Tenth Amendment to Amended and Restated Credit Agreement dated June 15, 2018

THIS TENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated as of June 15, 2018 is by and among CELADON GROUP, INC. (the “Borrower”), the Guarantors identified on the signature pages hereto, the Lenders identified on the signature pages hereto and BANK OF AMERICA, N.A., in its capacity as Administrative Agent (in such capacity, the “Administrative Agent”).

A.          Certain credit facilities have been provided to the Loan Parties pursuant to that certain Amended and Restated Credit Agreement (as amended, modified, supplemented, increased and extended from time to time, the “Credit Agreement”) dated as of December 12, 2014 by and among the Borrower, the Guarantors identified therein, the Lenders identified therein and the Administrative Agent.

B.          The Borrower has informed the Administrative Agent and Lenders that it intends to obtain a new asset-based credit facility and a new term loan facility and, subject to Section 7 of this Amendment, use the proceeds of such new facilities to repay in full all Obligations under the Loan Documents on or before July 13, 2018.

C.          The Borrower has requested that the Lenders (i) consent to certain Dispositions that the Loan Parties intend to consummate or agree to consummate and (ii) make certain amendments to the Credit Agreement.

D.          The Lenders have agreed to do so on the terms and conditions set forth in this Amendment.

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.          Defined Terms.  Capitalized terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the Credit Agreement.

2.          Estoppel, Acknowledgement and Reaffirmation.  The Loan Parties hereby acknowledge and agree that, as of the date hereof, the Outstanding Amount of the Committed Loans and L/C Obligations constitute valid and subsisting obligations of the Loan Parties to the Lenders that are not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind.  The Loan Parties hereby acknowledge the Loan Parties’ obligations under the respective Loan Documents to which they are party.  Each of the Loan Parties hereby (i) acknowledges that it has granted Liens in favor of the Administrative Agent pursuant to, and is a party to, the Collateral Documents (including, with respect to certain Guarantors, pursuant to the Joinder Agreements executed by such Guarantors); (ii) reaffirms that each of the Liens created and granted in or pursuant to the Collateral Documents is valid and subsisting as of the date hereof; (iii) agrees that such Liens shall continue in effect as security for all Obligations under the Loan Document; and (iv) agrees that this Amendment shall in no manner impair or otherwise adversely affect such Liens.

3.          Audit Events.

(a)          The Administrative Agent and the Lenders hereby acknowledge and agree that, until the earlier of (x) July 13, 2018 and (y) such time as the Borrower has received a determination from its auditors that the financial statements of the Borrower as delivered prior to the date hereof impacted by the Audit Events (as defined in that certain Eighth Amendment to Credit Agreement dated as of March 30, 2018 by and among the parties hereto), or as the same may be restated as deemed necessary by its auditors, can be relied upon, notice of which shall be provided to the Administrative Agent promptly and in any event within one (1) Business Day:

(i)          any representations and warranties as to preparation of financial statements of the Borrower in accordance with GAAP made or deemed to be made by the Loan Parties in connection with the delivery of (x) such financial statements under Sections 6.01(a), 6.01(b), and 6.02(o) of the Credit Agreement or (y) a Request for Credit Extension delivered under Section 4.02(c) of the Credit Agreement, shall be deemed to be qualified in their entirety by reference to and disclosure of the Audit Events, and no such representation or warranty shall be deemed untrue solely as a result of the occurrence of the Audit Events; and

(ii)          the existence of the Audit Events shall not, in and of itself, constitute a failure to satisfy the condition precedent set forth in Section 4.02(a) of the Credit Agreement.

(b)          Prior to July 13, 2018, the Loan Parties shall not make any Investment pursuant to Section 7.02(e) or (f) of the Credit Agreement, except for the following in an aggregate amount not to exceed $4,000,000 at any one time outstanding: (i) payroll, settlement, and similar advances to employees, drivers (including independent contractors); consultants or other service providers to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes; (ii) reasonable and customary advances of relocation expenses to employees and repair expense to independent contractors in the ordinary course of business; and (iii) advances to the Borrower’s Mexican subsidiaries in the ordinary course of business based on accounts receivable generated by such subsidiaries not to exceed $750,000 at any one time outstanding.

