1
U.S. $45,000,000
SECURED REVOLVING CREDIT AND LETTER OF CREDIT AGREEMENT
Dated as of March 15, 1994
Among
CAROLINA FREIGHT CARRIERS CORPORATION
and
RED ARROW FREIGHT LINES, INC.
as Borrowers
and
THE BANKS NAMED HEREIN
as Banks
and
CITIBANK, N.A.
as Agent
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TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.3. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 2.
AMOUNTS AND TERMS OF THE ADVANCES . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.1. The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.2. Making the Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.3. Special Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.5. Reduction of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.6. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.7. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.8. Additional Interest on Eurodollar Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.9. Interest Rate Notice and Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.10. Voluntary Conversion of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.11. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.12. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.13. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.14. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.15. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.16. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.17. Extension of Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.18. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.19. Evidence of Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.20. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.21. Reallocation of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 3.
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.1. Condition Precedent to Initial Credit Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.2. Conditions Precedent to Each Credit Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 3.3. Determination Under Section 3.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 46
(i)
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SECTION 4.1. Representations and Warranties of the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 5.
COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 5.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 5.3. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE 6.
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 7.
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.2. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.3. Citibank and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.4. Bank's Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.6. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 8.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.1. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 8.3. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.4. Costs, and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.5. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.6. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.7. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.8. Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.10. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.11. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.12. Effect of Termination of Status as a
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.13. No Liability Regarding Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(ii)
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SCHEDULES
---------
Schedule 1(a) Accounting Periods
Schedule 1(b) Bank Lending Offices
Schedule 2.3 Outstanding Special Credits
Schedule 2.13 Outstanding Letters of Credit
Schedule 3.1(j)(ix) Intercompany Notes owned by the Guarantor
Schedule 3.1(j)(x)(1) Certificates of Title on Motor Vehicles
Schedule 3.1(j)(x)(4) Intercompany Notes owned by each Borrower
Schedule 3.1(j)(xi) Mortgaged Property
Schedule 3.2 Certain Material Adverse Changes
Schedule 4.1(a) Shares of Stock
Schedule 4.1(b) Subsidiaries
Schedule 4.1(d) Approvals, Consents, Waivers, Filings, Notices
Schedule 4.1(i) Litigation
Schedule 4.1(l) Plans and Multiemployer Plans
Schedule 4.1(u) Notices Regarding Hazardous Material
Schedule 4.1(bb) Encumbrances on Mortgaged Property
Schedule 4.1(cc) Encumbrances on Other Collateral
Schedule 4.1(dd) Affiliate Agreements
Schedule 4.1(ee) Equipment Property Locations
Schedule 4.1(hh) Appraised Value of Mortgaged Property
Schedule 5.1(c) Schedule of Insurance
Schedule 5.2(a) Liens
Schedule 5.2(b) Debt
Schedule 6.1(n) Mortgaged Property Documents and Due Diligence Items
Schedule 6.1(o) Documents to be delivered by April 18, 1994
(iii)
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LIST OF EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Notice of Conversion
Exhibit D Form of Borrowing Base Certificate
Exhibit E Form of Letter of Credit Request
Exhibit F Form of Pledge Agreement
Exhibit G Form of Borrowers Security Agreement
Exhibit H Form of Mortgage
Exhibit I Form of Transferor Certificate
Exhibit J Form of Solvency Certificate
Exhibit K Form of Opinion of Smith Helms Mulliss & Moore, L.L.P.
Exhibit L Form of Guaranty
Exhibit M Form of Affiliate Guaranty
Exhibit N Form of Assignment and Acceptance
Exhibit O Form of Opinion of John B. Yorke
Exhibit P Copy of Employee Dishonesty Policy
Exhibit Q Copy of Appraisals for Mortgaged Property
(iv)
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SECURED REVOLVING CREDIT AND LETTER OF CREDIT AGREEMENT
Dated as of March 15, 1994
Carolina Freight Carriers Corporation ("CFCC"), a North
Carolina corporation and Red Arrow Freight Lines, Inc. ("RA"), a Texas
corporation (individually a Borrower and collectively the "Borrowers"), the
banks listed on the signature pages hereof (the "Banks"), and Citibank, N.A. as
agent (the "Agent") for the Banks, agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Certain Defined Terms. As used in this
Agreement, 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):
"Accounting Period" means, as to any Loan Party, an accounting
period during the calendar years 1993 through and including 1996, as
set forth on Schedule 1(a) hereto.
"Adjusted Base Rate" means, for any Interest Period for each
Adjusted Base Rate Advance comprising part of the same Borrowing, a
fluctuating interest rate equal to the Alternate Base Rate plus the
Applicable Margin.
"Adjusted Base Rate Advance" means an Advance which bears
interest as provided in Section 2.7(a)(i).
"Adjusted Borrowing Base" means the Borrowing Base minus the
Mortgaged Property component of the Borrowing Base.
"Advance" means an advance by a Bank to the Borrowers pursuant
to Article 2, and refers to an Adjusted Base Rate Advance or a
Eurodollar Rate Advance (each of which shall be a "Type" of Advance).
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is in control of, is controlled by
or is under common control with such Person or is a director or
officer of such Person. For purposes of this definition, the term
"control" (including the terms "controlling", "controlled by" and
"under common control with") of a Person means the possession, direct
or indirect, of the power (i) to direct or cause the direction of the
management and policies of such Person, whether through the ownership
of voting securities, by contract or otherwise, or (ii) to vote 10% or
more of the securities having ordinary voting power for the election
of directors of such Person.
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"Affiliate Agreements" means each of the agreements between a
Borrower or any of its Subsidiaries and an Affiliate of such Person.
"Affiliate Guaranty" means a guaranty agreement made by CCSI
in favor of the Banks in substantially the form of Exhibit M attached
hereto.
"Agreement" means this Secured Revolving Credit and Letter of
Credit Agreement, as the same may be modified, supplemented or amended
from time to time.
"Alternate Base Rate" means a fluctuating rate per annum equal
at all times to the highest of (i) Citibank's Base Rate; (ii) 1/2 of
one percent per annum above the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major U.S. money market banks,
such three-month morning average being determined weekly on each
Monday (or, if any such day is not a Business Day, on the next
preceding Business Day) adjusted to the nearest 1/4 of one percent or
(iii) a rate equal to 1/2 of one percent per annum above the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers.
"Applicable Margin" means, (i) with respect to Adjusted Base
Rate Advances three quarters of one percent (3/4%) per annum and, with
respect to Eurodollar Rate Advances two and one quarter percent (2
1/4%) per annum, for the period commencing on the Closing Date through
and including March 31, 1994; and (ii) for the period commencing on
April 1, 1994 through and including the Termination Date, the
Applicable Margin as determined by the Agent from time to time in
accordance with pricing matrix set forth below. For each fiscal
quarter during which the Guarantor's ratio of (x) the sum of EBIT plus
Rentals to (y) the sum of Interest Expense plus Rentals (hereinafter
referred to as the "Fixed Charge Coverage Ratio", and the Guarantor's
ratio of (a) the sum of Total Adjusted Debt to (b) Capital are as set
forth in the following pricing matrix, as determined on the applicable
Fixed Rate Margin Pricing Date by reference to the financial
statements delivered by the Guarantor pursuant to Section 7(i) of the
Guaranty, the following percentages shall apply:
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Pricing Matrix
--------------
Total Adjusted Debt/Capital
-----------------------------------------------------------------------------------------
(Greater than) 65% 50-65% (less than) 50%
------------------------- ----------------------- -------------------------
Fixed Charge
Coverage Ratio Euro- Adjusted Euro- Adjusted Euro- Adjusted
dollar Base dollar Base dollar Base
------------------------- ----------------------- -------------------------
Less than 2.75% 1.25% 2.25% 0.75% 1.50% 0%
1.35 times
1.35X - 2.50 times 2.25% 0.75% 1.50% 0% 1.00% 0%
Greater than 2.50 times 1.00% 0% 0.75% 0% 0.50% 0%
Beginning on the first Fixed Rate Margin Pricing Date following April
1, 1994 and continuing on each Fixed Rate Margin Pricing Date
thereafter, the Applicable Margin shall be determined in accordance
with the pricing matrix set forth above for the fiscal quarter most
recently ended in the case of the financial statements delivered
pursuant to Section 7(i)(i) of the Guaranty, and, in the case of the
financial statements delivered pursuant to Section 7(i)(ii) of the
Guaranty, for the last fiscal quarter of the Guarantor's most recently
ended fiscal year, in each case effective on the first day of the
month following receipt of the financial statements.
"ALTA Survey" means a survey prepared in accordance with the
standards adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1986 known as the
"Minimum Standard Detail Requirements of Land Title Survey." Each
ALTA Survey shall be in sufficient form to satisfy the requirements of
a title insurance company acceptable to the Agent to provide extended
coverage over survey defects and shall also show the location of all
easements, utilities and covenants of record, dimensions of all
improvements, encroachments from any adjoining property, certify as to
the location of any flood plain area affecting the subject real estate
and determine the location of improvements. To the extent permitted
by applicable law and the rules of any applicable governing
engineering or surveying associations, each ALTA Survey obtained
pursuant to the terms of this Agreement shall contain the following
certification: "To Carolina Freight Carriers Corporation, Citibank,
N.A., as Agent, and Lawyers Title Insurance Company. This is to
certify that this map or plat and the survey on which it is based were
made in accordance with the 'Minimum Standard
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Detail Requirements for Land title Surveys' established and adopted by
ALTA. (Signed) (SEAL) License No. ____________".
"Applicable Lending Office" means, with respect to each Bank,
such Bank's Domestic Lending Office in the case of an Adjusted Base
Rate Advance and such Bank's Eurodollar Lending Office in the case of
a Eurodollar Rate Advance.
"Appraised Value" means the value of Mortgaged Property set
forth on Schedule 4.1(hh) as it may be amended from time to time to
reflect any change in such value in accordance with appraisals
obtained pursuant to Section 5.1(m) hereof.
"Asbestos" shall include all the meanings therefor under any
Relevant Environmental Laws and shall include, without limitation,
asbestos fibers, friable asbestos, and friable and potentially friable
asbestos containing material, as such terms are defined under the
Relevant Environmental Laws.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Bank and an Eligible Assignee, and accepted by the
Agent, in substantially the form of Exhibit N hereto.
"Authorized Signatory" shall mean, with respect to any Person,
such officer or attorney-in-fact of that Person as may be designated
in writing by that Person to the Agent and the Banks as being
authorized to execute documents, certificates, agreements or other
writings on behalf of such Person.
"Banks" means the Banks listed on the signature pages hereof
and each Eligible Assignee that shall become a party hereto pursuant
to Section 8.7.
"Base Rate" means the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as Citibank's base
rate.
"Borrowers Security Agreement" has the meaning specified in
Section 3.1(j)(vii).
"Borrowing" means a borrowing consisting of Advances of the
same Type made on the same day by the Banks.
"Borrowing Base" means, at any time, an amount equal to the
sum of (i) 100% of the Net Liquidation Value of the Equipment
Property, (ii) 100% of the Total Accounts Receivable Availability and
(iii) 50% of the Appraised Value of the Mortgaged Property.
Capitalized terms used in this definition, which are not otherwise
defined in this Agreement, shall have the meaning specified or
otherwise designated as a line item on the Borrowing Base Certificate.
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10
"Borrowing Base Certificate" has the meaning specified in
Section 5.1(l)(v).
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London, England interbank market.
"Capital" means, for any Measurement Period, Total Adjusted
Debt plus Tangible Net Worth plus the long-term portion of deferred
income taxes of the Guarantor and its subsidiaries on a consolidated
basis.
"Cardinal" means Cardinal Freight Carriers, Inc., a
Virginia corporation.
"CCSI" means Carrier Computer Services, Inc., a North Carolina
corporation.
"Capital Expenditures" means all payments due (whether or not
paid) from a Person during such Person's fiscal year in respect of the
cost of any fixed asset or improvement, or replacement, substitution,
or addition thereto, having a useful life of more than 1 year, all as
determined under GAAP, including, without limitation, Capital Leases.
"Capital Lease" means any lease of Property by a Borrower or
any of their respective Subsidiaries on a consolidated basis that, in
accordance with GAAP, should be reflected as a liability on the
consolidated balance sheet of Borrowers and their respective
Subsidiaries.
"CFFC" means Carolina Freight Funding Corporation, a North
Carolina corporation, whose outstanding capital stock is one hundred
percent (100%) owned by the Guarantor.
"Citibank" means Citibank, N.A. in its individual capacity as
a Bank and as the issuer of Letters of Credit.
"CLC" means The Complete Logistics Company, a California
corporation.
"Closing Date" means the first date upon which Advances are
made, or Letters of Credit are issued (including deemed issuances of
Letters of Credit pursuant to the second paragraph of Section
2.13(a)), hereunder.
"Closing Fee" means a fee in the amount of $225,000 payable by
the Borrowers to the Agent, for the ratable benefit of the Banks, on
or before the Closing Date.
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"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all "Collateral" and "Mortgaged Property"
referred to in the Collateral Documents and all other property and
interests in property and proceeds thereof that is subject to any Lien
in favor of the Agent for the ratable benefit of the Banks (regardless
of whether such Lien shall also secure Obligations to any other
Person), including Citibank as issuer of the Letters of Credit.
"Collateral Documents" means the Security Agreements, the
Mortgages, the Guaranty, and all other guaranties, security
agreements, mortgages, instruments and other written evidence of
Obligations of a Borrower (except for the Notes and this Agreement) or
any Subsidiary or Affiliate of a Borrower in favor of the Agent or the
Banks (regardless of whether any of such agreements or documents
establish Liens that also secure Obligations to any other Person),
including Citibank as issuer of the Letters of Credit, now or
hereafter delivered to the Agent or the Banks pursuant to the terms
hereof or thereof, including, without limitation, all financing
statements (or comparable documents) now or hereafter filed in
accordance with the Uniform Commercial Code (or comparable law)
against a Borrower or any Subsidiary or Affiliate of a Borrower to
perfect or give notice of the Liens granted under any of the foregoing
guaranties, agreements, instruments or other written evidence, and any
amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Commitment" has the meaning specified in Section 2.1.
"Commitment Fee" has the meaning specified in Section 2.4.
"Commitments" means, collectively, the several obligation of
the Banks to make Advances and participate in Letters of Credit
(including any deemed Letters of Credit pursuant to Section 2.13(a))
issued by Citibank, to or for the account of the Borrowers pursuant to
this Agreement, up to an aggregate amount, at any time outstanding,
not to exceed $45,000,000, as such amount may be reduced pursuant to
Section 2.5 hereof.
"Compliance Certificate" means a certificate, executed on
behalf or a Borrower or the Borrowers, to the effect that (i) the
representations and warranties contained in each Loan Document are
correct in all material respects as though made on and as of the date
of the certificate, except for changes contemplated or permitted by
this Agreement and (ii) no event has occurred and is continuing that
constitutes an Event of Default or a Default.
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"Convert", "Conversion" and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type
pursuant to Section 2.9 or 2.10.
"Credit Event" means the incurrence of any Borrowing or the
issuance of any Letter of Credit, including any deemed issuance of
Letters of Credit on the Closing Date pursuant to the second paragraph
of Section 2.13(a) hereof.
"Debt" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services, (iv) obligations as lessee under leases which
shall have been or should be, in accordance with GAAP, recorded as
Capital Leases, and (v) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i) through (iv) above.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Domestic Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Domestic Lending Office"
opposite its name on Schedule 1(b) hereto or in the Assignment and
Acceptance pursuant to which it became a Bank, or such other office of
such Bank as such Bank may from time to time specify to the Borrowers
and the Agent.
"EBITDA" means, for any Measurement Period, consolidated net
operating income for such Measurement Period plus, to the extent
actually deducted in determining consolidated net operating income,
for such Measurement Period any (a) Interest Expense for such
Measurement Period, (b) depreciation and amortization expense for such
Measurement Period and (c) provision for taxes imposed on or measured
by income or excess profits for such Measurement Period.
"EBIT" means, for any Measurement Period, consolidated net
operating income for such Measurement Period plus, to the extent
actually deducted in determining consolidated net operating income,
for Measurement Period any (a) Interest Expense for such Measurement
Period, and (b) provision for taxes imposed on or measured by income
or excess profits for such Measurement Period.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any State thereof, and having
total assets in excess of $2,000,000,000, deposits in excess of
$1,000,000,000 and a combined capital and surplus of at least
$250,000,000; (ii) a savings bank organized under the laws of the
United States, or any State thereof, and having
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total assets in excess of $2,000,000,000, deposits in excess of
$1,000,000,000 and a combined capital and surplus of at least
$250,000,000; (iii) a commercial bank organized under the laws of any
other country which is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated
with its General Arrangements to Borrow or any "foreign bank" as that
term is defined in the International Banking Act of 1978, as amended
and having assets in excess of $2,000,000,000 and a combined capital
and surplus of at least $250,000,000, provided that such bank is
acting through a branch or agency located in the country in which it
is organized or another country which is described in this clause
(iii); (iv) the central bank of any country which is a member of the
OECD; (v) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership or other
entity) which is engaged in making, purchasing or otherwise investing
in commercial loans in the ordinary course of its business, and having
total assets in excess of $2,000,000,000 and a combined capital and
surplus of at least $250,000,000; and (vi) any Affiliate on any entity
referred to in the preceding clauses (i) through and including (v).
"Employee Dishonesty Policy" means that certain employee
dishonesty policy, policy number 3F543347-04, including all
indorsements, issued by Lumbermens Mutual Casualty Company, naming
each Borrower as an additional insured and Citibank as loss payee, a
copy of which is attached as Exhibit P hereto.
"Environmental Complaint" means any pending complaint, order,
citation, notice or other oral or written communication from any
Governmental Authority with respect to the existence or alleged
existence of a violation of or liability resulting from any Relevant
Environmental Laws.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under any Relevant Environmental Laws,
or (b) damages arising from, or costs incurred by, such Governmental
Authority in response to a release or threatened release of any
Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title
IV of ERISA is a member of the Borrowers' controlled group, or under
common control with the Borrowers, within the meaning of Section 414
of the Code, and the regulations promulgated and rulings issued
thereunder.
"Equipment Property" means Titled Vehicles, dollies,
forklifts, and all equipment and parts attached thereto, including
tires and tubes in service.
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"ERISA Event" means (i) a Reportable Event, unless the 30-day
notice requirement with respect thereto has been waived by the PBGC,
(ii) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred
to in Section 4041(e) of ERISA); (iii) the cessation of operations at
a facility in the circumstances described in Section 4068(f) of ERISA;
(iv) the withdrawal by the Borrowers or an ERISA Affiliate from a
Multiemployer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure
by the Borrowers or any ERISA Affiliate to make a payment to a Plan
required under Section 302(f)(1) of ERISA, which Section imposes a
lien for failure to make required payments; (vi) the adoption of an
amendment to a Plan requiring the provision of security to such Plan,
pursuant to Section 307 of ERISA; or (vii) the institution by the PBGC
of proceedings to terminate a Plan, pursuant to Section 4042 of ERISA,
or the occurrence of any event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Bank,
the office of such Bank specified as its "Eurodollar Lending Office"
opposite its name on Schedule 1(b) hereto or in the Assignment and
Acceptance pursuant to which it became a Bank (or, if no such office
is specified, its Domestic Lending Office), or such other office of
such Bank as such Bank may from time to time specify to the Borrowers
and the Agent.
"Eurodollar Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an
interest rate per annum (rounded upward to the nearest 1/16 of 1%)
equal to the average rate of interest per annum at which deposits in
U.S. dollars are offered by the principal offices of the Reference
Banks to prime banks in the London, England interbank market at 11:00
A.M. (London time) two Business Days before the first day of such
Interest Period in amounts substantially equal to the Reference Bank's
Eurodollar Rate Advances comprising part of such Borrowing and for a
period equal to such Interest Period.
"Eurodollar Rate Advance" means an Advance which bears
interest as provided in Section 2.7(a)(ii).
"Eurodollar Rate Reserve Percentage" means for any Interest
Period for any Eurodollar Rate Advance, the average daily maximum rate
at which reserves (including any marginal, supplemental or emergency
reserves) are required to be
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maintained during such Interest Period under Regulation D by member
banks of the Federal Reserve System in New York City with deposits
exceeding one billion dollars against, in the case of Eurodollar Rate
Advances, "Eurocurrency liabilities" (as such term is used in
Regulation D).
"Events of Default" has the meaning specified in Section 6.1.
"Excess Receivables" means the amount, if any, by which
Eligible Receivables (as defined in the Pooling and Servicing
Agreement) exceeds the amount of Eligible Receivables required from
time to time under the terms of the Pooling and Servicing Agreement.
"Extension Period" has the meaning specified in Section 2.17.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fixed Charge Coverage Ratio" has the meaning set forth in the
definition of Applicable Margin.
"Fixed Rate Margin Pricing Date" means each date which is (i)
45 days after each of Guarantor's first 3 fiscal quarters of each
fiscal year and (ii) 90 days after the last fiscal quarter of each
fiscal year of the Guarantor.
"Funded Debt" means total indebtedness for borrowed money,
inclusive of Capital Leases, regardless of the maturity thereof.
"GAAP" means generally accepted accounting principles
consistently applied.
"GITC" means G.I. Trucking Company, a California corporation.
"Governmental Authority" means any national government, any
federal, state, local or other political subdivision or agency thereof
and any central bank thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"Guarantor" means Carolina Freight Corporation, a North
Carolina corporation.
"Guaranty" means a Guaranty Agreement made by the Guarantor in
favor of the Agent and the Banks in substantially the form of Exhibit
L attached hereto.
"Hazardous Materials" means any solid wastes, toxic or
hazardous substances, wastes or contaminants, polychlorinated
biphenyls, paint containing lead, urea formaldehyde foam insulation,
petroleum or crude oil (or any fraction thereof), and discharges of
sewage or effluent, as any of those terms is defined from time to time
in or for the purposes of any Relevant Environmental Laws.
"Indemnified Party" has the meaning specified in Section
8.4(b).
"Indemnity Release Date" means the date on which all
Obligations of the Loan Parties under the Loan Documents, other than
those set forth in Section 8.4(c), have been satisfied in full.
"ILI" means Innovative Logistics Incorporated, a South
Carolina corporation.
"Insufficiency" means, with respect to any Plan, the amount,
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Intercompany Note" means a promissory note made by any
Affiliate of a Borrower and payable to the order of any Borrower or
Guarantor.
"Interest Expense" means, for any period, the total interest
expense (excluding interest capitalized during such period and
included as a Capital Expenditure) of Borrowers or the Guarantor, as
the case may be, and their respective Subsidiaries; on a consolidated
basis, for such period; Interest Expense shall include, without
limitation, for such period, the amount of any discount on (i) sale of
Receivables, by the Borrowers or the Guarantor, and (ii) sale of
accounts receivable (generated from delivery of services in the normal
course of business by Subsidiaries of the Guarantor other than the
Borrowers) sold by the Guarantor.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the
date of such Advance or the date of the Conversion of any Advance into
such an Advance and ending on the last day of the period selected by
the Borrowers pursuant to the provisions below and, thereafter, each
subsequent period commencing on the first day following the last day
of the immediately preceding Interest Period and ending on the last
day of the period selected by the Borrowers pursuant to the
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provisions below. The duration of each such Interest Period shall be
1, 2, 3 or 6 months, as the Borrowers may, upon notice received by the
Agent not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the first day of such Interest Period, select;
provided, however, that:
(i) the duration of any Interest Period which commences
before any principal repayment installment date and otherwise
ends after such date shall end on such date;
(ii) Interest Periods commencing on the same date for
Advances comprising part of the same Borrowing shall be of the
same duration; and
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last
day of such Interest Period shall be extended to occur on the
next succeeding Business Day, provided, in the case of any
Interest Period for a Eurodollar Rate Advance, that if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding
Business Day.
"Investor Certificate" means an Investor Certificate as
defined in the Pooling and Servicing Agreement.
"L/C Related Documents" has the meaning specified in Section
2.13(f)(i).
"Letter of Credit Advance" means an Advance which, in
accordance with Section 2.13(d), is made when the Borrowers do not
reimburse Citibank for a drawing made under a Letter of Credit and the
Borrowers are then permitted to obtain a Borrowing in the amount of
such drawing.
"Letter of Credit Amount" means, as of any date of
determination, the sum of (x) the aggregate amount available to be
drawn under all Letters of Credit then outstanding (assuming
compliance with all conditions to drawing), which amount shall be
deemed to be made available upon issuance of a Letter of Credit and to
be outstanding so long as such Letter of Credit remains outstanding,
and (y) the amount of all unreimbursed drawings with respect to
Letters of Credit which have not been converted to Advances hereunder.
"Letter of Credit Borrowing" means a Borrowing which comprises
Letter of Credit Advances.
"Letter of Credit Commitment" means, collectively, the several
obligations of the Banks to participate in Letters of Credit issued by
Citibank pursuant to Section 2.13 hereof (including any deemed Letters
of Credit pursuant to Section 2.13(a)) up to an aggregate amount, at
any time outstanding,
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not to exceed $30,000,000, as such amount may be reduced pursuant to
Section 2.5 hereof.
"Letter of Credit Request" has the meaning specified in
Section 2.13(b).
"Letters of Credit" has the meaning specified in Section
2.13(a).
"Lien" means any interest in property securing an obligation
owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law,
statute or contract, whether or not such interest shall be recorded or
perfected and whether or not such interest shall be contingent upon
the occurrence of some future event or events or the existence of some
future circumstance or circumstances, and including, without
limitation, the lien or security interest arising from a mortgage,
deed of trust, deed to secure debt, encumbrance, pledge, adverse claim
or charge, conditional sale or trust receipt, or from a lease,
consignment or bailment for security purposes, or the lien noted on
the title to a vehicle, which title was issued pursuant to the motor
vehicle laws of the applicable jurisdiction. The term Lien" shall
also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting property.
"Loan Documents" means this Agreement, the Notes, each Notice
of Borrowing, the Collateral Documents, the Pledge Agreement, the
Guaranty, the Affiliate Guaranty and the Letters of Credit and related
applications therefor, and each amendment to any of the foregoing.
"Loan Parties" means each Borrower, the Guarantor and CCSI.
"Majority Banks" means at any time Banks holding at least 90%
of the then aggregate unpaid principal amount of the Notes held by
Banks, or, if no such principal amount is then outstanding, Banks
having at least 90% of the Commitments.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with
any other event or events, act or acts, condition or conditions,
occurrence or occurrences, whether or not related, a material adverse
change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business, properties or prospects of the
Guarantor, the Borrowers and their respective subsidiaries taken as a
whole; (b) the rights and remedies of the Agent or the Banks under the
Loan Documents, or the ability of the Borrowers or the Guarantor to
perform its
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obligations under the Loan Documents or the Guaranty, as applicable;
or (c) the legality, validity or enforceability of any Loan Document
or the Guaranty.
"Measurement Period" means a period of four consecutive fiscal
quarters of the Borrowers or the Guarantor, as the case may be, and
ending on the last day of the then most recently completed fiscal
quarter of the Borrowers or the Guarantor, as the case may be;
provided, however, that for the period beginning January 1, 1994
through and including December 31, 1994, solely as to capitalized
terms defined herein (which terms embody the definition of Measurement
Period) used for the purpose of calculations in respect to the (a)
Applicable Margin and (b) Fixed Charge Coverage Ratio, Measurement
Period means (i) for the period beginning January 1, 1994 through and
including March 31, 1994, a period of one fiscal quarter of the
Borrowers ending on the last day of the then most recently completed
fiscal quarter of the Borrowers, (ii) for the period beginning April
1, 1994 through and including June 30, 1994, a period of two
consecutive fiscal quarters of the Borrowers ending on the last day of
the then most recently completed fiscal quarter of the Borrowers, and
(iii) for the period beginning July 1, 1994 through and including
September 30, 1994, a period of three consecutive fiscal quarters of
the Borrowers ending on the last day of the then most recently
completed fiscal quarter of the Borrowers.
"Mortgage" means each Mortgage, Open-End Mortgage, Deed of
Trust, Deed to Secure Debt, Security Agreement, Fixture Financing
Statement, and Financing Statement of CFCC and its Subsidiaries
entered into pursuant to the terms hereof substantially in the form of
Exhibit H.
"Mortgaged Property" has the meaning specified in Section
3.1(j)(xi).
"MCI means Motor Carrier Insurance, Ltd. a Bermuda corporation.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Liquidation Value" means net book value of an item
reduced by a stated percentage to obtain a gross liquidation value
minus estimated liquidation expenses.
"Note" means a promissory note of the Borrowers payable to the
order of any Bank, substantially in the form of Exhibit A, evidencing
the aggregate indebtedness of the Borrowers to such Bank resulting
from Advances made by such Bank.
"Notice of Borrowing" has the meaning specified in Section 2.2.
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"Notice of Conversion" has the meaning specified in Section
2.10.
"Obligation" means, with respect to any Person, any obligation
of such Person of any kind, including, without limitation, any
obligation to make any payment for any reason, whether or not such
obligation is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, disputed, undisputed, legal, equitable, secured
or unsecured, and whether or not such obligation is discharged, stayed
or otherwise affected by any proceeding referred to in Section 6.1(e).
Without limiting the generality of the foregoing, the Obligations of
the Loan Parties under the Loan Documents include (a) all principal
(including, without limitation, reimbursement for amounts drawn under
Letters of Credit), interest, Letter of Credit commissions, charges,
expenses, fees, attorneys' fees and disbursements, indemnities and any
other amounts payable by any Loan Party under any Loan Documents, (b)
any amount in respect of any of the foregoing that any Bank, in its
sole discretion, may elect to pay or advance on behalf of such Loan
Party in accordance with the terms of the relevant Loan Document, and
(c) any amount in respect of any Special Credits.
"Other Receivables" means the sum of accounts receivable of
each Borrower which do not constitute Receivables and any Receivables
assigned back to a Borrower by any Person.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Permitted Liens" means those Liens enumerated in Sections
5.2(a)(i) through and including 5.2(a)(xv).
"Plan" means any employee benefit plan or other plan for any
employees of each Borrower or any ERISA Affiliate and which is subject
to the provisions of Title IV of ERISA.
"Pledge Agreement" means a Pledge and Security Agreement made
by the Guarantor in favor of the Agent for the ratable benefit of the
Banks in substantially the form of Exhibit F attached hereto.
"Pooling And Servicing Agreement" means that certain Pooling
And Servicing Agreement, dated as of December 1, 1993, among and
between CFFC as transferor, Guarantor as servicer and the First
National Bank of Chicago as trustee, as the same may be amended from
time to time.
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"Prior Credit Agreement" means the Amended and Restated
Revolving Credit and Term Loan Agreement, dated as of May 7, 1993
among Carolina Freight Carriers Corporation, as borrower, Citibank,
N.A., First Union National Bank of North Carolina and NationsBank of
North Carolina, N.A., as banks (the "Prior Banks") and Citibank, N.A.,
as agent, including all amendments thereto.
"Receivables" means all of the Borrowers' United States
dollar-denominated accounts receivable (excluding international
receivables due from foreign obligors), or portions thereof, generated
from delivery of services in the normal course of business by the
Borrowers and sold to the Guarantor under the terms of the Transfer
Agreement.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement, dated as of December 1, 1993, between the
Guarantor as seller and CFFC as purchaser, as the same may be amended
from time to time.
"Reference Banks" means Citibank and the First National Bank
of Boston.
"Register" has the meaning specified in Section 8.7(c).
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be
amended or supplemented from time to time.
"Relevant Environmental Laws" means all Requirements of Law
from time to time applicable to a Borrower or any of its Subsidiaries
or to any property now or formerly owned, operated, leased, or used by
a Borrower or any of its Subsidiaries or any part thereof with respect
to (a) the installation, existence or removal of Asbestos; (b) the
existence, discharge, generation, use, release, treatment, storage,
disposal, remediation or removal of Hazardous Materials; (c) exposure
to Hazardous Materials; (d) air emissions, water discharges, noise
emissions, solid wastes and any other environmental, health or safety
matters; and (e) pollution or other effects on the environment.
"Rentals" shall mean all payments incurred by Borrowers or its
subsidiaries, during the previous Measurement Period, as lessee or
sublessee under a lease of property (other than a Capital Lease),
including, without limitation, basic rent, percentage rent, property
taxes, utility or maintenance costs and insurance premiums, net of any
rental receipts paid to the Borrowers.
"Reportable Event" means any of the events described in
Section 4043(b) of ERISA.
"Requirements of Law", as to any Person, means the articles of
incorporation and bylaws or other organizational
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or governing documents of such Person, and any federal, state or local
statute, ordinance, treaty, rule or regulation, permit, license or
standard, or final determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of
its property is subject, and shall include, without limitation, all
Relevant Environmental Laws.
"Revolving Credit Commitment" means, collectively, the several
obligations of the Banks to make Advances to the Borrowers pursuant to
Section 2.1 hereof up to an aggregate amount, at any time outstanding,
not to exceed $15,000,000, as such amount may be reduced pursuant to
Section 2.5 hereof.
"Secured Creditors" means all Banks hereunder.
"Security Agreements" means the Borrowers Security Agreement,
the Pledge Agreement and any other security agreement executed by the
Guarantor or any other Affiliate of the Borrowers pursuant to the
terms hereof to secure its guaranty of the Borrower's Obligations
under the Loan Documents.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property
of such Person is greater than the total amount of liabilities of such
Person in accordance with GAAP (b) the present fair saleable value of
the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as
they become absolute and matured in accordance with GAAP, (c) such
Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts
and liabilities mature and (d) such Person is not engaged in business
or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an
unreasonably small capital. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability in
accordance with GAAP.
"Special Credit Availability" means an amount equal to the
lesser of the (i) 67% of the Borrowing Base less the aggregate amount
of Advances outstandingless the Letter of Credit Amount less the
aggregate amount of any Special Credits outstanding or (ii) Adjusted
Borrowing Base less the aggregate amount of Advances outstanding less
the Letter of Credit Amount less the aggregate amount of any Special
Credits outstanding.
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"Special Credit" has the meaning specified in Section 2.3.
"Subsidiary", with respect to any Person, means any
corporation organized under the laws of the United States of America
or a jurisdiction thereof at least a majority of the outstanding
shares of voting stock or similar interest of which are owned,
directly or indirectly, by such Person.
"Tangible Net Worth" means total assets (minus the value of
all intangible assets, as determined in accordance with GAAP) less
Total Liabilities (plus deferred income taxes).
"Termination Date" means the earlier of (i) June 30, 1996 or
if the Termination Date is extended as contemplated in Section 2.17,
the last day of each successive Extension Period or (ii) termination
in whole of the Commitments pursuant to Section 2.5 or 6.1.
"Titled Vehicles" means all tractors, trailers and trucks
owned, or subsequently acquired, by a Borrower, for which titles are
issued pursuant to the motor vehicle laws of the applicable
jurisdiction.
"Total Adjusted Debt" means for any Measurement Period, for
any Loan Party, interest-bearing, on-balance sheet indebtedness plus
indebtedness in respect of Investor Certificates calculated as of the
last day of the Measurement Period plusfour times Rentals.
"Total Liabilities" means the liabilities of the Borrowers, or
the Guarantor, as the case may be, as reported in Borrowers' or the
Guarantor's consolidated financial statements,less deferred income
taxes.
"Transfer Agreement" means (i) the Originating Subsidiaries
Receivables Purchase Agreement, dated December 1, 1993, between CFCC,
GITC and RA as sellers and the Guarantor as purchaser, as the same may
be amended from time to time, which allows, among other things, for
the sale of Receivables for cash and intercompany indebtedness, on a
continuous basis, and (ii) any agreement succeeding to or replacing
the foregoing with respect to the sale of Receivables for cash and
intercompany indebtedness, to which the Majority Banks have given
their prior written approval.
"Transferor Certificate" means the Transferor Certificate,
number R-2, substantially in the form of Exhibit I attached hereto.
"Transferor Interest" shall mean an undivided 98% interest of
the transferor interest described in Section 4.01(a) of the Pooling
and Servicing Agreement.
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"Withdrawal Liability" has the meaning given such term under
Part 1 of Subtitle E of Title IV of ERISA.
SECTION 1.2. Computation of Time Periods. In this
Agreement in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
SECTION 1.3. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP;
provided, however, that the terms consolidated, when used solely in connection
with the financial statements of the Borrowers and their respective
Subsidiaries but excluding the Guarantor, shall mean combined and not
consolidated in accordance with GAAP.
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ARTICLE 2.
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1. The Advances. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, to make Advances to the
Borrowers from time to time on any Business Day during the period from the date
hereof until the Termination Date in an aggregate amount not to exceed at any
time outstanding (i) the amount set opposite such Bank's name on the signature
pages hereof, or if such Bank has entered into any Assignment and Acceptance,
set forth in the Register maintained by the Agent pursuant to Section 8.7(c),
as such amount may be reduced pursuant to Section 2.5 (such Bank's
"Commitment") provided, however, that the aggregate amount of Advances
outstanding shall not exceed the lesser of the (A) Revolving Credit Commitment
or (B) Adjusted Borrowing Base minimum and Borrowing Base minimum set forth in
Section 5.1(p) hereof. Each Borrowing, excluding a Letter of Credit Borrowing,
shall be in an aggregate amount of $1,000,000 or an integral multiple of
$500,000 in excess thereof and shall consist of Advances of the same Type made
on the same day by the Banks ratably according to their respective Commitments.
Within the limits of each Bank's Commitment, the Borrowers may borrow, prepay
pursuant to Section 2.11 and reborrow under this Section 2.1.
SECTION 2.2. Making the Advances. (a) Except as otherwise
provided by Section 2.13, each Borrowing shall be made on notice, given not
later than 11:00 A.M. (New York City time) on the third Business Day prior to
the date of the proposed Borrowing (on the first Business Day prior to the date
of the proposed Borrowing, in the case of an Adjusted Base Rate Advance), by
the Borrowers to the Agent, which shall give to each Bank prompt notice thereof
by telecopier. Each such notice of a Borrowing (a "Notice of Borrowing") shall
be by telecopier in substantially the form of Exhibit B hereto, specifying
therein the (i) date of such Borrowing, (ii) Type of Advances comprising such
Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a
Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period
for each such Advance. Each Bank shall, before 11:00 A.M. (New York City time)
on the date of such Borrowing, make available for the account of its Applicable
Lending Office to the Agent at its address at 399 Park Avenue, New York, New
York 10043, Attention: Margo Mitchell, in same day funds, such Bank's ratable
portion of such Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article 3, the Agent will
make such funds available to the Borrowers at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary
notwithstanding, the Borrowers may not select Eurodollar Rate Advances for any
Borrowing if any Bank's pro rata share of such Borrowing is less than
$1,000,000.
(c) Each Notice of Borrowing shall be irrevocable and binding
on the Borrowers. In the case of any Borrowing which the
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related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrowers shall indemnify each Bank against any loss, cost or
expense incurred by such Bank as a result of any failure by Borrowers to
fulfill on or before the date specified in such Notice of Borrowing for such
Borrowing the applicable conditions set forth in Article 3, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Bank to fund the Advance to be made by such Bank as part
of such Borrowing when such Advance, as a result of such failure, is not made
on such date.
(d) Unless the Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available to
the Agent such Bank's ratable portion of such Borrowing, the Agent may assume
that such Bank has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) of this Section 2.2 and the Agent
may, in reliance upon such assumption, make available to the Borrowers on such
date a corresponding amount. If and to the extent that such Bank shall not
have so made such ratable portion available to the Agent, such Bank and the
Borrowers jointly and severally agree to repay to the Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Borrowers until the date such amount
is repaid to the Agent, at (i) in the case of the Borrowers, the interest rate
applicable at the time to Advances comprising such Borrowing and (ii) in the
case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Advance as part of such Borrowing for purposes of this Agreement.
(e) The failure of any Bank to make the Advance to be made by
it as part of any Borrowing shall not relieve any other Bank of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Bank shall be responsible for the failure of any other Bank to make the Advance
to be made by such other Bank on the date of any Borrowing.
SECTION 2.3. Special Credit. The Borrowers may, from time to
time until 30 days prior to the Termination Date, obtain letters of credit,
financial guaranties, hedging instruments and other forms of credit, other than
a loan (any such form of credit being a "Special Credit") from any Bank that is
willing to provide a Special Credit to the Borrowers, provided, the Agent
receives notice by telecopier from the Borrowers, not later than 10:00 A.M.
(New York City time) at least one Business Day prior to the date on which the
Special Credit is to be provided, specifying (i) the date and the aggregate
amount of the Special Credit, (ii) the maturity date of the Special Credit
(which shall not exceed the Termination Date) and (iii) the identity of the
Bank providing the Special Credit. The aggregate amount of Special Credits
outstanding at any one time shall not exceed $5,000,000. A Special Credit
complying with the provisions of this Section 2.3 shall be secured by the
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Collateral on an equal and ratable basis with all other Obligations of the
Borrowers hereunder, provided, that at the time such Special Credit was
provided there existed Special Credit Availability as indicated on the latest
Borrowing Base Certificate furnished to the Agent by the Borrowers.
Notwithstanding the foregoing, on the Closing Date the
outstanding custom guaranty listed on Schedule 2.3 provided by Citibank on
behalf of Carolina Freight Carriers (U.K.) Limited shall be deemed to have been
provided on behalf of the Borrowers pursuant to the terms hereof on the Closing
Date and shall, from and after the Closing Date, constitute a Special Credit
for all purposes hereunder, and the Borrowers shall assume hereunder all
liabilities in respect of such Special Credit to the same extent as if such
Special Credit had been initially provided hereunder as a Special Credit.
SECTION 2.4. Fees. (a) Commitment Fee. The Borrowers agree
to pay to the Agent for the account of each Bank a commitment fee (the
"Commitment Fee") on the average daily unused portion of such Bank's Revolving
Credit Commitment and Letter of Credit Commitment, commencing on the Closing
Date in the case of each Bank and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Bank, in the case of
each other Bank, to and including March 31, 1994 at the rate of 1/2 of 1% per
annum, payable quarterly, in arrears on the first day of each March, June,
September and December during the term of such Bank's Commitment, and on the
Termination Date; provided, however, that, for the period commencing April 1,
1994 through and including the Termination Date, (a) during such period as the
Guarantor's Fixed Charge Coverage Ratio is between 1.35 and 2.50 to 1.00 and
the Guarantor's ratio of (i) the sum of Total Adjusted Debt to (ii) Capital is
between 50% and 65% as determined as of the most recent Fixed Rate Margin
Pricing Date, such rate shall be 3/8 of 1% per annum; and (b) during such
period as the Guarantor's Fixed Charge Coverage Ratio is greater than 2.50 to
1.00 and the Guarantor's ratio of (i) the sum of Total Adjusted Debt to (ii)
Capital is less than 50% as determined as of the most recent Fixed Rate Margin
Pricing Date, such rate shall be 1/4 of 1% per annum. Any change in rate
pursuant to the terms of the foregoing proviso shall be effective on the first
day of the month following receipt of the financial statements delivered by the
Guarantor pursuant to Section 7(i) of the Guaranty.
(b) Agent's Fees. The Borrowers shall pay to the Agent for its own
account such fees as may from time to time be agreed upon between the Borrowers
and the Agent.
SECTION 2.5. Reduction of the Commitments. (a) The Borrowers
shall have the right, upon at least 4 Business Days' notice to the Agent, to
terminate in whole or reduce in part the unused portion of either or both of
the Revolving Credit Commitment and Letter of Credit Commitment, provided that
each partial reduction of either the Revolving Credit Commitment or the Letter
of Credit Commitment shall be in the aggregate amount of $1,000,000
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or an integral multiple in excess thereof, provided that the Commitment Fee due
June 1, 1994 shall be paid in full regardless of any reduction made pursuant to
this Section 2.5 prior to said date.
