UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________________________________________
Form 10-Q
   ______________________________________________________________________
  ý      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2013
OR
¨      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-35007
 ______________________________________________________________________
  Swift Transportation Company
(Exact name of registrant as specified in its charter)
      ______________________________________________________________________
Delaware
 
20-5589597
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
2200 South 75th Avenue
Phoenix, AZ 85043
(Address of principal executive offices and zip code)
(602) 269-9700
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
   ______________________________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.    Yes   ý     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ý     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
 
 
 
 
 
Large accelerated filer
 
ý
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if a smaller reporting company)
  
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   ý
The number of outstanding shares of the registrant’s Class A common stock as of July 29, 2013 was 87,663,429 and the number of outstanding shares of the registrant’s Class B common stock as of July 29, 2013 wa s 52,495,236.
 
 
 
 
 

Table of Contents

 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EX 10.1
 
 
 
EX 31.1
 
 
 
EX 31.2
 
 
 
EX 32.1
 
 
 
EX-101 INSTANCE DOCUMENT
 
 
 
EX-101 SCHEMA DOCUMENT
 
 
 
EX-101 CALCULATION LINKBASE DOCUMENT
 
 
 
EX-101 LABELS LINKSBASE DOCUMENT
 
 
 
EX-101 PRESENTATION LINKBASE DOCUMENT
 
 
 
EX-101 DEFINITION LINKBASE DOCUMENT
 

2
Table of Contents

PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Swift Transportation Company and Subsidiaries
Consolidated Balance Sheets
 
 
June 30, 2013
 
December 31, 2012
 
 
(Unaudited)
 
 
 
 
(In thousands, except share data)
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
43,510

 
$
53,596

Restricted cash
 
42,694

 
51,678

Restricted investments, held to maturity, amortized cost
 
26,955

 
22,275

Accounts receivable, net
 
360,730

 
338,724

Equipment sales receivable
 
815

 
563

Income tax refund receivable
 
8,424

 
10,046

Inventories and supplies
 
15,744

 
15,678

Assets held for sale
 
16,752

 
31,544

Prepaid taxes, licenses, insurance and other
 
47,143

 
47,241

Deferred income taxes
 
45,688

 
98,235

Current portion of notes receivable
 
4,692

 
4,957

Total current assets
 
613,147

 
674,537

Property and equipment, at cost:
 
 
 
 
Revenue and service equipment
 
1,864,475

 
1,740,456

Land
 
115,672

 
112,587

Facilities and improvements
 
237,527

 
234,996

Furniture and office equipment
 
47,697

 
43,578

Total property and equipment
 
2,265,371

 
2,131,617

Less: accumulated depreciation and amortization
 
864,903

 
819,803

Net property and equipment
 
1,400,468

 
1,311,814

Other assets
 
50,700

 
59,010

Intangible assets, net
 
325,154

 
333,561

Goodwill
 
253,256

 
253,256

Total assets
 
$
2,642,725

 
$
2,632,178

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
 
Accounts payable
 
$
122,582

 
$
103,070

Accrued liabilities
 
99,972

 
96,439

Current portion of claims accruals
 
80,567

 
74,070

Current portion of long-term debt and obligations under capital leases
 
62,810

 
47,495

Fair value of guarantees
 
366

 
366

Current portion of interest rate swaps
 
3,993

 
1,853

Total current liabilities
 
370,290

 
323,293

Long-term debt and obligations under capital leases, less current portion
 
1,263,682

 
1,323,539

Claims accruals, less current portion
 
105,232

 
98,919

Fair value of interest rate swaps, less current portion
 
8,804

 
11,159

Deferred income taxes
 
425,716

 
441,157

Securitization of accounts receivable
 
165,000

 
204,000

Total liabilities
 
2,338,724

 
2,402,067

Contingencies (note 14)
 


 


Stockholders’ equity:
 
 
 
 
Preferred stock, par value $0.01 per share; Authorized 1,000,000 shares; none issued
 
—

 
—

Class A common stock, par value $0.01 per share; Authorized 500,000,000 shares; 87,647,904 and 87,055,664 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively
 
876

 
871

Class B common stock, par value $0.01 per share; Authorized 250,000,000 shares; 52,495,236 and 52,495,236 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively
 
525

 
525

Additional paid-in capital
 
903,626

 
896,575

Accumulated deficit
 
(593,886
)
 
(660,168
)
Accumulated other comprehensive loss
 
(7,342
)
 
(7,894
)
Noncontrolling interest
 
202

 
202

Total stockholders’ equity
 
304,001

 
230,111

Total liabilities and stockholders’ equity
 
$
2,642,725

 
$
2,632,178

See accompanying notes to consolidated financial statements.


3
Table of Contents

Swift Transportation Company and Subsidiaries
Consolidated Statements of Operations
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Amounts in thousands, except per
share data)
Operating revenue
 
$
898,104

 
$
872,584

 
$
1,754,898

 
$
1,699,469

Operating expenses:
 
 
 
 
 
 
 
 
Salaries, wages and employee benefits
 
202,757

 
198,618

 
409,364

 
398,753

Operating supplies and expenses
 
68,136

 
63,379

 
128,801

 
118,421

Fuel
 
144,377

 
145,826

 
296,259

 
298,829

Purchased transportation
 
257,471

 
252,685

 
502,288

 
485,887

Rental expense
 
30,541

 
26,576

 
59,792

 
50,075

Insurance and claims
 
29,207

 
26,278

 
56,978

 
56,858

Depreciation and amortization of property and equipment
 
52,527

 
50,389

 
102,859

 
100,783

Amortization of intangibles
 
4,203

 
4,215

 
8,407

 
8,518

Impairments
 
—

 
—

 
—

 
1,065

Gain on disposal of property and equipment
 
(4,681
)
 
(3,478
)
 
(7,035
)
 
(7,868
)
Communication and utilities
 
5,433

 
5,975

 
11,525

 
12,221

Operating taxes and licenses
 
15,852

 
15,444

 
31,392

 
31,348

Total operating expenses
 
805,823

 
785,907

 
1,600,630

 
1,554,890

Operating income
 
92,281

 
86,677

 
154,268

 
144,579

Other (income) expenses:
 
 
 
 
 
 
 
 
Interest expense
 
23,760

 
29,553

 
49,334

 
62,329

Derivative interest expense
 
532

 
2,108

 
1,094

 
4,653

Interest income
 
(517
)
 
(439
)
 
(1,090
)
 
(836
)
Loss on debt extinguishment
 
—

 
1,279

 
5,044

 
22,219

Gain on sale of real property
 
—

 
—

 
(6,078
)
 
—

Other
 
(1,323
)
 
(1,299
)
 
(1,819
)
 
(1,901
)
Total other (income) expenses, net
 
22,452

 
31,202

 
46,485

 
86,464

Income before income taxes
 
69,829

 
55,475

 
107,783

 
58,115

Income tax expense
 
26,888

 
21,776

 
41,501

 
18,228

Net income
 
$
42,941

 
$
33,699

 
$
66,282

 
$
39,887

Basic earnings per share
 
$
0.31

 
$
0.24

 
$
0.47

 
$
0.29

Diluted earnings per share
 
$
0.30

 
$
0.24

 
$
0.47

 
$
0.29

Shares used in per share calculations
 
 
 
 
 
 
 
 
Basic
 
139,989

 
139,522

 
139,839

 
139,505

Diluted
 
141,838

 
139,640

 
141,652

 
139,652

See accompanying notes to consolidated financial statements.


4
Table of Contents

Swift Transportation Company and Subsidiaries
Consolidated Statements of Comprehensive Income
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(In thousands)
Net income
 
$
42,941

 
$
33,699

 
$
66,282

 
$
39,887

Other comprehensive income before income taxes:
 
 
 
 
 
 
 
 
Accumulated losses on derivatives reclassified to derivative interest expense
 
466

 
2,108

 
955

 
4,653

Change in fair value of interest rate swaps
 
—

 
(1,169
)
 
(189
)
 
(2,108
)
Other comprehensive income before income taxes
 
466

 
939

 
766

 
2,545

Income tax effect of items of other comprehensive income
 
(242
)
 
453

 
(214
)
 
817

Other comprehensive income, net of taxes
 
224

 
1,392

 
552

 
3,362

Total comprehensive income
 
$
43,165

 
$
35,091

 
$
66,834

 
$
43,249

See accompanying notes to consolidated financial statements.


5
Table of Contents

Swift Transportation Company and Subsidiaries
Consolidated Statement of Stockholders’ Equity
 
 
Class A
Common Stock
 
Class B
Common Stock
 
Additional
Paid in Capital
 
Accumulated Deficit
 
Accumulated
Other
Comprehensive Loss
 
Noncontrolling Interest
 
Total
Stockholders’ Equity
 
 
Shares
 
Par Value
 
Shares
 
Par Value
 
 
 
 
 
 
 
(Unaudited)
(In thousands, except per share data)
Balances, December 31, 2012
 
87,055,664

 
$
871

 
52,495,236

 
$
525

 
$
896,575

 
$
(660,168
)
 
$
(7,894
)
 
$
202

 
$
230,111

Exercise of stock options
 
535,394

 
5

 

 

 
5,686

 

 

 

 
5,691

Excess tax deficiency of stock options
 

 

 

 

 
(503
)
 

 

 

 
(503
)
Grant of restricted Class A common stock
 
10,480

 

 

 

 
39

 

 

 

 
39

Shares issued under employee stock purchase plan
 
46,366

 

 

 

 
490

 

 

 

 
490

Other comprehensive income
 

 

 

 

 

 

 
552

 

 
552

Non-cash equity compensation
 

 

 

 

 
1,339

 

 

 

 
1,339

Net income
 

 

 

 

 

 
66,282

 

 

 
66,282

Balances, June 30, 2013
 
87,647,904

 
$
876

 
52,495,236

 
$
525

 
$
903,626

 
$
(593,886
)
 
$
(7,342
)
 
$
202

 
$
304,001

See accompanying notes to consolidated financial statements.


6
Table of Contents

Swift Transportation Company and Subsidiaries
Consolidated Statements of Cash Flows
 
 
Six Months Ended June 30,
 
 
2013
 
2012
 
 
(Unaudited)
(In thousands)
Cash flows from operating activities:
 
 
 
 
Net income
 
$
66,282

 
$
39,887

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization of property, equipment and intangibles
 
111,266

 
109,301

Amortization of debt issuance costs, original issue discount, and losses on terminated swaps
 
1,868

 
7,645

Gain on disposal of property and equipment less write-off of totaled tractors
 
(6,629
)
 
(7,166
)
Gain on sale of real property
 
(6,078
)
 
—

Impairments
 
—

 
1,065

Equity losses of investee
 
655

 
358

Deferred income taxes
 
36,731

 
12,100

Provision for allowance for losses on accounts receivable
 
1,609

 
1,013

Loss on debt extinguishment
 
5,044

 
21,267

Non-cash equity compensation
 
1,378

 
2,725

Income effect of mark-to-market adjustment of interest rate swaps
 
82

 
—

Increase (decrease) in cash resulting from changes in:
 
 
 
 
Accounts receivable
 
(23,615
)
 
(25,869
)
Inventories and supplies
 
(67
)
 
(371
)
Prepaid expenses and other current assets
 
3,663

 
1,772

Other assets
 
4,799

 
(2,384
)
Accounts payable, accrued and other liabilities
 
23,355

 
4,507

Net cash provided by operating activities
 
220,343

 
165,850

Cash flows from investing activities:
 
 
 
 
Decrease in restricted cash
 
8,984

 
14,556

Change in restricted investments
 
(4,680
)
 
(14,612
)
Funding of note receivable
 
—

 
(7,500
)
Proceeds from sale of property and equipment
 
35,222

 
57,240

Capital expenditures
 
(150,383
)
 
(131,102
)
Payments received on notes receivable
 
2,074

 
3,202

Expenditures on assets held for sale
 
(1,614
)
 
(2,223
)
Payments received on assets held for sale
 
22,773

 
10,340

Payments received on equipment sale receivables
 
644

 
5,496

Other investing activities
 
—

 
(500
)
Net cash used in investing activities
 
(86,980
)
 
(65,103
)
Cash flows from financing activities:
 
 
 
 
Repayment of long-term debt and capital leases
 
(115,472
)
 
(171,433
)
Proceeds from long-term debt
 
7,528

 
10,000

Payment of deferred loan costs
 
(2,183
)
 
(9,009
)
Borrowings under accounts receivable securitization
 
80,000

 
174,000

Repayment of accounts receivable securitization
 
(119,000
)
 
(151,000
)
Other financing activities
 
5,678

 
126

Net cash used in financing activities
 
(143,449
)
 
(147,316
)
Net decrease in cash and cash equivalents
 
(10,086
)
 
(46,569
)
Cash and cash equivalents at beginning of period
 
53,596

 
82,084

Cash and cash equivalents at end of period
 
$
43,510

 
$
35,515

  See accompanying notes to consolidated financial statements.

7
Table of Contents

Swift Transportation Company and Subsidiaries
Consolidated Statements of Cash Flows — (continued)
 
 
 
Six Months Ended June 30,
 
 
2013
 
2012
 
 
(Unaudited)
(In thousands)
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid during the period for:
 
 
 
 
Interest
 
$
47,192

 
$
64,608

Income taxes
 
$
4,794

 
$
6,917

Supplemental schedule of:
 
 
 
 
Non-cash investing activities:
 
 
 
 
Equipment sales receivables
 
$
896

 
$
1,751

Equipment purchase accrual
 
$
28,230

 
$
16,500

Notes receivable from sale of assets
 
$
1,577

 
$
1,319

Non-cash financing activities:
 
 
 
 
Accrued deferred loan costs
 
$
—

 
$
242

Capital lease additions
 
$
58,984

 
$
19,531

See accompanying notes to consolidated financial statements.


8
Table of Contents

Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Basis of Presentation
Swift Transportation Company is the holding company for Swift Transportation Co., LLC (a Delaware limited liability company, formerly Swift Transportation Co., Inc., a Nevada corporation) and its subsidiaries (collectively, “Swift Transportation Co.”), a truckload carrier headquartered in Phoenix, Arizona, and Interstate Equipment Leasing, LLC (“IEL”) (all the foregoing being, collectively, “Swift” or the “Company”). The Company’s three reportable operating segments consist of Truckload, Dedicated and Intermodal. As of June 30, 2013 , the Company operated a national terminal network and a tractor fleet of approximately 16,300 units comprised of 12,200 tractors driven by company drivers and 4,100 owner-operator tractors , a fleet of 52,200 trailers , and 8,700 intermodal containers .
In the opinion of management, the accompanying financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) include all adjustments necessary for the fair presentation of the interim periods presented. These interim financial statements should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2012 . Management has evaluated the effect on the Company’s reported financial condition and results of operations of events subsequent to June 30, 2013 through the issuance of the financial statements.
Note 2. New Accounting Standards
In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income . ASU 2013-02 requires entities to present information about the amounts reclassified out of accumulated other comprehensive income ("OCI") by component. In addition, an entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of accumulated OCI by the respective line items of net income, but only if the amount reclassified is required to be reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. The ASU is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this guidance impacted the Company's financial statement disclosures, but did not have an impact on Swift's financial position or results of operations.
Note 3. Income Taxes
The effective tax rate for the three and six months ended June 30, 2013 was 38.5% , as expected. The Company's effective tax rate for the three months ended June 30, 2012 was 39.3% . The Company's effective tax rate for the six months ended June 30, 2012 was 31.4% , which was approximately 8 percentage points lower than the expected effective tax rate primarily due to a deferred state tax benefit related to an internal corporate restructuring of our subsidiaries in January of 2012. Excluding the impact of discrete items in the first quarter of 2012, the effective tax rate for the six months ended June 30, 2012 would have been 38.5% .
The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties as of June 30, 2013 was $1.4 million . To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. The Company anticipates that the total amount of unrecognized tax benefits may decrease by approximately $0.7 million during the next twelve months, which should not have a material impact on the Company’s consolidated financial statements.
Certain of the Company’s subsidiaries are currently under examination by the state of California for the 2005 , 2006 and May 10, 2007 tax years. The Company anticipates concluding its California examination in 2013 for 2005 , 2006 and short period ending May 10, 2007. Tax years 2008 through 2012 remain subject to examination. In addition, other state jurisdictions are conducting examinations for years ranging from 2007 to 2012 . At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company’s effective tax rate.

9
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

Note 4. Investments
The following table presents the cost or amortized cost, gross unrealized gains and losses, and estimated fair value of the Company’s restricted investments as of June 30, 2013 and December 31, 2012 (in thousands): 
 
 
June 30, 2013
 
 
Cost or
 
Gross Unrealized
 
Estimated
 
 
Amortized
Cost
 
Gains
 
Temporary
Losses
 
Fair
Value
U.S. corporate securities
 
$
19,306

 
$
—

 
$
12

 
$
19,294

Foreign corporate securities
 
5,045

 
—

 
3

 
5,042

Negotiable certificate of deposits
 
2,604

 
—

 
1

 
2,603

Total restricted investments
 
$
26,955

 
$
—

 
$
16

 
$
26,939

 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 
Cost or
 
Gross Unrealized
 
Estimated
 
 
Amortized
 
 
 
Temporary
 
Fair
 
 
Cost
 
Gains
 
Losses
 
Value
U.S. corporate securities
 
$
20,274

 
$
3

 
$
8

 
$
20,269

Foreign corporate securities
 
2,001

 
1

 
—

 
2,002

Total restricted investments
 
$
22,275

 
$
4

 
$
8

 
$
22,271

As of June 30, 2013 , the contractual maturities of the restricted investments were 1 year or less. There were 23 securities and seven securities that were in an unrealized loss position for less than twelve months as of June 30, 2013 and December 31, 2012 , respectively.

The Company periodically evaluates restricted investments for impairment. The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value.
The Company accounts for other-than-temporary impairments of debt securities using the provisions of Topic 320, Investments – Debt and Equity Securities, related to the recognition of other-than-temporary impairments of debt securities. This guidance requires the Company to evaluate whether it intends to sell an impaired debt security or whether it is more likely than not that it will be required to sell an impaired debt security before recovery of the amortized cost basis. If either of these criteria is met, an impairment equal to the difference between the debt security’s amortized cost and its estimated fair value is recognized in earnings.
For impaired debt securities that do not meet this criteria, the Company determines if a credit loss exists with respect to the impaired security. If a credit loss exists, the credit loss component of the impairment (i.e., the difference between the security’s amortized cost and the present value of projected future cash flows expected to be collected) is recognized in earnings and the remaining portion of the impairment is recognized as a component of accumulated OCI. The Company did not recognize any impairment losses for the three and six months ended June 30, 2013 and 2012 , respectively.

Note 5. Intangible Assets
Intangible assets as of June 30, 2013 and December 31, 2012 were as follows (in thousands):
 
 
 
June 30, 2013
 
December 31, 2012
Customer Relationship:
 
 
 
 
Gross carrying value
 
$
275,324

 
$
275,324

Accumulated amortization
 
(131,207
)
 
(122,800
)
Owner-Operator Relationship:
 
 
 
 
Gross carrying value
 
3,396

 
3,396

Accumulated amortization
 
(3,396
)
 
(3,396
)
Trade Name:
 
 
 
 
Gross carrying value
 
181,037

 
181,037

Intangible assets, net
 
$
325,154

 
$
333,561

For all periods ending on or after December 31, 2007, amortization of intangibles consists primarily of amortization of $261.2 million gross carrying value of definite-lived intangible assets recognized under purchase accounting in connection with Swift Transportation Co.’s 2007 going

10
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

private transaction. Intangible assets acquired as a result of the 2007 going private transaction include trade name, customer relationships, and owner-operator relationships. Amortization of the customer relationship acquired in the going private transaction is calculated on the 150% declining balance method over the estimated useful life of 15 years . The customer relationship contributed to the Company at May 9, 2007 is amortized using the straight-line method over 15 years . The trade name has an indefinite useful life and is not amortized, but rather is tested for impairment at least annually, unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value.
The following tables presents amortization expense for the three and six months ended June 30, 2013 and 2012, related to intangible assets recognized in conjunction with the 2007 going private transaction and the previous intangible assets existing prior to the 2007 going private transaction (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Amortization of intangible assets related to 2007 going private transaction
 
$
3,912

 
$
3,923

 
$
7,824

 
$
7,934

Amortization of intangible assets related to intangible assets existing prior to the 2007 going private transaction
 
291

 
292

 
583

 
584

Amortization expense
 
$
4,203

 
$
4,215

 
$
8,407

 
$
8,518


Note 6. Assets Held for Sale
Assets held for sale as of June 30, 2013 and December 31, 2012 was as follows (in thousands):
 
 
June 30, 2013
 
December 31, 2012
Land and facilities
 
$
10,141

 
$
25,148

Revenue equipment
 
6,611

 
6,396

Assets held for sale
 
$
16,752

 
$
31,544

As of June 30, 2013 and December 31, 2012 , assets held for sale are carried at the lower of depreciated cost or estimated fair value less expected selling costs. The Company expects to sell these assets within the next 12 months .
During the six months ended June 30, 2013 , the Company sold two non-operating properties classified as held for sale with a carrying value of $15.8 million . As a result, the Company recognized a pre-tax gain of $6.1 million in Gain on sale of real property in the Company’s consolidated statements of operations.

Note 7. Equity Investment and Note Receivable – Swift Power Services, LLC
In February 2012, the Company contributed approximately $500 thousand to Swift Power Services, LLC (“SPS”) in return for 49.95% ownership interest. SPS was formed in 2012 for the purpose of acquiring the assets and business of three trucking companies engaged in bulk transporting of water, oil, liquids and pipe to various oil companies drilling in the Bakken shale in northwestern North Dakota. The Company accounts for its interest in SPS using the equity method.
Additionally, in February 2012, the Company loaned $7.5 million to SPS pursuant to a secured promissory note, which is secured by substantially all of the assets of SPS. SPS failed to make its first scheduled principal payment and quarterly interest payment to the Company on December 31, 2012 , which resulted in a $6.0 million pre-tax impairment charge in the fourth quarter of 2012 . As a result, this note has been placed on nonaccrual status as of December 31, 2012 . All outstanding interest and principal balances are due on April 30, 2015. During the three months ended June 30, 2013 and 2012 , the Company recorded equity losses of $455 thousand and $280 thousand , respectively, and during the six months ended June 30, 2013 and 2012 recorded equity losses of $655 thousand and $358 thousand , respectively, in other expense in the Company’s consolidated statements of operations related to its note receivable and investment in SPS, respectively. As a result of the accumulated equity losses and the impairment recorded during the three months ended December 31, 2012 , the net carrying value of the investment in SPS is zero as of June 30, 2013 and December 31, 2012 , and the net carrying value of the note receivable is $345 thousand and $1.0 million as of June 30, 2013 and December 31, 2012 , respectively.

Note 8. Debt and Financing Transactions
Other than the Company’s accounts receivable securitization as discussed in Note 9 and its outstanding capital lease obligations as discussed in Note 10, the Company had long-term debt outstanding as of June 30, 2013 and December 31, 2012 as follows (in thousands):
 

11
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

 
 
June 30, 2013
 
December 31, 2012
Senior secured first lien term loan B-1 tranche due December 2016
 
$
238,000

 
$
—

Senior secured first lien term loan B-2 tranche due December 2017
 
410,000

 
—

Senior secured first lien term loan B-1 tranche due December 2016, net of $405 OID as of December 31, 2012
 
—

 
157,095

Senior secured first lien term loan B-2 tranche due December 2017, net of $1,440 OID as of December 31, 2012
 
—

 
575,560

Senior second priority secured notes due November 15, 2018, net of $6,807 and $7,439 OID as of June 30, 2013 and December 31, 2012, respectively
 
493,193

 
492,561

Other
 
13,715

 
11,126

Total
 
1,154,908

 
1,236,342

Less: current portion
 
6,640

 
8,120

Long-term debt
 
$
1,148,268

 
$
1,228,222

The credit facility and senior notes are secured by substantially all of the assets of the Company and are guaranteed by Swift Transportation Company, IEL, Swift Transportation Co. and its domestic subsidiaries other than its captive insurance subsidiaries, driver training academy subsidiary, and its bankruptcy-remote special purpose subsidiary. As of June 30, 2013 and December 31, 2012 , the balance of deferred loan costs was $10.4 million and $13.1 million , respectively, and is reported in Other assets in the Company’s consolidated balance sheets.
Senior Secured Credit Facility
On March 7, 2013, the Company entered into a Second Amended and Restated Credit Agreement (the “2013 Agreement”) replacing its previous Amended and Restated Credit Agreement dated March 6, 2012 (the “2012 Agreement”). The 2013 Agreement replaced the previous first lien term loan B-1 and B-2 tranches with outstanding principal balances of $152.0 million and $508.0 million , respectively, with new first lien term B-1 and B-2 tranches with balances of $250.0 million and $410.0 million , respectively. In addition, the 2013 Agreement reduced the interest rate applicable to the first lien term loan B-1 tranche to the LIBOR rate plus 2.75% with no LIBOR floor, down from the LIBOR rate plus 3.75% with no LIBOR floor, and reduced the interest rate applicable to the first lien term loan B-2 tranche to the LIBOR rate plus 3.00% with a 1.00% LIBOR floor , down from the LIBOR rate plus 3.75% with a 1.25% LIBOR floor . As of June 30, 2013 , interest accrues at 2.94% and 4.00% on the Company’s first lien term loan B-1 and B-2 tranches, respectively. The replacement of the 2012 Agreement resulted in a loss on debt extinguishment of $5.0 million for the six months ended June 30, 2013 , representing the write-off of the unamortized original issue discount and deferred financing fees associated with the 2012 Agreement.
In addition to the pricing changes described above, the 2013 Agreement increased the availability pursuant to the accordion feature up to $350.0 million in aggregate, subject to the satisfaction of certain conditions and the participation of lenders.
In the first quarter of 2012, the Company entered into the 2012 Agreement which replaced the then-existing, remaining $874.0 million face value first lien term loan, resulting in a loss on debt extinguishment of $20.9 million in the first quarter of 2012, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the original term loan.
In the second quarter of 2012, the Company entered into the First Amendment to the then existing 2012 Agreement (“Amendment”). The Amendment reduced the applicable rate on the revolving credit facility from 4.50% to a range of 3.00% to 3.25% for LIBOR based borrowings and letters of credit from 3.50% to a range of 2.00% to 2.25% for Base Rate borrowings, depending on the Company’s consolidated leverage ratio as defined in the 2012 Agreement. Additionally, the commitment fee for the unused portion of the revolving credit facility was reduced from a range of 0.50% to 0.75% to a range of 0.25% to 0.50% , depending on the Company’s consolidated leverage ratio. In addition, the maturity date of the $400.0 million revolving credit facility was extended from December 21, 2015 to September 21, 2016. On April 17, 2012, the Company entered into the Incremental Facility Amendment to the Amended and Restated Credit Agreement (“Incremental Facility Amendment”). Pursuant to the Incremental Facility Amendment, the Company received $10.0 million in proceeds from a Specified Incremental Tranche B-1 Term Loan (“Incremental Term Loan”). The terms applicable to the Incremental Term Loan are the same as those applicable to the Company’s previous first lien term loan B-1tranche.
As of June 30, 2013 , there were no borrowings under the $400.0 million revolving line of credit, while the Company had outstanding letters of credit under this facility primarily for workers’ compensation and self-insurance liability purposes totaling $138.1 million , leaving $261.9 million available under the revolving line of credit. As of June 30, 2013 , interest accrues at 3.00% and 0.44% on the outstanding letters of credit and unused portion, respectively, on the revolving line of credit.
Senior Second Priority Secured Notes
In December 2010, Swift Services Holdings, Inc., a wholly owned subsidiary, completed a private placement of senior second priority secured notes totaling $500.0 million face value which mature in November 2018 and bear interest at 10.00% (the “senior notes”). The Company received proceeds of $490.0 million , net of a $10.0 million original issue discount. Interest on the senior notes is payable on May 15 and November 15 each year.


12

Note 9. Accounts Receivable Securitization
In June 2013, Swift Receivables Company II, LLC, a Delaware limited liability company (“SRCII”), a wholly-owned bankruptcy-remote special purpose subsidiary, entered into an Amended and Restated Receivables Sale Agreement (the “2013 RSA”) with unrelated financial entities (the “Purchasers”) to replace the Company's prior accounts receivable sale facility ("2011 RSA") and to sell, on a revolving basis, undivided interests in the Company’s accounts receivable. Pursuant to the 2013 RSA, the Company’s receivable originator subsidiaries will sell all of their eligible accounts receivable to SRCII, which in turn sells a variable percentage ownership interest in its accounts receivable to the Purchasers. The 2013 RSA increases the borrowing capacity secured by the receivables from $275.0 million under the 2011 RSA to $325.0 million and extends the final maturity date from June 8, 2014 to July 13, 2016 and is subject to customary fees and contains various customary affirmative and negative covenants, representations and warranties, and default and termination provisions. Outstanding balances under the 2013 RSA accrue program fees generally at commercial paper rates plus 95 basis points , down from commercial paper rates plus 125 basis points , and unused capacity is subject to an unused commitment fee of 35 basis points , decreasing from 40 basis points . Pursuant to the 2013 RSA, collections on the underlying receivables by the Company are held for the benefit of SRCII and the Purchasers in the facility and are unavailable to satisfy claims of the Company and its subsidiaries. The facility qualifies for treatment as a secured borrowing under Topic 860, Transfers and Servicing, and as such, outstanding amounts are carried on the Company’s consolidated balance sheets as a liability.
For the three and six months ended June 30, 2013, the Company incurred program fees of $0.7 million and $1.5 million , respectively, associated with the 2013 RSA and 2011 RSA, which were recorded in interest expense in the Company's consolidated statements of operations. For the three and six months ended June 30, 2012, the Company incurred program fees of $0.8 million and $1.6 million associated with the 2011 RSA. As of June 30, 2013 , the outstanding borrowing under the 2013 RSA was $165.0 million against a total available borrowing base of $266.7 million , leaving $101.7 million available. As of December 31, 2012 , the outstanding borrowing under the 2011 RSA was $204.0 million against a total available borrowing base of $268.6 million .

Note 10. Capital Leases
The Company leases certain revenue equipment under capital leases. The Company’s capital leases are typically structured with balloon payments at the end of the lease term equal to the residual value the Company is contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers. The Company is obligated to pay the balloon payments at the end of the leased term whether or not it receives the proceeds of the contracted residual values from the respective manufacturers. Certain leases contain renewal or fixed price purchase options. As of June 30, 2013 and December 31, 2012 , the present value of obligations under capital leases totaled $171.6 million and $134.7 million , of which the current portion was $56.2 million and $39.4 million , respectively. The leases are collateralized by revenue equipment with a cost of $332.2 million and accumulated amortization of $154.7 million as of June 30, 2013 . The amortization of the equipment under capital leases is included in depreciation and amortization expense in the Company’s consolidated statements of operations.

Note 11. Derivative Financial Instruments
In April 2011, as contemplated by the credit facility, the Company entered into two forward-starting interest rate swap agreements with a notional amount of $350.0 million . These interest rate swaps were effective in January 2013 and have a maturity date of July 2015 . On April 27, 2011 (“designation date”), the Company designated and qualified these interest rate swaps as cash flow hedges. Subsequent to the designation date, the effective portion of the changes in estimated fair value of the designated swaps was recorded in accumulated OCI and is thereafter recognized to derivative interest expense as the interest on the hedged debt affects earnings, which hedged interest accruals began in January 2013. As of June 30, 2013 and December 31, 2012 , changes in estimated fair value of the designated interest rate swap agreements totaling $0.1 million and $1.8 million , net-of-tax, respectively, were reflected in accumulated OCI. Refer to Note 12 below for further discussion of the Company’s estimated fair value methodology.
As discussed in Note 8—Debt and Financing Transactions, on March 7, 2013, the Company entered into the 2013 Agreement replacing the 2012 Agreement dated March 6, 2012. Due to the incorporation of a new interest rate floor provision in the 2013 Agreement, the Company concluded as of February 28, 2013, the outstanding interest rate swaps would no longer be highly effective in achieving offsetting changes in cash flows related to the hedged interest payments. As a result, the Company de-designated the hedges as of February 28, 2013 (“de-designation date”). Beginning on March 1, 2013, the effective portion of the change in fair value of interest rate swaps prior to the change (i.e. amounts previously recorded in accumulated OCI) have been and will continue to be amortized as derivative interest expense over the period of the originally designated hedged interest payments through July 2015 . Following the de-designation date, changes in fair value of the interest rate swaps are immediately recognized in the consolidated statements of operations as derivative interest expense.
The following table presents the changes in fair value, pre-tax of derivatives designated as cash flow hedges had on accumulated OCI and earnings (in thousands): 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Amount of loss recognized in OCI on derivatives (effective portion)
 
$
—

 
$
1,169

 
$
189

 
$
2,108

Amount of loss reclassified from accumulated OCI into income as “Derivative interest expense” (effective portion)
 
$
(466
)
 
$
(2,108
)
 
$
(955
)
 
$
(4,653
)
The following tables presents information about pre-tax gains and losses recognized in earnings on the Company’s interest rate derivative contracts that were de-designated on February 28, 2013 as hedging instruments under Topic 815 is as follows (in thousands): 

13
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Amount of loss recognized in income as “Derivative interest expense”
 
$
(66
)
 
$
—

 
$
(139
)
 
$
—

As of June 30, 2013 , $4.7 million of deferred losses on derivatives in accumulated OCI is expected to be reclassified to earnings within the next 12 months.

Note 12. Fair Value Measurement
Topic 820, Fair Value Measurements and Disclosures, requires that the Company disclose estimated fair values for its financial instruments. The estimated fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability. Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Changes in assumptions could significantly affect these estimates. Because the fair value is estimated as of June 30, 2013 and December 31, 2012 , the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.
 
The tables below exclude certain financial instruments. The excluded financial instruments are as follows: cash and cash equivalents, restricted cash, accounts receivable, net, income tax refund receivable, accounts payable, and accrued liabilities. The estimated fair value of these financial instruments approximate carrying value as they are short-term in nature. The table below also excludes financial instruments reported at estimated fair value on a recurring basis. See “— Recurring Fair Value Measurements.” All remaining balance sheet amounts excluded from the table below are not considered financial instruments subject to this disclosure.
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments as of June 30, 2013 and December 31, 2012 (in thousands): 
 
 
June 30, 2013
 
December 31, 2012
 
 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial Assets:
 
 
 
 
 
 
 
 
Restricted investments
 
$
26,955

 
$
26,939

 
$
22,275

 
$
22,271

Financial Liabilities:
 
 
 
 
 
 
 
 
Senior secured first lien term loan B-1 tranche (2013 Agreement)
 
238,000

 
238,976

 
—

 
—

Senior secured first lien term loan B-2 tranche (2013 Agreement)
 
410,000

 
412,419

 
—

 
—

Senior secured first lien term loan B-1 tranche (2012 Agreement)
 
—

 
—

 
157,095

 
157,346

Senior secured first lien term loan B-2 tranche (2012 Agreement)
 
—

 
—

 
575,560

 
582,236

Senior second priority secured notes
 
493,193

 
544,978

 
492,561

 
541,817

Securitization of accounts receivable
 
165,000

 
165,000

 
204,000

 
204,000

The carrying amounts shown in the table (other than the restricted investments, and the securitization of accounts receivable) are included in the consolidated balance sheets in long-term debt and obligations under capital leases. The estimated fair values of the financial instruments shown in the above table as of June 30, 2013 and December 31, 2012 , represent management’s best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. The estimated fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the estimated fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. These judgments are developed by the Company based on the best information available under the circumstances.
The following summary presents a description of the methods and assumptions used to estimate the fair value of each class of financial instrument.
Restricted investments
The estimated fair value of the Company’s restricted investments is based on quoted prices in active markets that are readily and regularly obtainable.

14
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

First lien term loans and senior second priority secured notes
The estimated fair values of the first lien term loan and senior second priority secured notes were determined by bid prices in trades between qualified institutional buyers.
Securitization of Accounts Receivable
The Company’s securitization of accounts receivable consists of borrowings outstanding pursuant to the Company’s 2013 RSA and 2011 RSA as of June 30, 2013 and December 31, 2012 , respectively, as discussed in Note 9. Its fair value is estimated by discounting future cash flows using a discount rate commensurate with the uncertainty involved.
Fair value hierarchy
Topic 820 establishes a framework for measuring fair value in accordance with GAAP and expands financial statement disclosure requirements for fair value measurements. Topic 820 further specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:

•
Level 1 — Valuation techniques in which all significant inputs are quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.
•
Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices from markets that are not active for assets or liabilities that are identical or similar to the assets or liabilities being measured. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.
•
Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
 
When available, the Company uses quoted market prices to determine the estimated fair value of an asset or liability. If quoted market prices are not available, the Company will measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the estimated fair value measurement in its entirety. Following is a brief summary of the Company’s classification within the fair value hierarchy of each major category of assets and liabilities that it measures and reports on its consolidated balance sheets at estimated fair value on a recurring basis as of June 30, 2013 :

•
Interest rate swaps. The Company’s interest rate swaps are not actively traded but are valued using valuation models and credit valuation adjustments, both of which use significant inputs that are observable in active markets over the terms of the instruments the Company holds, and accordingly, the Company classified these valuation techniques as Level 2 in the hierarchy. Interest rate yield curves and credit spreads derived from trading levels of the Company’s first lien term loan are the significant inputs into these valuation models. These inputs are observable in active markets over the terms of the instruments the Company holds. The Company considers the effect of its own credit standing and that of its counterparties in the valuations of its derivative financial instruments.
Recurring Fair Value Measurements
As of June 30, 2013 and December 31, 2012, no assets of the Company were measured at estimated fair value on a recurring basis. As of June 30, 2013 and December 31, 2012 , information about inputs into the estimated fair value measurements of each major category of the Company’s liabilities that were measured at estimated fair value on a recurring basis in periods subsequent to their initial recognition was as follows (in thousands):
 
 
 
 
 
Fair Value Measurements at Reporting Date Using
Description
 
Total
Estimated
Fair Value
 
Quoted Prices in
Active  Markets for
Identical Assets or
Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
As of June 30, 2013
 
 
 
 
 
 
 
 
Interest rate swaps
 
$
12,797

 
$
—

 
$
12,797

 
$
—

As of December 31, 2012
 

 

 

 

Interest rate swaps
 
$
13,012

 
$
—

 
$
13,012

 
$
—


15
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

Nonrecurring Fair Value Measurements
As of June 30, 2013 , no assets of the Company were measured at estimated fair value on a nonrecurring basis. As of December 31, 2012 , information about inputs into the estimated fair value measurements of the Company’s assets that were measured at estimated fair value on a nonrecurring basis in the period is as follows (in thousands):
 
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
Total
Estimated Fair Value
 
Quoted Prices
in Active
Markets for
Identical Assets (Level 1)
 
Significant
Other
Observable Inputs (Level 2)
 
Significant
Unobservable Inputs (Level 3)
 
Total Gains (Losses)
Description
 
 
 
 
 
As of December 31, 2012
 
 
 
 
 
 
 
 
 
 
Real property
 
$
665

 
$
—

 
$
—

 
$
665

 
$
(1,065
)
Other assets
 
$
—

 
$
—

 
$
—

 
$
—

 
$
(2,322
)
Note receivable
 
$
1,000

 
$
—

 
$
—

 
$
1,000

 
$
(5,979
)
As of December 31, 2012 , a deposit related to the purchase of certain fuel technology equipment and a related asset were written off as the supplier ceased operations, resulting in a pre-tax impairment of $2.3 million . Swift Power Services, LLC (“SPS”), an entity in which the Company owns a minority interest, failed to make its first scheduled principal payment and quarterly interest payment to the Company on December 31, 2012 due to a decline in its financial performance resulting from, among other things, a legal dispute with the former owners and its primary customer. This caused the Company to re-evaluate the secured promissory note due from SPS for impairment, which resulted in a $6.0 million pre-tax adjustment that was recorded in Impairments of non-operating assets in the fourth quarter of 2012 . In accordance with the provisions of ASC Topic 360, Property, Plant and Equipment , real property with a carrying amount of $1.7 million was written down to its estimated fair value of $0.6 million during the first quarter of 2012 , resulting in an impairment charge of $1.1 million , which was included in Impairments in the Company’s consolidated statements of operations. The impairment of this asset was identified due to the Company’s decision to no longer use this property for its initial intended purpose. The Company estimated its fair value using significant unobservable inputs because there have been no recent sales of similar properties in the market place.

Note 13. Earnings per Share
The computation of basic and diluted earnings per share is as follows:
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(In thousands, except
per share amounts)
Net income
 
$
42,941

 
$
33,699

 
$
66,282

 
$
39,887

Basic:
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
139,989

 
139,522

 
139,839

 
139,505

Diluted:
 
 
 
 
 
 
 
 
Dilutive effect of stock options
 
1,849

 
118

 
1,813

 
147

Total weighted average diluted shares outstanding
 
141,838

 
139,640

 
141,652

 
139,652

Anti-dilutive shares excluded from the diluted earnings per share calculation (1)
 
171

 
4,257

 
171

 
4,277

Earnings per share:
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.31

 
$
0.24

 
$
0.47

 
$
0.29

Diluted earnings per share
 
$
0.30

 
$
0.24

 
$
0.47

 
$
0.29

 
(1)
Impact of outstanding options to purchase shares of the Company’s Class A common stock were anti-dilutive because the options exercise price was greater than the average market price of the common shares and were excluded from the calculation of diluted earnings per share.

As of June 30, 2013 and 2012 , there were 5,847,980 and 6,005,914 options outstanding, respectively.




16
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

Note 14. Contingencies
The Company is involved in certain claims and pending litigation primarily arising in the normal course of business. The majority of these claims relate to workers compensation, auto collision and liability, and physical damage and cargo damage. The Company expenses legal fees as incurred and accrues for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on the Company. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold.
For certain cases described below, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages have not been sought; (iii) damages are unsupported and/or exaggerated; (iv) there is uncertainty as to the outcome of pending appeals and/or (v) there are significant factual issues to be resolved. For these cases, however, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on our financial condition, though the outcomes could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.
2004 owner-operator class action litigation
On January 30, 2004 , a class action lawsuit was filed by Leonel Garza on behalf of himself and all similarly situated persons against Swift Transportation: Garza vs. Swift Transportation Co., Inc., Case No. CV7-472, or the Garza Complaint. The putative class originally involved certain owner-operators who contracted with the Company under a 2001 Contractor Agreement that was in place for one year. The putative class is alleging that the Company should have reimbursed owner-operators for actual miles driven rather than the contracted and industry standard remuneration based upon dispatched miles. The trial court denied plaintiff’s petition for class certification, the plaintiff appealed and on August 6, 2008, the Arizona Court of Appeals issued an unpublished Memorandum Decision reversing the trial court’s denial of class certification and remanding the case back to the trial court. On November 14, 2008, the Company filed a petition for review to the Arizona Supreme Court regarding the issue of class certification as a consequence of the denial of the Motion for Reconsideration by the Court of Appeals. On March 17, 2009, the Arizona Supreme Court granted the Company’s petition for review, and on July 31, 2009, the Arizona Supreme Court vacated the decision of the Court of Appeals opining that the Court of Appeals lacked automatic appellate jurisdiction to reverse the trial court’s original denial of class certification and remanded the matter back to the trial court for further evaluation and determination. Thereafter, the plaintiff renewed the motion for class certification and expanded it to include all persons who were employed by Swift as employee drivers or who contracted with Swift as owner-operators on or after January 30, 1998, in each case who were compensated by reference to miles driven. On November 4, 2010, the Maricopa County trial court entered an order certifying a class of owner-operators and expanding the class to include employees. Upon certification, the Company filed a motion to compel arbitration as well as filing numerous motions in the trial court urging dismissal on several other grounds including, but not limited to the lack of an employee as a class representative, and because the named owner-operator class representative only contracted with the Company for a three month period under a one year contract that no longer exists. In addition to these trial court motions, the Company also filed a petition for special action with the Arizona Court of Appeals arguing that the trial court erred in certifying the class because the trial court relied upon the Court of Appeals ruling that was previously overturned by the Arizona Supreme Court. On April 7, 2011, the Arizona Court of Appeals declined jurisdiction to hear this petition for special action and the Company filed a petition for review to the Arizona Supreme Court. On August 31, 2011, the Arizona Supreme Court declined to review the decision of the Arizona Court of Appeals. In April 2012, the court issued the following rulings with respect to certain motions filed by Swift: (1) denied Swift’s motion to compel arbitration; (2) denied Swift’s request to decertify the class; (3) granted Swift’s motion that there is no breach of contract; and (4) granted Swift’s motion to limit class size based on statute of limitations. The Company intends to continue to pursue all available appellate relief supported by the record, which the Company believes demonstrates that the class is improperly certified and, further, that the claims raised have no merit. The Company retains all of its defenses against liability and damages. The final disposition of this case and the impact of such final disposition cannot be determined at this time.
Owner-operator misclassification class action litigation
On December 22, 2009 , a class action lawsuit was filed against Swift Transportation and IEL: John Doe 1 and Joseph Sheer v. Swift Transportation Co., Inc., and Interstate Equipment Leasing, Inc ., Jerry Moyes, and Chad Killebrew, Case No. 9-CIV-10376 filed in the United States District Court for the Southern District of New York, or the Sheer Complaint. The putative class involves owner-operators alleging that Swift Transportation misclassified owner-operators as independent contractors in violation of the federal Fair Labor Standards Act, or FLSA, and various New York and California state laws and that such owner-operators should be considered employees. The lawsuit also raises certain related issues with respect to the lease agreements that certain owner-operators have entered into with IEL. At present, in addition to the named plaintiffs, approximately 200 other current or former owner-operators have joined this lawsuit. Upon Swift’s motion, the matter has been transferred from the United States District Court for the Southern District of New York to the United States District Court in Arizona. On May 10, 2010, the plaintiffs filed a motion to conditionally certify an FLSA collective action and authorize notice to the potential class members. On September 23, 2010, plaintiffs filed a motion for a preliminary injunction seeking to enjoin Swift and IEL from collecting payments from plaintiffs who are in default under their lease agreements and related relief. On September 30, 2010, the District Court granted Swift’s motion to compel arbitration and ordered that the class action be stayed pending the outcome of arbitration. The court further denied plaintiff’s motion for preliminary injunction and motion for conditional class certification. The Court also denied plaintiff’s request to arbitrate the matter as a class. The plaintiff filed a petition for a writ of mandamus asking that the District Court’s order be vacated. On July 27, 2011, the court denied the plaintiff’s petition for writ of mandamus and the plaintiff’s filed another request for interlocutory appeal. On December 9, 2011, the court permitted the plaintiffs to

17
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

proceed with their interlocutory appeal. Swift intends to vigorously defend against any arbitration proceedings. The final disposition of this case and the impact of such final disposition cannot be determined at this time.


  California wage, meal and rest employee class action
On March 22, 2010 , a class action lawsuit was filed by John Burnell , individually and on behalf of all other similarly situated persons against Swift Transportation: John Burnell and all others similarly situated v. Swift Transportation Co., Inc. , Case No. CIVDS 1004377 filed in the Superior Court of the State of California, for the County of San Bernardino, or the Burnell Complaint. On September 3, 2010, upon motion by Swift, the matter was removed to the United States District Court for the Central District of California, Case No. EDCV10-809-VAP. The putative class includes drivers who worked for Swift during the four years preceding the date of filing alleging that Swift failed to pay the California minimum wage, failed to provide proper meal and rest periods, and failed to timely pay wages upon separation from employment. The Burnell Complaint was subject to a stay of proceedings pending determination of similar issues in a case unrelated to Swift, Brinker v Hohnbaum, which was then pending before the California Supreme Court. A ruling was entered in the Brinker matter and in August 2012 the stay in the Burnell Complaint was lifted. On April 9, 2013 the Company filed a motion for judgment on the pleadings requesting dismissal of plaintiff's claims related to alleged meal and rest break violations under the California Labor Code alleging that such claims are preempted by the Federal Aviation Administration Authorization Act. On May 29, 2013, the U.S. District Court for the Central District of California granted the Company's motion for judgment on the pleadings and dismissed plaintiff's claims that are based on alleged violations of meal and rest periods set forth in the California Labor Code.
On April 5, 2012, the Company was served with an additional class action complaint alleging facts similar to those as set forth in the Burnell Complaint. This new class action is James R. Rudsell, on behalf of himself and all others similarly situated v. Swift Transportation Co. of Arizona, LLC and Swift Transportation Company, Case No. CIVDS 1200255, in the Superior Court of California for the County of San Bernardino, or the Rudsell Complaint.
The Company intends to vigorously defend certification of the class in both matters as well as the merits of these matters should the classes be certified. The final disposition of both cases and the impact of such final dispositions of these cases cannot be determined at this time.
California and Oregon minimum wage class action
On July 12, 2011 , a class action lawsuit was filed by Simona Montalvo on behalf of herself and all similarly situated persons against Swift Transportation: Montalvo et al. v. Swift Transportation Corporation d/b/a ST Swift Transportation Corporation in the Superior Court of California, County of San Diego, or the Montalvo Complaint. The Montalvo Complaint was removed to federal court on August 15, 2011, case number 3-11-CV-1827-L. Upon petition by plaintiffs, the matter was remanded to state court and the Company filed an appeal to this remand, which appeal has been denied. On July 29, 2013, the court certified the class.
The issue of class certification in the Montalvo Complaint remains subject to appeal and must first be resolved before the court will address the merits of the case, and we retain all of our defenses against liability and damages pending a determination of class certification. The Company intends to vigorously defend against certification of the class as well as the merits of this matter should the class be certified.
Washington overtime class action
On September 9, 2011 , a class action lawsuit was filed by Troy Slack on behalf of himself and all similarly situated persons against Swift Transportation: Troy Slack, et al v. Swift Transportation Co. of Arizona, LLC and Swift Transportation Corporation in the State Court of Washington, Pierce County, or the Slack Compliant. The Slack Complaint was removed to federal court on October 12, 2011, case number 11-2-114380. The putative class includes all current and former Washington State based employee drivers during the three year statutory period alleging that they were not paid overtime in accordance with Washington State law and that they were not properly paid for meals and rest periods. The Company intends to viorously defend certification of the class as well as the merits of these matters should the class be certified. The final disposition of this case and the impact of such final disposition of this case cannot be determined at this time.
Environmental notice
On April 17, 2009 , the Company received a notice from the Lower Willamette Group , or LWG, advising that there are a total of 250 potentially responsible parties, or PRPs, with respect to alleged environmental contamination of the Lower Willamette River in Portland, Oregon designated as the Portland Harbor Superfund site, or the Site, and that as a previous landowner at the Site the Company has been asked to join a group of 60 PRPs and proportionately contribute to (i) reimbursement of funds expended by LWG to investigate environmental contamination at the Site and (ii) remediation costs of the same, rather than be exposed to potential litigation. Although the Company does not believe it contributed any contaminants to the Site, the Company was at one time the owner of property at the Site and the Comprehensive Environmental Response, Compensation and Liability Act imposes a standard of strict liability on property owners with respect to environmental claims. Notwithstanding this standard of strict liability, the Company believes our potential proportionate exposure to be minimal and not material. No formal complaint has been filed in this matter. The Company’s pollution liability insurer has been notified of this potential claim. The Company does not believe the outcome of this matter is likely to have a material adverse effect on Swift. However, the final disposition of this matter and the impact of such final disposition cannot be determined at this time.



