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Exhibit 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Loan Agreement") is made as of the 28th
day of November, 2006, by and between UNIVERSAL TRUCKLOAD
SERVICES, INC. , a corporation organized and existing under the
laws of Michigan with its principal place of business at
11355 Stephens Road, Warren, Michigan 48089 ("Borrower"), and
FIRST TENNESSEE BANK NATIONAL ASSOCIATION , a national
banking association organized and existing under the statutes of
the United States of America, with its principal place of business
at 165 Madison Avenue, Memphis, Tennessee 38103 ("Bank").
Recitals of Fact
Borrower has requested that the Bank commit to make loans and
advances and extensions of credit to it on a revolving credit basis
in an amount not to exceed at any one time outstanding the
principal sum of Twenty Million Dollars ($20,000,000.00)
("Committed Amount"). The Bank has agreed to make such loans and
advances and extensions of credit on the terms and subject to the
conditions herein set forth.
NOW, THEREFORE, incorporating the Recitals of Fact set forth
above and in consideration of the mutual agreements herein
contained, the parties agree as follows:
AGREEMENTS
SECTION ONE: DEFINITIONS AND ACCOUNTING TERMS
For the purposes of this Loan Agreement, the following terms
shall have the following meanings (such meanings to be applicable
equally to both the singular and plural forms of such terms) unless
the context otherwise requires:
"Accounts Receivable Assets" shall mean all of the accounts,
accounts receivable, chattel paper, instruments, and other
obligations of any kind, whether or not evidenced by an instrument
or chattel paper, and whether or not earned by performance
(collectively hereinafter "Accounts Receivable") whether now or
hereafter existing, arising out of or in connection with the sale
of goods or the rendering of services, and all rights now or
hereafter existing in and to all security agreements, and other
contracts securing or otherwise relating to any such Accounts
Receivable but excluded from Accounts Receivable are any accounts
arising out of the leasing of trucks, trailers, tractors and
equipment; all customer lists, original books and records, ledger
and account cards, computer tapes, discs and printouts, whether now
in existence or hereafter created pertaining to the foregoing
collateral; and all proceeds ("Proceeds") of any and all of the
foregoing collateral including, without limitation, all moneys due
or to become due in connection with any of the collateral,
guaranties and security for the payment of such moneys; in each
case, whether now owned or hereafter acquired by the Person and
howsoever its interest therein may arise or appear (whether by
ownership, lease, security interest, claim, or otherwise).
"Business Day" means a banking business day of the Bank.
"Closing Date" means the date set out in the
first paragraph of this Loan Agreement.
"Consistent Basis" shall mean, in reference to the application
of Generally Accepted Accounting Principles, that the accounting
principles observed in the current period are comparable in all
material respects to those applied in the preceding periods.
"Cure Period" shall mean fifteen (15) days with respect to
a Monetary Default and thirty (30) days with respect to a
NonMonetary Default.
"Debt/Tangible Net Worth Ratio" shall mean, as of the date of
determination, that ratio determined by a fraction:
"Event of Default" has the meaning assigned to that phrase in
Section Eight.
"Generally Accepted Accounting Principles" shall mean those
principles set forth in Opinion of the Accounting Principles Board
of the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, or those principles which
have other substantial authoritative support and are applicable in
the circumstances as of the date of the report, provided however,
that with respect to the calculation of the financial covenants set
forth in Section 6.8 such calculations shall be substantially
in accordance with applicable Interstate Commerce Commission
regulations, but nevertheless to the extent possible, substantially
consistent with Generally Accepted Accounting Principles (as
hereinabove defined).
"Loan" means the aggregate of (i) unpaid Loan advances from
time to time outstanding pursuant to the provisions of this Loan
Agreement, and (ii) the amount of any outstanding letters of
credit issued by Bank for the account of Borrower (including
letters of credit presently outstanding). Unless the context shall
otherwise require, the terms "extensions of credit" and
"indebtedness," when used in connection with this Loan, shall also
include any outstanding letters of credit issued by Bank for the
account of the Borrower, and drafts accepted pursuant thereto, as
well as loan advances disbursed to the Borrower.
"Loan Agreement" means this Loan Agreement between the Borrower
and the Bank.