(b) The reduction in the amount of the Commitments
hereunder shall be permanent and shall be conditional upon payment of (x) such
principal amount outstanding under the Notes pro rata as is necessary so that
the principal amount outstanding thereunder after such reduction does not
exceed the amount of the Commitments as so reduced and there is a positive
amount available under the Commitments as so reduced plus (y) any amounts
required to be paid under Sections 2.11 and/or 8.4.
SECTION 2.6. Repayment. The Borrowers shall repay the unpaid
principal amount of each Advance made by each Bank in accordance with the Note
to the order of such Bank.
SECTION 2.7. Interest. (a) Ordinary Interest. The
Borrowers shall pay interest on the unpaid principal amount of each Advance
made by each Bank from the date of such Advance until such principal amount
shall be paid in full, at the following rates per annum:
(i) Adjusted Base Rate Advances. During such
periods as such Advance is an Adjusted Base Rate Advance, a
rate per annum equal at all times to the Adjusted Base Rate in
effect from time to time payable quarterly on the first day of
each March, June, September, and December during such periods
and on the date such Adjusted Base Rate Advance shall be
Converted or paid in full.
(ii) Eurodollar Rate Advances. During such
periods as such Advance is a Eurodollar Rate Advance, a rate
per annum equal at all times during each Interest Period for
such Advance to the sum of the Eurodollar Rate for such
Interest Period for such Advance plus the Applicable Margin,
payable on the last day of such Interest Period and, if such
Interest Period has a duration of more than three months, on
each day which occurs during such Interest Period every three
months from the first day of such Interest Period.
(b) Default Interest. The Borrowers shall pay interest on
the unpaid principal amount of each Advance that is not paid when due and on
the unpaid amount of all interest, fees and other amounts payable hereunder
that is not paid when due, payable on demand, at a rate per annum equal at all
times to (i) in the case of any amount of principal, the greater of (x) 2.00%
per annum above the rate per annum required to be paid on such Advance
immediately prior to the date on which such amount became due and (y) 2.00% per
annum above the Base Rate in effect from time to time and (ii) in the case of
all other amounts, 2.00% per annum above the Base Rate in effect from time to
time.
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SECTION 2.8. Additional Interest on Eurodollar Rate
Advances. The Borrowers shall pay to the Agent for the account of each Bank
additional interest on the unpaid principal amount of each Eurodollar Rate
Advance of such Bank, from the date of such Advance until such principal amount
is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting (i) the Eurodollar Rate for such Interest
Period for such Eurodollar Rate Advance from (ii) the rate obtained by dividing
such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period, payable on each date on which
interest is payable on such Eurodollar Rate Advance.
SECTION 2.9. Interest Rate Notice and Protection. (a)
The Agent shall give prompt notice to the Borrowers and the Banks of the
applicable interest rate determined by the Agent for purposes of Section 2.7(i)
and (ii).
(b) If, with respect to any Eurodollar Rate Advances, the any
two Banks notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Banks of making,
funding or maintaining their respective Eurodollar Rate Advances for such
Interest Period, the Agent shall forthwith so notify the Borrowers and the
Banks, whereupon
(i) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest
Period therefor, Convert into an Adjusted Base Rate Advance
without penalty to the Borrowers, and
(ii) the obligation of the Banks to make, or to
Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrowers and the
Banks that the circumstances causing such suspension no longer
exist.
(c) If the Borrowers shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.1, the
Agent will forthwith so notify the Borrowers and the Banks and such Advances
will automatically, on the last day of the then existing Interest Period
therefor, Convert into Adjusted Base Rate Advances.
(d) On the date on which any Bank's pro rata share of the
aggregate unpaid principal amount of Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $1,000,000, such
Advances shall, if they are Advances of a Type other than Adjusted Base Rate
Advances, automatically Convert into Adjusted Base Rate Advances, and on and
after such date and for so long as the Bank's pro rata share of the aggregate
unpaid principal amount of Advances comprising any Borrowing shall remain below
$1,000,000, the right of the Borrowers to Convert such Advances into Advances
of a Type other than Adjusted Base Rate
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Advances shall terminate; provided, however, that if and so long as each such
Advance shall be of the same Type and have the same Interest Period as Advances
comprising another Borrowing or other Borrowings, and each Bank's pro rata
share of the aggregate unpaid principal amount of all such Advances shall equal
or exceed $1,000,000, the Borrowers shall have the right to continue all such
Advances as, or to Convert all such Advances into, Advances of such Type having
such Interest Period.
SECTION 2.10. Voluntary Conversion of Advances. The
Borrowers may on any Business Day, upon notice given to the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the
date of the proposed Conversion and subject to the provisions of Sections 2.9
and 2.13, Convert all Advances of one Type comprising the same Borrowing into
Advances of another Type; provided, however, that any Conversion of any
Eurodollar Rate Advances into Advances of another Type shall be made on, and
only on, the last day of an Interest Period for such Eurodollar Rate Advances.
Each such notice of a Conversion shall, be by telephone or telecopier,
confirmed immediately in writing, in substantially the form of Exhibit C
hereto, specifying, within the restrictions specified above, (i) the date of
such Conversion, (ii) the Advances to be Converted, the portion thereof to be
Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on the Borrowers; provided,
further, that Adjusted Base Rate Advances may not be converted to Eurodollar
Rate Advances if an Event of Default has occurred and is continuing.
SECTION 2.11. Prepayments. (a) The Borrowers may, upon at
least two Business Days' prior notice to the Agent in the case of a Eurodollar
Rate Advance, and one Business Days' prior notice to the Agent in the case of a
Adjusted Base Rate Advance, stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrowers shall,
prepay the outstanding principal amounts of the Advances comprising part of the
same Borrowing in whole or ratably in part, together with accrued interest to
the date of such prepayment on the principal amount prepaid; provided, however,
that (i) each partial prepayment shall be in an aggregate principal amount not
less than $500,000, and (ii) any prepayment of any Eurodollar Rate Advances
shall be made on, and only on, the last day of an Interest Period for such
Advances, and if such prepayment is made on a day other than the last day of an
Interest Period for such Advance, the Borrowers shall reimburse the Agent and
the Banks, on demand, for any loss or out-of-pocket expense incurred by the
Agent or any of the Banks in connection with such prepayment.
(b) Loss or out-of-pocket expense upon prepayment of a
Eurodollar Rate Advance shall include, without limitation, expenses incurred by
such Bank in connection with the reemployment of the funds prepaid in an amount
equal to the excess of (i) the interest that would have been received from the
Borrowers on the amount so reemployed during the remaining portion of the
Interest Period in
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question had the Borrowers not prepaid such Eurodollar Rate Advance over (ii)
the amount of interest which would have accrued on such funds if such Bank had
placed such funds on deposit with a first class bank in the London interbank
borrowing market from the date of such prepayment until the end of such
Interest Period. Such Bank's determination of such loss or out-of-pocket
expense, in the absence of manifest error, shall be conclusive and shall be set
forth in a written certificate delivered to the Borrowers by the Bank, setting
forth the basis therefor. Upon receipt of any notice of prepayment, the Agent
shall promptly notify each Bank of the contents thereof by telephone or
telecopier and of such Bank's portion of the prepayment.
SECTION 2.12. Increased Costs. (a) If, either (i) the
introduction of or any change in any law or regulation or in the interpretation
or administration of any law or regulation by any court or Governmental
Authority charged with the interpretation or administration thereof from the
date thereof or (ii) the compliance with any guideline or request from any such
Governmental Authority, including, without limitation, any central bank
(whether or not having the force of law), (x) subjects any Bank or corporation
controlling such Bank to any tax of any kind whatsoever with respect to this
Agreement, any Advance or any Letter of Credit, or changes the basis of
taxation of payments to such Bank or corporation of principal, commissions,
fees, interest or any other amount payable hereunder (except for (A) taxes on
or measured by the overall net income of such Bank or branch, office or agency
through which such Bank is acting for purposes of this Agreement, or (B) Taxes
for which such Bank is indemnified under Section 2.20 or would be indemnified
but for clause (y) in the second sentence of Section 2.20(a)); (y) imposes,
modifies or holds 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, advances or loans by, or other credit or commitment
therefor extended by, or any other acquisition of funds by, any office of such
Bank which would not otherwise be included in any determination of the Adjusted
Base Rate or Eurodollar Rate or interest payable hereunder; or (z) imposes on
such Bank or corporation controlling such Bank any other condition, and as a
result there shall be any increase in the cost to any Bank or corporation
controlling such Bank of agreeing to make or making, funding or maintaining
Advances by an amount deemed by such Bank to be material, then the Borrowers
shall from time to time, upon demand by such Bank (with a copy of such demand
to the Agent), pay to such Bank additional amounts sufficient to compensate
such Bank for such increased cost. A certificate as to the amount of such
increased cost and the basis therefor (with sufficient detail showing the
calculations made to determine such increased cost), submitted to the Borrowers
and the Agent by such Bank, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) affects or
would affect the amount of capital required or
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expected to be maintained by such Bank or any corporation controlling such Bank
and that the amount of such capital is increased by or based upon the existence
of such Bank's commitment to lend hereunder and other commitments of this type,
then, upon demand by such Bank (with a copy of such demand to the Agent), the
Borrowers shall immediately pay to the Agent for the account of such Bank, from
time to time as specified by such Bank, additional amounts sufficient to
compensate such Bank or such corporation in the light of such circumstances, to
the extent that such Bank reasonably determines such increase in capital to be
allocable to the existence of such Bank's commitment to lend hereunder. A
certificate as to such amounts and the basis therefor (with sufficient detail
showing the calculations made to determine such amounts), submitted to the
Borrowers and the Agent by such Bank shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 2.13. Letters of Credit. (a) Letters of Credit.
Citibank agrees, on the terms and conditions hereinafter set forth, to issue
letters of credit (each a "Letter of Credit") at the request and for the
account of the Borrowers from time to time on any Business Day from the Closing
Date until 30 days before the Termination Date; provided, however, that the
Letter of Credit Amount shall not exceed the lesser of the (i) Letter of Credit
Commitment or (ii) Adjusted Borrowing Base minimum and Borrowing Base minimum
set forth in Section 5.1(p) hereof. No Letter of Credit shall have an
expiration date (including all rights of renewal) later than the Termination
Date. Subject to the limits referred to above, the Borrowers may request the
issuance of Letters of Credit under this Section 2.13(a), repay any Advances
resulting from drawings thereunder pursuant to Section 2.13(d), and request the
issuance of additional Letters of Credit under this Section 2.13(a).
Notwithstanding the foregoing, on the Closing Date all
outstanding letters of credit listed on Schedule 2.13 issued by Citibank on
behalf of CFCC shall be deemed to have been issued on behalf of the Borrowers
pursuant to the terms hereof on the Closing Date and shall, from and after the
Closing Date, constitute Letters of Credit for all purposes hereunder, and the
Borrowers shall assume hereunder all liabilities in respect of such letters of
credit to the same extent as if such letters of credit had been initially
issued hereunder as Letters of Credit.
(b) Request for Issuance. (i) Each request by the
Borrowers for the issuance of a Letter of Credit (a "Letter of Credit Request")
shall be made not later than 11:00 A.M. (The City of New York time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrowers to the Agent and, if Citibank is not the Agent, to
Citibank. Each Letter of Credit Request shall be by telecopier, substantially
in the form of Exhibit E hereto, confirmed immediately in writing, and
accompanied by a signed letter of credit application on Citibank's then
standard form (which application shall be delivered, in original signed form,
within one Business Day of any such Letter of
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Credit Request to Citibank at the address and telecopy number, and to the
attention of the Person, set forth an Exhibit E hereto (or to such other
address, telecopy number and/or Person as Citibank may from time to time direct
by giving notice to the Borrowers and the Agent, if Citibank is not the Agent,
in the manner provided in Section 8.2), and may be canceled by notice thereof
prior to issuance of such Letter of Credit by telephone or telecopier,
confirmed immediately in writing, to the Agent, and, if Citibank is not the
Agent, to Citibank which shall give to each Bank prompt notice of such
cancellation.
(ii) Upon receipt by Citibank of a Letter of
Credit Request, and upon fulfillment of the applicable conditions set forth in
Article 3, Citibank shall promptly issue such Letter of Credit and shall
promptly so notify the Borrowers (and the Agent, if not Citibank), and the
Agent shall give each Bank prompt notice thereof by telecopier specifying the
(A) date of such issuance (which shall be a Business Day), (B) maximum amount
of such Letter of Credit, (C) expiration date of such Letter of Credit and (D)
name and address of the beneficiary of such Letter of Credit.
(c) Bank's Participation. Each Bank severally agrees to
participate in any Letter of Credit issued (or deemed issued) by Citibank
pursuant to subsection (a) of this Section 2.13 in an aggregate amount at any
time outstanding, together with such Bank's Advances, if any, not to exceed the
amount of such Bank's Commitment (although reductions to a Bank's Commitment
after the issuance of the respective Letter of Credit shall in no event reduce
such Bank's participation in Letters of Credit theretofore issued, unless the
reduction of Commitment is made in connection with an assignment by such Bank
of its Commitment or a portion thereof in accordance with Section 8.7, in which
case the assigning and assignee Bank's participations in all outstanding
Letters of Credit shall be automatically adjusted to give effect to such
assignment). Such participations shall be allocated ratably among the Bank's
according to their respective Percentages.
(d) Drawings. In the event that any drawing shall be
made under a Letter of Credit, by demand or claim (including, without
limitation, by draft), Citibank shall promptly notify the Borrowers and the
Agent of such drawing and the Borrowers shall on the date of such drawing
reimburse Citibank for any amount paid by Citibank under such Letter of Credit.
In the event that any drawing under a Letter of Credit is not reimbursed by the
Borrowers on the date of payment by Citibank, the Borrowers shall be deemed to
have requested a Borrowing consisting of Adjusted Base Rate Advances in an
aggregate amount equal to such unreimbursed payment. The Banks shall,
regardless of whether (x) any conditions contained in Article 3 are then met,
(y) one or more Defaults or Events of Default then exist or (z) the Commitments
have been reduced or terminated, make the requested Advances in accordance with
their Percentage participation in the respective Letter of Credit as of the
date of such payment by Citibank, and the proceeds of such Advances shall
automatically be applied to repay Citibank for such drawing in full. Such
Advances shall be required to be repaid by
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the Borrowers as otherwise provided in this Agreement. In the event that any
Bank fails to make its Advance in a timely manner as required by this Section
2.13, such Bank shall pay to Citibank interest thereon at the Federal Funds
Rate from the date of payment by Citibank to the date of repayment thereof to
Citibank by such Bank. If for any reason any Bank does not make its Advance as
required above, it shall be required to reimburse Citibank for its Percentage
of the unreimbursed payment (determined before giving effect to any portion
thereof paid by the other Banks directly or through the making of Advances)
with interest thereon as required by the preceding sentence.
Upon the earlier of (1) the thirtieth day prior to the
Termination Date or (2) the occurrence of an Event of Default under this
Agreement and the acceleration of the Advances pursuant to Section 6.1 of this
Agreement, the Borrowers shall, within one Business Day; (i) obtain the release
of Citibank from all of its obligations under each outstanding Letter of Credit
or (ii) deposit with Citibank, as further security for the Borrowers
Obligations to reimburse Citibank for any payments to be made under any Letter
of Credit, a cash amount equal to the Letter of Credit Amount. Citibank shall
apply such deposit toward any payment required under any Letter of Credit, and
shall, within three Business Days after the later of (i) the earlier of (x) the
date any Letter of Credit expires by its terms and (y) receipt of proof
satisfactory to Citibank that its obligations under any Letter of Credit have
otherwise been terminated, and (ii) in the case of an Event of Default and
acceleration, such Event of Default and acceleration shall have been waived by
the Banks pursuant to Section 6.1, refund to the Borrowers that portion of such
deposit represented by such Letter of Credit in the case of clause (i) of this
sentence and all such deposits in the case of clause (ii).
(e) Increased Costs. If either (i) the introduction of
or any change in any law or regulation or in the interpretation of
administration of any law or regulation by any court or administrative or
Governmental Authority charged with the interpretation or administration
thereof from the date hereof or (ii) the compliance with any guideline or
request from any Governmental Authority, including, without limitation, any
central bank (whether or not having the force of law) either (1) imposes,
modifies or holds applicable any reserve, special deposit or similar
requirement against letters of credit or guaranties issued by, or assets held
by, or deposits in or for the account of, Citibank or any Bank or any
corporation controlling Citibank or such Bank, or (2) imposes on Citibank or
any Bank or any corporation controlling Citibank or such Bank any other
condition regarding this Agreement or any Letter of Credit, and the result of
any event referred to in the preceding clause (1) or (2) shall be to increase
the cost to Citibank or any corporation controlling Citibank of Citibank
issuing or maintaining any Letter of Credit or to any Bank or any corporation
controlling such Bank of such Bank participating therein, then, upon demand by
Citibank or any such Bank or controlling corporation, the Borrowers shall,
subject to Section 8.7, immediately pay to Citibank, such Bank or controlling
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corporation, additional amounts that shall be sufficient to compensate
Citibank, such Bank or controlling corporation for such increased cost. A
certificate as to the amount of such increased cost and the basis therefor
(with sufficient detail showing the calculations made to determine such
increased cost), submitted to the Borrowers by Citibank, such Bank or
controlling corporation, shall be conclusive and binding for all purposes,
absence manifest error.
(f) Obligations Absolute. The Obligations of the
Borrowers relating to any Letter of Credit under this Agreement and any other
related agreement or instrument shall, to the extent permitted by law, be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and such other related agreement or instrument
under all circumstances, including, without limitation, the following
circumstances:
(i) Any lack of validity or enforceability of
this Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (collectively, the "L/C Related
Documents");
(ii) Any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations of the Borrowers in respect of the Letters of
Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense
or other right that the Borrowers may have at any time against
any beneficiary or any transferee of a Letter of Credit (or
any Persons for whom any such beneficiary or any such
transferee may be acting), Citibank or any other Person,
whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C Related Documents or any
unrelated transaction;
(iv) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(v) payment by Citibank under a Letter of Credit
against presentation of a draft or certificate that does not
comply with the terms of the Letter of Credit;
(vi) any exchange, release or non-perfection of
any Collateral or other collateral, or any release or
amendment or waiver of or consent to departure from the
Guaranty, any other Loan Document or any other guaranty or
other agreement, for all or any of the Obligations of the
Borrowers in respect of the Letters of Credit; or
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(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing,
including, without limitation, any other circumstance that
might otherwise constitute a defense available to, or a
discharge of, any Borrowers, the Guarantor or any Affiliate
Guarantor.
(g) Compensation. (i) The Borrowers shall pay to the
Agent for the ratable benefit of the Banks, a letter of credit fee ("Letter of
Credit Fee") (x) for the period commencing on the Closing Date through and
including March 31, 1994, an amount equal to 2 1/4 percent per annum based on
the amount available to be drawn (assuming compliance with all conditions to
drawing) under, and for the terms of, each Letter of Credit; and (y) for the
period commencing on April 1, 1994 through and including the Termination Date,
an amount as determined by the Agent in accordance with the pricing matrix set
forth below, based on the amount available to be drawn (assuming compliance
with all conditions to drawing) under, and for the terms of, each Letter of
Credit. Any change in the Letter of Credit Fee shall be effective on the first
day of the month following receipt of the financial statements delivered by the
Guarantor pursuant to Section 7(i) of the Guaranty. Such Letter of Credit Fee
shall be payable quarterly in arrears on the first day of each March, June,
September and December during the term of this Agreement, commencing on the
Closing Date, and ending on the Termination Date.
Pricing Matrix
--------------
Total Adjusted Debt/Capital
---------------------------------------------------
Fixed Charge
Coverage Ratio
(Greater than) 65% 50-65% (less than) 50%
------------------ ------ ---------------
Less than 1.35 times 2.75% 2.25% 1.50%
1.35X - 2.50 times 2.25% 1.50% 1.00%
Greater than 2.50 times 1.00% 0.75% 0.50%
(ii) The Borrowers shall pay to Citibank, for its
own account, such customary issuance fees, transfer fees and
other fees and charges in connection with the issuance of each
Letter of Credit as the Borrowers and Citibank shall agree.
(iii) Each fee paid pursuant to this Section 2.13(g)
shall be non-refundable.
SECTION 2.14. Illegality. Notwithstanding any other
provision of this Agreement, if any Bank shall notify the Agent that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other Governmental
Authority asserts that it is unlawful, for any Bank or its Eurodollar Lending
Office to perform its obligations
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hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (i) the obligation of the Banks to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent
shall notify the Borrowers and the Banks that the circumstances causing such
suspension no longer exist and (ii) the Borrowers shall forthwith prepay in
full all Eurodollar Rate Advances of all Banks then outstanding, without
penalty to Borrowers, together with interest accrued thereon, unless the
Borrowers, within five Business Days of notice from the Agent, Converts all
Eurodollar Rate Advances of all Banks then outstanding into Advances of another
Type in accordance with Section 2.10.
SECTION 2.15. Payments and Computations. (a) The Borrowers
shall make each payment hereunder and under the Notes not later than 11:00 A.M.
(New York City time) on the day when due in U.S. dollars to the Agent at its
address at 399 Park Avenue, New York, New York 10043, Attention: [Margo
Mitchell] in same day funds. Payments to be made to the Agent by the Borrowers
by Federal Funds wire shall be made to: Citibank, N.A., ABA #021000089, 399
Park Avenue, New York, New York 10043, for credit to Borrowers account
#00068398. The Borrowers hereby authorize the Agent, if and to the extent
payment is not made when due hereunder, to charge from time to time against any
or all of the Borrowers accounts with the Agent any amount so due. The Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest or commitment fees ratably (other than amounts
payable pursuant to Section 2.8 or 2.12) to the Banks for the account of their
respective Applicable Lending Offices, and like funds relating to the payment
of any other amount payable to any Bank to such Bank for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 8.7(d), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder and under the Notes
in respect of the interest assigned thereby to the Bank assignee thereunder,
and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.
(b) The Borrowers hereby authorize each Bank, if and to the
extent payment owed to such Bank is not made when due hereunder or under the
Note held by such Bank, to charge from time to time against any or all of the
Borrowers accounts with such Bank any amount so due.
(c) All computations of interest based on the Adjusted Base
Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the Eurodollar Rate
or the Federal Funds Rate and of commitment fees shall be made by the Agent,
and all computations of interest pursuant to Section 2.8 shall be made by a
Bank, on the basis of a year of 360 days, in each case for the actual number of
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days (including the first day but excluding the last day) occurring in the
period for which such interest or commitment fees are payable. Each
determination by the Agent (or, in the case of Section 2.8, by a Bank) of an
interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or commitment
fee, as the case may be; provided, however, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.
(e) Unless the Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to the Banks hereunder
that the Borrowers will not make such payment in full, the Agent may assume
that the Borrowers have made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank.
If and to the extent the Borrowers shall not have so made such payment in full
to the Agent, each Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each day
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.16. Sharing of Payments, Etc. If any Bank shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances made by it (other
than pursuant to Section 2.8 or 2.12) in excess of its ratable share of
payments on account of the Advances obtained by all the Banks, such Bank shall
forthwith purchase from the other Banks such participations in the Advances
made by them as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of them, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall repay
to the purchasing Bank the purchase price to the extent of such recovery
together with an amount equal to such Bank's ratable share (according to the
proportion of (i) the amount of such Bank's required repayment to (ii) the
total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrowers agrees that any Bank so purchasing a participation
from another Bank pursuant to this Section 2.16 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Bank were the
direct creditor of the Borrowers in the amount of such participation.
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SECTION 2.17. Extension of Termination Date. The Banks and
the Agent may, in their sole discretion and with the written consent of 100% of
the Banks, extend the Termination Date for a maximum of two additional one year
periods (each, an "Extension Period") upon receipt by the Agent from the
Borrowers of a written request (each such request being irrevocable) for any
such extension at least 180 days prior to the second anniversary of the Closing
Date (with respect to the first such request for an Extension Period, if any)
and at least 180 days prior to next succeeding anniversary of the Closing Date
(with respect to a subsequent request for an Extension Period). If 100% of the
Banks and the Agent agree to any such Extension Period, the parties to this
Agreement shall amend this Agreement and the Notes to reflect such Extension
Period. If the Borrowers does not receive the consent of 100% of the Banks
within thirty (30) Days after the submission of any request for an Extension
Period, any such request shall be deemed to have been denied.
SECTION 2.18. Use of Proceeds. The proceeds of the
Advances shall be available (and the Borrowers agree that such proceeds shall
be used) solely to meet the working capital and other short term capital needs
of the Borrowers. Letters of Credit will be issued (and the Borrowers agree
such Letters of Credit will be used) solely for the purpose of securing the
obligations of the Borrowers (in respect to self insurance, financial
guarantees and other forms of credit support) as such obligations arise in the
ordinary course of business.
SECTION 2.19. Evidence of Debt. (a) Each Bank shall
maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrowers to such Bank resulting from each
Advance owing to such Bank from time to time, including the amounts of
principal and interest payable and paid to such Bank from time to time
hereunder.
(b) The Register maintained by the Agent pursuant to
Section 8.7(c) shall include a control account, and a subsidiary account for
each Bank, in which accounts (taken together) shall be recorded (i) the date
and amount of each borrowing made and Letter of Credit issued hereunder, the
Type of Advances comprising such Borrowing and any Interest Period applicable
thereto, (ii) the terms of each Assignment and Acceptance delivered to and
accepted by the Agent, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Bank hereunder
and (iv) the amount of any sum received by the Agent from the Borrowers
hereunder and each Bank's share thereof.
(c) The entries made in the Register shall be conclusive
and binding for all purposes, absent manifest error.
SECTION 2.20. Taxes. (a) Except as required by law, any and
all payments to or for the benefit of any Bank that is not organized under the
laws of the United States or any political subdivision thereof (including,
without limitation, payments made to the Agent for the account of such Bank),
or to or for the
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benefit of the Agent if the Agent is not organized under the laws of the United
States or any political subdivision thereof, by the Borrowers hereunder shall
be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings imposed by
the United States, and all liabilities with respect thereto (all such taxes,
levies, imposts, deductions, charges, withholdings and liabilities imposed by
the United States being hereafter referred to as "Taxes"). If any Taxes are
required to be deducted, whether by the Borrowers, the Agent or any other
withholding agent, from, or otherwise required to be paid by any Person in
respect of, any sum payable hereunder to or for the benefit of any Bank that is
not organized under the laws of the United States or any political subdivision
thereof (including, without limitation, payments made to the Agent for the
account of such Bank) or to or for the benefit of the Agent if the Agent is not
organized under the laws of the United States or any political subdivision
thereof (excluding, in the case of each such Bank or the Agent, Taxes imposed
by reason of (x) such Bank or the Agent being or having been engaged in a trade
or business in the United States or having or having had a permanent
establishment or fixed place of business therein or (y) any failure of such
Bank or the Agent, if such Bank or the Agent is entitled at such time to a
total or partial exemption from withholding that is required to be evidenced by
a United States Internal Revenue Service form 1001 or 4224 or any successor or
additional form, to deliver to the Agent or the Borrowers, from time to time as
requested by the Agent or the Borrowers, such Form 1001 or 4224 (as applicable)
or such successor or additional form, completed in a manner reasonably
satisfactory to the Agent or the Borrowers), then (i) (subject to the proviso,
if applicable, in Section 8.7(a)) the sum payable shall be increased as may be
necessary so that after making all required deductions or payments of such
non-excluded Taxes (including deductions or payments of such non-excluded Taxes
applicable to additional sums payable under this Section 2.20) such Bank or the
Agent, as the case may be, receives an amount equal to the sum it would have
received had no such deductions or payments been made, (ii) the Borrowers shall
make such deductions and (iii) the Borrowers shall pay the full amount so
deducted or required to be paid to the relevant taxation authority or other
authority in accordance with applicable law or, if any other Person has made
such payment, shall reimburse such Person for such payment. The
indemnification provided under this Section 2.20(a) is in addition to (and
shall not be limited by) the provisions of Section 2.12(a).
(b) In addition, the Borrowers agrees to pay any
present or future stamp, documentary, privilege, intangible or similar
taxes or any other excise or property taxes, charges or similar levies
that arise at any time or from time to time from any payment made
under any and all Loan Documents, or from the execution or delivery by
any Loan Party of, or from the filing or recording or maintenance of,
or from the transfer of the rights of any Bank under any Loan Document
to any other Bank or Banks; or otherwise with respect to, any and all
Loan Documents (hereinafter referred to as "Other Taxes").
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(c) The Borrower will indemnify each Bank that is not
organized under the laws of the United States or any political subdivision
thereof and the Agent if such Agent is not organized under the laws of the
United States or any political subdivision thereof for the full amount of Taxes
(including, without limitation and without duplication, any taxes imposed by
any jurisdiction on amounts payable under this Section 2.20), and will
indemnify each Bank and the Agent for the full amount of Other Taxes
(including, without limitation and without duplication, any taxes imposed by
any jurisdiction on amounts payable under this Section 2.20) paid by such Bank
or the Agent, as the case may be, and any liability (including penalties,
interest and expenses) arising solely therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment of this indemnification shall be made within 10 days from the date such
Bank or the Agent, as the case may be, makes written demand thereof.
(d) Within 10 days after the date of any payment of Taxes
or Other Taxes, the Borrowers will furnish to the Agent, at its address
referred to in Section 8.2, the original or a certified copy of a receipt
evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in this Section 2.20 shall survive the payment in full of
principal and interest hereunder.
SECTION 2.21. Reallocation of the Commitments. The Banks and
the Agent may, in their sole discretion and with the written consent of 100% of
the Banks, upon receipt by the Agent of a written request from the Borrowers,
reallocate the amount of the Commitments between the Letter of Credit
Commitment and the Revolving Credit Commitment.
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ARTICLE 3.
CONDITIONS OF LENDING
SECTION 3.1. Condition Precedent to Initial Credit Event.
The obligation of each Bank to make an Advance or of Citibank to issue a Letter
of Credit (including any deemed issuance of Letters of Credit on the Closing
Date pursuant to the second paragraph of Section 2.13(a) hereof), as the case
may be, on the Closing Date is subject to the following conditions precedent:
(a) CFCC shall have repaid in full all amounts owing
under or in respect of the Prior Credit Agreement; simultaneously with such
repayment of the Prior Credit Agreement, CFCC shall have (i) canceled all
commitments of the Prior Banks under the Prior Credit Agreement and (ii) caused
the Prior Credit Agreement to be terminated to the satisfaction of the Agent
and the Banks.
(b) The Guarantor owns (i) one hundred percent (100%) of
the capital stock of CFCC, RA, CCSI, ILI, Cardinal, GITC, and CLC and (ii) one
hundred percent (100%) of the capital stock of MCI (less 8 directors qualifying
shares), in each case free and clear of any Lien (other than the Lien of the
Collateral Documents), as set forth on Schedule 4.1(b).
(c) Since December 31, 1993 nothing shall have occurred
(and neither the Agent nor any of the Banks shall have become aware of any
facts or conditions not previously known) which the Agent or the Banks shall
determine has, or would be reasonably likely to have, a Material Adverse Effect
on the rights or remedies of the Agent or the Banks under any of the Loan
Documents, or on the ability of any of the Loan Parties to perform its
obligations to the Agent or the Banks or to any other creditor of such Loan
Party.
(d) There shall have occurred no material adverse change
or development involving a prospective Material Adverse Effect on the business,
results of operations, condition (financial or otherwise) or prospects of the
Borrowers taken as a whole since December 31, 1993.
(e) Except as set forth on Schedule 4.1(d), all
regulatory authorizations, approvals, consents or other actions by and notices
to or filings with, any Governmental Authority or regulatory body or any third
party required or necessary for the due execution, delivery and performance by
each Loan Party of each Loan Document to which it is or is to be a party and
for the other transactions contemplated by the Loan Documents, shall have been
obtained, taken, given or made without the imposition of any condition which is
not acceptable to the Banks and shall be in full force and effect, and there
shall be no applicable laws, regulations, order, injunctions, restraining
orders or other impediments that would restrain, prevent or impose any material
adverse conditions upon any transaction contemplated by any of the Loan
Documents.
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(f) All loans made by the Banks and all other loans or
extensions of credit made by any other Person to the Borrowers in connection
with the transactions contemplated by the Loan Documents shall be in full
compliance with all applicable law, including, without limitation, Regulations
G, T, U and X of the Federal Reserve Board.
(g) There shall exist no action, suit, investigation,
litigation or proceeding affecting any of the Loan Parties or their respective
Subsidiaries pending or threatened before any court, governmental agency or
arbitrator that, in the sole judgment of the Banks, is reasonably likely to
have a Material Adverse Effect on the business, results of operations,
condition (financial or otherwise) or prospects of the Borrowers taken as a
whole, or on the ability of any of the parties to the Loan Documents to perform
their respective obligations thereunder or on the rights and remedies of the
Banks thereunder, or that purports to affect the legality, validity or
enforceability of any Loan Document or the consummation of any transaction
contemplated by such Loan Documents.
(h) The Borrowers shall have paid all accrued fees and
expenses of the Agent and the Banks including, without limitation, the Closing
Fee.
(i) After giving effect to the transactions contemplated
by the Loan Documents, including, without limitation, the execution and
delivery of such Loan Documents and the making of Advances in the maximum
amount available hereunder, no event shall have occurred and be continuing
which violates or constitutes a default or unmatured default under the terms of
any agreement for money borrowed to which any Loan Party is a party.
(j) The Agent shall have received, on or before the
Closing Date, the Notes, duly executed by the Borrowers to the order of the
Banks, respectively, and the following, each dated the Closing Date (unless
otherwise specified), in form and substance satisfactory to the Banks (unless
otherwise specified) and in sufficient copies for each Bank:
(i) Certified copies of (x) resolutions of the
Board of Directors of each Loan Party approving each Loan
Document to which it is a party and (y) all documents
evidencing other necessary corporate action and governmental
approvals, if any, with respect to or in connection with this
Agreement and each other Loan Document and the transactions
contemplated hereby and thereby.
(ii) A copy of the charter of each Loan Party and
each amendment thereto, certified (as of a date reasonably
near the Closing Date) by the Secretary of State of the state
of incorporation of such Loan Party as being a true and
correct copy thereof.
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(iii) A copy of a certificate of the Secretary of
State of the state of incorporation of each Loan Party, dated
reasonably near the Closing Date, listing the charter of each
of such Loan Party and each amendment thereto on file in his
office and certifying that (A) such amendments are the only
amendments to such Loan Party's charter on file in his office,
(B) such Loan Party has paid all franchise taxes to the date
of such certificate and (C) such Loan Party is duly
incorporated and in "good standing" (or alternatively "in
existence") under the laws of such state.
(iv) A certificate of each Loan Party signed on
behalf of such Person by its President or a Vice President and
the Secretary or any Assistant Secretary, dated the Closing
Date, certifying as to (A) the absence of any amendments to
the charter of such Person since the date of the Secretary of
State's certificate referred to in Section 3.1(j)(iii), (B) a
true and correct copy of the bylaws of such Person as in
effect on the Closing Date, (C) the due incorporation and good
standing of such Person as a corporation organized under the
laws of the jurisdiction of its incorporation, and the absence
of any proceeding for the dissolution or liquidation of such
Person, (D) the truth of the representations and warranties
made with respect to such Person contained in the Loan
Documents to which such Person is a party as though made on
the Closing Date, (e) the satisfaction of all conditions
precedent to the initial Credit Event, and (F) in the case of
the Borrowers, the absence of any event occurring and
continuing, or resulting from the initial Credit Event, that
constitutes a Default.
(v) A certificate of the Secretary or an
Assistant Secretary of each Loan Party certifying the names
and true signatures of the officers of such Person authorized
to sign each Loan Document to which it is a party and the
other documents to be delivered hereunder and thereunder.
(vi) A Borrowing Base Certificate as of February
25, 1994, in substantially the form of Exhibit D hereto,
certified by the Chief Financial Officer of the Guarantor as
to each Borrower.
(vii) The Guaranty.
(viii) The Affiliate Guaranty.
(ix) The Pledge Agreement, duly executed by the
Guarantor, equally and ratably securing the Obligation of the
Borrowers under the Loan Documents, together with the
following (in the case of the instruments referred to in
clauses (1) through and including (7) below, only originals
thereof being required to be delivered to the Agent):
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(1) certificates representing (i) one
hundred percent (100%) of the capital stock of CFCC,
RA, CCSI, ILI, Cardinal, GITC, and CLC, and (ii) one
hundred percent (100%) of the capital stock of MCI
(less 8 directors qualifying shares), with stock
powers endorsed in blank attached to each
certificate,
(2) a copy of the charter of ILI,
Cardinal, GITC, MCI and CLC (each a "Pledged Party")
and each amendment to the charter of each Pledged
Party, certified (as of a date reasonably near the
Closing Date) by the Secretary of State of the state
of incorporation of such Pledged Party as being a
true and correct copy thereof,
(3) a copy of a certificate of the
Secretary of State of the state of incorporation of
each Pledged Party, dated reasonably near the Closing
Date, listing the charter of each of such Pledged
Party and each amendment thereto on file in his
office and certifying that (A) such amendments are
the only amendments to such Pledged Party's charter
on file in his office, (B) such Pledged Party has
paid all franchise taxes to the date of such
certificate and (C) such Pledged Party is duly
incorporated and in "good standing" (or alternatively
"in existence") under the laws of such state,
(4) a certificate of each Pledged Party
signed on behalf of such Person by its President or a
Vice President and the Secretary or any Assistant
Secretary, dated the Closing Date, certifying as to
(A) the absence of any amendments to the charter of
such Person since the date of the Secretary of
State's certificate referred to in Section
3.1(j)(ix)(3), (B) a true and correct copy of the
bylaws of such Person as in effect on the Closing
Date and (C) the due incorporation and good standing
of such Person as a corporation organized under the
laws of the jurisdiction of its incorporation, and
the absence of any proceeding for the dissolution or
liquidation of such Person,
(5) a certificate of the Secretary or an
Assistant Secretary of each Pledged Party certifying
the names and true signatures of the officers of such
Person authorized to sign certificates and other
documents to be delivered hereunder,
(6) the Transferor Certificate
(representing the Transferor Interest) together with
all other instruments and documents (including,
without
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limitation, irrevocable instructions to the Person
shown as "Trustee" in the Pooling and Servicing
Agreement) that the Agent may deem necessary or
desirable in order to perfect and protect the Liens
created in and by the Pledge Agreement,
(7) all Intercompany Notes owned by the
Guarantor, as set forth on Schedule 3.1(j)(ix),
endorsed in blank, and
(8) evidence that all other action that
the Agent may deem necessary or desirable in order to
perfect and protect the Liens created by the Pledge
Agreement has been taken.
(x) A security agreement in substantially the
form of Exhibit G (as amended from time to time in accordance
with its terms, the "Borrowers Security Agreement"), duly
executed by each Borrower and the Agent, equally and ratably
securing the Obligations of the Borrowers under the Loan
Documents, together with the following (in the case of the
instruments referred to in clauses (1) through (5) below, only
originals thereof being required to be delivered to the
Agent):
(1) certificates of title on all tractors,
trailers and trucks owned by each Borrower (as set
forth on Schedule 3.1(j)(x)(1)) indicating thereon a
first priority Lien in favor of the Agent,
(2) financing statements, executed and in proper
form for filing under the Uniform Commercial Code of
all jurisdictions that the Agent may deem necessary
or desirable in order to perfect and protect the
Liens created by the Borrowers' Security Agreement,
covering the Collateral described therein,
(3) insurance certificate described in Section
4.1(gg) hereof,
(4) all Intercompany Notes owned by each Borrower
(as set forth on Schedule 3.1(j)(x)(4)) endorsed in
blank,
(5) all other instruments and documents, executed
and in proper form for recording and filing of or
with respect to the Borrowers Security Agreement that
the Agent may deem necessary or desirable in order to
perfect and protect the Liens created thereby, and
(6) evidence that all other action that the Agent
may deem necessary or desirable in order to perfect
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and protect the Liens created by the Borrowers
Security Agreement has been taken.
(xi) Mortgages, duly executed by the applicable
Borrower and the Agent, equally and ratably securing the
Obligations of the Borrowers under the Loan Documents and
covering the fee interest of the applicable Borrowers with
respect to the real property located at the addresses set
forth in Schedule 3.1(j)(xi), as it may be amended from time
to time, together with all land, buildings, fixtures,
personalty, leases, rents and other rights related thereto as
set forth in the related Mortgage, and all rights, options and
other benefits inuring to the applicable Borrowers under any
lease encumbered by the related Mortgage (the "Mortgaged
Property"), together with the following:
(1) Mortgages, and any other documents (in each
case, executed and in proper form for recordation and
filing) as may be necessary or, in the reasonable
judgment of the Agent, desirable to create and
perfect a valid and enforceable first priority Lien
on the Mortgaged Property covered thereby in favor of
the Agent,
(2) evidence of the insurance required by the
terms of such Mortgages,
(3) financing statements executed and in proper
form for filing under the Uniform Commercial Code of
all jurisdictions that the Agent may deem necessary
or desirable in order to perfect and protect the
Liens created by the Mortgages, and
(4) evidence of the completion of all other
recordings and filings of or with respect to the
Mortgages that the Agent may deem necessary or
desirable in order to perfect and protect the Liens
created thereby.
(xii) Title reports and commitments for title
insurance or mortgagee title insurance policies (as determined
by the Agent) with respect to all Mortgaged Property set forth
on Schedule 3.1(j)(xi) representing 50% of the Appraised Value
for title insurance purposes of such Mortgaged Property as set
forth on Schedule 4.1(hh), in each case in form and substance,
and from title insurers, satisfactory to the Agent, assuring
the Agent that such Mortgages are valid and enforceable first
priority mortgage Liens on such Mortgaged Property, free and
clear of all defects and encumbrances except such as are
created or permitted by such Mortgages, and including such
endorsements as the Agent in its discretion may request, and
providing for affirmative insurance and
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other coinsurance and reinsurance as the Agent in its
discretion may request.
(xiii) Current surveys for each Mortgaged Property
listed on Schedule 3.1(j)(xi) hereto substantially in
compliance with standards applicable to ALTA Surveys and
sufficient in form and substance for the removal of survey
exceptions from commitments for title insurance and mortgagee
title insurance policies delivered pursuant to paragraph (xii)
above.
(xiv) Current appraisals for each Mortgaged
Property, listed on Schedule 3.1(j)(xi) hereto, a copy of
which is attached as Exhibit Q hereto.
(xv) A certificate of each Borrower, signed on
behalf of each Borrower by the Chief Financial Officer of the
Guarantor, in the form of Exhibit J hereto, attesting to the
Solvency of each Borrower and its respective Subsidiaries (in
accordance with GAAP) after giving effect to the transactions
contemplated by the Loan Documents, including without
limitation, the making of the Advances in the maximum amount
available and the issuance of Letters of Credit hereunder.
(xvi) Evidence satisfactory to the Agent and the
Banks that each of the Collateral Documents are in full force
and effect and that the first priority security interests and
Liens granted to the Agent pursuant to such Collateral
Documents (subject only to Permitted Liens) shall (x) inure to
the equal and ratable benefit of the Banks and (u) equally and
ratably secure all of the Obligations of the Borrowers under
the Loan Documents.
(xvii) Such financial, business and other
information regarding each of the Loan Parties and their
respective Subsidiaries as the Banks shall have requested,
including, without limitation, (A) information as to possible
contingent liabilities, tax information, environmental
information, obligations under ERISA, collective bargaining
agreements and other arrangements with employees and (B)
annual financial statements dated December 31, 1993.