18
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

2013 Environmental incident

On May 14, 2013 a Swift Transportation tractor and trailer was involved in an accident in Bridgeport, California that resulted in fuel and other liquid components being released into the ground and a nearby stream.  Based on soil and water testing of the impacted area, the Company expects the range of cost to remediate this release is $300 thousand to $500 thousand .

Note 15. Segment information
The Company’s three reportable operating segments consist of Truckload, Dedicated and Intermodal.

•
Truckload. The truckload segment consists of one-way movements over irregular routes throughout the United States, Mexico, and Canada. This service utilizes both company and owner-operator tractors with dry van, flatbed, and other specialized trailing equipment.
•
Dedicated. Through the dedicated segment, the Company devotes use of equipment and offers tailored solutions under long-term contracts. This dedicated segment utilizes refrigerated, dry van, flatbed and other specialized trailing equipment.
•
Intermodal. The intermodal segment includes revenue generated by moving freight over the rail in our containers and other trailing equipment, combined with revenue for drayage to transport loads between the railheads and customer locations.
•
Other businesses. Nonreportable segments are comprised of the Company’s freight brokerage and logistics management services, as well as revenue generated by the Company’s subsidiaries offering support services to its customers and owner-operators, including shop maintenance, equipment leasing, and insurance.
 
The Company uses the “management approach” to determine its reportable operating segments, as well as to determine the basis of reporting the operating segment information. The management approach focuses on financial information that the Company’s management uses to make operating decisions. The chief operating decision makers use operating revenues, operating expense categories, operating ratios, operating income and key operating statistics to evaluate performance and allocate resources to the Company’s operations.
Operating income is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources and, consistent with GAAP accounting guidance for segment reporting, it is the Company’s measure of segment performance and is reported below. Operating income should not be viewed as a substitute for GAAP net income (loss). The Company believes the presentation of operating income enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business segments.
Operating income is defined as operating revenues less operating expenses, before tax.
Based on the unique nature of the operating structure of the Company, revenue generating assets are interchangeable between segments. Therefore the Company does not prepare separate balance sheets by segment as assets are not separately identifiable by segment. The Company allocates depreciation and amortization expense on its property and equipment to the segments based on the utilization of the asset by the segment during the period.
The Company’s foreign operations total revenue was less than 5.0% of the Company’s total revenue for the three and six months ended June 30, 2013 and 2012 , respectively.
Set forth in the tables below is certain financial information with respect to the Company’s reportable segments (in thousands):
 
 
 
Operating Revenues
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Truckload
 
$
588,724

 
$
575,193

 
$
1,148,319

 
$
1,126,440

Dedicated
 
182,651

 
181,873

 
361,877

 
353,412

Intermodal
 
84,375

 
81,120

 
161,700

 
150,165

Subtotal
 
855,750

 
838,186

 
1,671,896

 
1,630,017

Nonreportable segments
 
55,131

 
49,162

 
110,423

 
101,493

Intersegment eliminations
 
(12,777
)
 
(14,764
)
 
(27,421
)
 
(32,041
)
Consolidated operating revenue
 
$
898,104

 
$
872,584

 
$
1,754,898

 
$
1,699,469

 

19
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

 
 
Operating Income (Loss)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Truckload
 
$
64,614

 
$
67,994

 
$
107,017

 
$
114,548

Dedicated
 
24,263

 
18,515

 
43,217

 
33,022

Intermodal
 
753

 
123

 
(1,045
)
 
(3,904
)
Subtotal
 
89,630

 
86,632

 
149,189

 
143,666

Nonreportable segments
 
2,651

 
45

 
5,079

 
913

Consolidated operating income
 
$
92,281

 
$
86,677

 
$
154,268

 
$
144,579

 
 
 
Depreciation and Amortization
Expense
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Truckload
 
$
32,388

 
$
30,346

 
$
63,380

 
$
61,484

Dedicated
 
11,223

 
11,439

 
21,728

 
22,358

Intermodal
 
2,254

 
2,187

 
4,622

 
4,194

Subtotal
 
45,865

 
43,972

 
89,730

 
88,036

Nonreportable segments
 
6,662

 
6,417

 
13,129

 
12,747

Consolidated depreciation and amortization expense
 
$
52,527

 
$
50,389

 
$
102,859

 
$
100,783

Other Intersegment Transactions
Certain operating segments provide transportation and related services for other affiliates outside their reportable segment. Revenues for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results.

Note 16. Accumulated Other Comprehensive Income

The following table is a reconciliation of accumulated other comprehensive income by component (in thousands):
 
 
Derivative Financial Instruments
 
Foreign Currency Transactions
 
Accumulated Other Comprehensive Income
Balance as of December 31, 2012
 
$
(7,977
)
 
$
83

 
$
(7,894
)
Other comprehensive loss before reclassifications
 
(161
)
 
—

 
(161
)
Amounts reclassified from accumulated other comprehensive loss
 
713

 
—

 
713

Net current-period other comprehensive income
 
552

 
—

 
552

Balance as of June 30, 2013
 
$
(7,425
)
 
$
83

 
$
(7,342
)
All amounts are net-of-tax. Amounts in parenthesis indicate debits.

The following table presents details about reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2013 and 2012 are as follows (in thousands):








20
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

 
 
Amount Reclassified from Accumulated Other Comprehensive Loss
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 

 
 
2013
 
2012
 
2013
 
2012
 
Statement of Operations Classifications
Gains and losses on cash flow hedging:
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
$
466

 
$
2,108

 
$
955

 
$
4,653

 
Derivative interest expense
Income tax (benefit) expense
 
(242
)
 
828

 
(214
)
 
1,461

 
Income tax expense
 
 
$
224

 
$
2,936

 
$
741

 
$
6,114

 
Consolidated net income


Note 17. Guarantor Condensed Consolidating Financial Statements
The payment of principal and interest on the Company’s senior second priority secured notes are guaranteed by the Company’s 100% owned domestic subsidiaries (the “Guarantor Subsidiaries”) other than its driver academy subsidiary, its captive insurance subsidiaries, its special-purpose receivables securitization subsidiary, and its foreign subsidiaries (the “Non-guarantor Subsidiaries”). The separate financial statements of the Guarantor Subsidiaries are not included herein because the Guarantor Subsidiaries are the Company’s 100% owned consolidated subsidiaries and are jointly, severally, fully and unconditionally liable for the obligations represented by the senior second priority secured notes.
The condensed financial statements present condensed financial data for (i) Swift Transportation Company (on a parent only basis), (ii) Swift Services Holdings, Inc. (on an issuer only basis), (iii) the combined Guarantor Subsidiaries, (iv) the combined Non-Guarantor Subsidiaries, (v) an elimination column for adjustments to arrive at the information for the parent company and subsidiaries on a consolidated basis and (vi) the parent company and subsidiaries on a consolidated basis as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012 .
Investments in subsidiaries are accounted for by the respective parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company’s investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions.
 

21
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating balance sheet as of June 30, 2013  
 
 
Swift
Transportation
Company
(Parent)
 
Swift
Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Cash and cash equivalents
 
$
—

 
$
—

 
$
29,073

 
$
14,437

 
$
—

 
$
43,510

Restricted cash
 
—

 
—

 
—

 
42,694

 
—

 
42,694

Restricted investments, held to maturity, amortized cost
 
—

 
—

 
—

 
26,955

 
—

 
26,955

Accounts receivable, net
 
—

 
—

 
14,898

 
349,291

 
(3,459
)
 
360,730

Intercompany receivable (payable)
 
87,213

 
416,000

 
(559,390
)
 
56,177

 
—

 
—

Other current assets
 
22,344

 
(1,261
)
 
104,321

 
13,854

 
—

 
139,258

Total current assets
 
109,557

 
414,739

 
(411,098
)
 
503,408

 
(3,459
)
 
613,147

Property and equipment, net
 
—

 
—

 
1,365,137

 
35,331

 
—

 
1,400,468

Investment in subsidiaries
 
150,536

 
803,039

 
932,373

 
—

 
(1,885,948
)
 
—

Other assets
 
700

 
2,106

 
132,577

 
4,847

 
(89,530
)
 
50,700

Intangible assets, net
 
—

 
—

 
315,113

 
10,041

 
—

 
325,154

Goodwill
 
—

 
—

 
246,977

 
6,279

 
—

 
253,256

Total assets
 
$
260,793

 
$
1,219,884

 
2,581,079

 
$
559,906

 
$
(1,978,937
)
 
$
2,642,725

Current portion of long-term debt and obligations under capital leases
 
$
—

 
$
—

 
$
58,775

 
$
93,540

 
$
(89,505
)
 
$
62,810

Other current liabilities
 
2,040

 
6,389

 
271,900

 
30,610

 
(3,459
)
 
307,480

Total current liabilities
 
2,040

 
6,389

 
330,675

 
124,150

 
(92,964
)
 
370,290

Long-term debt and obligations under capital leases, less current portion
 
—

 
493,193

 
763,414

 
7,100

 
(25
)
 
1,263,682

Deferred income taxes
 
(20,899
)
 
(394
)
 
441,592

 
5,417

 
—

 
425,716

Securitization of accounts receivable
 
—

 
—

 
—

 
165,000

 
—

 
165,000

Other liabilities
 
—

 
—

 
67,726

 
46,310

 
—

 
114,036

Total liabilities
 
(18,859
)
 
499,188

 
1,603,407

 
347,977

 
(92,989
)
 
2,338,724

Total stockholders’ equity
 
279,652

 
720,696

 
977,672

 
211,929

 
(1,885,948
)
 
304,001

Total liabilities and stockholders’ equity
 
$
260,793

 
$
1,219,884

 
$
2,581,079

 
$
559,906

 
$
(1,978,937
)
 
$
2,642,725

 

22
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating balance sheet as of December 31, 2012  
 
 
Swift
Transportation
Company
(Parent)
 
Swift
Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Cash and cash equivalents
 
$
—

 
$
—

 
$
43,877

 
$
9,719

 
$
—

 
$
53,596

Restricted cash
 
—

 
—

 
—

 
51,678

 
—

 
51,678

Restricted investments, held to maturity, amortized cost
 
—

 
—

 
—

 
22,275

 
—

 
22,275

Accounts receivable, net
 
—

 
—

 
17,643

 
324,597

 
(3,516
)
 
338,724

Intercompany receivable (payable)
 
24,239

 
430,030

 
(507,934
)
 
53,665

 
—

 
—

Other current assets
 
57,914

 
181

 
136,582

 
13,587

 
—

 
208,264

Total current assets
 
82,153

 
430,211

 
(309,832
)
 
475,521

 
(3,516
)
 
674,537

Property and equipment, net
 
—

 
—

 
1,274,636

 
37,178

 
—

 
1,311,814

Investment in subsidiaries
 
106,194

 
757,590

 
904,312

 
—

 
(1,768,096
)
 
—

Other assets
 
250

 
2,301

 
81,104

 
4,974

 
(29,619
)
 
59,010

Intangible assets, net
 
—

 
—

 
323,134

 
10,427

 
—

 
333,561

Goodwill
 
—

 
—

 
246,977

 
6,279

 
—

 
253,256

Total assets
 
$
188,597

 
$
1,190,102

 
$
2,520,331

 
$
534,379

 
$
(1,801,231
)
 
$
2,632,178

Current portion of long-term debt and obligations under capital leases
 
$
—

 
$
—

 
$
45,703

 
$
28,301

 
$
(26,509
)
 
$
47,495

Other current liabilities
 
1,656

 
6,389

 
242,954

 
28,315

 
(3,516
)
 
275,798

Total current liabilities
 
1,656

 
6,389

 
288,657

 
56,616

 
(30,025
)
 
323,293

Long-term debt and obligations under capital leases, less current portion
 
—

 
492,561

 
827,972

 
6,116

 
(3,110
)
 
1,323,539

Deferred income taxes
 
(19,372
)
 
(346
)
 
455,874

 
5,001

 
—

 
441,157

Securitization of accounts receivable
 
—

 
—

 
—

 
204,000

 
—

 
204,000

Other liabilities
 
—

 
—

 
60,502

 
49,576

 
—

 
110,078

Total liabilities
 
(17,716
)
 
498,604

 
1,633,005

 
321,309

 
(33,135
)
 
2,402,067

Total stockholders’ equity
 
206,313

 
691,498

 
887,326

 
213,070

 
(1,768,096
)
 
230,111

Total liabilities and stockholders’ equity
 
$
188,597

 
$
1,190,102

 
$
2,520,331

 
$
534,379

 
$
(1,801,231
)
 
$
2,632,178















23
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of operations for the three months ended June 30, 2013  
 
 
Swift
Transportation
Company
(Parent)
 
Swift
Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Operating revenue
 
$
—

 
$
—

 
$
878,932

 
$
40,813

 
$
(21,641
)
 
$
898,104

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Salaries, wages and employee benefits
 
833

 
—

 
194,251

 
7,673

 
—

 
202,757

Operating supplies and expenses
 
631

 
4

 
64,335

 
5,041

 
(1,875
)
 
68,136

Fuel
 
—

 
—

 
137,550

 
6,827

 
—

 
144,377

Purchased transportation
 
—

 
—

 
267,284

 
3,641

 
(13,454
)
 
257,471

Rental expense
 
—

 
—

 
29,825

 
876

 
(160
)
 
30,541

Insurance and claims
 
—

 
—

 
24,983

 
10,376

 
(6,152
)
 
29,207

Depreciation and amortization of property and equipment
 
—

 
—

 
51,367

 
1,160

 
—

 
52,527

Amortization of intangibles
 
—

 
—

 
4,010

 
193

 
—

 
4,203

Gain on disposal of property and equipment
 
—

 
—

 
(4,716
)
 
35

 
—

 
(4,681
)
Communication and utilities
 
—

 
—

 
5,207

 
226

 
—

 
5,433

Operating taxes and licenses
 
—

 
—

 
13,051

 
2,801

 
—

 
15,852

Total operating expenses
 
1,464

 
4

 
787,147

 
38,849

 
(21,641
)
 
805,823

Operating income (loss)
 
(1,464
)
 
(4
)
 
91,785

 
1,964

 
—

 
92,281

Interest expense, net
 
—

 
12,914

 
9,432

 
1,429

 
—

 
23,775

Other (income) expenses, net
 
(20,844
)
 
(38,501
)
 
(30,738
)
 
(2,981
)
 
91,741

 
(1,323
)
Income before income taxes
 
19,380

 
25,583

 
113,091

 
3,516

 
(91,741
)
 
69,829

Income tax expense (benefit)
 
(23,561
)
 
(4,793
)
 
53,746

 
1,496

 
—

 
26,888

Net income
 
$
42,941

 
$
30,376

 
$
59,345

 
$
2,020

 
$
(91,741
)
 
$
42,941



24
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of operations for the three months ended June 30, 2012
 
 
Swift
Transportation
Company
(Parent)
 
Swift
Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Operating revenue
 
$
—

 
$
—

 
$
856,591

 
$
33,429

 
$
(17,436
)
 
$
872,584

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Salaries, wages and employee benefits
 
1,463

 
—

 
190,587

 
6,568

 
—

 
198,618

Operating supplies and expenses
 
685

 
6

 
60,395

 
3,800

 
(1,507
)
 
63,379

Fuel
 
—

 
—

 
140,635

 
5,191

 
—

 
145,826

Purchased transportation
 
—

 
—

 
262,009

 
2,169

 
(11,493
)
 
252,685

Rental expense
 
—

 
—

 
26,443

 
305

 
(172
)
 
26,576

Insurance and claims
 
—

 
—

 
20,980

 
9,562

 
(4,264
)
 
26,278

Depreciation and amortization of property and equipment
 
—

 
—

 
49,463

 
926

 
—

 
50,389

Amortization of intangibles
 
—

 
—

 
4,022

 
193

 
—

 
4,215

Gain on disposal of property and equipment
 
—

 
—

 
(3,478
)
 
—

 
—

 
(3,478
)
Communication and utilities
 
—

 
—

 
5,743

 
232

 
—

 
5,975

Operating taxes and licenses
 
—

 
—

 
13,324

 
2,120

 
—

 
15,444

Total operating expenses
 
2,148

 
6

 
770,123

 
31,066

 
(17,436
)
 
785,907

Operating income (loss)
 
(2,148
)
 
(6
)
 
86,468

 
2,363

 
—

 
86,677

Interest expense, net
 
—

 
12,914

 
17,099

 
1,209

 
—

 
31,222

Other (income) expenses, net
 
(34,756
)
 
(26,941
)
 
(18,707
)
 
(2,654
)
 
83,038

 
(20
)
Income before income taxes
 
32,608

 
14,021

 
88,076

 
3,808

 
(83,038
)
 
55,475

Income tax expense (benefit)
 
(1,091
)
 
(4,820
)
 
26,382

 
1,305

 
—

 
21,776

Net income
 
$
33,699

 
$
18,841

 
$
61,694

 
$
2,503

 
$
(83,038
)
 
$
33,699































25
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of operations for the six months ended June 30, 2013
 
 
Swift
Transportation
Company
(Parent)
 
Swift
Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Operating revenue
 
$
—

 
$
—

 
$
1,717,464

 
$
79,439

 
$
(42,005
)
 
$
1,754,898

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Salaries, wages and employee benefits
 
1,378

 
—

 
393,094

 
14,892

 
—

 
409,364

Operating supplies and expenses
 
1,130

 
4

 
123,270

 
8,029

 
(3,632
)
 
128,801

Fuel
 
—

 
—

 
283,174

 
13,085

 
—

 
296,259

Purchased transportation
 
—

 
—

 
521,410

 
6,619

 
(25,741
)
 
502,288

Rental expense
 
—

 
—

 
58,322

 
1,797

 
(327
)
 
59,792

Insurance and claims
 
—

 
—

 
47,758

 
21,525

 
(12,305
)
 
56,978

Depreciation and amortization of property and equipment
 
—

 
—

 
100,659

 
2,200

 
—

 
102,859

Amortization of intangibles
 
—

 
—

 
8,021

 
386

 
—

 
8,407

Gain on disposal of property and equipment
 
—

 
—

 
(7,055
)
 
20

 
—

 
(7,035
)
Communication and utilities
 
—

 
—

 
11,102

 
423

 
—

 
11,525

Operating taxes and licenses
 
—

 
—

 
25,927

 
5,465

 
—

 
31,392

Total operating expenses
 
2,508

 
4

 
1,565,682

 
74,441

 
(42,005
)
 
1,600,630

Operating income (loss)
 
(2,508
)
 
(4
)
 
151,782

 
4,998

 
—

 
154,268

Interest expense, net
 
—

 
25,827

 
21,010

 
2,501

 
—

 
49,338

Other (income) expenses, net
 
(44,343
)
 
(45,448
)
 
(31,206
)
 
(5,347
)
 
123,491

 
(2,853
)
Income before income taxes
 
41,835

 
19,617

 
161,978

 
7,844

 
(123,491
)
 
107,783

Income tax expense (benefit)
 
(24,447
)
 
(9,583
)
 
72,187

 
3,344

 
—

 
41,501

Net income
 
$
66,282

 
$
29,200

 
$
89,791

 
$
4,500

 
$
(123,491
)
 
$
66,282































26
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of operations for the six months ended June 30, 2012  
 
 
Swift
Transportation
Company
(Parent)
 
Swift
Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Operating revenue
 
$
—

 
$
—

 
$
1,666,098

 
$
67,911

 
$
(34,540
)
 
$
1,699,469

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Salaries, wages and employee benefits
 
2,730

 
—

 
382,542

 
13,481

 
—

 
398,753

Operating supplies and expenses
 
1,232

 
8

 
114,110

 
6,580

 
(3,509
)
 
118,421

Fuel
 
—

 
—

 
288,206

 
10,623

 
—

 
298,829

Purchased transportation
 
—

 
—

 
503,874

 
4,375

 
(22,362
)
 
485,887

Rental expense
 
—

 
—

 
49,819

 
609

 
(353
)
 
50,075

Insurance and claims
 
—

 
—

 
46,842

 
18,332

 
(8,316
)
 
56,858

Depreciation and amortization of property and equipment
 
—

 
—

 
98,980

 
1,803

 
—

 
100,783

Amortization of intangibles
 
—

 
—

 
8,127

 
391

 
—

 
8,518

Impairments
 
—

 
—

 
1,065

 
—

 
—

 
1,065

Gain on disposal of property and equipment
 
—

 
—

 
(7,868
)
 
—

 
—

 
(7,868
)
Communication and utilities
 
—

 
—

 
11,745

 
476

 
—

 
12,221

Operating taxes and licenses
 
—

 
—

 
26,859

 
4,489

 
—

 
31,348

Total operating expenses
 
3,962

 
8

 
1,524,301

 
61,159

 
(34,540
)
 
1,554,890

Operating income (loss), net
 
(3,962
)
 
(8
)
 
141,797

 
6,752

 
—

 
144,579

Interest expense, net
 
—

 
25,827

 
37,788

 
2,531

 
—

 
66,146

Other (income) expenses
 
(41,285
)
 
(55,940
)
 
(20,114
)
 
(5,045
)
 
142,702

 
20,318

Income before income taxes
 
37,323

 
30,105

 
124,123

 
9,266

 
(142,702
)
 
58,115

Income tax expense (benefit)
 
(2,564
)
 
(9,641
)
 
26,901

 
3,532

 
—

 
18,228

Net income
 
$
39,887

 
$
39,746

 
$
97,222

 
$
5,734

 
$
(142,702
)
 
$
39,887


 



























27
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)



Condensed consolidating statement of comprehensive income for the three months ended June 30, 2013  
 
 
Swift
Transportation
Company
(Parent)
 
Swift Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Net income
 
$
42,941

 
$
30,376

 
$
59,345

 
$
2,020

 
$
(91,741
)
 
$
42,941

Other comprehensive income before income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated losses on derivatives reclassified to derivative interest expense
 
—

 
—

 
466

 
—

 
—

 
466

Change in fair value of interest rate swaps
 
—

 
—

 
—

 
—

 
—

 
—

Other comprehensive income before income taxes
 
—

 
—

 
466

 
—

 
—

 
466

Income tax effect of items of other comprehensive income
 
—

 
—

 
(242
)
 
—

 
—

 
(242
)
Total comprehensive income
 
$
42,941

 
$
30,376

 
$
59,569

 
$
2,020

 
$
(91,741
)
 
$
43,165


28
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of comprehensive income for the three months ended June 30, 2012
 
 
Swift
Transportation
Company
(Parent)
 
Swift Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Net income
 
$
33,699

 
$
18,841

 
$
61,694

 
$
2,503

 
$
(83,038
)
 
$
33,699

Other comprehensive income before income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated losses on derivatives reclassified to derivative interest expense
 
—

 
—

 
2,108

 
—

 
—

 
2,108

Change in fair value of interest rate swaps
 
—

 
—

 
(1,169
)
 
—

 
—

 
(1,169
)
Other comprehensive income before income taxes
 
—

 
—

 
939

 
—

 
—

 
939

Income tax effect of items of other comprehensive income
 
—

 
—

 
453

 
—

 
—

 
453

Total comprehensive income
 
$
33,699

 
$
18,841

 
$
63,086

 
$
2,503

 
$
(83,038
)
 
$
35,091













































29
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of comprehensive income for the six months ended June 30, 2013
 
 
Swift
Transportation
Company
(Parent)
 
Swift Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Net income
 
$
66,282

 
$
29,200

 
$
89,791

 
$
4,500

 
$
(123,491
)
 
$
66,282

Other comprehensive income before income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated losses on derivatives reclassified to derivative interest expense
 
—

 
—

 
955

 
—

 
—

 
955

Change in fair value of interest rate swaps
 
—

 
—

 
(189
)
 
—

 
—

 
(189
)
Other comprehensive income before income taxes
 
—

 
—

 
766

 
—

 
—

 
766

Income tax effect of items of other comprehensive income
 
—

 
—

 
(214
)
 
—

 
—

 
(214
)
Total comprehensive income
 
$
66,282

 
$
29,200

 
$
90,343

 
$
4,500

 
$
(123,491
)
 
$
66,834













































30
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of comprehensive income for the six months ended June 30, 2012  
 
 
Swift
Transportation
Company
(Parent)
 
Swift Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Net income
 
$
39,887

 
$
39,746

 
$
97,222

 
$
5,734

 
$
(142,702
)
 
$
39,887

Other comprehensive income before income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated losses on derivatives reclassified to derivative interest expense
 
—

 
—

 
4,653

 
—

 
—

 
4,653

Change in fair value of interest rate swaps
 
—

 
—

 
(2,108
)
 
—

 
—

 
(2,108
)
Other comprehensive income before income taxes
 
—

 
—

 
2,545

 
—

 
—

 
2,545

Income tax effect of items of other comprehensive income
 
—

 
—

 
817

 
—

 
—

 
817

Total comprehensive income
 
$
39,887

 
$
39,746

 
$
100,584

 
$
5,734

 
$
(142,702
)
 
$
43,249


31
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)


Condensed consolidating statement of cash flows for the six months ended June 30, 2013  
 
 
Swift
Transportation
Company
(Parent)
 
Swift Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Net cash provided by (used in) operating activities
 
$
57,295

 
$
(14,029
)
 
$
197,026

 
$
(19,949
)
 
$
—

 
$
220,343

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Decrease in restricted cash
 
—

 
—

 
—

 
8,984

 
—

 
8,984

Change in restricted investments
 
—

 
—

 
—

 
(4,680
)
 
—

 
(4,680
)
Proceeds from sale of property and equipment
 
—

 
—

 
35,086

 
136

 
—

 
35,222

Capital expenditures
 
—

 
—

 
(149,878
)
 
(505
)
 
—

 
(150,383
)
Payments received on notes receivable
 
—

 
—

 
2,074

 
—

 
—

 
2,074

Expenditures on assets held for sale
 
—

 
—

 
(1,614
)
 
—

 
—

 
(1,614
)
Payments received on assets held for sale
 
—

 
—

 
22,773

 
—

 
—

 
22,773

Payments received on equipment sale receivables
 
—

 
—

 
644

 
—

 
—

 
644

Dividends from subsidiary
 
—

 
—

 
6,800

 
—

 
(6,800
)
 
—

Payments received on intercompany notes payable
 
—

 
—

 
3,399

 
—

 
(3,399
)
 
—

Capital contribution to subsidiary
 
—

 
—

 
(1,160
)
 
—

 
1,160

 
—

Net cash provided by (used in) investing activities
 
—

 
—

 
(81,876
)
 
3,935

 
(9,039
)
 
(86,980
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt
 
—

 
—

 
—

 
7,528

 
—

 
7,528

Payment of deferred loan costs
 
—

 
—

 
(1,332
)
 
(851
)
 
—

 
(2,183
)
Borrowings under accounts receivable securitization
 
—

 
—

 
—

 
80,000

 
—

 
80,000

Repayment of accounts receivable securitization
 
—

 
—

 
—

 
(119,000
)
 
—

 
(119,000
)
Repayment of long-term debt and capital leases
 
—

 
—

 
(114,570
)
 
(902
)
 
—

 
(115,472
)
Repayment of intercompany notes payable
 
—

 
—

 
—

 
(3,399
)
 
3,399

 
—

Dividend to parent
 
—

 
—

 
—

 
(6,800
)
 
6,800

 
—

Capital contribution
 
—

 
—

 
—

 
1,160

 
(1,160
)
 
—

Net funding (to) from affiliates
 
(62,973
)
 
14,029

 
(14,052
)
 
62,996

 
—

 
—

Other financing activities
 
5,678

 
—

 
—

 
—

 
—

 
5,678

Net cash provided by (used in) financing activities
 
(57,295
)
 
14,029

 
(129,954
)
 
20,732

 
9,039

 
(143,449
)
Net (decrease) increase in cash and cash equivalents
 
—

 
—

 
(14,804
)
 
4,718

 
—

 
(10,086
)
Cash and cash equivalents at beginning of period
 
—

 
—

 
43,877

 
9,719

 
—

 
53,596

Cash and cash equivalents at end of period
 
$
—

 
$
—

 
$
29,073

 
$
14,437

 
$
—

 
$
43,510






32
Swift Transportation Company and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) – (continued)

 
Condensed consolidating statement of cash flows for the six months ended June 30, 2012  
 
 
Swift
Transportation
Company
(Parent)
 
Swift Services
Holdings, Inc.
(Issuer)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
for
Consolidation
 
Consolidated
 
 
(In thousands)
Net cash provided by (used in) operating activities
 
$
25,110

 
$
6,520

 
$
151,107

 
$
(16,887
)
 
$
—

 
$
165,850

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Decrease in restricted cash
 
—

 
—

 
—

 
14,556

 
—

 
14,556

Change in restricted investments
 
—

 
—

 
—

 
(14,612
)
 
—

 
(14,612
)
Funding of notes receivable
 
—

 
—

 
(7,500
)
 
—

 
—

 
(7,500
)
Proceeds from sale of property and equipment
 
—

 
—

 
57,238

 
2

 
—

 
57,240

Capital expenditures
 
—

 
—

 
(130,012
)
 
(1,090
)
 
—

 
(131,102
)
Payments received on notes receivable
 
—

 
—

 
3,202

 
—

 
—

 
3,202

Expenditures on assets held for sale
 
—

 
—

 
(2,223
)
 
—

 
—

 
(2,223
)
Payments received on assets held for sale
 
—

 
—

 
10,340

 
—

 
—

 
10,340

Payments received on equipment sale receivables
 
—

 
—

 
5,496

 
—

 
—

 
5,496

Dividends from subsidiary
 
—

 
—

 
6,700

 
—

 
(6,700
)
 
—

Payments received on intercompany notes payable
 
—

 
—

 
604

 
—

 
(604
)
 
—

Funding of intercompany notes payable
 
—

 
—

 
(787
)
 
—

 
787

 
—

Other investing activities
 
—

 
—

 
(500
)
 
—

 
—

 
(500
)
Net cash used in investing activities
 
—

 
—

 
(57,442
)
 
(1,144
)
 
(6,517
)
 
(65,103
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Payment of deferred loan costs
 
—

 
—

 
(9,009
)
 
—

 
—

 
(9,009
)
Borrowings under accounts receivable securitization
 
—

 
—

 
—

 
174,000

 
—

 
174,000

Repayment of accounts receivable securitization
 
—

 
—

 
—

 
(151,000
)
 
—

 
(151,000
)
Repayment of long-term debt and capital leases
 
—

 
—

 
(171,167
)
 
(266
)
 
—

 
(171,433
)
Dividend to parent
 
—

 
—

 
—

 
(6,700
)
 
6,700

 
—

Proceeds from long term notes
 
—

 
—

 
10,000

 
—

 
—

 
10,000

Proceeds from intercompany notes payable
 
—

 
—

 
—

 
787

 
(787
)
 
—

Repayment of intercompany notes payable
 
—

 
—

 
—

 
(604
)
 
604

 
—

Net funding (to) from affiliates
 
(9,122
)
 
(6,520
)
 
10,120

 
5,522

 
—

 
—

Other financing activities
 
126

 
—

 
—

 
—

 
—

 
126

Net cash provided by (used in) financing activities
 
(8,996
)
 
(6,520
)
 
(160,056
)
 
21,739

 
6,517

 
(147,316
)
Net increase (decrease) in cash and cash equivalents
 
16,114

 
—

 
(66,391
)
 
3,708

 
—

 
(46,569
)
Cash and cash equivalents at beginning of period
 
11,132

 
—

 
64,717

 
6,235

 
—

 
82,084

Cash and cash equivalents at end of period
 
$
27,246

 
$
—

 
$
(1,674
)
 
$
9,943

 
$
—

 
$
35,515


33

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2012 .

Non-GAAP Measures
In addition to disclosing financial results that are determined in accordance with United States generally accepted accounting principles, or GAAP, we also disclose certain non-GAAP financial information, such as, Adjusted Operating Ratio, Adjusted EBITDA, and Adjusted EPS, which are not recognized measures under GAAP and should not be considered alternatives to or superior to profitability and cash flow measures derived in accordance with GAAP. We use Adjusted Operating Ratio, Adjusted EBITDA, and Adjusted EPS as a supplement to our GAAP results in evaluating certain aspects of our business, as described below. We believe our presentation of Adjusted Operating Ratio, Adjusted EBITDA, and Adjusted EPS is useful because it provides investors and securities analysts the same information that we use internally for purposes of assessing our core operating performance. See below for more information on our use of Adjusted Operating Ratio, Adjusted EBITDA, and Adjusted EPS, as well as a description of the computation and reconciliation of our Operating Ratio to our Adjusted Operating Ratio, our net income to Adjusted EBITDA, and our diluted earnings per share to Adjusted EPS.
We define Adjusted Operating Ratio as (a) total operating expenses, less (i) fuel surcharges, (ii) amortization of intangibles from our 2007 going-private transaction, (iii) non-cash impairment charges, (iv) other special non-cash items, and (v) excludable transaction costs, as a percentage of (b) total revenue excluding fuel surcharge revenue (revenue xFSR). We believe fuel surcharge is sometimes volatile and eliminating the impact of this source of revenue (by netting fuel surcharge revenue against fuel expense) affords a more consistent basis for comparing our results of operations. We also believe excluding impairments, non-comparable nature of the intangibles from our going-private transaction and other special items enhances the comparability of our performance from period to period. A reconciliation of our Adjusted Operating Ratio for each of the periods indicated is as follows:
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Total GAAP operating revenue
 
$
898,104

 
$
872,584

 
$
1,754,898

 
$
1,699,469

Less: Fuel surcharge revenue
 
172,723

 
176,017

 
343,009

 
338,731

Revenue xFSR
 
725,381

 
696,567

 
1,411,889

 
1,360,738

Total GAAP operating expense
 
805,823

 
785,907

 
1,600,630

 
1,554,890

Adjusted for:
 
 
 
 
 
 
 
 
Fuel surcharge revenue
 
(172,723
)
 
(176,017
)
 
(343,009
)
 
(338,731
)
Amortization of certain intangibles (a)
 
(3,912
)
 
(3,923
)
 
(7,824
)
 
(7,934
)
Non-cash impairments (b)
 
—

 
—

 
—

 
(1,065
)
Adjusted operating expense
 
629,188

 
605,967

 
1,249,797

 
1,207,160

Adjusted operating income
 
$
96,193

 
$
90,600

 
$
162,092

 
$
153,578

Adjusted Operating Ratio
 
86.7
%
 
87.0
%
 
88.5
%
 
88.7
%
Operating Ratio
 
89.7
%
 
90.1
%
 
91.2
%
 
91.5
%
 
(a)
Amortization of certain intangibles reflects the non-cash amortization expense relating to certain intangible assets identified in our 2007 going private transaction.
(b)
Real property with a carrying amount of $1.7 million was written down to its fair value of $0.6 million, resulting in a pre-tax impairment charge of $1.1 million in the first quarter of 2012.

We define Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) as net income (loss) plus (i) depreciation and amortization, (ii) interest and derivative interest expense, including other fees and charges associated with indebtedness, net of interest income, (iii) income taxes, (iv) non-cash equity compensation expense, (v) non-cash impairments, (vi) other special non-cash items, and (vii) excludable transaction costs. We believe that Adjusted EBITDA is a relevant measure for estimating the cash generated by our operations that would be available to cover capital expenditures, taxes, interest and other investments and that it enhances an investor’s understanding of our financial performance. We use Adjusted EBITDA for business planning purposes and in measuring our performance relative to that of our competitors. Our method of computing Adjusted EBITDA is consistent with that used in our senior secured credit agreement for covenant compliance purposes and may differ from similarly titled measures of other companies. A reconciliation of GAAP net income to Adjusted EBITDA for each of the periods indicated is as follows:

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Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Net income
 
$
42,941

 
$
33,699

 
$
66,282

 
$
39,887

Adjusted for:
 
 
 
 
 
 
 
 
Depreciation and amortization of property and equipment
 
52,527

 
50,389

 
102,859

 
100,783

Amortization of intangibles
 
4,203

 
4,215

 
8,407

 
8,518

Interest expense
 
23,760

 
29,553

 
49,334

 
62,329

Derivative interest expense
 
532

 
2,108

 
1,094

 
4,653

Interest income
 
(517
)
 
(439
)
 
(1,090
)
 
(836
)
Income tax expense
 
26,888

 
21,776

 
41,501

 
18,228

EBITDA
 
150,334

 
141,301

 
268,387

 
233,562

Non-cash equity compensation (a)
 
833

 
1,466

 
1,378

 
2,733

Loss on debt extinguishment (b)
 
—

 
1,279

 
5,044

 
22,219

Non-cash impairments (c)
 
—

 
—

 
—

 
1,065

Adjusted EBITDA
 
$
151,167

 
$
144,046

 
$
274,809

 
$
259,579

 
(a)
Represents recurring non-cash equity compensation expense on a pre-tax basis. In accordance with the terms of our senior credit agreement, this expense is added back in the calculation of Adjusted EBITDA for covenant compliance purposes.
(b)
On March 7, 2013, we entered into a Second Amended and Restated Credit Agreement (“2013 Agreement”). The 2013 Agreement replaced the then-existing first lien term loan B-1 and B-2 tranches under the Amended and Restated Credit Agreement (“2012 Agreement”) entered into on March 6, 2012 with outstanding principal balances of $152.0 million and $508.0 million, respectively, with new first lien term loan B-1 and B-2 tranches with face values of $250.0 million and $410.0 million, respectively. The replacement of the 2012 Agreement resulted in a loss on debt extinguishment of $5.0 million in the first quarter of 2013, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the then-existing first lien term loan B-1 and B-2 tranches. On May 21, 2012, we completed the call of our remaining $15.2 million face value 12.50% fixed rate notes due May 15, 2017, at a price of 106.25% of face value pursuant to the terms of the indenture governing the notes, resulting in a loss on debt extinguishment of $1.3 million, representing the call premium and write-off of the remaining unamortized deferred financing fees. We entered into the 2012 Agreement which replaced the then-existing, remaining $874 million face value first lien term loan, resulting in a loss on debt extinguishment of $20.9 million in the first quarter of 2012, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the original term loan.
(c)
Includes the item discussed in note (b) to the Adjusted Operating Ratio table above.
We define Adjusted EPS as (1) income (loss) before income taxes plus (i) amortization of the intangibles from our 2007 going private transaction, (ii) non-cash impairments, (iii) other special non-cash items, (iv) excludable transaction costs, (v) the mark-to-market adjustment on our interest rate swaps that is recognized in the consolidated statement of operations in a given period, and (vi) the amortization of previous losses recorded in accumulated other comprehensive income (“OCI”) related to interest rate swaps we terminated upon our IPO and refinancing transactions in December 2010; (2) reduced by income taxes; (3) divided by weighted average diluted shares outstanding. For all periods through 2012, we used a normalized tax rate of 39% in our Adjusted EPS calculation due to the amortization of deferred tax assets related to our pre-IPO interest rate swap amortization and other items that we knew would cause fluctuations in our GAAP effective tax rate. Beginning in 2013, these items should no longer result in large variations. Therefore, we will use our GAAP effective tax rate for our Adjusted EPS calculation beginning in 2013. We believe the presentation of financial results excluding the impact of the items noted above provides a consistent basis for comparing our results from period to period and to those of our peers due to the non-comparable nature of the intangibles from our going-private transaction, the historical volatility of the interest rate derivative agreements and the non-operating nature of the impairment charges, transaction costs and other adjustment items. A reconciliation of GAAP diluted earnings per share to Adjusted EPS for each of the periods indicated is as follows (the numbers reflected in the below table are calculated on a per share basis and may not foot due to rounding):
 

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Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
Diluted earnings per share
 
$
0.30

 
$
0.24

 
$
0.47

 
$
0.29

Adjusted for:
 
 
 
 
 
 
 
 
Income tax expense
 
0.19

 
0.16

 
0.29

 
0.13

Income before income taxes
 
0.49

 
0.40

 
0.76

 
0.42

Non-cash impairments (a)
 
—

 
—

 
—

 
0.01

Loss on debt extinguishment (b)
 
—

 
0.01

 
0.04

 
0.16

Amortization of certain intangibles (c)
 
0.03

 
0.03

 
0.06

 
0.06

Amortization of unrealized losses on interest rate swaps (d)
 
—

 
0.02

 
—

 
0.03

Adjusted income before income taxes
 
0.52

 
0.45

 
0.85

 
0.67

Provision for income tax expense at effective rate
 
0.20

 
0.18

 
0.33

 
0.26

Adjusted EPS
 
$
0.32

 
$
0.27

 
$
0.52

 
$
0.41

 
(a)
Includes the item discussed in note (b) to the Adjusted Operating Ratio table above.
(b)
Includes the items discussed in note (b) to the Adjusted EBITDA table above.
(c)
Includes the items discussed in note (a) to the Adjusted Operating Ratio table above.
(d)
Amortization of unrealized losses on interest rate swaps reflects the non-cash amortization expense of $2.1 million for the three months ended June 30, 2012, and $4.7 million for the six months ended June 30, 2012, respectively, comprised of previous losses recorded in accumulated OCI related to the interest rate swaps we terminated upon our IPO and concurrent refinancing transactions in December 2010. Such losses were incurred in prior periods when hedge accounting applied to the swaps and are expensed in relation to the hedged interest payments through the original maturity of the swaps in August 2012.

Overview
We are a multi-faceted transportation services company and the largest truckload carrier in North America. As of June 30, 2013 , we operate a tractor fleet of approximately 16,300 units comprised of 12,200 tractors driven by company drivers and 4,100 owner-operator tractors, a fleet of 52,200 trailers, and 8,700 intermodal containers from 35 major terminals positioned near major freight centers and traffic lanes in the United States and Mexico. We offer customers the opportunity for “one-stop shopping” for their truckload transportation needs through a broad spectrum of services and equipment. Our extensive suite of services includes general, dedicated, and cross-border U.S./Mexico truckload services through dry van, temperature-controlled, flatbed, and specialized trailers, in addition to rail intermodal and non-asset based freight brokerage and logistics management services, making it an attractive choice for a broad array of customers.
We principally operate in short-to-medium-haul traffic lanes around our terminals or dedicated customer locations. We concentrate on this length of haul because the majority of domestic truckload freight (as measured by revenue) moves in these lanes and our extensive terminal network affords us marketing, equipment control, supply chain, customer service, and driver retention advantages in local markets. Our relatively short average length of haul also helps reduce competition from railroads and trucking companies that lack a regional presence.
The table below reflects our total operating revenue, revenue xFSR, net income, diluted earnings per common share, Operating Ratio, Adjusted Operating Ratio, Adjusted EBITDA, and Adjusted EPS for the periods indicated.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands, except per share amounts)
Total operating revenue
 
$
898,104

 
$
872,584

 
$
1,754,898

 
$
1,699,469

Revenue xFSR
 
$
725,381

 
$
696,567

 
$
1,411,889

 
$
1,360,738

Net income
 
$
42,941

 
$
33,699

 
$
66,282

 
$
39,887

Diluted earnings per share
 
$
0.30

 
$
0.24

 
$
0.47

 
$
0.29

Operating Ratio
 
89.7
%
 
90.1
%
 
91.2
%
 
91.5
%
Adjusted Operating Ratio
 
86.7
%
 
87.0
%
 
88.5
%
 
88.7
%
Adjusted EBITDA
 
$
151,167

 
$
144,046

 
$
274,809

 
$
259,579

Adjusted EPS
 
$
0.32

 
$
0.27

 
$
0.52

 
$
0.41



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Revenue
We primarily generate revenue by transporting freight for our customers. Generally, we are paid a predetermined rate per mile for our services. We enhance our revenue by charging for fuel surcharges, stop-off pay, loading and unloading activities, tractor and trailer detention, and other ancillary services. The main factors that affect our revenue are the rate per mile we receive from our customers and the number of loaded miles we run.
Fuel surcharges are designed to compensate us for fuel costs above a certain cost per gallon base. Generally, we receive fuel surcharges on the miles for which we are compensated by customers. However, we continue to have exposure to increasing fuel costs related to deadhead miles, fuel inefficiency due to engine idle time, and other factors as well as the extent to which the surcharge paid by the customer is insufficient. The main factors that affect fuel surcharge revenue are the price of diesel fuel and the number of loaded miles. Although our surcharge programs vary by customer, we endeavor to negotiate an additional penny per mile charge for every five cent increase in the United States Department of Energy, or DOE, national average diesel fuel index over an agreed baseline price. In some instances, customers choose to incorporate the additional charge by splitting the impact between the basic rate per mile and the surcharge fee. In addition, we have moved much of our West Coast customer activity to a surcharge program that is indexed to the DOE’s West Coast average diesel fuel index as diesel fuel prices in the western United States generally are higher than the national average index. Our fuel surcharges are billed on a lagging basis, meaning we typically bill customers in the current week based on a previous week’s applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are paying current day prices for fuel but billing based on a lagging index. In periods of declining prices, the opposite is true.
Revenue in our non-reportable segment is generated by our non-asset based freight brokerage and logistics management service, tractor leasing revenue of Interstate Equipment Leasing (“IEL”), premium revenue generated by our captive insurance companies, and other revenue generated by our repair and maintenance shops. The main factors that affect the revenue in our non-reportable segment are demand for brokerage and logistics services and the number of owner-operators leasing equipment from us.
Expenses
The most significant expenses in our business vary with miles traveled and include fuel, driver-related expenses (such as wages and benefits), and services purchased from owner-operators and other transportation providers, such as the railroads, drayage providers, and other trucking companies (which are recorded on the “Purchased transportation” line of our consolidated statements of operations). Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety improvements, fleet age, efficiency, and other factors. Our main fixed costs are depreciation of long-term assets, such as tractors, trailers, containers, and terminals, interest expense, and the compensation of non-driver personnel.
Because a significant portion of our expenses are either fully or partially variable based on the number of miles traveled, changes in weekly revenue per tractor, excluding fuel surcharge revenue (“weekly revenue xFSR per tractor”) caused by increases or decreases in deadhead miles percentage, rate per mile, and loaded miles have varying effects on our profitability. In general, changes in deadhead miles percentage have the largest proportionate effect on profitability because we still bear all of the expenses for each deadhead mile but do not earn any revenue to offset those expenses. Changes in rate per mile have the next largest proportionate effect on profitability because incremental improvements in rate per mile are not offset by any additional expenses. Changes in loaded miles generally have a smaller effect on profitability because variable expenses increase or decrease with changes in miles. However, items such as driver and owner-operator satisfaction and network efficiency are affected by changes in mileage and have significant indirect effects on expenses.
In general, our miles per tractor per week, rate per mile, and deadhead miles percentage are affected by industry-wide freight volumes, industry-wide trucking capacity, and the competitive environment, which factors are beyond our control, as well as by our service levels, planning, and discipline of our operations, over which we have significant control.

Results of Operations for the Three and Six Months Ended June 30, 2013 and 2012
Factors Affecting Comparability between Periods

Three months ended June 30, 2013 results of operations
Net income for the three months ended June 30, 2013 was $42.9 million. Items during the 2013 period impacting comparability between the second quarter of 2013 and the corresponding 2012 period include the following:

•
$5.8 million reduction in interest expense for the three months ended June 30, 2013 compared to the corresponding period in 2012 resulting from the replacement of our previous Amended and Restated Credit Agreement in the first quarter of 2013 and our voluntary debt repayments.

Six months ended June 30, 2013 results of operations
Net income for the six months ended June 30, 2013 was $66.3 million . Items during the 2013 period impacting comparability between the six months ended June 30, 2013 and the corresponding prior year period include the following:


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•
$13.0 million reduction in interest expense for the six months ended June 30, 2013 compared to the corresponding period in 2012 resulting from the replacement of our previous Amended and Restated Credit Agreement in the first quarter of 2013 and our voluntary debt repayments;
•
$6.1 million gain on the sale of two properties classified as held for sale in the first quarter of 2013; and
•
$5.0 million loss on debt extinguishment resulting from the replacement of our previous Amended and Restated Credit Agreement in the first quarter of 2013.

Three months ended June 30, 2012 results of operations
Net income for the three months ended June 30, 2012 was $33.7 million . Items during the 2012 period impacting comparability between the second quarter of 2012 and the corresponding 2013 period include the following:

•
$1.3 million loss on debt extinguishment resulting from the call of our remaining $15.2 million face value 12.50% fixed rate notes due May 15, 2017, at a price of 106.25% of face value and the write-off of the then existing unamortized deferred financing fees.

Six months ended June 30, 2012 results of operations
Net income for the six months ended June 30, 2012 was $39.9 million . Items during the 2012 period impacting comparability between the first six months of 2012 and the corresponding 2013 period include the following:

•
$22.2 million loss on debt extinguishment resulting from the call of its remaining $15.2 million face value 12.50% fixed rate notes due May 15, 2017 and the replacement of the first term loan;
•
$5.2 million gain relating to a contractual settlement with the City of Los Angeles recorded in Operating supplies and expenses;
•
$4.6 million benefit reflecting the deferred state tax benefit related to an internal corporate restructuring of our subsidiaries; and
•
$1.1 million pre-tax impairment charge for real property with a carrying value of $1.7 million written down to its estimated fair value of $0.6 million in the first quarter of 2012.
Results of Operations—Segment Review
During 2013 , we operated three reportable segments: truckload, dedicated and intermodal. The descriptions of the operations of these reportable segments are described in Note 15 in our consolidated financial statements. The following tables reconcile our operating revenues and operating income by reportable segment to our consolidated operating revenue and operating income for the three and six months ended June 30, 2013 and 2012 .
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
2013
 
2012
 
2013
 
2012
 
 
 
(Unaudited)
(Dollars in thousands)
 
Operating revenue:
 
 
 
 
 
 
 
 
 
Truckload
 
$
588,724

 
$
575,193

 
$
1,148,319

 
$
1,126,440

 
Dedicated
 
182,651

 
181,873

 
361,877

 
353,412

 
Intermodal
 
84,375

 
81,120

 
161,700

 
150,165

 
Subtotal
 
855,750

 
838,186

 
1,671,896

 
1,630,017

 
Nonreportable segments
 
55,131

 
49,162

 
110,423

 
101,493

 
Intersegment eliminations
 
(12,777
)
 
(14,764
)
 
(27,421
)
 
(32,041
)
 
Consolidated operating revenue
 
$
898,104

 
$
872,584

 
$
1,754,898

 
$
1,699,469

 
Operating income (loss):
 
 
 
 
 
 
 
 
 
Truckload
 
$
64,614

 
$
67,994

 
$
107,017

 
$
114,548

 
Dedicated
 
24,263

 
18,515

 
43,217

 
33,022

 
Intermodal
 
753

 
123

 
(1,045
)
 
(3,904
)
(1)  
Subtotal
 
89,630

 
86,632

 
149,189

 
143,666

 
Nonreportable segments
 
2,651

 
45

 
5,079

 
913

 
Consolidated operating income
 
$
92,281

 
$
86,677

 
$
154,268

 
$
144,579

 
 
(1)
During the first quarter of 2012, our intermodal reportable segment incurred an increase in its insurance and claims expense primarily related to one claim associated with a drayage accident, which increased the intermodal operating ratio by approximately 210 basis points for the six months ended June 30, 2012, as compared to the first six months of 2013.

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The results and discussions that follow are reflective of how our chief operating decision makers monitors the performance of our reporting segments. We supplement the reporting of our financial information determined under generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures. Additionally, we use a number of primary indicators to monitor our revenue and expense performance and efficiency. We believe that these adjusted measures provide meaningful information to assist investors and analysts in understanding our financial results and assessing our prospects for future performance. We believe these adjusted financial measures are important indicators of our recurring results of operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and provide a better baseline for analyzing trends in our underlying businesses.

