Exhibit 10.2
FOURTH AMENDMENT TO SECURITIZATION AGREEMENTS
THIS FOURTH AMENDMENT TO SECURITIZATION AGREEMENTS (this
"Amendment"), is made and entered into as of October 18, 2001
(the "Effective Date"), by and between CONSOLIDATED FREIGHTWAYS
FUNDING LLC, a Delaware limited liability company (the
"Borrower"), CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, a
Delaware corporation ("CFCD"; the Borrower and CFCD are referred
to herein individually as a "Company" and collectively as the
"Companies"), and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation ("GE Capital"), in its capacities as (i)
assignee of all rights, titles and interests of Redwood
Receivables Corporation, a Delaware corporation ("Redwood") as
Conduit Lender (in such capacity, the "Conduit Lender"), (ii) as
Committed Lender (in such capacity, the "Committed Lender"; in
its dual capacities as Conduit Lender and Committed Lender, GE
Capital is herein referred to as "Lender"), and (iii) as
Administrative Agent for the Lender (in such capacity, the
"Administrative Agent").
W I T N E S E T H:
WHEREAS, CFCD and the Borrower are parties to a certain
Receivables Sale and Contribution Agreement, dated as of April
27, 2001 (as amended to the date hereof, the "Sale Agreement";
capitalized terms used herein and not otherwise defined herein
shall have the meanings given such terms in Annex X to the Sale
Agreement as amended by this Amendment), whereby CFCD has agreed
to sell, contribute or otherwise transfer to the Borrower, and
the Borrower has agreed to purchase or otherwise acquire from
CFCD, all of the right, title and interest of CFCD in the
Receivables; and
WHEREAS, CFCD, the Borrower, the Lender and the
Administrative Agent, are parties to a certain Servicing
Agreement, dated as of April 27, 2001 (as amended to the date
hereof, the "Servicing Agreement"), whereby the Borrower has
appointed CFCD to service, administer and collect the Transferred
Receivables pursuant to the Funding Agreement (defined below) on
the terms and conditions set forth therein; and
WHEREAS, the Borrower, the Lender and the Administrative
Agent are parties to a certain Receivables Funding Agreement,
dated as of April 27, 2001 (as amended to the date hereof, the
"Funding Agreement") (the Sale Agreement, the Servicing Agreement
and the Funding Agreement, together with all exhibits and annexes
thereto, are referred to herein collectively as the
"Securitization Agreements"), pursuant to which, among other
things, the Lender has agreed, subject to certain terms and
conditions, to make Advances to the Borrower to fund its
purchases of the Receivables; and
WHEREAS, pursuant to that certain Assignment Agreement,
dated as of the date hereof, between Redwood and GE Capital (the
"Redwood Assignment"), Redwood has assigned and transferred to GE
Capital, and GE Capital has accepted, all of Redwood's rights,
titles and interests as a Conduit Lender in and to Transferred
Receivables, the Borrower Collateral, the Advances and other
Borrower Secured Obligations owing to Redwood, the Funding
Agreement and the other Related Documents (collectively, the
"Redwood Interest"); and
WHEREAS, the Companies have requested that the
Securitization Agreements be amended in certain respects and that
certain waivers be granted, and GE Capital (in its various
capacities) is willing to agree to such amendments and grant such
waivers subject to the terms and conditions of this Amendment.
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Waivers of Certain Events. Subject to the terms and
conditions of this Amendment, including without limitation the
fulfillment of the conditions to effectiveness specified in
Section 7 below, the Lender, the Administrative Agent, the
Collateral Agent and the Liquidity Agent hereby waive any
Termination Event or Incipient Termination Event under Section
9.01(b) or (m) of the Funding Agreement and any Event of Servicer
Termination or Incipient Servicer Termination Event under Section
6.01(c) or (p) of the Servicing Agreement which may have resulted
from the occurrence of an "Event of Default" under Section
8.1(n)(i) of the Standby Letter of Credit Agreement (as in effect
immediately prior to the effectiveness of the Fourth Letter of
Credit Agreement Amendment as defined below) on account of the
Parent's failure to receive prior to October 15, 2001, the Debt
proceeds specified therein; provided that the aforesaid waivers
relate solely to the specific covenants, period and event
described above and nothing in this Amendment is intended, or
shall be construed, to waive any other Termination Event,
Incipient Termination Event, Event of Servicer Termination or
Incipient Servicer Termination Event (including without
limitation any Termination Event, Incipient Termination Event,
Event of Servicer Termination or Incipient Servicer Termination
Event which may result from any failure by Parent and its
Subsidiaries to comply with any of the financial covenants in
Annex 4.02(p) to the Sale Agreement or Annex C to the Standby
Letter of Credit Agreement, as such annexes are in effect after
giving effect to this Amendment and the Fourth Standby Letter of
Credit Amendment, for the fiscal quarter ending September 30,
2001).