(xviii) A Phase I environmental audit report,
addressed to and in form, scope and substance satisfactory to
the Banks, from Weston, as to any hazards or liabilities under
Relevant Environmental Laws to which any Borrower may be
subject in respect of each Mortgaged Property constituting
real property. All Relevant Environmental Laws relating to
the creation and perfection of valid first priority Liens on
the Collateral in favor of the Agent shall have been complied
with.
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(xix) With respect to each Plan of each Borrowers
and any of its ERISA Affiliates, the most recent actuarial
valuation report for such Plan.
(xx) With respect to each Multiemployer Plan to
which a Borrower or any of its ERISA Affiliates contributes,
(A) copies of the most recent estimates of potential
Withdrawal Liability received by each Borrower or any of its
ERISA Affiliates from the sponsor of such Multiemployer Plan,
(B) copies of such current estimates of Withdrawal Liability
as each Borrower is able to obtain from the sponsors of such
Multiemployer Plan and evidence that each Borrower has used
reasonable efforts to obtain all such current estimates
(provided that a Borrower shall not be required to incur costs
greater than $100 per report), together with a record of the
aggregate amount of the contributions of each Borrowers and
such ERISA Affiliates during the past five years to all
Multiemployer Plans for each of the operating businesses of
each Borrower, its ERISA Affiliates and its Subsidiaries.
(xxi) A landlord waiver (in form and substance
satisfactory to the Agent) executed by the owner, any
mortgagee and any Person holding a leasehold interest of
record, respecting each location, shown on Schedule 4.1(ee)
hereto, not owned by a Borrower.
(xxii) A favorable opinion of Smith Helms Mulliss &
Moore, L.L.P., special counsel for the Borrowers and the
Guarantor, in substantially the form of Exhibit K hereto, (or
in such other form, together with opinions of local counsel if
appropriate, as may be acceptable to the Agent and the Banks)
and as to such other matters as any Bank through the Agent may
reasonably request.
(xxiii) A favorable opinion of John B. Yorke, Vice
President, General Counsel and Secretary of the Guarantor, in
substantially the form of Exhibit O hereto, (or in such other
form as may be acceptable to the Agent and the Banks) and as
to such other matters as any Bank through the Agent may
reasonably request.
(xxiv) A favorable opinion of Hunton & Williams,
counsel for the Agent, in form and substance satisfactory to
the Agent.
SECTION 3.2. Conditions Precedent to Each Credit Event.
(a) Except as otherwise expressly provided in
Section 2.13(d), the obligation of each Bank to make an Advance (but not to
Convert any outstanding Advance in compliance with Sections 2.9 and 2.10) or of
Citibank to issue any Letter of Credit, as the case may be, on the occasion of
each Credit Event (including on the Closing Date), shall be subject to the
further
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conditions precedent that on the date of such Borrowing or issuance (x) the
following statements shall be true:
(i) the representations and warranties contained
in each Loan Document are correct in all material respects,
before and after giving effect to the Borrowing and to the
application of proceeds therefrom or to the issuance of the
Letter of Credit, as though made on and as of such date,
except for changes contemplated or permitted by this
Agreement;
(ii) no event has occurred and is continuing, or
would result from such Borrowing or from the application of
proceeds therefrom or from the issuance of such Letter of
Credit, that constitutes an Event of Default or a Default; and
(iii) before and after giving effect to the
Borrowing and to the application of proceeds therefrom or to
the issuance of the Letter of Credit, no material adverse
change or development involving a prospective Material Adverse
Effect (in each case not identified on Schedule 3.2 hereto)
has occurred in the business, results of operations, condition
(financial or otherwise) or prospects of the Borrowers and
their Subsidiaries taken as a whole since December 31, 1993,
and (y) the Agent shall have received a certificate from the Chief
Financial Officer of the Guarantor, on behalf of each Borrower,
certifying to such effect, and the Agent shall have received such
other approvals, opinions or documents as any Bank through the Agent
may reasonably request. The acceptance of the benefits of each
Advance or the issuance of each Letter of Credit shall constitute a
representation and warranty by each Borrower that all conditions set
forth above in this Section 3.2 are then satisfied.
SECTION 3.3. Determination Under Section 3.1. For
purposes of determining compliance with the conditions specified in
Section 3.1, each Bank shall be deemed to have consented to, approved
or accepted or to be satisfied with each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Banks unless an officer of the Agent responsible
for the transactions contemplated by the Loan Documents and holding
the position of Vice President, or a more senior position, shall have
received notice from such Bank prior to the initial Credit Event
specifying its objection thereto and either such objection shall not
have been withdrawn by notice to the Agent to that effect or, in the
event the initial Credit Event shall be a Borrowing, such Bank shall
not have made available to the Agent such Bank's ratable portion of
such Borrowing.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the
Borrowers. Each Borrower represents and warrants, at the time of the making of
each Advance (but not the Conversion of any outstanding Advance in compliance
with Sections 2.9 and 2.10), on the occasion of each Borrowing (including
without limitation the initial Borrowing) and on the date of each issuance (or
deemed issuance pursuant to the second paragraph of Section 2.13(a)) of any
Letter of Credit (which representations and warranties shall survive the
execution and delivery of this Agreement and the making of Advances and
Borrowings, and the issuance of Letters of Credit, hereunder), as follows:
(a) Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified as a foreign corporation and licensed to
do business and is in good standing in each jurisdiction in which the conduct
of its business requires it to so qualify or be licensed, except for such
jurisdictions where the failure to so qualify or be licensed would not
individually or in the aggregate have a Material Adverse Effect on the business
as now conducted and as proposed to be conducted. All of the capital stock of
each Borrower has been validly issued and is fully paid and non-assessable.
Set forth on Schedule 4.1(a) hereto is a complete and accurate list as of the
Closing Date of the number of shares of each class of capital stock of each
Borrower authorized and the number outstanding and the number of such shares
covered by outstanding options, warrants, rights of conversion or purchase and
similar rights.
(b) Set forth on Schedule 4.1(b) hereto is a complete and accurate
list as of the Closing Date of all of the Subsidiaries of each Loan Party,
showing as of such date (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock authorized
and the number outstanding, the percentage of the outstanding shares of each
such class owned (directly or indirectly) by such Loan Party, the number of
shares covered by and a description of, all outstanding options, warrants,
rights of conversion or purchase and similar rights at such date. As of the
Closing Date, all of the outstanding capital stock of each such Subsidiary has
been validly issued, is fully paid and nonassessable and is owned by such Loan
Party or one or more of its Subsidiaries free and clear of all Liens, except
those created by the Security Agreements. Each such Subsidiary (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) is duly qualified as a
foreign corporation and licensed to do business and is in good standing in each
jurisdiction in which the conduct of its business requires it to so qualify or
be licensed, except for such jurisdictions where the failure to so qualify or
be licensed would not individually or in the aggregate have a Material Adverse
Effect on the business, results of operations, condition
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(financial or otherwise) or prospects of the Borrowers and their respective
Subsidiaries taken as whole and (iii) has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted.
(c) The execution, delivery and performance by each Loan Party of
each Loan Document to which it is or is to be a party, and the consummation of
the transactions contemplated by the Loan Documents, have been duly authorized
by all necessary corporate action and are within such Person's corporate powers
and do not (i) contravene any such Person's charter or by-laws, (ii) violate
any law, rule, regulation (including, without limitation, Regulations G, T, U
or X of the Federal Reserve Board), order, writ, judgment, injunction, decree,
determination or award, (iii) result in any conflict with, breach of, default
under, or termination of, any contract, loan agreement, indenture, mortgage,
deed of trust, lease or other instrument binding on or affecting any such
Person or any of its properties that is reasonably likely to have a Material
Adverse Effect on the business, results of operations, condition (financial or
otherwise) or prospects of the Borrowers and their respective Subsidiaries
taken as a whole or that affects the legality, validity or enforceability of
this Agreement, any other Loan Document or the consummation of the transactions
contemplated hereby or thereby, or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of any
such Person (other than Liens created or otherwise permitted under the Loan
Documents). No such Person is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument that is reasonably likely to have a Material Adverse Effect
on the business, results of operations, condition (financial or otherwise) or
prospects of the Borrowers and their respective Subsidiaries taken as a whole,
or that affects the legality, validity or enforceability of this Agreement, any
other Loan Document or the consummation of the transactions contemplated hereby
and thereby.
(d) Except as set forth in Schedule 4.1(d), no authorization,
approval, consent, waiver or other action by, and no notice to or filing with,
any Governmental Authority or any third party is required or necessary for (i)
the due execution, delivery and performance by any Loan Party of any Loan
Document to which it is or is to be a party, (ii) the consummation of the
transactions contemplated by the Loan Documents or (iii) the creation and
perfection of valid first priority Liens on the Collateral in favor of the
Agent, the Banks and Citibank as issuer of the Letters of Credit. Except as
set forth in Schedule 4.1(d), all such authorizations, approvals, consents,
waivers, actions, notices and filings have been duly obtained, taken, given or
made and are in full force and effect. This Agreement has been, and each other
Loan Document to which any Loan Party is or will be a party has been, or when
delivered hereunder will have been, duly executed and delivered by such Person.
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(e) This Agreement is, and each other Loan Document to which any
Loan Party is or will be a party is, or when delivered hereunder will be, the
legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject as to enforcement to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally or by the application of general
equity principles.
(f)(i) The balance sheets of each Borrower and its Subsidiaries as of
December 31, 1992, and the related statement of income and retained earnings of
each Borrower and its Subsidiaries for the fiscal year ended December 31, 1992,
certified by Arthur Andersen & Co., independent public accountants, and the
balance sheets of each Borrower and its Subsidiaries as of December 31, 1993,
and the related statements of income and retained earnings of each Borrower and
its Subsidiaries for the fiscal year ended December 31, 1993, certified by the
chief financial officer of each Borrower, fairly present, in all material
respects, the financial condition of each Borrower and its Subsidiaries as at
such dates and the results of the operations and cash flows of each Borrower
and its Subsidiaries for the period ended on such dates, all in accordance with
GAAP.
(ii) Since December 31, 1993, there has been no material adverse
change or development involving a prospective Material Adverse Effect on the
business, results of operations, condition (financial or otherwise) or
prospects of the Borrowers and their respective Subsidiaries taken as a whole.
(g) The pro forma financial statements and forecasts of the
Borrowers and their respective Subsidiaries, dated December 1, 1993, were
prepared by the Borrowers in good faith on the basis of the assumptions stated
therein, which assumptions were fair and reasonable, and represented the best
estimate of the Borrowers of the future financial performance of the Borrowers
and their respective Subsidiaries after giving effect to the transactions
contemplated by the Loan Documents.
(h) No information, exhibit or report furnished by any Loan Party
to the Agent or any Bank in connection with the negotiation of the Loan
Documents or pursuant to the terms of the Loan Documents (when taken together
with any information subsequently furnished in writing to the Agent or any Bank
on or prior to the date hereof) contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading.
(i) Except as set forth in Schedule 4.1(i), there is no action,
suit, investigation, litigation or proceeding affecting any of the Loan Parties
or their respective Subsidiaries pending or threatened before any court,
governmental agency or arbitrator that is reasonably likely to have a Material
Adverse Effect on the business, results of operations, condition (financial or
otherwise) or prospects of the Borrowers and their respective Subsidiaries
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taken as a whole or on the ability of any of the parties to the Loan Documents
to perform their obligations thereunder or on the rights and remedies of the
Banks thereunder, or that purports to affect the legality, validity or
enforceability of any Loan Document or the consummation of any transaction
contemplated by such Loan Documents, and there has been no Material Adverse
Effect on the Borrowers and their respective Subsidiaries, taken as a whole, of
any such action, suit, investigation, litigation or proceeding from that
described in Schedule 4.1(i).
(j) No proceeds of any Advance will be used to acquire any equity
security of a class that is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.
(k) The Borrowers are not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Federal Reserve Board), and no proceeds
of any Advance 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.
(l) Set forth on Schedule 4.1(1) hereto is a complete and accurate
list as of the date hereof of all Plans and Multiemployer Plans with respect to
any employees of the Loan Parties and their respective ERISA Affiliates or
Subsidiaries.
(m) None of the Loan Parties or their respective ERISA Affiliates
or Subsidiaries has incurred or is reasonably expected to incur any Withdrawal
Liability to any Multiemployer Plan in excess of $10,000,000 in the aggregate
during the period beginning with the Closing Date and continuing through June
30, 1996.
(n) (i) No Reportable Event has occurred and is continuing with
respect to any Plan; (ii) the PBGC has not instituted proceedings to terminate
any Plan; (iii) neither the Borrowers, any ERISA Affiliate, nor any
duly-appointed administrator of a Plan (A) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or payable, or (B)
has instituted or intends to institute proceedings to terminate any Plan under
Sections 4041 or 4041A of ERISA or withdraw from any Multiemployer Plan; (iv)
no "accumulated funding deficiency" (as defined in ERISA Section 302 or
Internal Revenue Code Section 412) exists with respect to any Plan, whether or
not waived; (v) each Plan of the Borrowers and their respective Subsidiaries
has been administered and funded in accordance with its terms and with all
provisions of the Code and ERISA applicable thereto; and (vi) the Borrowers and
their respective Subsidiaries have not incurred any liability with respect to
any welfare plan (as defined in ERISA Section 3(i)) or for "welfare benefits"
(as defined in Code Section 419) that is not reflected on the financial
statements of the Borrowers and their Subsidiaries.
(o) Neither Borrowers nor their respective Subsidiaries have
received an Environmental Complaint which the Borrowers believes would have a
Material Adverse Effect, regarding the Borrowers or
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their respective Subsidiaries or operations (including, without limitation,
on-site or off-site waste disposal), or any real property now owned, operated,
leased or used by the Borrowers or their respective Subsidiaries, or with
respect to the Borrowers operations on formerly owned real property.
(p) Neither the business nor the properties of any of the Loan
Parties or their respective Subsidiaries are affected by any fire, explosion,
accident, drought, storm, hail, earthquake, embargo, act of God or of the
public enemy or other casualty (whether or not covered by insurance) that is
reasonably likely to have a Material Adverse Effect on the business, results of
operations, condition (financial or otherwise) or prospects of the Borrowers
and their respective Subsidiaries taken as a whole.
(q) Neither Borrower has ever caused or permitted any Hazardous
Material to be placed, held, located, released, generated, treated, stored or
disposed of on, under, over or in connection with activities at any real
Property now owned, operated, leased or used by the Borrowers or their
respective Subsidiaries, or any part thereof or with respect to a Borrower's
operations on formerly owned real property, other than quantities of petroleum
and chemical products or hazardous wastes permissible under the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et
seq., as amended or, other Hazardous Materials properly and legally stored (or,
in case of hazardous wastes, disposed of in accordance with regulations
promulgated under RCRA), necessary for the operation of the business of a
Borrower and its Subsidiaries or their tenants and the maintenance of fuel
storage tanks in compliance with relevant Environmental Laws. No real property
now owned, operated, leased or used by a Borrower or its Subsidiaries has been
used (whether by a Borrower or its Subsidiaries, or, to the best knowledge of
Borrowers, by any other Person) as a dump site or storage (whether permanent or
temporary) site for any Hazardous Material other than quantities of petroleum
and chemical products or hazardous wastes permissible under RCRA, or other
Hazardous Materials properly and legally stored (or, in case of hazardous
wastes, disposed of in accordance with regulations promulgated under RCRA),
necessary for the operation of the business of a Borrower and its Subsidiaries
or their tenants and the maintenance of fuel storage tanks in compliance with
Relevant Environmental Laws.
(r) To the best of Borrowers knowledge, after due inquiry, the
Borrowers know of no locations where any Hazardous Material or Asbestos from
any real Property now or formerly owned, operated, leased or used by a Borrower
or its Subsidiaries has been stored, treated, recycled or disposed of, except
in accordance with Relevant Environmental Laws.
(s) There are no Environmental Liens on or affecting any real
property owned, operated, leased or used by a Borrower or its Subsidiaries.
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(t) To the best of Borrowers knowledge, after due inquiry, the
Borrowers and each of their respective Subsidiaries obtained all permits,
certificates, licenses, approvals, registrations and other authorizations which
are required for the operation of their respective facilities under all
Relevant Environmental Laws and are in material compliance with all Relevant
Environmental Laws.
(u) Except as set forth in Schedule 4.1(u), neither Borrower, nor
any of its respective Subsidiaries has received notice that it generated,
transported or arranged for the transportation of any Hazardous Material to any
site listed on the National Priorities List under The Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42
U.S.C. Section 9601, et. seq., as amended, or any similar list under any
analogous state statute.
(v) There are no environmental, health or safety conditions
existing or reasonably expected to exist at any real property owned, operated,
leased or used by either Borrower or its respective Subsidiaries which might
require any construction or other capital costs within the next 5 years in
order to assure compliance with Relevant Environmental Laws and which the
Borrowers believe would have a Material Adverse Effect.
(w) None of the Loan Parties or their respective Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate restriction that
is reasonably likely to have a Material Adverse Effect on the business, results
of operations, condition (financial or otherwise) or prospects of the Borrowers
and their respective Subsidiaries taken as a whole, or on the ability of any
Loan Party to carry out its obligations under this Agreement or any other Loan
Document.
(x) Each Borrower and their respective Subsidiaries has filed all
tax returns, information returns and reports required to be filed under Federal
and state law or regulation and all material tax returns, information returns
and reports required to be filed under local and other applicable law or
regulation, and, in each case, has paid all taxes shown thereon to be due,
including interest and penalties, or such taxes are being contested in good
faith and adequate reserves for payment thereof have been established.
(y) None of the Loan Parties or their respective Subsidiaries is
an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter' for, an 'investment company," as such terms are defined
in the Investment Company Act of 1940, as amended. None of the making of any
Advances, the issuance of any Letter of Credit, the application of the proceeds
or repayment of any Advances by the Borrower, or the consummation of the other
transactions contemplated by the Loan Documents will violate any provision of
such Act or any rule, regulation or order of the Securities and Exchange
Commission thereunder.
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(z) After giving effect to the transactions contemplated by the
Loan Documents (and after giving effect to the making of any Borrowing or
Advance and the issuance of any Letter of Credit in accordance with the terms
of the Loan Documents) each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(aa) Payment of the unpaid principal of and accrued interest on the
Notes and the Advances and all fees and other Obligations of each Loan Party
under the Loan Documents to which it is a party, and the prompt observance and
performance by each Loan Party of all of the terms, provisions and conditions
of the Loan Documents to which it is a party or by which it is bound are
secured to the extent and as more fully set forth in the Collateral Documents.
On the Closing Date, each of the Collateral Documents will create a valid first
priority Lien upon the Collateral covered thereby, enforceable against each
Loan Party that is a party thereto and all third parties in accordance with its
terms, equally and ratably securing the payment of all Obligations purported to
be secured thereby and subject to no other Liens except as expressly permitted
by the Collateral Documents, and all filings, recordings and other actions
necessary to perfect and protect such Liens shall have been duly executed and
in proper form for filing. Assuming that the Agent, or a nominee or agent of
the Agent, maintains continuous possession of the Security Collateral and the
Mortgage Notes (as each such term is defined in the Borrowers Security
Agreement and in any Security Agreement executed by a Subsidiary of either
Borrower under the terms hereof), and that proper continuation statements under
the Uniform Commercial Code are filed in a timely fashion, no further action is
or will be required to maintain the perfection and priority of such Liens
(except as described in the immediately preceding sentence).
(bb) Each Borrower and its respective Subsidiaries has good and
record and marketable title in fee to all real property, including, without
limitation, Mortgaged Property, purported to be owned by it. All real property
purported to be leased by a Borrower or a Subsidiary, including, without
limitation, real property demised under leasehold interests included in the
Mortgaged Property, is leased pursuant to leases that constitute the legal,
valid and binding obligation of the lessors thereof, enforceable by the lessee
in accordance with their terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights and remedies generally or by application of general
equity principles. The Mortgaged Property is free and clear of all Liens,
except for the Liens created by the Collateral Documents and the Liens
described in Schedule 4.1(bb).
(cc) Each of the Borrowers and their respective Subsidiaries is the
legal and beneficial owner of all of the personal property purported to be
owned by it, including, without limitation, all of the currently existing
Collateral in which any such Person is granting a security interest pursuant to
a Security Agreement; such Collateral is free and clear of any Lien except for
the Liens created by the Collateral Documents and the Liens described in
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Schedule 4.1 (cc); the Borrowers and their respective Subsidiaries have all
necessary rights with respect to the use of all property material to the
conduct of their respective businesses without any conflict or infringement
with the rights of other Persons.
(dd) As of the Closing Date, Schedule 4.1 (dd) is a true and
complete list of each Affiliate Agreement between a Borrower or any of its
Subsidiaries and an Affiliate of such Person. Neither Borrower nor any of its
respective Subsidiaries is contractually liable for any liability or obligation
of any of its Affiliates, any Subsidiary or other Person, except pursuant to a
contractual obligation or guarantee set forth on Schedule 4.1(dd).
(ee) Set forth on Schedule 4.1(ee) hereto opposite the name of each
Borrower is a complete and accurate list, as of the Closing Date, of (i) all
locations where Equipment Property of each Borrower is based, stored, or
maintained, showing as of the Closing Date the street address, county, state or
other relevant jurisdiction and (ii) the name and complete address (including
zip code) of each owner of a location (other than a Borrower) where Equipment
Property of a Borrower is based, stored, or maintained.
(ff) The Borrowers have complied in all material respects with all
applicable statutes, rules, regulations, orders and restrictions of any
Government Authority having or claiming jurisdiction, the violation of which
would have a Material Adverse Effect.
(gg) Each Borrower has adopted all procedures and policies as
mandated by the Borrowers Security Agreement to perfect and protect the first
priority Lien of the Agent for the benefit of the Agent and the Banks
(including Citibank as issuer of the Letters of Credit) with respect to the
titles to the Titled Vehicles and is in compliance with all the provisions of
the Borrowers Security Agreement. The employees of each Borrower who have been
or will be authorized to apply for, file, retrieve, audit, or release the Lien
of the Agent for the benefit of the Banks on the titles to such Titled Vehicles
are only those employees in each Borrower's title department covered by a
fidelity bond, substantially in the form of the fidelity bond provided to the
Agent and the Banks on the Closing Date in accordance with Section 3.1(j)(x)(3)
hereof, exclusively for the benefit of the Agent and the Banks (including
Citibank as the issuer of the Letters of Credit), to the extent of the Agent's
priority right to payment under the Fidelity Bond Trust Agreement, in the
amount of not less than $1,000,000 issued by a reputable bonding company rated
by Best Bonding Company as A+ or better with respect to their respective
responsibilities relating to titles to Titled Vehicles or otherwise. No senior
personnel of either Borrower has any reason to question the veracity, integrity
or abilities of the employees who have been authorized to handle the titles to
the Titled Vehicles.
(hh) Set forth on Schedule 4.1(hh), as of the Closing Date, is the
Appraised Value of Mortgaged Property listed on Schedule 3.1(j)(xi) hereto.
(ii) All Titled Vehicles, listed on Schedule 3.1(j)(x)(1) hereto,
are properly titled in the jurisdictions indicated on Schedule 3.1(j)(x)(1) and
no Titled Vehicle is operated in any jurisdiction which would cause the title
on such Titled Vehicle to lapse or be invalidated.
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ARTICLE 5.
COVENANTS OF THE BORROWER
SECTION 5.1. Affirmative Covenants. From and after the
Closing Date and for so long as any Note or Advance or any amounts payable
under the Loan Documents shall remain unpaid, any Letter of Credit shall be
outstanding or any Bank shall have any Commitment hereunder, the Borrowers
will, unless the Majority Banks shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of
their respective Subsidiaries to comply, in all material respects, with all
applicable laws, rules, regulations and orders (including, without limitation,
ERISA and all applicable Environmental Laws), except where the failure to so
comply would not, and would not be reasonably likely to, have a Material
Adverse Effect on the business, results of operations, condition (financial or
otherwise) or prospects of the Borrowers and their respective Subsidiaries
taken as a whole.
(b) Payment of Taxes, Etc. Pay and discharge, and cause
each of their respective Subsidiaries to pay and discharge, before the same
shall become delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property; provided, however, that,
as long as no Event of Default has occurred and is continuing, neither the
Borrowers nor any of their respective Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge or claim that is being contested in
good faith and by proper proceedings and as to which appropriate reserves are
being maintained in accordance with GAAP.
(c) Maintenance of Insurance. Maintain, and cause each
of their respective Subsidiaries to maintain, policies of insurance in full
force and effect and fully paid for their respective policy periods (including
any policy under which such Person is loss payee) with responsible and
reputable insurance companies or associations in at least such amounts and
covering such risks as are usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrowers and each of their respective Subsidiaries operate; provided, however,
that (i) policies of casualty insurance in respect of Collateral shall not be
for less than the replacement cost of such Collateral and shall be maintained
in accordance with the Borrower's business practice in effect on the Closing
Date (including, without limitation, annual reviews of, and necessary
amendments to, the determination of such replacement cost) as set forth on
Schedule 5.1(c) and (ii) insurance coverage shall be provided for any amount of
liability in excess of $1,500,000 per occurrence and up to $50,000,000 per
occurrence. The Borrowers and their respective Subsidiaries may self-insure
for liability of up to $1,500,000 per occurrence.
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(d) Preservation of Corporate Existence, Etc. Cause
each Borrower and its respective Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory), and franchises, except for
mergers and consolidations permitted pursuant to Section 5.2(d) and except
where the failure to maintain such existence or such rights and franchises
would not, and would not be reasonably likely to, have a Material Adverse
Effect on the business, results of operations, condition (financial or
otherwise) or prospects of the Borrowers and their respective Subsidiaries
taken as a whole.
(e) Visitation Rights. At any reasonable time during
normal business hours and from time to time, in each case upon reasonable
notice, permit the Agent or any of the Banks, or any agents or representatives
thereof, to examine and make copies of and abstracts from the records and books
of account of, and visit the properties (including, without limitation, the
Collateral) of, each Borrower or any of their respective Subsidiaries, and to
discuss the affairs, finances and accounts of a Borrower or any of its
Subsidiaries with any of its officers or directors and with its independent
certified public accountants. The Borrowers will advise, and will cause each
of their respective Subsidiaries to advise, such independent certified public
accountants that the Agent and the Banks have been authorized to review and
discuss with such accountants, and such accountants are authorized to disclose,
any and all financial statements and other information of any kind that they
may have with respect to the Borrowers or any such Subsidiary and direct such
accountants to comply with any reasonable request of the Agent or any Bank for
such information.
(f) Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of each Borrower and each such Subsidiary in accordance with GAAP.
(g) Maintenance of Properties, Etc. Maintain and
preserve, and cause each of their respective Subsidiaries to maintain and
preserve, all of its properties that are used or useful in the conduct of its
or their respective business in good working order and condition, ordinary wear
and tear excepted, except where the failure to so maintain and preserve such
properties would not, and would not be reasonably likely to, have a Material
Adverse Effect on the business, results of operations, condition (financial or
otherwise) or prospects of the Borrowers and their respective Subsidiaries
taken as a whole.
(h) Tangible Net Worth. Maintain at all times, on a
consolidated basis, a Tangible Net Worth equal to $105,000,000 plus 100 percent
of the net proceeds of any issuance of equity plus an amount equal to 50% of
the aggregate cumulative net earnings (not adjusted for net losses) of the
Borrowers earned in each fiscal year after January 1, 1994. For purposes of
this Section 5.1(h) only, Tangible Net Worth and net earnings shall not include
any (i) extraordinary items of income earned after January 1, 1994, and
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(ii) changes in accounting principles occurring after January 1, 1994.
(i) Tangible Net Worth Ratio. Maintain, on a
consolidated basis, a quarterly ratio of Total Liabilities to Tangible Net
Worth of not more than 1.50 to 1.00.
(j) Interest Bearing Debt to EBITDA. Have, on a
consolidated basis, as of the last day of each fiscal quarter for the previous
Measurement Period, a ratio of (x) total on-balance sheet, interest-bearing
Debt to (y) EBITDA of not more than 2.00 to 1.00 (for the fiscal year of
Borrowers ending December 31, 1994); 1.75 to 1.00 (for the first three fiscal
quarters of Borrowers' 1995 fiscal year); and 1.50 to 1.00 thereafter.
(k) EBITDA to Interest and Rental Expenses. Have, on a
consolidated basis, as of the last day of each fiscal quarter for the previous
Measurement Period, a ratio of (x) the sum of EBITDA plus Rentals to (y) the
sum of Interest Expense plus Rentals plus principal payments due on Debt during
the period of the forthcoming four consecutive fiscal quarters of not less than
1.40 to 1.00.
(l) Reporting Requirements. Furnish to the Banks:
(i) as soon as available and in any event within
45 days after the end of each of the first three quarters of
each fiscal year of a Borrower, (x) balance sheets of such
Borrower and its Subsidiaries as of the end of such quarter
which shall contain a detailed statement, satisfactory to the
Banks, of the aging of accounts receivable, and statements of
income and retained earnings of such Borrower and its
Subsidiaries, on a consolidated and consolidating basis, for
the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, (y) detailed
calculations, satisfactory to the Banks, in respect to (A)
compliance by the Borrowers with Section 5.1(h), 5.1(i),
5.1(j) and 5.1(k) and (B) a determination of the Applicable
Margin and (z) a Compliance Certificate, in each case
certified by the Chief Financial Officer of the Guarantor on
behalf of each Borrower;
(ii) as soon as available and in any event within
90 days after the end of each fiscal year of a Borrower, (x) a
copy of the annual financial statements for such year for such
Borrower and its Subsidiaries, on a consolidated and
consolidating basis, (y) detailed calculations, satisfactory
to the Banks, in respect to (A) compliance by the Borrowers
with Section 5.1(h), 5.1(i), 5.1(j) and 5.1(k) and (B) a
determination of the Applicable Margin and (z) a Compliance
Certificate, in each case certified by the Chief Financial
Officer of the Guarantor on behalf of each Borrower;
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(iii) as soon as available and in any event within
90 days after the end of each fiscal year of a Borrower, a
detailed statement satisfactory to the Banks of the aging of
accounts receivable, certified by the Chief Financial Officer
of the Guarantor on behalf of each Borrower;
(iv) as soon as is available and in any event
within 30 days after the end of each Accounting Period
hereafter, (y) unaudited interim consolidated financial
statements (including balance sheets and income statements) of
each Borrower and their respective Subsidiaries as of the end
of such Accounting Period and of the portion of each
Borrowers' fiscal year then elapsed, on a consolidated and
consolidating basis and fairly presenting the consolidated
financial position and results of operations of Borrowers and
their respective Subsidiaries for such Accounting Period, and
(z) detailed calculations, satisfactory to the Banks, in
respect to compliance by the Borrowers with Section 5.1(h) and
5.1(i), in each case certified by the Chief Financial Officer
of the Guarantor on behalf of each Borrower.
(v) as soon as available, and in any event within
30 days after the end of each Accounting Period hereafter, as
to the Borrowers on a consolidated basis, (i) a receivables
aging summary with respect to the Accounting Period just
ended, each certified by the Chief Financial Officer of the
Guarantor on behalf of each Borrower, and (ii) a report, in
reasonable detail and in form satisfactory to the Agent,
setting forth the Adjusted Borrowing Base, the Borrowing Base
and, to the extent any amount exists, the amount of Special
Credit Availability as at the end of such Accounting Period,
which shall be in the form of the Borrowing Base Certificate
attached hereto as Exhibit D, as the same may be modified,
amended or restated from time to time in the manner provided
in this Agreement, certified by the Chief Financial Officer of
the Guarantor on behalf of each Borrower; provided that a
Borrowing Base Certificate may be requested by the Agent at
any time and from time to time.
(vi) as soon as possible and in any event within 5
days after the occurrence of each Default or Event of Default,
a statement of the Chief Financial Officer of the Guarantor on
behalf of each Borrower setting forth details of such Default
or Event of Default and the action which each Borrower has
taken and proposes to take with respect thereto;
(vii) promptly and in any event within 15 days
after the Borrowers or any ERISA Affiliate knows or has reason
to know that any ERISA Event has occurred, a statement of the
Chief Financial Officer of the Guarantor
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on behalf of each Borrower describing such ERISA Event and the
action, if any, which each Borrower or such ERISA Affiliate
proposes to take with respect thereto;
(viii) promptly and in any event within 5 Business
Days after receipt thereof by a Borrower or any ERISA
Affiliate, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed
to administer any Plan;
(ix) promptly and in any event within 5 Business
Days after receipt thereof by a Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan a copy of
each notice received by a Borrower or any ERISA Affiliate
concerning (x) the imposition of Withdrawal Liability by a
Multiemployer Plan, (y) the reorganization or termination,
within the meaning of Title IV of ERISA, of any Multiemployer
Plan or (z) the amount of liability incurred or which may be
incurred, by such Borrower or any ERISA Affiliate in
connection with any event described in clause (x) or (y)
above;
(x) promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court
or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which would have a
Material Adverse Effect on the Borrowers or any of their
respective Subsidiaries;
(xi) promptly after the sending or filing thereof
and except as otherwise expressly provided in this subsection
(l), copies of all such proxy statements, financial
statements, and reports which a Borrower or any of its
Subsidiaries sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration
statements, which a Borrower or any of its Subsidiaries files
with the Securities and Exchange Commission or any
Governmental Authority which may be substituted therefor, or
with any national securities exchange;
(xii) as soon as available, and in any event within
15 days after the end of each Accounting Period, a current
Schedule 4.1(ee).
(xiii) upon the Agent's written request, copies of
all reports and notices which a Borrower or any Subsidiary
files under ERISA with the Internal Revenue Service or the
PBGC or the U.S. Department of Labor or which a Borrower or
any Subsidiary receives from the PBGC; and
(xiv) such other information respecting the
business, properties, operations or condition, financial or
otherwise, of a Borrower or any of their respective
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Subsidiaries as any Bank through the Agent may from time to time
reasonably request.
(m) Periodic Appraisals. From time to time at the
request of the Agent, but not more frequently than annually, the
Borrowers shall obtain an appraisal of the Mortgaged Property (in
order to determine the Appraised Value, among other things) in
accordance with methods of appraising acceptable to the Banks by a
qualified appraiser who is both a member of a national group of
professional appraisers and reasonably acceptable to the Agent and the
Banks. Schedule 4.1(hh) shall be amended to reflect any change in the
Appraised Value of the Mortgaged Property as indicated in any such
appraisal. The Borrowers shall pay all costs and expenses associated
with such appraisals.
(n) ERISA. Each Borrower and its respective Subsidiaries
shall make prompt payments of contributions required by the terms of
each Plan or meet the minimum funding standards applicable.
(o) Defense of Collateral. Each Borrower shall defend
and enforce its respective right, title and interest in and to the
Collateral, and the Borrowers shall defend the Agent's right, title
and interest in and to each and every part of the Collateral, each
against all manner of claims and demands on a timely basis to the full
extent permitted by applicable law.
(p) Maintenance of Borrowing Base. The Borrowers shall
maintain, or cause to be maintained, on a consolidated basis, (i) an
Adjusted Borrowing Base that at all times, at a minimum, is equal to
or exceeds 100% of the aggregate amount of Advances outstanding plus
the Letter of Credit Amount plus the aggregate amount of any Special
Credits outstanding and (ii) a Borrowing Base that at all times, at a
minimum, is equal to or exceeds 150% of the aggregate amount of
Advances outstanding plus the Letter of Credit Amount plus the
aggregate amount of any Special Credits outstanding. If at any time
the Adjusted Borrowing Base and/or the Borrowing Base is less than the
aforestated minimum (a "Borrowing Base Deficiency"), the Borrowers
shall, as soon as possible and in any event within 2 Business Days
after notice of a Borrowing Base Deficiency from the Agent, (A)
deposit cash collateral with the Agent and/or pledge and deliver other
collateral (acceptable to the Banks) to the Agent, all for the ratable
benefit of the Banks, in an amount sufficient to eliminate any
Borrowing Base Deficiency or (B) prepay outstanding Advances, pursuant
to Section 2.11 hereof, in an amount sufficient to eliminate any
Borrowing Base Deficiency. The requirements, imposed by this Section,
are continuing tests, and, accordingly, the Agent at any time and from
time to time may demand such payment and delivery whenever a Borrowing
Base Deficiency is determined by the Agent.
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(q) Procedures Relating to Vehicle Titles. The Borrowers
will adopt and maintain procedures and policies as mandated by the
Borrowers Security Agreement to perfect and protect the first priority
Lien of the Agent for the benefit of the Agent and the Banks
(including Citibank as issuer of the Letters of Credit) on the Titled
Vehicles. The Borrowers will upon request provide the Agent and the
Banks a list of the names of each Borrower's employees who have been
authorized to handle the titles to such Titled Vehicles. Each
employee authorized to handle such titles shall be qualified to
perform the responsibilities delegated to such employee. The actions
of each employee authorized to handle such titles shall be covered at
all times by the fidelity bond described in Section 4.1(gg) hereof.
Upon Borrowers full and final satisfaction of their Obligations
hereunder to the Agent and the Banks, the Agent reasonably promptly
following the Borrowers' written request therefor shall notify the
trustee under the Fidelity Bond Trust Agreement, that the Agent for
the benefit of the Agent and the Banks hereunder (including Citibank
as issuer of the Letters of Credit) is no longer entitled to the
benefits of such trust agreement.
SECTION 5.2. Negative Covenants. From and after the
Closing Date and for so long as any Note or any Advance or any amounts payable
under the Loan Documents shall remain unpaid, any Letter of Credit shall be
outstanding or any Bank shall have any Commitment hereunder, the Borrowers will
not, without the written consent of the Majority Banks:
(a) Liens. Create, assume, or suffer to exist any Lien
of any kind on any of their respective property or assets, now owned
or hereafter acquired, except for: (i) Liens for taxes or assessments
or governmental charges, levies or imposts not yet due or being
contested as permitted by Section 4.1(j); (ii) Liens on real property,
fixtures and tangible personal property existing on the date hereof as
set forth on Schedule 5.2(a); (iii) purchase money Liens on real
property, fixtures and tangible personal property containing customary
terms (including leases in the nature of Capital Leases of equipment);
(iv) Liens granted in connection with tangible personal property on
terms not less favorable than the terms of the original purchase money
financing; (v) existing Liens on real property, fixtures and tangible
personal property acquired in an acquisition; (vi) carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like
liens arising in the ordinary course of business, payment for which is
not yet due or which are being contested in good faith and by
appropriate proceedings; (vii) pledges or deposits in connection with
worker's compensation, unemployment insurance and other social
security legislation; (viii) deposits to secure the performance of
utilities, leases, statutory obligations and surety and appeal bonds
and other obligations of a like nature incurred in the ordinary course
of business; (ix) bankers' Liens arising by statute or under customary
terms regarding depository relationships on deposits held by
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financial institutions with whom a Borrower has a banker-customer
relationship; (x) Liens in favor of a Bank arising by operation of
laws or under customary terms regarding depository relationships
relating to bankers' liens on deposits held by such Bank or in
connection herewith; (xi) easements, right-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business
of Borrowers or their respective Subsidiaries; (xii) typical
restrictions imposed by licenses and leases of software (including
location and transfer restrictions); (xiii) obligations or Liens
arising out of or created by the Transfer Agreement; (xiv) leases of
over-the-road tractors, trailers and automobiles; (xv) Liens on
property which consist of margin stock; and (xvi) liens granted
pursuant to the provisions of this Agreement and the other Loan
Documents.
(b) Debt. Incur, assume, or suffer to exist any Debt for
borrowed funds or Capital Leases except for: (i) Debt for borrowed
funds or under Capital Leases existing on the date of this Agreement
as set forth in Schedule 5.2(b) or arising under this Agreement; (ii)
Debt for Special Credits; (iii) Debt for borrowed funds or under
Capital Leases secured by Liens permitted by clauses (iii), (iv) and
(v) of Section 5.2(a); (iv) trade payables and contractual obligations
to suppliers and customers incurred in the ordinary course of
business; (v) accrued pension fund and other Plan obligations and
liabilities (provided, however, that such Debt does not result in the
existence of any Event of Default under any other provision of this
Agreement); (vi) deferred income taxes; (vii) Debt resulting from
endorsements of negotiable instruments received in the ordinary course
of its business; (viii) Debt for borrowed funds or under Capital
Leases, arising after the Closing Date, in an amount not to exceed
$5,000,000 during any period of twelve consecutive months and
$10,000,000 in the aggregate at any one time outstanding; and (ix)
Debt for borrowed funds against the cash value of life insurance
policies.
(c) Lease Obligations. Create or suffer to exist, or
permit any of their respective Subsidiaries to create or suffer to
exist, any obligations for the payment of rental for any property
under leases or agreements to lease (other than currently existing
leases or lease agreements or Capital Leases) having a term of one
year or more which would cause the direct or contingent liabilities of
the Borrowers and their Subsidiaries, on a consolidated basis, in
respect of all such obligations to exceed $12,000,000 payable in any
period of 12 consecutive calendar months.
(d) Mergers, Etc. Merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in
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one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets of, any Person, or
permit any of their respective Subsidiaries to do so, except that a
Borrower may merge or consolidate with any corporation or business so
long as such Borrower shall be the surviving or continuing corporation
and any Subsidiary of a Borrower may merge or consolidate with or
into, or dispose of assets to, or acquire assets of, any other
Subsidiary of a Borrower and except that any Subsidiary of a Borrower
may merge into or dispose of assets to a Borrower,provided in each
case that (i) immediately after giving effect to such proposed
transaction, no Default or Event of Default would exist, (ii) in the
case of any such merger to which a Borrower is a party, such Borrower
is the surviving corporation, and (iii) the value of any consideration
involved in any such transaction or series of transactions does not
exceed $5,000,000, in the aggregate, during the term of this
Agreement. Notwithstanding the foregoing, each Borrower may, pursuant
to the Transfer Agreement, sell Receivables for cash and intercompany
indebtedness.
(e) Compliance With ERISA. (i) Terminate or permit any
ERISA Affiliate to terminate any Plan maintained for employees of a
Borrower and covered by Title IV of ERISA so as to result in any
material (in the reasonable opinion of the Banks) liability of a
Borrower to the PBGC, (ii) enter into any Prohibited Transaction (as
defined in Section 4975 of the Code and in ERISA) involving any Plan
which results in any material (in the reasonable opinion of the
Banks) liability of the Borrowers to PBGC, (iii) cause any occurrence
of any Reportable Event which results in any material (in the
reasonable opinion of the Banks) liability of a Borrower to PBGC, or
(iv) allow or suffer to exist any other event or condition known to a
Borrower which results in any material (in the reasonable opinion of
the Banks) liability of a Borrower to PBGC.
(f) Loans, Advances and Investments. Make or permit to
remain outstanding any loan or advance or make any capital
contribution to, or guarantee, endorse or otherwise be or become
directly or contingently liable in connection with, the obligations,
stock or dividends of, or invest in, own, purchase or otherwise
acquire any stock, assets or obligations of, any Person, except that
any Subsidiary may guarantee or otherwise be or become directly or
contingently liable in connection with the Obligations of the
Borrowers to the Banks hereunder, and except that a Borrower or any
Subsidiary may (i) make or permit to remain outstanding loans or
advances or make capital contributions to any Subsidiary, (ii) invest
in, own, purchase or otherwise acquire stock, assets or obligations of
a Subsidiary or of a corporation which immediately after such
investment, purchase or acquisition will be a Subsidiary;provided,
that immediately after giving effect to such transaction one hundred
percent (100%) of the
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capital stock of any such Subsidiary is pledged to the Agent as
Collateral under the terms of the Borrowers Security Agreement, (iii)
acquire and own stock, assets or obligations received in settlement of
debts (created in the ordinary course of business) owing to a Borrower
or any Subsidiary, (iv) invest in, own, purchase or otherwise acquire
prime commercial paper due within one year from the date of purchase,
obligations of the United States government or any agency thereof,
obligations guaranteed by the United States government, certificates
of deposit and municipal securities rated for investment at least "A"
by any recognized rating service, (v) endorse in the ordinary course
of business negotiable instruments in the course of collection, (vi)
make or permit to remain outstanding loans or advances to the
Guarantor, and (vii) make or permit to remain outstanding loans or
advances or make capital contributions to, or guarantee, endorse, or
otherwise be or become directly or contingently liable in connection
with, the obligations, stock or dividends of, or invest in, own,
purchase or otherwise acquire stock, assets or obligations of Persons,
other than a Borrower, subsidiaries or corporations which immediately
after such transactions will be Subsidiaries;provided, however, that
the aggregate principal amount of such loans, advances and capital
contributions, plus the aggregate amount of such contingent
liabilities, plus the aggregate amount of investment in such stock,
assets or obligations shall not exceed $1,000,000 at any time
outstanding for both Borrowers and their respective Subsidiaries taken
as a whole.