Our main measure of productivity for our truckload and dedicated reportable segments is weekly revenue xFSR per tractor. Weekly revenue xFSR per tractor is affected by our loaded miles, which only include the miles driven when hauling freight, the size of our fleet (because available loads may be spread over fewer or more tractors), and the rates received for our services. We strive to increase our revenue per tractor by improving freight rates with our customers and hauling more loads with our existing equipment, effectively moving freight within our network, keeping tractors maintained, and recruiting and retaining drivers and owner-operators.
We also strive to reduce our number of deadhead miles within our truckload segment. We measure our performance in this area by monitoring our deadhead miles percentage, which is calculated by dividing the number of unpaid miles by the total number of miles driven. By balancing our freight flows and planning consecutive loads with shorter distances between the drop-off and pick-up locations, we are able to reduce the percentage of deadhead miles driven to allow for more revenue-generating miles during our drivers’ hours-of-service. This also enables us to reduce costs associated with deadhead miles, such as wages and fuel.
For our reportable segments, average tractors available measures the average number of tractors we have available during the period for dispatch and includes tractors driven by company drivers as well as owner-operator units. This measure changes based on our ability to increase or decrease our fleet size to respond to changes in demand.
We consider our Adjusted Operating Ratio to be an important measure of our operating profitability for each of our reportable segments. Operating Ratio is operating expenses as a percentage of revenue, or the inverse of operating margin, and produces a quick indication of operating efficiency. It is widely used in our industry as an assessment of management’s effectiveness in controlling all categories of operating expenses. We net fuel surcharge revenue against fuel expense in the calculation of our Adjusted Operating Ratio, therefore excluding fuel surcharge revenue from total revenue in the denominator. We exclude fuel surcharge revenue because fuel prices and fuel surcharge revenue are often volatile and changes in fuel surcharge revenue largely offset corresponding changes in our fuel expense. Eliminating the volatility (by netting fuel surcharge revenue against fuel expense) affords a more consistent basis for comparing our results of operations between periods. We also exclude impairments and other special or non-cash items in the calculation of our Adjusted Operating Ratio because we believe this enhances the comparability of our performance between periods. Accordingly, we believe Adjusted Operating Ratio is a better indicator of our core operating profitability than Operating Ratio and provides a better basis for comparing our results between periods and against others in our industry.
Within our Intermodal reportable segment, we monitor our load count and average container count. These metrics allow us to measure our utilization of our container fleet.
We monitor weekly revenue xFSR per tractor, deadhead miles percentage, average tractors available, load count and average container count on a daily basis, and we measure Adjusted Operating Ratio on a monthly basis.

Truckload
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands, except per tractor amounts)
Operating revenue
 
$
588,724

 
$
575,193

 
$
1,148,319

 
$
1,126,440

Operating income
 
$
64,614

 
$
67,994

 
$
107,017

 
$
114,548

Operating ratio
 
89.0
%
 
88.2
%
 
90.7
%
 
89.8
%
Adjusted operating ratio
 
86.2
%
 
84.9
%
 
88.2
%
 
87.1
%
Weekly revenue xFSR per tractor
 
$
3,270

 
$
3,169

 
$
3,227

 
$
3,098

Total loaded miles
 
274,830

 
268,905

 
536,680

 
531,454

Deadhead miles percentage
 
11.4
%
 
10.9
%
 
11.3
%
 
11.1
%
Average tractors available for dispatch:
 
 
 
 
 
 
 
 
Company
 
7,733

 
7,599

 
7,613

 
7,641

Owner-Operator
 
3,288

 
3,351

 
3,290

 
3,352

Total
 
11,021

 
10,950

 
10,903

 
10,993


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A reconciliation of our adjusted operating ratio for each of the periods indicated is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Total GAAP operating revenue
 
$
588,724

 
$
575,193

 
$
1,148,319

 
$
1,126,440

Less: Fuel surcharge revenue
 
120,144

 
124,059

 
238,483

 
240,925

Revenue xFSR
 
468,580

 
451,134

 
909,836

 
885,515

Total GAAP operating expense
 
524,110

 
507,199

 
1,041,302

 
1,011,892

Adjusted for:
 
 
 
 
 
 
 
 
Fuel surcharge revenue
 
(120,144
)
 
(124,059
)
 
(238,483
)
 
(240,925
)
Adjusted operating expense
 
403,966

 
383,140

 
802,819

 
770,967

Adjusted operating income
 
$
64,614

 
$
67,994

 
$
107,017

 
$
114,548

Adjusted operating ratio
 
86.2
%
 
84.9
%
 
88.2
%
 
87.1
%

Revenue
For the three months ended June 30, 2013 , our truckload segment operating revenue increased by $13.5 million , or 2.4% , compared with the same period in 2012 . During the second quarter of 2013 , truckload revenue xFSR increased 3.9% as compared to the second quarter of 2012 . This increase in revenue xFSR was driven by a 1.6% increase in our truckload revenue xFSR per loaded mile and a 2.2% increase in loaded miles. The increase in volume was achieved primarily through improved utilization, as measured by loaded truck miles per truck per week, of 1.5%.
For the six months ended June 30, 2013 , our truckload revenue increased by $21.9 million , or 1.9% , compared with the same period in 2012 . Despite the 1% reduction in our average operational fleet, our truckload revenue xFSR increased 2.7% during the six months ended June 30, 2013 as compared to the same period in 2012 with our truckload weekly revenue xFSR per tractor, which is a combination of revenue xFSR per loaded mile and loaded miles per truck per week (loaded utilization), increasing 4.2% year over year. For the six months ended June 30, 2013, our revenue xFSR per loaded mile increased 1.7% and our utilization increased 2.4%.
Operating income
Truckload operating income decreased $3.4 million from the second quarter of 2012 to the second quarter of 2013 . This decrease in operating income caused our adjusted operating ratio to increase to 86.2% during the three months ended June 30, 2013 compared with 84.9% in the same period in 2012. The year over year increase was driven primarily by an increase in our deadhead percentage, higher driver and owner-operator pay due to the pay changes implemented in the third quarter of 2012, and higher equipment costs. Higher deadhead was a result of our repositioning of equipment to service overbooked markets.

Truckload operating income decreased $7.5 million from the six months ended June 30, 2013 compared with the same period in 2012 . This decrease in operating income caused our adjusted operating ratio to increase to 88.2% during the six months ended June 30, 2013 compared with 87.1% in the same period in 2012, which benefited from a $5.2 million favorable contract resolution with the Port of Los Angeles in the first quarter of 2012.

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Dedicated
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands, except per tractor amounts)
Operating revenue
 
$
182,651

 
$
181,873

 
$
361,877

 
$
353,412

Operating income
 
$
24,263

 
$
18,515

 
$
43,217

 
$
33,022

Operating ratio
 
86.7
%
 
89.8
%
 
88.1
%
 
90.7
%
Adjusted operating ratio
 
83.7
%
 
87.4
%
 
85.3
%
 
88.5
%
Weekly revenue xFSR per tractor
 
$
3,396

 
$
3,355

 
$
3,391

 
$
3,363

Average tractors available for dispatch:
 
 
 
 
 
 
 
 
Company
 
2,735

 
2,717

 
2,709

 
2,627

Owner-Operator
 
632

 
664

 
638

 
666

Total
 
3,367

 
3,381

 
3,347

 
3,293

A reconciliation of our adjusted operating ratio for each of the periods indicated is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Total GAAP operating revenue
 
$
182,651

 
$
181,873

 
$
361,877

 
$
353,412

Less: Fuel surcharge revenue
 
33,998

 
34,415

 
68,431

 
65,546

Revenue xFSR
 
148,653

 
147,458

 
293,446

 
287,866

Total GAAP operating expense
 
158,388

 
163,358

 
318,660

 
320,390

Adjusted for:
 
 
 
 
 
 
 
 
Fuel surcharge revenue
 
(33,998
)
 
(34,415
)
 
(68,431
)
 
(65,546
)
Adjusted operating expenses
 
124,390

 
128,943

 
250,229

 
254,844

Adjusted operating income
 
$
24,263

 
$
18,515

 
$
43,217

 
$
33,022

Adjusted operating ratio
 
83.7
%
 
87.4
%
 
85.3
%
 
88.5
%
Revenue

For the three months ended June 30, 2013 , our dedicated segment operating revenue increased by $0.8 million , or 0.4% compared with the same period in 2012 and dedicated revenue xFSR increased 0.8% .

For the six months ended June 30, 2013 , our dedicated segment operating revenue increased by $8.5 million , or 2.4% compared with the same period in 2012 and dedicated revenue xFSR increased 1.9% . For both the three and six month periods ended 2013, the increase in revenue was primarily driven by growth with our existing customers and the addition of new customer accounts partially offset by the termination of a few underperforming customer contracts during the latter half of 2012 and the first half of 2013.
Operating income

Our dedicated operating income increased to $24.3 million for the three months ended June 30, 2013 compared to $18.5 million in the same period in 2012 . Our dedicated adjusted operating ratio improved 370 basis points to 83.7% for the three months ended June 30, 2013 from 87.4% in the same period in 2012.

For the six months ended June 30, 2013, our dedicated operating income increased to $43.2 million from $33.0 million in the same period in 2012 and our dedicated adjusted operating ratio improved 320 basis points to 85.3% for the six months ended June 30, 2013 from 88.5% in the same period in 2012. The improvement in adjusted operating ratio for both the three and six month periods ended 2013 resulted from a change in business mix and improvement in our operational efficiencies.





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Intermodal
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
2013
 
2012
 
2013
 
2012
 
 
 
(Unaudited)
(Dollars in thousands, except per tractor amounts)
 
Operating revenue
 
$
84,375

 
$
81,120

 
$
161,700

 
$
150,165

 
Operating income (loss)
 
$
753

 
$
123

 
$
(1,045
)
 
$
(3,904
)
(1)  
Operating ratio
 
99.1
%
 
99.8
%
 
100.6
%
 
102.6
%
(1)  
Adjusted operating ratio
 
98.9
%
 
99.8
%
 
100.8
%
 
103.3
%
(1)  
Average tractors available for dispatch:
 
 
 
 
 
 
 
 
 
Company
 
267

 
283

 
265

 
277

 
Owner-Operator
 
29

 
—

 
24

 
—

 
Total
 
296

 
283

 
289

 
277

 
Load count
 
36,912

 
35,694

 
70,607

 
66,404

 
Average container count
 
8,717

 
6,489

 
8,717

 
6,403

 
 
(1)
During the first quarter of 2012, our intermodal reportable segment incurred an increase in its insurance and claims expense primarily related to one claim associated with a drayage accident, which increased the intermodal operating ratio by approximately 210 basis points, and increased the intermodal adjusted operating ratio by approximately 270 basis points for six months ended June 30, 2012, respectively, as compared to the six months ended June 30 , 2013.
A reconciliation of our adjusted operating ratio for each of the periods indicated is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Total GAAP operating revenue
 
$
84,375

 
$
81,120

 
$
161,700

 
$
150,165

Less: Fuel surcharge revenue
 
17,525

 
17,278

 
34,265

 
31,745

Revenue xFSR
 
66,850

 
63,842

 
127,435

 
118,420

Total GAAP operating expense
 
83,622

 
80,997

 
162,745

 
154,069

Adjusted for:
 
 
 
 
 
 
 
 
Fuel surcharge revenue
 
(17,525
)
 
(17,278
)
 
(34,265
)
 
(31,745
)
Adjusted operating expenses
 
66,097

 
63,719

 
128,480

 
122,324

Adjusted operating income (loss)
 
$
753

 
$
123

 
$
(1,045
)
 
$
(3,904
)
Adjusted operating ratio
 
98.9
%
 
99.8
%
 
100.8
%
 
103.3
%
Revenue
For the three months ended June 30, 2013 , our intermodal operating revenue increased $3.3 million , or 4.0%, compared to the same period in 2012. During the second quarter of 2013 , our intermodal revenue xFSR grew 4.7% over the same period of 2012 . This increase in revenue xFSR was driven by a 1.3% increase in revenue xFSR per load and a 12.6% increase in Container on Flat Car (COFC) loads partially offset by a 47.6% reduction in Trailer on Flat Car (TOFC) loads.
For the six months ended June 30, 2013 , our intermodal operating revenue increased $11.5 million , or 7.7%, as compared to the six months ended June 30, 2012 . During the first half of 2013, our intermodal revenue xFSR grew 7.6% over the first half of 2012. This increase in revenue xFSR was driven by a 6.3% increase in the number of loads hauled, combined with a 1.2% increase in revenue xFSR per load. Loads in our Container on Flat Car (COFC) business grew 16.4% and our COFC revenue xFSR per load grew 2.4%. This growth in COFC was partially offset by a 53.5% reduction in Trailer on Flat Car (TOFC) loads.
Operating income (loss)
Our intermodal operating income increased from $0.1 million in the second quarter of 2012 to $0.8 million in the second quarter of 2013. Correspondingly, our intermodal adjusted operating ratio improved to 98.9% during the three months ended June 30, 2013 from 99.8% in the same period in 2012 due primarily to increased revenue xFSR per load, as well as improved dray efficiencies resulting in a lower drayage cost

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per load. These improvements were partially offset by increased equipment costs resulting from the larger container fleet and related chassis expenses as compared to the second quarter of 2012.

Our intermodal operating loss decreased from $3.9 million for the six months ended June 30, 2012 to $1.0 million for the six months ended June 30, 2013. Correspondingly, our intermodal adjusted operating ratio improved to 100.8% during the first half of 2013 from 103.3% in the same period in 2012. This improvement was primarily due to one claim associated with a dray truck accident in the first quarter of 2012. This claim increased the intermodal operating ratio by approximately 210 basis points, and the intermodal adjusted operating ratio by approximately 270 basis points in the first half of 2012 compared to the first half of 2013. The reduction of our adjusted operating ratio associated with improved insurance and claims expense, increases in our revenue xFSR per load and improved dray efficiencies in the first six months of 2013 were partially offset by higher expenses resulting from the larger container fleet and related chassis expense compared to the corresponding period in 2012.

Other non-reportable segments
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Operating revenue
 
$
55,131

 
$
49,162

 
$
110,423

 
$
101,493

Operating income
 
$
2,651

 
$
45

 
$
5,079

 
$
913



Revenue

Our other non-reportable segment revenue is generated primarily by our logistics and brokerage services, and revenue generated by our subsidiaries offering support services to customers and owner-operators, including shop repair and maintenance services, equipment leasing, and insurance. The main factors that impact our other non-reportable segment revenue are the demand for our brokerage and logistics services and the number of owner-operators leasing equipment and purchasing insurance coverage from us.
For the three and six months ended June 30, 2013, combined revenue from these services increased 12.1% and 8.8%, respectively, compared to the corresponding periods in 2012 . These increases were driven primarily by an increase in brokerage revenue and services provided to owner-operators compared to the same periods in 2012.

Consolidated Operating Expense
Salaries, Wages and Employee Benefits
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Salaries, wages and employee benefits
 
$
202,757

 
$
198,618

 
$
409,364

 
$
398,753

% of revenue xFSR
 
28.0
%
 
28.5
%
 
29.0
%
 
29.3
%
% of operating revenue
 
22.6
%
 
22.8
%
 
23.3
%
 
23.5
%
For the three months ended June 30, 2013, salaries, wages, and employee benefits increased by $4.1 million, or 2.1%, compared with the same period in 2012. The dollar increase was primarily a result of increases in the driver pay implemented in the third quarter of 2012, a 2.7% increase in miles driven by company drivers and growth in our non-driver administrative staff to support our growing business, partially offset by a reduction in group health insurance and workers compensation expense.
For the six months ended June 30, 2013, salaries, wages, and employee benefits increased by $10.6 million, or 2.7%, compared with the same period in 2012. The dollar increase was primarily a result of increases in the driver pay implemented in the third quarter of 2012, growth in our non-driver administrative staff to support our growing business, and a 1.5% increase in miles driven by company drivers. As a percentage of revenue xFSR, salaries, wages, and employee benefits decreased 30 basis points from the six months ended June 30, 2012 to the six months ended June 30, 2013 as a result of a 4.3% increase in our average consolidated revenue xFSR per loaded mile.
The compensation paid to our drivers and other employees has increased and may increase further in future periods as the economy strengthens and other employment alternatives become more available. Furthermore, because we believe that the market for drivers has tightened, we expect hiring expenses, including recruiting and advertising, to increase in order to attract sufficient numbers of qualified drivers to operate our fleet.


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Table of Contents

Operating Supplies and Expenses
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Operating supplies and expenses
 
$
68,136

 
$
63,379

 
$
128,801

 
$
118,421

% of revenue xFSR
 
9.4
%
 
9.1
%
 
9.1
%
 
8.7
%
% of operating revenue
 
7.6
%
 
7.3
%
 
7.3
%
 
7.0
%
For the three months ended June 30, 2013, operating supplies and expenses increased by $4.8 million, or 7.5%, compared with the same period in 2012. As a percentage of revenue xFSR, operating supplies and expenses increased to 9.4% compared with 9.1% for the 2012 period. The increase was primarily due to increases in tolls, hiring expenses and uncollectible revenue which was driven by the bankruptcies of two customers.
For the six months ended June 30, 2013, operating supplies and expenses increased by $10.4 million, or 8.8%, compared with the same period in 2012. As a percentage of revenue xFSR, operating supplies and expenses increased to 9.1% compared with 8.7% for the 2012 period. This increase was primarily the result of a $5.2 million benefit from the favorable contract resolution with the Port of Los Angeles in the first quarter of 2012, which we recognized as a reduction of operating supplies and expenses during the second quarter of 2012.
Because we believe that the market for drivers has tightened, hiring expenses, including recruiting and advertising, which are included in operating supplies and expenses, have increased and we expect this will continue to increase in order to attract sufficient numbers of qualified drivers to operate our fleet.
Fuel Expense
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Fuel expense
 
$
144,377

 
$
145,826

 
$
296,259

 
$
298,829

% of operating revenue
 
16.1
%
 
16.7
%
 
16.9
%
 
17.6
%
To measure the effectiveness of our fuel surcharge program, we subtract fuel surcharge revenue (other than the fuel surcharge revenue we reimburse to owner-operators, the railroads, and other third parties which is included in purchased transportation) from our fuel expense. The result is referred to as net fuel expense. Our net fuel expense as a percentage of revenue xFSR is affected by the cost of diesel fuel net of surcharge collection, the percentage of miles driven by company trucks, our fuel economy, and our percentage of deadhead miles, for which we do not receive fuel surcharge revenues. Net fuel expense as a percentage of revenue less fuel surcharge revenue is shown below:
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Total fuel surcharge revenue
 
$
172,723

 
$
176,017

 
$
343,009

 
$
338,731

Less: Fuel surcharge revenue reimbursed to owner-operators and other third parties
 
72,217

 
72,716

 
143,761

 
139,825

Company fuel surcharge revenue
 
$
100,506

 
$
103,301

 
$
199,248

 
$
198,906

Total fuel expense
 
$
144,377

 
$
145,826

 
$
296,259

 
$
298,829

Less: Company fuel surcharge revenue
 
100,506

 
103,301

 
199,248

 
198,906

Net fuel expense
 
$
43,871

 
$
42,525

 
$
97,011

 
$
99,923

% of revenue xFSR
 
6.0
%
 
6.1
%
 
6.9
%
 
7.3
%
For the three months ended June 30, 2013, net fuel expense increased $1.3 million, or 3.2%, compared with the same period in 2012. As a percentage of revenue xFSR, net fuel expense remained flat at 6.0% during the second quarter of 2013 compared with 6.1% in the 2012 period. As previously disclosed, our fuel surcharges are billed on a lagging basis, meaning we typically bill customers in the current week based on a previous week's applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is true. Throughout the second quarter of 2012, there was a steep decrease in fuel prices as compared to a gradual decrease throughout the second quarter of 2013. The average DOE diesel fuel index decreased 11.1% within the second quarter of

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Table of Contents

2012, from $4.14 to $3.68 and decreased 4.0% within the second quarter of 2013, from $3.98 to $3.82. This decrease in fuel price and the associated fuel surcharge lag increased our adjusted EPS approximately $0.03 - $0.035 during the second quarter of 2012, as compared to $0.015 to $0.02 in the same period in 2013.
For the six months ended June 30, 2013, net fuel expense decreased $2.9 million, or 2.9%, compared with the same period in 2012. As a percentage of revenue xFSR, net fuel expense decreased 40 basis points when compared to the first six months of2012. Although the average fuel price was relatively flat during the first six months of 2013 as compared to the first six months of 2012, the DOE diesel fuel index decreased slightly from $3.78 to $3.68, or 2.6%, within the first six months of 2012 but decreased by 9.0% within the corresponding six month period ended June 30, 2013. As described above, the lag effect associated with fuel surcharges in periods of declining prices enabled better fuel recovery in 2013 compared to 2012.
Purchased Transportation
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Purchased transportation expense
 
$
257,471

 
$
252,685

 
$
502,288

 
$
485,887

% of operating revenue
 
28.7
%
 
29.0
%
 
28.6
%
 
28.6
%
Purchased transportation expense includes payments made to owner-operators, rail partners and other third parties for their services. Because we reimburse owner-operators and other third parties for fuel, we subtract fuel surcharge revenue reimbursed to third parties from our purchased transportation expense. The result, referred to as purchased transportation, net of fuel surcharge reimbursements, is evaluated as a percentage of revenue less fuel surcharge revenue, as shown below: 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Purchased transportation
 
$
257,471

 
$
252,685

 
$
502,288

 
$
485,887

Less: Fuel surcharge revenue reimbursed to owner-operators and other third parties
 
72,217

 
72,716

 
143,761

 
139,825

Purchased transportation, net of fuel surcharge reimbursement
 
$
185,254

 
$
179,969

 
$
358,527

 
$
346,062

% of revenue xFSR
 
25.5
%
 
25.8
%
 
25.4
%
 
25.4
%
For the three months ended June 30, 2013, purchased transportation, net of fuel surcharge reimbursement, increased $5.3 million, or 2.9%, compared with the same period in 2012. As a percentage of revenue xFSR, purchased transportation, net of fuel surcharge reimbursement, decreased slightly to 25.5% compared with 25.8% in 2012. The dollar increase was due primarily to increased intermodal and brokerage volumes.
For the six months ended June 30, 2013, purchased transportation, net of fuel surcharge reimbursement, increased $12.5 million, or 3.6% compared with the same period in 2012. The increase in expense is primarily the result of an increase in intermodal volumes.
Insurance and Claims
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Insurance and claims
 
$
29,207

 
$
26,278

 
$
56,978

 
$
56,858

% of revenue xFSR
 
4.0
%
 
3.8
%
 
4.0
%
 
4.2
%
% of operating revenue
 
3.3
%
 
3.0
%
 
3.2
%
 
3.3
%
For the three months ended June 30, 2013, insurance and claims expense increased by $2.9 million, or 11.1%, compared with the same period in 2012. As a percentage of revenue xFSR, insurance and claims increased to 4.0% compared with 3.8% in the 2012 period. The increase is primarily due to the increase in reserves associated with unfavorable developments of our prior year loss layers based on new information received on these claims during the period.
For the six months ended June 30, 2013, insurance and claims expense was flat when compared with the same period in 2012. As a percentage

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of revenue xFSR, insurance and claims decreased to 4.0%, compared with 4.2% for the same period in 2012.
Rental Expense and Depreciation and Amortization of Property and Equipment
Because the mix of our leased versus owned tractors varies, we believe it is appropriate to combine our rental expense with our depreciation and amortization of property and equipment when comparing results from period to period for analysis purposes.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Rental expense
 
$
30,541

 
$
26,576

 
$
59,792

 
$
50,075

Depreciation and amortization of property and equipment
 
52,527

—

50,389

—

102,859

—

100,783

Rental expense and depreciation and amortization of property and equipment
 
$
83,068

 
$
76,965

 
$
162,651

 
$
150,858

% of revenue xFSR
 
11.5
%
 
11.0
%
 
11.5
%
 
11.1
%
% of operating revenue
 
9.2
%
 
8.8
%
 
9.3
%
 
8.9
%

Rental expense and depreciation and amortization of property and equipment were primarily driven by our fleet of tractors and trailers shown below:
 
 
As of
 
 
June 30,
2013
 
December 31,
2012
 
June 30,
2012
 
 
(Unaudited)
Tractors:
 
 
 
 
 
 
Company
 
 
 
 
 
 
Owned
 
6,108

 
5,431

 
6,158

Leased — capital leases
 
2,463

 
2,328

 
2,248

Leased — operating leases
 
3,661

 
3,516

 
3,443

Total company tractors
 
12,232

 
11,275

 
11,849

Owner-operator
 
 
 
 
 
 
Financed through the Company
 
3,092

 
3,020

 
3,051

Other
 
960

 
936

 
975

Total owner-operator tractors
 
4,052

 
3,956

 
4,026

Total tractors
 
16,284

 
15,231

 
15,875

Trailers
 
52,182

 
52,841

 
51,641

Containers
 
8,717

 
8,717

 
6,783

For the three months ended June 30, 2013, rental expense and depreciation and amortization of property and equipment increased by $6.1 million, or 7.9%, compared with the same period in 2012. As a percentage of revenue xFSR, such expenses increased to 11.5% compared with 11.0% for same period in 2012. The increase was primarily due to the rising cost of new equipment, a higher percentage of leased assets, which increases rent expense due to the inclusion of financing costs, as well as the growth in trailers and intermodal containers in the second quarter of 2013 as compared to the second quarter of 2012.
For the six months ended June 30, 2013, rental expense and depreciation and amortization of property and equipment increased by $11.8 million, or 7.8%, compared with the same period in 2012. As a percentage of revenue xFSR, such expenses increased to 11.5% compared with 11.1% for the 2012 period. This increase was primarily due to the rising costs of new equipment, the growth in trailers and intermodal containers, and a higher percentage of leased assets, which increases rent expense due to the inclusion of financing costs.
Amortization of Intangibles
Amortization of intangibles consists primarily of amortization of $261.2 million gross carrying value of definite-lived intangible assets recognized under purchase accounting in connection with our 2007 going private transaction.

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Table of Contents

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Amortization of intangibles
 
$
4,203

 
$
4,215

 
$
8,407

 
$
8,518

Amortization of intangibles for the three months ended June 30, 2013 and 2012 is comprised of $3.9 million in each period related to intangible assets recognized in conjunction with the 2007 going private transaction and $0.3 million in each period related to previous intangible assets from smaller acquisitions by Swift Transportation Co. prior to the going private transaction. Amortization expense decreased slightly in the 2013 period compared to the same period in 2012 primarily due to the 150% declining balance amortization method applied to the customer relationship intangible recognized in conjunction with the 2007 going private transaction.

Amortization of intangibles for the six months ended June 30, 2013 and 2012 is comprised of $7.8 million and $7.9 million, respectively, related to intangible assets recognized in conjunction with the 2007 going private transaction and $0.6 million in each period related to previous intangible assets from smaller acquisitions by Swift Transportation Co. prior to the going private transaction.
Impairments
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Impairments
 
$
—

 
$
—

 
$
—

 
$
1,065

In the first quarter of 2012, real property with a carrying amount of $1.7 million was written down to its estimated fair value of $0.6 million, resulting in a pre-tax impairment charge of $1.1 million.
Gain on disposal of property and equipment
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Gain on disposal of property and equipment
 
$
(4,681
)
 
$
(3,478
)
 
$
(7,035
)
 
$
(7,868
)
Gain on disposal of property and equipment increased to $4.7 million in the second quarter of 2013 compared to $3.5 million in the second quarter of 2012 primarily due to an increase in the amount of trailer equipment disposed of during the quarter.
For the six months ended June 30, 2013, gain on disposal of property and equipment decreased $0.8 million, compared with the same period in 2012. The decrease was due to the reduction of equipment disposed of during the first quarter of 2013.

Interest Expense
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
 
Interest expense
 
$
23,760

 
$
29,553

 
$
49,334

 
$
62,329

Interest expense for the three months ended June 30, 2013 is primarily based on the end of period debt balances as of June 30, 2013 of $238.0 million and $410.0 million carrying value of the first lien term loan B-1 tranche and B-2 tranche, respectively, $493.2 million net carrying value of senior second priority secured notes, $165.0 million of our accounts receivable securitization obligation, and $171.6 million present value of capital lease obligations.
Interest expense decreased for the three and six months ended June 30, 2013 as compared to the prior year periods primarily due to our various voluntary prepayments of debt made from June 30, 2012 to June 30, 2013 and the refinancing of our term loan facilities completed in March of 2013 and March of 2012. On March 6, 2012, we entered into the Amended and Restated Credit Agreement (the “2012 Agreement”) that replaced

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the then-existing $874.0 million face value first lien term loan, which accrued interest at LIBOR plus 4.50%, including a minimum LIBOR rate of 1.50% with a $200.0 million face value first lien loan B-1 tranche, which accrued interest at LIBOR plus 3.75% with no minimum LIBOR rate, and a $674.0 million face value first lien loan B-2 tranche, which accrued interest at LIBOR plus 3.75%, including a minimum LIBOR rate of 1.25%. On March 7, 2013, we entered into the Second Amended and Restated Credit Agreement (the “2013 Agreement”). The 2013 Agreement replaced the then-existing first lien term loan B-1 and B-2 tranches under the 2012 Agreement with outstanding principal balances of $152.0 million and $508.0 million, respectively, with new first lien term loan B-1 and B-2 tranches with face values of $250.0 million and $410.0 million, respectively. In addition, the 2013 Agreement reduced the interest rates applicable to the first lien term loan B-1 tranche to LIBOR plus 2.75% with no minimum LIBOR rate and the first lien term loan B-2 tranche to LIBOR plus 3.00% with a minimum LIBOR rate of 1.00%.
Derivative Interest Expense
In December 2010, in conjunction with our IPO and refinancing transactions, we terminated all our remaining interest rate swaps and paid $66.4 million to our counterparties in full satisfaction of these interest rate swap agreements. In April 2011, in connection with our new senior secured credit facility, we entered into two forward-starting interest rate swap agreements with a total notional amount of $350.0 million. These interest rate swaps became effective in January 2013, mature in July 2015, and had been designated and qualified as cash flow hedges. As such, the effective portion of the changes in fair value of these designated swaps was recorded in accumulated OCI and is thereafter recognized to derivative interest expense as the interest on the hedged debt affects earnings, which hedged interest accruals started in January of 2013. Any ineffective portions of the changes in the fair value of designated interest rate swaps was recognized directly to earnings as derivative interest expense.
As noted above, on March 7, 2013, we entered into the 2013 Agreement replacing our 2012 Agreement. Due to the incorporation of a new interest rate floor provision in the 2013 Agreement, we concluded as of February 28, 2013, the outstanding interest rate swaps would no longer be highly effective in achieving offsetting changes in cash flows related to the hedged interest payments. As a result, we de-designated the hedges as of February 28, 2013 (“de-designation date”). Beginning on March 1, 2013, the effective portion of the interest rate swaps prior to the change (i.e., amounts previously recorded in accumulated OCI) have been and will continue to be amortized as derivative interest expense over the period of the originally designated hedged interest payments through July 2015. Following the de-designation date, changes in fair value of the interest rate swaps are immediately recognized in the consolidated statements of operations as derivative interest expense.
The following is a summary of our derivative interest expense for the three and six months ended June 30, 2013 and 2012:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Derivative interest expense
 
$
532

 
$
2,108

 
$
1,094

 
$
4,653

Derivative interest expense for the three and six months ended June 30, 2013 represents mark-to-market adjustments and settlement payments related to our interest rate swaps, which were de-designated as of February 28, 2013. Derivative interest expense for the three and six months ended June 30, 2012 is related to our terminated swaps and represents the previous losses recorded in accumulated OCI that are amortized to derivative interest expense over the original term of the swaps, which had a maturity of August 2012.
Loss on Debt Extinguishment
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Loss on debt extinguishment
 
$
—

 
$
1,279

 
$
5,044

 
$
22,219


As noted above, on March 7, 2013, we entered into the 2013 Agreement replacing the 2012 Agreement. The 2013 Agreement replaced the then-existing first lien term loan B-1 and B-2 tranches under the 2012 Agreement. The replacement of the 2012 Agreement resulted in a loss on debt extinguishment of $5.0 million for the six months ended June 30, 2013, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the 2012 Agreement. On May 21, 2012, the Company completed the call of its remaining $15.2 million face value 12.50% fixed rate notes due May 15, 2017, at a price of 106.25% of face value pursuant to the terms of the indenture governing the notes, resulting in a loss on debt extinguishment of $1.3 million, representing the call premium and write-off of the remaining unamortized deferred financing fees. Also, in the first quarter of 2012, we entered into the 2012 Agreement, which replaced the then-existing, remaining $874.0 million face value first lien term loan, resulting in a loss on debt extinguishment of $20.9 million, representing the write-off of the unamortized original issue discount and deferred financing fees associated with the original term loan.


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Gain on Sale of Real Property
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Gain on sale of real property
 
$
—

 
$
—

 
$
(6,078
)
 
$
—

During the first quarter of 2013, we disposed of two non-operating properties in Wilmington, CA and Phoenix, AZ, resulting in a gain of $6.1 million.
Income Tax Expense
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Income tax expense
 
$
26,888

 
$
21,776

 
$
41,501

 
$
18,228

Income tax expense for the three and six months ended June 30, 2013 reflects an effective tax rate of 38.5%, as expected. The effective tax rate for the three months ended June 30, 2012 was 39.3%. The effective tax rate for the six months ended June 30, 2012 was 31.4% which was 8.1 percentage points lower than the expected effective tax rate primarily due to the deferred state tax benefit related to an internal corporate restructuring of our subsidiaries in January of 2012. Excluding the impact of discrete items in the first quarter of 2012, the effective tax rate for the six months ended June 30, 2012 would have been 38.5%.
The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties as of June 30, 2013 was $1.4 million. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. The Company anticipates that the total amount of unrecognized tax benefits may decrease by $0.7 million during the next twelve months, which should not have a material impact on our financial statements.

Liquidity and Capital Resources
Cash Flow
Our summary statements of cash flows information for the six months ended June 30, 2013 and 2012 , is set forth in the table below:
 
 
Six Months Ended June 30,
 
 
2013
 
2012
 
 
(Unaudited)
(Dollars in thousands)
Net cash provided by operating activities
 
$
220,343

 
$
165,850

Net cash used in investing activities
 
$
(86,980
)
 
$
(65,103
)
Net cash used in financing activities
 
$
(143,449
)
 
$
(147,316
)
The $54.5 million increase in net cash provided by operating activities during the six months ended June 30, 2013 , compared to the same period in 2012 , was primarily the result of the $19.5 million reduction in cash paid for interest and income taxes, $18.8 million increase in the change (increase) in accounts payable, accrued and other liabilities, a $9.7 million increase in operating income and $7.2 million increase in the change (decrease) in other assets during the six months ended June 30, 2013 as compared to the same period of 2012.
Our net cash used in investing activities increased $21.9 million during the six months ended June 30, 2013 as compared to the same period in 2012 . This increase was primarily related to the $19.3 million increase in our gross capital expenditures as well as the $22.0 million reduction in proceeds received on the sale of our property and equipment. This net outflow was partially offset by $12.4 million increase in proceeds received from the sale of property and equipment classified as assets held for sale during the six months ended June 30, 2013, which was primarily related to the sale of real property in Wilmington, CA and Phoenix, AZ. In addition, during the six months ended June 30, 2012, we loaned $7.5 million to Swift Power Services, LLC.
Cash used in financing activities decreased by $3.9 million during the six months ended June 30, 2013 as compared to the same period in 2012 . This decrease in net outflows was primarily related to the $56.0 million reduction in repayments of our long term debt and capital leases from the six months ended June 30, 2013 as compared to the corresponding period in 2012. Additionally, cash used in financing activities included $7.5 million in proceeds received from the issuance of long-term debt and $5.7 million in proceeds from issuance of common stock from exercises

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of stock options and the employee stock purchase plan during the first half of 2013. The reduction in our long term debt and capital lease repayments and the proceeds received from issuance of debt and common stock were offset by a $62.0 million increase in net repayments on our accounts receivable securitization from the first six months of 2013 as compared to the first six months of 2012.

Sources
As of June 30, 2013 and December 31, 2012 , we had the following sources of liquidity available to us:
 
 
June 30,
2013
 
December 31,
2012
 
 
(Unaudited)
(Dollars in thousands)
Cash and cash equivalents, excluding restricted cash
 
$
43,510

 
$
53,596

Availability under revolving line of credit due September 2016
 
261,894

 
240,932

Availability under 2013 RSA and 2011 RSA, respectively
 
101,700

 
64,600

Total unrestricted liquidity
 
$
407,104

 
$
359,128

Restricted cash
 
42,694

 
51,678

Restricted investments, held to maturity, amortized cost
 
26,955

 
22,275

Total liquidity, including restricted cash and investments
 
$
476,753

 
$
433,081

As of June 30, 2013 and December 31, 2012 , we had restricted cash and short-term investments of $69.6 million and $74.0 million , respectively, primarily held by our captive insurance companies for payment of claims. As of June 30, 2013 , there were no outstanding borrowings on our $400.0 million revolving line of credit, although there were $138.1 million in letters of credit outstanding under this facility, leaving $261.9 million available. In addition, we had borrowed $165.0 million against a total borrowing base of $266.7 million of eligible receivables from our accounts receivable facility, leaving $101.7 million available as of June 30, 2013 .
Uses
Our business requires substantial amounts of cash to cover operating expenses as well as to fund items such as cash capital expenditures, other assets, working capital changes, principal and interest payments on our obligations, letters of credit to support insurance requirements, and tax payments to fund our taxes in periods when we generate taxable income.
We make substantial net capital expenditures to maintain a modern company tractor fleet, refresh our trailer fleet, and potentially fund growth in our revenue equipment fleet if justified by customer demand and our ability to finance the equipment and generate acceptable returns. As of June 30, 2013 , we expect our net cash capital expenditures to be in the range of approximately $110.0 million to $135.0 million for the remainder of 2013. In addition, we believe we have ample flexibility with our trade cycle and purchase agreements to alter our current plans if economic or other conditions warrant. Beyond 2013, we expect our net capital expenditures to remain substantial.
As of June 30, 2013 , we had $137.7 million of purchase commitments outstanding to acquire replacement tractors through the rest of 2013 and 2014. We generally have the option to cancel tractor purchase orders with 60 to 90 day notice prior to scheduled production, although the notice date has lapsed for approximately 80.0% of the commitments remaining as of June 30, 2013 . In addition, we had trailer purchase commitments outstanding at June 30, 2013 for $74.2 million through the rest of 2013. These purchases are expected to be financed by a combination of operating leases, capital leases, debt, proceeds from sales of existing equipment and cash flows from operations.
As of June 30, 2013 , we did not have outstanding purchase commitments for intermodal containers, fuel, facilities, or non-revenue equipment. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.
As of June 30, 2013 and December 31, 2012 , we had a working capital surplus of $242.9 million and $351.2 million , respectively. The decrease was primarily related to the use of cash on hand to voluntarily repay $86.5 million of the non-current portion of our B-1 and B-2 tranches of first lien term loans and the $21.8 million increase in our current portion of long-term debt and obligations under capital leases and claims accruals from December 31, 2012 to June 30, 2013.
Financing
We believe we can finance our expected cash needs, including debt repayment, in the short-term with cash flows from operations, borrowings available under our revolving line of credit, borrowings under our 2013 RSA, and lease financing believed to be available for at least the next twelve months. Over the long-term, we will continue to have significant capital requirements, which may require us to seek additional borrowings, lease financing, or equity capital. The availability of financing or equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions. If such additional borrowings, lease financing, or equity capital is not available at the time we need to incur such indebtedness, then we may be required to utilize the revolving portion of our senior secured credit facility (if not then fully drawn), extend the maturity of then-outstanding indebtedness, rely on alternative financing arrangements, or engage in asset sales.
As of June 30, 2013 , we had the following material debt agreements:


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•
senior secured credit facility consisting of a term loan B-1 tranche due December 2016 and term loan B-2 tranche due December 2017, and a revolving line of credit due September 2016 (none drawn);
•
senior second priority secured notes due November 2018;
•
2013 RSA due July 2016; and
•
other secured indebtedness and capital lease agreements.

The amounts outstanding under such agreements and other debt instruments as of June 30, 2013 and December 31, 2012 were as follows:
 
 
June 30,
2013
 
December 31,
2012
 
 
(In thousands)
 
 
(Unaudited)
 
 
Senior secured first lien term loan B-1 tranche due December 2016
 
$
238,000

 
$
—

Senior secured first lien term loan B-2 tranche due December 2017
 
410,000

 
—

Senior secured first lien term loan B-1 tranche due December 2016, net of $405 OID as of December 31, 2012
 
—

 
157,095

Senior secured first lien term loan B-2 tranche due December 2017, net of $1,440 OID as of December 31, 2012
 
—

 
575,560

Senior second priority secured notes due November 15, 2018, net of $6,807 and $7,439 OID as of June 30, 2013 and December 31, 2012, respectively
 
493,193

 
492,561

2013 RSA and 2011 RSA, respectively
 
165,000

 
204,000

Other secured debt and capital leases
 
185,299

 
145,818

Total debt and capital leases
 
$
1,491,492

 
$
1,575,034

Less: current portion
 
62,810

 
47,495

Long-term debt and capital leases
 
$
1,428,682

 
$
1,527,539

The indenture for our senior secured notes provides that we may only incur additional indebtedness if, after giving effect to the new incurrence, we meet a minimum fixed charge coverage ratio of 2.00:1.00, as defined therein, or the indebtedness qualifies under certain specifically enumerated carve-outs and debt incurrence baskets, including a provision that permits us to incur capital lease obligations of up to $350.0 million outstanding at any one time. As of June 30, 2013 , we had a fixed charge coverage ratio in excess of 4.00:1.00. However, there can be no assurance that we can maintain a fixed charge coverage ratio over 2.00:1.00, in which case our ability to incur additional indebtedness under our existing financial arrangements to satisfy our ongoing capital requirements would be limited as noted above, although we believe the combination of our expected cash flows, financing available through operating leases which are not subject to debt incurrence baskets, the capital lease basket, and the funds available to us through our accounts receivable sale facility and our revolving credit facility will be sufficient to fund our expected capital expenditures for 2013.
See Notes 8 and 9 of the notes to these consolidated financial statements included in Part I, Item 1, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 for further discussion of the senior secured credit facility, senior second priority secured notes and 2013 RSA.

Capital and Operating Leases
In addition to the net cash capital expenditures discussed above, we also acquired revenue equipment, including tractors and trailers, with capital and operating leases. During the six months ended June 30, 2013 , we acquired revenue equipment through capital leases and operating leases with gross values of $59.0 million and $73.1 million, respectively, which were offset by capital lease and operating lease terminations with originating values of $10.7 million and $16.2 million, respectively. During the six months ended June 30, 2012 , we acquired revenue equipment through capital leases and operating leases with gross values of $19.4 million and $170.1 million, respectively, which were offset by capital and operating lease terminations with originating values of $19.4 million and $30.3 million, respectively, for tractors.
Contractual Obligations
During the six months ended June 30, 2013 , other than the voluntary prepayments of our long-term debt, entering into the 2013 Agreement and the 2013 RSA as discussed under the heading “Financing,” there have not been any material changes outside the ordinary course of business to the contractual obligations table contained in our Form 10-K for the fiscal year ended December 31, 2012 .
Off-Balance Sheet Arrangements
We lease approximately 5,800 tractors under operating leases, which includes approximately 3,700 company tractors and 2,100 owner-operator tractors financed by the Company. Operating leases have been an important source of financing for our revenue equipment. Tractors held under operating leases are not carried on our consolidated balance sheets, and lease payments in respect of such tractors are reflected in our consolidated statements of operations in the line item “Rental expense.” Our revenue equipment rental expense was $57.5 million for the six months ended June 30, 2013 , compared with $47.9 million in the six months ended June 30, 2012 . In connection with various operating leases, we issued residual value guarantees, which provide that if we do not purchase the leased equipment from the lessor at the end of the lease term, we are liable to the lessor for an amount equal to the shortage (if any) between the proceeds from the sale of the equipment and an agreed residual value.

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As of June 30, 2013 , the maximum possible payment under the residual value guarantees was approximately $10.0 million. To the extent the expected value at the lease termination date is lower than the residual value guarantee; we would accrue for the difference over the remaining lease term. We believe that proceeds from the sale of equipment under operating leases would exceed the payment obligation on substantially all operating leases.
Seasonality
In the transportation industry, results of operations generally show a seasonal pattern. As customers ramp up for the holiday season at year-end, the late third and fourth quarters have historically been our strongest volume quarters. As customers reduce shipments after the winter holiday season, the first quarter has historically been a lower volume quarter for us than the other three quarters. In the eastern and midwestern United States, and to a lesser extent in the western United States, during the winter season, our equipment utilization typically declines and our operating expenses generally increase, with fuel efficiency declining because of engine idling and harsh weather sometimes creating higher accident frequency, increased claims, and more equipment repairs. Our revenue also may be affected by holidays as a result of curtailed operations or vacation shutdowns, because our revenue is directly related to available working days of shippers. From time to time, we also suffer short-term impacts from weather-related events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes, and explosions that could harm our results of operations or make our results of operations more volatile.

Inflation
Inflation can have an impact on our operating costs. A prolonged period of inflation could cause interest rates, fuel, wages, and other costs to increase, which would adversely affect our results of operations unless freight rates correspondingly increase. However, with the exception of fuel, the effect of inflation has been minor in recent years. Historically, the majority of the increase in fuel costs has been passed on to our customers through a corresponding increase in fuel surcharge revenue, making the impact of the increased fuel costs on our operating results less severe. If fuel costs escalate and we are unable to recover these costs timely with effective fuel surcharges, it would have an adverse effect on our operation and profitability.
Forward Looking Statements
This Quarterly Report contains statements that may constitute forward-looking statements, usually identified by words such as “anticipates,” “believes,” “estimates,” “plans,” “projects,” “expects,” “intends,” or similar expressions which speak only as of the date the statement was made. Forward-looking statements in this quarterly report include statements concerning: adjustments to income tax assessments as the result of ongoing and future examinations; anticipated changes in our unrecognized tax benefits during the next 12 months; the outcome of pending litigation and actions we intend to take in respect thereof; the amount and timing of the recognition of unrealized losses included in other comprehensive income; trends concerning supply, demand, pricing and costs in the trucking industry; our expectation of increasing driver wage and hiring expenses; the benefits of our fuel surcharge program and our ability to recover increasing fuel costs through surcharges; the impact of the lag effect relating to our fuel surcharges; our exposure to residual value guarantees relating to operating leases; the sources and sufficiency of our liquidity and financial resources; the consequences of a failure to maintain compliance with our debt covenants; the timing of our disposition of assets held for sale; our intentions concerning the use of derivative financial instruments to hedge fuel price exposure; and the timing and amount of future acquisitions of trucking equipment and other capital expenditures and the use and availability of cash, cash flow from operations, leases and debt to finance such acquisitions. Such statements are based upon the current beliefs and expectations of the Company’s management. Such forward-looking statements are subject to significant risks and uncertainties as set forth in the Risk Factor Section of our Annual Report Form 10-K for the year ended December 31, 2012. Actual events may differ materially from those set forth in the forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
As to the Company’s business and financial performance, the following factors, among others, could cause actual results to differ materially from those in forward-looking statements: any future recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries in which we have a significant concentration of customers; increasing competition from trucking, rail, intermodal, and brokerage competitors; a significant reduction in, or termination of, our trucking services by a key customer; a significant reduction in, or termination of, our trucking services by a key customer; the amount and velocity of changes in fuel prices and our ability to recover fuel prices through our fuel surcharge program; volatility in the price or availability of fuel; increases in new equipment prices or replacement costs; the regulatory environment in which we operate, including existing regulations and changes in existing regulations, or violations by us of existing or future regulations; our Compliance Safety Accountability safety rating; increases in driver compensation to the extent not offset by increases in freight rates and difficulties in driver recruitment and retention; changes in rules or legislation by the National Labor Relations Board or Congress and/or union organizing efforts; potential volatility or decrease in the amount of earnings as a result of our claims exposure through our captive insurance companies; risks relating to our captive insurance companies; uncertainties associated with our operations in Mexico; our ability to attract and maintain relationships with owner-operators; the possible re-classification of our owner-operators as employees; our ability to retain or replace key personnel; conflicts of interest or potential litigation that may arise from other businesses owned by Jerry Moyes, including pledges of Swift stock and guarantees related to other businesses by Jerry Moyes; our dependence on fourth parties for intermodal and brokerage business; our ability to sustain cost savings realized as part of recent cost reduction initiatives; potential failure in computer or communications systems; our ability to execute or integrate any future acquisitions successfully; seasonal factors such as harsh weather conditions that increase operating costs; goodwill impairment; the potential impact of the significant number of shares of our common stock that is outstanding; our intention to not pay dividends; demand ; our significant ongoing capital requirements; our level of indebtedness and our ability to service our outstanding indebtedness, including compliance with our indebtedness covenants, and the impact such indebtedness may have on the way we operate our business; the significant amount of our stock and related control over the Company by Jerry Moyes; and restrictions contained in our debt agreements.

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have interest rate exposure arising from our senior secured credit facility, 2013 RSA, and other financing agreements, which have variable interest rates. These variable interest rates are impacted by changes in short-term interest rates, although the volatility related to the first lien term loan B-2 tranche is mitigated due to a minimum LIBOR rate of 1.00%. We manage interest rate exposure through a mix of variable rate debt, and fixed rate notes (weighted average rate of 3.2% before applicable margin). Assuming the current level of borrowings, a hypothetical one-percentage point increase in interest rates would increase our annual interest expense by $5.1 million considering the effect of the minimum LIBOR rate on the first lien term loan B-2 tranche.
We have commodity exposure with respect to fuel used in company tractors. Further increases in fuel prices will continue to raise our operating costs, even after applying fuel surcharge revenue. Historically, we have been able to recover a majority of fuel price increases from our customers in the form of fuel surcharges. The weekly average diesel price per gallon in the United States, as reported by the DOE, decreased slightly from an average of $3.960 per gallon for the six months ended June 30, 2012 to an average of $3.950 per gallon for the six months ended June 30, 2013 . We cannot predict the extent or speed of potential changes in fuel price levels in the future, the degree to which the lag effect of our fuel surcharge programs will impact us as a result of the timing and magnitude of such changes, or the extent to which effective fuel surcharges can be maintained and collected to offset such increases. We generally have not used derivative financial instruments to hedge our fuel price exposure in the past, but continue to evaluate this possibility.
 
ITEM 4: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures and determined that as of June 30, 2013 our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the quarter ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS
Information about our legal proceedings is included in Note 14 of the notes to these consolidated financial statements, included in Part I, Item 1, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 as well as Part I, Item 3, “Legal Proceedings”, in our Annual Report on Form 10-K for the year ended December 31, 2012 .

ITEM 1A: RISK FACTORS
In addition to the other information set forth in this report, the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012 should be carefully considered as these risk factors could materially affect our business, financial condition, future results and/or our ability to maintain compliance with our debt covenants. The risks described in our Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also adversely affect our business, financial condition, operating results and/or our ability to maintain compliance with our debt covenants.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES
Not applicable.

ITEM 4: MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5: OTHER INFORMATION
Not applicable.