"Maximum Rate" means the maximum effective variable contract
rate of interest which the Bank may lawfully charge under
applicable statutes and laws from time to time in effect.
"Monetary Default" shall mean any default under Section 8
of this Agreement which may be cured by the payment of money.
"Net Worth" means, as of the date of determination, the
difference between the Total Assets and the Total Liabilities of
Borrower on a consolidated basis, and is to be determined both as
to classification of items and amounts in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis.
"Non-Monetary Default" shall mean any default
under Section 8 of this Agreement other than a Monetary
Default.
"Note" means the promissory note of the Borrower dated of even
date herewith in the principal amount of Twenty Million Dollars
($20,000,000.00), payable to the order of the Bank which evidences
the Loan, as such note may be modified, renewed or extended from
time to time; and any other note or notes executed at any time to
evidence the Loan in whole or in part.
"Person" means an individual, partnership, limited liability
company, corporation, trust, unincorporated organization,
association, joint venture or a government or agency or political
subdivision thereof.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Related Person" shall mean any Person, other than a publicly
traded corporation or Person, (a) which now or hereafter
directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, Borrower, or
(b) which now or hereafter beneficially owns or holds five
percent (5%) or more of the capital stock of Borrower, or
(c) five percent (5%) or more of the capital stock of
which is beneficially owned or held by Borrower. For the purposes
hereof, "control" shall mean possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting stock
or the right to vote voting stock.
"Subsidiary," "Subsidiaries" of any Person means (a) any
corporation, more than fifty percent (50%) of whose stock of
any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time any class or classes of
the capital stock of such corporation shall have or might have
voting power by reason of the happening of an contingency), is at
the time owned by such Person directly or indirectly through
Subsidiaries of such Person; and (b) any partnership,
association, joint venture or other entity in which such Person
directly or indirectly through Subsidiaries of such Person has more
than fifty percent (50%) of the equity interest at any
time.
"Tangible Net Worth" shall mean, as of the date of
determination, Net Worth, less (a) the values assigned to
intangibles, e.g., goodwill, royalties, unamortized bond discount,
acquisition costs in excess of book value, research and development
costs, patents, copyrights, trademarks, tradenames, (b) any
accumulated earnings attributable to interests in the capital stock
and retained earnings of other Persons other than a wholly-owned
subsidiary of the Borrower, (c) deferred assets, and
(d) any other assets properly classified as intangible (except
for value assigned to intrastate operating authority, franchises,
licenses and permits), in accordance with Generally Accepted
Accounting Principles; provided that with respect to the foregoing,
accumulated earnings shall not be deducted from the market value of
any publicly traded securities; and provided, further, that with
respect to the Borrower, any loans due to the Borrower from Centra,
Inc. and any amounts due to the Borrower from any subsidiaries or
affiliates of Centra, Inc. or any affiliate of the Borrower shall
be deducted from Net Worth.
"Termination Date" shall mean the 31st day of
May, 2008, unless such date is extended pursuant to the provisions
of Section 9.12 hereof, in which event such extended date
shall be the Termination Date.
"Total Assets" shall mean all of the assets of the Borrower, on
a consolidated basis, whether tangible or intangible, determined in
accordance with Generally Accepted Accounting Principles.
"Total Liabilities" shall mean all obligations of Borrower, on a
consolidated basis, which, in accordance with Generally Accepted
Accounting Principles, are or should be classified as liabilities
on a balance sheet.
"United States" means the government of the United States of
America or any department, agency, division or instrumentality
thereof.
SECTION TWO: COMMITMENT AND FUNDING
2.1 The Commitment . Subject to the terms and conditions
herein set out, the Bank agrees and commits, from time to time,
from the Closing Date until the Termination Date, to make loan
advances to the Borrower and to issue letters of credit, all in an
aggregate principal amount not to exceed, at any one time
outstanding the sum of Twenty Million Dollars ($20,000,000.00).
2.2 Funding the Loan; Extending Credit . Each loan
advance hereunder shall be made by depositing the same to the
checking account of the Borrower in Bank, or in such other manner
as the Borrower and Bank may, from time to time, agree.