(g) Limitation on Loans to Affiliates. Permit at any
time to remain outstanding, in an aggregate amount, loans or other
forms of extension of credit, from the Borrowers or either Borrower,
directly or indirectly, to (i) Cardinal in excess of $25,000,000, (ii)
GITC in excess of $35,000,000 and (iii) CLC in excess of $4,000,000,
any other provision in this Agreement to the contrary notwithstanding.
(h) Transactions with Affiliates. Directly or indirectly
enter into any transaction (including, without limitation, the lease,
purchase, sale or exchange of any asset or property, the making of any
advance or loan or the entering into of any agreement or arrangement
for any payment in respect of any fee, charge or other expense for
services performed or to be performed or any allocation of
administrative salaries, expenses and other general overhead) with any
Affiliate other than in the ordinary course and pursuant to the
reasonable requirements of the business of the Borrowers and upon fair
and reasonable terms and provisions no less favorable to the Borrowers
than they could have obtained in a comparable arms-length transaction
with a Person who is not an Affiliate of a Borrower.
(i) Sale or Disposition of Collateral. Directly or
indirectly: sell, lease, sublease, transfer, exchange, abandon or
otherwise dispose of, surrender physical possession or
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control of, physically after or relocate all or any portion of the
Collateral, or offer or agree to do so, other than as permitted by the
terms of the Borrowers Security Agreement.
(j) Sale Leaseback. Engage in the sale and leaseback of
any of their respective property, real or personal, except for the
sale and leaseback of real property in a single transaction or series
of transactions which do not exceed the amount of $7,500,000, in the
aggregate, during the term of this Agreement.
(k) Negative Pledges. Enter into or permit any of their
respective Subsidiaries to enter into any agreement to incur Debt
(excluding this Agreement or any other Loan Document) prohibiting (i)
the creation or assumption of any Lien upon their respective
properties, revenues or assets, whether now owned or hereafter
acquired, or their ability to amend or otherwise modify this Agreement
or any other Loan Document to which they are a party or (ii) any
Subsidiary to make any payments, directly or indirectly, to a Borrower
by way of dividends, advances, repayments of loans or advances,
reimbursements of management and other intercompany charges, expenses
and accruals or other returns on investments or (iii) any other
agreement or arrangement which restricts the ability of any Subsidiary
to make any payment, directly or indirectly, to a Borrower.
(l) Operation of Titled Vehicles. Operate any Titled
Vehicle in any jurisdiction which would cause the title on such Titled Vehicle
to lapse or be invalidated.
SECTION 5.3. Environmental Matters. The Borrowers,
jointly and severally, hereby indemnify the Agent and the Banks and agree to
defend and hold the Agent and the Banks harmless from and against any and all
losses, damages (including, without limitation, all foreseeable and
unforeseeable consequential damages), costs, claims, liabilities, penalties,
fees, injuries or expenses of whatever kind or nature (including, without
limitation, reasonable counsel fees and costs), which the Agent and the Banks
may sustain or incur in connection with: any Environmental Complaint or any
claim, demand, or complaint asserted against the Agent and/or the Banks
relating to any environmental pollution, any Hazardous Material release,
disposal, recycling, storage, handling, treatment or exposure, or any
environmental clean-up (including, without limitation, any remedial, removal,
or response action) in connection with or relating to (i) a Borrower or any of
its Subsidiaries' premises, including, without limitation, any real or other
Property now or formerly owned, operated, leased or used by a Borrower or its
Subsidiaries; or (ii) a Borrower or any of its subsidiaries' operations,
whether such operations took place before or after the date of this Agreement.
The indemnification in this Section 5.3 shall survive termination of this
Agreement and all other Loan Documents as well as the payment of all Notes.
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ARTICLE 6.
EVENTS OF DEFAULT
SECTION 6.1. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrowers shall fail to (i) pay any principal on any
Note when due and payable, or (ii) pay any interest on any Note within
2 days of when the same becomes due and payable, or (iii) make any
other payment of Obligations under any Loan Document within 5 days
after the same becomes due and payable; or
(b) Any representation or warranty made by any Loan Party (or
any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made
or deemed made; or
(c) (i) The Borrowers shall fail to perform or observe any
term, covenant or agreement contained in Section 5.1(d), 5.1(h),
5.1(i), 5.1(j), 5.1(k), 5.1(l)(vi), 5.1(p), 5.1(q) or 5.2, (ii) a
Borrower or any of its Subsidiaries shall fail to perform any term,
covenant or agreement on its part to be performed or observed
contained in any Mortgage to which it is a party (after giving effect
to any grace periods provided in such Mortgage) or (iii) any Loan
Party shall fail to perform any other term, covenant or agreement
contained in any Loan Document on its part to be performed or observed
if such failure shall remain unremedied for 30 days after such Loan
Party shall have knowledge of such failure or after written notice
thereof shall have been given to the Borrowers by the Agent or any
Bank; or
(d) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Debt (excluding
Debt under this Agreement or evidenced by the Notes) of a Borrower or
such Subsidiary (as the case may be) in excess of $1,000,000,
exclusive of ERISA liabilities determined as of such date, when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other event
shall occur or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit
the acceleration of, the maturity of such Debt; or any such Debt in
excess of $1,000,000 shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall
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be required to be made, in each case prior to the stated maturity
thereof; or
(e) Any Loan Party or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or 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 any Loan Party or any of its Subsidiaries
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 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 30 days, or any of the actions sought in such
proceeding (including, without limitation, 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 any Loan Party or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set
forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess
of $1,000,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
(g) Any non-monetary judgment or order shall be rendered
against a Borrower or any of its Subsidiaries that is reasonably
likely to have a Material Adverse Effect on (i) the business, results
of operations, condition (financial or otherwise) or prospects of the
Borrowers and their respective Subsidiaries taken as a whole, (ii) the
ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party or (iii) the rights and remedies of
the Agent or the Banks under any Loan Document, and either (x)
enforcement proceedings shall have been commenced by any Person upon
such judgment or order and a stay of such enforcement proceedings
shall not be in effect; or (y) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(h) Any provision of any Loan Document shall for any
reason cease to be valid and binding on or enforceable against
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any Loan Party, or any Loan Party shall so state in writing; or
(i) The Security Agreements and the Mortgages shall for any
reason (x) cease to create a valid and perfected first priority Lien
on the Collateral purported to be covered thereby except, as to
priority, as permitted by the Collateral Documents, or (y) cease to
equally and ratably secure all of the Obligations of the Loan Parties
under the Loan Documents;
(j) Any ERISA Event shall have occurred with respect to a
Plan and, 30 days after notice thereof shall have been given to the
Borrowers by the Banks, (i) such ERISA Event shall still exist and
(ii) the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Plan and the Insufficiency of any
and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or, in the case of a Plan with respect to
which an ERISA Event described in clauses (iii) through (vi) of the
definition of ERISA Event shall have occurred and then exist, the
liability related thereto) is equal to or greater than $5,000,000; or
(k) A Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to
Multiemployer Plans by the Borrowers and their ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
exceeds $10,000,000 in the aggregate; or
(l) The occurrence of any event or condition which the
Majority Banks reasonably determine has a Material Adverse Effect; or
(m) The Guarantor shall fail to perform or observe any
term, covenant or agreement contained in Section 7(a), 7(c), 7(d),
7(k), 7(l) and 7(m) of the Guaranty.
(n) The applicable Borrower shall fail to (i) execute
(where applicable) and deliver to the Agent all documents relating to
Mortgaged Property described in Schedule 6.1(n) and (ii) accomplish
all due diligence items specified in Schedule 6.1(n), in each case
within the time periods set forth in said Schedule.
(o) The Borrowers shall fail to execute (where
applicable) and deliver to the Agent, by April 18, 1994, all documents
set forth on Schedule 6.1(o) hereto.
then, and in any such event, the Agent (i) shall at the request, or may with
the consent, of the Majority Banks, by notice to the Borrowers, declare the
obligation of each Bank to make Advances and of Citibank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request,
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or may with the consent, of the Majority Banks, by notice to the Borrowers,
declare the Notes and the Advances, all interest thereon and all other amounts
payable under this Agreement and the other Loan Documents to be forthwith due
and payable, whereupon the Notes and the Advances, all such interest and all
such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrowers, and the Borrower's deposit obligation
in respect of outstanding Letters of Credit pursuant to Section 2.13(d) shall
become immediately effective; provided, however, that in the event of an actual
or deemed entry of an order for relief with respect to any Loan Party or any of
its Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of each
Bank to make Advances and of Citibank to issue Letters of Credit shall
automatically be terminated and (y) the Notes and the Advances, all such
interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrowers and the Borrower's deposit
obligation in respect of outstanding Letters of Credit pursuant to Section
2.13(d) shall become immediately effective.
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ARTICLE 7.
THE AGENT
SECTION 7.1. Authorization and Action. Each Bank hereby
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Debt resulting
from the Advances), the Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Banks, and such instructions shall be binding upon
all Banks; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement, any other Loan Document or applicable law. The Agent agrees to
give to each Bank prompt notice of each notice given to it by the Borrowers
pursuant to the terms of this Agreement.
SECTION 7.2. Agent's Reliance, Etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
any Loan Document, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(i) may treat the Bank that made any Advance as the holder of the Debt
resulting therefrom until the Agent receives and accepts an Assignment and
Acceptance entered into by such Bank as assignor, and an Eligible Assignee as
assignee, as provided in Section 8.7; (ii) may consult with legal counsel
(including counsel for the Borrowers), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties or
representations (whether written or oral) made in or in connection with any
Loan Document; (iv) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of the Borrowers or to inspect the property
(including the books and records) of the Borrowers; (v) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant thereto; and (vi) shall incur
no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopier, telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper party or parties.
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SECTION 7.3. Citibank and Affiliates. With respect to its
Commitment, the Advances made by it, the portion of the Letter of Credit Amount
allocable to it and the Notes issued to it, Citibank shall have the same rights
and powers under this Agreement as any other Bank and may exercise the same as
though it were not the Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include Citibank in its individual capacity.
Citibank and its affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with,
the Borrowers, any of its subsidiaries and any Person who may do business with
or own securities of the Borrowers or any such subsidiary, all as if Citibank
were not the Agent and without any duty to account therefor to the Banks.
SECTION 7.4. Bank's Credit Decision. Each Bank
acknowledges that it has, independently and without reliance upon the Agent or
any other Bank and based on the financial statements referred to in Section 4.1
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and any other Loan Document to which it
is a party.
SECTION 7.5. Indemnification. The Banks agree to
indemnify the Agent (to the extent not reimbursed by the Borrowers), ratably
according to the respective principal amounts of the Advances then owing to
each of them (or if no Advances are at the time outstanding or if any Notes are
held by Persons which are not Banks, ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or
arising out of any Loan Document or any action taken or omitted by the Agent
under any Loan Document, provided that no Bank shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank agrees to reimburse the Agent promptly upon demand for its ratable
share of any costs and expenses, payable by the Borrowers under Section 8.4 to
the extent that the Agent is not promptly reimbursed for such costs and
expenses by the Borrowers.
SECTION 7.6. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and the Borrowers and may be
removed at any time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Agent without the consent of the Borrowers if the successor Agent is
a Bank and with the prior written consent of the Borrowers if the
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successor Agent is any other Person. If no successor Agent shall have been so
appointed by the Majority Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or
the Majority Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent [with the prior written
consent of the Borrowers], which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article 7 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
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ARTICLE 8.
MISCELLANEOUS
SECTION 8.1. Amendments, Etc. No amendment or waiver of
any provision of this Agreement, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by each Bank, (i) extend the final scheduled maturity of any
Advance or Note or extend the stated maturity of any Letter of Credit beyond
the Termination Date, or reduce the rate or extend the time of payment of
interest or fees thereon, or reduce the principal amount thereto, or increase
the Commitments of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Commitments prior to the Termination Date shall not constitute
a change in the terms of any Commitment of any Bank), (ii) release all or a
substantial part of the Collateral (except as shall be otherwise provided in
the respective Collateral Document), (iii) release the Guarantor from its
obligations, liabilities or duties under the Guaranty, (iv) change the ratable
distribution of funds received by the Agent for account of the Banks hereunder,
(v) change the percentage of the aggregate unpaid principal amount of the
Advances or the Notes or the percentage of the aggregate amount of Commitments
that shall be required for the Banks or any of them to take any action under
any Loan Documents, or (vi) amend this Section 8.1; and provided, further, that
no amendment, waiver or consent shall (x) unless in writing and signed by
Citibank in addition to the Banks required above to take such action, amend,
modify or waive any provision of this Agreement relating to Letters of Credit
or alter Citibank's rights or obligations with respect to Letters of Credit, or
(y) unless in writing and signed by the Agent in addition to the Banks required
above to take such action, affect the rights or duties of the Agent under this
Agreement.
SECTION 8.2. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telecopier, telegraphic, telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered:
(a) If to the Borrowers:
Carolina Freight Carriers Corporation
N.C. Highway 150 East
P. O. Box 697
Cherryville, North Carolina 28021
Attention: Treasurer
(b) If to any Bank, at its Domestic Lending Office
specified opposite its name on Schedule 1(b) hereto;
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(c) If to any other Bank, at its Domestic Lending Office
specified in the Assignment and Acceptance pursuant to which it became
a Bank;
(d) If to the Agent:
Citibank, N.A.
c/o Citicorp North America, Inc.
400 Perimeter Center Terrace
Suite 600
Atlanta, Georgia 30346
Attention: Kirk P. Lakeman, Vice President
With a copy of any notice given pursuant to Article 6
to:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attention: Barbara A. Cohen, Vice President
Hunton & Williams
NationsBank Plaza - Suite 4100
600 Peachtree Street, N.E.
Atlanta, Georgia 30308-2216
Attention: Jon I. Larson
(e) As to the Borrowers or the Agent, at such other
address as shall be designated by such party in a written notice to
the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to the
Borrowers and the Agent.
All such notices and communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback
or delivered to the cable company, respectively, except that notices and
communications to the Agent pursuant to Article 2, 3 or 7 shall not be
effective until received by the Agent.
SECTION 8.3. No Waiver; Remedies. No failure on the part
of any Bank or the Agent to exercise, and no delay in exercising, any right
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.4. Costs, and Expenses. (a) The Borrowers
agrees to pay on demand (i) all reasonable costs and expenses in connection
with the preparation, execution, delivery, syndication, administration,
modification and amendment of the Loan Documents and the other documents to be
delivered thereunder, (including,
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without limitation, (A) all due diligence, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Agent with respect thereto, with respect to advising the Agent as to
its rights and responsibilities, or the perfection, protection or preservation
of rights or interests, under the Loan Documents and the other documents to be
delivered thereunder and with respect to negotiations with the Borrowers
regarding any Default or any events or circumstances that may give rise to a
Default) and (ii) all costs and expenses of the Agent and the Banks in
connection with the enforcement of the Loan Documents (including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 8.4(a)) and the other documents to be
delivered thereunder, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally or otherwise (including, without limitation, the reasonable fees and
expenses of counsel for the Agent and each Bank with respect thereto).
(b) The Borrowers agree to indemnify and hold harmless
the Agent and each Bank and each of their Affiliates and their respective
officers, directors, employees, agents and advisors (each, an "Indemnified
Party") from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of, or in
connection with the preparation for a defense of, any investigation, litigation
or proceeding arising out of, related to or in connection with the Loan
Documents and the other documents to be delivered thereunder, the Banks'
agreements to make the Advances hereunder, Citibank's agreement to issue
Letters of Credit hereunder, the use or intended use of the proceeds of any of
the Advances or Letters of Credit hereunder, whether or not an Indemnified
Party is a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court
of competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct.
(c) With respect to the Mortgaged Property and all other
property of a Borrower and its Subsidiaries, the Borrowers agree to indemnify
and hold harmless each Indemnified Party for, from and against and to reimburse
each Indemnified Party with respect to, any Environmental Complaint,
Environmental Lien, loss, damage, liability, cost and expense (including
reasonable attorney's fees and court costs) of any and every kind or character,
known or unknown, fixed or contingent, asserted against or incurred by any
Indemnified Party at any time and from time to time by reason of or arising out
of any violation on or before the Indemnity Release Date of any Relevant
Environmental Laws in effect on or before the Indemnity Release Date, and any
and all matters arising out of any act, omission, event or circumstance
existing or occurring on or
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prior to the Indemnity Release Date (including, without limitation, the actual,
proposed or threatened storage, holding, existence, generation, processing,
abatement handling or presence on or under the Mortgaged Property or such other
property, or release, emission, removal, disposition, discharge or
transportation into or from the Mortgaged Property or such other property, of
Hazardous Materials disposed of or released prior to the Indemnity Release
Date), regardless of whether the act, omission, event or circumstances
constituted a violation of any Relevant Environmental Law at the time of its
existence or occurrence; provided that this indemnity shall not apply to any
Environmental Complaint, Environmental Lien, loss, damage, liability, cost or
expense (or the applicable part thereof) resulting from, or attributable to,
any act or omission of any Indemnified Party or its authorized agents,
attorneys or contractors. For purposes of this subsection (c), the term
"release" shall have the meaning specified in the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as subsequently
modified, supplemented or amended ("CERCLA"), and the term "disposed" shall
have the meaning specified in the Federal Resource Conservation and Recovery
Act of 1976, as subsequently modified, supplemented or amended ("RCRA");
provided that in the event either CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment and provided, further, that
to the extent that Mortgaged Property (or such other property) is situated in a
state in which the Relevant Environmental Laws of the state may establish a
meaning for a term which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply. The provisions of this subsection
shall survive the Indemnity Release Date, and shall continue thereafter in full
force and effect.
(d) If any payment of principal of, or conversion of, any
Eurodollar Rate Advance is made by or on behalf of the Borrowers to or for the
account of a Bank other than on the last day of the Interest Period for such
Advance, as a result of a payment, prepayment or Conversion pursuant to Article
2, acceleration of the maturity of the Advances pursuant to Section 6.1 or for
any other reason, the Borrowers shall, upon demand by such Bank (with a copy of
such demand to the Agent), pay to the Agent for the account of such Bank any
amounts required to compensate such Bank for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment, prepayment
or Conversion, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Bank to fund or
maintain such Advance.
SECTION 8.5. Right of Set-Off. Upon (a) the occurrence
and during the continuance of any Event of Default and (b) the making of the
request or the granting of the consent specified by Section 6.1 to authorize
the Agent to declare the Advances due and payable pursuant to the provisions of
Section 6.1, each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits
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(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of a Borrower or the Borrowers against any and all of the Obligations
of the Borrowers now or hereafter existing under this Agreement, irrespective
of whether such Bank shall have made any demand under this Agreement and
although such Obligations may be unmatured. Each Bank agrees promptly to
notify the Borrowers after any such set-off and application made by such Bank;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Bank may have.
SECTION 8.6. Binding Effect. This Agreement shall become
effective when it shall have been executed by each Borrower and the Agent and
when the Agent shall have been notified by each Bank that such Bank has
executed it and thereafter shall be binding upon and inure to the benefit of
the Borrowers, the Agent and each Bank and their respective successors and
assigns, except that the Borrowers shall not have the right to assign their
rights hereunder or any interest herein without the prior written consent of
the Banks.
SECTION 8.7. Assignments and Participations. (a) Each
Bank may assign to one or more banks or other entities, with the prior written
consent of Citibank, as the issuer of Letters of Credit, and the Borrowers
(which consent shall not be unreasonably withheld) all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment, the Advances owing to it and the Note or Notes
held by it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under
this Agreement, (ii) the amount of the Commitment of the assigning Bank being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than 5.0% of all such rights and obligations or less than $2,500,000 and
shall be an integral multiple of $500,000, (iii) each such assignment shall be
to an Eligible Assignee, and (iv) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment and a processing and recordation fee of $1,500. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder and (y) the Bank assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
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an assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Bank assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Bank makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement and any other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; (ii) such assigning Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of their
obligations under this Agreement or any other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 4.1 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such
assigning Bank or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement or any other Loan Documents are required
to be performed by it as a Bank.
(c) The Agent shall maintain at its address referred to
in Section 8.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Commitment of, and principal amount of the Advances owing to,
each Bank from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
the Borrowers, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrowers or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and an assignee representing that it is an
Eligible Assignee, any Note or Notes subject to such
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assignment and the written consent of Citibank and the Borrowers, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit N hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrowers. Within 5 Business Days
after its receipt of such notice, the Borrowers, at their own expense, shall
execute and deliver to the Agent in exchange for the surrendered Note or Notes
a new Note to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained a Commitment hereunder, a new Note to the order of
the assigning Bank in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A hereto.
(e) Each Bank may sell participations (without obtaining
the consent of any other party to this Agreement) to one or more banks,
insurance companies or other financial institutions in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and
the Note or Notes held by it); provided, however, that (i) such Bank's
obligations under this Agreement (including, without limitation, its Commitment
to the Borrowers hereunder) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of any such Note for all
purposes of this Agreement, and (iv) the Borrowers, the Agent and the other
Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.7, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers furnished to such Bank
by or on behalf of the Borrowers; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential information relating to the
Borrowers received by it from such Bank.
(g) Notwithstanding any other provision set forth in this
Agreement or in any of the other Loan Documents, each Bank may at any time
create a security interest in all or any portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes held by it) in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
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SECTION 8.8. Governing Law and Jurisdiction. (a)
Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
(b) Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally submits to the nonexclusive jurisdiction of a
New York State court or federal court of the United States of America sitting
in New York City, and any appellate court from any appeal thereof, in any
action or proceeding arising out of or relating to this Agreement, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
SECTION 8.9. Severability. Any provision of this
Agreement which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without invalidating
the remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
SECTION 8.10. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
SECTION 8.11. Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY LAW, THE BANKS AND THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY RELATED DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (VERBAL OR WRITTEN), OR ACTIONS OF THE BANKS OR THE
BORROWERS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS ENTERING INTO
THIS AGREEMENT.
SECTION 8.12. Effect of Termination of Status as a Bank.
Notwithstanding anything in this Agreement to the contrary, the assignment by
any Bank of all of its rights hereunder, or the payment by the Borrowers of all
Borrowings hereunder, shall not terminate any rights under this Agreement of
Citibank, the Agent or any Bank pursuant to Sections 2.12, 2.13(e), 2.20, 5.3
and 8.4.
SECTION 8.13. No Liability Regarding Letters of Credit. The
Borrowers assume all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit. Neither
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Citibank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) any
matter described in Section 2.13(f); or (c) any other circumstances whatsoever
in making or failing to make payment under any Letter of Credit, except to the
extent of any direct, but not consequential, damages suffered by the Borrowers
that are found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from Citibank's gross negligence or willful
misconduct in determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit after the presentation to
it of a draft and certificates strictly complying with the terms and conditions
of the Letter of Credit. In furtherance and not in limitation of the
foregoing, Citibank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
SECTION 8.14. Headings. Section headings in this Agreement
are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
BORROWERS:
CAROLINA FREIGHT CARRIERS CORPORATION
By:
--------------------
Name: John B. Yorke
Title: Secretary
RED ARROW FREIGHT LINES, INC.
By:
--------------------
Name: John B. Yorke
Title: Secretary
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CITIBANK, N.A., as Agent
By:
--------------
Vice President
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87
BANKS
Commitment
23,750,000 CITIBANK, N.A.
By:
---------------------
Title:
82
88
Commitment
$10,000,000 THE FIRST NATIONAL BANK OF BOSTON
By:
-------------------------
Title:
83
89
Commitment
$11,250,000 FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
--------------------------------------
Title:
84
90
PLEDGE AND SECURITY AGREEMENT
Dated as of March 15, 1994
From
CAROLINA FREIGHT CORPORATION
as Grantor
to
CITIBANK, N.A.
as Agent
91
T A B L E O F C O N T E N T S
Page
----
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Security for Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Delivery of Pledged Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Place of Perfection; Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 7. Voting Rights; Dividends; Collections, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 8. Transfers and Other Liens; Additional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 9. Agent Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 10. Agent May Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 11. Reasonable Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 12. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 13. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 14. Indemnity and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 15. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 16. Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 17. Continuing Security Interest; Assignments Under the Credit Agreement . . . . . . . . . . . . . . . . 12
SECTION 18. Release and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 19. Governing Law; Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 20. Consent to Jurisdiction; Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 21. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 22. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
SCHEDULE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
i
92
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of March 15, 1994, (the
"Agreement") made by CAROLINA FREIGHT CORPORATION, a corporation organized and
existing under the laws of North Carolina (the "Grantor"), to Citibank, N.A.
("Citibank") as agent (the "Agent") for the Banks (including Citibank as issuer
of the Letters of Credit under the Credit Agreement) (the "Banks") listed as
parties to the Credit Agreement (as defined below).
PRELIMINARY STATEMENTS.
(1) The Banks and the Agent have entered into a Secured Revolving
Credit and Letter of Credit Agreement, dated as of March 15, 1994 (said
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Carolina Freight
Carriers Corporation, a corporation organized and existing under the laws of
North Carolina, and Red Arrow Freight Lines, Inc., a corporation organized and
existing under the laws of Texas (individually, a "Borrower" and collectively,
the "Borrowers").
(2) The Grantor has executed and delivered a Guaranty of even date
herewith (the "Guaranty") to the Agent in connection with the Advances to be
made by the Banks and the Letters of Credit to be issued by Citibank under the
Credit Agreement.
(3) The Grantor is the owner of (i) the shares (the "Pledged
Shares") of stock described in Schedule I hereto and issued by the corporations
named therein, (ii) the Intercompany Notes described in Schedule II hereto, and
(iii) the Transferor Interest and the Transferor Certificate evidencing the
Transferor Interest.
(4) It is a condition precedent to the making of Advances by the
Banks and the issuance of the Letters of Credit by Citibank under the Credit
Agreement that the Grantor shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to make Advances and Citibank to issue the Letters of Credit
under the Credit Agreement, the Grantor hereby agrees with the Agent for its
benefit and the benefit of the Banks, including Citibank as issuer of the
Letters of Credit, as follows:
SECTION 1. Grant of Security. The Grantor hereby assigns, pledges and
grants to the Agent for its benefit and the benefit of the Banks, including
Citibank as issuer of the Letters of Credit (including any deemed Letters of
Credit, pursuant to Section
93
2.13(a) of the Credit Agreement, issued by Citibank), a security interest in,
the following (collectively, the "Collateral"):
(a) all of the Grantor's right, title and interest in and
to the following collateral (collectively, the "Pledged Collateral"):
(i) the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares;
(ii) all additional shares of stock of any issuer
of the Pledged Shares from time to time acquired by the
Grantor in any manner, together in each case with the
certificates representing such additional shares, and all
dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares;
(iii) the Transferor Certificate evidencing the
Transferor Interest; and
(iv) all Intercompany Notes now owned or hereafter
acquired by the Grantor.
(b) all cash and non-cash proceeds of any and all of the
foregoing Pledged Collateral (including, without limitation, proceeds that
constitute property of the types described in clause (a) and (b) of this
Section 1 and, to the extent not otherwise included, all payments under any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral) (any and all such
items being the "Proceeds").
SECTION 2. Security for Obligations. This Agreement secures the
payment of the following obligations of the Grantor: all Obligations of the
Grantor now or hereafter existing under the Guaranty and the Loan Documents
(including, without limitation, any deposit obligation in respect thereof as
set forth in the Credit Agreement), including any extensions, modifications,
substitutions, amendments and renewals thereof in accordance with their terms,
whether for principal (including, without limitation, reimbursement for amounts
drawn under Letters of Credit, including any deemed Letters of Credit, pursuant
to Section 2.13(a) of the Credit Agreement, issued by Citibank), interest
(including, without limitation, interest, as provided in the Credit Agreement,
after the filing of a petition initiating any proceeding referred to in Section
6.1(e) of the Credit Agreement), fees, breakage costs, expenses,
indemnification or otherwise, and all Obligations of the
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94
Grantor now or hereafter existing under this Agreement (all such Obligations
being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing Pledged Collateral shall be delivered to
and held by or on behalf of the Agent pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, including, in the case of the
Transferor Certificate, irrevocable instructions to the Trustee, instructing
the Trustee to make payment of all amounts due, or to become due, in respect to
the Transferor Interest and/or to the Holder of the Transferor Certificate
directly to the Agent upon a written (i) notice from the Agent that an Event of
Default under the Guaranty (an "Event of Default") has occurred and is
continuing, accompanied by a request from the Agent to make payment to the
Agent or (ii) request from the Agent, upon the occurrence and after the
continuance of an Early Amortization Event or the termination of the Trust, all
in form and substance satisfactory to the Agent. Capitalized terms used in
this Section 3 that are not defined in this Agreement or the Credit Agreement,
shall have the meaning ascribed to them in the Pooling And Servicing Agreement.
At any time after the occurrence of an Event of Default the Agent, at its
option, may have any or all of the Pledged Shares registered in its name or
that of its nominee, and the Grantor hereby covenants that, upon the Agent's
request, the Grantor will cause any or all issuers of Pledged Shares to effect
such registration. In addition, the Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged Shares
for certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. The Grantor represents and
warrants as follows:
(a) The chief place of business and chief executive
office of the Grantor and the office where Grantor keeps its records concerning
the Collateral are located at N.C. Highway 150 East, Cherryville, North
Carolina 28021.
(b) The Grantor is the legal and beneficial owner of the
Collateral free and clear of any lien, security interest, option or other
charge or encumbrance except for the security interest created by this
Agreement. The pledge and assignment of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Collateral, securing the payment of the Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken. The Grantor has no trade names.
(c) The Pledged Shares and the Transferor Certificate
have been duly authorized and validly issued and are fully paid and
non-assessable.
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95
(d) The Grantor is the Holder (as defined in the Pooling
And Servicing Agreement) of the Transferor Certificate.
(e) The Pledged Shares constitute the percentage
indicated on Schedule I of the issued and outstanding shares of capital stock
of all classes of the issuers thereof.
(f) No authorization, approval, consent, waiver or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or any third party is required or necessary for (i) the
creation and perfection of valid first priority Liens on the Collateral in
favor of the Agent and the Banks, including Citibank as issuer of the Letters
of Credit, or (ii) the exercise by the Agent of its rights (including, without
limitation, voting rights) provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement, except, with respect to
clause (ii), as may be required in connection with the disposition of Pledged
Collateral by laws affecting the offering and sale of securities generally).
(g) This Agreement creates a valid first priority Lien
upon the Collateral covered thereby enforceable against the Grantor and all
third parties in accordance with its terms, securing the payment of all Secured
Obligations and subject to no other Liens; all filings, recordings and other
actions necessary to perfect and protect such Liens have been duly made or
taken. Assuming that the Agent or a Bank, or a nominee or agent of either,
maintains continuous possession of the Pledged Collateral, and that proper
continuation statements under the Uniform Commercial Code are filed in a timely
fashion, no further action is or will be required to maintain the perfection
and priority of Liens created hereby.
SECTION 5. Further Assurances.
(a) The Grantor agrees that at any time and from time to
time, at the expense of the Grantor, the Grantor will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Agent may request, in order to
perfect and protect the assignment and security interest granted or purported
to be granted hereby or to enable the Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Grantor will: (i) mark conspicuously, at the
request of the Agent, each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Agent, indicating that such
Collateral is subject to the security interest granted hereby; (ii) if any
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to the Agent hereunder such note or instrument duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Agent; and (iii) execute and file such
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96
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Agent may
request, in order to perfect and preserve the assignment and security interest
granted or purported to be granted hereby.
(b) The Grantor hereby authorizes the Agent to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
(c) The Grantor will furnish to the Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
SECTION 6. Place of Perfection; Records. The Grantor shall keep its
chief place of business and chief executive office and the office where it
keeps its records concerning the Collateral at the location specified in
Section 4(a) hereof or, upon 30 days' prior written notice to the Agent, at
such other locations in a jurisdiction where all actions required by Section 5
shall have been taken with respect to the Collateral. The Grantor will hold
and preserve such records and will permit representatives of the Agent at any
time during normal business hours to inspect and make abstracts from such
records.
SECTION 7. Voting Rights; Dividends; Collections, Etc.
(a) So long as no Event of Default shall have occurred
and be continuing:
(i) The Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Shares or
any part thereof for any purpose not inconsistent with the terms of
this Agreement or the other Loan Documents; provided, however, that
the Grantor shall not exercise or fail to exercise any such right if,
in the Agent's judgment, such action or failure to act, as the case
may be, would have a Material Adverse Effect on the value of the
Pledged Shares or any part thereof; and, provided, further, that the
Grantor shall give the Agent at least 5 days written notice of the
manner in which it intends to exercise, or the reasons for failing to
exercise, any such right, other than the exercise of such right in
connection with the election of directors.
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97
(ii) The Grantor shall be entitled to receive and retain
any and all dividends and interest paid in respect of the Pledged
Shares; provided, in the event that any and all:
(A) dividends and interest paid or payable other
than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Shares in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in surplus, and
(C) cash paid, payable or otherwise distributed
in respect of principal of, or in redemption of, or in
exchange for, any Pledged Shares,
shall be, and shall be forthwith delivered to the Agent to hold as,
Pledged Collateral and shall, if received by the Grantor, be received
in trust for the benefit of the Agent, be segregated from the other
property or funds of the Grantor and be forthwith delivered to the
Agent as Pledged Collateral in the same form as so received (with any
necessary endorsement).
(iii) The Grantor shall be entitled to exercise any and all
rights pertaining to the Transferor Interest or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the
other Loan Documents; provided, howeve, that the Grantor shall not
exercise or fail to exercise any such right if, in the Agent's
judgment, such action or failure to act, as the case may be, would
have a Material Adverse Effect on the value of the Transferor Interest
(or any part thereof) or the Transferor Certificate and, provided,
further, that the Grantor shall give the Agent at least 5 days written
notice of the manner in which it intends to exercise, or the reasons
for failing to exercise, any such right.
(iv) The Grantor shall be entitled to receive and retain
such Collections (as defined in the Pooling And Servicing Agreement)
and other amounts payable, in respect to the Transferor Interest
and/or to the Holder of the Transferor Certificate as provided under
the terms of the Pooling And Servicing Agreement; provided, however,
that upon the occurrence and after the continuance of any Early
Amortization Event or the termination of the Trust, the Grantor shall
not be entitled to receive and retain such Collections and other
amounts payable under the terms of the Pooling And Servicing
Agreement, including, without limitation, distribution of any amounts
from the Carolina Freight Collection Accounts, Concentration Account,
Reserve Account, Transferor's Account,
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98
Trustee's Account and any Series Account, and any such amounts
received by the Grantor contrary to the provisions of paragraph (iv)
of this Section 7(a) shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of Grantor and shall be
forthwith paid over to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement). Capitalized
terms used in paragraph (iv) of this Section 7(a), that are not
defined in this Agreement or the Credit Agreement, shall have the
meaning ascribed to them in the Pooling And Servicing Agreement.
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) All rights of the Grantor to exercise the voting and
other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 7(a)(i) and to receive the dividends and
interest payments that it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) shall cease, and all such rights
shall thereupon become vested in the Agent who shall thereupon have
the sole right to exercise such voting and other consensual rights and
to receive and hold as Pledged Collateral such dividends and interest
payments.
(ii) All dividends and interest payments that are received
by the Grantor contrary to the provisions of paragraph (i) of this
Section 7(b) or any other Loan Document shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of
Grantor and shall be forthwith paid over to the Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
(iii) All rights of the Grantor to exercise the rights that
it would otherwise be entitled to exercise pursuant to Section
7(a)(iii) and to receive Collections and other amounts that it would
otherwise be authorized to receive and retain pursuant to Section
7(a)(iv) shall cease, and all such rights shall thereupon become
vested in the Agent who shall thereupon have the sole right to
exercise such rights and to receive and hold as Pledged Collateral
such Collections and other amounts.
(iv) All Collections and other amounts that are received
by the Grantor contrary to the provisions of paragraph (iii) of this
Section 7(b) or any other Loan Document shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of
Grantor and shall be forthwith paid over to the Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
(v) The Agent, at its option, may have the Transferor
Certificate registered (in the Certificate Register maintained
7
99
by the Trustee, as those terms are defined in the Pooling And
Servicing Agreement) in its name or that of its nominee, and Grantor
hereby covenants that, upon the Trustee's request, to execute and
deliver to the Trustee any documentation requested by the Trustee to
effect such registration.
SECTION 8. Transfers and Other Liens; Additional Shares.
(a) The Grantor shall not (i) sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option with respect
to, any of the Collateral, or (ii) create or permit to exist any Lien upon or
with respect to any of the Collateral except for the assignment and security
interest created by this Agreement.
(b) The Grantor agrees that it will (i) cause each issuer
of the Pledged Shares not to issue any stock of other equity securities or
securities convertible, exchangeable or redeemable for or into equity
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to the Grantor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or the equity securities or securities convertible, exchangeable or
redeemable for or into equity securities of each issuer of the Pledged Shares.
(c) The Grantor agrees that it will prevent each issuer
of Pledged Shares from merging with or consolidating into any other Person.
SECTION 9. Agent Appointed Attorney-in-Fact. The Grantor hereby
irrevocably appoints the Agent the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement (subject to the rights of the Grantor
under Section 7), including, without limitation, (a) to receive, indorse and
collect any drafts or other instruments, documents and chattel paper
representing any payment, dividend or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same, and (b)
to file any claims or take any action or institute any proceedings that the
Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce compliance with the rights of the Agent with
respect to any of the Collateral.
SECTION 10. Agent May Perform. If the Grantor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Grantor under Section 14(b).
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SECTION 11. Reasonable Care. The powers conferred on the Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon the Agent to exercise any such powers. Except for the
safe custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Agent or any Bank, including Citibank as issuer
of the Letters of Credit, has or is deemed to have knowledge of such matters,
or as to the taking of any necessary steps to preserve rights against any
parties or any other rights pertaining to any Collateral. The Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Agent accords its own property.
SECTION 12. Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code in effect in the State of New York at such
time (the "Code") (whether or not the Code applies to the affected Collateral)
and may also, without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the Agent
may deem commercially reasonable. The Grantor agrees that, to the extent
notice of sale shall be required by law, at least 10 days notice to the Grantor
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(b) Any cash held by the Agent as Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may, in the discretion
of the Agent, be held by the Agent as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to the Agent
pursuant to Section 14) in whole or in part by the Agent for the benefit of the
Banks, including Citibank as issuer of the Letters of Credit, against, all or
any part of the Secured Obligations in the manner
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101
specified in the Credit Agreement. Any surplus of such cash or cash proceeds
held by the Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the Grantor or to whomsoever may be lawfully
entitled to receive such surplus.
(c) The Agent may exercise any and all rights and
remedies of the Grantor under or in respect of the Collateral.
(d) All payments received by the Grantor in respect of
the Collateral shall be received in trust for the benefit of the Agent, shall
be segregated from other funds of the Grantor and shall be forthwith paid over
to the Agent in the same form as so received (with any necessary endorsement).
SECTION 13. Registration Rights. If the Agent shall determine to
exercise its right to sell all or any of the Pledged Shares pursuant to Section
12, the Grantor agrees that, upon request of the Agent, the Grantor will, at
its own expense:
(a) execute and deliver, and cause each issuer of the
Pledged Shares contemplated to be sold and the directors and officers thereof
to execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts and things, as may be necessary or, in the opinion
of the Agent, advisable to register such Pledged Shares under the provisions of
the Securities Act of 1933, as from time to time amended (the "Securities
Act"), and use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished and to make all amendments and
supplements thereto and to the related prospectus that, in the opinion of the
Agent, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Shares
under the state securities or "Blue Sky" laws and to obtain all necessary
approvals from the applicable Governmental Authority for the sale of the
Pledged Shares, as requested by the Agent;
(c) cause each such issuer to make available to its
security holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things
as may be necessary to make such sale of the Pledged Shares or any part thereof
valid and binding and in compliance with applicable law.
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SECTION 14. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Agent from and
against any and all claims, losses, liabilities and expenses arising out of, or
in connection with or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent such claim,
damage, loss, liability or expense results from the Agent's gross negligence or
wilful misconduct as determined by a final non-appealable judgment of a court
of competent jurisdiction.
(b) The Grantor will upon demand pay to the Agent the
amount of any and all reasonable costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that the Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent and the Banks, including Citibank as issuer of
the Letters of Credit, hereunder, (iv) the failure by the Grantor to perform or
observe any of the provisions hereof and (v) any action taken by the Agent
pursuant to Section 5 or 10 hereof.
(c) The foregoing provisions of this Section are in
furtherance and not in limitation of the Borrowers' obligations under Section
8.4 of the Credit Agreement.
SECTION 15. Amendments, Etc.
(a) No amendment or waiver of any provision of this
Agreement, and no consent to any departure by the Grantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) The waiver (whether expressed or implied) by the
Agent of any breach of the terms or conditions of this Agreement, and the
consent (whether expressed or implied) of any Bank, including Citibank as
issuer of the Letters of Credit, thereto, shall not prejudice any remedy of the
Agent or any Bank, including Citibank as issuer of the Letters of Credit, in
respect of any continuing or other breach of the terms and conditions hereof,
and shall not be construed as a bar to any right or remedy which the Agent, any
Bank or Citibank would otherwise have on any future occasion under this
Agreement.
(c) No failure to exercise nor any delay in exercising,
on the part of the Agent or the Banks, including Citibank as issuer of the
Letters of Credit, any right, power or privilege under this Agreement shall
operate as a waiver thereof. Further, no single or partial exercise of any
right, power or privilege under the
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Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
SECTION 16. Addresses for Notices. All notices and other
communication provided for hereunder shall be made in accordance with Section
13 of the Guaranty.
SECTION 17. Continuing Security Interest; Assignments Under the
Credit Agreement. This Agreement shall create a continuing security interest
in the Collateral and shall (a) remain in full force and effect until the later
of the cash payment in full of the Secured Obligations and the Termination
Date, (b) be binding upon Grantor, its successors and assigns and (c) inure,
together with the rights and remedies of the Agent hereunder, to the benefit of
the Agent, the Banks, including Citibank as issuer of the Letters of Credit,
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Bank may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitment,
Notes held by it and the Advances owing to it) to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Bank herein or otherwise, in each case as provided in
Section 8.7 of the Credit Agreement.
SECTION 18. Release and Termination. Upon the later of the cash
payment in full of the Secured Obligations and the Termination Date, the
assignment and security interest granted hereby shall terminate and all rights
to such of the Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof shall revert to the Grantor and the Grantor shall
be entitled to the return, upon its request and at its expense, of such of the
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof. Upon any such termination, the Agent will, at the Grantor's
expense, execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination.
SECTION 19. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. UNLESS
OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 8 OR
9 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF NEW YORK ARE USED HEREIN AS
THEREIN DEFINED.
SECTION 20. Consent to Jurisdiction; Waiver of Jury Trial.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT BY THE AGENT OR ANY BANK IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, GRANTOR HEREBY ACCEPTS
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FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTION.