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ITEM 6: EXHIBITS
 
Exhibit Number
 
Description
  
Page or Method of Filing
 
 
 
3.1
 
Amended and Restated Certificate of Incorporation of Swift Transportation Company
  
Incorporated by reference to Exhibit 3.1 of Form 10-K for the year ended December 31, 2010
 
 
 
3.2
 
Bylaws of Swift Transportation Company
  
Incorporated by reference to Exhibit 3.2 of Form 10-K for the year ended December 31, 2010
 
 
 
10.1
 
Amended and Restated Receivables Purchase Agreement (1)
  
Filed herewith
 
 
 
 
 
 
31.1
 
Certification by CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  
Filed herewith
 
 
 
31.2
 
Certification by CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  
Filed herewith
 
 
 
32.1
 
Certification by CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  
Furnished herewith
 
 
 
101
 
XBRL Instance Document
  
Filed herewith
 
 
 
101
 
XBRL Taxonomy Extension Schema Document
  
Filed herewith
 
 
 
101
 
XBRL Taxonomy Calculation Linkbase Document
  
Filed herewith
 
 
 
101
 
XBRL Taxonomy Label Linkbase Document
  
Filed herewith
 
 
 
101
 
XBRL Taxonomy Presentation Linkbase Document
  
Filed herewith
 
 
 
101
 
XBRL Taxonomy Extension Definition Document
  
Filed herewith

(1) Certain Confidential Information contained in this Exhibit was omitted by means of redacting a portion of the text and replacing it with an asterisk. This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without the redaction pursuant to Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934.

54
Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
SWIFT TRANSPORTATION COMPANY
 
 
 
 
 
 
/s/ Jerry Moyes
 
 
 
(Signature)
 
 
 
Jerry Moyes
 
 
 
Chief Executive Officer
 
 
 
Date: 
August 2, 2013
 
 
 
 
 
 
 
 
/s/ Virginia Henkels
 
 
 
(Signature)
 
 
 
Virginia Henkels
 
 
 
Executive Vice President and Chief Financial Officer
 
 
 
Date:
August 2, 2013
 
 

55
Confidential information in this Second Amended and Restated Credit Agreement has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request


EXECUTION COPY

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
dated as of June 14, 2013
among    
SWIFT RECEIVABLES COMPANY II, LLC,
as Seller
SWIFT TRANSPORTATION SERVICES, LLC,
as Servicer
THE VARIOUS CONDUIT PURCHASERS FROM TIME TO TIME PARTY HERETO,
THE VARIOUS RELATED COMMITTED PURCHASERS FROM TIME TO TIME PARTY HERETO,
THE VARIOUS PURCHASER AGENTS FROM TIME TO TIME PARTY HERETO,
THE VARIOUS LC PARTICIPANTS FROM TIME TO TIME PARTY HERETO,
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrator and LC Bank




3605383
TABLE OF CONTENTS


Page


ARTICLE I      AMOUNTS AND TERMS OF THE PURCHASES     2
Section 1.1
Purchases .    2
Section 1.2
Making Purchases     3
Section 1.3
Purchased Interest Computation     6
Section 1.4
Settlement Procedures     6
Section 1.5
Fees     11
Section 1.6
Payments and Computations, Etc     11
Section 1.7
Increased Costs     12
Section 1.8
Requirements of Law     13
Section 1.9
Funding Losses     14
Section 1.10
Taxes     14
Section 1.11
Inability to Determine Euro-Rate or the LIBOR Market Index Rate     18
Section 1.12
Letters of Credit     19
Section 1.13
Issuance of Letters of Credit     19
Section 1.14
Requirements For Issuance of Letters of Credit     20
Section 1.15
Disbursements, Reimbursement     20
Section 1.16
Repayment of Participation Advances     21
Section 1.17
Documentation     21
Section 1.18
Determination to Honor Drawing Request     21

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TABLE OF CONTENTS
(continued)
Page

Section 1.19
Nature of Participation and Reimbursement Obligations     21
Section 1.20
Indemnity     23
Section 1.21
Liability for Acts and Omissions     23
Section 1.22
Extension of Termination Date     25
Section 1.23
Increase in Purchase Limit     25
ARTICLE II    REPRESENTATIONS AND WARRANTIES; COVENANTS;     26
Section 2.1
Representations and Warranties; Covenants     26
Section 2.2
Termination Events     26
ARTICLE III    INDEMNIFICATION     26
Section 3.1
Indemnities by the Seller     26
Section 3.2
Indemnities by the Servicer     28
ARTICLE IV      ADMINISTRATION AND COLLECTIONS     29
Section 4.1
Appointment of the Servicer     29
Section 4.2
Duties of the Servicer     30
Section 4.3
Lock-Box Account Arrangements     31
Section 4.4
Enforcement Rights     31
Section 4.5
Responsibilities of the Seller     32
Section 4.6
Servicing Fee     33
ARTICLE V    THE AGENTS     33
Section 5.1
Appointment and Authorization     33
Section 5.2
Delegation of Duties     34

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TABLE OF CONTENTS
(continued)
Page

Section 5.3
Exculpatory Provisions     34
Section 5.4
Reliance by Agents     34
Section 5.5
Notice of Termination Events     35
Section 5.6
Non-Reliance on Administrator, Purchaser Agents and Other Purchasers     36
Section 5.7
Administrator, Purchasers, Purchaser Agents and Affiliates     36
Section 5.8
Indemnification     36
Section 5.9
Successor Administrator     37
ARTICLE VI      MISCELLANEOUS     37
Section 6.1
Amendments, Etc     37
Section 6.2
Notices, Etc     38
Section 6.3
Successors and Assigns; Participations; Assignments     38
Section 6.4
Costs, Expenses and Taxes     40
Section 6.5
No Proceedings; Limitation on Payments     41
Section 6.6
GOVERNING LAW AND JURISDICTION     42
Section 6.7
Confidentiality     42
Section 6.8
Execution in Counterparts     43
Section 6.9
Survival of Termination     43
Section 6.10
WAIVER OF JURY TRIAL     43
Section 6.11
Sharing of Recoveries     44

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TABLE OF CONTENTS
(continued)
Page

Section 6.12
Right of Setoff     44
Section 6.13
Entire Agreement     44
Section 6.14
Headings     44
Section 6.15
Purchaser Groups’ Liabilities     44
Section 6.16
Tax Treatment     44
Section 6.17
USA Patriot Act     45
Section 6.18
Original Agreement; Effect of Restatement     45



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EXHIBITS
Exhibit I    Definitions
Exhibit II    Conditions to Purchases
Exhibit III    Representations and Warranties
Exhibit IV    Covenants
Exhibit V    Termination Events
Exhibit VI    Flow of Funds among Purchasers

SCHEDULES
Schedule I    Credit and Collection Policy
Schedule II    Lock-Box Banks and Lock-Box Accounts
Schedule III    Actions and Proceedings

ANNEXES
Annex A-1    Form of Information Package
Annex A-2    Form of Weekly Report
Annex B    Form of Purchase Notice
Annex C    Form of Assumption Agreement
Annex D    Form of Transfer Supplement
Annex E    Form of Paydown Notice
Annex F    Form of Letter of Credit Application
Annex G    Form of Purchase Limit Increase Request




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This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”) is entered into as of June 14, 2013, among SWIFT RECEIVABLES COMPANY II, LLC, a Delaware limited liability company, as seller (the “ Seller ”), SWIFT TRANSPORTATION SERVICES, LLC, a Delaware limited liability company (“ Swift ”), as servicer (in such capacity, together with its successors and permitted assigns in such capacity, the “ Servicer ”), the various Conduit Purchasers from time to time party hereto, the various Related Committed Purchasers from time to time party hereto, the various Purchaser Agents from time to time party hereto, the various LC Participants from time to time party hereto and PNC BANK, NATIONAL ASSOCIATION, as administrator (in such capacity, together with its successors and assigns in such capacity, the “ Administrator ”) and as issuer of Letters of Credit (in such capacity, together with its successors and assigns in such capacity, the “ LC Bank ”).
Reference is hereby made to that certain Receivables Purchase Agreement dated June 8, 2011 among the Seller, the Servicer, the Conduit Purchasers party thereto, the Related Committed Purchasers party thereto, the LC Participants party thereto, the Administrator and the LC Bank (as amended, the “ Original Purchase Agreement ”). The parties hereto have agreed to amend and restate the Original Purchase Agreement in its entirety and to continue to extend the credit facilities on the terms and conditions of this Agreement. This Agreement consolidates, amends and replaces in its entirety the Original Purchase Agreement and, from and after the date hereof, all references made to the Original Purchase Agreement in any Transaction Document or in any other instrument or document shall, without more, be deemed to refer to this Agreement.
BACKGROUND
The Seller (i) desires to sell, transfer and assign an undivided variable percentage ownership interest in a pool of Receivables, and the Purchasers desire to acquire such undivided variable percentage ownership interest, as such percentage interest shall be adjusted from time to time based upon, in part, reinvestment payments that are made by such Purchasers and (ii) may, subject to the terms and conditions hereof, request that the LC Bank issue or cause the issuance of one or more Letters of Credit.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
DEFINITIONS
Certain terms that are capitalized and used throughout this Agreement are defined in Exhibit I . References in the Exhibits, Schedules and Annexes hereto to the “Agreement” refer to this Agreement, as amended, restated, supplemented or otherwise modified from time to time.




ARTICLE I

AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1      Purchases .
(a)      On the terms and subject to the conditions hereof, the Seller may, from time to time before the Facility Termination Date, (i) ratably (based on each Purchaser Group’s Ratable Share) request that each Purchaser Group’s Conduit Purchaser or, only if there is no Conduit Purchaser in such Purchaser Group or a Conduit Purchaser denies such request or is unable to fund (and provides notice of such denial or inability to the Seller, the Administrator and its Purchaser Agent), ratably (based on each Purchaser Group’s Ratable Share) request that its Related Committed Purchasers, make purchases of and reinvestments in undivided percentage ownership interests with regard to the Purchased Interest from the Seller from time to time from the date hereof to the Facility Termination Date and (ii) request that the LC Bank issue or cause the issuance of Letters of Credit, in each case subject to the terms hereof (each such purchase, reinvestment or issuance is referred to herein as a “ Purchase ”). Subject to Section 1.4(b) concerning reinvestments, at no time will a Conduit Purchaser have any obligation to make a Purchase. Each Related Committed Purchaser severally hereby agrees, on the terms and subject to the conditions hereof, to make Purchases of undivided percentage ownership interests with regard to the Purchased Interest from the Seller from time to time from the date hereof to the Facility Termination Date, based on the applicable Purchaser Group’s Ratable Share of each Purchase requested pursuant to Section 1.2(a) (and, in the case of each Related Committed Purchaser, its Commitment Percentage of its Purchaser Group’s Ratable Share of such Purchase) and, on the terms of and subject to the conditions of this Agreement, the LC Bank agrees to issue Letters of Credit in return for (and each LC Participant hereby severally agrees to make participation advances in connection with any draws under such Letters of Credit equal to such LC Participant’s Pro Rata Share of such draws) undivided percentage ownership interests with regard to the Purchased Interest from the Seller from time to time from the date hereof to the Facility Termination Date; provided , that under no circumstances shall any Purchaser make any Purchase (including, without limitation, any mandatory deemed Purchases pursuant to Section 1.1(b) ) or issue any Letters of Credit hereunder, as applicable, if, after giving effect to such Purchase, the (i) aggregate outstanding amount of the Capital funded by such Purchaser, when added to all other Capital funded by all other Purchasers in such Purchaser’s Purchaser Group would exceed (A) its Purchaser Group’s Group Commitment (as the same may be reduced from time to time pursuant to Section 1.1(c) ) minus (B) the related LC Participant’s Pro Rata Share of the face amount of any outstanding Letters of Credit, (ii) Aggregate Capital plus the LC Participation Amount would exceed the Purchase Limit or (iii) LC Participation Amount would exceed the aggregate of the Commitments of the LC Bank and the LC Participants.
The Seller may, subject to the requirements and conditions herein, use the proceeds of any Purchase by the Purchasers hereunder to satisfy its Reimbursement Obligation to the LC Bank and the LC Participants (ratably, based on the outstanding amounts funded by the LC Bank and each such LC Participant) pursuant to Section 1.15 .

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(b)      In addition, in the event the Seller fails to reimburse the LC Bank for the full amount of any drawing under any Letter of Credit on the applicable Drawing Date (out of its own funds available therefor) pursuant to Section 1.15 , then the Seller shall, automatically (and without the requirement of any further action on the part of any Person hereunder), be deemed to have requested a new Purchase from the Conduit Purchasers or Related Committed Purchasers, as applicable, on such date, on the terms and subject to the conditions hereof, in an amount equal to the amount of such Reimbursement Obligation at such time without resulting in a Termination Event hereunder. Subject to the limitations on funding set forth in paragraph (a) above (and the other requirements and conditions herein), the Conduit Purchasers or Related Committed Purchasers, as applicable, shall fund such deemed Purchase request and deliver the proceeds thereof directly to the Administrator to be immediately distributed to the LC Bank and the applicable LC Participants (ratably, based on the outstanding amounts funded by the LC Bank and each such LC Participant) in satisfaction of the Reimbursement Obligation pursuant to Section 1.15 .
(c)      The Seller may, upon fifteen (15) days’ written notice to the Administrator and each Purchaser Agent, terminate the purchase facility in whole or reduce the unfunded portion of the Purchase Limit in whole or in part (but not below the amount which would cause the Group Capital of any Purchaser Group plus the related LC Participant’s Pro Rata Share of the face amount of any outstanding Letters of Credit to exceed its Group Commitment (after giving effect to such reduction)); provided that each partial reduction shall be in the amount of at least $5,000,000, and in integral multiples of $1,000,000 in excess thereof and that, unless terminated in whole, the Purchase Limit shall in no event be reduced below $50,000,000. Each reduction in the Commitments hereunder shall be made ratably among the Purchasers in accordance with their respective Commitments. The Administrator shall advise the Purchaser Agents of any notice received by it pursuant to this Section 1.1(c) ; it being understood that (in addition to and without limiting any other requirements for termination, prepayment and/or the funding of the LC Collateral Account hereunder) no such termination or reduction shall be effective unless and until (i) in the case of a termination, the amount on deposit in the LC Collateral Account is at least equal to the then outstanding LC Participation Amount and (ii) in the case of a partial reduction, the amount on deposit in the LC Collateral Account is at least equal to the positive difference between the then outstanding LC Participation Amount and the Purchase Limit as so reduced by such partial reduction.
(d)      As of each date a Weekly Report is delivered, the sum of the LC Participation Amount and the Aggregate Capital shall not be less than the Minimum Usage Amount.
Section 1.2      Making Purchases . (23) Each Funded Purchase (but not reinvestment) of undivided percentage ownership interests with regard to the Purchased Interest hereunder may be made on any day upon the Seller’s irrevocable written notice in the form of Annex B (each, a “ Purchase Notice ”) delivered to the Administrator and each Purchaser Agent in accordance with Section 6.2 (which notice must be received by the Administrator and each Purchaser Agent before 2:00 p.m., New York City time) at least two (2) Business Days before the requested Purchase Date, which notice shall specify: (A) in the case of a Funded Purchase (other than one made pursuant to Section 1.15(b) ), the amount requested to be paid to the Seller, which shall not be less than $300,000 (or such lesser amount as agreed to by the Administrator and the Majority Purchaser Agents) and shall be in integral multiples of $100,000 in excess thereof, with respect to each Purchaser Group,

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(B) the date of such Funded Purchase (which shall be a Business Day) and (C) the pro forma calculation of the Purchased Interest after giving effect to the increase in the Aggregate Capital.
(a)      On the date of each Funded Purchase (but not reinvestment, issuance of a Letter of Credit or a Funded Purchase pursuant to Section 1.2(e) ) of undivided percentage ownership interests with regard to the Purchased Interest hereunder, each applicable Conduit Purchaser or Related Committed Purchaser, as the case may be, shall, upon satisfaction of the applicable conditions set forth in Exhibit II , make available to the Seller in same day funds, at the Administration Account an amount equal to the portion of Capital relating to the undivided percentage ownership interest with regard to the Purchased Interest then being funded by such Purchaser. On or after the date of a Funded Purchase, the Purchaser Agent of a Purchaser Group with more than one Conduit Purchaser may, with prior notice to the Seller, allocate or reallocate any portion of the Capital then being funded by the Purchasers in such Purchaser Agent’s Purchaser Group among the related Conduit Purchasers.
(b)      Effective on the date of each Funded Purchase or other Purchase pursuant to this Section 1.2 and each reinvestment pursuant to Section 1.4 , the Seller hereby sells and assigns to the Administrator for the benefit of the Purchasers (ratably, based on the sum of the Capital plus the LC Participation Amount outstanding at such time for each such Purchaser) the Purchased Interest.
(c)      To secure all of the Seller’s obligations (monetary or otherwise) under this Agreement and the other Transaction Documents to which it is a party, whether now or hereafter existing or arising, due or to become due, direct or indirect, absolute or contingent, the Seller hereby grants to the Administrator, for the benefit of the Purchasers, a security interest in all of the Seller’s right, title and interest (including any undivided interest of the Seller) in, to and under all of the following, whether now or hereafter owned, existing or arising: (i) all Pool Receivables, (ii) all Related Security with respect to such Pool Receivables, (iii) all Collections with respect to such Pool Receivables, (iv) the Lock-Box Accounts and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such Lock-Box Accounts and amounts on deposit therein, (v) all rights (but none of the obligations) of the Seller under the Sale Agreement, (vi) all proceeds of, and all amounts received or receivable under any or all of, the foregoing and (vii) all of its other property (collectively, the “ Pool Assets ”). The Seller hereby authorizes the Administrator to file financing statements describing as the collateral covered thereby as “all of the debtor’s personal property or assets” or words to that effect, notwithstanding that such wording may be broader in scope than the collateral described in this Agreement. The Administrator, for the benefit of the Purchasers, shall have, with respect to the Pool Assets, and in addition to all the other rights and remedies available to the Administrator and the Purchasers, all the rights and remedies of a secured party under any applicable UCC.
(d)      Whenever the LC Bank issues a Letter of Credit pursuant to Section 1.12 hereof, in the event that such Letter of Credit is subsequently drawn and such drawn amount shall not have been reimbursed pursuant to Section 1.15 upon such draw or through the distribution of such LC Participant’s Pro Rata Share of the amount on deposit in the LC Collateral Account, each LC Participant shall, automatically and without further action of any kind have irrevocably been deemed

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to have made a Funded Purchase hereunder in an amount equal to such LC Participant’s Pro Rata Share of such unreimbursed draw and such deemed Funded Purchase shall not result in a Termination Event hereunder. If the LC Bank pays a drawing under a Letter of Credit that is not reimbursed by the Seller on the applicable Drawing Date or through the distribution of the LC Bank’s Pro Rata Share of the amount on deposit in the LC Collateral Account, the LC Bank shall be deemed to have made a Funded Purchase in an amount equal to its Pro Rata Share of such unreimbursed draw. All such Funded Purchases shall accrue Discount from the date of such draw. In the event that any Letter of Credit expires or is surrendered without being drawn (in whole or in part) then, in such event, the foregoing commitment to make Funded Purchases shall expire with respect to such Letter of Credit and the LC Participation Amount shall automatically reduce by the face amount of the Letter of Credit which is no longer outstanding.
(e)      With respect to any Exiting Purchaser, the Seller may, with the written consent of the Administrator and each Purchaser Agent (and, in the case of a new related LC Participant, the LC Bank), add additional Persons as Purchasers (either to an existing Purchaser Group or by creating new Purchaser Groups) or with the written consent of the applicable Purchaser Agent and written acknowledgment of the Administrator (or written consent of the Administrator with respect to Commitment increases exceeding $25,000,000) cause an existing Related Committed Purchaser or related LC Participant to increase its Commitment; provided , that the Commitment of any Related Committed Purchaser or related LC Participant may only be increased with the prior written consent of such Purchaser. Each new Conduit Purchaser, Related Committed Purchaser or related LC Participant (or Purchaser Group) shall become a party hereto, by executing and delivering to the Administrator and the Seller, an Assumption Agreement in the form of Annex C hereto (which Assumption Agreement shall, in the case of any new Purchaser Group, be executed by each Person in such new Purchaser Group).
(f)      Each Related Committed Purchaser’s and related LC Participant’s obligations hereunder shall be several, such that the failure of any Related Committed Purchaser or related LC Participant to make any Purchase hereunder or a payment in connection with a drawing under a Letter of Credit hereunder, as the case may be, shall not relieve any other Related Committed Purchaser or related LC Participant of its obligation hereunder to make payment for any Funded Purchase or such drawing. Further, in the event any Related Committed Purchaser or related LC Participant fails to satisfy its obligation to make a Purchase or payment with respect to such drawing as required hereunder, upon receipt of notice of such failure from the Administrator (or any relevant Purchaser Agent), subject to the limitations set forth herein, (i) (A) the non-defaulting Related Committed Purchasers in such defaulting Related Committed Purchaser’s Purchaser Group shall fund the defaulting Related Committed Purchaser’s Commitment Percentage of its Purchaser Group’s Ratable Share of the related Purchase (based on their relative Commitment Percentages (determined without regard to the Commitment Percentage of the defaulting Related Committed Purchaser)) or (B) the non-defaulting related LC Participants in such defaulting related LC Participant’s Purchaser Group shall fund the defaulting related LC Participant’s Pro Rata Share of the related drawing (based on their relative Pro Rata Shares (determined without regard to the Pro Rata Share of the defaulting related LC Participant)); and (ii) if there are no other (A) Related Committed Purchasers in such Purchaser Group or if such other Related Committed Purchasers are also defaulting Related Committed Purchasers, then such defaulting Related Committed Purchaser’s

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Commitment Percentage of its Purchaser Group’s Ratable Share of such Purchase shall be funded by each other Purchaser Group ratably (based on their relative Purchaser Group Ratable Shares) and applied in accordance with this paragraph (g) or (B) if there are no other related LC Participants in such Purchaser Group or if such other related LC Participants are also defaulting related LC Participants, then such defaulting related LC Participant’s Pro Rata Share of such drawing shall be funded by each other Purchaser Group ratably (based on their relative Pro Rata Shares) and applied in accordance with this paragraph (g) . Notwithstanding anything in this paragraph (g) to the contrary, no Related Committed Purchaser or related LC Participant shall be required to make a Purchase or payment with respect to such drawing pursuant to this paragraph (g) for an amount which would cause the aggregate Capital of such Related Committed Purchaser or Pro Rata Share of the face amount of any outstanding Letter of Credit of such related LC Participant (after giving effect to such Purchase or payment with respect to such drawing) to exceed its Commitment.
Section 1.3      Purchased Interest Computation . The Purchased Interest shall be initially computed on the date of the initial Purchase hereunder. Thereafter, until the Facility Termination Date, such Purchased Interest shall be automatically recomputed (or deemed to be recomputed) on each Business Day other than a Termination Day. From and after the occurrence of any Termination Day, the Purchased Interest shall (until the event(s) giving rise to such Termination Day are satisfied or are waived by the Administrator in accordance with Section 2.2 ) be deemed to be 100%. The Purchased Interest shall become zero when (a) the Aggregate Capital thereof and Aggregate Discount thereon shall have been paid in full, (b) an amount equal to 100% of the LC Participation Amount shall have been deposited in the LC Collateral Account, or all Letters of Credit shall have expired and (c) all the amounts owed by the Seller and the Servicer hereunder to each Purchaser, the Administrator and any other Indemnified Party or Affected Person are paid in full, and the Servicer shall have received the accrued Servicing Fee thereon.
Section 1.4      Settlement Procedures .
(a)      The collection of the Pool Receivables shall be administered by the Servicer in accordance with this Agreement. The Seller shall provide to the Servicer on a timely basis all information needed for such administration, including notice of the occurrence of any Termination Day and current computations of the Purchased Interest.
(b)      The Servicer shall, on each day on which Collections of Pool Receivables are received (or deemed received) by the Seller or the Servicer:
(i)      set aside and hold (or cause the Seller to set aside and hold) in trust (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator) for the benefit of each Purchaser Group, out of such Collections, first , an amount equal to the Aggregate Discount accrued through such day and not previously set aside, second , an amount equal to the Fees accrued and unpaid through such day, and third , to the extent funds are available therefor, an amount equal to the aggregate of each Purchasers’ Share of the Servicing Fee accrued through such day and not previously set aside,
(ii)      subject to Section 1.4(f) , if such day is not a Termination Day, remit to the Seller, ratably, on behalf of each Purchaser Group, the remainder of such Collections. Such

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remainder shall, to the extent representing a return on the Aggregate Capital, ratably, according to each Purchaser’s Capital, be automatically reinvested in Pool Receivables and the Related Rights; provided , that if the Purchased Interest would exceed 100%, then the Servicer shall not remit such remainder to the Seller or reinvest it, but shall set aside and hold (or cause the Seller to set aside and hold) in trust for the benefit of the Purchasers (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator) a portion of such Collections that, together with the other Collections set aside pursuant to this clause (ii) , shall equal the amount necessary to reduce the Purchased Interest to 100% (determined as if such Collections set aside had been applied to reduce the Aggregate Capital at such time), which amount shall be deposited ratably to each Purchaser Agent’s account (for the benefit of its related Purchasers) on the next Settlement Date in accordance with Section 1.4(c) ; provided , further , that in the case of any Purchaser that has provided notice (an “ Exiting Notice ”) to its Purchaser Agent of its refusal, pursuant to Section 1.22 , to extend its Commitment hereunder (an “ Exiting Purchaser ”), then, such Collections shall not be reinvested and shall instead be held in trust for the benefit of such Purchaser and applied in accordance with clause (iii) below,
(iii)      if such day is a Termination Day (or a day on which the Commitment of an Exiting Purchaser terminates), set aside and hold (or cause the Seller to set aside and hold) in trust (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator) for the benefit of each Purchaser Group the entire remainder of such Collections (or, in the case of an Exiting Purchaser, an amount equal to such Purchaser’s ratable share of such Collections based on its Capital; provided , that solely for the purpose of determining such Purchaser’s ratable share of such Collections, such Purchaser’s Capital shall be deemed to remain constant from the day on which the Commitment of such Exiting Purchaser terminates, until the date such Purchaser’s Capital has been paid in full; it being understood that if such day is also a Termination Day, such Exiting Purchaser’s Capital shall be recalculated taking into account amounts received by such Purchaser in respect of this parenthetical and thereafter Collections shall be set aside for such Purchaser ratably in respect of its Capital (as recalculated); provided , further , that if amounts are set aside and held in trust on any Termination Day of the type described in clause (a) of the definition of “ Termination Day ” (or any day on which the Commitment of such Exiting Purchaser terminates) and, thereafter, the conditions set forth in Section 2 of Exhibit II are satisfied or waived by the Administrator and the Majority Purchaser Agents (or in the case of an Exiting Notice, such Exiting Notice has been revoked by the related Exiting Purchaser and written notice thereof has been provided to the Administrator, the related Purchaser Agent and the Servicer), such previously set-aside amounts shall, to the extent representing a return on Aggregate Capital (or the Capital of the Exiting Purchaser) and ratably in accordance with each Purchaser’s Capital, be reinvested in accordance with clause (ii) above on the day of such subsequent satisfaction or waiver of conditions or revocation of Exiting Notice, as the case may be, and
(iv)      subject to Section 1.4(f) , release to the Seller for its own account any Collections in excess of: (x) the amounts that are required to be set aside or reinvested pursuant to clauses (i) , (ii) and (iii) above plus (y) the Seller’s Share of the Servicing Fee accrued and unpaid through such day and all reasonable and appropriate out-of-pocket costs and expenses of the Servicer for servicing, collecting and administering the Pool Receivables plus (z) all other amounts then due

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and payable by the Seller under this Agreement to the Purchasers, the LC Bank, the Administrator and any other Indemnified Party or Affected Person.
(c)      The Servicer shall, in accordance with the priorities set forth in Section 1.4(d) below, deposit into each applicable Purchaser Agent’s account (or such other account designated by such applicable Purchaser or its Purchaser Agent), on each Settlement Date (for any Portion of Capital), Collections held for each Purchaser pursuant to Sections 1.4(b)(i) , (ii) and (iii) and Section 1.4(f) ; provided , that if Swift or an Affiliate thereof is the Servicer, such day is not a Termination Day and the Administrator has not notified Swift (or such Affiliate) that such right is revoked, Swift (or such Affiliate) may retain the portion of the Collections set aside pursuant to Section 1.4(b)(i) that represents the aggregate of each Purchasers’ Share of the Servicing Fee. On or prior to the last day of each Calculation Period, each Purchaser Agent will notify the Servicer by email communications or other electronic delivery of the amount of Discount accrued with respect to its Portion of Capital during such Calculation Period or portion thereof.
(d)      The Servicer shall distribute the amounts described (and at the times set forth) in Section 1.4(c) , as follows:
(i)      if such distribution occurs on a day that is not a Termination Day, that is not a day on which the Commitment of an Exiting Purchaser terminates and on which the Purchased Interest does not exceed 100%, first to each Purchaser Agent ratably (based on the Discount and Fees accrued during such Yield Period) (for the benefit of the relevant Purchasers within such Purchaser Agent’s Purchaser Group) in payment in full of all accrued Discount and Fees with respect to each Portion of Capital maintained by the Purchasers within such Purchaser Agent’s Purchaser Group; it being understood that each Purchaser Agent shall distribute such amounts to the Purchasers within its Purchaser Group ratably according to Discount and Fees, and second , if the Servicer has set aside amounts in respect of the Servicing Fee pursuant to Section 1.4(b)(i) and has not retained such amounts pursuant to Section 1.4(c) , to the Servicer’s own account (payable in arrears on each Settlement Date) in payment in full of the aggregate of the Purchasers’ Share of accrued Servicing Fees so set aside, and
(ii)      if such distribution occurs on a Termination Day, on a day on which the Commitment of an Exiting Purchaser terminates or on a day when the Purchased Interest exceeds 100%, first if Swift or an Affiliate thereof is not the Servicer or if Swift or an Affiliate thereof is the Servicer and a Termination Event shall have occurred and be continuing, to the Servicer’s own account in payment in full of the Purchasers’ Share of all accrued Servicing Fees, second to each Purchaser Agent ratably (based on the Discount and Fees accrued during such Yield Period) (for the benefit of the relevant Purchasers within such Purchaser Agent’s Purchaser Group) in payment in full of all accrued Discount and Fees with respect to each Portion of Capital funded or maintained by the Purchasers within such Purchaser Agent’s Purchaser Group, third to each Purchaser Agent ratably (based on the aggregate of the Capital of each Purchaser in each such Purchaser Agent’s Purchaser Group) (for the benefit of the relevant Purchasers within such Purchaser Agent’s Purchaser Group) in payment in full of (x) if such day is a Termination Day, each Purchaser’s Capital, (y) if such day is not a Termination Day, the amount necessary to reduce the Purchased Interest to 100%, or (z) if such day is a day on which the Commitment of an Exiting Purchaser terminates, an amount

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equal to the Exiting Purchaser’s ratable share of the Collections set aside pursuant to Section 1.4(b)(iii) based on its Capital (determined as if such Collections had been applied to reduce the Aggregate Capital); it being understood that each Purchaser Agent shall distribute the amounts described in the second and third clauses of this clause (ii) to the Purchasers within its Purchaser Group ratably (based on Discount and Fees and Capital, respectively), fourth , to the LC Collateral Account for the benefit of the LC Bank and the LC Participants, the amount necessary to cash collateralize the LC Participation Amount until the amount of cash collateral held in such LC Collateral Account equals 100% of the LC Participation Amount, fifth , if the Aggregate Capital and accrued Aggregate Discount with respect to each Portion of Capital for all Purchaser Groups have been reduced to zero, the Fees have been paid in full and the Purchasers’ Share of all accrued Servicing Fees payable to the Servicer (if other than Swift or an Affiliate thereof) have been paid in full, to each Purchaser Group ratably (based on the amounts payable to each) (for the benefit of the Purchasers within such Purchaser Group), the Administrator and any other Indemnified Party or Affected Person in payment in full of any other amounts owed thereto by the Seller or the Servicer hereunder and sixth , to the Servicer’s own account (if the Servicer is Swift or an Affiliate thereof and a Termination Event is not continuing) in payment in full of the aggregate of the Purchaser’s Share of all accrued Servicing Fees.
After the Capital (on and after a day when the Purchased Interest exceeds 100% or any day on which the Commitment of an Exiting Purchaser terminates), Aggregate Discount, Fees and Servicing Fees with respect to the Purchased Interest, and any other amounts payable by the Seller and the Servicer to each Purchaser Group, the Administrator or any other Indemnified Party or Affected Person hereunder have been paid in full, and (on and after a Termination Day) after Aggregate Capital and an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account, all additional Collections with respect to the Purchased Interest shall be paid to the Seller for its own account.
(e)      For the purposes of this Section 1.4 :
(i)      if on any day the Outstanding Balance of any Pool Receivable is reduced or adjusted as a result of any defective, rejected, returned, repossessed or foreclosed goods or services, or any revision, cancellation, allowance, rebate, discount or other adjustment made by the Seller or any Affiliate of the Seller, or the Servicer or any Affiliate of the Servicer, or any setoff or dispute between the Seller or any Affiliate of the Seller, or the Servicer or any Affiliate of the Servicer and an Obligor, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in the amount of such reduction or adjustment or, in the case of a Receivable which has been canceled and contemporaneously reissued pursuant to the Credit and Collection Policy, the negative difference (if any) between such canceled Receivable and such reissued Receivable, and shall, subject to Section 1.4(e)(v) , immediately pay any and all such amounts in respect thereof to a Lock-Box Account for the benefit of the Purchasers and their assigns and for application pursuant to Section 1.4(b) ;
(ii)      if on any day any of the representations or warranties in Sections 1(j) or 3(a) of Exhibit III is not true with respect to any Pool Receivable, the Seller shall be deemed to have received on such day a Collection of the full Outstanding Balance of such Pool Receivable and

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shall, subject to Section 1.4(e)(v) , immediately pay any and all such amounts in respect thereof to a Lock-Box Account (or as otherwise directed by the Administrator at such time) for the benefit of the Purchasers and their assigns and for application pursuant to Section 1.4(b) (Collections deemed to have been received pursuant to Sections 1.4(e)(i) or (ii) are hereinafter sometimes referred to as “ Deemed Collections ”);
(iii)      except as provided in Sections 1.4(e)(i) or (ii) or as otherwise required by applicable law or the relevant Contract, all Collections received from an Obligor of any Receivable shall be applied to the Receivables of such Obligor in the order of the age of such Receivables, starting with the oldest such Receivable, unless such Obligor specified an applicable Receivable;
(iv)      if and to the extent the Administrator, any Purchaser Agent or any Purchaser shall be required for any reason to pay over to an Obligor (or any trustee, receiver, custodian or similar official in any Insolvency Proceeding) any amount received by it hereunder, such amount shall be deemed not to have been so received by such Person but rather to have been retained by the Seller and, accordingly, such Person shall have a claim against the Seller for such amount, payable when and to the extent that any distribution from or on behalf of such Obligor is made in respect thereof; and
(v)      if at any time before the Facility Termination Date the Seller is deemed to have received any Deemed Collection under Sections 1.4(e)(i) and (ii) , so long as no Termination Day then exists, the Seller may satisfy its obligation to deliver the amount of such Deemed Collections to a Lock-Box Account by instead recalculating (or being deemed to have recalculated) the Purchased Interest by decreasing the Net Receivables Pool Balance by the amount of such Deemed Collections, so long as such adjustment does not cause the Purchased Interest to exceed 100%.
(f)      If at any time the Seller wishes to cause the reduction of Aggregate Capital (but not to commence the liquidation, or reduction to zero, of the entire Aggregate Capital) the Seller may do so as follows:
(i)      the Seller shall give the Administrator, each Purchaser Agent and the Servicer written notice in the form of Annex E (each, a “ Paydown Notice ”) at least two (2) Business Days prior to the date of such reduction for any reduction of the Aggregate Capital, and each such Paydown Notice shall include, among other things, the amount of such proposed reduction and the proposed date on which such reduction will commence;
(ii)      on the proposed date of the commencement of such reduction and on each day thereafter, the Servicer shall cause Collections not to be reinvested until the amount thereof not so reinvested shall equal the desired amount of reduction; and
(iii)      the Servicer shall hold (or cause the Seller to set aside and hold) such Collections in trust for the benefit of each Purchaser ratably according to its Capital, for payment to each such Purchaser (or its related Purchaser Agent for the benefit of such Purchaser) on the date specified in the Paydown Notice (or such other date as agreed to by the Administrator) with respect to any Portions of Capital maintained by such Purchaser immediately following the related current

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Yield Period, and the Aggregate Capital (together with the Capital of any related Purchaser) shall be deemed reduced in the amount to be paid to such Purchaser (or its related Purchaser Agent for the benefit of such Purchaser) only when in fact finally so paid;
provided , that:
(A)      the amount of any such reduction shall not be less than $100,000 for each Purchaser Group and shall be an integral multiple of $100,000, and the sum of the Aggregate Capital and the Adjusted LC Participation Amount after giving effect to such reduction shall not be less than the Minimum Usage Amount; and
(B)      with respect to any Portion of Capital, the Seller shall choose a reduction amount, and the date of commencement thereof, so that to the extent practicable such reduction shall commence and conclude in the same Yield Period.
Section 1.5      Fees . The Seller shall pay, or cause to be paid, to each Purchaser Agent for the benefit of the Purchasers and Liquidity Providers in the related Purchaser Group in accordance with the provisions set forth in Section 1.4(d) certain fees in the amounts and on the dates set forth in the fee letter agreement, dated the Closing Date, among the Seller, and the applicable Purchaser Agent, respectively (as any such fee letter agreement may be amended, restated, supplemented or otherwise modified from time to time, the “ Fee Letter ”).
Section 1.6      Payments and Computations, Etc .
(a)      All amounts to be paid or deposited by the Seller or the Servicer hereunder or under any other Transaction Document shall be made without reduction for offset or counterclaim and shall be paid or deposited no later than 2:00 p.m. (New York City time) on the day when due in same day funds to the account for each Purchaser maintained by the applicable Purchaser Agent (or such other account as may be designated from time to time by such Purchaser Agent to the Seller and the Servicer). All amounts received after 2:00 p.m. (New York City time) will be deemed to have been received on the next Business Day.
(b)      The Seller or the Servicer, as the case may be, shall, to the extent permitted by law, pay interest on any amount not paid or deposited by the Seller or the Servicer, as the case may be, when due hereunder, at an interest rate equal to 2.0% per annum above the Base Rate, payable on demand.
(c)      All computations of interest under Section 1.6(b) and all computations of Discount, Fees and other amounts hereunder shall be made on the basis of a year of 360 (or 365 or 366, as applicable, with respect to Discount or other amounts calculated by reference to the Base Rate) days for the actual number of days elapsed. Whenever any payment or deposit to be made hereunder shall be due on a day other than a Business Day, such payment or deposit shall be made on the next Business Day and such extension of time shall be included in the computation of such payment or deposit.

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Section 1.7      Increased Costs . (23) If, after the date hereof, the Administrator, any Purchaser, any Purchaser Agent, any Liquidity Provider or any Program Support Provider or any of their respective Affiliates (each an “ Affected Person ”) reasonably determines that the existence of or compliance with: (i) any law, rule, regulation, generally accepted accounting principle or any change therein or in the interpretation or application thereof, or (ii) any request, guideline or directive from any central bank or other Governmental Authority (whether or not having the force of law) issued or adopted or occurring after the date hereof affects or would affect the amount of capital required or expected to be maintained by such Affected Person, and such Affected Person determines that the amount of such capital is increased by or based upon the existence of any Commitment to make Purchases of (or otherwise to maintain the investment in) Pool Receivables or issue any Letter of Credit or any related liquidity facility, credit enhancement facility and other commitments of the same type, then, upon demand by such Affected Person (with a copy to the Administrator), the Seller shall promptly pay such Affected Person, from time to time as specified by such Affected Person, additional amounts sufficient to compensate such Affected Person for both increased costs and maintenance of bargained for yield in the light of such circumstances, to the extent that such Affected Person reasonably determines such increase in capital to be allocable to the existence of any of such commitments. A certificate as to such amounts submitted to the Seller and the Administrator by such Affected Person shall be conclusive and binding for all purposes, absent manifest error.
(a)      If, after the date hereof, due to either: (i) the introduction of or any change in or in the interpretation of any law, rule, regulation or generally accepted accounting principle or (ii) compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) issued or adopted or occurring after the date hereof, there shall be any increase in the cost to any Affected Person of agreeing to purchase or purchasing, or maintaining the ownership of, the Purchased Interest (or its portion thereof) in respect of which Discount is computed by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, then, upon demand by such Affected Person, the Seller shall promptly pay to such Affected Person, from time to time as specified by such Affected Person, additional amounts sufficient to compensate such Affected Person for both increased costs and maintenance of bargained for yield. A certificate as to such amounts submitted to the Seller and the Administrator by such Affected Person shall be conclusive and binding for all purposes, absent manifest error.
(b)      Within a reasonable time period after any Affected Person has actual knowledge that it is subject to increased capital requirements or incurs other increased costs pursuant to this Section 1.7 , such Affected Person shall use reasonable efforts to notify the Servicer of such fact; provided , that any failure to give such notice shall not preclude such Affected Person from asserting any claim for compensation at any time or relieve the Seller from its obligations under this Section 1.7 ; provided , further , that if such increased costs affect the related Affected Person’s portfolio of financing transactions, such Affected Person shall use reasonable averaging and attribution methods to allocate such increased capital requirements or increased costs to the transactions contemplated by this Agreement.
(c)      Notwithstanding anything in this Section 1.7 to the contrary, (i) if any Affected Person fails to give demand for amounts or losses incurred in connection with this Section 1.7 within 180 days after it obtains knowledge that it is subject to increased capital requirements or has incurred

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other increased costs, such Affected Person shall, with respect to amounts payable pursuant to this Section 1.7 , only be entitled to payment under this Section 1.7 for amounts or losses incurred from and after the date 180 days prior to the date that such Affected Person does give such demand and (ii) the Seller shall not be required to pay to any Affected Person (x) any amount that has been fully and finally paid in cash to such Affected Person pursuant to any other provision of this Agreement or any other Transaction Document, (y) any amount, if the payment of such amount is expressly excluded by any provision of this Agreement or any other Transaction Document or (z) any amount, if such amount constitutes Taxes (which shall be governed by Section 1.10 ).
(d)      For the avoidance of doubt, any increase in cost and/or reduction in yield caused by regulatory capital allocation adjustments caused by (i) implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be covered by this Section 1.7 regardless of the date enacted, adopted or issued.
(e)      The Seller may designate any Purchaser that requests amounts under this Section as an “Exiting Purchaser” by delivering a written notice to the Administrator and the related Purchaser Agent.
Section 1.8      Requirements of Law . If, after the date hereof, any Affected Person determines that the existence of or compliance with: (x) any law, regulation or rule or any change therein or in the interpretation or application thereof, or (y) any request, guideline or directive from any central bank or other Governmental Authority (whether or not having the force of law) issued or adopted or occurring after the date hereof:
(vi)      does or shall subject such Affected Person to any increase in the Purchased Interest (or its portion thereof) or in the amount of Capital relating thereto,
(vii)      does or shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, purchases, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Affected Person that are not otherwise included in the determination of the Euro-Rate or the LIBOR Market Index Rate, as applicable, hereunder, or
(viii)      does or shall impose on such Affected Person any other condition,
and the result of any of the foregoing is: (A) to increase the cost to such Affected Person of agreeing to Purchase or Purchasing or maintaining the ownership of undivided percentage ownership interests with regard to the Purchased Interest or any Portion of Capital or issuing any Letter of Credit, or (B) to reduce any amount receivable hereunder (whether directly or indirectly), then, in any such case, upon demand by such Affected Person, the Seller shall promptly pay to such Affected Person additional amounts necessary to compensate such Affected Person for such additional cost or reduced amount receivable. All such amounts shall be payable as incurred. A certificate as to such

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amounts submitted to the Seller and the Administrator by such Affected Person shall be conclusive and binding for all purposes, absent manifest error. The Seller may designate any Purchaser that requests amounts under this Section as an “Exiting Purchaser” by delivering a written notice to the Administrator and the related Purchaser Agent
Section 1.9      Funding Losses . If, for any reason, funding or maintaining any Portion of Capital hereunder at an interest rate determined by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, does not occur on a date specified therefore, the Seller shall compensate such Affected Person, upon written request by such Person, for the difference, if any, between the rate to be paid by such Affected Person for such Euro-Rate or LIBOR Market Index Rate, as applicable, and the rate of any replacement Euro-Rate or LIBOR Market Index Rate, as applicable.
Section 1.10      Taxes . The Seller agrees that:
(a)    Any and all payments by the Seller to or for the account of any Purchaser under this Agreement and any other Transaction Document shall be made free and clear of and without deduction for any Taxes or Other Taxes; provided , however that such payments shall not include (i) overall income taxes (however determined) or franchise taxes, in either case, imposed on any Affected Person by the United States, the jurisdiction under whose laws such Person is organized, the jurisdiction of such Person’s principal place of business or the jurisdiction in which such Person holds its undivided percentage ownership interest with regard to the Purchased Interest, or any political subdivision thereof; (ii) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction (iii) any backup withholding that is required by the Code to be withheld from amounts payable to any Affected Person that has failed to comply with Section 1.10(e) , (iv) in the case of each Affected Person, any United States withholding tax imposed with respect to any payment by the Seller pursuant to this Agreement, but only up to the rate (if any) at which United States withholding tax would apply to such payments to such Purchaser at the time such Purchaser first becomes a party to this Agreement as more fully set forth in Section 1.10 (e)(4) , and (v) any and all taxes imposed pursuant to or as a result of Section 1471 through 1474 of the Internal Revenue Code and any applicable Treasury Regulations promulgated thereunder or published administrative guidance implementing such Internal Revenue Code sections, whether in existence on the date hereof or promulgated or published hereafter (“FATCA”) (all such Taxes other than those referred to in the provisos (i) through (v) above shall hereinafter be referred to as “ Indemnified Taxes ”). If the Seller shall be required by law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder to any Affected Person, then (A) the sum payable shall be increased by the amount necessary to yield to such Person (after payment of all Taxes) an amount equal to the sum it would have received had no such deductions been made, (B) the Seller shall make such deductions, and (C) the Seller shall pay the amount deducted to the relevant taxation authority or other authority in accordance with applicable law. Further, if Seller is required by law to deduct any Taxes other than Indemnified Taxes from or in respect of any sum payable hereunder to any Affected Person, then (A) Seller shall make such deductions, (C) the Seller shall pay the amount deducted to the relevant taxation authority or other authority in accordance with applicable law, and (C) the amounts so deducted and paid to the relevant taxation authority shall be treated under this Agreement as made to such Affected Person.

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(b)    Whenever any Indemnified Taxes are payable by the Seller, as promptly as possible thereafter, the Seller shall send to the Administrator for its own account or for the account of the related Affected Person, a certified copy of an original official receipt showing payment thereof or such other evidence of such payment as may be available to the Seller and acceptable to the taxing authorities having jurisdiction over such Person. If the Seller fails to pay any Indemnified Taxes when due to the appropriate taxing authority or fails to remit to the Administrator the required receipts or other required documentary evidence, the Seller shall indemnify the Administrator and/or any other Affected Person, as applicable, for any incremental Taxes, interest or penalties that may become payable by such party as a result of any such failure.
(c)    The Seller shall indemnify each Affected Person, within twenty (20) Business Days after written demand therefor, for the full amount of any Indemnified Taxes paid by such Affected Party on or with respect to any payment by or on account of any obligation of the Seller hereunder (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 1.10 ) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto. Such demand shall be made as promptly as practicable, but in any event within 90 days after such Affected Person obtains actual knowledge of such event; provided, however, that if any Affected Person fails to make such demand within 90 days after such Affected Person obtains knowledge of such event, such Affected Person shall, with respect to compensation payable in respect of such event, not be entitled to compensation in respect of the costs and losses incurred between the 90th day after such Affected Person obtains actual knowledge of such event and the date such Affected Person makes such demand. None of Sections 1.7 , 1.8 , 3.1, 3.2 or 6.4(a) shall apply to Taxes, which shall be governed exclusively by this Section 1.10 .
(d)    If an Affected Person determines, in its sole discretion, that it has received a refund or credit of any Taxes or Other Taxes as to which it has been indemnified by the Seller, it shall pay over such refund or credit to the Seller (but only to the extent of indemnity payments made, or additional amounts paid, by the Seller under this Section 1.10 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Affected Person and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund net of any applicable Taxes payable in respect of such interest); provided , that the Seller agrees to repay each such Affected Person, within ten (10) Business Days after the request of such Affected Person, the amount paid over to the Seller (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event such Affected Person is required to repay such refund to such Governmental Authority. This Section 1.10 shall not be construed to require any Affected Person to make available its tax returns (or any other information relating to its Taxes which it deems confidential) to the Seller or any other Person.
(e)    (1)    Each Purchaser shall deliver to the Seller and to the Administrator, at the time or times prescribed by applicable laws or when reasonably requested by the Seller or the Administrator, such properly completed and executed documentation prescribed by applicable laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit the Seller or the Administrator, as the case may be, to determine (A) whether or not payments made hereunder are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Purchaser’s entitlement to any available exemption from, or reduction

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of, applicable Taxes in respect of all payments to be made to such Purchaser by the Seller pursuant to this Agreement or otherwise to establish such Purchaser’s status for withholding tax purposes in the applicable jurisdiction.
(2)    Without limiting the generality of the foregoing:
(A)      any Purchaser that is a “United States Person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code, and not an exempt recipient described in Section 6049(b)(4) of the Internal Revenue Code, shall deliver to the Seller and the Administrator executed originals of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable laws or reasonably requested by the Seller or the Administrator as will enable the Seller or the Administrator, as the case may be, to determine whether or not such Purchaser is subject to backup withholding or information reporting requirements; and
(B)    each Purchaser that is organized under the laws of a jurisdiction other than the United States (including each State thereof and the District of Columbia) (a “Foreign Purchaser”) that is entitled under the Internal Revenue Code or any applicable treaty to an exemption from or reduction of withholding tax with respect to payments hereunder shall deliver to the Seller and the Administrator (in such number of copies as shall be reasonably requested by the recipient) on or prior to the date on which such Foreign Purchaser becomes a Purchaser under this Agreement (and from time to time thereafter upon the request of the Seller or the Administrator, but only if such Foreign Purchaser is legally entitled to do so), whichever of the following is applicable
(I)    executed originals of Internal Revenue Service Form W‑8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,
(II)    executed originals of Internal Revenue Service Form W‑8ECI,
(III)    executed originals of Internal Revenue Service Form W‑8IMY and all required supporting documentation,
(IV)    in the case of a Foreign Purchaser claiming the benefits of the exemption for portfolio interest under section 881(c) of the Internal Revenue Code, (x) a certificate to the effect that such Foreign Purchaser is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Internal Revenue Code, (B) a “10 percent shareholder” of the Seller within the meaning of section 881(c)(3)(B) of the Internal Revenue Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Internal Revenue Code, and (y) executed originals of Internal Revenue Service Form W‑8BEN, or

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(V)    executed originals of any other form prescribed by applicable laws as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable laws to permit the Seller or the Administrator to determine the withholding or deduction required to be made.
(C) Each Purchaser or Administrator shall deliver to the Seller such other tax forms or other documents as shall be prescribed by applicable law, to the extent applicable, (x) to demonstrate that payments to such Purchaser or Administrator under this Agreement are exempt from any United States withholding tax imposed pursuant to FATCA, and (y) to allow the Seller to determine the amount to deduct or withhold under FATCA from a payment hereunder. Each Purchaser or Administrator further agrees to complete and to deliver to the Seller from time to time, so long as it is eligible to do so, any successor or additional form required by the Internal Revenue Service or reasonably requested by the Seller in order to secure an exemption from, or reduction in the rate of, withholding tax imposed pursuant to FATCA.
(3)    Each Purchaser shall promptly notify the Seller and the Administrator of any change in circumstances which would modify or render invalid any claimed exemption or reduction.
(4)    If the form provided by a Purchaser at the time such Purchaser first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Purchaser provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form.
(f)    For any period with respect to which a Purchaser has failed to provide the Seller with the appropriate form, certificate or other document described in Section 1.10(e) (other than as a result of a change in law occurring after the date such Purchaser becomes a Purchaser), such Purchaser shall not be entitled to gross up under Section 1.10(a)(1) with respect to Taxes imposed by reason of such failure; provided, however, that should a Purchaser become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Seller shall take such steps at the Purchaser’s expense as the Purchaser shall reasonably request to assist the Purchaser to recover such Taxes.
(g)    Any Affected Person claiming any additional amounts payable pursuant to this Section 1.10 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its lending office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Affected Person, be otherwise disadvantageous to such Affected Person.