2. Amendments of Securitization Agreements. Subject to the
terms and conditions of this Amendment, including without
limitation the fulfillment of the conditions to effectiveness
specified in Section 7 below, the Securitization Agreements shall
be amended as follows:
(A) Amendments to Funding Agreement. The parties
signatory to the Funding Agreement hereby agree that the Funding
Agreement shall be amended as follows:
(1) Section 5.02(b) of the Funding Agreement is
hereby deleted in its entirety and the following new
Section 5.02(b) is substituted in lieu thereof:
The Borrower hereby agrees that, from and after the
Closing Date and until the Termination Date, it shall
deliver or cause to be delivered to the Lenders, the
Administrative Agent and the Collateral Agent (i) as
soon as available and in any event no later than 12:00
noon (New York time) on each Business Day, a Borrowing
Base Certificate, and (ii) such other reports,
statements and reconciliations with respect to the
Borrowing Base or Borrower Collateral as any Lender,
the Administrative Agent or the Collateral Agent shall
from time to time request in its reasonable discretion.
(2) Section 6.03 of the Funding Agreement is hereby
amended by adding the following new subsection (d) at the
end thereof:
(d) Notwithstanding anything herein to the contrary,
no distribution shall be made to the Servicer under
Section 6.03(a)(ii)(3) or (4) if and for so long as the
Originator is the Servicer.
(3) Section 6.04 of the Funding Agreement is hereby
amended by adding the following new subsection (c) at the
end thereof:
(c) Notwithstanding anything herein to the contrary,
if and as for so long as the Originator is the
Servicer, no distribution under Section 6.04(a)(ii)
shall be made to the Servicer but rather the Borrower
shall pay to the Servicer on each Settlement Date
during the Revolving Period an amount equal to the
Servicer's accrued but unpaid Servicing Fee as of the
end of the immediately preceding Settlement Period.
(4) Annex 5.02(a) to the Funding Agreement is hereby
amended by adding the following new sentence at the end of
paragraph (a) thereof:
For each month in which the Servicer is the Originator,
such Monthly Report also shall be accompanied by the
written Certificate of the Chief Financial Officer of
the Parent, substantially in the form attached hereto
as Exhibit 5.02(a) that all Servicing Fees due to the
Servicer with respect to the fiscal month covered by
such Monthly Report have been paid to the Servicer by
the Borrower in accordance with the terms and
conditions of the Funding Agreement and the Servicing
Agreement or, if that is not the case, describing the
nature and status thereof and all efforts undertaken to
cure such failure to pay.
The Funding Agreement is hereby further amended by adding a
new Exhibit 5.02(a) thereto in the form attached to this
Amendment as Appendix II.
(B) Amendment to Sale Agreement. The parties
signatory to the Sale Agreement hereby agree that Annex 4.02(p)
to the Sale Agreement shall be deleted in its entirety and the
replacement Annex 4.02(p) attached to this Amendment as Appendix
I shall be substituted in lieu thereof.
(C) Amendments to Servicing Agreement. The parties
signatory to the Servicing Agreement hereby agree that Section
6.01(p) of the Servicing Agreement is hereby deleted in its
entirety and the following new Section 6.01(p) is substituted in
lieu hereof
(p) an "Event of Default" (as such term is
defined in the Standby Letter of Credit Agreement or
the Revolving Credit Agreement) shall occur, or the
occurrence of the Standby Letter of Credit Commitment
Termination Date; or
(D) Amendments to Annex X. The parties signatory to
each of the Funding Agreement, the Sale Agreement and the
Servicing Agreement hereby agree to amend Annex X to the Funding
Agreement, the Sale Agreement and the Servicing Agreement as
follows:
(1) The following definitions are hereby added to
Annex X to the Funding Agreement, the Sale Agreement and the
Servicing Agreement in the appropriate alphabetic order:
"Fourth Standby Letter of Credit Amendment" shall
mean the Fourth Amendment to Letter of Credit
Agreements, dated as of October 18, 2001, between
Parent, the Standby L/C Creditor and the other parties
thereto.