(b) The Grantor agrees that a final judgment in any such
action or proceeding referred to in Section 20(a) hereof shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
(c) TO THE FULLEST EXTENT PERMITTED BY LAW, THE GRANTOR
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE CREDIT AGREEMENT, ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(ORAL OR WRITTEN), OR ACTIONS OF THE BANKS, THE BORROWERS OR THE GRANTOR. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS ENTERING INTO THE CREDIT
AGREEMENT.
SECTION 21. Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 22. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CAROLINA FREIGHT CORPORATION
By:
-------------------------
Name: John B. Yorke
Title: Vice President
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SCHEDULE I
Attached to and forming a part of that certain Pledge and Security Agreement,
dated as of March 15, 1994, made by Carolina Freight Corporation in favor of
Citibank, N.A., as Agent.
PLEDGED SHARES
Percentage
of Number
Certificate Outstanding Capital Par of
Issuer Class No(s) Stock Value Shares
------ ----- ----------- --------- ----- ------
1. Carolina Freight
Carriers Corporation Common 60 100% $100 1,000
2. Red Arrow Freight Lines,
Inc. Common 100 100% $100 1,000
3. Carrier Computer
Services, Inc. Common 1 100% $ 1 1,000
4. Innovative Logistics
Incorporated Common 1 100% $ 1 1,000
5. Cardinal Freight
Carriers, Inc. Common 3 100% $ 1 1,000
6. G.I. Trucking Company,
Inc. Common 39 100% $ 5 102,109
7. Motor Carrier Insurance,
Ltd. Common 13, 19 99.998% $ 1 319,992
8. The Complete Logistics
Company Common 1 100% No par 50
I-1
106
SCHEDULE II
Attached to and forming a part of that certain Pledge and Security Agreement,
dated as of March 15, 1994, made by Carolina Freight Corporation in favor of
Citibank, N.A., as Agent.
INTERCOMPANY NOTES
Maker Date Amount Date Payable
----- ---- ----------- ------------
1.
2.
3.
4.
5.
6.
7.
8.
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107
BORROWERS SECURITY AGREEMENT
Dated as of March 15, 1994
From
CAROLINA FREIGHT CARRIERS CORPORATION
and
RED ARROW FREIGHT LINES, INC.
as Grantors
to
Citibank, N.A.
as Agent
108
TABLE OF CONTENTS
Page
SECTION 1. Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Security for Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Grantors Remain Liable . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. Documents of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. As to Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 6. Delivery of Intercompany Notes . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 7. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 9. As to Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 11. Place of Perfection; Records . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 12. Transfers and Other Liens . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 13. Agent Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . 11
SECTION 14. Agent May Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 15. Reasonable Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 16. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 17. Indemnity and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 18. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 19. Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 20. Continuing Security Interest; Assignments Under the Credit Agreement . . . 14
SECTION 21. Release and Termination . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 23. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 24. Governing Law; Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 25. Consent to Jurisdiction; Waiver of Jury Trial . . . . . . . . . . . . . . 16
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BORROWERS SECURITY AGREEMENT
BORROWERS SECURITY AGREEMENT dated as of March 15, 1994 (the
"Agreement"), made by Carolina Freight Carriers Corporation ("CFCC"), a
corporation organized and existing under the laws of North Carolina, and Red
Arrow Freight Lines, Inc. ("RA"), a corporation organized and existing under
the laws of Texas (individually a "Grantor" and collectively the "Grantors"),
to Citibank, N.A. ("Citibank") as agent (the "Agent") for the Banks (including
Citibank as issuer of the Letters of Credit under the Credit Agreement) (the
"Banks") parties to the Credit Agreement (as defined below).
PRELIMINARY STATEMENTS.
(1) The Banks and the Agent have entered into a Secured Revolving
Credit and Letter of Credit Agreement dated as of March 15, 1994, with the
Grantors (said Agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "Credit Agreement"; the terms defined therein and
not otherwise defined herein being used herein as therein defined).
(2) It is a condition precedent to the making of Advances by the
Banks and the issuance of Letters of Credit (including deemed Letters of
Credit, pursuant to Section 2.13(a) of the Credit Agreement) by Citibank under
the Credit Agreement that the Grantors shall have granted the assignment and
security interests contemplated by this Agreement.
(3) The Grantors are the owners of the Intercompany Notes
described in Schedule I hereto.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to make Advances and Citibank to issue the Letters of Credit,
each Grantor hereby agrees with the Agent for its benefit and the benefit of
the Banks, including Citibank as issuer of the Letters of Credit, as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns and
grants to the Agent for its benefit and the benefit of the Banks, including
Citibank as issuer of the Letters of Credit, a security interest in all of the
Grantor's right, title and interest, whether now owned or hereafter acquired,
in and to the following, whether now or hereafter existing (collectively, the
"Collateral"):
(a) Other Receivables, being herein defined as all accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles and other obligations of any kind relating thereto, whether or not
arising out of or in connection with the sale or lease of goods or the
rendering of services, and
110
all rights in and to all security agreements, leases and other contracts
securing or otherwise relating to any such accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles or obligations, but
excluding Receivables (any and all such accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles and obligations being
defined for purposes of this Agreement as the "Accounts", and any and all such
leases, security agreements and other contracts being herein defined as the
"Related Contracts");
(b) all Equipment Property, and manuals, warranties, service
records and other records related thereto, whether in hard copy or electronic
format, including any software necessary to access and use such information,
and any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto (any and all of
such items being the "Equipment");
(c) all Intercompany Notes now owned or hereafter acquired by a
Grantor; and
(d) all cash and non-cash proceeds and products of any and all of
the foregoing Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (a), (b) and (c) of this
Section 1) and, to the extent not otherwise included, all payments under
insurance (whether or not the Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral (any and all of such
items being the "Proceeds"); and
(e) all cash collateral paid to the Agent for its benefit and the
benefit of the Banks, including Citibank as issuer of the Letters of Credit,
pursuant to Section 5.1(p) of the Credit Agreement and all cash collateral paid
to the Agent for the benefit of Citibank pursuant to Section 2.13(d) of the
Credit Agreement.
SECTION 2. Security for Obligations. This Agreement secures the
payment of all of the following obligations of the Grantors: all Obligations of
the Grantors now or hereafter existing under the Loan Documents (including,
without limitation, any deposit obligation in respect thereof as set forth in
the Credit Agreement), including any extensions, modifications, substitutions,
amendments and renewals thereof in accordance with their terms, whether for
principal (including, without limitation, reimbursement for amounts drawn under
Letters of Credit, including any deemed Letters of Credit, pursuant to Section
2.13(a) of the Credit Agreement issued by Citibank), interest (including,
without limitation, interest, as provided in the Credit Agreement, after the
filing of a petition initiating
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any proceeding referred to in Section 6.1(e) of the Credit Agreement), fees,
breakage costs, expenses, indemnification or otherwise, and all obligations of
the Grantors now or hereafter existing under this Agreement (all such
Obligations being the "Secured Obligations").
SECTION 3. Grantors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Agent of any of the rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral and (c) neither the Agent nor any Bank, including Citibank as issuer
of the Letters of Credit, shall have any obligation or liability with respect
to the contracts and agreements which constitute part of the Collateral by
reason of this Agreement, nor shall the Agent or any Bank, including Citibank
as issues of the Letters of Credit, be obligated to perform any of the
obligations or duties of the Grantors thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 4. Documents of Title. (a) Agent will, at the
Grantor's expense, file an application for and obtain a certificate of title
for each Titled Vehicle, designating Agent as first lienholder, and a
certificate of registration issued in the name of the Agent. Each Grantor
shall, at its expense, take such action as shall be necessary from time to time
to avoid suspension or revocation of any certificates of title and to renew
and, unless otherwise notified by the Agent, maintain all certificates of
registration. For purposes of administration, each Grantor may, unless
otherwise notified by the Agent, at Grantor's expense, file an application for
and obtain the first certificate of title for each Titled Vehicle designating
Grantor at Grantor's address as owner, and whoever the Agent shall designate as
first lienholder, and obtain a certificate of registration issued in the name
of Grantor. If any Grantor is required to obtain any new certificate of title
or of registration, unless otherwise notified by the Agent, the Grantor shall,
at its expense and with written notice to the Agent of such action, obtain such
new certificate of title or of registration in the form described above.
(b) Unless otherwise notified by the Agent, each Grantor shall
maintain in a safe and secure manner at the Agent's Leased Space (as defined in
Section 4(c) hereof) all original title and registration documentation, and
copies of applications for title relating to the Titled Vehicles. As soon as
available, and in any event within 30 days after the end of each Accounting
Period, each Grantor shall deliver to the Agent a complete list of all
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112
Titled Vehicles that are subject to this Agreement, indicating each Titled
Vehicle that has been added or deleted since the list most recently delivered
to the Agent. In addition, each Grantor shall promptly forward to the Agent, by
mail or fax, copies or originals of any or all such documents and applications
at the Agent's request. Upon the request of the Agent, the Grantor shall
deliver to the Agent all the foregoing documentation for safekeeping by the
Agent.
(c) As partial consideration for the Advances made by the Banks
and the issuance of Letters of Credit by Citibank under the Credit Agreement,
the Grantors hereby lease to the Agent the space designated in Schedule II
hereto (the "Agent's Leased Space") for the sole purpose of enabling the Agent
and its agents and attorneys-in-fact to maintain, preserve and have control
over all the documentation described in Section 4.1(b) hereof. Such leases
shall continue in existence until the cash payment in full (after the
Termination Date) of the Secured Obligations. During such time, the Agent
shall have full rights of ingress and egress to the Agent's Leased Space at all
times (during normal business hours and upon reasonable notice to the Grantors
at any other time) and shall have complete access to such documentation. The
Agent's Leased Space shall be clearly designated as such, and all cabinets,
folders, documentation and other storage facilities located within such space
shall be clearly designated as belonging to and subject to the exclusive
control of the Agent. The Agent's Leased Space shall not be used for any other
purpose by the Grantors, and no employee or agent of the Grantors shall have
access thereto other than Authorized Agents (as defined in Section 4.1(d)
hereof).
(d) The employees of each Grantor who have been or will be authorized
to apply for, file, retrieve, audit, or release the Lien of the Agent for the
benefit of the Banks on the titles to Titled Vehicles, as provided in Section
11 hereof, are only those employees in each Grantor's title department covered
by a certificate of insurance, substantially in the form of the certificate of
insurance provided to the Agent and the Banks on the Closing Date in accordance
with Section 3.1(j)(x)(3) of the Credit Agreement, exclusively for the benefit
of the Agent and the Banks (including Citibank as issuer of the Letters of
Credit under the Credit Agreement), to the extent of the Agent's priority right
to payment under the Employee Dishonesty Policy, in the amount of not less than
$1,000,000 issued by a reputable bonding company rated by Best Bonding Company
as A+ or better with respect to their respective responsibilities relating to
titles to Titled Vehicles or otherwise (such employees being the "Authorized
Agents"). Each Authorized Agent shall be qualified to perform the
responsibilities delegated to such agent. No senior personnel of either
Grantor has any reason to question the veracity, integrity or abilities of any
of the Authorized Agents. The Grantors will upon request provide the Agent and
the Banks a
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list of the names of each Authorized Agent. Upon Grantors full and final
satisfaction of their Obligations hereunder to the Agent and the Banks, the
Agent reasonably promptly following the Grantors' written request therefor
shall notify the issuer of the Employee Dishonesty Policy, that the Agent for
the benefit of the Agent and the Banks is no longer entitled to the benefits of
such policy.
(e) The appointment of each Authorized Agent pursuant to Section
4(d) is subject to modification or revocation at any time by the Agent in its
sole discretion and shall automatically terminate upon the occurrence and
during the continuance of an Event of Default. During normal business hours
and upon reasonable notice to the Grantors at any other time, in its sole
discretion, the Agent shall have the right to enter the Agent's Leased Space
and to remove therefrom any and all original title and registration
documentation and any copies of applications for title relating to the Titled
Vehicles. Unless otherwise notified by the Agent, however, the revocation of
an Authorized Agent's appointment or the Agent's removal of documentation from
the Agent's Leased Space shall not relieve the Grantors from their continuing
duty to maintain and to update all certificates of registration, pursuant to
Sections 4(a) and 4(b) hereof. In the event of revocation of the appointment
of all Authorized Agents or the removal of any original title and registration
documentation by the Agent, the Agent shall furnish copies of, or copy or make
available to the Grantors for copying, all at Grantors' expense, the affected
documentation.
SECTION 5. As to Accounts. (a) Except as otherwise
provided in this subsection (a), each Grantor shall, at its own expense, and in
accordance with customary business practices, collect all amounts due or to
become due such Grantor under the Accounts. In connection with such
collections, the applicable Grantor may take (and, upon the occurrence and
during the continuance of an Event of Default, at the Agent's direction, shall
take) such action as the Grantor or, upon the occurrence and during the
continuance of an Event of Default, the Agent may deem necessary or advisable
to enforce collection of the Accounts; provided, however, that the Agent shall
have the right at any time, upon the occurrence and during the continuance of
an Event of Default and upon written notice to the Grantors of its intention to
do so, to notify the obligors under any Accounts of the assignment of such
Accounts to the Agent and to direct obligors to make payment of all amounts due
or to become due to the Grantor thereunder directly to the Agent and, upon such
notification and at the expense of the Grantors, and so long as any Event of
Default shall have occurred and be continuing, to enforce collection of any
such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the applicable Grantor
might have done. After receipt by the Grantors of the notice from the Agent
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referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including instruments) received by a Grantor in respect of the
Accounts shall be received in trust for the benefit of the Agent hereunder,
shall be segregated from other funds of the applicable Grantor and shall be
forthwith paid over to the Agent in the same form as so received (with any
necessary endorsement) and (ii) the applicable Grantor shall not adjust, settle
or compromise the amount or payment of any Account, release wholly or partly
any obligor thereof, or allow any credit or discount thereon.
(b) The Agent may in its own name or in the name of others
communicate from time to time with any obligor (but no more than once in any
fiscal quarter) in order to verify with them the existence, amount and terms of
their obligations to the applicable Grantor. Upon reasonable prior notice to
the applicable Grantor (unless a Default has occurred and is continuing, in
which case no notice is necessary), the Agent shall also have the right to make
test verifications of the Accounts and Related Contracts in any manner and
through any medium that it reasonably considers advisable, and the Grantor
agrees to furnish all such assistance and information as the Agent reasonably
may require in connection therewith. At any time and from time to time, upon
the Agent's request and at the expense of the Grantor, the Grantor will
furnish, or will cause independent public accountants or others satisfactory to
the Agent to furnish, to the Agent reports showing reconciliations and test
verifications of, and aging of, and trial balances for, the Accounts and
Related Contracts.
SECTION 6. Delivery of Intercompany Notes. All Intercompany
Notes owned by the Grantors shall be delivered to and held by or on behalf of
the Agent pursuant hereto and shall be in suitable form for transfer by
delivery, and shall be endorsed in blank.
SECTION 7. Representations and Warranties. Each Grantor
represents and warrants as to itself and the Collateral in which it has an
interest as follows:
(a) Each location at which a Grantor stores or maintains Equipment
is specified opposite its name in Schedule 4.1(ee) of the Credit Agreement.
The chief place of business and chief executive office of each Grantor is
located at N.C. Highway 150 East, Cherryville, North Carolina 28021. Each
Grantor keeps its records concerning the Accounts and Related Contracts and all
originals of all chattel paper that evidence Accounts that have not been
delivered to the Agent hereunder only at its chief executive office or at
locations which are owned by such Grantor. None of the Accounts is evidenced
by a promissory note, other instrument or chattel paper except for promissory
notes, other
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instruments and chattel paper which have been delivered to the Agent pursuant
to the terms of this Agreement.
(b) Each Grantor is the legal and beneficial owner of the
Collateral in which it is granting a security interest free and clear of any
Lien except for the Liens created by this Agreement and the Liens described in
Schedule 4.1(cc) to the Credit Agreement. No effective financing statement or
other instrument similar in effect covering all or any part of the Collateral
is on file in any recording office, except (i) such as may have been filed in
favor of the Agent relating to this Agreement, (ii) filings with respect to the
Liens described on Schedule 4.1(cc) to the Credit Agreement and (iii) as to
which executed termination statements on Form UCC-3 have been delivered to
Citibank. Each Grantor has the trade names listed opposite its name on
Schedule III and has not used, or operated under, any other name during the
last six years.
(c) Except as listed on Schedule 4.1(cc) to the Credit Agreement,
each Grantor has exclusive possession and control of the Equipment in which it
is granting a security interest.
(d) Each Account and Related Contract is genuine and in all
respects what it purports to be, and each Account represents the legal, valid
and binding obligation of the account debtor to pay for the performance of
labor or services, the sale or lease and delivery of the merchandise listed
therein, and/or the advance of funds. The amount represented by the Grantors
to the Agent from time to time as owing by each account debtor or by all
account debtors in respect of the Accounts will at all times be the correct
amount actually and unconditionally owing by such account debtor thereunder to
the best of the applicable Grantor's knowledge, except to the extent, if any,
that such account debtor may be entitled to normal trade discounts, adjustments
and allowances.
(e) No authorization, approval, consent, waiver or other action
by, and no notice to or filing with, any governmental authority or regulatory
body or any third party is required or necessary for (i) the creation and
perfection of valid first priority Liens on the Collateral in favor of the
Agent and the Banks, including Citibank as issuer of the letters of Credit, or
(ii) the exercise by the Agent of its rights (including, without limitation,
voting rights) provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except, with respect to clause (i), for
the authorizations, approvals, consents, waivers, actions and filings set forth
in Schedule 4.1(d) to the Credit Agreement, all of which have been duly
obtained, taken, given or made and are in full force and effect, except as set
forth on such Schedule.
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(f) This Agreement creates a valid first priority Lien upon the
Collateral covered thereby, enforceable against the Grantors and all third
parties in accordance with its terms, securing the payment of all Secured
Obligations and subject to no other Liens except as described in Schedule
4.1(cc) to the Credit Agreement, and all filings, recordings and other actions
necessary to perfect and protect such Liens have been duly made or taken.
Assuming that the Agent, or a nominee or agent of the Agent, is named as a
lienholder on all documents of title evidencing ownership of Titled Vehicles
and such documents are filed with the appropriate state authorities and that
proper continuation statements under the Uniform Commercial Code are filed in a
timely fashion, no further action is or will be required to maintain the
perfection and priority of Liens created hereby.
SECTION 8. Further Assurances. (a) Each Grantor agrees that
from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may request, in order to perfect and
protect the assignment and security interest granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, each Grantor will: (i) except with respect to bills, invoices or
other ordinary course communications or documents otherwise included within the
following classifications of Collateral, at Agent's request mark conspicuously
each certificate of title of each vehicle included in the Equipment, each
chattel paper included in the Accounts, each Related Contract, and, at the
request of the Agent, each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Agent, indicating that such
document, certificate of title, chattel paper, Related Contract or Collateral
is subject to the security interest granted hereby; (ii) if any Collateral
shall be evidenced by a promissory note or other instrument or chattel paper,
deliver and pledge to the Agent hereunder such note or instrument or chattel
paper duly indorsed, without recourse or warranty, and accompanied by
duly, executed instruments of transfer or assignment, all in form and substance
satisfactory to the Agent; and (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, and obtain such consents or waivers from third parties, as may be
necessary or desirable, or as the Agent may request, in order to perfect and
preserve the assignment and security interest granted or purported to be
granted hereby.
(b) The Grantor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic or other reproduction of this
Agreement or any
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financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) The Grantor will furnish to the Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
SECTION 9. As to Equipment. (a) Except for the use of Equipment
Property in the ordinary course of business, each Grantor shall keep Equipment
at the locations specified in Schedule 4.1(ee) to the Credit Agreement.
Notwithstanding the foregoing, the Grantors may, upon 30 days' prior written
notice to the Agent, keep Equipment at such other places in a jurisdiction
where all action required by Section 8 shall have been taken with respect to
the Equipment to be kept in such location.
(b) Each Grantor shall pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment, provided, however, the Grantors shall not be required to pay or
discharge any tax, assessment, charge or claim that is being contested
diligently in good faith and by proper proceedings and as to which adequate
reserves are being maintained in accordance with GAAP.
(c) The Grantors shall cause the Equipment to be operated in
accordance with the applicable manufacturer's manual or instructions by
qualified and duly authorized personnel only, in accordance with applicable
laws, ordinances and regulations and for business purposes only. The Equipment
shall not be used in the transportation of radioactive materials, hazardous
waste or materials, explosives, gases or liquids, except as necessary in the
normal course of Grantors' business. Each Grantor shall, at its own cost and
expense, repair and maintain or cause to be repaired and maintained, the
Equipment so as to keep it in as good condition as on the date hereof or when
hereafter delivered to the Grantor, ordinary wear and tear excepted. Grantor
agrees, at its own cost and expense, to cause each item of Equipment to be kept
numbered with the identification or serial number thereof specified from time
to time to the Agent pursuant to Section 4(b) and marked in such manner as may
be reasonably requested by the Agent and/or as may be required by applicable
law to indicate the Agent's interest therein.
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SECTION 10. Insurance. (a) Each Grantor shall, at its own
expense, maintain insurance with respect to the Equipment in such amounts,
against such risks, in such form and with such insurers, as may be required
under Section 5.1(c) of the Credit Agreement. Each policy for liability
insurance shall provide for all losses to be paid to the Agent and the
applicable Grantor as their interests may appear, and each policy for property
damage insurance shall provide for all losses (except for losses of less than
$1,000,000 per occurrence) to be paid directly to the Agent. Each such policy
shall in addition (i) name the applicable Grantor and the Agent as insured
parties thereunder (without any representation or warranty by or obligation
upon the Agent) as their interests may appear, (ii) contain the agreement by
the insurer that any loss thereunder shall be payable to the Agent
notwithstanding any action, inaction or breach of representation or warranty by
the Grantor, (iii) provide that there shall be no recourse against the Agent
for payment of premiums or other amounts with respect thereto and (iv) provide
that at least 10 days' prior written notice of cancellation or of lapse shall
be given to the Agent by the insurer. Each Grantor shall, if so requested by
the Agent, deliver to the Agent original or duplicate policies of such
insurance and, as often as the Agent may reasonably request, a report of a
reputable insurance broker with respect to such insurance. Further, each
Grantor shall, at the request of the Agent, duly exercise and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 8 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance maintained by the
Grantors pursuant to this Section 10 may be paid directly to the Person who
shall have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment when subsection (c) of this Section 10 is not
applicable, the applicable Grantor shall make or cause to be made the necessary
repairs to or replacements of such Equipment, and any proceeds of insurance
maintained by the Grantor pursuant to this Section 10 shall be paid to the
Grantor as reimbursement for the costs of such repairs or replacements. If
such repairs or replacements have not been made within 180 days after the
receipt of such insurance proceeds by the Grantor or the Agent, such proceeds
shall be paid over to the Agent (to the extent not then held by the Agent) and
shall be retained by the Agent as additional security for the Secured
Obligations until the Grantor has satisfied its obligations with respect
thereto.
(c) Upon the occurrence and during the continuance of any Event of
Default, all insurance payments in respect of such Equipment shall be paid to
and applied by the Agent as specified in Section 16(b).
(d) The Grantors shall not use, operate or locate the Equipment or
allow the Equipment to be used, operated or located
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in any area excluded from coverage by any insurance required under this
Agreement.
SECTION 11. Place of Perfection; Records. Each Grantor shall
keep its place of business, or, if the Grantor has more than one place of
business, the chief place of business and chief executive office of the
Grantor, and the office where it keeps its records concerning the Collateral
and all originals of all chattel paper that evidence Accounts, at the locations
therefor specified in Section 7(a) or, upon 30 days' prior written notice to
the Agent, at such other locations in a jurisdiction where all actions required
by Section 8 shall have been taken with respect to the Collateral. The Grantor
will hold and preserve such records and chattel paper and will permit
representatives of the Agent at any time during normal business hours to
inspect and make abstracts from such records and chattel paper. All records
and documents relating to Titled Vehicles shall be maintained at the Agent's
Leased Space as provided in Section 4.
SECTION 12. Transfers and Other Liens. The Grantors shall not (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of any of
the Collateral, except for sales, assignments and other dispositions of
Equipment that is obsolete, worn out or requires replacement in the ordinary
course of business, subject to the restriction that not more than 100 Titled
Vehicles may be sold, assigned or disposed of in any Accounting Period, or (ii)
create or suffer to exist any Lien upon or with respect to any of the
Collateral except for the assignment and security interest created by this
Agreement. Subject to the terms and conditions of Section 4 hereof, and so
long as no Event of Default has occurred and is continuing, the Agent hereby
appoints the Authorized Agents as the Agent's attorneys-in-fact to deliver
releases and other documentation necessary to release the Lien of the Agent on
any Titled Vehicle that is sold, assigned or otherwise disposed of in
accordance with clause (i) above. Such appointment shall automatically
terminate upon the occurrence and during the continuance of an Event of
Default.
SECTION 13. Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Agent the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor
or otherwise, from time to time in the Agent's discretion to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement (subject to the rights of the Grantor
under Section 5), including, without limitation, (a) to receive, indorse and
collect any drafts or other instruments, documents and chattel paper
representing any payment in respect of the Collateral or any part thereof and
to give full discharge for the same, and (b) to file any claims or take any
action or institute any proceedings that the Agent may
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deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Agent with respect to any of the
Collateral.
SECTION 14. Agent May Perform. If any Grantor fails to perform
any agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by such Grantor under Section 17(b).
SECTION 15. Reasonable Care. The Agent shall not be liable to
the Grantors, the Banks, including Citibank as issuer of the Letters of Credit,
or any other Person for any act or omission on its part except for any such act
or omission which is the result of its gross negligence or willful misconduct.
The powers conferred on the Agent hereunder are solely to protect its interest
in the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession and
the accounting for monies actually received by it hereunder, the Agent shall
have no duty as to any Collateral, whether or not the Agent, or any Bank,
including Citibank as issuer of the Letters of Credit, has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Agent accords its
own property.
SECTION 16. Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code in effect in the State of New York at such
time (the "Code") (whether or not the Code applies to the affected Collateral)
and also may (i) require the applicable Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of the Agent forthwith,
assemble all or part of the Collateral as directed by the Agent and make it
available to the Agent at a place to be designated by the Agent that is
reasonably convenient to both parties and (ii) subject to any applicable state
law requirements governing foreclosure on Titled Vehicles, without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker's board or at
any of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agent may deem commercially
reasonable. Each Grantor agrees that, to the extent notice of sale shall be
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required by law, at least ten days' notice to the applicable Grantor of the
time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. The Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) Any cash held by the Agent as Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
the Agent, be held by the Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Agent pursuant
to Section 17) in whole or in part by the Agent for the benefit of the Banks,
including Citibank as issuer of the Letters of Credit, against all or any part
of the Secured Obligations in the order specified in the Credit Agreement. Any
surplus of such cash or cash proceeds held by the Agent and remaining after
payment in full of all the Secured Obligations shall be paid over to the
applicable Grantor or to whomsoever may be lawfully entitled to receive such
surplus.
(c) The Agent may exercise any and all rights and remedies of the
Grantor under or in respect of the Collateral.
(d) All payments received by any Grantor in respect of the
Collateral shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Grantor and shall be forthwith paid over to
the Agent in the same form as so received (with any necessary endorsement).
SECTION 17. Indemnity and Expenses. (a) The Grantors jointly and
severally agree to indemnify the Agent from and against any and all claims,
losses, liabilities and expenses arising out of, or in connection with, or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except to the extent such claim, damage, loss, liability or
expense results from the Agent's gross negligence or wilful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction.
(b) The Grantors, jointly and severally, will upon demand pay to
the Agent the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation of, or the sale of, collection from
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent and the Banks,
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including Citibank as issuer of the Letters of Credit, hereunder (iv) the
failure by any Grantor to perform or observe any of the provisions hereof or
(v) any action taken by the Agent pursuant to Section 8 or 14 hereof.
(c) The foregoing provisions of this Section are in furtherance
and not in limitation of the Borrower's obligations under Sections 7.5 and 8.4
of the Credit Agreement.
SECTION 18. Amendments, Etc. (a) No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
(b) The waiver (whether expressed or implied) by the Agent of any
breach of the terms or conditions of this Agreement, and the consent (whether
expressed or implied) of any Bank, including Citibank as issuer of the Letters
of Credit thereto, shall not prejudice any remedy of the Agent, any Bank or
Citibank in respect of any continuing or other breach of the terms and
conditions hereof, and shall not be construed as a bar to any right or remedy
which the Agent or any Bank, including Citibank as issuer of the Letters of
Credit, would otherwise have on any future occasion under this Agreement.
(c) No failure to exercise nor any delay in exercising, on the
part of the Agent or the Banks, including Citibank as issuer of the Letters of
Credit, any right, power or privilege under this Agreement shall operate as a
waiver thereof; further, no single or partial exercise of any right, power or
privilege under this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
SECTION 19. Addresses for Notices. All notices and other
communications provided for hereunder shall be made in accordance with Section
8.2 of the Credit Agreement.
SECTION 20. Continuing Security Interest; Assignments Under the
Credit Agreement. This Agreement shall create a continuing security interest
in the Collateral and shall (a) remain in full force and effect until the later
of the cash payment in full of the Secured Obligations and the Termination
Date, (b) be binding upon the Grantors, their respective successors and assigns
and (c) inure, together with the rights and remedies of the Agent hereunder, to
the benefit of the Agent, the Banks, including Citibank as issuer of the
Letters of Credit, and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Bank may
assign or otherwise transfer all or any portion of its
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rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, Notes held by it and the
Advances owing to it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
such Bank herein or otherwise, in each case as provided in Section 8.7 of the
Credit Agreement.
SECTION 21. Release and Termination. (a) Upon any sale of any
item of Collateral in accordance with the terms of the Credit Agreement (other
than Titled Vehicles, which are subject to Sections 4 and 12), the Agent will,
at the Grantors' expense, execute and deliver to the applicable Grantor, such
documents as the Grantor shall reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted
hereby; provided, however, that (x) at the time of such request and such
release no Default shall have occurred and be continuing, (y) the Grantor shall
have delivered to the Agent, at least five Business Days prior to the date of
the proposed release or such shorter period acceptable to the Agent, a written
request for release describing the item of Collateral and the terms of the
sale, lease, transfer or other disposition in reasonable detail, including the
price thereof and any expenses in connection therewith, together with a form of
release for execution by the Agent and a certification by the Grantor to the
effect that the transaction is in compliance with the Credit Agreement and as
to such other matters as the Agent may request and (z) any proceeds of any such
sale required to be applied to the prepayment of Advances or reduction in
Commitments in accordance with the Credit Agreement shall be so applied.
(b) Upon the cash payment in full (after the Termination Date) of
the Secured Obligations, the assignment and security interest granted hereby
shall terminate and all rights to such of the Collateral as shall not have been
sold or otherwise applied pursuant to the terms hereof shall revert to the
applicable Grantor. Upon any such termination, the Agent will, at the
Grantors' expense, execute and deliver to the applicable Grantor such documents
as the Grantor shall reasonably request to evidence such termination.
SECTION 22. Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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SECTION 23. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
SECTION 24. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
UNLESS OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN
ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE OF THE STATE OF NEW YORK ARE USED
HEREIN AS THEREIN DEFINED.
SECTION 25. Consent to Jurisdiction; Waiver of Jury Trial.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT BY THE AGENT OR ANY BANK IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, GRANTOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTION.
(b) EACH GRANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer hereunto duly authorized as of the date
first above written.
CAROLINA FREIGHT CARRIERS
CORPORATION
By:
---------------------------
Name: John B. Yorke
Title: Secretary
RED ARROW FREIGHT LINES, INC.
By:
---------------------------
Name: John B. Yorke
Title: Secretary
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SCHEDULE I
INTERCOMPANY NOTES
Owned by CFCC:
Owned by RA:
SCHEDULE I-1
126
SCHEDULE II
AGENT'S LEASED SPACE
SCHEDULE II-1
127
SCHEDULE III
TRADE NAMES
Carolina Salvage.
SCHEDULE III-1
128
MORTGAGE, MORTGAGE DEED, OPEN-END MORTGAGE,
DEED TO SECURE DEBT, DEED OF TRUST,
FIXTURE FINANCING STATEMENT, ASSIGNMENT OF LEASES
AND RENTS AND FINANCING STATEMENT
BY
CAROLINA FREIGHT CARRIERS CORPORATION,
a North Carolina Corporation
and
RED ARROW FREIGHT LINES, INC.,
a Texas corporation
(collectively, "Mortgagor")
AND
BETWEEN
CITIBANK, N.A., a national banking association,
for itself and as agent for
THE BANKS HEREIN NAMED
(collectively, the "Mortgagee")
________________________________________________________________________________
THIS INSTRUMENT WAS PREPARED BY
AND AFTER RECORDING RETURN TO:
Catherine P. Powell
Hunton & Williams
NationsBank Plaza
600 Peachtree Street, N.E.
Suite 4100
Atlanta, Georgia 30308
129
MORTGAGE, MORTGAGE DEED, OPEN-END MORTGAGE,
DEED TO SECURE DEBT, DEED OF TRUST,
FIXTURE FINANCING STATEMENT, ASSIGNMENT OF LEASES AND
RENTS AND FINANCING STATEMENT
A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. A POWER OF SALE MAY ALLOW
THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT
IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS INSTRUMENT (AS
SUCH TERMS ARE HEREINAFTER DEFINED), SUBJECT TO APPLICABLE STATE LAWS.
THIS MORTGAGE, MORTGAGE DEED, OPEN-END MORTGAGE, DEED TO SECURE DEBT, DEED OF
TRUST, FIXTURE FINANCING STATEMENT, ASSIGNMENT OF LEASES AND RENTS AND
FINANCING STATEMENT (hereinafter referred to as the "Mortgage"), is entered
into as of the 17th day of March, 1994, by and between CAROLINA FREIGHT
CARRIERS CORPORATION, a North Carolina corporation ("CFCC") and RED ARROW
FREIGHT LINES, INC., a Texas corporation ("RAFLI"), the mortgagor, grantor and
trustor hereunder (CFCC and RAFLI are hereinafter collectively called
"Mortgagor", or in the context of certain representations, warranties and
covenants made herein with respect to certain of the Mortgaged Property (as
such term is hereinafter defined) such term shall mean and be the entity in
which fee simple title is vested), whose address for all purposes hereunder is
N.C. Highway, 150 East, P.O. Box 697, Cherryville, North Carolina 28021; and
CITIBANK, N.A., a national banking association (for itself and as Agent for the
Banks (as defined herein), whose address for all purposes hereunder is c/o
Citicorp North America, Inc., 400 Perimeter Center Terrace, Suite 600, Atlanta,
Georgia 30346, Attention: Mr. Kirk P. Lakeman, the mortgagee hereunder to the
extent that this Mortgage operates as a mortgage, the grantee hereunder to the
extent that this Mortgage operates as a deed to secure debt, and the
beneficiary hereunder to the extent this Mortgage operates as a deed of trust
(herein called "Mortgagee"), which term shall include each of its successors
and assigns). This Mortgage secures the Obligations (as defined below), it
being the intention of the parties hereto that this Mortgage shall be deemed an
open and continuing lien instrument to secure all such Obligations now existing
or hereafter arising regardless of the extinguishment and payment of any one or
more obligations owed to Mortgagee. This Mortgage secures future advances made
by Mortgagee to Mortgagor and each future advance, whether or not evidenced by
a note, and each note or other instrument evidencing the same, shall be secured
hereby. All provisions of this Mortgage shall apply to each future advance as
well as to all other Obligations secured hereby, whether or not evidenced by a
note.
This Mortgage secures the Obligations, which shall be construed in all cases to
consist of, among other obligations, the covenants of Mortgagor set forth in,
and the amounts advanced to or for the account, use or benefit of Mortgagor
from time to time pursuant to, the Credit Agreement (as defined below) or
pursuant to any of the
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Loan Documents (as defined below) or any other papers evidencing, securing or
otherwise relating to any of the Indebtedness (as defined below), the aggregate
amount of the Indebtedness actually outstanding at any particular time being
subject to fluctuations up or down due to further advances of loan proceeds
and/or future repayments of such loan proceeds from time to time over
the term of such Indebtedness (all of which advances and repayments are hereby
declared to be contemplated by the Mortgagor and the Mortgagee at the time this
Mortgage is executed). The maximum amount secured hereby at any one time shall
not exceed $45,000,000.00 which is the maximum amount of original principal
indebtedness secured hereby, and the maturity of the Indebtedness is June 30,
1996.
W I T N E S S E T H: That,
ARTICLE 1
DEFINITIONS
1.1 Definitions: As used herein, the following terms shall have
the following meanings; capitalized terms used herein which are not otherwise
defined herein shall have the meanings ascribed to them in the Credit
Agreement:
Assignment: The assignment and delivery to Mortgagee as security for
the payment and performance of the Obligations of all of the rights,
titles, interests and estates of Mortgagor in and to all of the
following: (a) the Leases, (b) the Rents, (c) the Fixtures and (d) the
Personalty.
Banks: The "Banks" as defined in the Credit Agreement.
Building: Any and all buildings, parking structures, utility sheds,
workrooms, air conditioning towers, open parking areas, and other
structures or improvements, and any and all additions, alterations,
betterments or appurtenances thereto, now or at any time hereafter
situated, placed or constructed upon the Land or any part thereof.
Citibank: Citibank, N.A. for itself or as agent for the Banks.
Credit Agreement: The Secured Revolving Credit and Letter of Credit
Agreement dated of even date herewith by and among the Mortgager, the
Mortgagee (for itself and as agent for the Banks), as the same may be
amended, supplemented, or otherwise modified from time to time, which
is incorporated herein by this reference.
Deed to Secure Debt State: Any state defined as a "Deed to Secure Debt
State" in Section 2.3 hereof.
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Deed of Trust State: Any state defined as a "Deed of Trust State" in
Section 2.3 hereof.
Default Interest Rate: The rate of interest payable pursuant to the
terms of Section 2.7(b) of the Credit Agreement.
Expenses: All out-of-pocket reasonable costs and expenses (including
reasonable fees and expenses of counsel court costs) incurred, and all
advances made, by the Mortgagee or any trustee, co-trustee or agent of
the Mortgagee pursuant to the provisions of, or in furtherance of the
Mortgagee's duties or rights under, the Loan Documents, including
without limitation, expenses of retaking, holding, preparing for sale
or lease or selling and/or leasing the Mortgaged Property, but
excluding any of the same specifically described in the Loan Documents
as being the responsibility of the Mortgagee.
Fixtures: Equipment now owned or the ownership of which is hereafter
acquired by Mortgagor which is so related to the Land and Buildings
forming part of the Mortgaged Property that it is deemed real property
under the laws of the State, including, without limitation, all
building or construction materials intended for construction,
reconstruction, alteration or repair of or installation on the
Mortgaged Property, construction equipment, appliances, machinery,
equipment, fittings, apparatus, fixtures and other now owned or
hereafter acquired by Mortgagor and now or hereafter attached to,
installed or used in connection with (temporarily or permanently) any
of the Buildings or the Land, including, but not limited to, engines,
devices for the operation of pipes, plumbing, cleaning, call and
sprinkler systems, fire extinguishing apparatus and equipment, water
tanks, heating, ventilating, plumbing, laundry, incinerating, air
conditioning and air cooling equipment and systems, gas and electric
machinery, appurtenances and equipment, pollution control equipment,
disposals, dishwashers, refrigerators and ranges, recreational
equipment and facilities of all kinds, and water, gas, electrical,
storm and sanitary sewer facilities, utility lines and equipment
(whether owned individually or jointly with others, and, if owned
jointly, to the extent of Mortgagor's interest therein) and all other
utilities whether or not situated in easements, all water tanks, water
supply, water power sites, fuel stations, fuel tanks, fuel supply, and
all other structures, together with all accessions, appurtenances,
additions, replacements, betterments and substitutions for any of the
foregoing and the proceeds thereof. Notwithstanding the foregoing,
"Fixtures" shall not include any property which tenants are entitled
to remove pursuant to their Leases.
Impositions: All real estate and personal property taxes; water, gas,
sewer, electricity and other utility rates and
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charges; charges for any easement, license or agreement maintained for
the benefit of the Mortgaged Property; and all other taxes, levies,
claims, charges and assessments, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever which at any time prior to or after the execution hereof
may be assessed, levied or imposed upon the Mortgaged Property or the
Rents or the ownership, use, occupancy or enjoyment thereof, and any
interest, costs or penalties with respect to any of the foregoing.
Indebtedness: (a) The principal, interest and other sums owing or
payable by Mortgagor pursuant to the Loan Documents, which includes
present advances (including, without limitation, indebtedness in the
amount of up to FORTY FIVE MILLION AND NO/100 DOLLARS ($45,000,000.00)
evidenced by that certain promissory note dated of even date in the
original principal face amount FORTY FIVE MILLION AND NO/100 DOLLARS
($45,000,000.00) having a final maturity date of June 30, 1996 (the
"Note") and future advances to be incurred within the terms specified
in the Credit Agreement; (b) any and all additional advances made by
Mortgagee to protect or preserve the Mortgaged Property (as defined
below) or the security title, security interest and lien hereof on the
Mortgaged Property or to repair or maintain the Mortgaged Property, or
to complete improvements on the Mortgaged Property (whether or not
Mortgagor remains the owner of the Mortgaged Property at the time of
such advances or whether or not the Mortgagee remains the owner of the
Obligations and this Mortgage) in accordance with the provisions
hereof; and (c) any and all expenses incident to the collection of the
Obligations secured hereby and the foreclosure hereof by action in
court by exercise of the power of sale herein contained; provided,
however, that the total Indebtedness shall in no event exceed
$45,000,000.00 which shall represent the original principal due under
the Credit Agreement. The Credit Agreement provides that the interest
rate and payment terms of the Indebtedness may be adjusted as provided
therein.
Land: All those tracts or parcels of real property owned in fee or
leased by the Mortgagor and described in Exhibits "A", attached hereto
and incorporated herein and all rights, titles and interests
appurtenant thereto.
Leases: Any and all leases, subleases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) through
which Mortgagor directly or indirectly grants a possessory interest in
and to, or the right to occupy and use, all or any portion of the
Mortgaged Property that constitutes real property together with any
renewals or extensions thereof and all leases, subleases, licenses,
concessions or other agreements in substitution therefor.
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Legal Requirements: (i) Any and all present and future decisions,
statutes, rulings, rules, regulations, permits, certificates or
ordinances of any Governmental Authority in any way applicable to
Mortgagor or the Mortgaged Property, including, without limitation,
the ownership, use, occupancy, possession, operation, maintenance,
alteration, repair or reconstruction thereof and (ii) Mortgagor's
presently or subsequently effective Certificate of Incorporation and
Bylaws.
Loan Documents: This Mortgage, the Credit Agreement, the Note, the
Security Agreement, together with any and all other documents
described as "Loan Documents" in the Credit Agreement.
Material Adverse Effect: Material adverse effect shall have the
meaning ascribed to it in the Credit Agreement.
Mechanic's Liens: As defined in Section 4.4 hereof.
Mortgage State: Each state defined as a "Mortgage State" in Section
2.3 hereof.
Mortgaged Property or Mortgaged Properties: The Land, Buildings,
Fixtures and Leases and Rents, as set forth in Exhibit "A" attached
hereto, together with:
(i) all rights, privileges, tenements, licenses,
privileges, hereditaments, rights-of-way, easements, utility use, air
rights, appendages and appurtenances in anywise appertaining thereto,
and all right, title, interest or estate of Mortgagor in and to any
streets, ways, alleys, roadbeds, inclines, tunnels, culverts, strips
or gores of land adjoining or serving the Land or any part thereof.