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Section 1.11      Inability to Determine Euro-Rate or the LIBOR Market Index Rate . (23) If the Administrator (or any Purchaser Agent) determines before the first day of any Yield Period (which determination shall be final and conclusive) that, by reason of circumstances affecting the interbank eurodollar market generally (i) deposits in Dollars (in the relevant amounts for such Yield Period) are not being offered to banks in the interbank eurodollar market for such Yield Period, (ii) adequate means do not exist for ascertaining the Euro-Rate or the LIBOR Market Index Rate, as applicable, for such Yield Period or (iii) the Euro-Rate or the LIBOR Market Index Rate, as applicable, does not accurately reflect the cost to any Purchaser (as determined by the related Purchaser or the applicable Purchaser Agent) of maintaining any Portion of Capital during such Yield Period, then the Administrator or such Purchaser Agent shall give notice thereof to the Seller. Thereafter, until the Administrator or such Purchaser Agent notifies the Seller that the circumstances giving rise to such suspension no longer exist, (a) no Portion of Capital shall be funded at the Alternate Rate determined by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, and (b) the Discount for any outstanding Portions of Capital then funded at the Alternate Rate determined by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, shall, on the last day of the then current Yield Period, be converted to the Alternate Rate determined by reference to the Base Rate.
(b)    If, on or before the first day of any Yield Period, the Administrator shall have been notified by any Affected Person that such Affected Person has determined (which determination shall be final and conclusive) that any enactment, promulgation or adoption of or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by a Governmental Authority charged with the interpretation or administration thereof, or compliance by such Affected Person with any guideline, request or directive (whether or not having the force of law) of any such Governmental Authority shall make it unlawful or impossible for such Affected Person to fund or maintain any Portion of Capital at the Alternate Rate and based upon the Euro-Rate or the LIBOR Market Index Rate, as applicable, the Administrator shall notify the Seller thereof. Upon receipt of such notice, until the Administrator notifies the Seller that the circumstances giving rise to such determination no longer apply, (a) no Portion of Capital shall be funded at the Alternate Rate determined by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, and (b) the Discount for any outstanding Portions of Capital then funded at the Alternate Rate determined by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, shall be converted to the Alternate Rate determined by reference to the Base Rate either (i) on the last day of the then current Yield Period if such Affected Person may lawfully continue to maintain such Portion of Capital at the Alternate Rate determined by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, to such day, or (ii) immediately, if such Affected Person may not lawfully continue to maintain such Portion of Capital at the Alternate Rate determined by reference to the Euro-Rate or the LIBOR Market Index Rate, as applicable, to such day.
Section 1.12      Letters of Credit . On the terms and subject to the conditions hereof, the LC Bank shall issue or cause the issuance of Letters of Credit on behalf of Seller (and, if applicable, on behalf of, or for the account of, any Originator or any Affiliate of any Originator in favor of such beneficiaries as such Originator or such Affiliate of an Originator may elect); provided , that the LC Bank will not be required to issue or cause to be issued any Letters of Credit to the extent that after

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giving effect thereto the issuance of such Letters of Credit would then cause (a) the sum of (i) the Aggregate Capital plus (ii) the LC Participation Amount to exceed the Purchase Limit or (b) the LC Participation Amount to exceed the aggregate of the Commitments of the LC Bank and the LC Participants. All amounts drawn upon Letters of Credit shall accrue Discount. Letters of Credit that have not been drawn upon shall not accrue Discount.
Section 1.13      Issuance of Letters of Credit .
(a)      The Seller may request the LC Bank, upon two (2) Business Days’ prior written notice submitted on or before 11:00 a.m., New York time, to issue a Letter of Credit by delivering to the Administrator a Letter of Credit Application (the “ Letter of Credit Application ”), substantially in the form of Annex F hereto and a Purchase Notice, in the form of Annex B hereto, in each case completed to the satisfaction of the Administrator and the LC Bank and, such other certificates, documents and other papers and information as the Administrator may reasonably request. The Seller also has the right to give instructions and make agreements with respect to any Letter of Credit Application and the disposition of documents, and to agree with the Administrator upon any amendment, extension or renewal of any Letter of Credit.
(b)      Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or other written demands for payment when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance, extension or renewal, as the case may be, and in no event later than the date that is twelve (12) months after the date in clause (a) of the definition of “ Facility Termination Date .” Each Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, and any amendments or revisions thereof adhered to by the LC Bank or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590), and any amendments or revisions thereof adhered to by the LC Bank, as determined by the LC Bank.
(c)      The Administrator shall promptly notify the LC Bank and LC Participants, at such Person’s respective address for notices hereunder, of the request by the Seller for a Letter of Credit hereunder, and shall provide the LC Bank and LC Participants with the Letter of Credit Application delivered to the Administrator by the Seller pursuant to Section 1.13(a) above, by the close of business on the day received or if received on a day that is not a Business Day or on any Business Day after 11:00 a.m. New York time on such day, on the next Business Day.
Section 1.14      Requirements For Issuance of Letters of Credit . The Seller shall authorize and direct the LC Bank to name the Seller, any Originator or any Affiliate of an Originator as the “Applicant” or “Account Party” of each Letter of Credit.
Section 1.15      Disbursements, Reimbursement .
(a)      Immediately upon the issuance of each Letter of Credit, each LC Participant shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the LC Bank a participation in such Letter of Credit and each drawing thereunder in an amount equal to such LC

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Participant’s Pro Rata Share of the face amount of such Letter of Credit and the amount of such drawing, respectively.
(b)      In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the LC Bank will promptly notify the Administrator and the Seller of such request. Provided that it shall have received such notice, the Seller shall reimburse (such obligation to reimburse the LC Bank shall sometimes be referred to as a “ Reimbursement Obligation ”) the LC Bank prior to 12:00 p.m., New York time on each date that an amount is paid by the LC Bank under any Letter of Credit (each such date, a “ Drawing Date ”) in an amount equal to the amount so paid by the LC Bank. In the event the Seller fails to reimburse the LC Bank for the full amount of any drawing under any Letter of Credit by 12:00 p.m., New York time, on the Drawing Date, the LC Bank will promptly notify each LC Participant thereof, and the Seller shall be deemed to have requested that a Funded Purchase be made by the Purchasers in the Purchaser Group for the LC Bank and the LC Participants to be disbursed on the Drawing Date under such Letter of Credit in accordance with Section 1.1(b) . Any notice given by the LC Bank pursuant to this Section 1.15(b) may be oral if immediately confirmed in writing; provided that the lack of any such written confirmation shall not affect the conclusiveness or binding effect of the oral notice.
(c)      Each LC Participant shall upon any notice pursuant to Section 1.15(b) above make available to the LC Bank an amount in immediately available funds equal to its Pro Rata Share of the amount of the drawing. If any LC Participant so notified fails to make available to the LC Bank the amount of such LC Participant’s Pro Rata Share of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such LC Participant’s obligation to make such payment, from the Drawing Date to the date on which such LC Participant makes such payment (i) at a rate per annum equal to the Federal Funds Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Capital on and after the fourth day following the Drawing Date. The LC Bank will promptly give notice of the occurrence of the Drawing Date, but failure of the LC Bank to give any such notice on the Drawing Date or in sufficient time to enable any LC Participant to effect such payment on such date shall not relieve such LC Participant from its obligation under this Section 1.15(c) ; provided that such LC Participant shall not be obligated to pay interest as provided in clauses (i) and (ii) above until and commencing from the date of receipt of notice from the LC Bank or the Administrator of a drawing. Each LC Participant’s Commitment shall continue until the last to occur of any of the following events: (A) the LC Bank ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding and uncancelled; or (C) all Persons (other than the Seller) have been fully reimbursed for all payments made under or relating to Letters of Credit.
Section 1.16      Repayment of Participation Advances .
(a)      Upon (and only upon) receipt by the LC Bank for its account of immediately available funds from or for the account of the Seller in reimbursement of any payment made by the LC Bank under a Letter of Credit with respect to which any LC Participant has made a participation advance to the LC Bank, the LC Bank (or the Administrator on its behalf) will pay to each LC Participant, ratably (based on the outstanding drawn amounts funded by each such LC Participant in respect of

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such Letter of Credit), in the same funds as those received by the LC Bank; it being understood , that the LC Bank shall retain a ratable amount of such funds that were not the subject of any payment in respect of such Letter of Credit by any LC Participant.
(b)      If the LC Bank is required at any time to return to the Seller, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by the Seller to the LC Bank pursuant to this Agreement in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each LC Participant shall, on demand of the LC Bank, forthwith return to the LC Bank the amount of its Pro Rata Share of any amounts so returned by the LC Bank plus interest at the Federal Funds Rate, from the date the payment was first made to such LC Participant through, but not including, the date the payment is returned by such LC Participant.
Section 1.17      Documentation . The Seller agrees to be bound by (i) the terms of the Letter of Credit Application, (ii) by the LC Bank’s interpretations of any Letter of Credit issued for the Seller and (iii) by the LC Bank’s written regulations and customary practices relating to letters of credit, though the LC Bank’s interpretation of such regulations and practices may be different from the Seller’s own. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct by the LC Bank, the LC Bank shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following the Seller’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
Section 1.18      Determination to Honor Drawing Request . In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the LC Bank shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.
Section 1.19      Nature of Participation and Reimbursement Obligations . Each LC Participant’s obligation in accordance with this Agreement to make participation advances as a result of a drawing under a Letter of Credit, and the obligations of the Seller to reimburse the LC Bank upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Article I under all circumstances, including the following circumstances:
(a)    any set-off, counterclaim, recoupment, defense or other right which such LC Participant may have against the LC Bank, the Administrator, the Purchasers, the Purchaser Agents, the Seller or any other Person for any reason whatsoever;
(b)    the failure of the Seller or any other Person to comply with the conditions set forth in this Agreement for the making of Purchases, reinvestments, requests for Letters of Credit or otherwise, it being acknowledged that such conditions are not required for the making of participation advances hereunder;

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(c)    any lack of validity or enforceability of any Letter of Credit or any set-off, counterclaim, recoupment, defense or other right which Seller or any Originator on behalf of which a Letter of Credit has been issued may have against the LC Bank, the Administrator, any Purchaser, or any other Person for any reason whatsoever;
(d)    any claim of breach of warranty that might be made by the Seller, the LC Bank or any LC Participant against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, defense or other right which the Seller, the LC Bank or any LC Participant may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the LC Bank, any LC Participant, the Purchasers or Purchaser Agents or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Seller or any Subsidiaries of the Seller or any Affiliates of the Seller and the beneficiary for which any Letter of Credit was procured);
(e)    the lack of power or authority of any signer of, or lack of validity, sufficiency, accuracy, enforceability or genuineness of, any draft, demand, instrument, certificate or other document presented under any Letter of Credit, or any such draft, demand, instrument, certificate or other document proving to be forged, fraudulent, invalid, defective or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, even if the Administrator or the LC Bank has been notified thereof;
(f)    payment by the LC Bank under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit other than as a result of the gross negligence or willful misconduct of the LC Bank;
(g)    the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(h)    any failure by the LC Bank or any of the LC Bank’s Affiliates to issue any Letter of Credit in the form requested by the Seller, unless the LC Bank has received written notice from the Seller of such failure within three (3) Business Days after the LC Bank shall have furnished the Seller a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(i)    any Material Adverse Effect on the Seller, any Originator or any Affiliates thereof;
(j)    any breach of this Agreement or any Transaction Document by any party thereto;

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(k)    the occurrence or continuance of an Insolvency Proceeding with respect to the Seller, any Originator or any Affiliate thereof;
(l)    the fact that a Termination Event or an Unmatured Termination Event shall have occurred and be continuing;
(m)    the fact that this Agreement or the obligations of the Seller or the Servicer hereunder shall have been terminated; and
(n)    any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
Section 1.20      Indemnity . In addition to other amounts payable hereunder, the Seller hereby agrees to protect, indemnify, pay and save harmless the Administrator, the LC Bank, each LC Participant and any of the LC Bank’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including Attorney Costs) which the Administrator, the LC Bank, any LC Participant or any of their respective Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful misconduct of the party to be indemnified as determined by a final judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the LC Bank of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or omissions herein called “ Governmental Acts ”).
Section 1.21      Liability for Acts and Omissions . As between the Seller, on the one hand, and the Administrator, the LC Bank, the LC Participants, the Purchasers and the Purchaser Agents, on the other, the Seller assumes all risks of the acts and omissions of, or misuse of any Letter of Credit by, the respective beneficiaries of such Letter of Credit. In furtherance and not in limitation of the respective foregoing, none of the Administrator, the LC Bank, the LC Participants, the Purchasers or the Purchaser Agents shall be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the LC Bank or any LC Participant shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of the Seller against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among the Seller and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the

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beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Administrator, the LC Bank, the LC Participants, the Purchasers and the Purchaser Agents, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of the LC Bank’s rights or powers hereunder. Nothing in the preceding sentence shall relieve the LC Bank from liability for its gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall the Administrator, the LC Bank, the LC Participants, the Purchasers or the Purchaser Agents or their respective Affiliates, be liable to the Seller or any other Person for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation Attorney Costs), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, the Administrator, the LC Bank, the LC Participants, the Purchasers and the Purchaser Agents and each of its Affiliates: (i) may rely on any written communication believed in good faith by such Person to have been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor any presentation if the documents presented appear on their face to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the LC Bank or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Administrator, the LC Bank, the LC Participants, the Purchasers or the Purchaser Agents or their respective Affiliates, in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “ Order ”) and may honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the LC Bank under or in connection with any Letter of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, shall not put the LC Bank under any resulting liability to the Seller, any LC Participant or any other Person.
Section 1.22      Extension of Termination Date . The Seller may request the extension of the then current Facility Termination Date by providing written notice to the Administrator and each Purchaser Agent; provided such request is made not more than 180 days prior to, and not less than

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90 days prior to, the then current Facility Termination Date. In the event that the Purchasers are all agreeable to such extension, the Administrator shall so notify the Seller and the Servicer ( it being understood that the Purchasers may accept or decline such a request in their sole discretion and on such terms as they may elect) not more than 90 days from the date of the Seller’s written notice and the Seller, the Servicer, the Administrator, the Purchaser Agents and the Purchasers shall enter into such documents as the Purchasers may deem necessary or appropriate to reflect such extension, and all reasonable costs and expenses incurred by the Purchasers, the Administrator and the Purchaser Agents in connection therewith (including Attorney Costs) shall be paid by the Seller. In the event any Purchaser declines the request for such extension, (a) the Purchase Limit shall be reduced by an amount equal to the Commitment of such Purchaser and (b) such Purchaser (or the applicable Purchaser Agent on its behalf) shall so notify the Administrator and the Administrator shall so notify the Seller of such determination; provided , that the failure of the Administrator to notify the Seller of the determination to decline such extension shall not affect the understanding and agreement that the applicable Purchasers shall be deemed to have refused to grant the requested extension in the event the Administrator fails to affirmatively notify the Seller of their agreement to accept the requested extension.
Section 1.23      Increase in Purchase Limit . The Seller may, on any Business Day prior to the Facility Termination Date, with the written consent of the Administrator (not to be unreasonably withheld or delayed), request an increase of the Purchase Limit by delivering a request substantially in the form attached hereto as Annex G (each, a “ Purchase Limit Increase Request ” ) or in such other form acceptable to the Administrator, at least ten (10) Business Days prior to the desired effective date of such increase (the “ Purchase Limit Increase ”) identifying the additional Purchaser(s) (or, with the written consent of the applicable Purchaser Agent and Related Committed Purchaser(s) or related LC Participant, additional Commitments for existing Purchaser(s)) and the related Purchaser Group(s), which additional Purchaser(s) shall be reasonably acceptable to the Administrator (other than in the case of the existing Purchaser(s), which shall be deemed acceptable), and the amount of its Commitment (or additional amount of the Commitment(s) of the existing Purchaser(s)); provided , however , that:
(a)      the aggregate amount of all Purchase Limit Increases shall not exceed $75,000,000 and any such Purchase Limit Increase shall be in an amount not less than $10,000,000 (or such lesser amount then agreed to by the Administrator);
(b)      no Unmatured Termination Event or Termination Event shall have occurred and be continuing at the time of the request or the effective date of the Purchase Limit Increase;
(c)      the representations and warranties of the Seller contained in Exhibit III of this Agreement are true and correct in all material respects on and as the date of such purchase or reinvestment as though made on and as of such date (except for representations and warranties which apply as to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); and
(d)      the conditions set forth in clause 2 of Exhibit II shall be satisfied.

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The effective date of the Purchase Limit Increase shall be agreed upon by the Seller and the Administrator. Upon the effectiveness thereof, the new Purchaser (or, if applicable, existing Purchaser) shall make Purchases in an amount sufficient such that after giving effect to its Purchases each Purchaser Group shall have outstanding its Ratable Share of the Aggregate Capital outstanding. The Seller agrees to pay the expenses of the Administrator (including reasonable attorneys’ fees) relating to any Purchase Limit Increase. Notwithstanding anything herein to the contrary, no Purchaser shall have any obligation to increase its Commitment and no Purchaser’s Commitment shall be increased without its written consent thereto, and each Purchaser may at its option, unconditionally and without cause, decline to increase its Commitment.
ARTICLE II     

REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS    
Section 2.1      Representations and Warranties; Covenants . Each of the Seller and the Servicer hereby makes the representations and warranties, and hereby agrees to perform and observe the covenants, applicable to it set forth in Exhibits III and IV , respectively.
Section 2.2      Termination Events . If any of the Termination Events set forth in Exhibit V shall occur, the Administrator may (with the consent of the Majority Purchaser Agents) or shall (at the direction of the Majority Purchaser Agents), by notice to the Seller, declare the Facility Termination Date to have occurred (in which case the Facility Termination Date shall be deemed to have occurred); provided , that upon the occurrence of any event (without any requirement for the passage of time or the giving of notice) described in paragraph (f) of Exhibit V , the Facility Termination Date shall automatically occur. Upon any such declaration, occurrence or deemed occurrence of the Facility Termination Date, the Administrator, each Purchaser Agent and each Purchaser shall have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided after default under the UCC and under other applicable law, which rights and remedies shall be cumulative.
ARTICLE III     

INDEMNIFICATION    
Section 3.1      Indemnities by the Seller . Without limiting any other rights any such Person may have hereunder or under applicable law, the Seller hereby indemnifies and holds harmless, on an after-tax basis, the Administrator, each Purchaser Agent, each Liquidity Provider, each Program Support Provider and each Purchaser and their respective officers, directors, agents and employees (each an “ Indemnified Party ”) from and against any and all damages, losses, claims, liabilities, penalties, Taxes, costs and expenses (including Attorney Costs) (all of the foregoing collectively, the “ Indemnified Amounts ”) at any time imposed on or incurred by any Indemnified Party arising out of or otherwise relating to any Transaction Document, the transactions contemplated thereby or the acquisition of any portion of the Purchased Interest, or any action taken or omitted by any of the Indemnified Parties (including any action taken by the Administrator as

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attorney-in-fact for the Seller or any Originator hereunder or under any other Transaction Document), whether arising by reason of the acts to be performed by the Seller hereunder or otherwise, excluding only Indemnified Amounts to the extent (a) a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct of the Indemnified Party seeking indemnification, (b) due to the credit risk of the Obligor and for which reimbursement would constitute recourse to any Originator, the Seller or the Servicer for uncollectible Receivables or (c) such Indemnified Amounts include Taxes imposed or based on, or measured by, the gross or net income or receipts of such Indemnified Party by the jurisdiction under the laws of which such Indemnified Party is organized (or any political subdivision thereof); provided , that nothing contained in this sentence shall limit the liability of the Seller or the Servicer or limit the recourse of any Indemnified Party to the Seller or the Servicer for any amounts otherwise specifically provided to be paid by the Seller or the Servicer hereunder. Without limiting the foregoing indemnification, but subject to the limitations set forth in clauses (a) , (b) and (c) of the previous sentence, the Seller shall indemnify each Indemnified Party for amounts (including losses in respect of uncollectible Receivables, regardless, for purposes of these specific matters, whether reimbursement therefor would constitute recourse to the Seller or the Servicer) relating to or resulting from:
(a)    the failure of any Receivable included in the calculation of the Net Receivables Pool Balance as an Eligible Receivable to be an Eligible Receivable, the failure of any information contained in any Information Package to be true and correct, or the failure of any other information provided to any Purchaser or the Administrator with respect to the Receivables or this Agreement to be true and correct;
(b)    the failure of any representation, warranty or statement made or deemed made by the Seller (or any employee, officer or agent of the Seller) under or in connection with this Agreement, any other Transaction Document, or any Information Package or any other information or report delivered by or on behalf of the Seller pursuant hereto to have been true and correct as of the date made or deemed made in all respects;
(c)    the failure by the Seller to comply with any applicable law, rule or regulation with respect to any Receivable or the related Contract, or the nonconformity of any Receivable or related Contract with any such applicable law, rule or regulation;
(d)    the failure of the Seller to vest and maintain vested in the Administrator, for the benefit of the Purchasers, a first priority perfected ownership or security interest in the Purchased Interest and the property conveyed hereunder, free and clear of any Adverse Claim;
(e)    any commingling of funds to which the Administrator, any Purchaser Agent or any Purchaser is entitled hereunder with any other funds;
(f)    [intentionally omitted];
(g)    any failure of a Lock-Box Bank to comply in all material respects with the terms of the applicable Lock-Box Agreement;

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(h)    any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable (including a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale or lease of goods or the rendering of services related to such Receivable or the furnishing or failure to furnish any such goods or services or relating to collection activities (if such collection activities were performed by the Seller or any of its Affiliates acting as the Servicer or by any agent or independent contractor retained by the Seller or any of its Affiliates) with respect to such Receivable;
(i)    any failure of the Seller (or any of its Affiliates acting as the Servicer) to perform its duties or obligations in accordance with the provisions of this Agreement, any Contract or any other Transaction Document to which it is a party;
(j)    [intentionally omitted];
(k)    any reduction in Capital as a result of the distribution of Collections pursuant to Section 1.4(d) , if all or a portion of such distributions shall thereafter be rescinded or otherwise must be returned for any reason;
(l)    the use of proceeds of Purchase or reinvestment or the issuance of any Letter of Credit on behalf of Seller (and, if applicable, on behalf of, or for the account of, any Originator); or
(m)    any environmental liability claim, products liability claim or personal injury or property damage suit or other similar or related claim or action of whatever sort, arising out of or in connection with any Receivable or any other suit, claim or action of whatever sort relating to any of the Transaction Documents.
Section 3.2      Indemnities by the Servicer . Without limiting any other rights that any Indemnified Party may have hereunder or under applicable law, rules or regulations, the Servicer hereby agrees to indemnify each Indemnified Party from and against any and all Indemnified Amounts arising out of or resulting from (whether directly or indirectly): (a) the failure of any information contained in any Information Package to be true and correct, or the failure of any other information provided to such Indemnified Party by, or on behalf of, the Servicer to be true and correct, (b) the failure of any representation, warranty or statement made or deemed made by the Servicer (or any of its officers) under or in connection with this Agreement or any other Transaction Document to which it is a party to have been true and correct as of the date made or deemed made in all respects when made, (c) the failure by the Servicer to comply with any applicable law, rule or regulation with respect to any Pool Receivable or the related Contract, (d) any dispute, claim, offset or defense of the Obligor (other than as a result of discharge in bankruptcy with respect to such Obligor) to the payment of any Receivable in, or purporting to be in, the Receivables Pool resulting from or related to the collection activities with respect to such Receivable or (e) any failure of the Servicer to perform its duties or obligations in accordance with the provisions hereof or any other Transaction Document to which it is a party.

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ARTICLE IV     

ADMINISTRATION AND COLLECTIONS
Section 4.1      Appointment of the Servicer .
(g)      The servicing, administering and collection of the Pool Receivables shall be conducted by the Person so designated from time to time as the Servicer in accordance with this Section 4.1 . Until the Administrator gives notice to Swift (in accordance with this Section 4.1 ) of the designation of a new Servicer, Swift is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms hereof. Upon the occurrence of a Termination Event, the Administrator may (with the consent of the Majority Purchaser Agents) or shall (at the direction of the Majority Purchaser Agents) terminate Swift as Servicer and designate as Servicer any Person (including itself) to succeed Swift or any successor Servicer, on the condition in each case that any such Person so designated shall agree to perform the duties and obligations of the Servicer pursuant to the terms hereof.
(h)      Upon the designation of a successor Servicer as set forth in Section 4.1(a) , Swift agrees that it will terminate its activities as Servicer hereunder in a manner that the Administrator determines will facilitate the transition of the performance of such activities to the new Servicer, and Swift shall cooperate with and assist such new Servicer. Such cooperation shall include access to and transfer of related records (including all Contracts) and use by the new Servicer of all licenses (or the obtaining of new licenses), hardware or software necessary or desirable to collect the Pool Receivables and the Related Security.
(i)      Swift acknowledges that, in making their decision to execute and deliver this Agreement, the Administrator and each member in each Purchaser Group have relied on Swift’s agreement to act as Servicer hereunder. Accordingly, Swift agrees that it will not voluntarily resign as Servicer.
(j)      The Servicer may delegate its duties and obligations hereunder to any subservicer (each a “ Sub-Servicer ”); provided , that, in each such delegation: (i) such Sub-Servicer shall agree in writing to perform the delegated duties and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer shall remain liable for the performance of the duties and obligations so delegated, (iii) the Seller, the Administrator and each Purchaser Group shall have the right to look solely to the Servicer for performance, (iv) the terms of any agreement with any Sub-Servicer shall provide that the Administrator may terminate such agreement upon the termination of the Servicer hereunder by giving notice of its desire to terminate such agreement to the Servicer (and the Servicer shall provide appropriate notice to each such Sub-Servicer) and (v) the Administrator and the Majority Purchaser Agents shall have consented in writing in advance to such delegation. For the avoidance of doubt, this Section 4.1(d) shall not apply to any third party collection agency collecting Defaulted Receivables or other third party servicer provider assisting in the servicing of the Defaulted Receivables.

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Section 4.2      Duties of the Servicer .
(a)      The Servicer shall take or cause to be taken all such action as may be necessary or advisable to administer and collect each Pool Receivable from time to time, all in accordance with this Agreement and all applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy. The Servicer shall set aside (or cause the Seller to set aside and hold) for the accounts of the Seller and each Purchaser Group the amount of Collections to which each such Purchaser Group is entitled in accordance with Article I hereof. The Servicer may, in accordance with the applicable Credit and Collection Policy, extend the maturity of any Pool Receivable and extend the maturity or adjust the Outstanding Balance of any Defaulted Receivable, as the Servicer may reasonably determine to be appropriate to maximize Collections thereof or reflect adjustments expressly permitted under the Credit and Collection Policy or as expressly required under applicable laws, rules or regulations or the applicable Contract; provided , that for purposes of this Agreement: (i) such extension shall not, and shall not be deemed to, change the number of days such Pool Receivable has remained unpaid from the date of the original due date related to such Pool Receivable unless such Pool Receivable has been cancelled and reissued pursuant to the Credit and Collection Policy with appropriate Deemed Collections being recorded pursuant to Section 1.4(e)(i) hereof, (ii) such extension or adjustment shall not alter the status of such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or limit the rights of any Purchaser, any Purchaser Agent or the Administrator under this Agreement or any other Transaction Document and (iii) if a Termination Event has occurred and is continuing and Swift or an Affiliate thereof is serving as the Servicer, Swift or such Affiliate may take such action only upon the prior approval of the Administrator. The Seller shall deliver to the Servicer and the Servicer shall hold for the benefit of the Seller and the Administrator (individually and for the benefit of each Purchaser Group, in accordance with their respective interests), all records and documents (including computer tapes or disks) with respect to each Pool Receivable. Notwithstanding anything to the contrary contained herein, if a Termination Event has occurred and is continuing, the Administrator may direct the Servicer (whether the Servicer is Swift or any other Person) to commence or settle any legal action to enforce collection of any Pool Receivable or to foreclose upon or repossess any Related Security.
(b)      The Servicer shall, as soon as practicable following actual receipt of collected funds, turn over to the Seller the collections of any indebtedness owed to the Seller that is not a Pool Receivable, less, if Swift or an Affiliate thereof is not the Servicer, all reasonable and appropriate out-of-pocket costs and expenses of such Servicer of servicing, collecting and administering such collections. The Servicer, if other than Swift or an Affiliate thereof, shall, as soon as practicable upon demand, deliver to the Seller all records in its possession that evidence or relate to any indebtedness that is not a Pool Receivable, and copies of records in its possession that evidence or relate to any indebtedness that is a Pool Receivable.
(c)      The Servicer’s obligations hereunder shall terminate on the later of: (i) the Facility Termination Date, (ii) the date on which no Capital or Discount in respect of the Purchased Interest shall be outstanding, (iii) the date on which an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account or all Letters of Credit have expired, and (iv) the date on which all amounts required to be paid to each Purchaser Agent, each Purchaser, the

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Administrator and any other Indemnified Party or Affected Person hereunder shall have been paid in full.
After such termination, if Swift or an Affiliate thereof was not the Servicer on the date of such termination, the Servicer shall promptly deliver to the Seller all books, records and related materials that the Seller previously provided to the Servicer, or that have been obtained by the Servicer, in connection with this Agreement.
Section 4.3      Lock-Box Account Arrangements . Prior to the Closing Date, the Seller shall have entered into Lock-Box Agreements with all of the Lock-Box Banks and delivered executed counterparts of each to the Administrator. Upon the occurrence and during the continuation of a Termination Event, the Administrator may (with the consent of the Majority Purchaser Agents) or shall (upon the direction of the Majority Purchaser Agents) at any time thereafter give notice to each Lock-Box Bank that the Administrator is exercising its rights under the Lock-Box Agreements to do any or all of the following: (a) to have the exclusive ownership and control of the Lock-Box Accounts transferred to the Administrator (for the benefit of the Purchasers) and to exercise exclusive dominion and control over the funds deposited therein, (b) to have the proceeds that are sent to the respective Lock-Box Accounts redirected pursuant to the Administrator’s instructions rather than deposited in the applicable Lock-Box Account, and (c) to take any or all other actions permitted under the applicable Lock-Box Agreement. The Seller hereby agrees that if the Administrator at any time takes any action set forth in the preceding sentence, the Administrator shall have exclusive control (for the benefit of the Purchasers) of the proceeds (including Collections) of all Pool Receivables and the Seller hereby further agrees to take any other action that the Administrator or any Purchaser Agent may reasonably request to transfer such control. Any proceeds of Pool Receivables received by the Seller or the Servicer thereafter shall be sent immediately to, or as otherwise instructed by, the Administrator. The parties hereto hereby acknowledge that if at any time the Administrator takes control of any Lock-Box Account, the Administrator shall not have any rights to the funds therein in excess of the unpaid amounts due to the Administrator, any member of any Purchaser Group, any Indemnified Party or Affected Person or any other Person hereunder, and the Administrator shall distribute or cause to be distributed such funds in accordance with Section 4.2(b) and Article I (in each case as if such funds were held by the Servicer thereunder).
Section 4.4      Enforcement Rights .
(f)      At any time following the occurrence and during the continuation of a Termination Event:
(i)      the Administrator may direct the Obligors that payment of all amounts payable under any Pool Receivable is to be made directly to the Administrator or its designee,
(ii)      the Administrator may instruct the Seller or the Servicer to give notice of the Purchaser Groups’ interest in Pool Receivables to each Obligor, which notice shall direct that payments be made directly to the Administrator or its designee (on behalf of such Purchaser Groups), and the Seller or the Servicer, as the case may be, shall give such notice at the expense of the Seller or the Servicer, as the case may be; provided , that if the Seller or the Servicer, as the case may be,

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fails to so notify each Obligor, the Administrator (at the Seller’s or the Servicer’s, as the case may be, expense) may so notify the Obligors,
(iii)      the Administrator may request the Servicer to, and upon such request the Servicer shall: (A) assemble all of the records necessary or desirable to collect the Pool Receivables and the Related Security, and transfer or license to a successor Servicer the use of all software necessary or desirable to collect the Pool Receivables and the Related Security, and make the same available to the Administrator or its designee (for the benefit of the Purchasers) at a place selected by the Administrator, and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner acceptable to the Administrator and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Administrator or its designee, and
(iv)      the Administrator may collect any amounts due from any Originator under the Sale Agreement.
(g)      The Seller hereby authorizes the Administrator (on behalf of each Purchaser Group), and irrevocably appoints the Administrator as its attorney-in-fact with full power of substitution and with full authority in the place and stead of the Seller, which appointment is coupled with an interest, to take any and all steps in the name of the Seller and on behalf of the Seller necessary or desirable, in the determination of the Administrator, after the occurrence and during the continuation of a Termination Event, to collect any and all amounts or portions thereof due under any and all Pool Assets, including endorsing the name of the Seller on checks and other instruments representing Collections and enforcing such Pool Assets. Notwithstanding anything to the contrary contained in this Section 4.4(b) , none of the powers conferred upon such attorney-in-fact pursuant to the preceding sentence shall subject such attorney-in-fact to any liability if any action taken by it shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any manner whatsoever.
Section 4.5      Responsibilities of the Seller .
(b)      Anything herein to the contrary notwithstanding, the Seller shall: (i) perform all of its obligations, if any, under the Contracts related to the Pool Receivables to the same extent as if interests in such Pool Receivables had not been transferred hereunder, and the exercise by the Administrator, the Purchaser Agents or the Purchasers of their respective rights hereunder shall not relieve the Seller from such obligations, and (ii) pay when due any Taxes, including any sales taxes payable in connection with the Pool Receivables and their creation and satisfaction. None of the Administrator, the Purchaser Agents or any of the Purchasers shall have any obligation or liability with respect to any Pool Asset, nor shall any of them be obligated to perform any of the obligations of the Seller, the Servicer, Swift or the Originators thereunder.
(c)      Swift hereby irrevocably agrees that if at any time it shall cease to be the Servicer hereunder, it shall act (if the then-current Servicer so requests) as the data-processing agent of the Servicer and, in such capacity, Swift shall conduct the data-processing functions of the administration of the Receivables and the Collections thereon in substantially the same way that Swift conducted such data-processing functions while it acted as the Servicer.

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Section 4.6      Servicing Fee . (23) Subject to clause (b) , the Servicer shall be paid a fee (the “ Servicing Fee ”) equal to 1.00% per annum (the “ Servicing Fee Rate ”) of the daily average aggregate Outstanding Balance of the Pool Receivables. The Purchasers’ Share of the Servicing Fee shall be paid through the distributions contemplated by Section 1.4(d) , and the Seller’s Share of the Servicing Fee shall be paid directly by the Seller.
(a)      If the Servicer ceases to be Swift or an Affiliate thereof, the Servicing Fee shall be the greater of: (i) the amount calculated pursuant to clause (a) , and (ii) an alternative amount specified by the successor Servicer not to exceed 110% of the aggregate reasonable costs and expenses incurred by such successor Servicer in connection with the performance of its obligations as Servicer.
ARTICLE V     

THE AGENTS    
Section 5.1      Appointment and Authorization . (23) Each Purchaser and Purchaser Agent hereby irrevocably designates and appoints PNC Bank, National Association, as the “ Administrator ” hereunder and authorizes the Administrator to take such actions and to exercise such powers as are delegated to the Administrator hereby and to exercise such other powers as are reasonably incidental thereto. The Administrator shall hold, in its name, for the benefit of each Purchaser, ratably, the Purchased Interest. The Administrator shall not have any duties other than those expressly set forth herein or any fiduciary relationship with any Purchaser or Purchaser Agent, and no implied obligations or liabilities shall be read into this Agreement, or otherwise exist, against the Administrator. The Administrator does not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with, the Seller or Servicer. Notwithstanding any provision of this Agreement or any other Transaction Document to the contrary, in no event shall the Administrator ever be required to take any action which exposes the Administrator to personal liability or which is contrary to the provision of any Transaction Document or applicable law.
(d)      Each Purchaser hereby irrevocably designates and appoints the respective institution identified as the Purchaser Agent for such Purchaser’s Purchaser Group on the signature pages hereto or in the Purchase Limit Increase Request, Assumption Agreement or Transfer Supplement pursuant to which such Purchaser becomes a party hereto, and each authorizes such Purchaser Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to such Purchaser Agent by the terms of this Agreement, if any, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Purchaser Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Purchaser or other Purchaser Agent or the Administrator, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Purchaser Agent shall be read into this Agreement or otherwise exist against such Purchaser Agent.
(e)      Except as otherwise specifically provided in this Agreement, the provisions of this Article V are solely for the benefit of the Purchaser Agents, the Administrator and the Purchasers, and none of the Seller or the Servicer shall have any rights as a third‑party beneficiary or otherwise

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under any of the provisions of this Article V , except that this Article V shall not affect any obligations which any Purchaser Agent, the Administrator or any Purchaser may have to the Seller or the Servicer under the other provisions of this Agreement. Furthermore, no Purchaser shall have any rights as a third-party beneficiary or otherwise under any of the provisions hereof in respect of a Purchaser Agent which is not the Purchaser Agent for such Purchaser.
(f)      In performing its functions and duties hereunder, the Administrator shall act solely as the agent of the Purchasers and the Purchaser Agents and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller or the Servicer or any of their successors and assigns. In performing its functions and duties hereunder, each Purchaser Agent shall act solely as the agent of its respective Purchaser and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller, the Servicer, any other Purchaser, any other Purchaser Agent or the Administrator, or any of their respective successors and assigns.
Section 5.2      Delegation of Duties . The Administrator may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrator shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
Section 5.3      Exculpatory Provisions . None of the Purchaser Agents, the Administrator or any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted (i) with the consent or at the direction of the Majority Purchaser Agents (or in the case of any Purchaser Agent, the Purchasers within its Purchaser Group that have a majority of the aggregate Commitments of such Purchaser Group) or (ii) in the absence of such Person’s gross negligence or willful misconduct. The Administrator shall not be responsible to any Purchaser, Purchaser Agent or other Person for (i) any recitals, representations, warranties or other statements made by the Seller, the Servicer, any Originator or any of their Affiliates, (ii) the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Transaction Document, (iii) any failure of the Seller, the Servicer, any Originator or any of their Affiliates to perform any obligation hereunder or under the other Transaction Documents to which it is a party (or under any Contract), or (iv) the satisfaction of any condition specified in Exhibit II . The Administrator shall not have any obligation to any Purchaser or Purchaser Agent to ascertain or inquire about the observance or performance of any agreement contained in any Transaction Document or to inspect the properties, books or records of the Seller, the Servicer, any Originator or any of their respective Affiliates.
Section 5.4      Reliance by Agents . (23) Each Purchaser Agent and the Administrator shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or other writing or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person and upon advice and statements of legal counsel (including counsel to the Seller), independent accountants and other experts selected by the Administrator. Each Purchaser Agent and the Administrator shall in all cases be fully justified in failing or refusing to take any action under any Transaction Document unless it shall first receive such advice or concurrence of the Majority Purchaser Agents (or in the case of any Purchaser Agent, the Purchasers

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within its Purchaser Group that have a majority of the aggregate Commitment of such Purchaser Group), and assurance of its indemnification, as it deems appropriate.
(d)      The Administrator shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Majority Purchaser Agents or the Purchaser Agents, and such request and any action taken or failure to act pursuant thereto shall be binding upon all Purchasers, the Administrator and Purchaser Agents.
(e)      The Purchasers within each Purchaser Group with a majority of the Commitments of such Purchaser Group shall be entitled to request or direct the related Purchaser Agent to take action, or refrain from taking action, under this Agreement on behalf of such Purchasers. Such Purchaser Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of such Majority Purchaser Agents, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of such Purchaser Agent’s Purchasers.
(f)      Unless otherwise advised in writing by a Purchaser Agent or by any Purchaser on whose behalf such Purchaser Agent is purportedly acting, each party to this Agreement may assume that (i) such Purchaser Agent is acting for the benefit of each of the Purchasers in respect of which such Purchaser Agent is identified as being the “ Purchaser Agent ” in the definition of “ Purchaser Agent ” hereto, as well as for the benefit of each assignee or other transferee from any such Person, and (ii) each action taken by such Purchaser Agent has been duly authorized and approved by all necessary action on the part of the Purchasers on whose behalf it is purportedly acting. Each Purchaser Agent and its Purchaser(s) shall agree amongst themselves as to the circumstances and procedures for removal, resignation and replacement of such Purchaser Agent.
Section 5.5      Notice of Termination Events . Neither any Purchaser Agent nor the Administrator shall be deemed to have knowledge or notice of the occurrence of any Termination Event or Unmatured Termination Event unless the Administrator and the Purchaser Agents have received notice from any Purchaser, the Servicer or the Seller stating that a Termination Event or an Unmatured Termination Event has occurred hereunder and describing such Termination Event or Unmatured Termination Event. In the event that the Administrator receives such a notice, it shall promptly give notice thereof to each Purchaser Agent whereupon each such Purchaser Agent shall promptly give notice thereof to its related Purchasers. In the event that a Purchaser Agent receives such a notice (other than from the Administrator), it shall promptly give notice thereof to the Administrator. The Administrator shall take such action concerning a Termination Event or an Unmatured Termination Event as may be directed by the Majority Purchaser Agents (unless such action otherwise requires the consent of all Purchasers, the LC Bank and/or the Required LC Participants), but until the Administrator receives such directions, the Administrator may (but shall not be obligated to) take such action, or refrain from taking such action, as the Administrator deems advisable and in the best interests of the Purchasers and the Purchaser Agents.
Section 5.6      Non-Reliance on Administrator, Purchaser Agents and Other Purchasers . Each Purchaser expressly acknowledges that none of the Administrator, the Purchaser Agents or any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrator, or any Purchaser Agent

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hereafter taken, including any review of the affairs of the Seller, Swift, the Servicer or any Originator, shall be deemed to constitute any representation or warranty by the Administrator or such Purchaser Agent, as applicable. Each Purchaser represents and warrants to the Administrator and the Purchaser Agents that, independently and without reliance upon the Administrator, Purchaser Agents or any other Purchaser and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller, Swift, the Servicer or the Originators, and the Receivables and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items specifically required to be delivered hereunder, the Administrator shall not have any duty or responsibility to provide any Purchaser Agent with any information concerning the Seller, Swift, the Servicer or the Originators or any of their Affiliates that comes into the possession of the Administrator or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Section 5.7      Administrator, Purchasers, Purchaser Agents and Affiliates . Each of the Administrator, the Purchasers and the Purchaser Agents and any of their respective Affiliates may extend credit to, accept deposits from and generally engage in any kind of banking, trust, debt, equity or other business with the Seller, Swift, the Servicer or any Originator or any of their Affiliates. With respect to the acquisition of the Eligible Receivables pursuant to this Agreement, each of the Purchaser Agents and the Administrator shall have the same rights and powers under this Agreement as any Purchaser and may exercise the same as though it were not such an agent, and the terms “ Purchaser ” and “ Purchasers ” shall include, to the extent applicable, each of the Purchaser Agents and the Administrator in their individual capacities.
Section 5.8      Indemnification . Each LC Participant and Related Committed Purchaser shall indemnify and hold harmless the Administrator (but solely in its capacity as Administrator) and the LC Bank and their respective officers, directors, employees, representatives and agents (to the extent not reimbursed by the Seller, the Servicer or any Originator and without limiting the obligation of the Seller, the Servicer, or any Originator to do so), ratably (based on its Commitment) from and against any and all liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses and disbursements of any kind whatsoever (including in connection with any investigative or threatened proceeding, whether or not the Administrator, the LC Bank or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against the Administrator, the LC Bank or such Person as a result of, or related to, any of the transactions contemplated by the Transaction Documents or the execution, delivery or performance of the Transaction Documents or any other document furnished in connection therewith (but excluding any such liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Administrator, the LC Bank or such Person as finally determined by a court of competent jurisdiction). Without limiting the generality of the foregoing, each LC Participant agrees to reimburse the Administrator and the LC Bank, ratably according to its Pro Rata Shares, promptly upon demand, for any out of pocket expenses (including Attorney Costs) incurred by the Administrator or the LC Bank in connection with the administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of, its rights and responsibilities under this Agreement.