"Revolving Credit Agreement" shall mean the Credit
Agreement contemplated to be entered into on or before
October 31, 2001, among the Parent as Borrower, the
other Credit Parties signatory thereto, and GE Capital
as Lender and pursuant to which (and subject to the
terms and conditions of which) it is contemplated that
the Parent may obtain a revolving loan facility of up
to $50,000,000 from GE Capital, together with any and
all amendments, restatements supplements or
modifications thereto or any refinancings, replacements
or refundings thereof by GE Capital. Nothing in this
Annex X or any other Related Document is intended, or
shall be construed, to be an offer, promise, commitment
or agreement by GE Capital to enter into the Revolving
Credit Agreement or to extend any credit to the Parent
thereunder.
"Revolving Credit Agreement Closing Date" shall
mean the date on which the initial loan is made by GE
Capital to the Parent under the Revolving Credit
Agreement.
(2) The definitions of the terms "Committed Lender
Funding Event" and "Payroll Reserve" set forth in Annex X to
the Funding Agreement, the Sale Agreement and the Servicing
Agreement are hereby deleted in their entireties and the
following respective amended definitions of such terms are
substituted in lieu thereof:
"Committed Lender Funding Event" shall mean the
occurrence of (a) any Redwood Termination Date (but
only if both (i) no Termination Event has occurred and
is continuing and (ii) the Committed Lender Expiry Date
has not occurred) or (b) any Redwood Transfer Date.
"Payroll Reserve" shall mean (i) at all times
during the period from the Third Amendment Effective
Date through the earlier of October 31, 2001 and the
Revolving Credit Agreement Closing Date, an amount
equal to $5,000,000 and (ii) at all times thereafter,
an amount equal to $15,000,000. The imposition of the
Payroll Reserve is not intended to modify or impair the
Administrative Agent's discretion to impose additional
reserves with respect to the unpaid employee payroll of
the Parent and its Subsidiaries under clause (iv) of
the definition of the term "Reserves" herein.
3. No Other Waivers or Amendments. Except for the waivers and
amendments expressly set forth and referred to in Section 1 and
Section 2 above, respectively, the Securitization Agreements
shall remain unchanged and in full force and effect.
4. Representations and Warranties. Each Company hereby
represents and warrants to the Lender and the Administrative
Agent that (a) this Amendment has been duly authorized, executed
and delivered by such Company, (b) after giving effect to this
Amendment and the Fourth Letter of Credit Agreement Amendment, no
Termination Event, Incipient Termination Event, Event of Servicer
Termination or Incipient Servicer Termination Event in respect of
such Company has occurred and is continuing as of this date, and
(c) after giving effect to this Amendment and the Fourth Letter
of Credit Agreement Amendment, all of the representations and
warranties made by such Company in the Securitization Agreements
are true and correct in all material respects on and as of the
date of this Amendment (except to the extent that any such
representations or warranties expressly referred to a specific
prior date). Any breach in any material respect by any Company
of any of its representations and warranties contained in this
Section 4 shall be a Termination Event and an Event of Servicer
Termination for all purposes of the Securitization Agreements.
Any Advances made on the Effective Date shall be deemed to have
been requested and funded after giving effect to this Amendment.
5. Ratification. Each Company hereby ratifies and reaffirms
each and every term, covenant and condition set forth in the
Securitization Agreements and all other documents delivered by
such Company in connection therewith (including without
limitation the other Related Documents to which each Company is a
party), effective as of the date hereof.
6. Estoppel. To induce GE Capital (in its various capacities)
to enter into this Amendment, each Company hereby acknowledges
and agrees that, as of the date hereof, there exists no right of
offset, defense or counterclaim in favor of any Company as
against Redwood or GE Capital (in its various capacities) with
respect to the obligations of any Company to Redwood or GE
Capital (in its various capacities) under the Securitization
Agreements or the other Related Documents, either with or without
giving effect to this Amendment.