(ii) all betterments, additions, alterations
appurtenances, substitutions, replacements and revisions thereof and
thereto and all reversions and remainders therein;
(iii) all of Mortgagor's right, title and interest in and
to any awards, remuneration, settlement, compensation hereafter to be
made by any insured Governmental Authority or other person or entity
as a result of the destruction, loss, theft, taking by eminent domain
or other involuntary conversion of whatever nature (whether occurring
prior to or after the date of this Mortgage) of any of the Land,
Buildings, Fixtures, Leases, Rents or Personalty, including those for
any condemnation and vacation of, or change of grade in, any streets
affecting the Land or the Buildings;
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(iv) any and all other security and collateral of any
nature whatsoever, now or hereafter given by Mortgagor to secure the
payment and performance of the Obligations;
(v) all water and water rights (whether riparian,
appropriative, or otherwise and whether or not appurtenant) in or
hereafter relating to or used in connection with the Land;
(vi) any right, title, interest or estate hereafter
acquired by Mortgagor in any of the foregoing and in and to the Land,
Buildings, Fixtures (except as otherwise provided herein), Leases and
Rents;
(vii) all proceeds and products of the foregoing. As used
in this Mortgage, the term "Mortgaged Property", including each
component thereof, shall be expressly interpreted as meaning all or,
where the context permits or requires, any portion of the above, and
all or, where the context permits or requires, any interest of
Mortgagor therein.
Mortgagee: Citibank, N.A., for itself and as agent for the Banks.
Mortgagor: The above-defined Mortgagor and any and all subsequent
owners of the Mortgaged Property.
Obligations: All Indebtedness and all Obligations (as such term is
defined in the Credit Agreement) of the Mortgagor under or in respect
of the Loan Documents.
Parcel: A single parcel of real property identified as a unit in
Exhibit "A" attached hereto. For purposes of legal descriptions and
real property title records, a Parcel may be comprised of more than
one lot.
Rents: All of the rents, revenues, income, proceeds, profits,
security and other types of deposits, and other benefits paid or
payable and to become due or payable to Mortgagor by parties to the
Leases for using, leasing, licensing, possessing, operating from,
residing in, selling or otherwise enjoying any portion or portions of
the Mortgaged Property.
State: The State in which the applicable portion of the Mortgaged
Property is situated. For example, with respect to the portion of the
Mortgaged Property situated in Georgia, the term "State" shall mean
the State of Georgia.
Trustee: A to-be designated person or entity, to be appointed by
Mortgagee when, and if, additional Mortgaged Property situated in a
Deed of Trust State is added as further security for the Obligations
by amendment to this Mortgage.
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Trustor: The Mortgagor.
UCC: The Uniform Commercial Code as adopted in the State.
Work: As defined in Section 4.7 hereof.
1.2 Defined Terms: The terms "Business Day," "Capital
Expenditures," "Commitment," "Default," "Event of Default," "GAAP,"
"Governmental Authority," "Letter of Credit Amount," "Loan Documents," "Loan
Parties," "Permitted Liens," "Subsidiary," together with any other capitalized
term used herein but not otherwise defined herein, shall have the same
respective meanings given to them in the Credit Agreement.
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ARTICLE 2
GRANT
2.1 Grant: NOW THEREFORE, for and in consideration of the sum of
TEN AND NO/100 DOLLARS ($10.00), and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Mortgagor, and to
secure Mortgagor's full and faithful performance and satisfaction of the
Obligations, Mortgagor has GIVEN, ALIENATED, REMISED, GRANTED, BARGAINED,
MORTGAGED, SOLD, RELEASED, CONVEYED, ASSIGNED, TRANSFERRED, WARRANTED, SET OVER
AND CONFIRMED and by these presents does GIVE, ALIENATE, REMISE, GRANT,
BARGAIN, MORTGAGE, SELL, RELEASE, CONVEY, ASSIGN, TRANSFER and WARRANT, SET
OVER AND CONFIRM unto Trustee, in trust, with power of sale, for the benefit of
Mortgagee to the extent the Mortgaged Property is situated in a Deed of Trust
State, or unto Mortgagee to the extent the Mortgaged Property is situated in a
Mortgage State or a Deed to Secure Debt State, with POWER OF SALE and right of
entry for the benefit of Mortgagee, all of the Mortgaged Property, subject only
to the Permitted Liens, TO HAVE AND TO HOLD the Mortgaged Property and (except
as otherwise set forth herein) all parts, rights, members and appurtenances
thereof for the use, benefit and behoof of the Trustee and its successors and
assigns in trust for the benefit of the Mortgagee to the extent the Mortgaged
Property is located in a Deed of Trust State, for the use, benefit and behoof
of the Mortgagee and its successor and assigns to the extent the Mortgaged
Property is situated in a Mortgage State or a Deed to Secure Debt State, IN FEE
SIMPLE forever; and Mortgagor hereby absolutely and irrevocably assigns to
Mortgagee the Leases and Rents for the purposes and upon the terms and
conditions herein set forth; and Mortgagor does hereby bind itself, its
successors and assigns to FOREVER WARRANT AND DEFEND the title to the Mortgaged
Property and every part thereof, and that at and until the unsealing of these
presents Mortgagor is well seized of the Mortgaged Property as a good and
indefeasible estate subject only to the Permitted Liens, unto Trustee, in
trust, for the benefit of the Mortgagee to the extent the Mortgaged Property is
situated in a Deed of Trust State, or unto Mortgagee to the extent the
Mortgaged Property is situated in a Mortgage State or a Deed to Secure Debt
State, against every person whomsoever lawfully demanding, claiming or to claim
the same or any part thereof.
2.2 Defeasance and Reconveyance: If the Indebtedness shall have
been paid in full and the Obligations shall have been performed and discharged
in full, and provided that there exists no pending or threatened unsatisfied
obligation pursuant to the environmental indemnification in Section 5.3 of the
Credit Agreement, and provided that respective Commitments of the Banks under
the Credit Agreement shall be terminated and none of the Banks shall have any
remaining, absolute or contingent obligation to lend money to Mortgagor under
the Credit Agreement or any
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related documents including without limitation, the Loan Documents, then:
(a) with respect to Mortgaged Property located in any State except
a Deed to Secure Debt State, the liens, security interests, estates and rights
granted by this Mortgage shall terminate; whereupon (i) with respect to any
Deed of Trust State upon Mortgagee's written request (which shall be made
promptly upon request by Mortgagor), and upon surrender to Trustee of this
Mortgage for cancellation (which shall be made promptly upon request by
Mortgagor) the Trustee shall reconvey, without warranty, the Mortgaged
Property, or that portion thereof then held hereunder, and (ii) with respect to
any Mortgage State, the Mortgagee promptly shall execute such documents in
recordable form as may be necessary to release and/or satisfy the Mortgaged
Property, or that portion thereof then held hereunder from the lien of and
security interests created by this Mortgage and this Mortgage shall thereafter
cease, determine and be void, null and canceled; and
(b) with respect to the Mortgaged Property located in a Deed to
Secure Debt State, the Mortgagee shall cancel and surrender this Mortgage. To
the extent permitted by law, any reconveyance delivered hereunder may describe
the grantee as "the person or persons legally entitled thereto." Neither
Mortgagee (nor Trustee, if applicable) shall have any duty to determine the
rights of persons claiming to be rightful grantees of any reconveyance. Each
reconveyance of Mortgaged Property or portions thereof shall also operate as a
reassignment of all future rents, issues and profits appertaining to the
Parcel(s) or portions thereof covered by such reconveyance to the person or
persons legally entitled thereto, unless its reconveyance expressly provides
otherwise.
2.3 Provisions Concerning Particular States:
Notwithstanding anything to the contrary contained herein:
(i) to the extent the Mortgaged Property is located in
Illinois, Ohio, Pennsylvania, New Jersey, Michigan and Florida (a
"Mortgage State"), this instrument shall be deemed to be and shall be
enforceable as a mortgage or open-end mortgage and as an assignment of
leases and rents and financing statement;
(ii) to the extent the Mortgaged Property is located in
the State of Georgia (a "Deed to Secure Debt State"), this instrument
shall be deemed to be and shall be enforceable as (x) a deed passing
title to the Mortgagee in the portion of the Mortgaged Property
located in the Deed to Secure Debt State, made under those provisions
of the existing laws of the Deed to Secure Debt State relating to
deeds to secure debt, and not as a mortgage, and given to secure the
Obligations and
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(y) an assignment of leases and rents and financing statement given to
secure the Obligations; and
(iii) to the extent the Mortgaged Property is located in the
State of California (a "Deed of Trust State"), this instrument shall
be deemed to be and shall be enforceable as a deed of trust and as an
assignment of leases and rents and financing statement.
Whenever herein contained, the phrase "Trustee and Mortgagee",
as applicable" or any similar phrase (1) shall be deemed to refer to Mortgagee
(as mortgagee) to the extent the Mortgaged Property is situated in any Mortgage
State and Trustee shall have no rights, powers or obligations in those States,
(2) shall be deemed to refer to Mortgagee (as grantee) to the extent the
Mortgaged Property is situated in any Deed to Secure Debt State and Trustee
shall have no rights, powers or obligations in those States, (3) shall be
deemed to refer to (a) Trustee for the benefit of Mortgagee, and, if the
context so requires or permits, and (b) if Mortgagee so elects to the Mortgagee
(as beneficiary) to the extent the Mortgaged Property is situated in any Deed
of Trust State.
2.4 Revolving Credit: The Credit Agreement includes a revolving
credit facility and there may be repayments and disbursements of principal from
time to time. It is expressly agreed that the outstanding principal balance of
the Obligations under the Credit Agreement may, from time to time, be reduced
to a zero balance without such repayment operating to extinguish and release
the lien, security titles and security interests created by this Mortgage.
This Mortgage shall remain in full force and effect as to any subsequent future
advances made after the zero balance without loss of priority until the
Obligations are paid in full and satisfied and the Credit Agreement and all
other agreements between Mortgagor and Mortgagee for further advances have been
terminated and this Mortgage is released of record. Mortgagor waives the
operation of any applicable statute, law or regulation having a contrary
effect.
2.5 Future Advances. (a) This Mortgage secures such future or
additional advances (in addition to the principal amount of the Note) as may be
made by the Mortgagee or the holder hereof, at its exclusive option, to the
Mortgagor or its successors or assigns in title, provided that all such
advances are made within twenty (20) years from the date of this Mortgage or
within such lesser period of time as may be provided by law as a prerequisite
for the sufficiency of actual notice or record notice of such optional future
or additional advances as against the rights of creditors or subsequent
purchasers for valuable consideration to the same extent as if such future or
additional advances were made on the date of the execution of this Mortgage.
The total amount of Indebtedness secured by this Mortgage may be increased or
decreased from time to
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time, but the total unpaid balance so secured at any one time shall not exceed
the maximum principal amount of $45,000,000.00 plus interest thereon and any
disbursements made under the Mortgage for the payment of Impositions,
insurance, or otherwise, with interest on such disbursements. It is the intent
of the parties that this Mortgage shall secure the payment of the Note and
advances made from time to time pursuant to any additional notes or otherwise,
all of said indebtedness being equally secured hereby and having the same
priority as any amounts advanced as of the date of this Mortgage. It is agreed
that any additional sum or sums advanced by Mortgagee shall be equally secured
with, and have the same priority as, the original Indebtedness and shall be
subject to all of the terms, provisions and conditions of this Mortgage,
whether or not such additional advances are evidenced by other promissory notes
of Mortgagor and whether or not identified by a recital that it or they are
secured by this Mortgage.
(b) To the extent the Mortgaged Property is located in the State
of Illinois, it is understood and agreed that with respect to subsequent
purchasers and mortgagees without actual notice, none of the future advances
made pursuant to this Mortgage and the other Loan Documents on account of costs
and expenses paid by Mortgagee as a result of Mortgagor's failure to do so,
shall result in an increase of the Indebtedness secured and to be secured
hereby over the face amount of the Note beyond Eighty Percent (80%) of such
face amount. In determining the amount of such increase, there shall be
excluded from any computation all Indebtedness which would constitute secured
Indebtedness under the terms of this Mortgage had this Section 2.5(b) been
omitted herefrom.
ARTICLE 3
WARRANTIES AND REPRESENTATIONS
For the consideration aforesaid and to protect the security of this
Mortgage, Mortgagor hereby unconditionally warrants and represents to Mortgagee
as follows:
3.1 Title to Mortgaged Property and Lien of this Instrument:
Mortgagor has good and record and marketable (and to the extent that the
Mortgaged Property is located in Ohio, Mortgagor has good and indefeasible)
title in fee to the Land, Buildings and Fixtures and good title to the Leases
in all cases free and clear of any Liens and claims of Lien except the
Permitted Liens and Liens described on Schedule 4.1(d) to the Credit Agreement.
This Mortgage constitutes a valid first lien (and with respect to certain of
the Mortgaged Properties a subordinate lien, second only to those certain
mortgages, deeds to secure debt and deeds of trust approved by Mortgagee and
included as a Permitted Lien, the "Permitted Prior Mortgages"), mortgage, deed
to secure debt or deed of trust on the Mortgagor's fee interest in the Land,
the Buildings
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and the Fixtures, and a valid first security interest in and to, and a valid
first assignment of (subject to the rights of the holder(s) of the Permitted
Prior Mortgages), the Fixtures, Leases and Rents all in accordance with the
terms hereof, in each case subject to the Permitted Liens and such scheduled
Liens to the extent applicable thereto.
3.2 Impositions and Other Payments: (a) Mortgagor has filed all
property and similar tax returns required to have been filed by it and has paid
and discharged, or caused to be paid and discharged, all Impositions imposed
against, affecting or relating to the Mortgaged Property which otherwise would
have become due, together with any fine, penalty, interest or cost for
non-payment pursuant to such returns or pursuant to any assessments received by
it other than those not yet delinquent and except for those contested in good
faith by appropriate proceedings for which adequate reserves in conformity with
GAAP have been made. Except for amounts secured by any of the Permitted Liens
and Liens described on Schedule 4.1(d) of the Credit Agreement, sums not yet
delinquent and sums contested in good faith by appropriate proceedings and for
which adequate reserves in conformity with GAAP have been made, Mortgagor has
paid and discharged, or caused to be paid and discharged, all other sums which
have become due (or, in the case of installment contracts, all installment sums
which have become due), together with any fine, penalty, interest or cost for
non-payment, for labor, material, supplies, personal property (whether or not
forming a Fixture hereunder) and services of every kind and character installed
in or on the Mortgaged Property and no claim for same exists.
(b) To the extent the Mortgaged Property is located in the State of
Michigan, the failure of Mortgagor to pay any Impositions against the Mortgaged
Property shall constitute waste, as provided by Act No. 236 of the Michigan
Public Acts of 1961, as amended. Mortgagor consents to the appointment of a
receiver under said statute, in the event the Mortgagee or Trustee, as the case
may be, elects to seek such relief thereunder.
3.3 Powers of Termination and Rights of Reverter: With respect
to any fee owned Parcel of Mortgaged Property subject to a right of reverter or
power of termination, no event has occurred or is threatened, or is likely to
occur by virtue of the performance by Mortgagor of any of its obligations under
any of the Loan Documents, which would enable the beneficiary of such right or
power to cause such reversion or termination.
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ARTICLE 4
AFFIRMATIVE COVENANTS
Mortgagor hereby unconditionally covenants and agrees with Mortgagee
as follows:
4.1 Payment and Performance: Mortgagor will satisfy and perform
the Obligations, including the payment of any sums required thereby, in full
and on or before the dates same are to be satisfied and performed.
4.2 Compliance with Legal Requirements: Mortgagor will promptly
and faithfully comply with, conform to and obey in all material respects all
Legal Requirements whether or not the same shall necessitate structural changes
in or improvements to, or interfere with the use or enjoyment of the Mortgaged
Property, unless failure to comply with such Legal Requirements would not, and
would not be reasonably likely to, have a Material Adverse Effect, and provided
Mortgagor shall have the right in good faith to contest any such Legal
Requirement provided that the Mortgaged Property affected thereby shall be in
no danger of being sold, forfeited or lost pursuant to such contest and
provided adequate reserves have been set aside by Mortgagor, in accordance with
GAAP, to pay the cost necessary to comply with such Legal Requirement in the
event Mortgagor fails to prevail in such contest. Mortgagor will procure and
continuously maintain in full force and effect all permits, licenses and other
authorizations required for construction of improvements, for any permitted use
of the Mortgaged Property or any part thereof then being made and for the
lawful and proper installation, operation and maintenance of the Mortgaged
Property. Mortgagor will not maintain any nuisance on the Mortgaged Property.
4.3 Lien Status: Mortgagor will defend and protect the first lien
(and with respect to certain of the Mortgaged Properties the second lien,
subject only to the Permitted Prior Mortgages) security title and security
interest status of this Mortgage, subject only to Permitted Liens and Liens
described on Schedule 4.1(d) of the Credit Agreement. If Mortgagor shall fail
to satisfy its obligations under this Section 4.3, Mortgagee shall have the
rights granted by Section 10.7 hereof to do such actions as Mortgagee deems
necessary to defend and protect the first lien, security title and security
interest status of this Mortgage (or the second lien and security interest
status) subject as aforesaid. Mortgagor shall reimburse Mortgagee for any
losses or Expenses incurred by Mortgagee if an interest in the Mortgaged
Property, other than as permitted hereunder, is claimed by others.
4.4 Payment of Impositions and Other Amounts: (a) Mortgagor will
duly pay and discharge, or cause to be paid and discharged, the Impositions not
later than the latest of (i) the due date
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thereof, (ii) the day any fine, penalty, interest or cost may be added thereto
or imposed thereon or (iii) the day any Lien may be filed for the non-payment
thereof (but only if such day is used to determine the due date of the
respective item); provided, however, that (1) Mortgagor may, if permitted by
law and if such installment payment would not result in the imposition of any
fine, penalty or cost on the remaining amount then due, pay the Impositions in
installments whether or not interest shall accrue on the unpaid balance of such
Impositions, and (2) unless an Event of Default has occurred and is continuing,
Mortgagor shall not be required to pay and discharge or to cause to be paid and
discharged any such Impositions so long as (u) the validity or amount thereof
shall be contested diligently and in good faith by appropriate proceedings, (v)
the Mortgaged Property shall then be in no danger of being sold, forfeited or
lost pursuant to such contest, and (w) adequate reserves have been set aside by
Mortgagor to pay the Impositions in accordance with GAAP, consistently applied
by Mortgagor in connection therewith.
(b) Notwithstanding the foregoing clause (a), but subject to
clause (c) succeeding, Mortgagor (i) shall pay all lawful claims and demands of
mechanics, materialmen, laborers and others with respect to the Mortgaged
Property not later than the latest of (x) the due date thereof, (y) the day any
fine, penalty, interest or cost may be added thereto or imposed thereon or (z)
the day any Lien or claim of Lien may be filed for the non-payment thereof (but
only if such day is used to determine the due date of the respective item); and
(ii) shall not create or suffer or permit any mechanic's liens or claims of
lien, materialmen's liens or claims of liens, or other claims for lien made by
parties claiming to have provided labor or materials with respect to the
Mortgaged Property (which liens and claims of lien are herein referred to as
"Mechanic's Liens") to attach to or be filed against the Mortgaged Property,
whether such Mechanic's Liens are inferior or superior to the lien of this
Mortgage, except to the extent permitted by clause (c) below.
(c) Notwithstanding the foregoing prohibition against Mechanic's
Liens against the Mortgaged Property, Mortgagor, or any party obligated to
Mortgagor to do so, may in good faith and with reasonable diligence by
appropriate proceedings contest the validity or amount of any Mechanic's Lien
and defer payment and discharge thereof during the pendency of such contest,
provided: (i) that such contest shall have the effect of preventing the sale or
forfeiture of the affected Parcels and any part thereof, or any interest
therein, to satisfy any such Mechanic's Lien; (ii) that, within twenty (20)
days after Mortgagor has been notified of the filing of any Mechanic's Lien,
any affidavit claiming a Mechanic's Lien or any notice of intention to file a
Mechanic's Lien, Mortgagor shall have notified Mortgagee in writing of
Mortgagor's intention to contest such Mechanic's Lien or to cause such other
party to contest such Mechanic's Lien; (iii) that to the extent
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required by applicable Legal Requirements in connection with such contest,
Mortgagor shall deposit with the court or other applicable Person such bonds or
other security as is so required; and (iv) that adequate reserves have been set
aside by Mortgagor, in accordance with GAAP, to pay in full such Mechanic's
Lien and all interest which may be due in connection therewith.
4.5 Repair: Mortgagor will maintain and preserve the Mortgaged
Property in good working order and condition, ordinary wear and tear excepted,
and will make all repairs, replacements, renewals, additions, betterments,
improvements and alterations thereof and thereto, interior and exterior,
structural and non-structural, ordinary and extraordinary, foreseen and
unforeseen, which are necessary to keep same in such order and condition.
4.6 Insurance: Mortgagor will maintain upon and relating to the
Mortgaged Property policies of liability and casualty insurance in accordance
with the provisions of Section 5.1 (c) of the Credit Agreement.
4.7 Restoration Following Casualty: If any acts or occurrences
of any kind or nature, ordinary or extraordinary, foreseen or unforeseen, shall
result in damage to or loss or destruction of Parcels listed on the Schedule
3.1(j) of the Credit Agreement the aggregate cost of repair of which would
exceed $1,000,000 in any one year, Mortgagor will give prompt notice thereof to
Mortgagee that (a) there are sufficient insurance proceeds or sufficient other
amounts available to Mortgagor to fully pay for the restoration, repair or
replacement (hereinafter called "Work") of the Mortgaged Property and (b) no
Event of Default shall have occurred and be continuing, then Mortgagor will so
certify to Mortgagee, and will certify that it will, and shall, within 30 days
following reaching an agreement with the insurer under the casualty insurance
policy relating thereto with regard to the disbursement of insurance proceeds
commence and thereafter continue diligently to completion, to restore, repair,
replace and rebuild such Mortgaged Property as nearly as possible to the value,
condition and character immediately prior to such damage, loss or destruction
with such alterations, modifications and/or betterments reasonably deemed
necessary or desirable by Mortgagor in its business judgment. Notwithstanding
the foregoing, if the Mortgagor, in the exercise of its business judgment,
elects to abandon such Mortgaged Property upon notice to the Mortgagee within
Forty-five (45) days following the occurrence of damage, loss or destruction
and subject to the requirements of clause (b) of Section 4.5 above, then the
obligations of restoration, repair, replacement or rebuilding, pursuant to this
Section 4.7 shall not apply. If the conditions set forth in such certificate
of Mortgagor are not satisfied with respect to casualty, or if Mortgagor fails
to timely deliver such a certificate to Mortgagee, the insurance proceeds
relating thereto shall be promptly paid by Mortgagor to Mortgagee if previously
paid to Mortgagee, in
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accordance with Section 4.8, shall be retained by Mortgagee), and applied to
the payment of the Obligations as provided in the Credit Agreement.
4.8 Application of Proceeds: Insurance proceeds to be for Work,
which proceeds are equal to or greater than $5,000,000 on a per occurrence or
claim basis, initially shall be paid to Mortgagee, and shall be paid out by
Mortgagee to Mortgagor from time to time to Mortgagor as the Work progresses,
subject to the following conditions: (a) prior to the commencement thereof
(other than Work to be performed on an emergency basis to protect the Mortgaged
Property or prevent interference therewith), (i) an architect or engineer,
reasonably approved by Mortgagee shall be retained by Mortgagor (at Mortgagor's
expense) and be charged with the supervision of the Work; (b) each request for
payment by Mortgagor shall be made on ten (10) days prior notice to Mortgagee
and shall be accompanied by a certificate by an executive officer of Mortgagor,
stating that: (i) all of the Work completed has been completed in substantial
compliance with the plans and specifications therefor; (ii) the sum requested
is justly required to reimburse Mortgagor for payments by Mortgagor to, or is
justly due to, the contractor, subcontractors, materialmen, laborers,
engineers, architects or other Persons rendering services or materials for the
Work; (iii) when added to all sums previously paid out by Mortgagor, the sum
requested does not exceed the value of the Work completed to the date of such
certificate; and (iv) the amount of insurance proceeds remaining in the hands
of Mortgagee, plus any further reserves agreed to be maintained by Mortgagor in
conformity with GAAP in connection with the Work, will in Mortgagee's
reasonable judgment be sufficient to complete the Work; (c) each request shall
be accompanied by certification by an executive officer of Mortgagor or copies
of waivers of Lien reasonably satisfactory in form and substance to Mortgagee
covering that part of the Work for which payment or reimbursement is being
requested, provided, however, that in the event it is customary State practice
not to grant such waivers prior to the making of such payments, Mortgagor shall
have obtained affidavits from the parties requesting such payment (i) stating
the amount then due and (ii) promising the delivery of the waiver upon the
making of the payment; (d) an Event of Default has not occurred and is not
continuing since the hazard, casualty or contingency giving rise to payment of
the insurance proceeds occurred; (e) in the case of the request for the final
disbursement, such request is accompanied by a copy of any Certificates of
Occupancy or other certificate required by any Legal Requirement to render
occupancy of the damaged portion of the Mortgaged Property lawful; and (f) if,
in Mortgagee's reasonable judgment, the amount of such insurance proceeds will
not be sufficient to complete the Work (which determination may be made prior
to or from time to time during the performance of the Work), Mortgagor shall
maintain adequate reserves in conformity with GAAP equal to an amount of money
which when added to such insurance proceeds will be sufficient, in
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Mortgagee's reasonable judgment, to complete the Work. Insurance proceeds to
be used for Work, which proceeds are less than $5,000,000 on a per occurrence
or claim basis, initially shall be paid to Mortgagor and shall be used by
Mortgagor to perform such work in accordance with its certificate delivered
pursuant to Section 4.7, with any excess thereof used to pay down the
Obligations in accordance with Section 4.7.
4.9 Inspection: Mortgagor will permit Mortgagee and Trustee, and
their respective agents, representatives and employees, upon reasonable advance
notice to Mortgagor to inspect the Mortgaged Property at any reasonable time.
4.10 Leases: With respect to Leases with annual payments of basic
or fixed rental (exclusive of insurance premiums, taxes, impositions and other
items constituting additional rent) equal to or exceeding $250,000: (a)
Mortgagor shall promptly and fully keep, observe and perform, or cause to be
kept, observed and performed, all of the material terms, covenants, provisions
and agreements imposed upon or assumed by Mortgagor under any Leases, now or
hereafter in effect, including any amendments or supplements to such Leases
covering any part of the Mortgaged Property that is affected by the terms,
covenants, provisions and agreements imposed upon or assumed by Mortgagor in
such Leases and Mortgagor shall not do or fail to do, or permit or fail to
permit to be done, any act or thing, the doing or omission of which would give
any party a right to terminate any of such Leases in the case of any tenant, to
abate the rental or other material payment due thereunder;
(b) If Mortgagor shall, in any manner, fail to comply with
subparagraph (a) above, Mortgagor agrees that Mortgagee may (but shall not be
obligated to) take upon five (5) days' written notice to Mortgagor (or upon
less notice, or without notice, if Mortgagee reasonably deems that the same is
required to protect its interest in the Mortgaged Property), any action which
Mortgagee shall reasonably deem necessary or desirable to keep, observe,
perform or cause to be kept, observed or performed any of the terms, covenants,
provisions or agreements and to enter into the Mortgaged Property and take all
action thereon as may be necessary therefor, or to prevent or cure any default
by Mortgagor in the performance of or compliance with any of Mortgagor's
covenants or obligations under said Leases. Mortgagee may rely on any notice
of default received by any tenant unless, in connection with any such default
or alleged default Mortgagor in good faith notifies Mortgagee of Mortgagor's
election to contest such default by appropriate procedures and diligently
pursues such contest. Mortgagor shall promptly deliver to Mortgagee a copy of
any notice relating to defaults received from any tenant that is a party, or
the trustee, receiver or successor for or to a party, to any of said Leases.
Mortgagee may expend such sums of money as are reasonable and necessary for any
purposes, and Mortgagor hereby agrees to pay to Mortgagee immediately upon
demand, all sums so expended by
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Mortgagee, together with interest thereon from the date of such payment at the
Default Interest Rate, and until so paid by Mortgagor, all sums so expended by
Mortgagee and the interest thereon shall be added to the Obligations secured by
the lien and legal operation and effect of this Mortgage; and
(c) To the extent the Mortgaged Property is located in the State of
Michigan, Mortgagee and/or Trustee, as applicable, shall be entitled to all of
the rights and benefits conferred by Act No. 210 of the Michigan Public Acts of
1953, as amended, and Act No. 228 of the Michigan Public Acts of 1925, as
amended.
4.11 Leases; Mortgagor as Lessor: Mortgagor shall use its
efforts to cause each tenant under a Lease with annual payments of basic or
fixed rental equal to or exceeding $250,000.00 entered into after the date
hereof to permit the inclusion in its Lease of provisions substantially in the
form attached hereto as Exhibit "B".
4.12 Taxes: Mortgagor shall pay, together with interest, fines,
and penalties, if any, any documentary stamps, recording, transfer, mortgage,
intangibles or other taxes or fees whatsoever due under the laws of the State
in connection with the making, execution, delivery, filing of record,
recordation, assignment, release, or discharge of any of the Loan Documents or
in connection with any advances made thereunder. This obligation shall survive
the repayment of the Obligations and shall continue for so long as Mortgagee
could be assessed for such taxes or fees, or for penalties or interest with
respect to such taxes or fees.
4.13 Collection Costs: In the event that this Mortgage is
foreclosed, or in the event this Mortgage is put into the hands of an attorney
for collection, suit, action or foreclosure, or in the event of the
foreclosure of any mortgage prior to or subsequent to this Mortgage, in which
proceeding Mortgagee is made a party, or in the event of the bankruptcy of
Mortgagor, or an assignment by Mortgagor for the benefit of creditors,
Mortgagor, its successors or assigns, shall be chargeable with and agrees to
pay all reasonable costs of collection and defense, including an amount as
attorneys' fees not to exceed such amount as may be permitted by the laws of the
applicable State including reasonable actual attorneys' fees for all appellate
proceedings and post- judgment action involved therein, which shall be due and
payable at once together with all required service or use taxes; the payment of
which charges, fees and taxes, together with all costs and expenses, shall be
secured hereby, and may be recovered in any suit or action hereupon or
hereunder.
4.14, 4.15, 4.16 [Intentionally Omitted]
4.17 Estoppel Certificates: Mortgagor, upon request of Mortgagee,
shall, from time to time, certify to the best of its
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knowledge to Mortgagee or to any permitted assignee of this Mortgage, by an
instrument in the form satisfactory to Mortgagee or such assignee, in its
reasonable discretion and duly acknowledged, inter alia, the amount then owing
under the Loan Documents and the date through which interest thereon has been
paid, and whether any offsets, counterclaims, credits, or defenses exist
against payments thereof or performance of any obligation of Mortgagor under
the Loan Documents or this Mortgage, within ten (10) days of notice of such
request. Mortgagee and any permitted assignee of the Mortgage shall have the
right to rely on any such certification.
4.18 [Intentionally Omitted]
4.19 [Intentionally Omitted]
4.20 Creation and Recordation of Additions and Betterments:
Mortgagor shall arrange for timely recording or filing as is required of all
documents having to do with additions to or betterments of any portion of the
Mortgaged Property, and all covenants and agreements set forth in this Mortgage
shall apply to all such additions and betterments.
4.21 Consents: Mortgagor will obtain and maintain the consent or
approval of any Person whose consent or approval is required to the granting of
a Lien on any interest in the Mortgaged Property to the Mortgagee for its
benefit and ratable the benefit of the Banks except for certain consents and
waivers set forth in Schedule 4.1(d) of the Credit Agreement.
4.22 [Intentionally Omitted]
ARTICLE 5
NEGATIVE COVENANTS
Mortgagor hereby covenants and agrees with Mortgagee that, until all
of the Obligations shall have been fully paid, performed, satisfied and
discharged:
5.1 Use Violations: Mortgagor will not use, maintain, operate or
occupy, or allow the use, maintenance, operation or occupancy of, any portion
of the Mortgaged Property in any manner which would result in a violation of
Section 4.2 above or make void, voidable or cancelable, or substantially
increase the premium of, any insurance then in force with respect thereto.
5.2 Waste: Mortgagor will not commit or permit any waste of the
Mortgaged Property or permit any nuisance to be maintained thereon.
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5.3 Transfer of Mortgaged Property; Partial Release: Except as
otherwise expressly provided for in this Mortgage or in the Credit Agreement,
Mortgagor will not, without the prior written consent of Mortgagee, acting in
its sole discretion, and, if the Mortgaged Property is located in Ohio, as
otherwise provided in Ohio Revised Code Section 5301, permit any of the
Mortgaged Property to be sold, transferred, conveyed, mortgaged, pledged,
encumbered, disposed of, leased (except for leases which have an annual basic
or fixed rental income of less than $250,000.00), or removed (a "transfer") at
any time. If such transfer is otherwise permitted pursuant to this Mortgage or
the Credit Agreement, then, upon at least ten (10) days' prior notice to
Mortgagee and upon compliance with the terms of this Mortgage or the Credit
Agreement, as the case may be, Mortgagor shall have the right to obtain from
the Mortgagee the release or reconveyance of such transferred portions of the
Mortgaged Property.
5.4 Rights of Reverter and Powers of Termination: With respect to
any fee owned Parcel of Mortgaged Property subject to a right of reverter or
power of termination, and so long as such right or power is or may be
enforceable, Mortgagor:
(a) will not take or omit to take any action or change the use of
such Parcel or otherwise so as to enable the beneficiary of such right or power
to enforce or obtain the benefit of such reversion or termination; and
(b) will not file for or otherwise initiate any proceedings to
abandon such Parcel.
ARTICLE 6
DEFAULT AND FORECLOSURE
6.1 Remedies: If an Event of Default shall have occurred and all
of the Obligations then remaining unpaid shall have been declared due and
payable in accordance with the Credit Agreement, then, without notice or
demand, which are hereby expressly waived, the Mortgagee or Trustee, as
applicable, may exercise any or all of the following rights, remedies and
recourses:
(a) Entry Upon Mortgaged Property: To the extent permitted by
applicable Legal Requirements, enter upon all or any part of the Mortgaged
Property and take exclusive possession thereof and of all books, records and
accounts relating thereto. If Mortgagor remains in possession of all or any
part of the Mortgaged Property after an Event of Default and without
Mortgagee's prior written consent thereto, Mortgagee or Trustee, as applicable,
may invoke any and all legal remedies and dispossess Mortgagor, including
specifically one or more actions for forcible entry and detainer, trespass to
title and writ of restitution. Nothing contained in the foregoing
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sentence shall, however, be construed to impose any greater obligation or any
prerequisites acquiring possession of the Mortgaged Property after an Event of
Default than would have existed in the absence of such sentence.
(b) Operation of Mortgaged Property: (i) To the extent permitted
by applicable Legal Requirements, Mortgagee shall lease, manage, operate or
otherwise use or permit the use of all or any portion of the Mortgaged Property
either by itself or by other persons, firms or entities in such manner, for
such time and upon such other terms as Mortgagee or Trustee, as applicable, may
deem prudent and reasonable under the circumstances (making such repairs,
alterations, additions and improvements thereto and taking any and all other
action with reference thereto, from time to time, as Mortgagee shall reasonably
deem necessary or desirable), and all Rents and other amounts collected by
Mortgagee or Trustee in connection therewith in accordance with the provisions
of Section 6.6 hereinbelow.
(ii) To the extent permitted by applicable Legal
Requirements, as attorney-in-fact or agent of the Mortgagor or in its
own name as Mortgagee and under the power therein granted, hold,
operate, manage, and control all or any portion of the Mortgaged
Property and conduct the business, if any, thereof, either personally
or by its agents, and to exercise the powers described in Section 8.3
hereof. Such remedies may be exercised cumulatively and concurrently,
and in this respect Mortgagee shall be entitled to avail itself of the
benefits and rights stated in Section 6.3 of this Mortgage.
(c) Foreclosure. (i) Institute a proceeding, judicial or
otherwise, for the complete foreclosure of this Mortgage to the fullest extent
permitted by law; or (ii) institute a proceeding or proceedings, judicial or
otherwise, for the partial foreclosure of this Mortgage, as permitted by
applicable legal requirements for the portion of the Obligations then due and
payable, with this Mortgage then continuing unimpaired and without loss of
priority so as to secure the balance of the obligations.
(d) Special State Provisions:
(1) Georgia. To the extent that the applicable portion
of the Mortgaged Property is situated in the State of Georgia, such
foreclosure proceedings shall include, without limitation,
non-judicial foreclosure pursuant to a private power of sale in
accordance with Official Code of Georgia Section 44-14-160 et seq.,
as amended, modified and/or superseded from time to time, in
accordance with the following: upon the occurrence of an Event of
Default, the Mortgagee shall have the right to sell the Mortgaged
Property situated in the State of Georgia or any part of the Mortgaged
Property situated in the State of Georgia at public sale or sales
before the door
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of the courthouse of the county in which such Mortgaged Property or
any part of such Mortgaged Property is situated, to the highest bidder
for cash, in order to pay the Obligations secured hereby and accrued
interest thereon and insurance premiums, liens, assessments, taxes and
charges, including utility charges, if any, with accrued interest
thereon, and all expenses of the sale and of all proceedings in
connection therewith, including reasonable attorneys' fees, if
incurred, after advertising the time, place and terms of sale once a
week for four (4) weeks immediately proceeding such sale (but without
regard to the number of days) in a newspaper in which sheriff's sales
are advertised in said county. At any such public sale, the Mortgagee
may execute and deliver to the purchaser a conveyance of the Mortgaged
Property or any part of such Mortgaged Property in fee simple with
full warranties of title (or without warranties if the Mortgagee shall
so elect) and to this end, Mortgagor hereby constitutes and appoints
the Mortgagee the agent and attorney-in-fact of Mortgagor to make such
sale and conveyance, and thereby to divest Mortgagor of all right,
title, interest, equity and equity of redemption that Mortgagor may
have in and to such Mortgaged Property and to vest the same in the
purchaser or purchasers at such sale or sales, and all the acts and
doings of said agent and attorney-in-fact are hereby ratified and
confirmed and any recitals in said conveyance or conveyances as to
facts essential to a valid sale shall be binding upon Mortgagor. The
aforesaid power of sale and agency hereby granted are coupled with an
interest and are irrevocable, are granted as cumulative of the other
remedies provided hereby or by law for collection of the Obligations
secured hereby and shall not be exhausted by one exercise thereof but
may be exercised until full payment of all Obligations secured hereby.
In the event of any such foreclosure sale by Mortgagee, Mortgagor
shall be deemed a tenant holding over and shall forthwith deliver
possession to the purchaser or purchasers at such sale or be summarily
dispossessed according to provisions of law applicable to tenants
holding over. In addition to and cumulative of the remedies provided
in this clause (d)(1), the Mortgagee may foreclose or cause to be
foreclosed the lien, security title and security interest of this
instrument, in whole or in part, through judicial foreclosure or in
any other manner as may at any time be authorized under the laws of
the State of Georgia. Mortgagee may adjourn from time to time any
sale by it to be made under or by virtue of this Mortgage by
announcement at the time and place appointed for such sale or for such
adjourned sale or sales; and, except as otherwise provided by any
applicable provision of law, Mortgagee, without further notice or
publication, may make such sale at the time and place to which the
same shall be so adjourned. Upon the completion of any sale or sales
made by Mortgagee under or by virtue of this clause (d)(1), Mortgagee,
or an officer of any
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court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or
good and sufficient instruments, conveying, assigning and transferring
all estate, right, title and interest in and to the property and
rights sold. Mortgagee is hereby irrevocably appointed true and
lawful attorney of Mortgagor, in its name and stead, to make all
necessary conveyances, assignments, transfers and deliveries of the
Mortgaged Property and rights so sold and for that purpose Mortgagee
may execute any necessary instruments of conveyance, assignment and
transfer, and may substitute one or more persons with like power,
Mortgagor hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof.
Any such sale or sales made under or by virtue of this clause (d)(1),
whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, shall operate to divest all the estate, right,
title, interest, claim and demand whatsoever, whether at law or in
equity, of Mortgagor in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against Mortgagor
and against any and all persons claiming or who may claim the same, or
any part thereof from, through or under Mortgagor. Upon any sale made
under or by virtue of this clause (d)(1) (whether made under the power
of sale herein granted or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale), Mortgagee may bid
for and acquire the Mortgaged Property or any part thereof and in lieu
of paying cash therefor may make settlement for the purchase price by
crediting upon the Obligations the net sales price after deducting
therefrom the expenses of the sale and the costs of the action and any
other sums which Mortgagee is authorized to deduct under this
Mortgage. No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any
other property of Mortgagor shall affect in any manner or to any
extent, the lien and title of this Mortgage upon the Mortgaged
Property or any part thereof, or any liens, titles, rights, powers and
remedies of Mortgagee hereunder, but such liens, titles, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
Mortgagor agrees, to the fullest extent permitted by law, that upon
the occurrence of an Event of Default, neither Mortgagor nor anyone
claiming through or under it shall or will set up, claim or seek to
take advantage of any appraisement, valuation, stay, extension,
homestead, exemption or redemption laws now or hereafter in force, in
order to prevent or hinder the enforcement or foreclosure of this
Mortgage, or the absolute sale of the Mortgaged Property, or the final
and absolute Putting into possession thereof, immediately after such
sale, of the purchasers thereat, and Mortgagor, for itself and all who
may at any time claim through or under it,
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hereby waives to the full extent that it may lawfully so do, the
benefit of all such laws, and any and all right to have the assets
comprised in the security intended to be created hereby marshalled
upon any foreclosure of the lien or title hereof. Mortgagee, at its
option, is authorized to foreclose this Mortgage subject to the rights
of any tenants of the Mortgaged Property, and the failure to make any
such tenants parties to any such foreclosure proceedings and to
foreclose their rights will not be, nor be asserted to be by
Mortgagor, a defense to any proceedings instituted by Mortgagee to
collect the sums secured hereby.
(2) Pennsylvania. To the extent the applicable portion
of the Mortgaged Property is situated in the State of Pennsylvania,
Mortgagee may sell said property by judicial proceeding after first
giving notice to Mortgagor prior to acceleration. The Notice shall
inform Mortgagor of the right to reinstate after acceleration and the
right to assert in the foreclosure proceedings the non-existence of an
Event of Default. Mortgagee shall be entitled to collect all
reasonable expenses incurred in pursuing the remedies provided in this
clause (d)(2), including but not limited to, reasonable attorneys'
fees and costs of title evidence permitted by applicable law.
Mortgagor, to the fullest extent permitted by law, hereby waives and
releases any errors or defects in proceedings to enforce this
Mortgage, and hereby waives the benefit of any present or future laws
providing for stay of execution, extension of time, exemption from
attachment, levy and sale, and homestead exemption. Mortgagor's
reinstatement period shall extend to one hour prior to the
commencement of bidding at a sheriff's sale or other sale pursuant to
this Mortgage.
(3) Illinois. To the extent the applicable portion of
the Mortgaged Property is situated in the State of Illinois, Mortgagee
may sell said property by judicial proceeding after first giving
notice to Mortgagor prior to acceleration. The notice shall inform
Mortgagor of the right to reinstate after acceleration and the right
to assert in the foreclosure proceedings the non-existence of an Event
of Default. Mortgagee shall be entitled to collect all reasonable
expenses incurred in pursuing the remedies provided in this clause
(d)(3), including but not limited to, reasonable attorneys' fees and
costs of title evidence permitted by applicable law. Mortgagor, to
the fullest extent permitted by law, hereby waives all right of
homestead exemption in the Mortgaged Property.
