benefit of creditors or has become insolvent or fails generally to pay its debts (including its payrolls) as such debts become due.

 

(9)  Accounts which have not been paid in full within 90 days from the invoice date.

 

(10)  All Accounts of any account debtor of Borrower if any Account of such account debtor has not been paid in full within 90 days of its invoice date.

 

(11)  All Accounts due from foreign companies.

 

Eligible Inventory.  The words “Eligible Inventory” mean, at any time, all of Borrower’s Inventory as defined below, except:

 

(1)  Inventory which is not owned by Borrower free and clear of all security interests, liens, encumbrances, and claims of third parties.

 

(2)  Inventory which Lender, in its sole discretion, deems to be obsolete, unsalable, damaged, defective, or unfit for further processing.

 

(3)  Work in progress.

 

Environmental Laws.  The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.

 

Event of Default.  The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.

 

Expiration Date.  The words “Expiration Date” mean the date of termination of Lender’s commitment to lend under this Agreement.

 

GAAP.  The word “GAAP” means generally accepted accounting principles.

 

Grantor.  The word “Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.

 

Guarantor.  The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Loan.

 

Guaranty.  The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.

 

  

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Hazardous Substances.  The words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when
improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled.  The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws.  The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.

 

Indebtedness.  The word “Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or
under any of the Related Documents.

 

Inventory.  The word “Inventory” means all of Borrower’s raw materials, work in process, finished goods, merchandise, parts and supplies, of every kind and description, and goods held for sale or lease or furnished under contracts of service in which Borrower
now has or hereafter acquires any right, whether held by Borrower or others, and all documents of title, warehouse receipts, bills of lading, and all other documents of every type covering all or any part of the foregoing.  Inventory includes inventory temporarily out of Borrower’s custody or possession and all returns on Accounts.

 

Lender.  The word “Lender” means Bank Midwest N.A., its successors and assigns.

 

Loan.  The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on
any exhibit or schedule attached to this Agreement from time to time.

 

Note.  The word “Note” means the Note executed by ELECSYS CORPORATION and ELECSYS INTERNATIONAL CORPORATION in the principal amount of $5,000,000.00 dated August 13, 2009, together with all renewals of, extensions of, modifications of, refinancings of, consolidations
of, and substitutions for the note or credit agreement.

 

Permitted Liens.  The words “Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and security interests
which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets.

 

Primary Credit Facility.  The words “Primary Credit Facility” mean the credit facility described in the Line of Credit section of this Agreement.

 

  

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Related Documents.  The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments,
agreements and documents, whether now or hereafter existing, executed in connection with the Loan.

 

Security Agreement.  The words “Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing,
or creating a Security Interest.

 

Security Interest.  The words “Security Interest” mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge,
chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.

 

ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT.  TO PROTECT YOU (BORROWER(S))
AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

 

WAIVE JURY.  All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.

 

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED) , BORROWER AGREES TO ITS TERMS.  THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED AUGUST 13, 2009.

 

BORROWER:

 

ELECSYS CORPORATION

By: _______________________________________________                                                                                    

KARL B. GEMPERLI, President & CEO of ELECSYS

CORPORATION

ELECSYS INTERNATIONAL CORPORATION

By:  _______________________________________________                                                                                   

KARL B. GEMPERLI, President & CEO of ELECSYS

INTERNATIONAL CORPORATION

  

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LENDER:

BANK MIDWEST N.A.

By: ________________________________________________                                                                                    

Authorized Signer

  

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