2.3 The Note and Interest .
(a) All advances with respect to the Loan shall be evidenced by
the promissory note of the Borrower, payable to the order of the
Bank in the principal amount of Twenty Million Dollars
($20,000,000.00), in form substantially the same as the copy of the
Note attached hereto as Exhibit "A." The entire
principal amount of the Loan shall be due and payable on the
Termination Date. The unpaid principal balance of the Loan shall
bear interest from the Closing Date on disbursed and unpaid
principal balances (calculated on the basis of a year of 360 days)
at a rate or rates per annum as specified in the Note. Said
interest shall be payable monthly on the first day of each month
after the Closing Date, with the final installment of interest
being due and payable on the Termination Date, or on such earlier
date as the Loan shall become due and payable.
(b) In the event that the Bank should at any time agree to
increase the Committed Amount, the Borrower will either execute a
new note for the amount of such increase, or a new note for the
aggregate increased Committed Amount; and in either event, the term
"Note," as used herein, shall be deemed to mean and include such
new note, as the circumstances shall require.
2.4 [Intentionally Deleted].
SECTION THREE: REQUIRED PAYMENTS, PLACE OF PAYMENT,
ETC.
3.1 Place of Payments . All payments of principal and
interest on the Loan and all payments of fees required hereunder
shall be made to the Bank, at its address listed at the beginning
of this Agreement (Attention: First Horizon Business Credit
Division), in immediately available funds.
3.2 Payment on Nonbusiness Days . Whenever any payment of
principal, interest or fees to be made on the indebtedness
evidenced by the Note shall fall due on a Saturday, Sunday or
public holiday under the laws of the State of Tennessee, such
payment shall be made on the next succeeding Business Day.
SECTION FOUR: CONDITIONS OF LENDING
4.1 Conditions Precedent to Closing and Funding Initial
Advance . The obligation of the Bank to fund the initial Loan
advance hereunder is subject to the condition precedent that the
Bank shall have received, on or before the Closing Date, all of the
following in form and substance satisfactory to the Bank:
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(a) This Loan Agreement
(b) Note (the "Note") from the Borrower, payable to the order of
the Bank in the principal amount of Twenty Million Dollars
($20,000,000.00).
(c) Certified corporate resolutions of Borrower and
certificate(s) of good standing for Borrower from its state of
incorporation and such other states as Bank shall require, together
with a copy of the charter and bylaws of the Borrower.
(d) If required by Bank, the opinion of Borrower’s counsel
that the transactions herein contemplated have been duly authorized
by all requisite corporate authority, that this Loan Agreement and
the other instruments and documents herein referred to have been
duly authorized, validly executed and are in full force and effect,
and pertaining to such other matters as the Bank may require.
(e) Such other information and documentation as Bank shall
reasonably deem to be necessary or desirable in connection with the
funding of the Loan.
4.2 Conditions Precedent to All Credit Extensions . The
obligation of the Bank to extend credit or make loan advances
pursuant hereto (including the initial advance at the Closing Date)
shall be subject to the following additional conditions
precedent:
(a) The Borrower shall have furnished to the Bank each of the
items referred to in Section 4.1 hereof, all of which shall
remain in full force and effect as of the date of such requested
credit extension or loan advance (notwithstanding that the Bank may
not have required any such item to be furnished prior to the
Closing Date).
(b) The Borrower shall not be in default of any
of the terms and provisions hereof, or of any instrument or
document now or at any time hereafter evidencing or securing all or
any part of the Loan indebtedness and extensions of credit. Each of
the Warranties and Representations of the Borrower, as set out in
Section Five hereof shall remain true and correct in all material
respects as of the date of such Loan advance.
SECTION FIVE: REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
5.1 Incorporation . It is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Michigan; it has the power and authority to own its properties
and assets and is duly qualified to carry on its business in every
jurisdiction wherein such qualification is necessary.
5.2 Power and Authority . The execution, delivery and
performance of this Loan Agreement and the Note, executed pursuant
thereto by the Borrower, have been duly authorized by all requisite
action and will not violate any provision of law, any order of any
court or other agency of government, the Articles of Incorporation
or Bylaws of the Borrower, any provision of any indenture,
agreement or other instrument to which Borrower is a party, or by
which Borrower’s properties or assets are bound, or be in
conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation
or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of Borrower or any
Subsidiary of the Borrower except for liens and other encumbrances
provided for and securing the indebtedness covered by this Loan
Agreement.