7. Conditions to Effectiveness. This Amendment shall become
effective, as of the Effective Date, subject to the prior or
subsequent (i) receipt by the Administrative Agent of this
Amendment, duly executed, completed and delivered by each of the
Companies and by GE Capital in its various capacities; (ii)
receipt by the Administrative Agent of the Amendment Fee Letter
of even date between the Borrower and the Administrative Agent
(the "Amendment Fee Letter"), duly executed and delivered by such
parties, (iii) receipt by the Administrative Agent of a Borrowing
Base Certificate dated the date hereof, in form and substance
satisfactory to Agent, (iv) receipt by the Administrative Agent
of evidence satisfactory to it that all conditions precedent to
the effectiveness of the Fourth Amendment to Letter of Credit
Agreements of even date between the Debtor, the other Credit
Parties party thereto and the Standby L/C Creditor (the "Fourth
Letter of Credit Document Amendment") have been fulfilled (other
than the effectiveness of this Amendment), and (v) receipt by the
Administrative Agent for the account of GE Capital of the
Amendment Fee in the amount specified in the Amendment Fee
Letter, which fee shall be non-refundable and fully earned upon
payment thereof by the Borrower. The Administrative Agent shall
promptly notify the Companies in writing when the conditions
specified in clauses (i), (ii) and (iii) above are satisfied. It
is the intention and agreement of the parties that the assignment
and transfer of the Redwood Interest by Redwood to GE Capital
under the Redwood Assignment shall be deemed to have occurred
immediately prior to the effectiveness of this Amendment. Upon
the effective date of this Amendment, (i) the amendments to the
financial covenants in Annex 4.02 (p) to the Sale Agreement as
provided for in Appendix I attached hereto shall be deemed
effective retroactively as of July 1, 2001, and (ii) all other
amendments set forth in Section 2 of this Amendment shall become
effective as of the Effective Date of this Amendment.
8. Reimbursement of Expenses. Each Company hereby agrees that
it shall reimburse the Administrative Agent on demand for all
costs and expenses (including without limitation reasonable
attorney's fees) incurred by the Administrative Agent in
connection with the negotiation, documentation and consummation
of this Amendment and the other documents executed in connection
herewith and therewith and the transactions contemplated hereby
and thereby.
9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
FOR CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SAID STATE.
10. Severability of Provisions. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To
the extent permitted by Applicable Law, each Company hereby
waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
11. Counterparts. This Amendment may be executed in any number
of several counterparts, all of which shall be deemed to
constitute but one original and shall be binding upon all
parties, their successors and permitted assigns.
12. Entire Agreement. The Securitization Agreements as amended
by this Amendment embody the entire agreement between the parties
hereto relating to the subject matter hereof and supersedes all
prior agreements, representations and understandings, if any,
relating to the subject matter hereof.
13. Originators' and GE Capital's Capacities. CFCD is executing
and delivering this Amendment both in its capacity as an
Originator under the Sale Agreement and as a Servicer under the
Servicing Agreement, and all references herein to "CFCD" shall be
deemed to include CFCD in both such capacities unless otherwise
expressly indicated. GE Capital is executing and delivering this
Amendment in its various capacities as Lender and the
Administrative Agent, and all references herein to "GE Capital"
shall be deemed to include it in all such capacities unless
otherwise expressly indicated.
IN WITNESS WHEREOF, the parties have caused this Amendment
to be duly executed by their respective officers thereunto duly
authorized, as of the date first above written.
CONSOLIDATED FREIGHTWAYS FUNDING LLC, as
Borrower
By:/s/Xxxxx X. Xxxxxx
Name:Xxxxx X. Xxxxxx
Title:Vice President and Treasurer
CONSOLIDATED FREIGHTWAYS CORPORATION OF
DELAWARE, as Originator and Servicer
By:/s/Xxxxxx X. Xxxxxxxxx
Name:Xxxxxx X. Xxxxxxxxx
Title:Executive Vice President and
Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender and Administrative Agent
By:/s/Xxxxx Xxxxxxx
Name:Xxxxx Xxxxxxx
Duly Authorized Signatory
APPENDIX I TO FOURTH AMENDMENT TO SECURITIZATION AGREEMENTS
ANNEX 4.02(p) (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
(a) Minimum Fixed Charge Coverage Ratio. The Borrower and
its Subsidiaries shall have on a consolidated basis, as of the
end of each Fiscal Quarter set forth below, a Fixed Charge
Coverage Ratio for the Rolling Period then ended of not less than
the following:
Fiscal Quarter Minimum Fixed
Charge
Coverage Ratio
Fiscal Quarter ending 0.20 to 1.00
September 30, 2001
Fiscal Quarter ending 0.01 to 1.00
December 31, 2001
Fiscal Quarter ending -1.0 to 1.00
March 31, 2002
Fiscal Quarter ending 0.30 to 1.00
June 30, 2002
Fiscal Quarter ending 1.60 to 1.00
September 30, 2002
Fiscal Quarter ending 1.70 to 1.00
December 31, 2002 and
each Fiscal Quarter
thereafter
(b) Minimum Tangible Net Worth. Borrower and its
Subsidiaries on a consolidated basis shall have a Tangible Net
Worth, (i) as of the Closing Date and as of the end of each of
the second and third Fiscal Quarters of the Fiscal Year ending
December 31, 2001, of not less than $180,000,000, (ii) as of the
end of the fourth Fiscal Quarter of the Fiscal Year ending
December 31, 2001, of not less than $150,000,000, (iii) as of the
end of each of the first, second and third Fiscal Quarters of the
Fiscal Year ending December 31, 2002, of not less than
$120,000,000, and (iv) as of the end of the fourth Fiscal Quarter
of the Fiscal Year ending December 31, 2002 and as of the end of
each of the first, second and third Fiscal Quarters of the Fiscal
Year ending December 31, 2003, of not less than $130,000,000.