(4) California. To the extent the Mortgaged Property is
situated in the State of California, such foreclosure proceedings
shall include without limitation non-judicial foreclosure pursuant to
exercise of a power of sale in
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accordance with Section 2924 of the California Civil Code, as amended,
supplemented and, superseded from time to time, in accordance with the
following: upon the occurrence of an Event of Default Mortgagee may
execute and deliver to Trustee a written declaration of default and
demand for sale and written notice of default and of election to cause
all or any part of the Mortgaged Property to be sold, which notice
Trustee shall cause to be filed for record in the office of the
recorder of each county wherein any part of the Mortgaged Property is
situated; and after the lapse of such time as may then be required by
law following the recordation of such notice of default, and notice of
sale having been given as then required by law, Trustee without demand
on Mortgagor, shall sell such property at the time and place fixed by
it in such notice of sale either as a whole or in separate parcels and
in such order as Mortgagee may direct (Mortgagor waiving any right to
direct the order of sale), at public auction to the highest bidder for
cash in lawful money of the United States (or cash equivalents
acceptable to Trustee to the extent permitted by applicable law),
payable at the time of sale. Trustee may postpone the sale of all or
any part of the Mortgaged Property by public announcement at such time
and place of sale, and from time to time after any such postponement
may postpone such sale by public announcement at the time fixed by the
preceding postponement. Trustee shall deliver to the purchaser at
such sale its deed conveying the property so sold, but without any
covenant or warranty express or implied, and the recitals in such deed
of matters or facts shall be conclusive proof of the truthfulness
thereof. Any Person, including Trustee or Mortgagee, may purchase at
such sale, and any bid by Mortgagee may be, in whole or in part, in
the form of cancellation of all or any part of the Obligations. Any
such sale shall be free and clear of any interest of Mortgagor under
any lease, encumbrance or other matter affecting the property so sold
which is subject or subordinate to this Mortgage, except that any such
sale shall not result in the termination of any such lease (A) if and
to the extent otherwise provided in the estoppel or other agreement
executed by the tenant to such lease and Mortgagee, or (B) if the
purchaser at such sale gives written notice to such tenant, within ten
(10) days after date of sale, then the lease will continue in effect.
(5) New Jersey. To the extent the applicable portion
of the Mortgaged Property is situated in the State of New Jersey, Mortgagee may
sell said property by judicial proceeding. Mortgagee shall be entitled to
collect all reasonable expenses incurred in pursuing the remedies provided in
this clause (d)(6), including but not limited to, reasonable attorneys' fees
and collection costs.
(6) Michigan. To the extent the applicable portion of
the Mortgaged Property is situated in the State of Michigan, (i)
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Mortgagee may commence foreclosure proceedings against that portion of the
Mortgaged Property through judicial proceedings or by advertisement, at the
option of Mortgagee, pursuant to statutes in such case made and provided, and
(ii) Mortgagor hereby waives all rights to a hearing prior to sale in
connection with any foreclosure of this Mortgage by advertisement and all
notice requirements except as set forth in the Michigan statute providing for
foreclosure by advertisement.
(7) Florida. To the extent the applicable portion
of the Mortgaged Property is situated in the State of Florida, Mortgagee may
commence foreclosure proceedings against that portion of the Mortgaged Property
situated in Florida under the power of sale provided herein, or the judgment or
decree of a court or courts of competent jurisdiction, and may sell that
portion of the Mortgaged Property as an entirety or in separate lots or
parcels.
(e) Sale: To the extent permitted by applicable Legal
Requirements, sell or offer for sale the Mortgaged Property, in such portions,
order and parcels as Mortgagee or Trustee, as the case may be, may determine,
or without having first taken possession of same, to the highest bidder for
cash in lawful money of the United States at public auction in accordance with
applicable Legal Requirements, or the UCC, and in the event of sale, by
foreclosure or otherwise, of less than all of the Mortgaged Property, this
Mortgage shall continue as a lien and security interest on the remaining
portion of the Mortgaged Property. Mortgagee or Trustee, as the case may be,
may postpone any sale by public announcement at the time and place notice is
given of the sale. If the Mortgaged Property consists of several lots, Parcels
or items of property, Mortgagee or Trustee, as the case may be, may, in its
sole discretion: (i) designate the order in which such lots, parcels or items
shall be offered for sale or sales, or (ii) elect to sell such lots, parcels or
items through a single sale, or through two or more successive sales or in any
other manner Mortgagee or Trustee, as the case may be, deems in its best
interest. Should Mortgagee or Trustee, as the case may be, desire that more
than one sale or other disposition of the Mortgaged Property or any portion
thereof be conducted simultaneously, or successively, on the same day, or at
such different days or times and in such order as Mortgagee or Trustee, as the
case may be, may deem to be in its best interests, no such sale shall terminate
or otherwise affect the lien and security interest of this Mortgage on any part
of the Mortgaged Property not sold until all the Obligations have been fully
satisfied and all Commitments of the Banks under the Credit Agreement have been
fully terminated. Mortgagor shall pay the Expenses of any sale of the
Mortgaged Property, whether one or more, and of any judicial proceedings
wherein the same may be made, including reasonable compensation to Mortgagee
and Trustee, their agents and counsel, and to pay all expenses, liabilities and
advances made or incurred by Mortgagee or Trustee, as the case may be, with
such sale or
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sales, together with interest on all such advances made by Mortgagee or
Trustee, as the case may be, at the Default Interest Rate. Upon any sale
hereunder, Mortgagee or Trustee, as the case may be, shall execute and deliver
to the purchaser or purchasers a deed or deeds conveying the property so sold,
but without any covenant or warranty whatsoever, express or implied, whereupon
such purchaser or purchasers shall be let into immediate possession; and the
recitals in any such deed or deeds of facts, such as default, the giving of
notice of default and notice of sale, and other facts affecting the regularity
or validity of such sale or disposition, shall be conclusive proof of the truth
of such facts; and any such deed or fees shall be conclusive against all
persons as to such facts recited therein.
(f) Trustee or Receiver: Prior to, upon or at any time after,
commencement of foreclosure of the lien, security title and security interest
provided for herein, or any legal proceedings pursuant hereto, make application
to a court of competent jurisdiction for appointment of a receiver of the
Mortgaged Property. Such application may be made as a matter of strict right
and without notice to Mortgagor (unless notice is required by applicable Legal
Requirements and such right of notice may not be waived) or regard to the
adequacy of the Mortgaged Property or insolvency of the Mortgagor any person
who may be legally or equitably liable for the Indebtedness and without giving
bond to Mortgagor (unless bond is required by applicable Legal Requirements and
such right of bond may not be waived) and Mortgagor does hereby irrevocably
consent to such appointment. Any such receiver shall have all the powers and
duties of receivers in similar cases, including the full power to rent,
maintain and otherwise operate the Mortgaged Property all upon such terms as
may be approved by the court, and shall apply the Rents in accordance with the
provisions of this Mortgage.
(g) Separate Sales: To the extent permitted by applicable Legal
Requirements, the Mortgaged Property may be sold in one or more Parcels and in
such manner and order as Mortgagee or Trustee, as applicable, in their sole
discretion may elect, it being expressly understood and agreed that the right
of sale arising hereunder as a result of any Event of Default shall not be
exhausted by any one or more sales.
(h) Other: Exercise any and all other rights, remedies and
recourses granted under the Loan Documents or now or hereafter existing in
equity or at law, by virtue of statute or otherwise; including, without
limitation, the right in the Deed of Trust State, to bring an action in any
court of competent jurisdiction to foreclose this instrument as a realty
mortgage and enforce any of the terms hereof.
(i) Remedies Cumulative, Concurrent and Nonexclusive: Mortgagee
shall have all rights, remedies and recourses granted in
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the Loan Documents and available at law or equity (including specifically those
granted by the UCC in effect and applicable to the Mortgaged Property) and,
except as limited by applicable Legal Requirements, the same shall be
cumulative and concurrent; (b) may be pursued separately, successively or
concurrently against Mortgagor or against all or any portion of the Mortgaged
Property at the sole discretion of Mortgagee; (c) may be exercised as often as
occasions therefor shall arise, it being agreed by Mortgagor that the exercise
or failure to exercise any of same shall in no event be construed as a waiver
or release thereof of any other right, remedy or recourse; and (d) are intended
to be, and shall be nonexclusive.
6.2 No Conditions Precedent to Exercise of Remedies: Mortgagor
shall not be relieved of any obligation it has under the Loan Documents by
reason of (i) the release, regardless of consideration, of any of the Mortgaged
Property or any other collateral held pursuant to the Loan Documents or the
addition of any other property to the Mortgaged Property or any other such
collateral; (ii) any agreement or stipulation between any subsequent owner of
all or any portion of the Mortgaged Property and Mortgagee extending, renewing,
rearranging or in any other way modifying the terms of the Loan Documents
without first having obtained the consent of, given notice to or paid any
consideration to Mortgagor, and in such event Mortgagor shall continue to be
liable to make payment according to the terms of any such extension or
modification agreement unless expressly released and discharged in writing by
Mortgagee; or (iii) any other acts or occurrence, save and except the complete
satisfaction of all of the obligations, and the termination of the Commitments
of the Banks under the Credit Agreement.
6.3 Release of and Resort to Collateral: To the fullest extent
permitted by law, Mortgagee may release, regardless of consideration, any part
of the Mortgaged Property without, as to the remainder, in any way impairing,
affecting, subordinating or releasing the lien or security interest created in
or evidenced by the Loan Documents or their stature as a first and prior lien
and security interest in and to the Mortgaged Property. For payment of the
Obligations, to the fullest extent permitted by applicable Legal Requirements,
Mortgagee may resort to any other security therefor held by Trustee in such
order and manner as Mortgagee may elect.
6.4 Waivers: To the fullest extent permitted by applicable Legal
Requirements, Mortgagor hereby irrevocably and unconditionally WAIVES and
RELEASES (a) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, homestead
exemption, stay of execution, exemption from civil process, redemption or
extension of time for payment; (b) except as
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otherwise provided with the Loan Documents, all notices of any demand, Event of
Default, intent to accelerate or acceleration or the election by Mortgagee or
Trustee, as applicable, to exercise or the actual exercise of any right, remedy
or recourse provided for under the Loan Documents; (c) any right to a
marshalling of assets or a sale in inverse order of alienation; (d) any
restrictions or conditions upon the exercise by Mortgagee or Trustee, as
applicable, of the remedies set forth in Section 6.1; and (e) in Illinois, any
equity of redemption, statutory right of redemption and all other rights and
exemptions of every kind.
To the extent the Mortgaged Property is located in the State of
Illinois, the foregoing waiver is made pursuant to Section 12-124 of the
Illinois Code of Civil Procedure.
6.5 Discontinuance of Proceedings: To the extent permitted by
applicable Legal Requirements, in case Mortgagee or Trustee, as the case may
be, shall have proceeded to invoke any right, remedy or recourse permitted
under the Loan Documents and shall thereafter elect to discontinue or abandon
same for any reason, Mortgagee or Trustee, as the case may be, shall have the
unqualified right so to do and in such an event, Mortgagor, Mortgagee and
Trustee shall be restored to their former positions with respect to the Loan
Documents, the Mortgaged Property and otherwise, and the rights, remedies,
recourses and powers of Mortgagee and Trustee shall continue as if same had
never been invoked.
6.6 Application of Proceeds: (a) To the extent permitted by
applicable Legal Requirements, all proceeds received from the sale or other
dispositions of the Mortgaged Property pursuant to this Mortgage shall be
applied by the Mortgagee and/or Trustee, as applicable, in accordance with the
following priorities:
First: to the costs and expense of the sale, including
Trustee's reasonable commission, if any, title and abstracting
charges, reasonable attorneys' fees and a reasonable auctioneer's fee
if such expense has been incurred;
Second: to the satisfaction of the Obligations in the manner
provided in the Loan Documents; and
Third: to the payment to whomsoever shall be entitled thereto
under applicable Legal Requirements, assuming the person who made the
sale knows who is entitled thereto. Otherwise, the surplus shall be
paid to the clerk of the superior, district or circuit court (or other
court having jurisdiction) of the county where the sale was had.
(b) If the Mortgagee and or Trustee shall be ordered, in
connection with any bankruptcy, insolvency or reorganization of Mortgagor, to
restore or repay to or for the account of Mortgagor or its creditors any amount
theretofore received under this
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Section, the amount for such restoration or repayment shall be deemed to be an
Obligation so as to place the Mortgagee and/or Trustee in the position he would
have been in had such amount never been received by the party hereto.
6.7 Cooperation: If an Event of Default shall occur and be
continuing, Mortgagor will use its best efforts to cooperate with Mortgagee and
Trustee and promptly do all things reasonably required of it toward obtaining
all necessary authority and permission from any Governmental Authority or
otherwise to accomplish any disposition, abandonment or change in use of the
Mortgaged Property (or any portion thereof) as Mortgagee or Trustee, as the
case may be, may request in connection with the exercise of its rights and
powers hereunder and under the other Loan Documents. Without limiting the
generality of the foregoing, following an Event of Default and reasonable
advance notice to Mortgagor, Mortgagor agrees to relocate operations located on
the Mortgaged Property to accommodate the disposition, abandonment, change in
use or foreclosure by Mortgagee or Trustee, as the case may be, of any portion
thereof, provided that such relocation does not materially violate any Legal
Requirement applicable to Mortgagor or the Mortgaged Property.
6.8 [Intentionally Omitted]
ARTICLE 7
CONDEMNATION
7.1 General: Promptly following the date on which an executive
officer of Mortgagor obtains knowledge of the institution or the threatened
institution of any proceeding for the condemnation of all or any portion of the
Mortgaged Property, the aggregate value of which would exceed $1,000,000,
Mortgagor shall notify Mortgagee of such fact. Mortgagor shall then, unless
Mortgagee waives this requirement, file or defend its claim in respect of such
proceeding and prosecute same with due diligence to its final disposition and
shall cause any awards or settlements to be paid over directly to Mortgagee for
disposition pursuant to the terms of this Mortgage. Mortgagor may be the
nominal party in such proceeding but Mortgagee shall be entitled to participate
in same and to be represented therein by counsel of its own choice, and
Mortgagor will deliver or cause to be delivered to Mortgagee such instruments
as may be reasonably requested by it from time to time to permit such
participation. If the aggregate value of the condemned portion of the
Mortgaged Property would exceed $5,000,000 Mortgagee also shall be entitled to
control the condemnation proceedings. If all or any portion of the Mortgaged
Property is taken or diminished in value, or if a consent settlement is
entered, by or under threat of such proceeding, the award or settlement payable
to Mortgagor by virtue of its interest in such
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Mortgaged Property shall be subject to the lien and security interest of this
Mortgage and (subject to the remaining provisions of this Section 7.1) shall
be, and by these presents is assigned, transferred and set over unto Mortgagee
to be held by it, in trust, and disbursed as follows:
(a) if (i) all of the Mortgaged Property is taken, or (ii) so much
of a Parcel of the Mortgaged Property is taken or a Parcel of the Mortgaged
Property is so diminished in value that the remainder thereof, even if rebuilt,
restored or repaired, cannot (in Mortgagor's reasonable judgment) continue to
be operated in an economically satisfactory manner for the purpose it was being
used immediately prior to such taking or diminution, then in any such event,
and except as otherwise provided in (b)(y) below, the entirety of the sums so
paid to Mortgagee shall be applied by it as set forth in Section 7.2
hereinbelow; or
(b) if (x)(i) only a portion of the Mortgaged Property is taken
and the portion remaining can be (in Mortgagor's reasonable judgment), with
rebuilding, restoration or repair, operated in an economically satisfactory
manner for the purpose referred to in Section 7.1(a)(ii) hereinabove; and (ii)
none of the other facts recited in Section 7.1(a) hereinabove exists; and (iii)
if the cost of the rebuilding, restoration or repair reasonably estimated by
Mortgagee shall exceed $5,000,000, Mortgagor shall deliver to Mortgagee plans
and specifications for such rebuilding, restoration or repair; or (y) if
Mortgagor shall deliver to Mortgagee, within forty-five (45) days of the
receipt by Mortgagee of the disbursement of the award or settlement, a
certificate executed by Mortgagor wherein Mortgagor describes the replacement
property to be acquired in substitution of the taken Mortgaged Property (which
replacement property, unless the Mortgagee otherwise consents shall have a
value which is no less than the value of the taken Mortgaged Property
immediately prior to the date of such taking); provided, however, that if
Mortgaged Property with an aggregate value exceeding $5,000,000 is taken, the
replacement property shall be reasonably acceptable to Mortgagee, which
acceptance shall be evidenced by Mortgagee's written consent thereto, which
shall not be unreasonably withheld; Mortgagor shall thereafter either (1)
commence the rebuilding, restoration or repair (all in accordance with the
plans and specifications if required pursuant to the preceding provisions)
within ninety (90) days after the date of the disbursement of the award or
settlement, and complete same within a reasonable time thereafter or (2) within
ninety (90) days of the disbursement of the award or settlement, complete
arrangements for the purchase of the approved replacement property, and shall
otherwise comply with Section 4.8 hereinabove, then such sums will be paid to
Mortgagor for the exclusive purposes of reimbursing Mortgagor for money spent
or owed in connection with the rebuilding, restoration or repair of such
Mortgaged Property that has been subject to partial condemnation and the same
to be distributed in the same manner as provided in Section 4.8;
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provided, however, if the cost of such rebuilding, restoration or repair does
not exceed $5,000,000, Mortgagee shall promptly deliver such condemnation
proceeds (or any portion thereof required for such restoration or repair as
described in the certificate referenced below) to Mortgagor upon receipt of a
certificate by an executive officer of Mortgagor stating the rebuilding,
restoration or repair to be effected and stating the estimated cost therein is
otherwise same (including any remaining surplus) shall be applied by Mortgagee
in the order recited in Section 7.2 hereinbelow. Notwithstanding the
foregoing, Mortgagor shall nonetheless be obligated to take such actions as may
be required to comply with any Legal Requirements applicable to such Mortgaged
Property.
7.2 Application of Proceeds: Except as otherwise provided in
Section 7.1 above, all proceeds received by Mortgagee or Trustee with respect
to a taking or a diminution in value of all or any portion of the Mortgaged
Property shall be retained by or paid over to Mortgagee, as applicable, and
shall be applied to the payment of the Obligations as set forth in the Credit
Agreement, subject to deduction from such proceeds by Mortgagee and/or Trustee
of its Expenses incurred in connection with the condemnation proceedings, the
Mortgagee's review process and other actions in connection therewith. The
foregoing provision shall apply regardless of whether notice of such
condemnation was required to be given by Mortgagor to Mortgagee pursuant to
Section 7.1.
ARTICLE 8
ASSIGNMENT OF LEASES AND RENTS
8.1 Assignment: Subject to the terms and conditions hereinafter
set forth, Mortgagor as debtor does hereby irrevocably transfer, assign and
deliver unto Mortgagee, the secured party, for its benefit and the ratable
benefit of the Banks, as security for the payment and performance of the
Obligations, and grant a security interest in, all of the right, title and
interest of Mortgagor in and to all of the following:
(a) The Leases;
(b) The Rents; and
(c) The Fixtures.
This assignment of rentals and any other assignments required by the
provisions hereof shall terminate and become null and void upon release of this
Mortgage.
This instrument shall be deemed to be a fixture financing statement
within the meaning of the Georgia Uniform Commercial Code, Georgia Statutes,
Section 402, Article 9, and for such purpose the following information is set
forth:
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(1) Name and Address of Debtor: as set forth on page 1 hereof.
(2) Name and Address of Secured Party: as set forth on page 1
hereof.
(3) Description of the types (or items) of property covered by
this financing statement as set forth in Sections 1.1 and this
Section 8.1.
(4) Description of real estate to which collateral is attached or
upon which it is located: as set forth on Exhibit "A".
8.2 Collection of Rents: Mortgagor does hereby authorize and
empower Mortgagee to collect the Rents as the same shall become due, and does
hereby irrevocably direct each and any of the lessees, sublessees, licensees,
or other occupants of the Mortgaged Property to pay to Mortgagee, upon demand
by Mortgagee, the Rents, provided, however, that no such demand shall be made
by Mortgagee unless and until an Event of Default has occurred and is
continuing, and that, until such demand is made, Mortgagor shall be authorized
to collect or continue to collect the Rents.
8.3 Mortgagee's Powers of Attorney: Mortgagor does hereby
irrevocably constitute and appoint Mortgagee, while this Mortgage remains in
force and effect, its true and lawful attorney-in-fact, coupled with an
interest and with full power of substitution, delegation and revocation, for
Mortgagor and in its name, place and stead, to enter and take possession of the
Mortgaged Property by actual physical possession without the commencement of
any action to foreclose this Mortgage or to exercise any power of sale
Mortgagee may have hereunder and to do and perform any or all of the following
actions, as fully as Mortgagor could do if personally present, hereby ratifying
and confirming all that Mortgagee, as attorney or its substitute, shall
lawfully do or cause to be done by virtue hereof:
(a) to enter into subordination and non-disturbance agreements
with respect to any Leases or with any of the lessees under any of the Leases;
(b) to demand, collect, sue for, attach, levy recover, receive,
compromise and adjust, and make, execute and deliver receipts, releases,
discharges or other instruments for all Rents, issues, and other amounts that
may thereafter become due, owing or payable with respect to the Mortgaged
Property or any part thereof from any present or future lessees, sublessees,
licensees or other occupants thereof;
(c) to institute, prosecute to completion, or compromise and
settle, all summary proceedings, actions for rent or for removing
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any and all lessees, sublessees, licensees for other occupants of the Mortgaged
Property or any part or parts thereof;
(d) to enforce or enjoin or restrain the violation of any of the
terms, provisions and conditions of any of the Leases;
(e) to pay, from and out of any Rents and issues collected in
respect of the Mortgaged Property or any part thereof, or from or out of any
other funds, any taxes, assessments, water rates, sewer rates, or other
government charges levied, assessed, or imposed against the Mortgaged Property,
or any portion thereof, and also any and all other charges, costs and expenses
which it may be reasonably necessary or advisable for Mortgagee to pay in the
management or operation of the Mortgaged Property, including commissions for
renting the Mortgaged Property or any portion thereof, management and
consulting fees, and legal expenses incurred in enforcing claims, drafting and
negotiating documents or for any other services that may be required;
(f) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for moneys due and to become due under or in
respect of any of the Personalty;
(g) to receive, indorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (f) above;
(h) to file any claims or take any action or institute any
proceedings which the Mortgagee may deem necessary or desirable for the
collection of all of the Personalty or otherwise to enforce the right of the
Mortgagee with respect to any of the Personalty, including without limitation
the execution, delivery, and filing of financing statements, continuation
statements, affidavits or other security instruments, and agreements necessary
to perfect, confirm and continue in effect the lien of this Mortgage with
respect to the Leases, the Rents, the Fixtures and Personalty; and
(i) to generally do, execute, and perform any other act, deed,
matter or thing whatsoever that otherwise needs to be done, executed and
performed in and about or respect to the Mortgaged Property, the Leases and the
Personalty, as fully as Mortgagor might do, provided, however, that this
Assignment shall not operate to place upon Mortgagee any responsibility or
obligation to take any of the above actions or any action whatsoever with
respect to the operation, control, care, management or repair of the Mortgaged
Property and that any action taken or failure or refusal to by Mortgagee under
this Agreement shall be at Mortgagee's election and without any liability or
part. Notwithstanding the preceding provisions, Mortgagee shall not exercise
any of the rights or powers described in subparagraph (a) through this
subparagraph (i) until an Event of Default has occurred and is continuing.
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8.4 Mortgagor Remains Liable: Anything herein to the contrary
notwithstanding,
(a) Mortgagor shall remain liable under the Leases to the extent
set forth therein to perform all of its duties and obligations thereunder to
the same extent as if this Mortgage had not been executed;
(b) the exercise by the Mortgagee of any of the rights hereunder
shall not release the Mortgagor from any of its duties or obligations under any
of the Leases; and
(c) the Mortgagee shall not have any obligation or liability under
any of the Leases to any person or entity under this Mortgage nor shall the
Mortgagee be obligated to perform any of the obligations or duties of the
Mortgagor thereunder or to take any action to collect or enforce any claims
thereunder.
8.5 Mortgagor's Representations and Warranties: Mortgagor
represents and warrants that:
(a) No Rents, nor any part thereof becoming due subsequent to the
date hereof, have been collected with respect to the Leases (excepting an
amount not exceeding one month's installment under the Leases, and excepting
those Rents collected from Leases which have annual basic or fixed rental
income less than $250,000.00), nor has payment of any of the same been
anticipated, waived, released, discounted or otherwise discharged or
compromised; and
(b) Each of the Leases described in Section 4.10 hereof, as
amended to the date of execution and delivery hereof, true and complete copies
of which have been delivered to the Mortgagee, has been duly authorized,
executed and delivered by Mortgagor (and to Mortgagor's knowledge all other
parties thereto) and are in full force and effect and binding upon and
enforceable against Mortgagor and, to Mortgagor's knowledge, against the other
parties thereto, in accordance with its terms. No event has occurred and is
continuing, or will occur as a result of the performance of this Mortgage, that
constitutes or would constitute any material event of default under any of the
Leases or would constitute such an event of default but for the requirement
that notice be given or time lapse or both.
8.6 Mortgagor's Covenants: Mortgagor covenants and agrees with
respect to the Leases described in Section 4.10 hereof that:
(a) It will perform and observe each of its material obligations
under the terms of the Leases or hereafter in effect (except when the amount or
validity of such obligations is being contested in good faith) and use best
efforts to cause the other party thereto to comply with their obligations
thereunder;
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(b) It will, upon the reasonable written request by Mortgagee,
while this Assignment remains in force and effect, serve written notices of
this Assignment upon any lessor or lessee, sublessee, licensee, or other
occupant of any portion of the Mortgaged Property or include among the written
provisions of any instrument hereafter creating any such lease, sublease,
license, or right of occupancy specific reference to this Assignment, and make,
execute and deliver all powers of attorney or instrument or pledge or
assignment, and such other instrument or documents as Mortgagee may reasonably
request at any time for the purpose of securing its rights hereunder;
(c) It will promptly furnish to Mortgagee, promptly following
demand, true copies of all Leases, hereafter executed and true copies of each
agreement letter effecting the renewal, amendment or modification of any Lease;
and in each case after request by the Mortgagee, furnish to the Mortgagee
promptly following receipt thereof copies of all notices, requests and other
documents received by the Mortgagor under or pursuant to the Leases during the
term of each of the Leases and from time to time (A) furnish to Mortgagee such
information and reports regarding the Leases as the Mortgagee may reasonably
request, and (B) promptly following request of the Mortgagee make such demands
and requests for information or action upon such person, firm, corporation, or
other entity as the Mortgagor is entitled to make under the Leases;
8.7 Effect of Releases of Mortgaged Property: The Mortgagor
hereby consents to, and hereby agrees that the rights of Mortgagee and the
security interests hereunder, and the obligations of the Mortgagor hereunder,
to the fullest extent permitted by applicable Legal Requirements, shall not be
affected by any and all releases of any of the Mortgaged Property from the
liens or security interests created by this Mortgage or otherwise, whether for
purposes of sales or other dispositions of assets or for some other purpose,
except to the extent expressly provided herein, any agreement extending the
time or otherwise altering the terms of payment of all or any part of the
Indebtedness secured hereby, or subordinating, modifying or waiving any
obligation, or subordinating, modifying or otherwise dealing with the lien or
charge hereof, each such agreement to be in writing to be binding and
effective, by exercising or refraining from exercising or waiving any right
Mortgagee may have hereunder, or by accepting additional security of any kind
or additional parties to the Indebtedness secured hereby or instruments
creating or evidencing such.
8.8 Hold Harmless: Mortgagor hereby agrees to indemnify and hold
Mortgagee and/or Trustee, as applicable, harmless (a) against and from any and
all liability, loss, damage and expense, including reasonable attorneys' fees,
which it may or shall incur under or in connection with the exercise by
Mortgagee of its rights hereunder in respect of any of the Leases, or by reason
of any action taken
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or expenses paid or incurred by Mortgagee under and in accordance with the
terms of this Assignment and (b) against and from any and all claims and
demands whatsoever which may be asserted against Mortgagor by reason of any
alleged obligations or undertaking on its part to perform or discharge any of
the terms, covenants and conditions contained in any of the Leases; provided
that Mortgagor shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits costs,
expenses or disbursements resulting from Mortgagee's or Trustee's, as the case
may be, gross negligence or willful misconduct. Should Mortgagee pay or incur
any such liability, loss, damage, expense, the amount thereof, together with
interest thereon from the date of such payment at the Default Interest Rate
shall be payable by Mortgagor to Mortgagee or Trustee, as the case may be,
immediately upon demand therefor; and until so paid by Mortgagor, all sums so
expended by Mortgagee or Trustee, as the case may be, and interest thereon,
shall be added to the Obligations secured by the lien and legal operation and
effect of this Mortgage. At its option, Mortgagee or Trustee, as the case may
be, may reimburse itself therefor out of any Rents which it has collected or
may collect.
ARTICLE 9
CONCERNING THE TRUSTEE IN THE DEED OF TRUST STATE
9.1 No Required Action. Trustee shall not be required to take any
action toward the execution and enforcement of the trust hereby created or to
institute, appear in or defend any action, suit or other proceeding in
connection therewith where in his opinion such action will be likely to involve
him in expense or liability, unless requested so to do by a written instrument
signed by Mortgagee and, if Trustee so requests, unless Trustee is tendered
security and indemnity satisfactory to him against any and all costs, expense
and liabilities arising therefrom. Trustee shall not be responsible for the
execution, acknowledgement or validity of the Loan Documents, or for the proper
authorization thereof, or for the sufficiency of the lien and security interest
purported to be created hereby, and makes no representation in respect thereof
or in respect of the rights, remedies and recourse of Mortgagee.
9.2 Certain Rights. With the approval of Mortgagee, Trustee shall
have the right to take any and all of the following actions: (a) to select,
employ and consult with counsel (who may be, but need not be, counsel for
Mortgagee) upon any matters arising hereunder, including the preparation,
execution and interpretation of the Loan Documents, and shall be fully
protected in relying as to legal matters on the advice of counsel; (b) to
execute any of the trusts and powers hereof and to perform any duty hereunder
either directly or through his agents or attorneys; (c) to select
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and employ, in and about the execution of his duties hereunder, suitable
accountants, engineers and other experts, agents and attorneys-in-fact, either
corporate or individual, not regularly in the employ of Trustee, and Trustee
shall not be answerable for any act, default or misconduct of any such
accountant, engineer or other expert, agent or attorney-in-fact, if selected
with reasonable care, or be otherwise responsible or accountable under any
circumstances whatsoever, except for Trustee's gross negligence or bad faith;
and (d) to take any and all other lawful action as Mortgagee may instruct
Trustee to take to protect or enforce Mortgagee's rights hereunder. Trustee
shall not be personally liable, except for his gross negligence or misconduct,
in case of entry by him, or anyone entering by virtue of the powers herein
granted to him, upon the Mortgaged Property for debts contracted or liability
or damages incurred in the management or operation of the Mortgaged Property.
Trustee shall have the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be taken by him
hereunder, believed by him in good faith to be genuine. Trustee shall be
entitled to reimbursement for reasonable expenses incurred by him in the
performance of his duties hereunder and to reasonable compensation for such of
his services hereunder as shall be rendered. Mortgagor will, from time to
time, pay the reasonable compensation due to Trustee hereunder and reimburse
Trustee for, and save him harmless against, any and all liability and expenses
which may be incurred by him in the performance of his duties.
9.3 Retention of Monies. All monies received by Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other monies (except to the extent required by law) and Trustee shall be under
no liability for interest on any monies received by him hereunder.
9.4 Successor Trustees. Trustee may resign by the giving of
written notice of such resignation in recordable form to Mortgagee. If Trustee
shall die, resign or become disqualified from acting in the execution of this
trust or shall fail or refuse to execute the same when requested by Mortgagee
so to do, or if, for any reason, Mortgagee shall prefer to appoint a substitute
trustee or trustees to act instead of the aforenamed Trustee, Mortgagee shall
have full power to appoint a substitute trustee or trustees and, if preferred,
several substitute trustees in succession who shall succeed to all the estates,
properties, rights, powers and duties of the aforenamed Trustee. Such
appointment may be executed by any authorized agent or officer of Mortgagee,
and if such Mortgagee be a corporation and such appointment be executed in its
behalf by any officer of such corporation, such appointment shall be
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the Board of Directors or any
superior officer of the corporation. Such appointment shall be duly recorded
in the appropriate real estate records at any time
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before or, if permitted by applicable law, upon sale of Mortgaged Property by
the successor appointed thereby. Mortgagor hereby ratifies and confirms any
and all acts which the aforementioned Trustee, or his successor or successors
in this trust, lawfully does by virtue hereof. Mortgagor shall reimburse
Mortgagee and/or Trustee for any Expenses incurred pursuant to the provisions
of this Section 9.4.
9.5 Perfection of Appointment. Should any deed, conveyance or
instrument of any nature be required from Mortgagor by any successor Trustee to
more fully and certainly vest in and confirm to such new Trustee such estates,
rights, powers and duties, then, upon request by such Trustee, any and all
deeds, conveyances and instruments shall be made, executed, acknowledged and
delivered and shall be caused to be recorded and/or filed by Mortgagor and
Mortgagor shall pay for any Expenses incurred by Trustee pursuant to this
Section 9.5.
9.6 Succession Instruments. Any new Trustee appointed pursuant to
any of the provisions hereof shall, without any further act, deed or
conveyance, become vested with all the estates, properties, rights, powers and
trusts of its or his predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written request
of Mortgagee or of the successor Trustee, the Trustee ceasing to act shall
execute and deliver an instrument in recordable form transferring to such
successor Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and monies held by
such Trustee to the successor Trustee so appointed in its or his place.
9.7 No Representation by Trustee. By accepting or approving
anything required to be observed, performed or fulfilled or to be given to
Trustee or Mortgagee pursuant to the Loan Documents, including but not limited
to, any officer's certificate, balance sheet, statement of profit and loss or
other financial statement, survey, appraisal or insurance policy, neither
Trustee nor Mortgagee shall be deemed to have warranted, consented to, or
affirmed the sufficiency, legality, effectiveness or legal effect of the same,
or of any term, provision or condition thereof, and such acceptance or approval
thereof shall not be or constitute any warranty, consent or affirmation with
respect thereto by Trustee or Mortgagee.
ARTICLE 10
MISCELLANEOUS
10.1 Performance at Mortgagor's Expense: The cost and expense of
performing or complying with any and all of the
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Obligations shall be borne solely by Mortgagor, and no portion of such cost and
expense shall be, in any way or to any extent, credited against any installment
on or portion of the Indebtedness which may be payable by Mortgagor pursuant to
the Loan Documents.
10.2 Survival of Obligations: Each and all of the Obligations
survive the execution and delivery of the Loan Documents and the consummation
of the loans called for therein and shall continue in full force and effect
with respect to Mortgagor until the Obligations shall have been satisfied in
full.
10.3 Further Assurances: Mortgagor, upon the request of
Mortgagee, will execute, acknowledge, and record and/or file such further
instruments and do such further acts as may be reasonably necessary, desirable
or proper to carry out more effectively the purpose of the Loan Documents and
to subject to the liens and security interests thereof any property intended by
the terms thereof to be covered thereby, including specifically but without
limitation, any renewals, additions, substitutions, replacements, betterments
or appurtenances to the then Mortgaged Property.
10.4 Recording and Filing: Mortgagor will cause this Mortgage and
all amendments and supplements thereto and supplements therefor to be recorded,
filed, re-recorded and refiled in such manner and in such places as Mortgagee
shall reasonably request, and will pay all such recording, filing, re-recording
and refiling taxes, fees and other charges.
10.5 Notices: All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex or cable
communication) and mailed, telegraphed, telexed, cabled or delivered:
If to the Mortgagor: Carolina Freight Carriers Corporation
N.C. Highway 150 East
P. O. Box 697
Cherryville, North Carolina 28021
Attention: Treasurer
Red Arrow Freight Lines, Inc.
c/o Carolina Freight Carriers Corporation
N.C. Highway 150 East
P. O. Box 697
Cherryville, North Carolina 28021
Attention: Treasurer
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If to the Mortgagee: Citibank, N.A.
c/o Citicorp North America, Inc.
400 Perimeter Center Terrace
Suite 600
Atlanta, Georgia 30346
Attention: Kirk P. Lakeman
Vice President
With a copy to: Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attention: Barbara A. Cohen
Vice President
or at such other address as shall be designated by such party in a written
notice to the other. All such notices and communications shall, whether
mailed, telegraphed, telexed or cabled, be effective when received, delivered
to the telegraph company, confirmed telex answerback or delivered to the cable
company, respectively, or two (2) business days after being deposited in the
mails, respectively.
Without limiting the generality of the foregoing, Mortgagor, pursuant
to California Government Code Section 27321.5(b), hereby requests that a copy
of any notice of default and a copy of any notice of sale given pursuant to
this Mortgage be mailed to Mortgagor at the address set forth in this Section
10.5.
10.6 No Waiver; Remedies: The Mortgagee's failure at any time or
times hereafter, to require strict performance by the Mortgagor of any
provision of this Mortgage shall not waive, affect or diminish any right of the
Mortgagee or Trustee, thereafter to demand strict compliance and performance
therewith, and the Mortgagee's or Trustee's single or partial exercise of any
right, remedy, power or privilege hereunder shall not preclude any other or
further exercise thereof or the exercise of any other right, remedy, power, or
privilege. The rights, remedies, powers or privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers or privileges
provided by applicable Legal Requirements. Any suspension or waiver of the
Mortgagee or Trustee of a default by the Mortgagor under this Mortgage or under
any of the other Loan Documents shall not suspend, waive or affect any other
default thereunder, whether the same is prior or subsequent thereto and whether
of the same or of a different kind of character. None of the undertakings,
agreements, warranties, covenants and representations of the Mortgagor
contained in this Mortgage and no default by the Mortgagor under this Mortgage
shall be deemed to have been suspended or waived unless suspension or waiver is
in writing signed by an officer of the Mortgagee, and directed to the Mortgagor
specifying the suspension or waiver.
10.7 Mortgagee's Right to Perform the Obligations: If Mortgagor
shall fail, refuse or neglect to make any payments or
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perform any act required of it by the Mortgage (including the Mortgagor's
obligation under Section 4.3 hereof to defend the first lien status of this
Mortgage), at any time thereafter, upon reasonable notice to Mortgagor and
without waiving or releasing any other right, remedy or recourse, Mortgagee may
have because of same, Mortgagee may (but shall not be obligated to) make such
payment or perform such act for the account of and at the expense of Mortgagor,
and shall have the right to enter upon or in the Land and Buildings for such
purpose and to take all such action thereon and with respect to the Mortgaged
Property it may deem reasonably necessary or appropriate. In its exercise of
its rights under this Section 10.7, if Mortgagee shall elect to pay any
Imposition or other sums due with reference to the Mortgaged Property,
Mortgagee may do so in reliance on any bill, statement or assessment procured
from the appropriate Governmental Authority or other issuer thereof without
inquiring into the accuracy or validity thereof subject to any other applicable
terms and provisions set forth herein. Similarly, in making any payments to
protect the security intended to be created by the Loan Documents, Mortgagee
shall not be bound to inquire into the validity of any apparent or threatened
adverse title, lien, encumbrance, claim or charge before making an advance for
the purpose of preventing or removing the same subject to any other applicable
terms and provisions set forth herein. Mortgagor shall indemnify Mortgagee for
all losses, expenses, damage, claims and causes of action, including reasonable
attorneys' fees, incurred or accruing by reason of any acts performed by
Mortgagee pursuant to the provisions of this Section 10.7. All sums paid by
Mortgagee pursuant to this Section 10.7 and all other sums expended by
Mortgagee to which it shall be entitled to be indemnified, together with
interest thereon at the Default Interest Rate from the date of such payment or
expenditure, shall constitute additions to the Obligations, and shall be
secured by the Loan Documents and Mortgagor covenants and agrees to pay them to
the order of Mortgagee upon demand.
10.8 Covenants Running with the Land: All Obligations are intended
by the parties to be, and shall be construed as, covenants running with the
Mortgaged Property until such Mortgaged Property has been released from the
lien of this Mortgage.
10.9 Successors and Assigns: All of the terms of this Mortgage
shall apply to, be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
10.10 Severability: This Mortgage is intended to be performed in
accordance with, and only to the extent permitted by, applicable Legal
Requirements. If any provision of any of this Mortgage or the application
thereof to any person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, then neither the remainder of this Mortgage nor
the application of such provision to other persons or circumstances nor the
other instruments referred to hereinabove shall be affected
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thereby, but rather shall be enforced to the greatest extent permitted by
applicable law.
10.11 Entire Agreement and Modification, No Oral Changes: The Loan
Documents contain the entire agreement between the parties relating to the
subject matter hereof and thereof and all prior agreements relative thereto
which are not contained herein or therein are terminated. This Mortgage may
not be amended, revised, waived, discharged, released or terminated orally but
only by a written instrument or instruments executed by the party against which
enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.
10.12 APPLICABLE LAW; KNOWLEDGEABLE MORTGAGOR: THE PARTIES TO THIS
MORTGAGE AGREE THAT THEIR RIGHTS AND OBLIGATIONS UNDER THIS MORTGAGE SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE. THE PARTIES FURTHER AGREE THAT:
(A) THE PROCEDURES GOVERNING THE ENFORCEMENT BY MORTGAGEE OR
TRUSTEE, AS THE CASE MAY BE, OF THE PROVISIONAL REMEDIES AGAINST MORTGAGOR,
INCLUDING WITHOUT LIMITATION, ACTIONS FOR REPLEVIN, FOR CLAIM AND DELIVERY OF
PROPERTY, FOR INJUNCTIVE RELIEF OR FOR APPOINTMENT OF A RECEIVER AND THE
REQUIREMENTS NECESSARY TO CREATE OR GRANT, PERFECT OR FORECLOSE, OR DETERMINE
THE PRIORITY OF, THE LIEN AND SECURITY INTEREST OF THIS MORTGAGE, SHALL BE
GOVERNED BY THE LAWS OF THE STATE;
(B) TRUSTEE AND MORTGAGEE SHALL COMPLY WITH APPLICABLE LAW OF THE
STATE, TO THE EXTENT REQUIRED IN CONNECTION WITH THE POWER OF SALE OR THE
FORECLOSURE OF THE SECURITY INTERESTS AND LIENS CREATED HEREBY. THE PARTIES
FURTHER AGREE THAT MORTGAGEE AND TRUSTEE MAY ENFORCE THEIR RIGHTS UNDER THIS
MORTGAGE AND THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THEIR RIGHTS TO
SUE MORTGAGOR TO COLLECT ANY OUTSTANDING INDEBTEDNESS OR TO OBTAIN JUDGMENT FOR
ANY DEFICIENCY FOLLOWING FORECLOSURE, IN ACCORDANCE WITH THE LAWS OF THE STATE.
(C) MORTGAGOR HEREBY ACKNOWLEDGES, WARRANTS AND REPRESENTS THAT
EACH IS SOPHISTICATED, KNOWLEDGEABLE AND EXPERIENCED IN COMMERCIAL TRANSACTIONS
SIMILAR TO THE TRANSACTION EMBODIED IN THIS MORTGAGE AND THE LOAN DOCUMENTS;
EACH HAS BEEN FULLY, COMPLETELY AND ADEQUATELY REPRESENTED AND ADVISED BY
COMPETENT COUNSEL AND OTHER CONSULTANTS RETAINED FOR SUCH PURPOSES IN
CONNECTION WITH ALL ASPECTS (INCLUDING BUSINESS AND LEGAL) OF THE TRANSACTIONS
UNDER THIS MORTGAGE AND THE LOAN DOCUMENTS; ALL PARTIES TO SUCH TRANSACTION
HAVE EQUAL BARGAINING STRENGTH.