4.          Amendments to Credit Agreement.  Subject to the satisfaction of the conditions precedent set forth below, the Credit Agreement is hereby amended as follows:

(a)          Section 1.01 of the Credit Agreement is hereby amended by deleting the following definitions in their entirety and substituting the following therefor:

“Asset Coverage Ratio Certificate” means a Compliance Certificate duly completed with respect to the Loan Parties’ compliance with the Asset Coverage Ratio required pursuant to Section 6.12(c) as of the last Business Day of the preceding calendar week, including a statement showing the Maximum Borrowing Amount and Maximum Outstanding Amount as in effect as of the last Business Date of the preceding calendar week and the amount of any reduction to the Maximum Borrowing Amount and Maximum Outstanding Amount during such calendar week, signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower.

“Maximum Borrowing Amount” means an amount equal to $180,727,000, as such amount may be reduced pursuant to Section 2.02(f) or the provisions of the Tenth Amendment or increased up to an amount not to exceed the Aggregate Commitments with the written consent of the Required Lenders.

 

“Maximum Outstanding Amount” means $205,727,000, as such amount may be reduced pursuant to Section 2.02(f) or the provisions of the Tenth Amendment or increased up to an amount not to exceed the Aggregate Commitments with the written consent of the Required Lenders.

(b)          Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions to such section in the appropriate alphabetical order:

“Tenth Amendment” means that certain Tenth Amendment to Credit Agreement, dated as of the Tenth Amendment Effective Date, by and among the Loan Parties, the Administrative Agent and the Lenders.

“Tenth Amendment Effective Date” means June 15, 2018.

(c)          Section 2.05(f) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(f)          If for any reason, at any time, the ratio of (a) Total Assets as set forth in the Asset Coverage Ratio Certificate delivered pursuant to Section 6.02(h) with respect to the last Business Day of the preceding calendar week to (b) Total Outstandings is less than (i) 1.05 to 1.0 at any time on or prior to July 13, 2018 or (ii) 1.85 to 1.0 at any time after July 13, 2018, the Borrower shall on the next Business Day prepay Loans and/or Cash Collateralize the Dollar Equivalent of the L/C Obligations in the aggregate amount necessary to reduce the Total Outstandings to an amount that would comply with the applicable foregoing ratio, without a corresponding reduction of the Aggregate Commitments, the Maximum Outstanding Amount or the Maximum Borrowing Amount.

(d)          Section 4.02(f) of the Credit Agreement is hereby amended by replacing each occurrence of the date “June 15, 2018” in such section with the date “July 13, 2018”.

(e)          Each of Sections 6.12(a), (b) and (c) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(a)          Lease Adjusted Total Debt To EBITDAR Ratio.  Maintain on a consolidated basis the Lease Adjusted Total Debt to EBITDAR Ratio not exceeding 4.00 to 1.00 as of any fiscal quarter end, commencing with the fiscal quarter ending September 30, 2018.

(b)          Fixed Charge Coverage Ratio.  Maintain on a consolidated basis a Fixed Charge Coverage Ratio of not less than 1.00 to 1.00 as of each fiscal quarter end, commencing with the fiscal quarter ending September 30, 2018.

(c)          Asset Coverage Ratio.  Not permit the Asset Coverage Ratio to be less than (i) 1.05 to 1.0 as of the last Business Day of any calendar week ending on or prior to July 13, 2018 and (ii) 1.85 to 1.0 as of the last Business Day of any calendar week ending after July 13, 2018.

(f)          Section 6.17 of the Credit Agreement is hereby amended by replacing the date “June 15, 2018” in such section with the date “July 13, 2018”.

5.          Refinancing Efforts.  The Borrower shall provide the Administrative Agent with prompt written notice in the event that (i) either proposed provider of the Borrower’s new asset-based credit facility or the new term loan facility terminates its engagement or commitment with respect to the applicable facility or otherwise notifies the Borrower that it will not close the applicable transaction on or before July 13, 2018 or (ii) the Borrower decides not to pursue closing of either transaction.  If any of the foregoing shall occur, the Borrower shall promptly take action to begin implementing its plan, with respect to alternative transactions intended to repay the Obligations, that was delivered to the Administrative Agent on April 13, 2018 pursuant to Section 6.02(y) of the Credit Agreement.