5.3 Financial Condition .
(a) (i) The audited financial statements of Borrower for
the fiscal year ended as of December 31, 2005, on a
consolidated basis for the year then ended, a copy of which has
been furnished to the Bank, together with any explanatory notes
therein referred to and attached thereto, and the unaudited
financial statements of the Borrower for the quarter ended as of
June 30, 2006, on a consolidated basis, a copy of which has
been furnished to the Bank, fairly present the financial condition
of Borrower as of the date of said balance sheet and the results of
its operations for said periods. Such financial statements have
been prepared in accordance with Generally Accepted Accounting
Principles applied on a consistent basis maintained through the
period involved.
(b) There has been no material adverse change in the business,
properties or condition, financial or otherwise, of Borrower since
the 30th day of June, 2006.
5.4 Title to Assets . Borrower has good and marketable
title to material properties and assets shown to be owned by it as
reflected on the balance sheet referred to in Section 5.3
hereof, except for (i) such assets as have been disposed of
since said date as no longer used or useful in the conduct of
business, (ii) Accounts Receivable collected and properly
accounted for, and (iii) items which have been amortized in
accordance with Generally Accepted Accounting Principles applied on
a consistent basis.
5.5 Litigation . There is no action, suit
or proceeding at law or in equity or by or before any governmental
instrumentality or other agency now pending, or, to the knowledge
of the Borrower threatened against or affecting Borrower, or any
properties or rights of Borrower, which, if adversely determined,
would materially and adversely affect the financial condition of
Borrower.
5.6 Taxes . Borrower has filed or caused to be filed all
federal, state or local tax returns which are required to be filed,
and has paid all taxes as shown on said returns or on any
assessment received by it, to the extent that such taxes have
become due, except as otherwise permitted by the provisions hereof
(see Section 6.4).
5.7 Contracts or Restrictions Affecting Borrower .
Borrower is not a party to any agreement or instrument or subject
to any charter or other corporate restrictions adversely affecting
its business, properties or assets, operations or financial
condition.
5.8 No Default . Borrower is not in default in the
performance, observance or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument
to which it is a party, which does or will in the foreseeable
future materially and adversely affect the business or operations
of Borrower.
5.9 ERISA . Borrower is in compliance with all applicable
provisions of the Employees Retirement Income Security Act of 1974
("ERISA"), and all other laws, state or federal, applicable to any
employees’ retirement plan maintained or established by
it.
SECTION SIX: AFFIRMATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that from the date hereof and
until payment in full of the principal of and interest on the Loan,
unless the Bank shall otherwise consent in writing, such consent to
be at the discretion of the Bank, Borrower will:
6.1 Business and Existence . Perform all things necessary
to preserve and keep in full force and affect its existence, rights
and franchises, comply with all laws applicable to it and continue
to conduct and operate its business.
6.2 Maintain Property . Maintain, preserve, and protect
all franchises, and trade names and preserve all the remainder of
its properties used or useful in the conduct of its business
substantially as conducted and operated during the present and
preceding fiscal year; preserve all the remainder of its properties
used or useful in the conduct of its business and keep the same in
good repair, working order and condition, and from time to time
make, or cause to be made, all needed and proper repairs, renewals,
replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly
conducted at all times.
6.3 Insurance . At all times maintain in some company or
companies (having a Best’s rating of A- or
better) approved by Bank, comprehensive public liability
insurance covering claims for bodily injury, death, and property
damage, with minimum limits satisfactory to the Bank, but in any
event not less than those amounts customarily maintained by
companies in the same or substantially similar business;
6.4 Obligations, Taxes and Liens . Pay all
of its indebtednesses and obligations promptly in accordance with
normal terms and practices of its business and pay and discharge or
cause to be paid and discharged promptly all taxes, assessments,
and governmental charges or levies imposed upon it or upon any of
its income, profits, or properties, real, personal or mixed, or
upon any part thereof, before the same shall become in default, as
well as all lawful claims for labor, materials, and supplies which
otherwise, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that the
Borrower shall not be required to pay and discharge or to cause to
be paid and discharged any such tax, assessment, trade payable,
charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings satisfactory to
Bank, and Bank shall be furnished, if Bank shall so request, bond
or other security protecting it against loss in the event that such
contest should be adversely determined.