Thereafter, Borrower and its Subsidiaries on a consolidated basis
shall have, as of the end of each Fiscal Year ending on or after
December 31, 2003 (each such Fiscal Year herein called the
"Subject Fiscal Year") and as of the end of the first three
Fiscal Quarters of the immediately succeeding Fiscal Year, a
Tangible Net Worth of not less than the sum of (i) the minimum
Tangible Net Worth required hereunder for the Fiscal Year which
immediately preceded the Subject Fiscal Year (or, where the
Subject Fiscal Year is the Fiscal Year ending December 31, 2003,
the sum of $130,000,000) plus (ii) an amount equal to fifty
percent (50%) of the positive net income of the Borrower and its
Subsidiaries on a consolidated basis for the Subject Fiscal Year
plus (iii) an amount equal to one hundred percent (100%) of the
amount of any equity raised by or capital contributed to the
Borrower during the Subject Fiscal Year (in the case of equity
raised or capital contributed, net of the bona fide, reasonable
expenses, if any, relating to the raising of such equity or such
capital contribution and paid to Persons who are not Affiliates
of the Borrower).
(c) Minimum EBITDA. Borrower and its Subsidiaries shall
have on a consolidated basis for each Fiscal Quarter set forth
below an EBITDA for the Rolling Period then ended of not less
than the following:
Fiscal Quarter Minimum EBITDA
Fiscal Quarter ending $8,000,000
September 30, 2001
Fiscal Quarter ending $6,000,000
December 31, 2001
Fiscal Quarter ending -$17,000,000
March 31, 2002
Fiscal Quarter ending $15,000,000
June 30, 2002
Fiscal Quarter ending $53,000,000
September 30, 2002
Fiscal Quarter ending $80,000,000
December 31, 2002 and
for each Fiscal Quarter
thereafter
(d) Maximum Capital Expenditures. Borrower and its
Subsidiaries shall not make or incur any Capital Expenditures if,
after giving effect thereto, the aggregate amount of all Capital
Expenditures made or incurred by Borrower and its Subsidiaries
during any period of four (4) consecutive Fiscal Quarters would
exceed the amounts set forth below for such period:
Four Consecutive Fiscal Maximum Capital
Quarters Ending Expenditures
Fiscal Quarter ending $35,000,000
June 30, 2001
Fiscal Quarter ending $36,000,000
September 30, 2001
Fiscal Quarter ending $30,000,000
December 31, 2001
Fiscal Quarter ending $25,000,000
March 31, 2002 and for
each Fiscal Quarter
thereafter
Capitalized terms used in this Annex C and not otherwise
defined below shall have the respective meanings ascribed to them
in Annex A. The following terms shall have the respective
meanings set forth below:
"Capital Expenditures" shall mean, with respect to any
Person, all expenditures (by the expenditure of cash or the
incurrence of Indebtedness) by such Person during any measuring
period for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under
GAAP, but excluding (i) Capital Expenditures of the Borrower or
any Subsidiary Guarantor financed by the incurrence of Term Debt
to the extent that such Term Debt is permitted to be incurred
under Section 6.3, provided that on or prior to the date of
incurrence of such Term Debt, Borrower has furnished to Lender a
written statement of sources and uses of such Term Debt, which
statement describes with particularity the principal amount of
the Term Debt to be used for the proposed Capital Expenditure and
the fixed assets or improvements to be acquired, replaced,
substituted or added to in connection with such proposed Capital
Expenditure, (ii) the purchase of the Vancouver Property by the
Borrower, provided that to the extent the purchase price of the
Vancouver Property exceeds $25,000,000, such excess shall be
included as a Capital Expenditure for purposes of determining
compliance with the Maximum Capital Expenditure covenant set
forth in paragraph (d) of this Annex C, (iii) any Capital
Expenditures incurred by the Borrower in connection with the
refinancing of the Participation Agreement, provided that to the
extent that such Capital Expenditures exceed $22,500,000, such
excess shall be included as a Capital Expenditure for purposes of
determining compliance with the Maximum Capital Expenditure
covenant set forth in paragraph (d) of this Annex C, (iv) any
purchase by the Borrower or any Subsidiary of fixed assets or