6.          Deferral of Seventh Amendment Fee and Eighth Amendment Fee.  The Loan Parties hereby acknowledge and agree that each of the fees in the amount of (x) $5,950,000 that was incurred on the Seventh Amendment Effective Date in connection with the amendment dated as of the date thereof (the “Seventh Amendment Fee”) and (y) $2,760,000 that was incurred on the Eighth Amendment Effective Date in connection with the amendment dated as of the date thereof (the “Eighth Amendment Fee”) is a valid and subsisting obligation of the Loan Parties to the Lenders that is not subject to any credits, offsets, defenses, claims, counterclaim or adjustments of any kind.  Each of the Lenders and Loan Parties hereby agrees that, notwithstanding anything to the contrary set forth in any Loan Document, the Seventh Amendment Fee and the Eighth Amendment Fee shall each be due and payable upon the earliest to occur of (i) subject to Section 7 of this Amendment, July 13, 2018, (ii) acceleration of any Obligations under the Loan Documents or (iii) subject to Section 7 of this Amendment, repayment in full of the Obligations under the Loan Documents.

7.          Repayment of Obligations.

(a)          Each of the Lenders, the L/C Issuer and the Administrative Agent hereby agrees that if all Payoff Items (as defined below) are received on or prior to 12:00 noon Eastern time on July 13, 2018, (i) the Lenders, L/C Issuer and Administrative Agent shall accept the Payoff Items in full satisfaction of all Obligations under the Loan Documents (excluding contingent indemnification obligations and, to the extent constituting Obligations, any Banking Services Obligations and any obligations under any Swap Contract (all of the foregoing, the “Excluded Obligations”)); (ii) the Loan Documents (excluding any Loan Document that evidences any Excluded Obligation), including all Commitments of the Lenders thereunder, and all Liens granted to the Administrative Agent securing the Obligations under the Loan Documents, shall be terminated and (iii) all other Obligations (excluding Excluded Obligations), including without limitation Obligations in respect of the Seventh Amendment Fee and $160,000 of the Eighth Amendment Fee shall be forgiven and deemed canceled by the Lenders; provided, however, that the agreements of the Lenders, L/C Issuer and Administrative Agent set forth in this Section 7 shall be null and void upon any acceleration of all Obligations under the Loan Documents after the occurrence of an Event of Default.

(b)          The “Payoff Items” shall consist of the following:

(i) cash in an amount equal to the sum of the Outstanding Amount of all Loans plus the amount of interest on the Loans plus the amount of L/C Fees plus the amount of Commitment Fees plus the amount of any Unreimbursed Amounts plus the amount, not to exceed $450,000, of all reasonable out-of-pocket fees and expenses incurred by the Administrative Agent and Lenders in connection with the Loan Documents, including without limitation this Amendment, in each case, accrued and unpaid or unreimbursed as of the applicable repayment date;

(ii) either of (x) Cash Collateralization of the L/C Obligations (excluding any Unreimbursed Amounts) at 105% of the Dollar Equivalent of the aggregate amount of the L/C Obligations or (y) replacement letters of credit or such other actions that would permit the termination of the L/C Obligations in a manner satisfactory to the L/C Issuer, the Administrative Agent and each Lender;

(iii) promissory notes issued to the Lenders in accordance with their Applicable Percentage by the Borrower and each other Loan Party (other than Loan Parties that the Lenders agree to exclude in their sole discretion), on a joint and several basis, in an aggregate principal amount of $2,600,000, which promissory notes shall be in form and substance satisfactory to the provider of the new term loan facility and each Lender, and such promissory notes shall (1) be unsecured and subordinated to the Loan Parties’ obligations under the new asset-based credit facility and new term loan facility on terms satisfactory to the providers of such facilities, (2) bear interest at 5.0% per annum, which interest may be paid in cash or paid-in-kind at the option of the Loan Parties, (3) mature on the date that is the earlier of the date that is six months after (x) the maturity date of the new term loan facility, as the same may be extended from time to time, and (y) the date on which such new term loan facility is repaid in full and (4) not contain any affirmative, negative or financial covenants; and

(iv) a release, in substantially the same form as Section 14 hereof, duly executed by each of the Loan Parties.

8.          Consent to Kernersville Transaction.  The Administrative Agent and Lenders hereby consent to the Disposition by Celadon Trucking Services, Inc. of that certain parcel of real property located at 1651 Old Greensboro Road, Kernersville, North Carolina and the Loan Parties’ entry into one or more agreements with respect to such Disposition (the “Kernersville Disposition”) so long as (1) the Kernersville Disposition is made to an unaffiliated third party pursuant to an arms-length transaction; (2) the gross purchase price for the Kernersville Disposition is $2,725,000, with the Loan Parties being entitled to receive all proceeds after deducting reasonable and customary closing expenses; and (3) within one Business Day after consummation of the Kernersville Disposition, the Loan Parties shall prepay Loans in an amount equal to the amount of net cash proceeds received in connection with the Kernersville Disposition with a corresponding reduction of the Maximum Outstanding Amount and the Maximum Borrowing Amount as required under Section 2.02(f) of the Credit Agreement; provided that, if the Kernersville Disposition is consummated on or before July 13, 2018 and no Event of Default exists on the date of consummation of the Kernersville Disposition, the Maximum Borrowing Amount and Maximum Outstanding Amount shall be reduced by an amount equal to 60.0% of the net cash proceeds received in connection with the Kernersville Disposition.