6.5 Financial Reports and Other Data .
(a) Furnish to the Bank as soon as available, and in any event
within one hundred twenty (120) days after the end of each
fiscal year of Borrower, consolidated balance sheets and statements
of income and surplus of Borrower which have been certified by an
independent Certified Public Accountant acceptable to the Bank,
showing the financial condition of Borrower and at the close of
such year and the results of operations during such year; and,
within ninety (90) days after the end of each fiscal quarter,
financial statements similar to those mentioned above, on a
consolidating basis, not audited, such balance sheets to be as of
the end of each such quarter, and such statements of income and
surplus to be for the period from the beginning of the fiscal year
to the end of such quarter, in each case subject only to audit and
year-end adjustment. Borrower shall use good faith efforts to
submit the unaudited financial statements as certified by the
Treasurer or other appropriate financial officer ("Certifying
Officer"). Borrower’s failure to submit a certificate of the
Certifying Officer with the unaudited financial statements shall
not constitute an Event of Default, but any submission of Borrower
shall automatically have been deemed to make the certifications in
the preceding sentence when Borrower submits any financial
statements to the Bank. The certificate of the Certifying Officer
shall state that the attached financial statement, together with
any explanatory notes therein referred to and attached thereto, is
correct and complete and fairly presents the financial condition of
the Borrower as of the date of the financial statement, and the
results of its operations for the period ending on the date
reflected in said financial statement; and that such financial
statement has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis maintained
throughout the period involved.
(b) Borrower’s delivery to Bank of each set of financial
statements pursuant to Section 6.5(a) hereof shall constitute
a certification to the effect that such financial statements set
forth the information required in order to establish whether the
Borrower was in compliance with the requirements set forth in
Section 6.8 of this Agreement during and as of the end of the
period covered by the financial statements then being
furnished.
6.6 Notice of Default . At the time of Borrower’s
first knowledge or notice, furnish the Bank with written notice of
the occurrence of any event or the existence of any event,
circumstance, or condition which constitutes or upon notice, lapse
of time, or both, would constitute an Event of Default under the
terms of this Loan Agreement.
6.7 [Intentionally Deleted
]
6.8 Financial Covenants . Maintain the following
financial status as of the end of each fiscal quarter of the
Borrower as hereinafter set forth, on a consolidated basis with all
subsidiaries, and each defined term used in this Section 6.8,
or incorporated or used in the calculations herein required of any
defined term, shall be determined on a consolidated basis of
Borrower. and all subsidiaries:
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(i) as of the fiscal quarter ending December 31, 2006, and
as of the end of each fiscal quarter thereafter, a Debt to Tangible
Net Worth Ratio not to exceed 1.0 to 1.0;
(ii) as of the fiscal quarter ending December 31, 2006, and
as of the end of each fiscal quarter thereafter, a Tangible Net
Worth of not less than Eighty-Five Million Dollars
($85,000,000.00); and
(iii) as of the fiscal quarter ending December 31, 2006,
and as of the end of each fiscal quarter thereafter, net profits of
at least One Dollar ($1.00) for said fiscal quarter.
6.9 Right of Inspection . Permit the Bank, upon two
(2) Business Days notice to visit and inspect any of the
properties, corporate books and financial reports of the Borrower
and to discuss its affairs, finances and accounts with its
principal officers, at all such reasonable times and as often as
the Bank may reasonably request.
SECTION SEVEN: NEGATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that at all times from and after
the Closing Date, unless the Bank shall otherwise consent in
writing, such consent to be at the discretion of the Bank, it will
not, either directly or indirectly:
7.1 Sale of Assets . Sell, transfer or dispose (other
than in the normal course of business) of all or a substantial part
of its assets where any such sale or transfer will result in a
breach of the financial covenants as contained as Section 6.9
hereof.
7.2 Additional Encumbrances . Pledge or grant a lien
on Accounts Receivable Assets.
7.3 Dividends, Redemptions and Other Payments .
(a) Declare or pay, or set aside any sum for the payment of,
any dividends or make any other distribution upon any shares of its
capital stock of any class, or (b) purchase, redeem or other
otherwise
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