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Section 5.9      Successor Administrator . The Administrator may, upon at least thirty (30) days’ prior written notice to the Seller, each Purchaser and Purchaser Agent, resign as Administrator. Such resignation shall not become effective until (x) a successor Administrator is appointed by the Majority Purchaser Agents and has accepted such appointment and (y) so long as no Termination Event or Unmatured Termination Event has occurred and is continuing, the Seller and the Servicer shall have consented to such successor Administrator (such consent not to be unreasonably withheld or delayed). Upon such acceptance of its appointment as Administrator hereunder by a successor Administrator, such successor Administrator shall succeed to and become vested with all the rights and duties of the retiring Administrator, and the retiring Administrator shall be discharged from its duties and obligations under the Transaction Documents. After any retiring Administrator’s resignation hereunder, the provisions of Sections 3.1 and 3.2 and this Article V shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrator.
ARTICLE VI     

MISCELLANEOUS
Section 6.1      Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Transaction Document, or consent to any departure by the Seller or the Servicer therefrom, shall be effective unless in a writing signed by the Administrator, the LC Bank and each of the Majority LC Participants and Majority Purchaser Agents, and, in the case of any amendment, by the other parties thereto; and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , that, to the extent required by the securitization program of any Conduit Purchaser, no such material amendment shall be effective until the Rating Agency Condition shall have been satisfied with respect thereto (the Administrator hereby agrees to provide executed copies of any material amendment to or waiver of any provision of this Agreement to the Rating Agencies); provided , further that no such amendment or waiver shall, without the consent of each affected Purchaser, (A) extend the date of any payment or deposit of Collections by the Seller or the Servicer, (B) reduce the rate or extend the time of payment of Discount, (C) reduce any fees payable to the Administrator, any Purchaser Agent or any Purchaser pursuant to the Fee Letter, (D) change the amount of Capital of any Purchaser, any Purchaser’s pro rata share of the Purchased Interest or any Related Committed Purchaser’s or LC Participant’s Commitment, (E) amend, modify or waive any provision of the definition of “ Majority Purchaser Agents ” or this Section 6.1 , (F) consent to or permit the assignment or transfer by the Seller of any of its rights and obligations under this Agreement, (G) change the definition of “ Defaulted Receivable ,” “ Delinquent Receivable ,” “ Eligible Receivable ,” “ Facility Termination Date ” (other than an extension of such date in accordance with clause (H) or Section 1.22 ), “ Loss Reserve ,” “ Loss Reserve Percentage ,” “ Dilution Reserve ,” “ Dilution Reserve Percentage ” or “ Termination Event ”, (H) extend the “ Facility Termination Date ” or (I) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (I) above in a manner that would circumvent the intention of the restrictions set forth in such clauses. No failure on the part of the Purchasers, the Purchaser Agents or the Administrator to exercise, and no delay in exercising any right hereunder shall operate as a waiver

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thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
Section 6.2      Notices, Etc . All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including facsimile and email communications) and shall be personally delivered or sent by facsimile or email, or by overnight mail, to the intended party at the mailing or email address or facsimile number of such party set forth under its name on the signature pages hereof (or in any other document or agreement pursuant to which it is or became a party hereto), or at such other address or facsimile number as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective (i) if delivered by overnight mail, when received, and (ii) if transmitted by facsimile or email, when sent, receipt confirmed by telephone or electronic means.
Section 6.3      Successors and Assigns; Participations; Assignments .
(g)      Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Except as otherwise provided in Section 4.1(d) , neither the Seller nor the Servicer may assign or transfer any of its rights or delegate any of its duties hereunder or under any Transaction Document without the prior consent of the Administrator, the LC Bank, the Required LC Participants and the Purchaser Agents.
(h)      Participations . (i) Except as otherwise specifically provided herein, any Purchaser may sell to one or more Persons (each a “ Participant ”) participating interests in the interests of such Purchaser hereunder; provided , that no Purchaser shall grant any participation under which the Participant shall have rights to approve any amendment to or waiver of this Agreement or any other Transaction Document. Such Purchaser shall remain solely responsible for performing its obligations hereunder, and the Seller, the Servicer, each Purchaser Agent and the Administrator shall continue to deal solely and directly with such Purchaser in connection with such Purchaser’s rights and obligations hereunder. A Purchaser shall not agree with a Participant to restrict such Purchaser’s right to agree to any amendment hereto, except amendments that require the consent of all Purchasers.
(ii) Notwithstanding anything contained in paragraph (a) or clause (i) of paragraph (b) of this Section 6.3 , each of the LC Bank and each LC Participant may sell participations in all or any part of any Funded Purchase made by such LC Participant to another bank or other entity so long as (x) no such grant of a participation shall, without the consent of the Seller, require the Seller to file a registration statement with the SEC and (y) no holder of any such participation shall be entitled to require such LC Participant to take or omit to take any action hereunder except that such LC Participant may agree with such participant that, without such Participant’s consent, such LC Participant will not consent to an amendment, modification or waiver referred to in Section 6.1 . Any such Participant shall not have any rights hereunder or under the Transaction Documents.
(i)      Assignments by Certain Related Committed Purchasers . Any Related Committed Purchaser may assign to one or more Persons (each a “ Purchasing Related Committed Purchaser ”), reasonably acceptable to the Administrator, the LC Bank and the related Purchaser Agent in its sole discretion, any portion of its Commitment (which shall be inclusive of its Commitment as an LC

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Participant) pursuant to a supplement hereto, substantially in the form of Annex D with any changes as have been approved by the parties thereto (each, a “ Transfer Supplement ”), executed by each such Purchasing Related Committed Purchaser, such selling Related Committed Purchaser, such related Purchaser Agent and the Administrator and with the consent of the Seller ( provided , that the consent of the Seller shall not be unreasonably withheld or delayed and that no such consent shall be required if a Termination Event or Unmatured Termination Event has occurred and is continuing; provided , further , that no consent of the Seller shall be required if the assignment is made by any Related Committed Purchaser to the Administrator, to any other Related Committed Purchaser, to any Affiliate of the Administrator or any Related Committed Purchaser, to any Program Support Provider or any Person which (i) is in the business of issuing commercial paper notes and (ii) is associated with or administered by the Administrator or any Affiliate of the Administrator). Any such assignment by a Related Committed Purchaser cannot be for an amount less than $10,000,000. Upon (i) the execution of the Transfer Supplement, (ii) delivery of an executed copy thereof to the Seller, the Servicer, such related Purchaser Agent and the Administrator and (iii) payment by the Purchasing Related Committed Purchaser to the selling Related Committed Purchaser of the agreed purchase price, if any, such selling Related Committed Purchaser shall be released from its obligations hereunder to the extent of such assignment and such Purchasing Related Committed Purchaser shall for all purposes be a Related Committed Purchaser party hereto and shall have all the rights and obligations of a Related Committed Purchaser hereunder to the same extent as if it were an original party hereto. The amount of the Commitment of the selling Related Committed Purchaser allocable to such Purchasing Related Committed Purchaser shall be equal to the amount of the Commitment of the selling Related Committed Purchaser transferred regardless of the purchase price, if any, paid therefor. The Transfer Supplement shall be an amendment hereof only to the extent necessary to reflect the addition of such Purchasing Related Committed Purchaser as a “ Related Committed Purchaser ” and a related “ LC Participant ” and any resulting adjustment of the selling Related Committed Purchaser’s Commitment.
(j)      Assignments to Liquidity Providers and other Program Support Providers . Any Conduit Purchaser may at any time grant to one or more of its Liquidity Providers or other Program Support Providers, participating interests in its portion of the Purchased Interest. In the event of any such grant by such Conduit Purchaser of a participating interest to a Liquidity Provider or other Program Support Provider, such Conduit Purchaser shall remain responsible for the performance of its obligations hereunder. The Seller agrees that each Liquidity Provider and Program Support Provider of any Conduit Purchaser hereunder shall be entitled to the benefits of Section 1.7 .
(k)      Other Assignment by Conduit Purchasers . Each party hereto agrees and consents (i) to any Conduit Purchaser’s assignment, participation, grant of security interests in or other transfers of any portion of, or any of its beneficial interest in, the Purchased Interest (or portion thereof), including without limitation to any collateral agent in connection with its commercial paper program and (ii) to the complete assignment by any Conduit Purchaser of all of its rights and obligations hereunder to any other Person, and upon such assignment such Conduit Purchaser shall be released from all obligations and duties, if any, hereunder; provided , that such Conduit Purchaser may not, without the prior consent of its Related Committed Purchasers, make any such transfer of its rights hereunder unless the assignee (i) is principally engaged in the purchase of assets similar to the assets being purchased hereunder, (ii) has as its Purchaser Agent the Purchaser Agent of the

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assigning Conduit Purchaser and (iii) issues commercial paper or other Notes with credit ratings substantially comparable to the ratings of the assigning Conduit Purchaser. Any assigning Conduit Purchaser shall deliver to any assignee a Transfer Supplement with any changes as have been approved by the parties thereto, duly executed by such Conduit Purchaser, assigning any portion of its interest in the Purchased Interest to its assignee. Such Conduit Purchaser shall promptly (i) notify each of the other parties hereto of such assignment and (ii) take all further action that the assignee reasonably requests in order to evidence the assignee’s right, title and interest in such interest in the Purchased Interest and to enable the assignee to exercise or enforce any rights of such Conduit Purchaser hereunder. Upon the assignment of any portion of its interest in the Purchased Interest, the assignee shall have all of the rights hereunder with respect to such interest (except that the Discount therefor shall thereafter accrue at the rate, determined with respect to the assigning Conduit Purchaser unless the Seller, the related Purchaser Agent and the assignee shall have agreed upon a different Discount).
(l)      Opinions of Counsel . If required by the Administrator or the applicable Purchaser Agent or to maintain the ratings of the Notes of any Conduit Purchaser, each Transfer Supplement or other assignment and acceptance agreement must be accompanied by an opinion of counsel of the assignee as to such matters as the Administrator or such Purchaser Agent may reasonably request.
(m)      Assignments to Federal Reserve Banks . Notwithstanding any other provision of this Section 6.3 , any Purchaser may at any time assign, as collateral or otherwise, all or any portion of its rights (including, without limitation, rights to payment of interest and repayment of the Purchased Interest) under this Agreement to any Federal Reserve Bank, without notice to or consent of the Seller, Administrator or any other Person. In connection with such pledge, such Purchaser shall be entitled to receive a physical note evidencing such Purchased Interest.
Section 6.4      Costs, Expenses and Taxes . (23) By way of clarification, and not of limitation, of Sections 1.7 , 1.20 or  3.1 , the Seller shall pay to the Administrator, each Purchaser Agent and/or any Purchaser on demand all reasonable costs and expenses in connection with (i) the preparation, execution, delivery and administration of this Agreement or the other Transaction Documents and the other documents and agreements to be delivered hereunder and thereunder (and all reasonable costs and expenses in connection with any amendment, waiver or modification of any thereof), (ii) the sale of the Purchased Interest (or any portion thereof) by the Seller, (iii) the perfection (and continuation) of the Administrator’s rights in the Receivables, Collections and other Pool Assets, (iv) the enforcement by the Administrator, any Purchaser Agent or any member of any Purchaser Group of the obligations of the Seller, the Servicer or the Originators under the Transaction Documents or of any Obligor under a Receivable and (v) the maintenance by the Administrator of the Lock-Box Accounts (and any related lock-box or post office box), including Attorney Costs for the Administrator, the Purchaser Agents and the Purchasers relating to any of the foregoing or to advising the Administrator or any member of any Purchaser Group (including, any related Liquidity Provider or any other related Program Support Provider) about its rights and remedies under any Transaction Document or any other document, agreement or instrument related thereto and all reasonable costs and expenses (including Attorney Costs) of the Administrator, any Purchaser Agent and any Purchaser in connection with the enforcement or administration of the Transaction Documents or any other document, agreement or instrument related thereto. The Administrator

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and each member of each Purchaser Group agree, however, that unless a Termination Event has occurred and is continuing, all of such entities will be represented by a single law firm. The Seller shall, subject to the provisos in clause (e) of each of Sections 1 and 2 of Exhibit IV , reimburse the Administrator, each Purchaser Agent and each Purchaser for the cost of such Person’s auditors (which may be employees of such Person) auditing the books, records and procedures of the Seller or the Servicer; provided, that the Administrator shall discuss the scope and cost of any such audit prior to commencement (it being understood that failure to discuss the scope or cost of any such audit shall not relieve the Seller of its obligation to pay such amounts). The Seller shall reimburse each Conduit Purchaser for any amounts such Conduit Purchaser must pay to any related Liquidity Provider or other related Program Support Provider pursuant to any Program Support Agreement on account of any Tax. The Seller shall reimburse each Purchaser on demand for all reasonable out of pocket costs and expenses incurred by such Purchaser in connection with the Transaction Documents or the transactions contemplated thereby.
(b)      In addition, the Seller shall pay on demand any and all stamp, franchise and other taxes and fees payable in connection with the execution, delivery, filing and recording of this Agreement or the other documents or agreements to be delivered hereunder, and agrees to save each Indemnified Party and Affected Person harmless from and against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.
Section 6.5      No Proceedings; Limitation on Payments . (23) Each of the Seller, Swift, the Servicer, the Administrator, the Purchaser Agents, the Purchasers, each assignee of the Purchased Interest or any interest therein, and each Person that enters into a commitment to purchase the Purchased Interest or interests therein, hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing Note issued by such Conduit Purchaser is paid in full. The provisions of this paragraph shall survive any termination of this Agreement. Each party hereto, each assignee of the Purchased Interest or any interest therein, and each Person that enters into a commitment to purchase the Purchased Interest or interests therein, agrees that it will not institute against, or join any Person in instituting against, the Seller any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or any other proceeding under any federal or state bankruptcy or similar law, for one year and one day after which all other indebtedness and other obligations of the Seller hereunder and under each other Transaction Document shall have been paid in full; provided that the Administrator may take any such action with the prior written consent of the Majority Purchaser Agents and the LC Bank.
(a)      Notwithstanding any provisions contained in this Agreement to the contrary, no Conduit Purchaser shall or shall be obligated to, pay any amount, if any, payable by it pursuant to this Agreement or any other Transaction Document unless (i) such Conduit Purchaser has received funds which may be used to make such payment and which funds are not required to repay the Notes when due and (ii) after giving effect to such payment, either (x) such Conduit Purchaser could issue Notes to refinance all outstanding Notes (assuming such outstanding Notes matured at such time) in accordance with the program documents governing such Conduit Purchaser’s securitization program or (y) all Notes are paid in full. Any amount which such Conduit Purchaser does not pay

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pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in §101 of the Bankruptcy Code) against or company obligation of such Conduit Purchaser for any such insufficiency unless and until such Conduit Purchaser satisfies the provisions of clauses (i) and (ii) above. The provisions of this paragraph shall survive any termination of this Agreement.
Section 6.6      GOVERNING LAW AND JURISDICTION .
(a)      THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY OTHERWISE APPLICABLE CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b)      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 6.7      Confidentiality . Unless otherwise required by applicable law, each of the Seller and the Servicer agrees to maintain the confidentiality of this Agreement and the other Transaction Documents (and all drafts thereof) in communications with third parties and otherwise; provided , that this Agreement may be disclosed (a) to third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to the Administrator and each Purchaser Agent and (b) to the Seller’s and Servicer’s legal counsel and auditors if they agree to hold it confidential. Unless otherwise required by applicable law, rules or regulations, the Administrator, the Purchaser Agents and the Purchasers agree to maintain the confidentiality of non-public financial information regarding the Seller, the Servicer and the Originators; provided , that such information may be disclosed (i) to third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and

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substance reasonably satisfactory to the Servicer, (ii) to legal counsel and auditors of the Purchasers, the Purchaser Agents or the Administrator if they agree to hold it confidential, (iii) to the rating agencies rating the Notes of any Conduit Purchaser, (iv) to any Program Support Provider or potential Program Support Provider (if they agree to hold it confidential), (v) to any placement agency placing the Notes, (vi) to any regulatory authorities having jurisdiction over the Administrator, the Purchaser Agents, any Purchaser, any Program Support Provider or any Liquidity Provider and (vii) to any Rating Agency or any non-hired nationally recognized statistical rating organization that provides to a Conduit Purchaser or its agent the certification required by subsection (e) of Rule 17g-5, and who agrees to keep such information confidential as contemplated by Rule 17g-5, by posting such information to a password protected internet website accessible to each such nationally recognized statistical rating organization in connection with, and subject to the terms of Rule 17g-5 .
Section 6.8      Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same agreement.
Section 6.9      Survival of Termination . The provisions of Sections 1.7 , 1.8 , 1.9 , 1.10 , 1.19 , 1.20 , 3.1 , 3.2 , 6.4 , 6.5 , 6.6 , 6.7 , 6.10 and 6.15 shall survive any termination of this Agreement.
Section 6.10      SECTION 6.10    WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 6.11      Sharing of Recoveries . Each Purchaser agrees that if it receives any recovery, through set-off, judicial action or otherwise, on any amount payable or recoverable hereunder in a greater proportion than should have been received hereunder or otherwise inconsistent with the provisions hereof, then the recipient of such recovery shall purchase for cash an interest in amounts owing to the other Purchasers (as return of Capital or otherwise), without representation or warranty except for the representation and warranty that such interest is being sold by each such other Purchaser free and clear of any Adverse Claim created or granted by such other Purchaser, in the amount necessary to create proportional participation by the Purchaser in such recovery. If all

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or any portion of such amount is thereafter recovered from the recipient, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
Section 6.12      Right of Setoff . Each Purchaser is hereby authorized (in addition to any other rights it may have) to setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by such Purchaser (including by any branches or agencies of such Purchaser) to, or for the account of, the Seller against amounts owing by the Seller hereunder (even if contingent or unmatured).
Section 6.13      Entire Agreement . This Agreement and the other Transaction Documents embody the entire agreement and understanding between the parties hereto, and supersede all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof.
Section 6.14      Headings . The captions and headings of this Agreement and any Exhibit, Schedule or Annex hereto are for convenience of reference only and shall not affect the interpretation hereof or thereof.
Section 6.15      Purchaser Groups’ Liabilities . The obligations of each Purchaser Agent and each Purchaser under the Transaction Documents are solely the corporate obligations of such Person. Except with respect to any claim arising out of the willful misconduct or gross negligence of the Administrator, any Purchaser Agent or any Purchaser, no claim may be made by the Seller or the Servicer or any other Person against the Administrator, any Purchaser Agent or any Purchaser or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any other Transaction Document, or any act, omission or event occurring in connection therewith; and each of Seller and Servicer hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
Section 6.16      Tax Treatment . Notwithstanding any other express or implied agreement to the contrary, the parties hereto agree and acknowledge that each of them and each of their employees, representatives, and other agents may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws. For purposes of this paragraph, the terms “tax treatment” and “tax structure” have the meanings specified in Treasury Regulation section 1.6011‑4(c).
Section 6.17      USA Patriot Act . The Purchasers, each Liquidity Provider and each Program Support Provider that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107‑56 (signed into law October 26, 2001)) (the “ Patriot Act ”) hereby notifies the Seller that pursuant to the requirements of the Patriot Act, it is required to obtain, verify, and record

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information that identifies the Seller, which information includes the name and address of the Seller and other information that will allow such Purchaser, Liquidity Provider or Program Support Provider to identify the Seller in accordance with the Patriot Act.
Section 6.18      Original Agreement; Effect of Restatement . This Agreement shall become effective on the Restatement Date and shall amend and replace in its entirety the Original Purchase Agreement. Reference to this specific Agreement need not be made in any agreement, document, instrument, letter, certificate, the Original Purchase Agreement itself, or any communication issued or made pursuant to or with respect to the Original Purchase Agreement, any reference to the Original Purchase Agreement being sufficient to refer to the Original Purchase Agreement as amended and restated hereby.
From and after the Restatement Date, (a)(i) the commitments of those Purchasers under the Original Purchase Agreement that are continuing as Purchasers under this Agreement (the “ Continuing Purchasers ”) shall be amended as set forth below the signatures of such Purchasers to this Agreement and (ii) the commitments of those Purchasers party to this Agreement that were not “Purchasers” under the Original Purchase Agreement immediately prior to the Restatement Date (the “ New Purchasers ”) shall be as set forth below the signatures of such Purchasers to this Agreement; and (b) all outstanding “Capital” of the Continuing Purchasers and all interests in outstanding “Letters of Credit” under the Original Purchase Agreement shall remain outstanding as the Capital and Letters of Credit hereunder.
The Continuing Purchasers and New Purchasers each agree to make such purchases and sales of interests in the Purchased Interest outstanding on the Restatement Date between themselves in the amounts set forth on Exhibit VI to this Agreement so that each Continuing Purchaser and New Purchaser and their related Purchaser Group is then holding its relevant Ratable Share of the Aggregate Capital based on their Commitments as in effect on the Restatement Date (such purchases and sales shall be arranged through the Administrator and each Purchaser hereby agrees to execute such further instruments and documents, if any, as the Administrator may reasonably request in connection therewith), with all subsequent extensions of credit under this Agreement (including, without limitation, participations in respect of all Letters of Credit) to be made in accordance with the respective Commitments of the Purchasers from time to time party to this Agreement as provided herein.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

SWIFT RECEIVABLES COMPANY II, LLC, as Seller
By:    
Name:    
Title:    


Address:    Swift Receivables Company II, LLC
2200 South 75th Avenue
Phoenix, Arizona 85043
    

 
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SWIFT TRANSPORTATION SERVICES, LLC, as Servicer
By:    
Name:    
Title:    


Address:    Swift Transportation Services, LLC
2200 South 75th Avenue
Phoenix, Arizona 85043
    

 
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THE PURCHASER GROUPS:
PNC BANK, NATIONAL ASSOCIATION , as Purchaser Agent for the Market Street Purchaser Group
By:    
Name:    
Title:    


Address:    PNC Bank, National Association
Three PNC Plaza
225 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2724
    

Market Street Purchaser Group Commitment:     $150,000,000

 
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PNC BANK, NATIONAL ASSOCIATION,
as a Related Committed Purchaser
By:    
Name:    
Title:    


Address:    PNC Bank, National Association
Three PNC Plaza
225 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2724
    

Commitment: $150,000,000

 
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MARKET STREET FUNDING LLC,
as Conduit Purchaser
By:    
Name:    
Title:    

Address:    c/o AMACAR Group, L.L.C.
6525 Morrison Blvd., Suite 318
Charlotte, North Carolina 28211
    

 
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PNC BANK, NATIONAL ASSOCIATION, as the LC Bank
By:    
Name:    
Title:    


Address:    PNC Bank, N.A.
225 Fifth Avenue
Pittsburgh, Pennsylvania 15222
    

Commitment: $150,000,000

 
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WELLS FARGO BANK, NATIONAL ASSOCIATION , as Purchaser Agent for the Wells Fargo Purchaser Group
By:    
Name:    
Title:    
 

Address:    Wells Fargo Bank, National Association
Wells Fargo Capital Finance
1100 Abernathy Road NE
16th Floor, Suite 1600
Atlanta, Georgia 30328-5657
    

Wells Fargo Purchaser Group Commitment:     $100,000,000

 
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WELLS FARGO BANK, NATIONAL ASSOCIATION,

 
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as a Related Committed Purchaser
By:    
Name:    
Title:    


Address:    Wells Fargo Bank, National Association
Wells Fargo Capital Finance
1100 Abernathy Road NE
16th Floor, Suite 1600
Atlanta, Georgia 30328-5657
    

Commitment: $100,000,000

 
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as a LC Participant


By:    
Name:    
Title:    

Address:    Wells Fargo Bank, National Association
1100 Abernathy Road NE
16th Floor, Suite 1600
Atlanta, Georgia 30328-5657
    

Commitment: $100,000,000

 
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CITIBANK, N.A., as Purchaser Agent for the Citibank Purchaser Group
By:    
Name:
Title:

Address:    Citibank, N.A.
390 Greenwich Street, 1 st floor
New York, NY 10013
    

Citibank Purchaser Group Commitment:                                 $75,000,000

 
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CAFCO, LLC , as Conduit Purchaser
By: Citibank, N.A., as Attorney-in-fact

By:    
Name:
Title:

Address:    Citibank, N.A.
750 Washington Boulevard
Stamford, CT 06901
    

 
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CHARTA, LLC , as Conduit Purchaser
By: Citibank, N.A. as Attorney-in-fact
By:    
Name:
Title:

Address:    Citibank, N.A.
750 Washington Boulevard
Stamford, CT 06901
    

 
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CIESCO, LLC , as Conduit Purchaser
By: Citibank, N.A., as Attorney-in-fact
By:    
Name:
Title:

Address:    Citibank, N.A.
750 Washington Boulevard
Stamford, CT 06901
    

 
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CRC FUNDING, LLC , as Conduit Purchaser
By: Citibank, N.A., as Attorney-in-fact
By:    
Name:
Title:

Address:    Citibank, N.A.
750 Washington Boulevard
Stamford, CT 06901
CITIBANK, N.A., as a Related Committed Purchaser
By:    
Name:
Title:

Address:    Citibank, N.A.
390 Greenwich Street, 1 st floor
New York, NY 10013
    

Commitment: $75,000,000

 
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CITIBANK, N.A., as a LC Participant
By:    
Name:
Title:

Address:    Citibank, N.A.
390 Greenwich Street, 1 st floor
New York, NY 10013
    
Commitment: $75,000,000

 
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PNC BANK, NATIONAL ASSOCIATION , as Administrator
By:    
Name:    
Title:    
 
Address:    PNC Bank, National Association
Three PNC Plaza
225 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2724
        



 
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EXHIBIT I

DEFINITIONS
1.     Definitions . As used in this Agreement (including its Exhibits, Schedules and Annexes), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined). Unless otherwise indicated, all Section, Annex, Exhibit and Schedule references in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to this Agreement.
“ Administration Account ” means the account designated as the Administration Account established and maintained by the Seller with PNC Bank, National Association having account number [ * ] and routing number [ * ] , or such other account as may be so designated as such by the Seller with notice to the Administrator and each Purchaser Agent.
“ Administrator ” has the meaning set forth in the preamble to this Agreement.
“ Adjusted LC Participation Amount ” means, at any time, the LC Participation Amount minus the amount on deposit in the LC Collateral Account.
“ Adverse Claim ” means a lien, security interest or other charge or encumbrance, or any other type of preferential arrangement; it being understood that any thereof in favor of the Administrator (for the benefit of the Purchasers) or the Seller as contemplated in the Sale Agreement shall not constitute an Adverse Claim.
“ Affected Person ” has the meaning set forth in Section 1.7 of this Agreement.
“ Affiliate ” means, as to any Person: (a) any Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person, or (b) who is a director or officer: (i) of such Person or (ii) of any Person described in clause (a) , except that, in the case of each Conduit Purchaser, Affiliate shall mean the holder of its capital stock or membership interest, as the case may be. For purposes of this definition, control of a Person shall mean the power, direct or indirect: (x) to vote 50% or more of the securities having ordinary voting power for the election of directors of such Person, or (y) to direct or cause the direction of the management and policies of such Person, in either case whether by ownership of securities, contract, proxy or otherwise.
“ Aggregate Capital ” means the amount paid to the Seller in respect of the Purchased Interest or portion thereof by each Purchaser pursuant to this Agreement, as reduced from time to time by Collections distributed and applied on account of such Aggregate Capital pursuant to Section 1.4(d) of this Agreement; provided , that if such Aggregate Capital shall have been reduced by any distribution, and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Aggregate Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made.
*Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.

 
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“ Aggregate Discount ” means at any time, the sum of the aggregate for each Purchaser of the accrued and unpaid Discount with respect to each such Purchaser’s Capital at such time.
“ Agreement ” has the meaning set forth in the preamble hereto.
“ Alternate Rate ” for any Yield Period for any Capital (or portion thereof) funded by any Purchaser: (a) other than through the issuance of Notes means an interest rate per annum equal to the daily average LIBOR Market Index Rate for such Yield Period, or, (b) if the Base Rate is applicable to such Purchaser pursuant to Section 1.11, the daily average Base Rate for such Yield Period; provided , that the “ Alternate Rate ” for any day while a Termination Event or an Unmatured Termination Event exists shall be an interest rate equal to 2.0% per annum above the higher of (i) the Base Rate and (ii) the Euro-Rate.
“ Assumption Agreement ” means an agreement substantially in the form set forth in Annex C to this Agreement.
“ Attorney Costs ” means and includes all reasonable fees and disbursements of any law firm or other external counsel.
“ Bankruptcy Code ” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.
“ Base Rate ” means, with respect to any Purchaser, for any day, a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the higher of:
(a)    the rate of interest in effect for such day as publicly announced from time to time by the applicable Purchaser Agent (or applicable Related Committed Purchaser) as its “prime rate”. Such “prime rate” is set by the applicable Purchaser Agent based upon various factors, including the applicable Purchaser Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate, and
(b)    0.50% per annum above the latest Federal Funds Rate.
“ Business Day ” means any day (other than a Saturday or Sunday) on which: (a) banks are not authorized or required to close in Phoenix, Arizona, Pittsburgh, Pennsylvania, or New York, New York, and (b) if this definition of “Business Day” is utilized in connection with the Euro-Rate or the LIBOR Market Index Rate, as applicable, dealings are carried out in the London interbank market.
“ Calculation Period ” means with respect to any Portion of Capital (a) initially the period commencing on (and including) the date of the initial Purchase or funding of such Portion of Capital and ending on (but not including) the next occurring Settlement Date, and (b) thereafter, each period commencing on (and including) the first day after the last day included in the immediately preceding

 
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Calculation Period for such Portion of Capital and ending on (but not including) the next occurring Settlement Date.
“ Capital ” means with respect to any Purchaser, (a) the amount paid to the Seller by such Purchaser pursuant to Section 1.1(a) or (b) of this Agreement or (b) such Purchaser’s Pro Rata Share of the aggregate amount of all unreimbursed draws deemed to be Funded Purchases pursuant to Section 1.2(e) of this Agreement, as reduced from time to time by Collections distributed and applied on account of such Capital pursuant to Section 1.4(d) of this Agreement; provided , that if such Capital shall have been reduced by any distribution and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made.
“ Change in Control ” means (a) that Swift ceases to own, directly or indirectly, 100% of the membership interests of the Seller free and clear of all Adverse Claims, (b) Parent ceases to own, directly or indirectly, 100% of the membership interests of any Originator or (c) a “Change in Control” (as such term is defined in the Credit Agreement, without giving effect to any amendment, supplement, modification or waiver of such definition made or given after such time either PNC, Citi or Wells is no longer a lender thereunder).
“ Citi ” means Citibank, N.A.
“ Closing Date ” means June 8, 2011.
“ Collections ” means, with respect to any Pool Receivable: (a) all funds that are received by any Originator, Swift, the Seller or the Servicer in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor or any other Person directly or indirectly liable for the payment of such Pool Receivable and available to be applied thereon), (b) all Deemed Collections and (c) all other proceeds of such Pool Receivable.
“ Commitment ” means, with respect to any Related Committed Purchaser, LC Participant or LC Bank, as applicable, the maximum aggregate amount which such Purchaser is obligated to pay hereunder on account of all Funded Purchases and all drawings under all Letters of Credit, on a combined basis, as set forth below its signature to this Agreement or in the Purchase Limit Increase Request, Assumption Agreement or Transfer Supplement pursuant to which it became a Purchaser, as such amount may be modified in connection with any subsequent assignment pursuant to Section 6.3(c) or in connection with a change in the Purchase Limit pursuant to Section 1.1(c) .
“ Commitment Percentage ” means, for each Related Committed Purchaser or related LC Participant in a Purchaser Group, the Commitment of such Related Committed Purchaser or related LC Participant, as the case may be, divided by the total of all Commitments of all Related Committed Purchasers or related LC Participants, as the case may be, in such Purchaser Group.
“ Company Notes ” has the meaning set forth in Section 3.1 of the Sale Agreement.

 
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“ Concentration Percentage ” means, at any time: (a) for any Group A Obligor, 15.0%, (b) for any Group B Obligor, 7.0%, (c) for any Group C Obligor, 5.0% and (d) for any Group D Obligor, 3.0%;
“ Concentration Reserve ” means at any time, (a) the Concentration Reserve Percentage divided by (b) 100% minus the Concentration Reserve Percentage.
“ Concentration Reserve Percentage ” means, at any time, the ratio (expressed as a percentage) (a) the largest of the following (i) the sum of the five (5) largest Group D Obligor Receivables balances (up to the Concentration Percentage for each such Obligor), (ii) the sum of the three (3) largest Group C Obligor Receivables balances (up to the Concentration Percentage for each such Obligor), (iii) the sum of the two (2) largest Group B Obligor Receivables balances (up to the Concentration Percentage for such Obligor), and (iv) the largest Group A Obligor Receivables balance (up to the Concentration Percentage for such Obligor), divided by (b) the sum of the aggregate Outstanding Balances of all Eligible Receivables in the Receivables Pool.
“ Conduit Purchaser ” means each commercial paper conduit that is a party to this Agreement, as a purchaser, or that becomes a party to this Agreement, as a purchaser pursuant to a Purchase Limit Increase Request, Assumption Agreement, Transfer Supplement or otherwise.
“ Continuing Purchaser ” has the meaning set forth in Section 6.18 of this Agreement.
“ Contract ” means, with respect to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes or other writings (including electronic or other forms of writings consistent with standard industry billing practices) pursuant to which such Receivable arises or that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable.
“ Contributed Receivables ” has the meaning set forth in Section 1.1(a) of the Sale Agreement.
“ CP Rate ” means, for any Conduit Purchaser and for any Yield Period for any Portion of Capital (a) the per annum rate equivalent to the weighted average cost (as determined by the applicable Purchaser Agent and which shall include commissions of placement agents and dealers, incremental carrying costs incurred with respect to Notes of such Person maturing on dates other than those on which corresponding funds are received by such Conduit Purchaser, other borrowings by such Conduit Purchaser (other than under any Program Support Agreement) and any other costs associated with the issuance of Notes) of or related to the issuance of Notes that are allocated, in whole or in part, by the applicable Purchaser Agent to fund or maintain such Portion of Capital (and which may be also allocated in part to the funding of other assets of such Conduit Purchaser); provided , that if any component of such rate is a discount rate, in calculating the “ CP Rate ” for such Portion of Capital for such Yield Period, the applicable Purchaser Agent shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum ; provided , further , that notwithstanding anything in this Agreement or the other Transaction Documents to the contrary, the Seller agrees that any amounts payable to the Purchasers in respect of Discount for any Yield Period with respect to any Portion of Capital funded by such Purchaser at the CP Rate shall include an amount equal to the portion of the face amount of the outstanding

 
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Notes issued to fund or maintain such Portion of Capital that corresponds to the portion of the proceeds of such Notes that was used to pay the interest component of maturing Notes issued to fund or maintain such Portion of Capital, to the extent that such Purchaser had not received payments of interest in respect of such interest component prior to the maturity date of such maturing Notes (for purposes of the foregoing, the “interest component” of Notes equals the excess of the face amount thereof over the net proceeds received by such Purchaser from the issuance of Notes, except that if such Notes are issued on an interest-bearing basis its “interest component” will equal the amount of interest accruing on such Notes through maturity) or (b) any other rate designated as the “ CP Rate ” for such Conduit Purchaser in a Purchase Limit Increase Request, Assumption Agreement or Transfer Supplement pursuant to which such Person becomes a party as a Conduit Purchaser to this Agreement, or any other writing or agreement provided by such Conduit Purchaser to the Seller, the Servicer and the applicable Purchaser Agent from time to time. The “ CP Rate ” for any day while a Termination Event or an Unmatured Termination Event exists shall be an interest rate equal to the Alternate Rate as calculated in the definition thereof.
“ Credit Agreement ” means that certain Second Amended and Restated Credit Agreement, dated as of March 7, 2013, among Swift Transportation Co., LLC, as borrower, Swift Transportation Co., LLC, the Parent, the other Guarantors party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Morgan Stanley Senior Funding, Inc. and Wells, as Co-Syndication Agents, and the other Lenders party thereto (as the same may be amended, restated, supplemented or otherwise modified from time to time).
“ Credit and Collection Policy ” means, as the context may require, those receivables credit and collection policies and practices of each Originator and of Swift in effect on the date of this Agreement and described in Schedule I to this Agreement, as modified in compliance with this Agreement.
“ Credit Sales ” means, for any period, the aggregate initial principal balance of Receivables originated by the Originators during such period.
“ Cut-off Date ” has the meaning set forth in Section 1.1(a) the Sale Agreement.
“ Days’ Sales Outstanding ” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to : (a) the average of the Outstanding Balance of all Pool Receivables as of the last day of each of the three most recent Fiscal Months ended on the last day of such Fiscal Month divided by (b)(i) the aggregate Credit Sales during the three Fiscal Months ended on the last day of such Fiscal Month divided by (ii) 90.
“ Debt ” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than current trade liabilities and current intercompany liabilities (but not any refinancings, extensions, renewals or replacements thereof) incurred in the ordinary course of business and maturing within 365 days after the incurrence thereof), (e) all guarantees by such Person of Debt of others, (f) all capital lease

 
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obligations of such Person, (g) all payments that such Person would have to make in the event of an early termination, on the date Debt of such Person is being determined, in respect of outstanding swap agreements, (h) the principal component of all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and (i) the principal component of all obligations of such person in respect of bankers’ acceptances. The Debt of any person shall include the Debt of any partnership in which such Person is a general partner, other than to the extent that the instrument or agreement evidencing such Debt expressly limits the liability of such person in respect thereof.
“ Deemed Collections ” has the meaning set forth in Section 1.4(e)(ii) of this Agreement.
“ Default Ratio ” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing : (a) the aggregate Outstanding Balance of all Pool Receivables that became Defaulted Receivables during such month (other than Receivables that became Defaulted Receivables as a result of an Insolvency Proceeding with respect to the Obligor thereof during such month) by (b) the Credit Sales during the month that is four (4) Fiscal Months before such month.
“ Defaulted Receivable ” means a Receivable:
(a)    as to which any payment, or part thereof, remains unpaid for more than 120 days from the original invoice date for such payment, or
(b)    without duplication (i) as to which an Insolvency Proceeding shall have occurred with respect to the Obligor thereof or any other Person obligated thereon or owning any Related Security with respect thereto; provided, however, that notwithstanding that an Insolvency Proceeding has occurred with respect to such Obligor, such Receivable shall not be deemed a Defaulted Receivable in the event that the applicable Originator is determined by a bankruptcy court of competent jurisdiction to be a critical vendor or other entity entitled to post-petition payment on its pre-petition claim or such Receivable is for post-petition services which are entitled to administrative priority, (ii) as to which any payment, or part thereof, has been written off the Seller’s or the applicable Originator’s books as uncollectible or (iii) as to which the related Obligor is not entitled to any further extensions of credit under the terms of the applicable Credit and Collection Policy.
“ Delinquency Ratio ” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing : (a) the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of all Pool Receivables on such day.
“ Delinquent Receivable ” means a Receivable as to which any payment, or part thereof, remains unpaid for more than 120 days from the original invoice date for such payment.
“ Dilution Horizon Ratio ” means, for any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) computed as of

 
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the last day of such Fiscal Month by dividing : (a) the aggregate Credit Sales during the two most recent Fiscal Months, by (b) the Net Receivables Pool Balance at the last day of such Fiscal Month.
“ Dilution Ratio ” means the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each Fiscal Month by dividing : (a) the aggregate amount of payments made or owed by the Seller pursuant to Section 1.4(e)(i) of this Agreement during such Fiscal Month by (b) the aggregate Credit Sales during the Fiscal Month that is one month prior to such Fiscal Month.
“ Dilution Reserve ” means, on any day, an amount equal to (a) the Dilution Reserve Percentage on such day, divided by (b) 100% minus the Dilution Reserve Percentage on such day.
“ Dilution Reserve Percentage ” means on any day, the product (expressed as a percentage) of (a) the Dilution Horizon Ratio multiplied by (b) the sum of (i) 2.25 times the average of the Dilution Ratios for the twelve most recent Fiscal Months and (ii) the Dilution Spike Factor.
“ Dilution Spike Factor ” means, for any Fiscal Month, the product of (a) the positive difference , if any, between : (i) the highest Dilution Ratio for any Fiscal Month during the twelve most recent Fiscal Months and (ii) the arithmetic average of the Dilution Ratios for such twelve Fiscal Months times (b) (i) the highest Dilution Ratio for any Fiscal Month during the twelve most recent Fiscal Months, divided by (ii) the arithmetic average of the Dilution Ratios for such twelve Fiscal Months.
“ Discount ” means with respect to any Purchaser:
(a)    for any Portion of Capital for any Yield Period with respect to any Purchaser to the extent such Portion of Capital will be funded by such Purchaser during such Yield Period through the issuance of Notes:
CPR x C x ED/360
(b)    for any Portion of Capital for any Yield Period with respect to any Purchaser to the extent such Portion of Capital will not be funded by such Purchaser during such Yield Period through the issuance of Notes or, if the LC Bank and/or any LC Participant has deemed to have made a Funded Purchase in connection with any drawing under a Letter of Credit which accrues Discount pursuant to Section 1.2(e) of this Agreement:
AR x C x ED/Year
where:
AR
=    the Alternate Rate for such Portion of Capital for such Yield Period with respect to such Purchaser,
C
=    the daily average Capital with respect to such Portion of Capital during such Yield Period with respect to such Purchaser,

 
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CPR
=    the CP Rate for the Portion of Capital for such Yield Period with respect to such Purchaser,
ED
=    the actual number of days during such Yield Period, and
Year
=    if such Portion of Capital is funded based upon: (i) the Euro-Rate or the LIBOR Market Index Rate, as applicable, 360 days, and (ii) the Base Rate, 365 or 366 days, as applicable;
provided , that no provision of this Agreement shall require the payment or permit the collection of Discount in excess of the maximum permitted by applicable law; and provided further , that Discount for any Portion of Capital shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason.
“ Dollar ” or “ $ ” means lawful currency of the United States of America.
“ Drawing Date ” has the meaning set forth in Section 1.15(b) of this Agreement.
“ Eligible Receivable ” means, at any time, a Pool Receivable:
(a)    the Obligor of which is (i) a resident of the United States or, subject to the limitations in the definition of “Excess Concentrations”, a resident of Mexico or Canada, (ii) not subject to any action of the type described in paragraph (f) of Exhibit V to this Agreement and (iii) not an Affiliate of Swift;
(b)    that is denominated and payable in U.S. dollars to a Lock-Box Account in the United States, and the Obligor with respect to which has been instructed on or prior to the Closing Date to remit Collections in respect thereof to a Lock-Box Account in the United States, provided , however , that the Obligor with respect to any FUMS Receivable shall not be required to remit Collections to a Lock-Box Account;
(c)    that does not have a stated maturity which is more than 60 days after the invoice date of such Receivable;
(d)    that arises under a duly authorized Contract for the sale and delivery of goods and services in the ordinary course of an Originator’s business;
(e)    that arises under a duly authorized Contract that is in full force and effect and that is a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms;
(f)    that conforms in all material respects with all applicable laws, rulings and regulations in effect;
(g)    that is not the subject of any asserted dispute, offset, hold back, defense, Adverse Claim or other claim, but any such Pool Receivable shall be ineligible only to the

 
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extent of the amount of such asserted dispute, offset, hold back, defense, Adverse Claim or other claim;
(h)    that satisfies in all material respects all applicable requirements of the applicable Credit and Collection Policy;
(i)    that has not been modified, waived or restructured since its creation, except as permitted pursuant to Section 4.2 of this Agreement;
(j)    in which the Seller has good and marketable title, free and clear of any Adverse Claims, and that is freely assignable by the Seller (including without any consent of the related Obligor unless such consent has already been obtained);
(k)    for which the Administrator (for the benefit of each Purchaser) shall have a valid and enforceable undivided percentage ownership or security interest, to the extent of the Purchased Interest, and a valid and enforceable first priority perfected security interest therein and in the Related Security and Collections with respect thereto, in each case free and clear of any Adverse Claim;
(l)    that constitutes an “account” or “general intangible” (each, as defined in the UCC), and that is not evidenced by “instruments” or “chattel paper” (each, defined in the UCC);
(m)    that is not a Defaulted Receivable or a Delinquent Receivable;
(n)    for which none of the Originator thereof, the Seller and the Servicer has established any offset arrangements with the related Obligor (other than contractual arrangements in the ordinary course of business which do not reduce the Outstanding Balance of the applicable Receivable);
(o)    for which Defaulted Receivables of the related Obligor do not exceed 50% of the Outstanding Balance of all such Obligor’s Receivables;
(p)    that represents amounts earned and payable by the Obligor that are not subject to the performance of additional services by the Originator thereof; and
(q)    that if such Receivable has not yet been billed, no more than 45 days have expired since the date that such Receivable was created.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute of similar import, together with the rulings and regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.
“ ERISA Affiliate ” means: (a) any corporation that is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the Seller, any Originator or Swift, (b) a trade or business (whether or not incorporated) under common control

 
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(within the meaning of Section 414(c) of the Internal Revenue Code) with the Seller, any Originator or Swift, or (c) a member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as the Seller, any Originator, any corporation described in clause (a) or any trade or business described in clause (b) .
“ Euro-Rate ” means with respect to any Yield Period, the interest rate per annum determined by the applicable Purchaser Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum , rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) (a) the rate of interest determined by such Purchaser Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the rate per annum for deposits in Dollars as reported by Bloomberg Finance L.P. and shown on US0001M Screen as the composite offered rate for London interbank deposits for such period (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by such Purchaser Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at or about 11:00 a.m. (London time) on the Business Day which is two (2) Business Days prior to the first day of such Yield Period for an amount comparable to the Portion of Capital to be funded at the Alternate Rate and based upon the Euro-Rate during such Yield Period by (b) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the following formula:
Composite of London interbank offered rates shown on
Bloomberg Finance L.P. Screen US0001M
or appropriate successor
Euro-Rate =                                                                                                            
1.00 - Euro-Rate Reserve Percentage
where “ Euro-Rate Reserve Percentage ” means, the maximum effective percentage in effect on such day as prescribed by the Federal Reserve Board for determining the reserve requirements (including without limitation, supplemental, marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “ Eurocurrency Liabilities ”). The Euro-Rate shall be adjusted with respect to any Portion of Capital funded at the Alternate Rate and based upon the Euro-Rate that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective date. The applicable Purchaser Agent shall give prompt notice to the Seller of the Euro-Rate as determined or adjusted in accordance herewith (which determination shall be conclusive absent manifest error).
“ Excess Concentration ” means, for any day, the sum of, without duplication, (a) the sum of the amounts by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool of each Obligor exceeds an amount equal to (i) the applicable Concentration Percentage for such Obligor multiplied by (ii) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, plus (b) the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool the Obligor of which is a resident of Mexico or Canada exceeds an amount equal to (i) 3.0% (or such lower amount at the sole discretion of any Purchaser upon ten (10) days prior written notice to the Seller (it being understood that such

 
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percentage may be reduced to zero)) multiplied by (ii) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, plus (c) the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool that have not been invoiced to the Obligor thereof exceeds an amount equal to (i) 10.0% multiplied by (ii) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, plus (d) the amount by which the aggregate Outstanding Balance of all FUMS Receivables then in the Receivables Pool exceeds an amount equal to (i) 4.0% (or such other amount as may be agreed to in writing by the Borrower and each Purchaser Group from time to time) multiplied by (ii) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, plus (e) the amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool the Obligor of which is a Governmental Authority exceeds an amount equal to (i) 1.0% multiplied by (ii) the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool.
“ Exiting Notice ” has the meaning set forth in Section 1.4(b)(ii) of this Agreement.
“ Exiting Purchaser ” has the meaning set forth in Section 1.4(b)(ii) of this Agreement and any Purchaser the Seller designates as an Exiting Purchaser pursuant to Sections 1.7 or 1.8.
“ Facility Termination Date ” means the earliest to occur of: (a) with respect to each Purchaser July 13, 2016, (b) the date determined pursuant to Section 2.2 of this Agreement, (c) the date the Purchase Limit reduces to zero pursuant to Section 1.1(c) of this Agreement, (d) with respect to each Conduit Purchaser, the date that the commitments of all of the Liquidity Providers terminate under the related Liquidity Agreement, (e) with respect to each Purchaser Group, the date that the Commitment of all of the Related Committed Purchasers of such Purchaser Group terminate pursuant to Section 1.22 , and (f) the Seller shall fail to cause the amendment or modification of any Transaction Document as reasonably requested by Fitch, Moody’s or Standard & Poor’s, and such failure shall continue for 60 days after such amendment or modification is initially requested.
“ Fair Market Value Discount ” has the meaning set forth in Section 2.2 of the Sale Agreement.
“ Federal Funds Rate ” means, for any day, the per annum rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “ H.15(519) ”) for such day opposite the caption “Federal Funds (Effective).” If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the “ Composite 3:30 p.m. Quotations ”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day the appropriate rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Administrator of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New York City Time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrator.
“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.

 
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“ Fee Letter ” has the meaning set forth in Section 1.5 of this Agreement.
“ Fees ” means the fees payable by the Seller to each member of each Purchaser Group pursuant to the Fee Letter.
“ Fiscal Month ” means each calendar month.
“ Fiscal Quarter ” means a quarter ending on the last day of March, June, September or December.
“ Fiscal Year ” means any period of twelve consecutive calendar months ending on December 31; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the “2010 Fiscal Year”) refer to the Fiscal Year ending on December 31 of such calendar year.
“ Fitch ” means Fitch, Inc.
“ FUMS Receivable ” means a Receivable generated by an Originator pursuant to such Originator’s Freight Under Management Services program offered to its customers pursuant to which such Originator coordinates, in the capacity as an agent, services provided to the Obligor through a third party carrier.
“ Funded Purchase ” means a Purchase or deemed Purchase of undivided percentage ownership interests in the Purchased Interest under this Agreement which (a) is paid for in cash, including pursuant to Section 1.1(b) (other than through reinvestment of Collections pursuant to Section 1.4(b) ) or (b) is treated as a Funded Purchase pursuant to Section 1.2(e) .
“ GAAP ” means the generally accepted accounting principles and practices in the United States, consistently applied.
“ Governmental Acts ” has the meaning given such term in Section 1.20 .
“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any body or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, and any Person owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
“ Group A Obligor ” means any Obligor with a short-term rating of at least: (a) “A-1” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “A+” or better by Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-1” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “A1” or better by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities. If both a short-term and long-term rating exist for an Obligor, the short-term rating will be used and if Standard & Poor’s and Moody’s ratings for an Obligor indicate a different group for such Obligor, the lower of such ratings shall be used.

 
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“ Group B Obligor ” means an Obligor, other than a Group A Obligor, with a short-term rating of at least: (a) “A-2” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “BBB+” Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-2” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baa1” by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities. If both a short-term and long-term rating exist for an Obligor, the short-term rating will be used and if Standard & Poor’s and Moody’s ratings for an Obligor indicate a different group for such Obligor, the lower of such ratings shall be used.
“ Group C Obligor ” means an Obligor, other than a Group A Obligor or Group B Obligor, with a short-term rating of at least: (a) “A-3” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “BBB-” by Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-3” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baa3” by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities. If both a short-term and long-term rating exist for an Obligor, the short-term rating will be used and if Standard & Poor’s and Moody’s ratings for an Obligor indicate a different group for such Obligor, the lower of such ratings shall be used.
“ Group Capital ” means with respect to any Purchaser Group, an amount equal to the aggregate of all Capital of the Purchasers within such Purchaser Group.
“ Group Commitment ” means with respect to any Purchaser Group, the aggregate of the Commitments of each Purchaser within such Purchaser Group, which amount is set forth on the signature pages hereto.
“ Group D Obligor ” means any Obligor that is not a Group A Obligor, Group B Obligor or Group C Obligor.
“ Indemnified Amounts ” has the meaning set forth in Section 3.1 of this Agreement.
“ Indemnified Party ” has the meaning set forth in Section 3.1 of this Agreement.
“ Indemnified Taxes ” has the meaning set forth in Section 1.10 of this Agreement.
“ Independent Manager ” has the meaning set forth in paragraph 3(c) of Exhibit IV to this Agreement.
“ Information Package ” means each report, in substantially the form of Annex A-1 to this Agreement, furnished by or on behalf of the Servicer to the Administrator and each Purchaser Agent pursuant to this Agreement.
“ Insolvency Proceeding ” means: (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors of a Person or any composition, marshalling of assets for creditors of a Person, or other similar arrangement in respect of its creditors generally or any substantial portion of its

 
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creditors, in each case undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.
“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of the Internal Revenue Code also refer to any successor sections.
“ LC Bank ” has the meaning set forth in the preamble to this Agreement.
“ LC Collateral Account ” means the account designated as the LC Collateral Account established and maintained by the Administrator (for the benefit of the LC Bank and the LC Participants), or such other account as may be so designated as such by the Administrator with notice to the Seller and the Servicer.
“ LC Participant ” means each financial institution that is a party to this Agreement, as a LC Participant, or that becomes a party to this Agreement, as a LC Participant pursuant to a Purchase Limit Increase Request, Assumption Agreement or otherwise.
“ LC Participation Amount ” means, at any time, the then sum of the undrawn amounts of all outstanding Letters of Credits.
“ Letter of Credit ” means any stand-by letter of credit issued by the LC Bank for the account of the Seller pursuant to this Agreement.
“ Letter of Credit Application ” has the meaning set forth in Section 1.13(a) of this Agreement.
“ LIBOR Market Index Rate ” means, for any day, the three-month Eurodollar Rate for U.S. dollar deposits as reported on the Reuters Screen LIBOR01 Page or any other page that may replace such page from time to time for the purpose of displaying offered rates of leading banks for London interbank deposits in United States dollars, as of 11:00 a.m. (London time) on such date, or if such day is not a Business Day, then the immediately preceding Business Day (or if not so reported, then as determined by the Wells Purchaser Agent from another recognized source for interbank quotation), in each case, changing when and as such rate changes.
“ Liquidity Agreement ” means any agreement entered into in connection with this Agreement pursuant to which a Liquidity Provider agrees to make purchases or advances to, or purchase assets from, any Conduit Purchaser in order to provide liquidity for such Conduit Purchaser’s Purchases.
“ Liquidity Provider ” means each bank or other financial institution that provides liquidity support to any Conduit Purchaser pursuant to the terms of a Liquidity Agreement.
“ Lock-Box Account ” means each account listed on Schedule II to this Agreement and maintained, in each case in the name of the Seller and maintained by the Seller at a bank or other financial institution acting as a Lock-Box Bank pursuant to a Lock-Box Agreement for the purpose of receiving Collections.

 
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“ Lock-Box Agreement ” means an agreement, among the Seller, the Servicer, a Lock-Box Bank and the Administrator, governing the terms of the related Lock-Box Accounts, in each case acceptable to the Administrator.
“ Lock-Box Bank ” means any of the banks or other financial institutions holding one or more Lock-Box Accounts.
“ Loss Reserve ” means, on any day, an amount equal to (a) the Loss Reserve Percentage on such date divided by (b) 100%, minus the Loss Reserve Percentage on such date.
“ Loss Reserve Percentage ” means, on any day, an amount (expressed as a percentage) equal to (a) the product of (i) 2.25 times the highest three month rolling average of the Default Ratios during the twelve most recent Fiscal Months multiplied by (ii) the aggregate Credit Sales during the four most recent Fiscal Months and one quarter of the fifth most recent Fiscal Month divided by (b) the Net Receivables Pool Balance as of such date.
“ Majority LC Participants ” shall mean LC Participants whose Pro Rata Shares aggregate 50% or more.
“ Majority Purchaser Agents ” means, at any time, the Purchaser Agents which in their related Purchaser Group have Related Committed Purchasers whose Commitments aggregate more than 50% of the aggregate of the Commitments of all Related Committed Purchasers in all Purchaser Groups; provided , that so long as any one Related Committed Purchaser’s Commitment is greater than 50% of the aggregate Commitments and there is more than one Purchaser Group, then “ Majority Purchaser Agents ” shall mean a minimum of two Purchaser Agents which in their related Purchaser Group have Related Committed Purchasers whose Commitments aggregate more than 50% of the aggregate Commitment of all Related Committed Purchasers in all Purchaser Groups.
“ Material Adverse Effect ” means, relative to any Person with respect to any event or circumstance, a material adverse effect on:
(a)    the assets, operations, business or financial condition of an Originator, the Seller or the Servicer,
(b)    the ability of any of an Originator, the Seller or Servicer to perform its obligations under this Agreement or any other Transaction Document to which it is a party,
(c)    the validity or enforceability of any of the Transaction Documents, or the validity, enforceability or collectability of the Pool Receivables, or
(d)    the status, perfection, enforceability or priority of the Administrator’s, any Purchaser’s or the Seller’s interest in the Pool Assets.
“ Minimum Dilution Reserve ” means, on any day, (a) the Minimum Dilution Reserve Percentage on such date divided by (b) 100% minus the Minimum Dilution Reserve Percentage on such date.

 
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“ Minimum Dilution Reserve Percentage ” means, at any time, the product (expressed as a percentage) of (a) the 12-month rolling average of the Dilution Ratio at such time multiplied by (b) the Dilution Horizon Ratio as of such date.
“ Minimum Usage Amount ” means, as of any date of determination, an amount greater than or equal to the lesser of (a) 50% of the Purchase Limit or (b) an amount which causes the Purchased Interest to equal 100%.
“ Moody’s ” means Moody’s Investors Service, Inc.
“ Net Receivables Pool Balance ” means, at any time: (a) the Outstanding Balance of Eligible Receivables then in the Receivables Pool minus (b) the Excess Concentration.
“ New Purchaser ” has the meaning set forth in Section 6.18 of this Agreement.
“ Notes ” means short-term promissory notes issued, or to be issued, by any Conduit Purchaser to fund its investments in accounts receivable or other financial assets.
“ Obligor ” means, with respect to any Receivable, the Person obligated to make payments pursuant to the Contract relating to such Receivable.
“ Order ” has the meaning set forth in Section 1.21 of this Agreement.
“ Original Purchase Agreement ” has the meaning set forth in the preamble hereto.
“ Originator ” means each Person from time to time party to the Sale Agreement as an Originator.
“ Other Taxes ” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Transaction Document.
“ Outstanding Balance ” means, for any Receivable at any time, the then outstanding principal balance thereof.
“ Parent ” means Swift Transportation Company, a Delaware corporation.
“ Participant ” has the meaning set forth in Section 6.3(b) of this Agreement.
“ Patriot Act ” has the meaning given such term in Section 6.17 .
“ Payment Date ” means (a) the Closing Date and (b) each Business Day thereafter that the Originators are open for business.