9.          Consent to Disposition of Certain Refrigerated Trailers.  The Administrative Agent and Lenders hereby consent to the Disposition by one or more Loan Parties of any or all of the refrigerated trailer Vehicles identified on Schedule A to the Ninth Amendment (the “Refrigerated Trailers”) in one or more transactions, and the Loan Parties’ entry into one or more agreements with respect to such Dispositions, so long as (1) each Disposition of a Refrigerated Trailer is made to an unaffiliated third party pursuant to an arms-length transaction; (2) the gross purchase price for each Refrigerated Trailer is not less than $34,000 per Refrigerated Trailer; and (3) within one Business Day after consummation of each Disposition of a Refrigerated Trailer, the Loan Parties shall prepay Loans in an amount equal to the amount of net cash proceeds received in connection with such Disposition with a corresponding reduction of the Maximum Outstanding Amount and the Maximum Borrowing Amount as required under Section 2.02(f) of the Credit Agreement; provided that, if any such Disposition is consummated on or before July 13, 2018 and no Event of Default exists on the date of consummation of such Disposition, the Maximum Borrowing Amount and Maximum Outstanding Amount shall be reduced by an amount equal to 60.0% of the net cash proceeds received in connection with such Disposition.

10.          Cash Dominion.  Upon the earlier of (i) July 13, 2018 and (ii) the occurrence of any event with respect to which the Borrower is obligated to deliver notice pursuant to Section 5 hereof, the Borrower and the Loan Parties shall take such actions as the Administrative Agent shall request and shall open such accounts with the Administrative Agent as the Administrative Agent shall request to assure that, as soon as practicable and in any even by no later than the thirtieth (30^th) calendar day following the applicable date or event, all cash Collateral and all other collections and proceeds of Collateral received by the Borrower or any other Loan Party may be applied directly to repay the Obligations and to otherwise permit the Administrative Agent to implement full dominion over all such cash Collateral and all other collections and proceeds of Collateral received by the Borrower or any other Loan Party.

11.          Conditions Precedent.  This Amendment shall become effective as of the date hereof upon the satisfaction (or waiver by the Administrative Agent) of the following conditions precedent:

(a)          receipt by the Administrative Agent of counterparts of this Amendment duly executed by the Borrower, the Guarantors, each Lender and the Administrative Agent;

(b)          receipt by the Administrative Agent of opinions of legal counsel to the Borrower in form and substance reasonably acceptable to the Administrative Agent, addressed to the Administrative Agent and each Lender, dated as of the date hereof; and

(c)          receipt by the Administrative Agent of a certificate of each Loan Party dated as of the date hereof signed by a Responsible Officer of such Loan Party (A) certifying and attaching resolutions adopted by the board of directors or equivalent governing body of such Loan Party approving this Amendment and (B) in the case of the Borrower, certifying that, after giving effect to this Amendment, (1) the representations and warranties of each Loan Party contained in Article V of the Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date, in each case, other than with respect to the Audit Events, and (2) no Default exists after giving effect to this Amendment.

12.          Payment of Fees and Expenses.  Promptly, and in any event within 5 Business Days of demand therefor, the Borrower shall reimburse the Administrative Agent for all fees and expenses of the Administrative Agent (including without limitation, all fees and expenses of counsel and financial advisors to the Administrative Agent and all appraisal, inspection and other costs incurred by the Administrative Agent) and any Lender for all fees and expenses of counsel to such Lender, in each case, incurred in connection with the Loan Documents, including without limitation this Amendment.  The Administrative Agent will provide invoices to the Borrower at the end of each two-week period from and after the Tenth Amendment Effective Date providing (i) the amount of out-of-pocket fees and expenses incurred by the Administrative Agent and the Lenders during such two-week period and (ii) the aggregate amount of out-of-pocket fees and expenses incurred by the Administrative Agent and Lenders for the period commencing April 1, 2018 through the end of such two-week period.  The Loan Parties shall not be obligated to reimburse the Administrative Agent or the Lenders for their respective fees and expenses incurred during the period commencing April 1, 2018 through July 13, 2018 in an aggregate amount in excess of $450,000 unless either (i) all Obligations under the Loan Documents are accelerated after the occurrence of an Event of Default prior to July 13, 2018 or (ii) all Payoff Items are not received on or prior to 12:00 noon Eastern time on July 13, 2018.