improvements to the extent that such purchase qualifies for like-
kind tax treatment under Section 1031 of the IRC, provided that
such exclusion from Capital Expenditures under this clause (iv)
shall be limited to an amount not to exceed the lesser of (x) the
cash proceeds received from the transfer of the property
relinquished in the like-kind exchange, assuming for purposes
hereof that the Borrower or Subsidiary does not qualify for like-
kind tax treatment under Section 1031 of the IRC in connection
with such transfer and (y) the value of the fixed assets or
improvements purchased by the Borrower in the subject transaction
which qualifies for like-kind tax treatment under Section 1031 of
the IRC, (v) any purchase by the Borrower or any Subsidiary of
fixed assets or improvements with the proceeds received from the
sale of the Menlo Park Property, provided that on or prior to the
date of any such Capital Expenditures, Borrower has furnished to
Lender a written statement of sources and uses of the proceeds
from the sale of the Menlo Park Property, which statement
describes with particularity the amount of the proceeds from the
sale of the Menlo Park Property to be used for the proposed
Capital Expenditure and the fixed assets or improvements to be
acquired, replaced, substituted or added to in connection with
such proposed Capital Expenditures, and (vi) such other items as
Borrower and Lender may agree in writing to exclude.
"EBITDA" shall mean, with respect to any Person for any
fiscal period, the amount equal to (a) consolidated net income of
such Person for such period, plus (b) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss
from extraordinary items for such period, (iv) depreciation and
amortization for such period, (v) amortized debt discount for
such period, (vi) the amount of any deduction to consolidated net
income as the result of any grant to any members of the
management of such Person of any Stock, and (vii) Lease Expenses,
in each case to the extent included in the calculation of
consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, minus (c) the sum
of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain
(but not any aggregate net loss) during such period arising from
the sale, exchange or other disposition of capital assets by such
Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), provided that
there shall be excluded from the amount of any aggregate net gain
under this clause (iv), in solely the Fiscal Quarter ending March
31, 2001, an amount equal to the lesser of (x) $19,200,000 and
(y) the actual gain recognized by the Borrower and its
Subsidiaries from the sale of its Portland, Oregon administrative
complex and (v) any other non-cash gains that have been added in
determining consolidated net income (including LIFO adjustments),
in each case to the extent included in the calculation of
consolidated net income of such Person for such period in
accordance with GAAP, but without duplication,. For purposes of
this definition, the following items shall be excluded in
determining consolidated net income of a Person: (A) the income
(or deficit) of any other Person accrued prior to the date it
became a Subsidiary of, or was merged or consolidated into, such
Person or any of such Person's Subsidiaries; (B) the income (or
deficit) of any other Person (other than a Subsidiary) in which
such Person has an ownership interest, except to the extent any
such income has actually been received by such Person in the form
of cash dividends or distributions; (C) the undistributed
earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any
contractual obligation or requirement of law applicable to such
Subsidiary; (D) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was
made out of income accrued during such period; (E) any write-up
of any asset; (F) any net gain from the collection of the
proceeds of life insurance policies; (G) any net gain arising
from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (H) in the case
of a successor to such Person by consolidation or merger or as a
transferee of its assets, any earnings of such successor prior to
such consolidation, merger or transfer of assets, and (I) any
deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such
Subsidiary over the cost to such Person of the investment in such
Subsidiary.