 
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“ Performance Guaranty ” means that certain Performance Guaranty, dated as of the date hereof, made by the Parent in favor of the Administrator with respect to certain obligations of the Servicer and the Originators.
“ Person ” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.
“ PNC ” means PNC Bank, National Association.
“ Pool Assets ” has the meaning set forth in Section 1.2(d) of this Agreement.
“ Pool Receivable ” means a Receivable in the Receivables Pool.
“ Portion of Capital ” means, with respect to any Purchaser and its related Capital, the portion of such Capital being funded or maintained by such Purchaser by reference to a particular interest rate basis.
“ Pro Rata Share ” means, for each LC Participant or the LC Bank, the Commitment of such LC Participant or LC Bank, as the case may be, divided by the aggregate of the Commitments of all LC Participants and the LC Bank at such time.
“ Program Support Agreement ” means and includes any Liquidity Agreement and any other agreement entered into by any Program Support Provider providing for: (a) the issuance of one or more letters of credit for the account of any Conduit Purchaser, (b) the issuance of one or more surety bonds for which the such Conduit Purchaser is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, (c) the sale by such Conduit Purchaser to any Program Support Provider of the Purchased Interest (or portions thereof) maintained by such Conduit Purchaser and/or (d) the making of loans and/or other extensions of credit to any Conduit Purchaser in connection with such Conduit Purchaser’s securitization program contemplated in this Agreement, together with any letter of credit, surety bond or other instrument issued thereunder.
“ Program Support Provider ” means and includes with respect to each Conduit Purchaser, any Liquidity Provider and any other Person (other than any customer of such Conduit Purchaser) now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, such Conduit Purchaser pursuant to any Program Support Agreement.
“ Purchase ” has the meaning set forth in Section 1.1(a) of this Agreement.
“ Purchase and Sale Indemnified Amounts ” has the meaning set forth in Section 9.1 of the Sale Agreement.
“ Purchase and Sale Indemnified Party ” has the meaning set forth in Section 9.1 of the Sale Agreement.
“ Purchase and Sale Termination Date ” has the meaning set forth in Section 1.4 of the Sale Agreement.

 
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“ Purchase and Sale Termination Event ” has the meaning set forth in Section 8.1 of the Sale Agreement.
“ Purchase Date ” means the date on which a Purchase or a reinvestment is made pursuant to this Agreement.
“ Purchase Facility ” has the meaning set forth in Section 1.1 of the Sale Agreement.
“ Purchase Limit ” means $325,000,000, as such amount may be reduced pursuant to Section 1.1(c) or otherwise in connection with any Exiting Purchaser, or increased pursuant to Section 1.1(f) . References to the unused portion of the Purchase Limit shall mean, at any time, the Purchase Limit minus the sum of the then outstanding Aggregate Capital plus the LC Participation Amount.
“ Purchase Limit Increase ” has the meaning set forth in Section 1.23 of this Agreement.
“ Purchase Limit Increase Request ” has the meaning set forth in Section 1.23 of this Agreement.
“ Purchase Notice ” has the meaning set forth in Section 1.2(a) to this Agreement.
“ Purchase Price ” has the meaning set forth in Section 2.2 of the Sale Agreement.
“ Purchased Interest ” means, at any time, the undivided percentage ownership interest of the Purchasers in: (a) each and every Pool Receivable now existing or hereafter arising, (b) all Related Security with respect to such Pool Receivables and (c) all Collections with respect to, and other proceeds of, such Pool Receivables and Related Security. Such undivided percentage ownership interest shall be computed as:
Aggregate Capital + Adjusted LC Participation Amount + Total Reserves  
Net Receivables Pool Balance
The Purchased Interest shall be determined from time to time pursuant to Section 1.3 of this Agreement.
“ Purchaser ” means each Conduit Purchaser, each Related Committed Purchaser, each LC Participant and/or the LC Bank, as applicable.
“ Purchaser Agent ” means each Person acting as agent on behalf of a Purchaser Group and designated as a Purchaser Agent for such Purchaser Group on the signature pages to this Agreement or any other Person who becomes a party to this Agreement as a Purchaser Agent pursuant to a Purchase Limit Increase Request, an Assumption Agreement or a Transfer Supplement.
“ Purchaser Group ” means, (a) for any Conduit Purchaser, such Conduit Purchaser, its Related Committed Purchaser, its related Purchaser Agent, its related LC Participants, any other related Conduit Purchasers with the same Related Committed Purchaser as such Conduit Purchaser, and, in the case of Market Street Funding LLC as a Conduit Purchaser, the LC Bank or (b) with respect

 
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to the Wells Fargo Purchaser Group, Wells’ roles as Related Committed Purchaser, Purchaser Agent and LC Participant.
“ Purchasers’ Share ” of any amount, at any time, means such amount multiplied by the Purchased Interest at such time.
“ Purchasing Related Committed Purchaser ” has the meaning set forth in Section 6.3(c) of this Agreement.
“ Ratable Share ” means, for each Purchaser Group, such Purchaser Group’s aggregate Commitments divided by the aggregate Commitments of all Purchaser Groups.
“ Rating Agency ” means Fitch, Moody’s, Standard & Poor’s or any other rating agency a Conduit Purchaser chooses to rate its Notes.
“ Rating Agency Condition ” means, when applicable, with respect to any material event or occurrence, receipt by the Administrator (or the applicable Purchaser Agent) of written confirmation from each of Fitch, Standard & Poor’s and Moody’s (and/or each other rating agency then rating the Notes of the applicable Conduit Purchaser) that such event or occurrence shall not cause the rating on the then outstanding Notes of any applicable Purchaser to be downgraded or withdrawn.
“ Receivable ” means any accounts or notes receivable representing or evidencing any indebtedness and other obligations owed to any Originator or the Seller or any right of the Seller or any Originator to payment from or on behalf of an Obligor or any right to reimbursement for funds paid or advanced by the Seller or any Originator on behalf of an Obligor, whether constituting an “account,” “chattel paper,” “payment intangible,” “instrument” or “general intangible,” (each, as defined in the UCC) however arising (whether or not earned by performance), and includes, without limitation, the obligation to pay any finance charges, fees and other charges with respect thereto, but which expressly excludes owner-operator advances and settlements. Indebtedness and other obligations arising from any one transaction, including, without limitation, indebtedness and other obligations represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other obligations arising from any other transaction.
“ Receivables Pool ” means, at any time, all of the then outstanding Receivables purchased by the Seller pursuant to the Sale Agreement prior to the Facility Termination Date.
“ Reimbursement Obligation ” has the meaning set forth in Section 1.15(b) of this Agreement.
“ Related Committed Purchaser ” means each Person listed as such (and its respective Commitment) as set forth on the signature pages of this Agreement or in any Purchase Limit Increase Request, Assumption Agreement or Transfer Supplement.
“ Related Rights ” has the meaning set forth in Section 1.1 of the Sale Agreement.

 
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“ Related Security ” means, with respect to any Receivable:
(a)    all of the Seller’s and the Originator thereof’s interest in any goods (including returned goods), and documentation of title evidencing the shipment or storage of any goods (including returned goods), the sale of which gave rise to such Receivable,
(b)    all instruments and chattel paper that may evidence such Receivable,
(c)    all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto,
(d)    solely to the extent applicable to such Receivable, all of the Seller’s and the Originator thereof’s rights, interests and claims under the Contracts relating to such Receivable, and all guaranties, indemnities, insurance and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, and
(e)    all of the Seller’s rights, interests and claims under the Sale Agreement and the other Transaction Documents.
“ Required LC Participants ” means the LC Participants whose Pro Rata Shares aggregate 66⅔% or more.
“ Restatement Date ” means June 14, 2013.
“ Restricted Payments ” has the meaning set forth in Section 1(m) of Exhibit IV to this Agreement.
“ Sale Agreement ” means the Purchase and Sale Agreement, dated as of the Closing Date between the Seller and the Originators, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ SEC ” means the U.S. Securities and Exchange Commission.
“ Seller ” has the meaning set forth in the preamble to this Agreement.
“ Seller’s Share ” of any amount means the greater of: (a) $0 and (b) such amount minus the product of (i) such amount multiplied by (ii) the Purchased Interest.
“ Servicer ” has the meaning set forth in the preamble to this Agreement.
“ Servicing Fee ” means the fee referred to in Section 4.6 of this Agreement.
“ Servicing Fee Rate ” has the meaning set forth in Section 4.6 of this Agreement.

 
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“ Settlement Date ” means the 20th day of each calendar month (or if such day is not a Business Day, the next occurring Business Day) and such other dates as the Seller or Servicer shall request and as consented to by the Administrator and Purchaser Agents; provided , that on and after the occurrence and continuation of any Termination Event, the Settlement Date shall be the date selected as such by the Administrator (with the consent or at the direction of the Majority Purchaser Agents) from time to time ( it being understood that the Administrator (with the consent or at the direction of the Majority Purchaser Agents) may select such Settlement Date to occur as frequently as daily) or, in the absence of any such selection, the date which would be the Settlement Date pursuant to this definition.
“ Solvent ” means, with respect to any Person at any time, a condition under which:
(a)    the fair value and present fair saleable value of such Person’s total assets (including intangible assets) is, on the date of determination, greater than such Person’s total liabilities (including contingent and unliquidated liabilities) at such time;
(b)    the fair value and present fair saleable value of such Person’s assets is greater than the amount that will be required to pay such Person’s probable liability on its existing debts as they become absolute and matured (“ debts ,” for this purpose, includes all legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent);
(c)    such Person is and shall continue to be able to pay all of its liabilities as such liabilities mature; and
(d)    such Person does not have unreasonably small capital with which to engage in its current and in its anticipated business.
For purposes of this definition:
(i)    the amount of a Person’s contingent or unliquidated liabilities at any time shall be that amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be expected to become an actual or matured liability;
(ii)    the “ fair value ” of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value;
(iii)    the “ regular market value ” of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to purchase such asset under ordinary selling conditions; and
(iv)    the “ present fair saleable value ” of an asset means the amount which can be obtained if such asset is sold with reasonable promptness in an arm’s-length transaction in an existing and not theoretical market.
“ Standard & Poor’s ” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.

 
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“ Sub-Servicer ” has the meaning set forth in Section 4.1(d) of this Agreement.
“ Subsidiary ” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.
“ Swift ” has the meaning set forth in the preamble to this Agreement.
“ Tangible Net Worth ” means, with respect to any Person, the tangible net worth of such Person as determined in accordance with GAAP.
“ Taxes ” means, with respect to any Person, any and all present or future taxes, charges, fees, levies or other assessments (including income, gross receipts, profits, withholding, excise, property, sales, use, value added, license, occupation and franchise taxes and including any related interest, penalties or other additions) imposed by any jurisdiction or taxing authority (whether foreign or domestic) under the laws of which such Person is organized.
“ Termination Day ” means: (a) each day on which the conditions set forth in Section 2 of Exhibit II to this Agreement are not satisfied or (b) each day that occurs on or after the Facility Termination Date.
“ Termination Event ” has the meaning specified in Exhibit V to this Agreement.
“ Total Reserves ” means, on any day, an amount equal to the product of (a) the greater of (i) 15% and (ii) the sum of: (1) the Yield Reserve, plus (2) the greater of (x) the sum of the Loss Reserve plus the Dilution Reserve and (y) the sum of the Concentration Reserve plus the Minimum Dilution Reserve and (b) the sum of the then outstanding Aggregate Capital plus the LC Participation Amount.
“ Transaction Documents ” means this Agreement, the Lock-Box Agreements, the Fee Letter, the Sale Agreement, the Performance Guaranty, the Company Notes and all other certificates, instruments, reports, notices, agreements and documents executed, delivered or filed under or in connection with this Agreement, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“ Transfer Supplement ” has the meaning set forth in Section 6.3(c) of this Agreement.
“ UCC ” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.
“ Unmatured Purchase and Sale Termination Event ” means any event which, with the giving of notice or lapse of time, or both, would become a Purchase and Sale Termination Event.

 
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“ Unmatured Termination Event ” means an event that, with the giving of notice or lapse of time, or both, would constitute a Termination Event.
“ Weekly Report ” means each report, in substantially the form of Annex A-2 to this Agreement, furnished by or on behalf of the Servicer to the Administrator and each Purchase Agent pursuant to this Agreement.
“ Wells ” means Wells Fargo Bank, National Association.
“ Yield Period ” means (a) with respect to any Portion of Capital funded by the issuance of Notes, (i) initially the period commencing on (and including) the date of the initial Purchase or funding of such Portion of Capital and ending on (but not including) the next occurring Settlement Date, and (ii) thereafter, each period commencing on (and including) the first day after the last day included in the immediately preceding Yield Period for such Portion of Capital and ending on (but not including) the next occurring Settlement Date; and (b) with respect to any Portion of Capital not funded by the issuance of Notes, (i) initially the period commencing on (and including) the date of the initial Purchase or funding of such Portion of Capital and ending such number of days later (including a period of one day) as the Administrator (with the consent or at the direction of the applicable Purchaser Agent) shall select, and (ii) thereafter, each period commencing on the last day of the immediately preceding Yield Period for such Portion of Capital and ending such number of days later (including a period of one day) as the Administrator (with the consent or at the direction of the applicable Purchaser Agent) shall select; provided , that
(i)    any Yield Period (other than of one day) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; provided , if Discount in respect of such Yield Period is computed by reference to the Euro-Rate or the LIBOR Market Index Rate, and such Yield Period would otherwise end on a day which is not a Business Day, and there is no subsequent Business Day in the same calendar month as such day, such Yield Period shall end on the next preceding Business Day;
(ii)    in the case of any Yield Period of one day, (A) if such Yield Period is the initial Yield Period for a Purchase hereunder (other than a reinvestment), such Yield Period shall be the day of such Purchase; (B) any subsequently occurring Yield Period which is one day shall, if the immediately preceding Yield Period is more than one day, be the last day of such immediately preceding Yield Period, and, if the immediately preceding Yield Period is one day, be the day next following such immediately preceding Yield Period; and (C) if such Yield Period occurs on a day immediately preceding a day which is not a Business Day, such Yield Period shall be extended to the next succeeding Business Day; and
(iii)    in the case of any Yield Period for any Portion of Capital which commences before the Facility Termination Date and would otherwise end on a date occurring after the Facility Termination Date, such Yield Period shall end on such Facility Termination Date and the duration of each Yield Period which commences on or after the Facility Termination Date shall be of such duration as shall be selected by the Administrator (with the consent or at the direction of the applicable Purchaser Agent).

 
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“ Yield Reserve ” means, on any date, an amount (expressed as a percentage) equal to (a) the Yield Reserve Percentage on such date divided by (b) 100%, minus the Yield Reserve Percentage on such date.
“ Yield Reserve Percentage ” means, at any time, the following amount:
{( BR + SFR ) x 1.5(DSO)}
360
where:
BR
=    the Base Rate in effect at such time,
DSO
=    the Days’ Sales Outstanding, and
SFR
=    the Servicing Fee Rate.
2.     Other Terms; Usage . All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. Unless the context otherwise requires, “or” means “and/or,” and “including” (and with correlative meaning “include” and “includes”) means including without limiting the generality of any description preceding such term.


 
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EXHIBIT II

CONDITIONS TO PURCHASES
1. Conditions Precedent to Amendment and Restatement . The amendment and restatement of this Agreement is subject to the conditions precedent that the Administrator and each Purchaser Agent shall have received on or before the Restatement Date, each in form and substance (including the date thereof) reasonable satisfactory to the Administrator and each Purchaser Agent the following:
(a)      A counterpart of this Agreement and the other Transaction Documents duly executed by the parties thereto.
(b)      Copies of: (i) the resolutions of the board of directors or board of managers of each of the Parent, the Seller, the Originators and the Servicer authorizing the execution, delivery and performance by the Parent, the Seller, such Originator and the Servicer, as the case may be, of this Agreement and the other Transaction Documents to which it is a party; (ii) all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the other Transaction Documents; and (iii) the organizational documents of the Parent, the Seller, each Originator and the Servicer, in each case, certified by the Secretary or Assistant Secretary of the applicable party and, in the case of good standing certificates, certificates of qualification, certificate of formation or similar documents, the applicable secretary of state.
(c)      A certificate of the Secretary or Assistant Secretary of the Parent, the Seller, the Originators and the Servicer certifying the names and true signatures of its officers who are authorized to sign this Agreement and the other Transaction Documents to which it is a party. Until the Administrator and each Purchaser Agent receives a subsequent incumbency certificate from the Parent, the Seller, an Originator or the Servicer, as the case may be, the Administrator and each Purchaser Agent shall be entitled to rely on the last such certificate delivered to it by the Seller, such Originator or the Servicer, as the case may be.
(d)      [intentionally omitted]
(e)      Acknowledgment copies, or time stamped receipt copies, of proper financing statements, duly filed on or before the Restatement Date under the UCC of all jurisdictions that the Administrator may deem reasonably necessary or desirable in order to perfect the interests of the Seller and the Administrator (for the benefit of the Purchasers) contemplated by this Agreement and the Sale Agreement.
(f)      Acknowledgment copies, or time stamped receipt copies, of proper financing statements, if any, duly filed by the Administrator on or before the Restatement Date under the UCC of all jurisdictions that the Administrator may deem reasonably necessary or desirable in order to terminate or release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by the Originators or the Seller in any applicable secretary of state UCC filing office.

 
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(g)      Completed UCC search reports from all applicable state jurisdictions, dated on or shortly before the Restatement Date, listing all financing statements filed with the secretary of state in all such state jurisdictions, that name Swift, the Originators or the Seller as debtor, and similar search reports from all applicable jurisdictions with respect to judgment, tax, ERISA and other liens as the Administrator may request, showing no Adverse Claims on any Pool Assets (other than those which have been released as described in the preceding clause (f) ).
(h)      Favorable opinions, addressed to each Rating Agency, the Administrator, each Purchaser, each Purchaser Agent and each Liquidity Provider, in form and substance reasonably satisfactory to the Administrator and each Purchaser Agent, of Snell & Wilmer L.L.P., counsel for the Parent, the Seller, the Originators and the Servicer, and/or in-house counsel for the Parent, the Seller, the Originators and the Servicer, covering such matters as the Administrator or any Purchaser Agent may reasonably request, including, without limitation, organizational and enforceability matters, certain bankruptcy matters, and certain UCC perfection and priority matters (based on the search results referred to in clause (g) above and the officer’s certificate referred to in clause (d) above).
(i)      Satisfactory results of a review, field examination and audit (performed by representatives of the Administrator) of the Servicer’s collection, operating and reporting systems, the Credit and Collection Policy of each Originator, historical receivables data and accounts, including satisfactory results of a review of the Servicer’s operating location(s) and satisfactory review and approval of the Eligible Receivables in existence on the date of the initial Purchase under this Agreement.
(j)      A pro forma Information Package representing the performance of the Receivables Pool for the Fiscal Month before closing and a pro forma Weekly Report representing the performance of the Receivables Pool for the week before the closing.
(k)      Evidence of payment by the Seller of all accrued and unpaid fees (including those contemplated by the Fee Letter), costs and expenses to the extent then due and payable on the date thereof, including any such costs, fees and expenses arising under or referenced in Section 6.4 of this Agreement and the Fee Letter.
(l)      Good standing certificates with respect to each of the Parent, the Seller, the Originators and the Servicer issued by the Secretary of State (or similar official) of the state of each such Person’s organization or formation and principal place of business.
(m)      To the extent required by each Conduit Purchaser’s commercial paper program, letters from each of the rating agencies then rating such Conduit Purchaser’s Notes confirming the rating of such Notes after giving effect to the transaction contemplated by this Agreement.
(n)      A computer file containing all information with respect to the Receivables as the Administrator or any Purchaser Agent may reasonably request.
(o)      Such documents necessary to terminate or release all security interests and other rights of any Person in the membership interests of the Seller.

 
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(p)      Such other approvals, opinions or documents as the Administrator or any Purchaser Agent may reasonably request.
2.      Conditions Precedent to All Funded Purchases, Reinvestments and Issuance of Letters of Credit . Each Funded Purchase, including the initial Funded Purchase (but excluding any deemed Funded Purchase pursuant to Section 1.2(e) ), reinvestment and issuance of any Letters of Credit shall be subject to the further conditions precedent that:
(a)      in the case of each Funded Purchase and the issuance of any Letters of Credit, the Servicer shall have delivered to the Administrator and each Purchaser Agent on or before such Purchase or issuance, as the case may be, in form and substance reasonably satisfactory to the Administrator and each Purchaser Agent, the most recent Weekly Report and Information Package to reflect the level of the Aggregate Capital, the LC Participation Amount and Total Reserves and the calculation of the Purchased Interest after such subsequent Purchase or issuance, as the case may be, and a completed Purchase Notice in the form of Annex B ; and
(b)      on the date of such Funded Purchase, reinvestment or issuance, as the case may be, the following statements shall be true (and acceptance of the proceeds of such Funded Purchase, reinvestment or issuance shall be deemed a representation and warranty by the Seller that such statements are then true):
(i)          the representations and warranties contained in Exhibit III to this Agreement are true and correct in all material respects on and as of the date of such Funded Purchase, reinvestment or issuance, as the case may be, as though made on and as of such date except for representations and warranties which apply as to an earlier date (in which case such representations and warranties shall be true and correct as of such earlier date);
(ii)          no event has occurred and is continuing, or would result from such Funded Purchase, reinvestment or issuance, as the case may be, that constitutes a Termination Event or an Unmatured Termination Event;
(iii)          the sum of the Aggregate Capital plus the LC Participation Amount, after giving effect to any such Funded Purchase, reinvestment or issuance, as the case may be, shall not be greater than the Purchase Limit, and the Purchased Interest shall not exceed 100%; and
(iv)          the Facility Termination Date has not occurred.


 
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EXHIBIT III

REPRESENTATIONS AND WARRANTIES
1.      Representations and Warranties of the Seller . The Seller represents and warrants to the Administrator, each Purchaser Agent and each Purchaser as of the date of execution of this Agreement that:
(q)      Existence and Power . The Seller is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware, and has all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted unless the failure to have such power, authority, licenses, authorizations consents of approvals could not be reasonably expected to have a Material Adverse Effect.
(r)      Company and Governmental Authorization, Contravention . The execution, delivery and performance by the Seller of this Agreement and each other Transaction Document to which it is a party including the use of the proceeds of purchases and reinvestments: (i) are within the Seller’s organizational powers, (ii) have been duly authorized by all necessary organizational action, (iii) require no authorization, approval or other action by or in respect of, and no notice to or filing with (other than the filing of UCC financing statements and continuation statements), any Governmental Authority or other Person, and (iv) do not (A) contravene, or constitute a default under, any provision of (1) applicable law or regulation or (2) the organizational documents of the Seller or (3) any agreement, judgment, award, injunction, order, writ, decree or other instrument binding upon the Seller or (B) result in the creation or imposition of any lien (other than liens in favor of the Administrator under the Transaction Documents) on assets of the Seller. This Agreement and the other Transaction Documents to which the Seller is a party have been duly executed and delivered by the Seller.
(s)      Binding Effect of Agreement . Each of this Agreement and each other Transaction Document to which it is a party constitutes the legal, valid and binding obligations of the Seller enforceable against the Seller in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law.
(t)      Accuracy of Information . None of the factual information, when taken as a whole, heretofore or contemporaneously, and furnished in writing, to the Administrator or any Purchaser Agent by or on behalf of the Seller pursuant to or in connection with this Agreement or any other Transaction Document or any transaction contemplated hereby or thereby contains, as of the date such information was furnished (and as modified or supplemented by other information so furnished) any untrue statement of a material fact, or omits to state any material fact necessary to make any information, in light of the circumstances under which they were made, not materially misleading.
(u)      Actions, Suits and Proceedings . There are no actions, suits or proceedings pending or, to the best of the Seller’s knowledge, threatened against or affecting the Seller or any of its

 
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Affiliates or their respective properties, in or before any court, arbitrator or governmental body which could reasonably be expected to have a Material Adverse Effect upon the ability of the Seller to perform its obligations under this Agreement or any other Transaction Document to which it is a party. The Seller is not in default with respect to any order of any court, arbitrator or governmental body.
(v)      Accuracy of Exhibits; Lock-Box Arrangements . The names and addresses of all the Lock-Box Banks together with the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified in Schedule II to this Agreement (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Administrator), and all Lock-Box Accounts are subject to Lock-Box Agreements. All information on each Exhibit, Schedule or Annex to this Agreement or the other Transaction Documents (as updated by the Seller from time to time) is true and complete. The Seller has delivered a copy of all Lock-Box Agreements to the Administrator. The Seller has not granted any interest in any Lock-Box Account (or any related lock-box or post office box) to any Person other than the Administrator and, upon delivery to a Lock-Box Bank of the related Lock-Box Agreement, the Administrator will have exclusive ownership and control of the Lock-Box Account at such Lock-Box Bank.
(w)      No Material Adverse Effect, Unmatured Termination Event or Termination Event . Since the date of organization of the Seller as set forth in its certificate of formation, there has been no Material Adverse Effect with respect to the Seller. No event has occurred and is continuing or would result from a Purchase in respect of the Purchased Interest or from the application of the proceeds therefrom, that constitutes a Termination Event or an Unmatured Termination Event.
(x)      Names and Location . The Seller has not used any company names, trade names or assumed names other than its name set forth on the signature pages of this Agreement. The Seller is “located” (as defined in the UCC) in Delaware. The office where the Seller keeps its records concerning the Receivables is at the address set forth below its signature to this Agreement.
(y)      Margin Stock, No Fraudulent Conveyance . The Seller is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U and X, as issued by the Federal Reserve Board), and no proceeds of any Purchase will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. No Purchase hereunder constitutes a fraudulent transfer or conveyance under any United States federal or applicable state bankruptcy of insolvency laws or is otherwise void or voidable under such or similar laws or principles or for any other reason.
(z)      Eligible Receivables . Each Pool Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance is an Eligible Receivable.
(aa)      Credit and Collection Policy . The Seller has complied in all material respects with the Credit and Collection Policy of each Originator with regard to each Receivable originated by such Originator and the related Contract.

 
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(bb)      Investment Company Act . The Seller is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
(cc)      No Unmatured Termination Event or Termination Event . No event has occurred and is continuing that constitutes a Termination Event or an Unmatured Termination Event.
(dd)      Taxes . The Seller has filed or caused to be filed all U.S. federal income tax returns and all other material returns, statements, forms and reports for taxes, domestic or foreign, required to be filed by it and has paid or has made adequate provision for payment of all taxes payable by it which have become due or any assessments made against it or any of its property and all other material taxes, fees or other charges imposed on it or any of its property by any Governmental Authority other than any taxes or assessments that are being contested in good faith and by appropriate proceedings diligently conducted, and for which adequate reserves have been set aside in accordance with GAAP.
a. Compliance with Applicable Laws . The Seller is in compliance with the requirements of all applicable laws, rules, regulations and orders of all Governmental Authorities except to the extent that the failure to comply could not be reasonably expected to have a Material Adverse Effect.
b. Licenses and Labor Controversies .
(i)          The Seller has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business unless such failure could not reasonably be expected to have a Material Adverse Effect.
(ii)          There are no labor controversies pending against the Seller that have had (or could be reasonably expected to have) a Material Adverse Effect.
2.      Representations and Warranties of the Servicer . The Servicer represents and warrants to the Administrator, each Purchaser Agent and each Purchaser as of the date of execution of this Agreement that:
(c)      Existence and Power . The Servicer is a limited liability company duly formed, validly existing and in good standing under the laws of its state of organization, and has all corporate power and authority and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted unless the failure to have such power, authority, licenses, authorizations consents of approvals could not be reasonably expected to have a Material Adverse Effect.
(d)      Company and Governmental Authorization, Contravention . The execution, delivery and performance by the Servicer of this Agreement and each other Transaction Document to which it is a party including the use of the proceeds of purchase and reinvestment: (i) are within the Servicer’s organizational powers, (ii) have been duly authorized by all necessary organizational

 
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action, (iii) require no authorization, approval or other action by or in respect of, and no notice to or filing with, any Governmental Authority or other Person, and (iv) do not (A) contravene, or constitute a default under, any provision of (1) applicable law or regulation, (2) the organizational documents of the Servicer or (3) any judgment, award, injunction, order, writ, or decree or agreement or other instrument binding upon the Servicer or (B) result in the creation or imposition of any lien (other than in favor of the Administrator under the Transaction Documents) on assets of the Servicer or any of its Subsidiaries. This Agreement and the other Transaction Documents to which the Servicer is a party have been duly executed and delivered by the Servicer.
(e)      Binding Effect of Agreement . This Agreement and each other Transaction Document to which it is a party constitute the legal, valid and binding obligations of the Servicer enforceable against the Servicer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law.
(f)      Accuracy of Information . None of the factual information, when taken as a whole, heretofore or contemporaneously, and furnished in writing, to the Administrator or any Purchaser Agent by or on behalf of the Servicer pursuant to or in connection with this Agreement or any other Transaction Document or any transaction contemplated hereby or thereby contains, as of the date such information was furnished (and as modified or supplemented by other information so furnished) any untrue statement of a material fact, or omits to state any material fact necessary to make any information, in light of the circumstances under which they were made, not materially misleading.
(g)      Actions, Suits and Proceedings . Except as set forth in Schedule III or as otherwise disclosed in its publicly available SEC filings, there are no actions, suits or proceedings pending or, to the best of the Servicer’s knowledge, threatened against or affecting the Servicer or any of its Affiliates or their respective properties, in or before any court, arbitrator or governmental body, which could reasonably be expected to have a Material Adverse Effect upon the ability of the Servicer (or such Affiliate) to perform its obligations under this Agreement or any other Transaction Document to which it is a party.
(h)      No Material Adverse Effect, Unmatured Termination Event or Termination Event . Since the date of the financial statements described in Section 2(i) below, there has been no Material Adverse Effect with respect to the Servicer. No event has occurred and is continuing or would result from a Purchase in respect of the Purchased Interest or from the application of the proceeds therefrom, that constitutes a Termination Event or an Unmatured Termination Event.
(i)      Credit and Collection Policy . The Servicer has complied in all material respects with the Credit and Collection Policy of each Originator with regard to each Receivable originated by such Originator and the related Contract.
(j)      Investment Company Act . The Servicer is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 
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(k)      Financial Information . The balance sheets of the Parent and its consolidated Subsidiaries at March 31, 2011, and the related statements of income and retained earnings for the Fiscal Quarter then ended, copies of which have been made publicly available, fairly present in all material respects the financial condition of the Parent and its consolidated Subsidiaries at such date and the results of the operations of the Parent and its consolidated Subsidiaries for the period ended on such date, all in accordance with GAAP.
(l)      [intentionally omitted]
(m)      Taxes . The Servicer has filed or caused to be filed all U.S. federal income tax returns and all other material returns, statements, forms and reports for taxes, domestic or foreign, required to be filed by it and has paid or has made adequate provision for payment of all taxes payable by it which have become due or any assessments made against it or any of its property and all other material taxes, fees or other charges imposed on it or any of its property by any Governmental Authority other than any taxes or assessments that are being contested in good faith and by appropriate proceedings diligently conducted, and for which adequate reserves have been set aside in accordance with GAAP.
(n)      Compliance with Applicable Laws . The Servicer is in compliance with the requirements of all applicable laws, rules, regulations and orders of all Governmental Authorities except to the extent that the failure to comply could not be reasonably expected to have a Material Adverse Effect.
(o)      Licenses and Labor Controversies .
(i)          The Servicer has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business unless such failure could not reasonably be expected to have a Material Adverse Effect.
(ii)          There are no labor controversies pending against the Servicer that have had (or could be reasonably expected to have) a Material Adverse Effect.
3.      Representations, Warranties and Agreements Relating to the Security Interest . The Seller hereby makes the following representations, warranties and agreements with respect to the Receivables and Related Security as of the date of execution of this Agreement:
(a)      The Receivables .
(v)           Creation . This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Pool Receivables in favor of the Administrator (for the benefit of the Purchasers), which security interest is prior to all other Adverse Claims, and is enforceable as such as against creditors of and purchasers from the Seller.
(vi)           Nature of Receivables . The Pool Receivables constitute either “accounts”, “general intangibles” or “tangible chattel paper” within the meaning of the applicable UCC.

 
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(vii)           Ownership of Receivables . The Seller owns and has good and marketable title to the Pool Receivables and Related Security free and clear of any Adverse Claim.
(viii)           Perfection and Related Security . The Seller has caused the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the sale of the Receivables and Related Security from the applicable Originator to the Seller pursuant to the Sale Agreement, and the sale and security interest therein from the Seller to the Administrator under this Agreement, to the extent that such collateral constitutes “accounts,” “general intangibles,” or “tangible chattel paper” each within the meaning of the applicable UCC.
(ix)           Tangible Chattel Paper . With respect to any Pool Receivables that constitute “tangible chattel paper” (within the meaning of the applicable UCC), if any, the Seller (or the Servicer on its behalf) has in its possession the original copies of such tangible chattel paper that constitute or evidence such Receivables, and the Seller has caused (and will cause the applicable Originator to cause), within ten (10) days after the Closing Date, the filing of financing statements described in clause (iv) above, each of which will contain a statement that: “A purchase of, or security interest in, any collateral described in this financing statement will violate the rights of the Administrator” or similar words to that effect. The Receivables to the extent they are evidenced by “tangible chattel paper” do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Seller or the Administrator.
(b)      The Lock-Box Accounts .
(i)           Nature of Accounts . Each Lock-Box Account constitutes a “deposit account” within the meaning of the applicable UCC.
(ii)           Ownership . The Seller owns and has good and marketable title to the Lock-Box Accounts free and clear of any Adverse Claim.
(iii)           Perfection . The Seller has delivered to the Administrator a fully executed Lock-Box Agreement relating to each Lock-Box Account, pursuant to which each applicable Lock-Box Bank, respectively, has agreed, following the delivery of a notice of control by the Administrator, to comply with all instructions originated by the Administrator (on behalf of the Purchasers) directing the disposition of funds in such Lock-Box Account without further consent by the Seller or the Servicer.
(c)      Priority .
(i)          Other than the transfer of the Receivables to the Seller and the Administrator under the Sale Agreement and this Agreement, respectively, and/or the security interest granted to the Seller and the Administrator pursuant to the Sale Agreement and this Agreement, respectively, neither the Seller nor any Originator has pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Receivables transferred or

 
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purported to be transferred under the Transaction Documents, the Lock-Box Accounts or any subaccount thereof, except for any such pledge, grant or other conveyance which has been released or terminated. Neither the Seller nor any Originator has authorized the filing of, or is aware of any financing statements against either the Seller or such Originator that include a description of Receivables transferred or purported to be transferred under the Transaction Documents, the Lock-Box Accounts or any subaccount thereof, other than any financing statement (i) relating to the sale thereof by such Originator to the Seller under the Sale Agreement, (ii) relating to the security interest granted to the Administrator under this Agreement, or (iii) that has been released or terminated.
(ii)          The Seller is not aware of any judgment, ERISA or tax lien filings against either the Seller, the Servicer or any Originator, other than any judgment, ERISA or tax lien filing that (A) has not been outstanding for greater than 30 days from the earlier of such Person’s knowledge or notice thereof, (B) is less than $250,000 and (C) does not otherwise give rise to a Termination Event under clause (k) of Exhibit V to this Agreement.
(iii)          The Lock-Box Accounts are not in the name of any person other than the Seller or the Administrator. Neither the Seller nor the Servicer has consented to any bank maintaining such account to comply with instructions of any person other than the Administrator and, prior to the occurrence and continuation of a Termination Event and the delivery of a notice of control by the Administrator, the Servicer.
(d)      Survival of Supplemental Representations . Notwithstanding any other provision of this Agreement or any other Transaction Document, the representations contained in this Section 3 shall be continuing, and remain in full force and effect until such time as the Purchased Interest and all other obligations under this Agreement have been finally and fully paid and performed.
(e)      No Waiver . To the extent required pursuant to the securitization program of any Conduit Purchaser, the parties to this Agreement: (i) shall not, without obtaining a confirmation of the then-current rating of the Notes of such Conduit Purchaser, waive any of the representations set forth in this Section 3 ; (ii) shall provide the Ratings Agencies with prompt written notice of any breach of any representations set forth in this Section 3 , and shall not, without obtaining a confirmation of the then-current rating of such Notes (as determined after any adjustment or withdrawal of the ratings following notice of such breach) waive a breach of any of the representations set forth in this Section 3 .
(f)      Servicer to Cooperate with Administrator to Maintain Perfection and Priority . In order to evidence the interests of the Administrator under this Agreement, the Servicer shall, at the reasonable request of the Administrator, from time to time take such action, or execute and deliver such instruments as may be necessary (including, without limitation, such actions as are reasonably requested by the Administrator or any Purchaser Agent) to maintain and perfect, as a first-priority interest, the Administrator’s security interest in the Receivables, Related Security and Collections. Notwithstanding anything else in the Transaction Documents to the contrary, the Servicer shall not have any authority to file a termination, partial termination, release, partial release, or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements, without the prior written consent of the Administrator, until such time as the latest of (i) the Facility

 
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Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding and an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account or all Letters of Credit have expired, and (iii) the date all amounts owed by the Seller under this Agreement to any Purchaser, any Purchaser Agent, the Administrator and any other Indemnified Party or Affected Person shall be paid in full.
4.      Ordinary Course of Business . Each of the Seller and the Purchasers represents and warrants, as to itself, that each remittance of Collections by or on behalf of the Seller to the Purchasers under this Agreement will have been (i) in payment of a debt incurred by the Seller in the ordinary course of business or financial affairs of the Seller and the Purchasers and (ii) made in the ordinary course of business or financial affairs of the Seller and the Purchasers.
5.      Reaffirmation of Representations and Warranties . On the date of each Purchase and/or reinvestment hereunder, and on the date each Information Package or other report is delivered to the Administrator, any Purchaser Agent or any Purchaser hereunder, the Seller and the Servicer, by accepting the proceeds of such Purchase or reinvestment and/or the provision of such information or report, shall each be deemed to have certified that (i) all representations and warranties of the Seller and the Servicer, as applicable, described in this Exhibit III , as from time to time amended in accordance with the terms hereof, are correct on and as of such day as though made on and as of such day, except for representations and warranties which apply as to an earlier date (in which case such representations and warranties shall be true and correct as of such date), and (ii) no event has occurred or is continuing, or would result from any such Purchase, which constitutes a Termination Event or an Unmatured Termination Event.



 
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EXHIBIT IV

COVENANTS
1.      Covenants of the Seller . Unless waived by Administrator and Majority Purchaser Agents, at all times from the date hereof until the latest of (i) the Facility Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding and an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account or all Letters of Credit have expired, and (iii) the date all amounts owed by the Seller under this Agreement to any Purchaser, any Purchaser Agent, the Administrator and any other Indemnified Party or Affected Person shall be paid in full:
(ee)      Financial Reporting . The Seller will maintain a system of accounting established and administered in accordance with GAAP, and the Seller (or the Servicer on its behalf) shall furnish to the Administrator and each Purchaser Agent:
(i)           Annual Reporting . Promptly upon completion and in no event later than 120 days after the close of each Fiscal Year of the Seller, annual unaudited financial statements of the Seller certified by a designated financial or other officer of the Seller.
(ii)           Information Packages and Weekly Reports . As soon as available and in any event not later than two (2) Business Days prior to the Settlement Date, an Information Package as of the last day of the most recently completed Fiscal Month. As soon as available and in any event not later than the third Business Day of each week, a Weekly Report of the most recently completed week.
(iii)           [intentionally deleted] .
(iv)           [intentionally deleted] .
(v)           Copies of Notices . Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Administrator or any Purchaser Agent, copies of the same.
(vi)           Change in Credit and Collection Policy . At least ten days prior to the effectiveness of any material change in or amendment to any Credit and Collection Policy, notice of such change or amendment.
(vii)      Other Information . Such other information (including non-financial information) as the Administrator or any Purchaser Agent may from time to time reasonably request, within a reasonable time after such request is received.
(ff)      Notices . The Seller will notify the Administrator and each Purchaser Agent in writing of any of the following events promptly upon (but in no event later than three (3) Business Days

 
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after) a financial or other officer learning of the occurrence thereof, with such notice describing the same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:
(i)           Notice of Termination Events or Unmatured Termination Events . A statement of the chief financial officer or chief accounting officer of the Seller setting forth details of any Termination Event or Unmatured Termination Event.
(ii)           Judgments and Proceedings . (A)(1) The entry of any judgment or decree against the Parent or any Originator if the amount of such judgment or decree exceeds $30,000,000 after deducting (I) the amount with respect to which such Person or any such Subsidiary, as the case may be, is insured and with respect to which the insurer has assumed responsibility in writing, and (II) the amount for which such Person or any such Subsidiary, as the case may be, is otherwise indemnified if the terms of such indemnification are reasonably satisfactory to the Administrator and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against the Parent or any Originator which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; and (B) the entry of any judgment or decree or the institution of any litigation, arbitration proceeding or governmental proceeding against the Seller.
(iii)           Representations and Warranties . The failure of any representation or warranty to be true (when made or at any time thereafter) with respect to the Pool Receivables.
(iv)           Notice of Purchase and Sale Termination Event . The occurrence of a Purchase and Sale Termination Event or an Unmatured Purchase and Sale Termination Event.
(v)           Defaults under Other Agreements . The occurrence of a default or an event of default under any agreement pursuant to which any of the Parent, the Seller or any Originator is a debtor or an obligor, which could reasonably be expected to have a Material Adverse Effect.
(vi)           Notices under Sale Agreement . Copies of all notices delivered under the Sale Agreement.
(vii)      Adverse Claim . (A) Any Person shall obtain an Adverse Claim upon the Pool Receivables or Collections with respect thereto, (B) any Person other than the Seller, the Servicer or the Administrator shall obtain any rights or direct any action with respect to any Lock-Box Account (or related lock-box or post office box) or (C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrator.
(viii)      ERISA and Other Claims . Promptly after the filing or receiving thereof, copies of all reports and notices that the Seller or any ERISA Affiliate files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or that the Seller or any Affiliate receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) to which the Seller or any of its Affiliates is or was, within the preceding five years, a

 
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contributing employer, in each case in respect of any Reportable Event (as defined in ERISA) that could, in the aggregate, result in the imposition of liability on the Seller and/or any such Affiliate.
(ix)           Name Changes . At least thirty (30) days before any change in the Seller’s name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof.
(x)           Material Adverse Change . Promptly after the occurrence thereof, notice of a Material Adverse Change in respect of the Seller, the Servicer, Swift or any of their respective Subsidiaries.
(gg)      Conduct of Business . The Seller will carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and will do all things necessary to remain duly organized, validly existing and in good standing as an entity in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted if the failure to have such authority could reasonably be expected to have a Material Adverse Effect.
(hh)      Compliance with Laws . The Seller will comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject if the failure to comply could reasonably be expected to have a Material Adverse Effect.
(ii)      Furnishing of Information and Inspection of Receivables . The Seller will furnish to the Administrator and each Purchaser Agent from time to time such information with respect to the Pool Receivables as the Administrator or such Purchaser Agent may reasonably request. The Seller will, at the Seller’s expense, at any time during regular business hours with, if a Termination Event has not occurred and is not continuing, no less than 30 days prior written notice (i) permit the Administrator or any Purchaser Agent, or their respective agents or representatives, (A) to examine and make copies of and abstracts from all books and records relating to the Pool Receivables or other Pool Assets and (B) to visit the offices and properties of the Seller for the purpose of examining such books and records, and to discuss matters relating to the Pool Receivables, other Pool Assets or the Seller’s performance hereunder or under the other Transaction Documents to which it is a party with any of the officers, directors, employees or independent public accountants of the Seller ( provided that representatives of the Seller are present during such discussions) having knowledge of such matters; provided , that so long as no Termination Event has occurred and is continuing such examinations and visits shall not exceed one (1) per year and (ii) without limiting the provisions of clause (i) above, from time to time during regular business hours, at the Seller’s expense, upon, if a Termination Event has not occurred and is not continuing, no less than 30 days prior written notice from the Administrator and the Purchaser Agents, permit certified public accountants or other auditors acceptable to the Administrator to conduct a review of its books and records with respect to the Pool Receivables.
(jj)      Payments on Receivables, Accounts . The Seller will, and will cause each Originator to, at all times instruct all Obligors to deliver payments on the Pool Receivables (other than Pool Receivables that are FUMS Receivables) to a Lock-Box Account. If any payments or other

 
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Collections are received by the Seller or an Originator (including payments or other Collections on Pool Receivables that are FUMS Receivables), it shall hold such payments in trust for the benefit of the Administrator and the Purchasers and promptly (but in any event within two (2) Business Days after receipt) remit such funds into a Lock-Box Account. The Seller will cause each Lock-Box Bank to comply with the terms of each applicable Lock-Box Agreement. The Seller will not permit the funds other than Collections on Pool Receivables and other Pool Assets to be deposited into any Lock-Box Account. If such funds are nevertheless deposited into any Lock-Box Account, the Seller will promptly identify such funds for segregation. The Seller will not, and will not permit the Servicer, any Originator or other Person to, commingle Collections or other funds to which the Administrator, any Purchaser Agent or any Purchaser is entitled with any other funds, provided, however, that Collections on FUMS Receivables may be commingled with other funds so long as such fund are remitted into a Lock-Box Account within two (2) Business Days after receipt. The Seller shall only add or replace, and shall only permit an Originator to add or replace, a Lock-Box Bank (or the related lock-box or post office box) or Lock-Box Account to those listed on Schedule II to this Agreement if the Administrator has received notice of such addition or replacement, a copy of any new Lock-Box Agreement and an executed and acknowledged copy of a Lock-Box Agreement in form and substance acceptable to the Administrator from any such new Lock-Box Bank. The Seller shall only terminate a Lock-Box Bank or close a Lock-Box Account (or the related lock-box or post office box), upon 30 days’ prior notice to and with the prior written consent of the Administrator.
(kk)      Sales, Liens, etc . Except as otherwise provided herein, the Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Pool Receivable or other Pool Asset or its membership interests, or assign any right to receive income in respect thereof.
(ll)      Extension or Amendment of Pool Receivables . Except as otherwise permitted in Section 4.2(a) of this Agreement, the Seller will not extend, amend or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, the provisions of any Contract related thereto, without the prior written consent of the Administrator. The Seller shall at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Pool Receivables, and timely and fully comply in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract.
(mm)      Change in Business . The Seller will not (i) make any material change in the character of its business, which change would impair the collectability of any Pool Receivable or (ii) make any change in any Credit and Collection Policy that could reasonably be expected to materially adversely affect the collectability of the Pool Receivables, the credit quality of any Pool Receivable, the enforceability of any related Contract or its ability to perform its obligations under the related Contract or the Transaction Documents, in the case of either clause (i) or (ii) above, without the prior written consent of the Administrator.

 
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(nn)      Fundamental Changes . The Seller shall not, without the prior written consent of the Administrator and the Majority Purchaser Agents, permit itself (i) to merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person or (ii) to be owned by any Person other than Swift and thereby cause Swift’s percentage of ownership or control of the Seller to be reduced. The Seller shall provide the Administrator and each Purchaser Agent with at least 30 days’ prior written notice before making any change in the Seller’s name, location or making any other change in the Seller’s identity or corporate structure that could impair or otherwise render any UCC financing statement filed in connection with this Agreement “seriously misleading” as such term (or similar term) is used in the applicable UCC; each notice to the Administrator and the Purchaser Agents pursuant to this sentence shall set forth the applicable change and the proposed effective date thereof and at least ten (10) days prior to such change, deliver to the Administrator all financing statements, instruments and other documents requested by the Administrator in connection with such change or relocation. The Seller will also maintain and implement (or cause the Servicer to maintain and implement) administrative and operating procedures (including an ability to recreate records evidencing Pool Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain (or cause the Servicer to keep and maintain) all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Pool Receivables (including records adequate to permit the daily identification of each Pool Receivable and all Collections of and adjustments to each existing Pool Receivable).
(oo)      Ownership Interest, Etc . The Seller shall (and shall cause the Servicer to), at its expense, take all action necessary or desirable to establish and maintain a valid and enforceable undivided percentage ownership or security interest, to the extent of the Purchased Interest, in the Pool Receivables, the Related Security and Collections with respect thereto, and a first priority perfected security interest in the Pool Assets, in each case free and clear of any Adverse Claim, in favor of the Administrator (on behalf of the Purchasers), including taking such action to perfect, protect or more fully evidence the interest of the Administrator (on behalf of the Purchasers) as the Administrator or any Purchaser Agent may reasonably request.
(pp)      Certain Agreements . Without the prior written consent of the Administrator and the Majority Purchaser Agents, the Seller will not amend, modify, waive, revoke or terminate any Transaction Document to which it is a party or any provision of the Seller’s organizational documents which requires the consent of the “Independent Manager”.
(qq)      Restricted Payments . (i)Except pursuant to clause (ii) and (iii) below, the Seller will not: (A) purchase or redeem any shares of its membership interests, (B) declare or pay any dividend or set aside any funds for any such purpose, (C) other than Company Notes, prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) other than Company Notes, repay any loans or advances to, for or from any of its Affiliates (the amounts described in clauses (A) through (E) being referred to as “ Restricted Payments ”).
(ii)    Subject to the limitations set forth in clause (iii) below, the Seller may make Restricted Payments so long as such Restricted Payments are made only in one or more of the following ways:

 
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(A) the Seller may make cash payments (including prepayments) on the Company Notes in accordance with their respective terms, and (B) if no amounts are then outstanding under any Company Note, the Seller may declare and pay dividends.
(iii)    The Seller may make Restricted Payments only out of the funds, if any, it receives pursuant to Sections 1.4(b)(ii) and (iv) and 1.4(d) of this Agreement. Furthermore, the Seller shall not pay, make or declare: (A) any dividend if, after giving effect thereto, the Tangible Net Worth of the Seller would be less than $15,000,000, or (B) any Restricted Payment (including any dividend) if, after giving effect thereto, any Termination Event or Unmatured Termination Event shall have occurred and be continuing.
(rr)      Other Business . The Seller will not: (i) engage in any business other than the transactions contemplated by the Transaction Documents, (ii) create, incur or permit to exist any Debt of any kind (or cause or permit to be issued for its account any letters of credit or bankers’ acceptances) other than pursuant to this Agreement or the Company Notes, or (iii) form any Subsidiary or make any investments in any other Person; provided , that the Seller shall be permitted to incur minimal obligations to the extent necessary for the day-to-day operations of the Seller (such as expenses for stationery, audits, maintenance of legal status, etc.).
(ss)      Use of Seller’s Share of Collections . The Seller shall apply the Seller’s Share of Collections to make payments in the following order of priority: (i) the payment of its expenses (including all obligations payable to the Purchasers, the Purchaser Agents and the Administrator under this Agreement and under the Fee Letter), (ii) the payment of accrued and unpaid interest on the Company Notes and (iii) other legal and valid corporate purposes.
(tt)      Tangible Net Worth . The Seller will not permit its Tangible Net Worth, at any time, to be less than $15,000,000.
(uu)      Further Assurances . The Seller hereby authorizes Administrator and hereby agrees from time to time, at its own expense, promptly to execute (if necessary) and deliver all further instruments and documents, and to take all further actions, that may be necessary or reasonably desirable, or that the Administrator or the Purchaser Agents may reasonably request, to perfect, protect or more fully evidence the purchases or issuances made under this Agreement and/or security interest granted pursuant to this Agreement or any other Transaction Document, or to enable the Administrator or the Purchaser Agents to exercise and enforce their respective rights and remedies under this Agreement or any other Transaction Document. Without limiting the foregoing, the Seller hereby authorizes, and will, upon the request of the Administrator or the Purchaser Agents, at its own expense, execute (if necessary) and file such financing or continuation statements, or amendments thereto, and such other instruments and documents, that may be necessary or desirable, or that the Administrator or the Purchaser Agents may reasonably request, to perfect, protect or evidence any of the foregoing. The Seller authorizes the Administrator to file financing or continuation statements, and amendments thereto and assignments thereof, relating to the Receivables and the Related Security, the related Contracts and the Collections with respect thereto and the other collateral subject to a lien under any Transaction Document without the signature of the Seller. A photocopy or other reproduction of this Agreement shall be sufficient as a financing statement where permitted by law.