13.          Release.  In consideration of the Administrative Agent’s and the Lenders’ willingness to enter into this Amendment, each of the Loan Parties hereby releases and forever discharges the Administrative Agent, the Lenders and each of the Administrative Agent’s and the Lenders’ predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives, and affiliates (hereinafter all of the above collectively referred to as the “Lender Group”), from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of any nature whatsoever, in each case to the extent arising in connection with the Loan Documents or any of the negotiations, activities, events or circumstances arising out of or related to the Loan Documents through the date of this Amendment, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any of the Loan Parties may have or claim to have against any entity or other Person within the Lender Group.

14.          Amendment is a “Loan Document”.  This Amendment is a Loan Document and all references to a “Loan Document” in the Credit Agreement and the other Loan Documents (including, without limitation, all such references in the representations and warranties in the Credit Agreement and the other Loan Documents) shall be deemed to include this Amendment.

15.          Representations and Warranties; No Default.  Each Loan Party represents and warrants to the Administrative Agent and each Lender that (a) any forecasts of cash flows and other projections delivered to the Administrative Agent or any Lender prior to the Tenth Amendment Effective Date reflect the Borrower’s good faith estimate of the matters described therein, (b) the representations and warranties of each Loan Party contained in Article V of the Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date, in each case, other than with respect to the Audit Events, and (c) after giving effect to this Amendment, no Default exists, including without limitation any Default under Section 8.01(e) of the Credit Agreement.

16.          No Other Changes.  Except as modified hereby, all of the terms and provisions of the Loan Documents shall remain in full force and effect.

17.          Counterparts; Delivery.  This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of this Amendment by facsimile or other electronic imaging means shall be effective as an original.

19.          Governing Law.  This Amendment shall be deemed to be a contract made under, and for all purposes shall be construed in accordance with, the laws of the State of Indiana.

IN WITNESS WHEREOF, the parties hereto have caused this Tenth Amendment to Amended and Restated Credit Agreement to be duly executed as of the date first above written.

GUARANTORS:	BUCKLER TRANSPORT, INC.
	By:	/s/ Thomas S. Albrecht
	Name:	Thomas S. Albrecht
	Title:	Chief Financial Officer
	CELADON DRIVING ACADEMY, LLC
	By:	/s/ Paul Svindland
	Name:	Paul Svindland
	Title:	Chief Executive Officer
	CELADON REALTY, LLC
	By:	/s/ Paul Svindland
	Name:	Paul Svindland
	Title:	Chief Executive Officer
	DISTRIBUTION, INC.
	By:	/s/ Thomas S. Albrecht
	Name:	Thomas S. Albrecht
	Title:	Chief Financial Officer
	EAGLE LOGISTICS SERVICES INC.
	By:	/s/ Paul Svindland
	Name:	Paul Svindland
	Title:	Chief Executive Officer

GUARANTORS:	VORBAS, LLC
	By:	/s/ Thomas S. Albrecht
	Name:	Thomas S. Albrecht
	Title:	Chief Financial Officer
	A&S KINARD LOGISTICS, LLC
	By:	/s/ Thomas S. Albrecht
	Name:	Thomas S. Albrecht
	Title:	Chief Financial Officer
	BUCKLER DISTRIBUTION CENTER, L.P.
	By:	J. David Buckler, Inc., its general partner
	By:	/s/ Thomas S. Albrecht
	Name:	Thomas S. Albrecht
	Title:	Chief Financial Officer

 

 

ADMINISTRATIVE AGENT:	BANK OF AMERICA, N.A., as Administrative Agent
	By:	/s/ Andrew J. Maidman
	Name:	Andrew J. Maidman
	Title:	Senior Vice President
LENDERS:	BANK OF AMERICA, N.A., as a Lender
	By:	/s/ Andrew J. Maidman
	Name:	Andrew J. Maidman
	Title:	Senior Vice President
	WELLS FARGO BANK, N.A., as a Lender
	By:	/s/ Kristine Netjes
	Name:	Kristine Netjes
	Title:	Senior Vice President
	CITIZENS BANK, N.A., as a Lender
	By:	/s/ John F. Kendrick
	Name:	John F. Kendrick
	Title:	Vice President