"Fixed Charges" shall mean, with respect to any Person for
any fiscal period, the aggregate of, without duplication, (a) all
Interest Expense and Lease Expense paid or accrued during such
period, plus (b) all regularly scheduled payments of principal
and implied principal with respect to Debt (including any lease
payments by any Person in respect of any Capital Leases, any Sale-
Leaseback Debt and any Vancouver Secured Debt as such terms are
defined in the Standby Letter of Credit Agreement) due or made
during such period, plus (c) all Restricted Payments made during
such period (other than Permitted Stock Repurchases covered by
Section 6.14(vii) of the Standby Letter of Credit Agreement),
plus (d) any cash payments made by such Person in connection with
any Permitted Acquisitions.
"Fixed Charge Coverage Ratio" shall mean, with respect to
any Person for any fiscal period, the ratio of (i) the sum of (x)
EBITDA for such period less (y) cash taxes made during such
period to (ii) Fixed Charges for such period.
"Interest Expense" shall mean, with respect to any Person
for any fiscal period, the sum of (a) interest expense (whether
cash or non-cash) of such Person determined in accordance with
GAAP for the relevant period ended on such date, including (i)
amortization of original issue discount on any Indebtedness and
of all fees payable in connection with the incurrence of such
Indebtedness (to the extent included in interest expense), (ii)
the interest portion of any deferred payment obligation, (iii)
the interest component of any Capital Lease Obligation plus (b)
the amount of any Letter of Credit Fee (as such term is defined
in the Letter of Credit Agreement) paid during the relevant
period ended on such date, plus (c) the amount of any payments by
such Person, as lessee, under any sale-leaseback or synthetic
lease transaction.
"Lease Expenses" shall mean, with respect to any Person for
any fiscal period, the aggregate rental obligations of such
Person determined in accordance with GAAP that are payable in
respect of such period under operating leases of equipment having
an original non-cancelable term (as determined in accordance with
GAAP) in excess of twelve months (net of income from subleases
thereof, but including taxes, insurance, maintenance and similar
expenses that the lessee is obligated to pay under the terms of
such leases), whether or not such obligations are reflected as
liabilities or commitments on a consolidated balance sheet of
such Person or in the notes thereto, excluding, however, any such
obligations under Capital Leases.
"Net Worth" shall mean, with respect to any Person as of any
date of determination, (a) the book value of the assets of such
Person, minus (b) reserves applicable thereto, minus (c) all of
such Person's liabilities on a consolidated basis (including
accrued and deferred income taxes), all as determined in
accordance with GAAP.
"Rolling Period" shall mean, as of the end of any Fiscal
Quarter, the immediately preceding four (4) Fiscal Quarters,
including the Fiscal Quarter then ending.
"Tangible Net Worth" shall mean, with respect to any Person
at any date, the Net Worth of such Person at such date, (x)
excluding, however, from the determination of the total assets at
such date, (a) all goodwill, capitalized organizational expenses,
capitalized research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses
(excluding software licenses) and rights in any thereof, and
other intangible items (other than software licenses), (b) all
unamortized debt discount and expense, (c) treasury Stock, and
(d) any write-up in the book value of any asset resulting from a
revaluation thereof, but (y) including any non-cash valuation
reserves for deferred taxes and any foregone tax benefits
provided that such reserves are established in accordance with
Financial Accounting Standard Number 109 and do not result in an
increase in such Person's future cash tax payments.
Rules of Construction Concerning Financial Covenants. Unless
otherwise specifically provided therein, any accounting term used
in any Loan Document shall have the meaning customarily given
such term in accordance with GAAP, and all financial computations
thereunder shall be computed in accordance with GAAP consistently
applied. That certain items or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any Accounting Changes
occur and such changes result in a change in the calculation of
the financial covenants, standards or terms used in any Loan
Document, then the parties thereto agree to enter into
negotiations in order to amend such provisions so as to equitably
reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of such Persons
and their Subsidiaries shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. If the
parties thereto agree upon the required amendments thereto, then
after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been
implemented, any reference to GAAP contained therein shall, only
to the extent of such Accounting Change, refer to GAAP
consistently applied after giving effect to the implementation of
such Accounting Change. If such parties cannot agree upon the
required amendments within 30 days following the date of
implementation of any Accounting Change, then all financial
statements delivered and all calculations of financial covenants
and other standards and terms in accordance with the Related
Documents shall be prepared, delivered and made without regard to
the underlying Accounting Change.