 
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2.      Covenants of the Servicer . Unless waived by Administrator and Majority Purchaser Agents, at all times from the date hereof until the latest of (i) the Facility Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding and an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account or all Letters of Credit have expired, and (iii) the date all amounts owed by the Seller under this Agreement to any Purchaser, any Purchaser Agent, the Administrator and any other Indemnified Party or Affected Person shall be paid in full:
(p)      Financial Reporting . The Servicer will maintain a system of accounting established and administered in accordance with GAAP as in effect in the appropriate jurisdiction, and the Servicer shall furnish or cause to be furnished to the Administrator and each Purchaser Agent or, in the case of any of clauses (i) or (ii) below, make publicly available:
(i)           Annual Reporting . Subject to clause (x) below, promptly upon completion and in no event later than 120 days after the close of each Fiscal Year of the Parent, annual audited financial statements of the Parent and its consolidated subsidiaries audited by independent certified public accountants selected by the Parent but reasonably acceptable to the Administrator and each such Purchaser Agent, prepared in accordance with GAAP, including consolidated balance sheets as of the end of such period, and the related consolidated statements of income or operations, shareholders’ (or members’) equity and cash flows for such Fiscal Year, setting forth, in each case, in comparative form, the figures for the previous Fiscal Year.
(ii)           Quarterly Reporting . Subject to clause (x) below, promptly upon completion and in no event later than 60 days after the close of each Fiscal Quarter of the Parent, unaudited financial statements of the Parent certified by a designated financial officer of the Parent prepared in accordance with GAAP, including consolidated balance sheets of the Parent as of the end of such period, and the related consolidated statements of income or operations, shareholders’ (or members’) equity and cash flows for such Fiscal Quarter, setting forth, in each case, in comparative form, the figures for the previous Fiscal Quarter.
(iii)           Compliance Certificates . Together with the annual report required above, a compliance certificate in form and substance acceptable to the Administrator and each Purchaser Agent signed by its chief financial officer, chief accounting officer or treasurer solely in their capacities as officers of the Servicer stating that no Termination Event or Unmatured Termination Event exists, or if any Termination Event or Unmatured Termination Event exists, stating the nature and status thereof.
(iv)           Information Packages and Weekly Reports . As soon as available and in any event not later than two (2) Business Days prior to the Settlement Date, an Information Package as of the last day of the most recently completed Fiscal Month. As soon as available and in any event not later than the third Business Day of each week, a Weekly Report of the most recently completed week.

 
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(v)           Shareholders Statements and Reports and SEC Filings . Subject to clause (x) below, promptly upon the furnishing thereof to the shareholders of the Parent copies of all financial statements, reports and proxy statements so furnished.
(vi)           Delivery of Financial Information . Subject to clause (x) below, promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Seller, Swift, the Parent or any of their respective Affiliates files with the SEC.
(vii)      Copies of Notices . Subject to clause (x) below, promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Administrator or any Purchaser Agent, copies of the same.
(viii)      Change in Credit and Collection Policy . At least ten (10) days prior to the effectiveness of any material change in or amendment to any Credit and Collection Policy, notice of such change or amendment.
(ix)           Other Information . Such other information (including non-financial information) as the Administrator or any Purchaser Agent may from time to time reasonably request, within a reasonable time after such request is received.
(x)           Public Reports . Documents required to be delivered pursuant to this Section 2(a) (to the extent such documents are included otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Parent posts such documents, or provides a link thereto on the Parent’s website on the Internet at swifttrans.com; or (ii) on which such documents are posted on the Parent’s behalf on an Internet or intranet website, if any, to which the Administrator, any Purchaser Agents or any Purchaser has access (whether a commercial, third party website or whether sponsored by the Administrator); provided , that (i) the Parent shall deliver paper copies of such documents to the Administrator, any Purchaser Agents or any Purchaser that requests in writing that the Parent deliver such paper copies until a written request to cease delivering such paper copies is given by the Administrator, any Purchaser Agents or such Purchaser and (ii) the Parent shall notify the Administrator (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrator by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein to the contrary, the Servicer shall be required to provide paper copies of Information Packages and Officer’s Certificates required by Sections 2(a)(iii) and 2(a)(iv) , respectively.
(q)      Notices . The Servicer will notify the Administrator and each Purchaser Agent in writing of any of the following events promptly upon (but in no event later than three (3) Business Days after) a financial or other officer learning of the occurrence thereof, with such notice describing the same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:

 
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(i)           Notice of Termination Events or Unmatured Termination Events . A statement of the chief financial officer or chief accounting officer of the Servicer setting forth details of any Termination Event or Unmatured Termination Event.
(ii)           Judgments and Proceedings . (A)(1) The entry of any judgment or decree against the Parent or any Originator if the amount of such judgment or decree exceeds $30,000,000 after deducting (I) the amount with respect to which such Person or any such Subsidiary, as the case may be, is insured and with respect to which the insurer has assumed responsibility in writing, and (II) the amount for which such Person or any such Subsidiary, as the case may be, is otherwise indemnified if the terms of such indemnification are reasonably satisfactory to the Administrator and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against the Parent or any Originator which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; and (B) the entry of any judgment or decree or the institution of any litigation, arbitration proceeding or governmental proceeding against the Seller.
(iii)           Representations and Warranties . The failure of any representation or warranty to be true (when made or at any time thereafter) with respect to the Pool Receivables.
(iv)           Notice of Purchase and Sale Termination Event . The occurrence of a Purchase and Sale Termination Event or an Unmatured Purchase and Sale Termination Event.
(v)           Defaults Under Other Agreements . The occurrence of a default or an event of default under any agreement pursuant to which any of the Parent, any Originator or Seller is a debtor or an obligor, which could reasonably be expected to have a Material Adverse Effect.
(vi)           Notices under Sale Agreement . Copies of all notices delivered under the Sale Agreement.
(vii)      Adverse Claim . (A) Any Person shall obtain an Adverse Claim upon the Pool Receivables or Collections with respect thereto, (B) any Person other than the Seller, the Servicer or the Administrator shall obtain any rights or direct any action with respect to any Lock-Box Account (or related lock-box or post office box) or (C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrator.
(viii)      ERISA and Other Claims . Promptly after the filing or receiving thereof, copies of all reports and notices that Swift or any ERISA Affiliate files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or that Swift or any Affiliate receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) to which Swift or any of its Affiliates is or was, within the preceding five years, a contributing employer, in each case in respect of any Reportable Event (as defined in ERISA) that could, in the aggregate, result in the imposition of liability on Swift and/or any such Affiliate.

 
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(ix)           Name Changes . At least thirty (30) days before any change in Swift’s name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof.
(x)           Material Adverse Change . Promptly after the occurrence thereof, notice of a Material Adverse Change in respect of the Seller, the Servicer, Swift or any of their respective Subsidiaries.
(r)      Conduct of Business . The Servicer will carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and will do all things necessary to remain duly organized, validly existing and in good standing as an entity in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted if the failure to have such authority could reasonably be expected to have a Material Adverse Effect.
(s)      Compliance with Laws . The Servicer will comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject if the failure to comply could reasonably be expected to have a Material Adverse Effect.
(t)      Furnishing of Information and Inspection of Receivables . The Servicer will furnish to the Administrator and each Purchaser Agent from time to time such information with respect to the Pool Receivables as the Administrator or such Purchaser Agent may reasonably request. The Servicer will, at the Servicer’s expense, at any time during regular business hours with, if a Termination Event has not occurred and is not continuing, no less than 30 days prior written notice (i) permit the Administrator or any Purchaser Agent, or their respective agents or representatives, (A) to examine and make copies of and abstracts from all books and records relating to the Pool Receivables or other Pool Assets and (B) to visit the offices and properties of the Servicer for the purpose of examining such books and records, and to discuss matters relating to the Pool Receivables, other Pool Assets or the Servicer’s performance hereunder or under the other Transaction Documents to which it is a party with any of the officers, directors, employees or independent public accountants of the Servicer ( provided that representatives of the Servicer are present during such discussions) having knowledge of such matters; provided , that so long as no Termination Event has occurred and is continuing such examinations and visits shall not exceed one (1) per year and (ii) without limiting the provisions of clause (i) above, during regular business hours, at the Servicer’s expense, upon, if a Termination Event has not occurred and is not continuing, no less than 30 days prior written notice from the Administrator, permit certified public accountants or other auditors acceptable to the Administrator and the Purchaser Agents to conduct, a review of its books and records with respect to the Pool Receivables; provided , that so long as no Termination Event has occurred and is continuing, the Servicer shall be required to reimburse the Administrator and Purchaser Agents for only one (1) such audit per year. For the avoidance of doubt, the Administrator may require examinations and audits in addition to the examinations and audits specified in clause (i) and clause (ii) above, but the expense of any such additional examination or audit shall be borne by the Administrator and not the Servicer.
(u)      Payments on Receivables, Accounts . The Servicer will at all times instruct all Obligors to deliver payments on the Pool Receivables (other than Pool Receivables that are FUMS

 
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Receivables) to a Lock-Box Account. If any payments or other Collections are received by the Servicer (including payments or other Collections on Pool Receivables that are FUMS Receivables), it shall hold such payments in trust for the benefit of the Administrator and the Purchasers and promptly (but in any event within two (2) Business Days after receipt) remit such funds into a Lock-Box Account. The Servicer will cause each Lock-Box Bank to comply with the terms of each applicable Lock-Box Agreement. The Servicer will not permit the funds other than Collections on Pool Receivables and other Pool Assets to be deposited into any Lock-Box Account. If such funds are nevertheless deposited into any Lock-Box Account, the Servicer will promptly identify such funds for segregation. The Servicer will not, and will not permit the Servicer, any Originator or other Person to, commingle Collections or other funds to which the Administrator, any Purchaser Agent or any Purchaser is entitled with any other funds, provided, however, that Collections on FUMS Receivables may be commingled with other funds so long as such fund are remitted into a Lock-Box Account within two (2) Business Days after receipt. The Servicer shall only add or replace, and shall only permit an Originator to add or replace, a Lock-Box Bank (or the related lock-box or post office box) or Lock-Box Account to those listed on Schedule II to this Agreement if the Administrator has received notice of such addition or replacement, a copy of any new Lock-Box Agreement and an executed and acknowledged copy of a Lock-Box Agreement in form and substance acceptable to the Administrator from any such new Lock-Box Bank. The Servicer shall only terminate a Lock-Box Bank or close a Lock-Box Account (or the related lock-box or post office box), upon 30 days’ prior notice to and with the prior written consent of the Administrator.
(v)      Extension or Amendment of Pool Receivables . Except as otherwise permitted in Section 4.2(a) of this Agreement, the Servicer will not extend, amend or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, the provisions of any Contract related thereto, without the prior written consent of the Administrator.
(w)      Change in Business . The Servicer will not (i) make any material change in the character of its business, which change would impair the collectability of any Pool Receivable or (ii) make any change in any Credit and Collection Policy that could reasonably be expected to adversely affect the collectability of the Pool Receivables, the credit quality of any Pool Receivable, the enforceability of any related Contract or its ability to perform its obligations under the related Contract or the Transaction Documents, in the case of either clause (i) or (ii) above, without the prior written consent of the Administrator.
(x)      Records . The Servicer will maintain, implement and keep (i) administrative and operating procedures (including an ability to recreate records evidencing Pool Receivables and related Contracts if originals are destroyed), (ii) adequate facilities, personnel and equipment and (iii) all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Pool Receivables (including records adequate to permit the daily identification of each new Pool Receivable and all Collections of, and adjustments to, each existing Pool Receivable). The Servicer will give the Administrator prior notice of any change in such administrative and operating procedures that causes them to be materially different from the procedures described to Administrator on or before the date hereof as the Servicer’s then existing or planned administrative and operating procedures for collecting Receivables.

 
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(y)      Ownership Interest, Etc . The Servicer shall, at its expense, take all action necessary or desirable to establish and maintain a valid and enforceable undivided percentage ownership or security interest, to the extent of the Purchased Interest, in the Pool Receivables, the Related Security and Collections with respect thereto, and a first priority perfected security interest in the Pool Assets, in each case free and clear of any Adverse Claim in favor of the Administrator (on behalf of the Purchasers), including taking such action to perfect, protect or more fully evidence the interest of the Administrator (on behalf of the Purchasers) as the Administrator or any Purchaser Agent may reasonably request.
3.      Separate Existence . Each of the Seller and the Servicer hereby acknowledges that the Purchasers and the Administrator are entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon the Seller’s identity as a legal entity separate from Swift, the Originators and their respective Affiliates. Therefore, from and after the date hereof, each of the Seller and the Servicer shall take all steps specifically required by this Agreement or reasonably required by the Administrator or any Purchaser Agent to continue the Seller’s identity as a separate legal entity and to make it apparent to third Persons that the Seller is an entity with assets and liabilities distinct from those of Swift, any Originator and any other Person, and is not a division of Swift, any Originator or any other Person. Without limiting the generality of the foregoing and in addition to and consistent with the other covenants set forth herein, each of the Seller and the Servicer shall take such actions as shall be required in order that:
(g)      The Seller will be a limited liability company whose primary activities are restricted in its operating agreement to: (i) purchasing or otherwise acquiring from the Originators, owning, holding, granting security interests or selling interests in Pool Assets, (ii) entering into agreements for the selling and servicing of the Receivables Pool, and (iii) conducting such other activities as it deems necessary or appropriate to carry out its primary activities;
(h)      The Seller shall not engage in any business or activity, or incur any indebtedness or liability (including, without limitation, any assumption or guaranty of any obligation of Swift, any Originator or any Affiliate thereof), other than as expressly permitted by the Transaction Documents;
(i)      At all times have a Board of Managers and not less than one member of Seller’s Board of Managers shall be an individual who (A) has (1) prior experience as an Independent Director or Independent Manager for a corporation or limited liability company whose charter documents required the unanimous consent of all Independent Directors or Independent Managers thereof before such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (2) at least three years of employment experience with one or more entities that provide, in the ordinary course of their respective businesses, advisory, management or placement services to issuers of securitization or structured finance instruments, agreements or securities, (B) is reasonably acceptable to the Administrator as evidenced in a writing executed by the Administrator (it being understood and agreed that any equity owner, manager or employee of Global Securitization Services, LLC or Lord Securities Corporation is hereby consented to by the Administrator), (C) is not, and has not been for a period of five years prior to his or her appointment as an Independent Manager of the Seller: (1) a member (whether

 
IV - 12
 



direct, indirect or beneficial), customer, advisor or supplier of Swift or any of its respective Affiliates, (2) a director, officer, employee, partner, attorney or consultant of Swift or any of its Affiliates (Swift and its Affiliates other than the Seller being hereinafter referred to as the “ Parent Group ”), (3) a person related to any person referred to in clauses (1) or (2) above, (4) a person or other entity controlling or under common control with any such stockholder, partner, customer, supplier, employee, officer or director or (5) a trustee, conservator or receiver for any member of the Parent Group and (D) shall not at any time serve as a trustee in bankruptcy for the Seller, Swift or any Affiliate thereof (such an individual meeting the requirements set forth above, the “Independent Manager”) and causing its limited liability company agreement to provide that (w) at least one member of the Seller’s Board of Managers shall be an Independent Manager, (x) the Seller’s Board of Managers shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Seller unless a unanimous vote of the Seller’s Board of Managers (which vote shall include the affirmative vote of all Independent Managers) shall approve the taking of such action in writing prior to the taking of such action, (y) the Seller’s Board of Managers shall not vote on any matter requiring the vote of its Independent Managers under its certificate of formation unless and until at least one Independent Manager is then serving on the Seller’s Board of Managers and (z) the provisions requiring an Independent Manager and the provision described in clauses (x) and (y) of this paragraph (c) cannot be amended without the prior written consent of each Independent Manager (it being understood that, as used in this paragraph (c) , “ control ” means the possession directly or indirectly of the power to direct or cause the direction of management policies or activities of a person or entity whether through ownership of voting securities, by contract or otherwise);
(j)      The Independent Manager shall not at any time serve as a trustee in bankruptcy for the Seller, Swift, any Originator or any of their respective Affiliates;
(k)      The Seller shall conduct its affairs strictly in accordance with its organizational documents and observe all necessary, appropriate and customary company formalities, including, but not limited to, holding all regular and special members’ and board of managers’ meetings appropriate to authorize all limited liability company action, keeping separate and accurate minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts;
(l)      Any employee, consultant or agent of the Seller will be compensated from the Seller’s funds for services provided to the Seller, and to the extent that Seller shares the same officers or other employees as Swift or any Originator (or any other Affiliate thereof), the salaries and expenses relating to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with such common officers and employees. The Seller will not engage any agents other than its attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the Transaction Documents for the Receivables Pool, which servicer will be fully compensated for its services by payment of the Servicing Fee, and a manager, which manager will be fully compensated from the Seller’s funds;

 
IV - 13
 



(m)      The Seller will contract with the Servicer to perform for the Seller all operations required on a daily basis to service the Receivables Pool. The Seller will pay the Servicer the Servicing Fee pursuant hereto. Except as otherwise permitted by this Agreement, the Seller will not incur any material indirect or overhead expenses for items shared with Swift or any Originator (or any other Affiliate thereof) that are not reflected in the Servicing Fee. To the extent, if any, that the Seller (or any Affiliate thereof) shares items of expenses not reflected in the Servicing Fee or the manager’s fee, such as legal, auditing and other professional services, such expenses will be allocated to the extent practical on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably related to the actual use or the value of services rendered; it being understood that Swift, in its capacity as Servicer, shall pay all expenses relating to the preparation, negotiation, execution and delivery of the Transaction Documents, including legal, agency and other fees;
(n)      The Seller’s operating expenses will not be paid by Swift or any Originator (except as permitted by this Agreement in connection with servicing the Pool Receivables) or any Affiliate thereof;
(o)      The Seller’s books and records will be maintained separately from those of Swift, each Originator and any other Affiliate thereof and in a manner such that it will not be difficult or costly to segregate, ascertain or otherwise identify the assets and liabilities of Seller;
(p)      All financial statements of Swift or any Originator or any Affiliate thereof that are consolidated to include Seller will disclose that (i) the Seller’s sole business consists of the purchase or acceptance through capital contributions of the Receivables and Related Rights from the Originators and the subsequent retransfer of or granting of a security interest in such Receivables and Related Rights to certain purchasers party to this Agreement, (ii) the Seller is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the Seller’s assets prior to any assets or value in the Seller becoming available to the Seller’s equity holders and (iii) the assets of the Seller are not available to pay creditors of Swift or the Originators or any other Affiliates of Swift or the Originators;
(q)      The Seller’s assets will be maintained in a manner that facilitates their identification and segregation from those of Swift, the Originators or any Affiliates thereof;
(r)      The Seller will strictly observe corporate formalities in its dealings with Swift, the Originators or any Affiliates thereof, and funds or other assets of the Seller will not be commingled with those of Swift, the Originators or any Affiliates thereof except as permitted by this Agreement in connection with servicing the Pool Receivables. The Seller shall not maintain joint bank accounts or other depository accounts to which Swift or any Affiliate thereof (other than Swift in its capacity as the Servicer) has independent access. The Seller is not named, and has not entered into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy with respect to any loss relating to the property of Swift, the Originators or any Subsidiaries or other Affiliates thereof. The Seller will pay to the appropriate Affiliate the marginal increase or, in the absence of such increase, the market amount of its portion of the premium payable with respect to any insurance policy that covers the Seller and such Affiliate;

 
IV - 14
 



(s)      The Seller will maintain arm’s-length relationships with Swift, the Originators and any Affiliates thereof. Any Person that renders or otherwise furnishes services to the Seller will be compensated by the Seller at market rates for such services it renders or otherwise furnishes to the Seller. Neither the Seller on the one hand, nor Swift or any Originator, on the other hand, will be or will hold itself out to be responsible for the debts of the other or the decisions or actions respecting the daily business and affairs of the other. The Seller, Swift and the Originators will immediately correct any known misrepresentation with respect to the foregoing, and they will not operate or purport to operate as an integrated single economic unit with respect to each other or in their dealing with any other entity;
(t)      The Seller shall have a separate area from Swift and each Originator for its business (which may be located at the same address as such entities) and to the extent that any other such entity has offices in the same location, there shall be a fair and appropriate allocation of overhead costs between them, and each shall bear its fair share of such expenses; and
(u)      To the extent not already covered in paragraphs (a) through (n) above, Seller shall comply and/or act in accordance with the provisions of Section 6.4 of the Sale Agreement.



 
IV - 15
 



EXHIBIT V

TERMINATION EVENTS
Each of the following shall be a “ Termination Event ”:
(a)      (i) the Parent, the Seller, Swift, any Originator or the Servicer shall fail to perform or observe any term, covenant or agreement under this Agreement or any other Transaction Document to which it is a party and, except as otherwise provided herein, such failure shall, solely to the extent capable of cure, continue for thirty (30) days after the earlier of any such Person’s actual knowledge or notice thereof or (ii) the Seller or the Servicer shall fail to make when due any payment or deposit to be made by it under this Agreement or any other Transaction Document and such failure shall remain unremedied for two (2) Business Days;
(b)      Swift (or any Affiliate thereof) shall fail to transfer to any successor Servicer, when required, any rights pursuant to this Agreement that Swift (or such Affiliate) then has as Servicer;
(c)      any representation or warranty made or deemed made by the Parent, the Seller, the Servicer or any Originator (or any of their respective officers) under or in connection with this Agreement or any other Transaction Document to which it is a party, or any information or report delivered by the Seller, the Servicer or any Originator pursuant to this Agreement or any other Transaction Document to which it is a party, shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered and, if the representation or warranty is of a type that is capable of being cured, shall remain incorrect or untrue for thirty (30) days after the earlier of such Person’s actual knowledge or notice thereof;
(d)      the Seller or the Servicer shall fail to deliver any (i) Information Package when due pursuant to this Agreement, and such failure shall remain unremedied for two (2) Business Days or (ii) Weekly Report when due pursuant to this Agreement, and such failure shall remain unremedied for two (2) Business Days;
(e)      this Agreement (and each Lock-Box Agreement, as applicable) or any Purchase pursuant to this Agreement shall for any reason: (i) cease to create, or the Purchased Interest shall for any reason cease to be, a valid and enforceable first priority perfected undivided percentage ownership or security interest to the extent of the Purchased Interest in each Pool Receivable, the Related Security and Collections with respect thereto, free and clear of any Adverse Claim, or (ii) cease to create with respect to the Pool Assets, or the interest of the Administrator (for the benefit of the Purchasers) with respect to such Pool Assets shall cease to be, a valid and enforceable first priority perfected security interest, free and clear of any Adverse Claim;
(f)      the Parent, the Seller, Swift, the Servicer or any Originator shall generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Parent, the Seller, Swift, the Servicer or any Originator seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency

 
V - 1
 



or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Parent, the Seller, Swift, the Servicer or any Originator shall take any corporate action to authorize any of the actions set forth above in this paragraph;
(g)      (i) the average for three consecutive Fiscal Months of: (A) the Default Ratio shall exceed 5.5%, (B) the Delinquency Ratio shall exceed 6.0%, or (C) the Dilution Ratio shall exceed 3.0% or (ii) the Days’ Sales Outstanding exceeds 45 days;
(h)      a Change in Control shall occur;
(i)      the Purchased Interest shall exceed 100% for two (2) Business Days;
(j)      a default shall occur in the payment of any amount when due (subject to any applicable grace period), whether by acceleration or otherwise, of any principal or stated amount of, or interest or fees on, any Debt (other than Debt described in clause (a) above) of the Parent or any of its Subsidiaries having a principal or stated amount, individually or in the aggregate, in excess of $30,000,000, a default shall occur in the performance or observance of any obligation or condition with respect to such Debt, or an event of default shall occur, if the effect of such default or event of default is to accelerate the maturity of any such Debt or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Debt, or any trustee or agent for such holders, to cause or declare such Debt to become due and payable or to require such Debt to be prepaid, redeemed, purchased or defeased, or require an offer to purchase or defease such Debt to be made, prior to its expressed maturity;
(k)      either the Internal Revenue Service or the Pension Benefit Guaranty Corporation shall have filed one or more notices of lien asserting a claim or claims pursuant to the Internal Revenue Code, or ERISA, as applicable, against the assets of Seller, any Originator, Swift or any ERISA Affiliate; or
(l)      the Parent permits the Consolidated Leverage Ratio (as such term is defined in the Credit Agreement on the Closing Date without giving effect to any amendment, supplement, modification or waiver of such definition made or given after the Closing Date) for any day to be greater than 4.375:1.00.


 
V - 2
 



EXHIBIT VI

FLOW OF FUNDS AMONG PURCHASERS
Upon satisfaction of all the conditions precedent under Section 1 of Exhibit II , the New Purchasers shall wire an aggregate of $38,076,923.08 of their own funds to the accounts of the Continuing Purchasers’ Purchaser Groups shown below, which amount represents the Citi Purchaser Group’s Ratable Share of the Aggregate Capital based on the Commitments as in effect on the Restatement Date.
1.    For the benefit of the Market Street Purchaser Group:
Amount:
$13,846,153.85
Name of Bank:
PNC Bank, National Association
Account Name:
Market Street Funding LLC
ABA No.:
[ * ]
Account No.:
[ * ]
Reference:
Swift Transportation Company

2.    For the benefit of the Wells Fargo Purchaser Group:

Amount:
$24,230,769.23
Name of Bank:
Wells Fargo Bank, N.A.
ABA No.:
[ * ]
Account No.:
[ * ]
Reference:
RSG Swift Receivables Co II, LLC







*Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.

 
VI - 1
 





 
VI - 2
 



SCHEDULE I

CREDIT AND COLLECTION POLICY
(attached)



 
Schedule I - 1
 



SCHEDULE II

LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS

BANK
LOCK-BOX  
ADDRESS AND NO.
BANK ACCOUNT NO.
PNC Bank, National Association
[ * ]
[ * ]
PNC Bank, National Association
[ * ]
[ * ]
PNC Bank, National Association
[ * ]
[ * ]


























*Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.


 
Schedule II - 1
 



SCHEDULE III

ACTIONS AND PROCEEDINGS
[NONE]


 
Schedule III - 1
 



ANNEX A-1

FORM OF INFORMATION PACKAGE


 
Annex A - 1 - 1
 



ANNEX A-2

FORM OF WEEKLY REPORT


 
Annex A - 2 - 1 #
 



ANNEX B

FORM OF PURCHASE NOTICE
Dated as of [________ __, 20__]
PNC Bank, National Association
One PNC Plaza, 26 th Floor
249 Fifth Avenue
Pittsburgh, PA 15222-2707
Attention: [__________]
Wells Fargo Bank, National Association
Wells Fargo Capital Finance
6 Concourse Parkway, Suite 1450
Atlanta, Georgia 30328
Attention: [__________]
Citibank, N.A.
390 Greenwich Street, 1st floor
New York, NY 10013
Attention: [__________]
[Each Purchaser Agent]
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Receivables Purchase Agreement, dated as of June 14, 2013 (as amended, restated, supplemented or otherwise modified through the date hereof, the “ Receivables Purchase Agreement ”), among Swift Receivables Company II, LLC, as Seller, Swift Transportation Services, LLC, as Servicer, the various Conduit Purchasers, Related Committed Purchasers, Purchaser Agents and LC Participants from time to time party thereto and PNC Bank, National Association, as Administrator and as LC Bank. Capitalized terms used in this Purchase Notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.
[This letter constitutes a Purchase Notice pursuant to Section 1.2(a) of the Receivables Purchase Agreement. Seller desires to sell an undivided percentage ownership interest in a pool of Receivables on ___________, [20__], for a purchase price of $____________. Subsequent to this Purchase, the Aggregate Capital will be $___________.][This letter constitutes a notice pursuant to Section 1.13(a) of the Receivables Purchase Agreement. Seller desires that the LC Bank issue Letters of Credit [currently issued under the [___________]] on __________, [20__], with a face amount of $____________. Subsequent to this Purchase, the LC Participation Amount will be $_______ and the Aggregate Capital will be $____________.]

 
Annex B - 1
 



Seller hereby represents and warrants as of the date hereof, and as of the date of Purchase, as follows:
(i)    the representations and warranties contained in Exhibit III of the Receivables Purchase Agreement are true and correct in all material respects on and as of the date of such purchase as though made on and as of such date (except for representations and warranties which apply as to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date);
(ii)    no event has occurred and is continuing, or would result from such Purchase, that constitutes a Termination Event or Unmatured Termination Event;
(iii)    the sum of the Aggregate Capital plus the LC Participation Amount, after giving effect to any such Purchase shall not be greater than the Purchase Limit, and the Purchased Interest will not exceed 100%; and
(iv)    the Facility Termination Date has not occurred.

 
Annex B - 2
 



IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to be executed by its duly authorized officer as of the date first above written.
SWIFT RECEIVABLES COMPANY II, LLC
By:    
Name:    
Title:    



 
Annex B - 3
 



ANNEX C


FORM OF ASSUMPTION AGREEMENT
Dated as of [__________ __, 20__]
THIS ASSUMPTION AGREEMENT (this “ AGREEMENT ”), dated as of [______ __, ____], is among SWIFT RECEIVABLES COMPANY II, LLC (the “ Seller ”), [[________], as purchaser (the “[_____] Conduit Purchaser ”)], [________], as the related committed purchaser (the “[______] Related Committed Purchaser ”), [________], as related LC participant (the “[_____] LC Participant ” and together with the Conduit Purchaser and the Related Committed Purchaser, the “[_____] Purchasers ”), and [________], as agent for the [_____] Purchasers (the “[______] Purchaser Agent ” and together with the [_____] Purchasers, the “[_______] Purchaser Group ”).
BACKGROUND
The Seller and various others are parties to that certain Amended and Restated Receivables Purchase Agreement dated as of June 14, 2013 (as amended, restated, supplemented or otherwise modified through the date hereof, the “ Receivables Purchase Agreement ”). Capitalized terms used and not otherwise defined herein have the respective meaning assigned to such terms in the Receivables Purchase Agreement.    
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1.    This letter constitutes an Assumption Agreement pursuant to Section 1.2(f) of the Receivables Purchase Agreement. The Seller desires [the [_____] Purchasers] [the [______] Related Committed Purchaser][______] related LC Participant] to [become Purchasers under] [increase its existing Commitment under] the Receivables Purchase Agreement and upon the terms and subject to the conditions set forth in the Receivables Purchase Agreement, the [________] Purchasers agree to [become Purchasers thereunder] [increase its Commitment in an amount equal to the amount set forth as the “Commitment” under the signature of such [______] Related Committed Purchaser hereto] [increase its Commitment in an amount equal to the amount set forth as the “ Commitment ” under the signature of such [______] related LC Participant hereto].
Seller hereby represents and warrants to the [________] Purchasers as of the date hereof, as follows:
(i)    the representations and warranties of the Seller contained in Exhibit III of the Receivables Purchase Agreement are true and correct in all material respects on and as the date of such purchase or reinvestment as though made on and as of such date (except for representations and warranties which apply as to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date);

 
Annex C - 1
 



(ii)    no event has occurred and is continuing, or would result from such Purchase, that constitutes a Termination Event or an Unmatured Termination Event; and
(iii)    the Facility Termination Date has not occurred.
SECTION 2.    Upon execution and delivery of this Agreement by the Seller and each member of the [______] Purchaser Group, satisfaction of the other conditions to assignment specified in Section 1.2(f) of the Receivables Purchase Agreement (including the written consent of the Administrator and each Purchaser Agent) and receipt by the Administrator and Seller of counterparts of this Agreement (whether by facsimile or otherwise) executed by each of the parties hereto, [the [_____] Purchasers shall become a party to, and have the rights and obligations of Purchasers under, the Receivables Purchase Agreement][the [______] Related Committed Purchaser shall increase its Commitment in the amount set forth as the “Commitment” under the signature of the [______] Related Committed Purchaser hereto][the [______] related LC Participant shall increase its Commitment in the amount set forth as the “Commitment” under the signature of the [______] related LC Participant hereto].
SECTION 3.    Each party hereto hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing Note issued by such Conduit Purchaser is paid in full. The covenant contained in this paragraph shall survive any termination of the Receivables Purchase Agreement.
SECTION 4.    THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 5.    This Agreement may not be amended, supplemented or waived except pursuant to a writing signed by the party to be charged. This Agreement may be executed in counterparts, and by the different parties on different counterparts, each of which shall constitute an original, but all together shall constitute one and the same agreement.
(signatures commence on following page)

 
Annex C - 2
 



IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first above written.
[[___________], as a Conduit Purchaser
By:    
Name:    
Title:    ]
[Address]
[___________], as a Related Committed Purchaser
By:    
Name:    
Title:    
[Address]
[Commitment]
[___________], as a related LC Participant
By:    
Name:    
Title:    
[Address]
[Commitment]
[_______], as Purchaser Agent for [______]
By:    
Name:    
Title:    
[Address]    

 
Annex C - 3
 



SWIFT RECEIVABLES COMPANY II, LLC, as Seller
By:    
Name:    
Title:    
Consented and Agreed:
PNC BANK, NATIONAL ASSOCIATION, as Administrator
By:    
Name:    
Title:    
Address:    PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
PNC BANK, NATIONAL ASSOCIATION, as LC Bank
By:    
Name:    
Title:    
Address:    PNC Bank, National Association
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
[THE PURCHASER AGENTS]
By:    
Name:    
Title:    
[Address]




 
Annex C - 4
 



ANNEX D

FORM OF TRANSFER SUPPLEMENT
Dated as of [_______ __, 20__]
Section 1 .
Commitment assigned:    $_________
Assignor’s remaining Commitment:    $_________
Capital allocable to Commitment assigned:    $_________
Assignor’s remaining Capital:    $_________
Discount (if any) allocable to
Capital assigned:    $_________
Discount(if any) allocable to Assignor’s
remaining Capital:    $_________

Section 2 .
Effective Date of this Transfer Supplement: [__________]
Upon execution and delivery of this Transfer Supplement by transferee and transferor and the satisfaction of the other conditions to assignment specified in Section 6.3(c) of the Receivables Purchase Agreement (as defined below), from and after the effective date specified above, the transferee shall become a party to, and have the rights and obligations of a Related Committed Purchaser under, the Amended and Restated Receivables Purchase Agreement, dated as of June 14, 2013 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Receivables Purchase Agreement”), among SWIFT RECEIVABLES COMPANY II, LLC, as Seller, SWIFT TRANSPORTATION SERVICES, LLC, as initial Servicer, the various Purchasers, Purchaser Agents and LC Participants from time to time party thereto, and PNC Bank, National Association, as Administrator and as LC Bank.

 
Annex D - 1
 



ASSIGNOR:    [_________], as a Related Committed Purchaser
By:    
Name:    
Title:    
ASSIGNEE:    [_________], as a Purchasing Related Committed Purchaser
By:    
Name:    
Title:    
[Address]
Accepted as of date first above written:
[___________], as Purchaser Agent for
the [______] Purchaser Group
By    
Name:    
Title:    
Swift Receivables Company II, LLC, as Seller
By    
Name:    
Title:    



 
Annex D - 2
 



ANNEX E

FORM OF PAYDOWN NOTICE
Dated as of [_____________ __, 20__]
PNC Bank, National Association
One PNC Plaza, 26 th Floor
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Attention: [__________]
Wells Fargo Bank, National Association
Wells Fargo Capital Finance
6 Concourse Parkway, Suite 1450
Atlanta, Georgia 30328
Attention: [__________]
Citibank, N.A.
390 Greenwich Street, 1st floor
New York, NY 10013
Attention: [__________]

[Each Purchaser Agent]
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Receivables Purchase Agreement, dated as of June 14, 2013 (as amended, restated, supplemented or otherwise modified through the date hereof, the “ Receivables Purchase Agreement ”), among Swift Receivables Company II, LLC, as Seller, Swift Transportation Services, LLC, as Servicer, the various Purchasers, Purchaser Agents and LC Participants from time to time party thereto and PNC Bank, National Association, as Administrator and as LC Bank. Capitalized terms used in this paydown notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.
This letter constitutes a paydown notice pursuant to Section 1.4(f)(i) of the Receivables Purchase Agreement. The Seller desires to reduce the Aggregate Capital on ____________, _____ by the application of $___________ in cash to pay Aggregate Capital and Discount to accrue (until such cash can be used to pay commercial paper notes) with respect to such Aggregate Capital, together with all costs related to such reduction of Aggregate Capital. Subsequent to this paydown, the aggregate outstanding Capital will be $___________.

 
Annex E - 1
 



IN WITNESS WHEREOF, the undersigned has caused this paydown notice to be executed by its duly authorized officer as of the date first above written.
SWIFT RECEIVABLES COMPANY II, LLC
By:    
Name:    
Title:    



 
Annex E - 2
 



ANNEX F

FORM OF LETTER OF CREDIT APPLICATION
























 
Annex F - 1 #
 




 
Application for Irrevocable Standby Letter of Credit

PNC Bank, National Association 500 First Avenue, Third Floor P7-PFSC-03-T Pittsburgh, PA 15219

The undersigned hereby applies for the establishment of an Irrevocable Standby Letter of Credit (or, if the undersigned's bank is not the Issuing Bank, then application is hereby made to the undersigned's bank identified below for the establishment of such credit by the Issuing Bank as its correspondent bank), for the account of the undersigned, as set forth below. This Application is delivered under, and such Credit when issued will be subject to, the undersigned's Reimbursement Agreement for Standby Letters of Credit delivered to PNC Bank, National Association ("PNC Bank"), or such other agreement with PNC Bank for the issuance and reimbursement of letters of credit, as the case may be. PNC Bank hereby notifies the undersigned that pursuant to the requirements of the USA Patriot Act (Title III of Pub.L. 107-56 (the "Act"), it is required to obtain, verify and record information that identifies the undersigned, which information includes the name and address of the undersigned and other information that will allow PNC Bank to identify the undersigned in accordance with the Act. PNC Bank complies with all US laws and federal regulations and will take all actions in connection with this Application as may be necessary to ensure compliance.

1. Date of Application 2. L/C No. (Bank Use Only)

3. Applicant: (Complete name and address as it is to appear in the letter of credit) 4. Amount

5a. Expiry Date
b. Place of Expiry: Pittsburgh, PA or Cleveland, OH at discretion of PNC Bank

6. Letter of credit to be automatically extendable with at least days notice for non-extension by the bank

7. Currency: US Dollar Other (specify)

8. Beneficiary of letter of credit or guarantee to be issued by foreign bank: (complete name and address)

9. Transmit letter of credit by (check one) Courier SWIFT
Attention:
Phone:
Extension
Fax
Choose one of the following (unless letter of credit is to support a guarantee issued by another bank - see Field 15 below).

10. Beneficiary's statement purportedly signed by one of its authorized officers or representatives reading as follows (Indicate within quotation marks the exact wording to appear on the statement to be presented.)

11. The wording of the credit should be similar to the attached specimen/addendum forming a part hereof. Please initial all pages.

12. Clean credit: available by sight draft only; no written certification of default of beneficiary's entitlement to draw on the letter of credit required.

13. COMPLETION REQUIRED - in order to comply with the United States Department of the Treasury - Office of Foreign Assets Control Regulations and other U.S. regulations, the following Section must be completed for all letters of credit, both domestic and international. Goods (Product) or Services

Does your transaction involve movement of goods or services to be performed outside the U.S.: Yes No

Goods Origination City State Country

Goods Final Destination City State Country


 
Annex F - 2 #
 



Ultimate Use of Goods

Goods(Product) or Services Descriptions:

Is an Export License required?

Yes (provide copy)

No (by checking "No" you are certifying the following statement about your transaction)

"We certify that an Export License is not required in accordance with U.S. laws and regulations, including without limitation the regulations of the Export Administration of the Bureau of Industry and Security."


14. Advising Bank (specify if known) Request Advising Bank to add their confirmation
Advising Bank's charges are for the account of:
Beneficiary Account Party
SWIFT Address
15. If the beneficiary designated above is to be the beneficiary of a guarantee issued by a foreign bank, complete the following:
Name and location of bank issuing guarantee or bond (Guarantor)

The letter of credit will be sent by SWIFT to the Guarantor Bank. (If you do not designate a bank, a PNC Bank correspondent will be used.) The Guarantor Bank will be the beneficiary of the PNC Bank letter of credit and issuer of the guarantee/bond.

The letter of credit in favor of the Guarantor Bank will be available by the authenticated SWIFT message certifying a draw on the Guarantee/Bond.

Expiry date of guarantee on bond (Must be 15-30 days prior to the Expiry date of the letter of credit

Choose One of the Following:
The wording of the guarantee should be similar to the attached specimen/addendum forming a part hereof
Instruct Guarantor bank to issue guarantee in accordance with their standard format
Please provide wording for any statement or other documents required to draw on guarantee. This will be subject to approval of guarantor.
Please provide any instructions for delivery of guarantee/bond.

16. Special Instructions: Enter any special processing instructions for this transaction

This letter of credit will be (i) issued by PNC Bank or any affiliate designated by PNC Bank, unless otherwise agreed, and (ii) subject to the version of the Uniform Customs and Practice for Documentary Credits in effect at the time of issuance (UCP), or International Standby Practices 1998 (ISP98), at PNC Bank's discretion.

17. Obligor Name Second Obligor Name (if applicable) or Correspondent Bank

Signature Signature

Phone: Phone:

Fax Fax

For assistance, please call Customer Service at (800) 682-4689






 
Annex F - 3 #
 




 
To: PNC Bank, National Association
500 First Avenue, 3rd Floor P7-PFSC-03-T
Pittsburgh, PA 15219

Application for Amendment To Standby Letter of Credit

1. Letter of Credit Number 2. Date

3. Current Amount of Letter of Credit

4. Applicant Applicant NAME ONLY

5. Beneficiary Beneficiary NAME ONLY

6. Current Expiry

The following amendment(s) to the above-mentioned Letter of Credit are requested:

7. Credit Amount to be Increased by:

8. Credit Amount to be Decreased by:

9. Effective date of increase/decrease

(If no date is designated, effective date will be date amendment is issued.) Note: The beneficiary's written consent is required for a decrease. Accordingly, the beneficiary's written consent should be obtained in advance and attached to this Application for Amendment (See Note below).

10. Amend Expiration Date to:

11. Other (Please Specify)

Except as amended hereby, the terms and conditions of the Letter of Credit will remain in full force and effect.

12. Obligor Name
    
Signed By
Printed Name
Title
Phone Number Extension     
Fax Number     

Note: Pursuant to applicable law, an amendment to a letter of credit is effective when the beneficiary consents to it. However, if the amendment does not adversely affect the beneficiary's rights, then a written consent will not be necessary..



Form 19F - Multistate Rev. 11/09

 
Annex F - 4 #
 



ANNEX G

FORM OF PURCHASE LIMIT INCREASE REQUEST

_____________, 201__
To:
PNC BANK, NATIONAL ASSOCIATION, as Administrator for the Purchasers parties to the Amended and Restated Receivables Purchase Agreement dated as of June 14, 2013 (as extended, renewed, amended or restated from time to time, the “ Receivables Purchase Agreement ”), SWIFT RECEIVABLES COMPANY II, LLC, a Delaware limited liability company, as seller (the “ Seller ”), SWIFT TRANSPORTATION SERVICES, LLC, a Delaware limited liability company (together with its successors and permitted assigns, “ Swift ”), as servicer (in such capacity, together with its successors and permitted assigns in such capacity, the “ Servicer ”), the various Conduit Purchasers from time to time party hereto, the various Related Committed Purchasers from time to time party hereto, the various Purchaser Agents from time to time party hereto, the various LC Participants from time to time party hereto and PNC BANK, NATIONAL ASSOCIATION (in such capacity, together with its successors and assigns in such capacity, the “ Administrator ”), and as issuer of Letters of Credit (in such capacity, together with its successors and assigns in such capacity, the “ LC Bank ”).
Ladies and Gentlemen:
The undersigned, Swift Receivables Company II, LLC, a Delaware limited liability company (the “ Seller ”) hereby refers to the Receivables Purchase Agreement and requests that the Administrator consent to an increase in the Purchase Limit (the “ Purchase Limit Increase ” ), in accordance with Section 1.23 of the Receivables Purchase Agreement, to be effected by [an increase

 
Annex G - 1
 



in the Commitment of [name of existing Purchaser] [the addition of [name of new Purchaser] (the “ New Purchaser ”) as a [________] Purchaser under the terms of the Receivables Purchase Agreement [as a member of the [__________] Purchaser Group]][the addition of [name of new Conduit Purchaser], as purchaser (the “ New Conduit Purchaser ”), [name of new Related Committed Purchaser], as the related committed purchaser (the “ New Committed Purchaser ”), [name of new LC Participant], as related LC participant (the “ New LC Participant ”) and together with the New Conduit Purchaser and the New Committed Purchaser, the “ New Purchasers ”), and [name of new Purchaser Agent], as agent for the New Purchasers (the “ New Purchaser Agent ”) and together with the New Purchasers, the “ [_________] Purchaser Group ”)]. Capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Receivables Purchase Agreement.
After giving effect to such Purchase Limit Increase, the Commitment of [the Purchaser shall be $_____________][the New Purchaser/__________ Purchaser Group shall be an amount equal to the amount set forth as the “Commitment” under the signature of such Person].
[Include paragraphs 1-4 for a New Purchaser/New Purchaser Group]
1.    [Each member of the ______ Purchaser Group][The New Purchaser] hereby confirms that it has received a copy of the Transaction Documents and the exhibits related thereto, together with copies of the documents which were required to be delivered under the Receivables Purchase Agreement as a condition to the making of the Purchases and other extensions of credit thereunder. [Each member of the ______ Purchaser Group][The New Purchaser] acknowledges and agrees that it has made and will continue to make, independently and without reliance upon the Administrator or any other Purchaser and based on such documents and information as it has deemed appropriate, its own credit analysis and decisions relating to the Receivables Purchase Agreement. [Each member of the ______ Purchaser Group][The New Purchaser] further acknowledges and agrees that the Administrator has not made any representations or warranties about the credit worthiness of the Seller or any other party to the Receivables Purchase Agreement or any other Transaction Document or with respect to the legality, validity, sufficiency or enforceability of the Receivables Purchase Agreement or any other Transaction Document or the value of any security therefor.
2.    Except as otherwise provided in the Receivables Purchase Agreement, effective as of the date of acceptance hereof by the Administrator, the [each member of the ______ Purchaser Group][the New Purchaser] (i) shall be deemed automatically to have become a party to the Receivables Purchase Agreement and have all the rights and obligations of a “Purchaser” under the Receivables Purchase Agreement as if it were an original signatory thereto and (ii) agrees to be bound by the terms and conditions set forth in the Receivables Purchase Agreement as if it were an original signatory thereto.

 
Annex G - 2
 



3.    [Each member of the ______ Purchaser Group][The New Purchaser] shall deliver to the Administrator such information and shall complete such forms as are reasonably requested of the such Person by the Administrator.
4.    [Each member of the ______ Purchaser Group][The New Purchaser] has delivered to the Seller and the Administrator (or is delivering to the Seller and the Administrator concurrently herewith) the tax forms referred to in Section 1.10 of the Receivables Purchase Agreement.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
The Purchase Limit Increase shall be effective when the executed consent of the Administrator is received or otherwise in accordance with Section 1.23 of the Receivables Purchase Agreement, but not in any case prior to ___________________, 201__. It shall be a condition to the effectiveness of the Purchase Limit Increase that all expenses referred to in Section 1.23 of the Receivables Purchase Agreement shall have been paid.
The Seller hereby certifies that (i) the representations and warranties of the Seller contained in Exhibit III of the Receivables Purchase Agreement are true and correct in all material respects on and as the date of such purchase or reinvestment as though made on and as of such date (except for representations and warranties which apply as to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date) and (ii) no event has occurred and is continuing, or would result from such Purchase, that constitutes a Termination Event or an Unmatured Termination Event

 
Annex G - 3
 



Please indicate the Administrator’s consent to such Purchase Limit Increase by signing the enclosed copy of this letter in the space provided below.
Very truly yours,
SWIFT RECEIVABLES COMPANY II, LLC
By    
Name    
Title    

[NEW PURCHASER(S):
[[___________], as a Conduit Purchaser
By:    
Name:    
Title:    ]
[Address]
[___________], as a Related Committed Purchaser
By:    
Name:    
Title:    
[Address]
[Commitment]

 
Annex G - 4
 



[___________], as a related LC Participant
By:    
Name:    
Title:    
[Address]
[Commitment]
[_______], as Purchaser Agent for [______]
By:    
Name:    
Title:    
[Address]]

The undersigned hereby consents on this __ day of _____________, 201__ to the above-requested Purchase Limit Increase.
PNC BANK, NATIONAL ASSOCIATION, as Administrator
By    
Name    
Title    

[PURCHASER(S):
[Existing Committed Purchaser]
By    
Name    
Title    

 
Annex G - 5
 




[Existing LC Participant]
By    
Name    
Title    

[Existing Purchaser Agent]
By    
Name    
Title    ]


 
Annex G - 6
 



EXHIBIT 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Jerry Moyes, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Swift Transportation Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
 
 
 
Date: 
August 2, 2013
 
 
 
 
 
 
 
 
/s/ Jerry Moyes
 
 
 
Jerry Moyes
 
 
 
Chief Executive Officer




EXHIBIT 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Virginia Henkels, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Swift Transportation Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
 
 
 
Date: 
August 2, 2013
 
 
 
 
 
 
 
 
/s/ Virginia Henkels
 
 
 
Virginia Henkels
 
 
 
Executive Vice President and Chief Financial Officer




EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Swift Transportation Company (the “Company”) for the quarter ending June 30, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, the undersigned, certify, to the best of our knowledge, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
SWIFT TRANSPORTATION COMPANY,
 
a Delaware corporation
 
 
By:
 
/s/ Jerry Moyes
 
 
Jerry Moyes
 
 
Chief Executive Officer
 
August 2, 2013
 
 
By:
 
/s/ Virginia Henkels
 
 
Virginia Henkels
 
 
Executive Vice President and Chief Financial Officer
 
August 2, 2013