10.13 No Partnership; Control in Mortgagor: Except to the extent
occurring as a matter of law (a) nothing contained in this
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Mortgage is intended to, or shall be construed as, creating to any extent and
in any manner whatsoever, any partnership, joint venture, or association
between Mortgagor, Mortgagee and Trustee, or in any way make Mortgagee or
Trustee co-principals with Mortgagor with reference to all or any portion of
the Mortgaged Property, and any inferences to the contrary, are hereby
expressly negated; and (b) notwithstanding anything contained herein which may
be to the contrary, this Mortgage, the Loan Documents, any agreement, mortgage
or other document referred to herein by reference, whether specifically or
generally, and the transactions contemplated hereby do not and will not
constitute or create indirect, actual or practical ownership of the Mortgaged
Property or of Mortgagor by Mortgagee, or control, affirmative or negative,
direct or indirect, by Mortgagee over the programming, management, or any other
aspect of the day-to-day operation of the Mortgaged Property or Mortgagor,
which control remains in Mortgagor, its shareholders and board of directors.
10.14 Headings: The Article, Section and Subsection titles hereof
are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles, Sections
or Subsections.
10.15 Hold Harmless: Neither Mortgagee nor Trustee shall be
obligated to perform or discharge, nor does either hereto undertake to perform
or discharge, any obligation, duty or liability with respect to the Mortgaged
Property or the Leases under or by reason of this Mortgage or any of the Loan
Documents, and Mortgagor shall and does hereby agree to indemnify Mortgagee
and/or Trustee, as applicable, for and to hold Mortgagee harmless from any and
all liability, loss or damage which it may or might incur with respect to the
Mortgaged Property, the Leases or under or by reason of this Mortgage or any of
the Loan Documents and from any and all claims and demands whatsoever which may
be asserted against it by reason of any alleged obligations or undertakings on
its part to perform or discharge any of the terms, covenants, agreements
relating to the Mortgaged Property; provided, that Mortgagor shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions judgment, suits costs, expenses or disbursements resulting
from Mortgagee's or Trustee's, as the case may be, gross negligence or willful
misconduct. Should Mortgagee incur any such liability, loss or damage, the
amount thereof, including all reasonable attorneys' fees and reasonable costs
and expenses associated with actions taken by Mortgagee in defense thereof, or
otherwise in protecting its interest hereunder, shall be secured hereby, and
Mortgagor covenants and agrees to reimburse Mortgagee therefor immediately upon
demand.
10.16 Pronouns and Plurals: All pronouns used herein shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require, and the singular form of nouns,
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pronouns and verbs shall include plural, and vice versa, whichever the context
may require.
10.17 Waiver of Trial by Jury: To the extent permitted under the
laws of the state in which the applicable portion of the Mortgaged Property is
situated, Mortgagor and the Mortgagee each hereby waives and shall waive trial
by jury in any action, proceeding or counterclaim arising out of or relating to
this Mortgage.
10.18 Assignment: Mortgagee may assign or transfer all or any
portion of its rights under this Mortgage.
10.19 No Merger: So long as this Mortgage is an encumbrance upon
the Mortgaged Property, there shall be no merger of the interest of any lessor
or any lessee under any Lease or sublease.
10.20 Enforceability of Lien: In the event that any part of the
Obligations cannot be lawfully secured by this Mortgage, or the lien or
security interest hereof cannot be lawfully enforced to pay any part of the
Obligations, then and in either such event, at the option of Mortgagee, all
payments on the Obligations shall be deemed to have been first applied against
the unsecured part of the Obligations.
10.21 Knowledge: Whenever referenced in this Mortgage, the
"knowledge" or "best knowledge" of Mortgagor shall include the knowledge of its
parent corporations, if any, and its Subsidiaries, if any.
10.22 Best Efforts: Whenever referenced in this Mortgage, the term
"best efforts" shall not be interpreted as requiring the expenditure of
unreasonable sums of money, in view of the objectives sought.
10.23 Counterparts: This Mortgage shall be executed in multiple
counterparts, each of which shall be deemed an original, but all of such
counterparts shall constitute one and the same document.
TO THE EXTENT THE APPLICABLE PORTION OF THE MORTGAGED
PROPERTY IS SITUATED IN THE STATE OF CALIFORNIA OR GEORGIA, MORTGAGOR HEREBY
REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND NOTICE OF SALE AS MAY BE
REQUIRED BY LAW BE MAILED TO MORTGAGOR AT THE ABOVE ADDRESS BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED.
Mortgagor hereby acknowledges that it has received a copy of this
Mortgage free of charge.
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IN WITNESS AND TESTIMONY WHEREOF, THIS MORTGAGE, MORTGAGE DEED,
OPEN-END MORTGAGE, DEED TO SECURE DEBT, FIXTURE FINANCING STATEMENT, ASSIGNMENT
OF LEASES AND RENTS AND FINANCING STATEMENT has been duly executed and
delivered by Mortgagor and their respective corporate seals to be hereunto
affixed, by its proper officers hereunto duly authorized as of the date and
year first above written and Mortgagor accepts and agrees to the terms and
covenants contained herein.
MORTGAGOR:
Signed, sealed and delivered in
the presence of: CAROLINA FREIGHT CARRIERS
CORPORATION, a North Carolina
- ------------------------------ Corporation
Witness Signature
- ------------------------------ By:
Printed Name ---------------------------
Printed Name:
- ------------------------------ --------------
Witness Signature Title:
---------------------
Social Security #:
- ------------------------------ ---------
Printed Name
- ------------------------------
Notary Public
Date Executed by Notary:
---------
My Commission Expires:
-----------
[NOTARIAL SEAL]
Signed, sealed and delivered in
the presence of:
- ------------------------------ Attest:
Witness Signature ------------------------
Printed Name: John B. Yorke
- ------------------------------ Title: Secretary
Printed Name Social Security #:
----------
- ------------------------------
Witness Signature
- ------------------------------
Printed Name
[CORPORATE SEAL]
- ------------------------------
Notary Public
Date Executed by Notary:
---------
My Commission Expires:
-----------
[NOTARIAL SEAL]
[Signatures and acknowledgements continue on following page]
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Signed, sealed and delivered in RED ARROW FREIGHT LINES, INC., a
the presence of: Texas Corporation
- ------------------------------ By:
Witness Signature ----------------------------
Printed Name:
- ------------------------------ ---------------
Printed Name Title:
---------------------
- ------------------------------ Social Security #:
Witness Signature ----------
- ------------------------------
Printed Name
- ------------------------------
Notary Public
Date Executed by Notary:
---------
My Commission Expires:
-----------
[NOTARIAL SEAL]
Signed, sealed and delivered in
the presence of:
- ------------------------------ Attest:
Witness Signature ------------------------
Printed Name: John B. Yorke
- ------------------------------ Title: Secretary
Printed Name Social Security #:
----------
- ------------------------------
Witness Signature
- ------------------------------
Printed Name
[CORPORATE SEAL]
- ------------------------------
Notary Public
Date Executed by Notary:
---------
My Commission Expires:
-----------
[NOTARIAL SEAL]
[Acknowledgements continue on following page]
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ILLINOIS
THE STATE OF __________ )
) ss.
_____________ County, )
I, ________________________________, a Notary Public in and for said
county and state, do hereby certify that ______________, _________________ of
Carolina Freight Carriers Corporation, personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person, and acknowledged that he signed and delivered the said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
Given under my hand and official seal, this ___ day of
____________________, 1994.
My Commission Expires
-------------------------------
Notary Public
This instrument was prepared by:
- --------------------------------
(Name)
- --------------------------------
(Address)
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177
ILLINOIS
THE STATE OF _________ )
) ss.
_____________ County, )
I, ________________________________, a Notary Public in and for said
county and state, do hereby certify that JOHN B. YORKE, Secretary of Carolina
Freight Carriers Corporation, personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this
day in person, and acknowledged that he signed and delivered the said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
Given under my hand and official seal, this ___ day of
____________________, 1994.
My Commission Expires
---------------------------------
Notary Public
This instrument was prepared by:
- --------------------------------
(Name)
- --------------------------------
(Address)
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178
ILLINOIS
THE STATE OF _________ )
) ss.
_____________ County, )
I, ________________________________, a Notary Public in and for said
county and state, do hereby certify that ______________, ________________ of
Red Arrow Freight Lines, Inc., personally known to me to be the same person
whose name is subscribed to the foregoing instrument, appeared before me this
day in person, and acknowledged that he signed and delivered the said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
Given under my hand and official seal, this ___ day of
____________________, 1994.
My Commission Expires
---------------------------------
Notary Public
This instrument was prepared by:
- --------------------------------
(Name)
- --------------------------------
(Address)
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179
ILLINOIS
THE STATE OF _________ )
) ss.
_____________ County, )
I, ________________________________, a Notary Public in and for said
county and state, do hereby certify that JOHN B. YORKE, Secretary of Red Arrow
Freight Lines, Inc., personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person,
and acknowledged that he signed and delivered the said instrument as his free
and voluntary act, for the uses and purposes therein set forth.
Given under my hand and official seal, this ___ day of
____________________, 1994.
My Commission Expires
------------------------------
Notary Public
This instrument was prepared by:
- --------------------------------
(Name)
- --------------------------------
(Address)
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EXHIBIT "B"
Attornment Provisions
"The lessee covenants and agrees that if, by reason of default under
any mortgage which may now or hereafter affect the land and/or building of
which the premises that is the subject of this Lease forms a part (the
"Mortgaged Property") (including, without limitation, the Mortgage, Mortgage
Deed, Open-End Mortgage, Deed to Secure Debt, Deed of Trust, Fixture Financing
Statement, Assignment of Leases and Rents and Financing Statement (the
"Mortgage"), dated as of March 17, 1994 between the landlord hereunder or a
predecessor in title or interest, as Mortgagor and Citibank, N.A., for itself
and as agent, as Mortgagee, and any amendments, supplements or modifications
thereof, the mortgagee thereunder enters into and becomes possessed of the
Mortgaged Property either through possession or foreclosure action or
proceeding, or in the event of the sale of the said Mortgaged Property as a
result of any action or proceeding to foreclose said mortgage, the tenant will
attorn to the mortgagee or such then owner and will recognize the mortgagee or
such then owner as its landlord under this Lease, unless the mortgagee or such
then owner shall elect to terminate this Lease and the rights of the lessee
hereunder. The lessee agrees to execute and deliver, at any time and from time
to time, upon the request of the mortgagee or the then owner of the Mortgaged
Property, any instrument which may be necessary or appropriate to evidence such
attornment and the lessee hereby irrevocably appoints the mortgagee or the then
owner of the Mortgaged Property the attorney-in-fact of the lessee to execute
and deliver for and on behalf of the lessee any such instrument. The lessee
further waives the provision of any statute or rule of law now or hereafter in
effect which may give or purport to give the lessee any right of election to
terminate this Lease or to surrender possession of the premises that is the
subject of this Lease in the event any proceeding is brought by the mortgagee
under any such mortgage to terminate the same, and agrees that unless and until
the mortgagee, in connection with any such proceeding, shall elect to terminate
this Lease and the rights of the lessee hereunder, this Lease shall not be
affected in any way whatsoever by any such proceeding."
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181
GUARANTY AGREEMENT
Dated as of March 15, 1994
From
CAROLINA FREIGHT CORPORATION
To
CITIBANK, N.A.
as Agent
182
GUARANTY AGREEMENT
TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Guaranty; Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Guaranty of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 4. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 6. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tangible Net Worth Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Keeping of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Maintenance of Properties, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Interest Bearing Debt to EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
EBITDA to Interest and Rental Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Ownership of Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Intercompany Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Dividends, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Compliance With ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Negative Stock Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Loans, Advances and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Limitation on Loans to Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Limitation on Investor Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9. Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 10. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(i)
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SECTION 11. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 12. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 13. Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 14. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 15. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 16. Continuing Guaranty; Assignments under. . . . . . . . . . . . . . . . . . . . . . . . . 22
Credit Agreement
SECTION 17. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 18. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 19. Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 20. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 21. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 22. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(ii)
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GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of March 15, 1994 (the "Guaranty"),
made by Carolina Freight Corporation, a corporation organized and existing
under the laws of North Carolina (the "Guarantor"), in favor of the Banks (the
"Banks") listed as parties to the Credit Agreement (as defined below) and
Citibank, N.A., as agent (the "Agent") for the Banks.
PRELIMINARY STATEMENTS.
(1) The Banks and the Agent have entered into a Secured Revolving
Credit and Letter of Credit Agreement, dated as of March 15, 1994 (said
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Carolina Freight
Carriers Corporation, a corporation organized and existing under the laws of
North Carolina, and Red Arrow Freight Lines, Inc., a corporation organized and
existing under the laws of Texas (individually, a "Borrower" and collectively,
the "Borrowers"). The Guarantor may receive a portion of the proceeds of the
Advances under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement,
including the issuance of Letters of Credit by Citibank.
(2) It is a condition precedent to the making of Advances by the
Banks and the issuance of Letters of Credit by Citibank under the Credit
Agreement that the Guarantor, as owner of 100% of the outstanding capital
shares of stock of each Borrower, shall have executed and delivered this
Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to make Advances and Citibank to issue Letters of Credit under
the Credit Agreement, the Guarantor hereby agrees with the Agent for its
benefit and the benefit of the Banks, including Citibank as issuer of the
Letters of Credit, as follows:
SECTION 1. Guaranty; Security. The Guarantor hereby unconditionally
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Borrowers now or hereafter
existing under the Credit Agreement, the Notes, all Letters of Credit
(including any deemed Letters of Credit, pursuant to Section 2.13(a) of the
Credit Agreement, issued by Citibank) and under or respecting any application
or agreement executed by or binding upon the Borrowers in connection with any
Letters of Credit (collectively, the "Reimbursement Documents"), whether for
principal, interest, fees, expenses or otherwise (such obligations being the
"Obligations"), and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) incurred by the Agent or the Banks in enforcing any
rights under this Guaranty. Without limiting the generality of the foregoing,
the Guarantor's liability shall extend
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to all amounts which constitute part of the Obligations and would be owed by
the Borrowers to the Agent or the Banks under the Credit Agreement, the Notes,
the Reimbursement Documents, the Letters of Credit and any other Loan Documents
but for the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Borrower. For purposes of this Guaranty, the term "Bank" or "Banks" shall,
unless otherwise expressly indicated, include Citibank in its capacity as a
Bank. The Obligations are secured by that certain Pledge and Security
Agreement (the "Pledge Agreement"), dated of even date herewith, made by
Guarantor in favor of Agent for the ratable benefit of the Banks which Pledge
Agreement is incorporated herein by this reference and to which reference is
made for a description of such security and the rights and remedies of the
Agent thereunder.
SECTION 2. Guaranty of Payment. This is a guaranty of payment and not
of collection, and the Guarantor expressly waives any right to require that any
action be brought against a Borrower or any other guarantor of amounts due
under the Credit Agreement, the Notes, the Reimbursement Documents, the Letters
of Credit or any other Loan Documents or to require that resort be had to any
security. If the Borrower shall fail to pay the Obligations when and as the
same becomes due (whether at maturity, by acceleration or call for prepayment
or otherwise), the Guarantor, upon demand, without notice other than such
demand and without the necessity of further action by the Banks, shall promptly
and fully make such payment. The Guarantor shall pay all reasonable costs and
expenses, including reasonable counsel fees and expenses, paid or incurred by
the Bank, in connection with the enforcement of the requirement of the
Borrowers to pay the Obligations. All payments by the Guarantor shall be made
in lawful money of the United States of America. Each default in the payment
of the Obligations shall give rise to a separate cause of action hereunder, and
separate suits may be brought hereunder as each cause of action arises.
SECTION 3. Guaranty Absolute. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes, any Letter of Credit, the Reimbursement Documents and any
other Loan Documents, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional irrespective
of:
(i) any lack of validity or enforceability of the Credit
Agreement, any Letter of Credit, the Reimbursement Documents, the
Notes, any other Loan Documents or any other agreement or
instrument relating thereto;
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(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any
consent to departure from the Credit Agreement, the Notes, any
Letter of Credit, the Reimbursement Documents or any other
Loan Documents, including, without limitation, any increase in
the Obligations resulting from the extension of additional
credit to the Borrowers or any of their respective
Subsidiaries or otherwise;
(iii) any taking, exchange, release or
non-perfection of any collateral, or any taking, release or
amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the Obligations, or any
manner of sale or other disposition of any collateral for all
or any of the Obligations or any other assets of a Borrower or
any of its Subsidiaries;
(v) any change, restructuring or termination of the
corporate structure or existence of a Borrower or any of its
Subsidiaries; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, a
Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Agent or any Bank upon the
insolvency, bankruptcy or reorganization of a Borrower or otherwise, all as
though such payment had not been made.
SECTION 4. Waiver. The Guarantor hereby unconditionally waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Obligations and this Guaranty and any requirement that the Agent
or any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right or take any action against
the Borrowers or any other person or entity or any collateral.
SECTION 5. Subrogation. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the Commitments
shall have expired or terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time prior to the later
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of (x) the payment in full of the Obligations and all other amounts payable
under this Guaranty and (y) the expiration or termination of the Commitments,
such amount shall be held in trust for the benefit of the Agent and the Banks
and shall forthwith be paid to the Agent to be credited and applied upon the
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement or to be held by the Agent as collateral security for any
Obligations thereafter existing. If (i) the Guarantor shall make payment to
the Agent or the Banks of all or any part of the Obligations, (ii) all the
Obligations and all other amounts payable under this Guaranty shall be paid in
full, (iii) the Commitments shall have expired or terminated, and (iv) at such
time no Letter of Credit is outstanding, the Agent and the Banks will, at the
Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary
to evidence the transfer by subrogation to the Guarantor of an interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 6. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) The Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
indicated at the beginning of this Agreement.
(b) The execution, delivery and performance by the
Guarantor of this Guaranty are within the Guarantor's corporate powers, have
been duly authorized by all necessary corporate action, and do not contravene
(i) the Guarantor's articles of incorporation or by-laws or (ii) in any
material respect, any law or any contractual restriction binding on or
affecting the Guarantor.
(c) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or regulatory body is
required for the due execution, delivery and performance by the Guarantor of
this Guaranty.
(d) This Guaranty is the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance
with its respective terms.
(e) The balance sheets of the Guarantor and its
Subsidiaries as at December 31, 1993, and the related statements of income and
retained earnings of the Guarantor and its Subsidiaries for the fiscal year
then ended, copies of which have been furnished to each Bank, fairly present
the financial condition of the Guarantor and its Subsidiaries at such date and
the results of the operations of the Guarantor and its Subsidiaries for the
period ended on such date, all in accordance with GAAP, and since
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188
December 31, 1993, there has been no Material Adverse Effect in such condition
or operations.
(f) The Guarantor owns (i) one hundred percent (100%) of
the capital stock of CFCC, RA, CCSI, ILI, Cardinal, GITC and CLC, and (ii) one
hundred percent (100%) of the capital stock of MCI (less 8 directors qualifying
shares), in each case free and clear of any Lien (other than the Lien of the
Collateral Documents) as set forth on Schedule 4.1(b) of the Credit Agreement.
(g) There is no pending or threatened action or
proceeding affecting the Guarantor or any of its Subsidiaries before any court,
governmental agency or arbitrator, which may have a Material Adverse Effect on
the financial condition or operations of the Guarantor or any Subsidiary or
which purports to affect the legality, validity or enforceability of this
Guaranty.
(h) The Guarantor and each of its Subsidiaries has filed
or caused to be filed all tax returns required to be filed by it and has paid
all taxes shown to be due and payable by it on said returns or on any
assessments made against it, except those which are being contested in good
faith by appropriate proceedings and for which reasonable reserves, as may be
required by GAAP, are being maintained on its books.
(i) Neither Guarantor nor any of its Subsidiaries has
received an Environmental Complaint which the Guarantor believes would have a
Material Adverse Effect, regarding the Guarantor or any of its Subsidiaries or
its operations (including, without limitation, on-site or off-site waste
disposal), or any real property now owned, operated, leased or used by the
Guarantor or any of its Subsidiaries or with respect to the Guarantor's
operations on formerly owned real property.
(j) (i) No Reportable Event has occurred and is
continuing with respect to any Plan; (ii) the PBGC has not instituted
proceedings to terminate any Plan; (iii) neither the Guarantor, any ERISA
Affiliate, nor any duly-appointed administrator of a Plan (A) has incurred any
liability to PBGC with respect to any Plan other than for premiums not yet due
or payable, or (B) has instituted or intends to institute proceedings to
terminate any Plan under Sections 4041 or 4041A of ERISA or withdraw from any
Multiemployer Plan; (iv) no "accumulated funding deficiency" (as defined in
ERISA Section 302 or Internal Revenue Code Section 412) exists with respect to
any Plan, whether or not waived; (v) each Plan of the Guarantor and its
Subsidiaries has been administered and funded in accordance with its terms and
with all provisions of the Code and ERISA applicable thereto; and (vi) the
Guarantor and its Subsidiaries have not incurred any liability with respect to
any welfare plan (as defined in ERISA Section 3(i)) or for "welfare benefits"
(as defined in Code Section 419) that is
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189
not reflected on the financial statements of the Guarantor and its
Subsidiaries.
(k) The Guarantor has never caused or permitted any
Hazardous Material to be placed, held, located, released, generated, treated,
stored or disposed of on, under, over or in connection with activities at any
real property now owned, operated, leased or used by the Guarantor or any of
its Subsidiaries, or any part thereof or with respect to the Guarantor's
operations on formerly owned real property, other than quantities of petroleum
and chemical products or hazardous wastes permissible under the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et
seq., as amended, or other Hazardous Materials properly and legally stored
(or, in case of hazardous wastes, disposed of in accordance with regulations
promulgated under RCRA), necessary for the operation of the business of the
Guarantor and any of its Subsidiaries or their tenants and the maintenance of
fuel storage tanks in compliance with Relevant Environmental Laws. No real
property now owned, operated, leased or used by Guarantor or any of its
Subsidiaries has been used (whether by Guarantor or its Subsidiaries, or, to
the best knowledge of Guarantor, by any other Person) as a dump site or storage
(whether permanent or temporary) site for any Hazardous Material other than
quantities of petroleum and chemical products or hazardous wastes permissible
under RCRA, or other Hazardous Materials properly and legally stored (or, in
case of hazardous wastes, disposed of in accordance with regulations
promulgated under RCRA), necessary for the operation of the business of the
Guarantor and its Subsidiaries or their tenants and the maintenance of fuel
storage tanks in compliance with Relevant Environmental Laws.
(l) To the best of Guarantor's knowledge, after due
inquiry, the Guarantor knows of no locations where any Hazardous Material or
Asbestos from any real property now or formerly owned, operated, leased or used
by Guarantor or any of its Subsidiaries is now stored or has been treated,
recycled or disposed of, except in compliance with Relevant Environmental Laws.
(m) There are no Environmental Liens on or affecting any
real property owned, operated, leased or used by Guarantor or any of its
Subsidiaries.
(n) To the best of Guarantor's knowledge, after due
inquiry, the Guarantor and each of its Subsidiaries obtained all permits,
certificates, licenses, approvals, registrations and other authorizations which
are required for the operation of its facilities under all Relevant
Environmental Laws and is in material compliance with all Relevant
Environmental Laws.
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190
(o) Except as shown on Exhibit 1, neither the Guarantor,
nor any of its Subsidiaries has received notice that it generated, transported
or arranged for the transportation of any Hazardous Material to any site listed
on the National Priorities List under The Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601, et.
seq., as amended, or any similar list under any analogous state statute.
(p) There are no environmental, health or safety
conditions existing or reasonably expected to exist at any real property owned,
operated, leased or used by the Guarantor or any of its Subsidiaries which
might require any construction or other capital costs within the next 5 years
in order to assure compliance with Relevant Environmental Laws and which the
Guarantor believes would have a Material Adverse Effect.
(q) To the best of the Guarantor's knowledge, neither
this Guaranty nor any other document, certificate or statement furnished to the
Agent or the Banks by or on behalf of the Guarantor in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading. To the best of the Guarantor's knowledge, there is no fact
peculiar to a Borrower or any of its Subsidiaries which has or in the future
may (so far as the Guarantor can now foresee) have a Material Adverse Effect
which has not been set forth in this Guaranty or in the other documents,
certificates and statements furnished to the Banks by or on behalf of the
Guarantor prior to the date hereof in connection with the transactions
contemplated by the Credit Agreement and this Guaranty.
(r) The Guarantor has complied in all material respects
with all applicable statutes, rules, regulations, orders and restrictions of
any Governmental Authority having or claiming jurisdiction, the violation of
which would have a Material Adverse Effect.
(s) There are no conditions precedent to the
effectiveness of this Guaranty that have not been satisfied or waived.
(t) The Guarantor has, independently and without reliance
upon the Agent or any Bank and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty.
SECTION 7. Affirmative Covenants. The Guarantor covenants and agrees
that, so long as any part of the Obligations shall remain unpaid, any Letter of
Credit shall be outstanding or any Bank shall have any Commitment, the
Guarantor will, unless the Majority Banks shall otherwise consent in writing:
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(a) Corporate Existence. Maintain its corporate
existence and its qualification to do business in all states where such
qualifications is necessary. Notwithstanding any other provision contained in
this Guaranty or any other Loan Document to the contrary, maintain the
corporate existence and going concern status of CFCC, RA, CCSI, ILI, Cardinal,
GITC, MCI and CLC.
(b) Compliance with Laws, Etc. Comply, and cause each of
its Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property except to the extent
contested in good faith by appropriate proceedings and for which reasonable
reserves, as may be required by GAAP, are being maintained.
(c) Tangible Net Worth. Maintain at all times, on a
consolidated basis, a Tangible Net Worth equal to $112,500,000 plus 100 percent
of the net proceeds of any issuance of equity plus an amount equal to 50% of
the aggregate cumulative net earnings (not adjusted for net losses) of the
Guarantor earned in each fiscal year after January 1, 1994. For purposes of
this Section 7(c) only, Tangible Net Worth and net earnings shall not include
any (i) extraordinary items of income earned after January 1, 1994, and (ii)
changes in accounting principles occurring after January 1, 1994.
(d) Tangible Net Worth Ratio. Maintain on a consolidated
basis a quarterly ratio of Total Liabilities to Tangible Net Worth of not more
than 2.25 to 1.0.
(e) Maintenance of Insurance. Maintain, and cause each
of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations covering such risk as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Guarantor and its Subsidiaries operate. Such
insurance shall provide coverage for amounts of liability in excess of
$1,500,000 per occurrence and up to a total of $50,000,000 per occurrence. The
Guarantor and its Subsidiaries may self-insure for liability of up to
$1,500,000 per occurrence.
(f) Visitation Rights. At any reasonable time and from
time to time, permit the Agent or any of the Banks or any agents or
representatives thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Guarantor and
any of its Subsidiaries, and to discuss the affairs, finances and accounts of
the Guarantor and any of its Subsidiaries with any of their respective officers
or directors and with their independent certified public accountants.
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192
(g) Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Guarantor and each of its Subsidiaries in accordance with GAAP.
(h) Maintenance of Properties, Etc. Maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, all of
its properties which are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(i) Reporting Requirements. Furnish to the Banks:
(i) as soon as available and in any event within
45 days after the end of each of the first three quarters of
each fiscal year of the Guarantor, (y) balance sheets of the
Guarantor and its Subsidiaries as of the end of such quarter
which shall contain a detailed statement satisfactory to the
Banks of the aging of accounts receivable, and statements of
income and retained earnings of the Guarantor and its
Subsidiaries, on a consolidated and consolidating basis, for
the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, and (z) detailed
calculations, satisfactory to the Banks, in respect to
compliance of the Guarantor with Section 7(c), 7(d), 7(k) and
7(l), in each case certified by the Chief Financial Officer of
the Guarantor;
(ii) as soon as available and in any event within
90 days after the end of each fiscal year of the Guarantor, a
copy of the annual audit report for such year for the
Guarantor and its Subsidiaries, on a consolidated and
consolidating basis, containing financial statements for such
year, certified in a manner acceptable to the Majority Banks
by Arthur Andersen & Co. or other independent public
accountants acceptable to the Majority Banks;
(iii) as soon as available and in any event within
90 days after the end of each fiscal year of the Guarantor,
(y) a detailed statement, satisfactory to the Banks, of the
aging of accounts receivable, and (z) detailed calculations,
satisfactory to the Banks, in respect to compliance of the
Guarantor with Section 7(c), 7(d), 7(k) and 7(l), in each case
certified by the Chief Financial Officer of the Guarantor;
(iv) as soon as is available and in any event
within 30 days after the end of each Accounting Period
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hereafter, (y) unaudited interim consolidated financial
statements (including balance sheets and income statements) of
Guarantor and its Subsidiaries as of the end of such
Accounting Period and of the portion of the Guarantor's fiscal
year then elapsed, on a consolidated and consolidating basis,
and fairly presenting the financial position and results of
operations of Guarantor and its Subsidiaries for such
Accounting Period and (z) detailed calculations, satisfactory
to the Banks, in respect to compliance of the Guarantor with
Section 7(c) and 7(d), in each case certified by the Chief
Financial Officer of the Guarantor;
(v) as soon as possible and in any event within
five days after the occurrence of each Default or Event of
Default, a statement of the Chief Financial Officer of the
Guarantor setting forth details of such Default or Event of
Default and the action which the Guarantor has taken and
proposes to take with respect thereto;
(vi) promptly and in any event within 15 days
after the Guarantor or any ERISA Affiliate knows or has reason
to know that any ERISA Event has occurred, a statement of the
Chief Financial Officer of the Guarantor describing such ERISA
Event and the action, if any, which the Guarantor or such
ERISA Affiliate proposes to take with respect thereto;
(vii) promptly and in any event within 5 Business
Days after receipt thereof by the Guarantor or any ERISA
Affiliate, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed
to administer any Plan;
(viii) promptly and in any event within 5 Business
Days after receipt thereof by the Guarantor or any ERISA
Affiliate from the sponsor of a Multiemployer Plan a copy of
each notice received by the Guarantor or any ERISA Affiliate
concerning (x) the imposition of Withdrawal Liability by a
Multiemployer Plan, (y) the reorganization or termination,
within the meaning of Title IV of ERISA, of any Multiemployer
Plan or (z) the amount of liability incurred or which may be
incurred, by the Guarantor or any ERISA Affiliate in
connection with any event described in clause (x) or (y)
above;
(ix) promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court
or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which would have a
Material Adverse Effect;
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(x) promptly after the sending or filing thereof
and except as otherwise expressly provided in this subsection
(i), copies of all such proxy statements, financial
statements, and reports which the Guarantor or any of its
Subsidiaries sends to its respective stockholders, and copies
of all regular, periodic and special reports, and all
registration statements, which the Guarantor or any of its
Subsidiaries files with the Securities and Exchange Commission
or any Governmental Authority which may be substituted
therefor, or with any national securities exchange;
(xi) upon the Agent's written request, copies of
all reports and notices which the Guarantor or any Subsidiary
files under ERISA with the Internal Revenue Service or the
PBGC or the U.S. Department of Labor or which the Guarantor or
any Subsidiary receives from the PBGC; and
(xii) such other information respecting the
business, properties, operations or condition, financial or
otherwise, of the Guarantor or any of its Subsidiaries as any
Bank through the Agent may from time to time reasonably
request.
(j) ERISA. The Guarantor and each of its Subsidiaries
shall make prompt payments of contributions required by the terms of each Plan
or meet the minimum funding standards applicable.
(k) Interest Bearing Debt to EBITDA. Guarantor shall
have, on a consolidated basis, as of the last day of each fiscal quarter for
the previous Measurement Period, a ratio of (x) the sum of total on-balance
sheet, interest-bearing Debt plus the aggregate principal amount of Investor
Certificates to (y) EBITDA of not more than 4.00 to 1.00 (for the first three
fiscal quarters of Guarantors' 1994 fiscal year) and 3.75 to 1.00 thereafter.
(l) EBITDA to Interest and Rental Expenses. Guarantor
shall have, on a consolidated basis, as of the last day of each fiscal quarter
for the previous Measurement Period a ratio of (x) the sum of EBITDA plus
Rentals to (y) the sum of Interest Expense plus Rentals plus principal payments
due on Debt during the period of the forthcoming four consecutive fiscal
quarters of not more than 1.75 to 1.00.
(m) Ownership of Subsidiary Stock. Continue to own (i)
one hundred percent (100%) of the capital stock of CFCC, RA, CCSI, ILI,
Cardinal, GITC and CLC and (ii) one hundred percent (100%) of the capital stock
of MCI (less 8 directors qualifying shares).
(n) Intercompany Debt. Cause all intercompany
indebtedness, between the Guarantor and any of its Subsidiaries or
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between any Subsidiary of the Guarantor and any other Subsidiary of the
Guarantor, for borrowed money to be evidenced by promissory notes, which, after
the Closing Date, shall (i) be for a tenure of 18 months or less, and (ii)
contain acceleration provisions in the event of non-payment.
SECTION 8. Negative Covenants. The Guarantor covenants and agrees
that, so long as any part of the Obligations shall remain unpaid, any Letter of
Credit shall be outstanding or any Bank shall have any Commitment, the
Guarantor will not, without the prior written consent of the Majority Banks:
(a) Guaranties. Guarantee, endorse or otherwise become
directly or contingently liable or permit any of its Subsidiaries (excluding
the Borrowers) to guarantee, endorse or otherwise become directly or
contingently liable in connection with the obligations of any Person, except
that: (i) the Guarantor or any Subsidiary may guarantee, endorse or otherwise
become directly or contingently liable in connection with the obligations of
any Person, to the Banks; (ii) the Guarantor or any Subsidiary may guarantee or
otherwise be or become directly or contingently liable in connection with
guaranty agreements (or similar agreements) currently in effect, as set forth
on Schedule 8(a); (iii) the Guarantor or any Subsidiary may endorse in the
ordinary course of business negotiable instruments in the course of collection;
and (iv) the Guarantor may guarantee or otherwise become directly or
contingently liable in connection with the (y) obligations of its Subsidiaries
where applicable law or regulations requires the Guarantor, as parent of the
Subsidiary, to guarantee the obligations of such Subsidiary or (z) obligations
of the Guarantor's Subsidiaries not exceeding, in an aggregate amount
outstanding, $15,000,000.
(b) Debt. Incur, assume, or suffer to exist or allow any
Subsidiary (excluding the Borrowers) to incur, assume or suffer to exist any
Debt for borrowed funds or Capital Leases except for: (i) Debt for borrowed
funds or under Capital Leases existing on the date of this Guaranty, as set
forth on Schedule 8(b), or arising under the Credit Agreement; (ii) trade
payables and contractual obligations to suppliers and customers incurred in the
ordinary course of business; (iii) accrued pension fund and other Plan
obligations and liabilities (provided, however, that such Debt does not result
in the existence of any Event of Default under any other provision of this
Guaranty); (iv) deferred taxes; (v) Debt resulting from endorsements of
negotiable instruments received in the ordinary course of its business; (vi)
Debt for borrowed funds or under Capital Leases in an amount not to exceed
$10,000,000 in the aggregate outstanding at any time; and (vii) Debt for
borrowed funds against the cash value of life insurance policies.
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(c) Lease Obligations. Create or suffer to exist, or
permit any of its Subsidiaries to create or suffer to exist, any obligations
for the payment of rental for any property under leases or agreements to lease
(other than currently existing leases or lease agreements or Capital Leases)
having a term of one year or more which would cause the direct or contingent
liabilities of the Guarantor and its Subsidiaries, on a consolidated basis, in
respect of all such obligations to exceed $24,000,000 payable in any period of
12 consecutive calendar months.
(d) Dividends, Etc. Declare or make any dividend payment
or other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of capital stock of the
Guarantor (other than dividends payable solely in the stock of the Guarantor),
or purchase, redeem or otherwise acquire for value (or permit any of its
Subsidiaries to do so) any shares of any class of capital stock of the
Guarantor or any warrants, rights or options to acquire any such shares, now or
hereafter outstanding (other than the purchase or redemption of any class of
capital stock with the proceeds received from the substantially concurrent
issue of new shares of its common stock), except that the Guarantor may (i)
declare and make any dividend payment or other distribution payable in cash,
and (ii) purchase, redeem or otherwise acquire shares of its capital stock or
warrants, rights or options to acquire any such shares, provided that the sum
of (i) and (ii) shall not exceed, at any time, the sum of $1,000,000 and 50% of
the consolidated net earnings of the Guarantor and its Subsidiaries accumulated
subsequent to December 31, 1993, computed in accordance with GAAP, and further
provided that, immediately after giving effect to such proposed action, no
Default or Event of Default would exist.
(e) Mergers, Etc. Guarantor will not, and will not
permit any Subsidiary 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, or acquire all or substantially all of the
assets of, any Person, or permit any of its Subsidiaries to do so, except that
the Guarantor may merge or consolidate with any corporation or business
(excluding CFFC) so long as the Guarantor shall be the surviving or continuing
corporation and any Subsidiary of the Guarantor (excluding CFFC) may merge or
consolidate with or into, or dispose of assets to, or acquire assets of, any
other Subsidiary of the Guarantor and except that any Subsidiary of the
Guarantor (excluding CFFC) may merge into or dispose of assets to the
Guarantor, provided in each case that (i) immediately after giving effect to
such proposed transaction, no Default or Event of Default would exist, (ii) in
the case of any such merger to which the Guarantor is a party, the Guarantor is
the surviving corporation, (iii) the value of the assets involved in any such
transaction or
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series of transactions does not exceed $5,000,000 in the aggregate, and (iv)
the Guarantor shall continue to own a majority of the voting stock in any
Subsidiary. Notwithstanding the foregoing, each of the Guarantor or any
Subsidiary may (i) sell up to 5% of its respective assets, for cash, in each
fiscal year, (ii) sell accounts receivable (as regards the Borrowers, the
Guarantor and CFFC any such sale of accounts receivable shall be pursuant to
the Transfer Agreement, the Receivables Purchase Agreement, and the Pooling and
Servicing Agreement, respectively), and (iii) sell its assets, for cash, in
the ordinary course of business.
(f) Compliance With ERISA. (i) Terminate or permit any
ERISA Affiliate to terminate any Plan maintained for employees of the Guarantor
and covered by Title IV of ERISA so as to result in any material (in the
reasonable opinion of the Banks) liability of the Guarantor to the PBGC, (ii)
enter into any Prohibited Transaction (as defined in Section 4975 of the Code
and in ERISA) involving any Plan which results in any material (in the
reasonable opinion of the Banks) liability of the Guarantor to PBGC, (iii)
cause any occurrence of any Reportable Event which results in any material (in
the reasonable opinion of the Banks) liability of the Guarantor to PBGC, or
(iv) allow or suffer to exist any other event or condition known to the
Guarantor which results in any material (in the reasonable opinion of the
Banks) liability of the Guarantor to PBGC.
(g) Subordinated Debt. Redeem, repurchase, defease,
consummate an exchange for or otherwise acquire for consideration any
"Subordinated Debt" (as hereinafter defined), or give irrevocable written
notice to take any such action, except for the repurchase or redemption of
Subordinated Debt up to $3,000,000, face value, in any calendar year commencing
January 1, 1996 in satisfaction of annual sinking fund requirements commencing
in 1997, as set forth in the debenture evidencing the Subordinated Debt.
"Subordinated Debt" for the purpose of this Guaranty shall mean the Carolina
Freight corporation $50,00,000 6-1/4% Convertible Subordinated Debenture,
maturing on April 15, 2011.
(h) Limitation on Liens. Create, assume, or suffer to
exist or permit any Subsidiary (excluding the Borrowers) to create, assume or
suffer to exist any Lien of any kind in any of their respective properties or
assets, now owned or hereafter acquired, except for: (i) Liens for taxes or
assessments or governmental charges, levies or imposts not yet due or being
contested in good faith by appropriate proceedings and for which reasonable
reserves, as may be required by GAAP, are being maintained; (ii) Liens on real
property, fixtures and tangible personal property existing on the date hereof
and listed on Exhibit 2 attached hereto; (iii) purchase money Liens on real
property, fixtures and tangible personal property containing customary terms
(including leases in the nature of Capital Leases of equipment); (iv) Liens
granted in
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connection with tangible personal property on terms not less favorable than the
terms of the original purchase money financing; (v) existing Liens on real
property, fixtures and tangible personal property acquired in an acquisition;
(vi) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other
like liens arising in the ordinary course of business, payment for which is not
yet due or which are being contested in good faith and by appropriate
proceedings; (vii) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation;
(viii) deposits to secure the performance of utilities, leases, statutory
obligations and surety and appeal bonds and other obligations of a like nature
incurred in the ordinary course of business; (ix) bankers' Liens arising by
statute or under customary terms regarding depository relationships on deposits
held by financial institutions with whom the Guarantor or any Subsidiary has a
banker-customer relationship; (x) Liens in favor of a Bank arising by operation
of laws or under customary terms regarding depository relationships relating to
bankers' liens on deposits held by such Bank or in connection herewith; (xi)
easements, right-of-way, restrictions and other similar encumbrances incurred
in the ordinary course of business which, in the aggregate, are not substantial
in amount, and which do not in any case materially detract from the value of
the property subject thereto or interfere with the ordinary conduct of the
business of Guarantor or any of its Subsidiaries; (xii) typical restrictions
imposed by licenses and leases of software (including location and transfer
restrictions); (xiii) obligations or Liens arising out of or created by the
Receivables Purchase Agreement and the Pooling and Servicing Agreement; (xiv)
leases of over-the-road tractors and trailers; (xv) Liens granted pursuant to
the provisions of the Credit Agreement; (xvi) Liens on property which consist
of margin stock and (xvii) Liens which neither individually nor in the
aggregate secure an obligation or obligations in excess of $2,000,000 at any
given time.
(i) Negative Stock Pledge. Pledge, assign, hypothecate
or in any manner create or suffer to exist any Lien upon, or permit any
Subsidiary to pledge, assign, hypothecate or in any manner create or suffer to
exist any Lien upon any shares of capital stock of any Subsidiary directly or
indirectly owned by either the Guarantor or any Subsidiary of Guarantor to any
Person except to the Agent for the ratable benefit of the Banks as contemplated
hereby.
(j) Loans, Advances and Investments. Make or allow any
Subsidiary (excluding the Borrowers) to make or permit to remain outstanding
any loan or advance or make any capital contribution to, or guarantee, endorse
or otherwise be or become directly or contingently liable in connection with,
the obligations, stock or dividends of, or invest in, own, purchase or
otherwise acquire any stock, assets or obligations of, any Person, except that
any
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Subsidiary may guarantee or otherwise be or become directly or contingently
liable in connection with the obligations of the Guarantor to the Banks
hereunder, and except that the Guarantor or any Subsidiary may (i) make or
permit to remain outstanding loans or advances or make capital contributions to
any Subsidiary, (ii) invest in, own, purchase or otherwise acquire stock,
assets or obligations of a Subsidiary or of a corporation which immediately
after such investment, purchase or acquisition will be a Subsidiary, (iii)
acquire and own stock, assets or obligations received in settlement of debts
(created in the ordinary course of business) owing to the Guarantor or any
Subsidiary, (iv) invest in, own, purchase or otherwise acquire prime commercial
paper due within one year from the date of purchase, obligations of the United
States government or any agency thereof, obligations guaranteed by the United
States government, certificates of deposit and municipal securities rated for
investment at least "A" by any recognized rating service, (v) endorse in the
ordinary course of business negotiable instruments in the course of collection,
and (vi) make or permit to remain outstanding loans or advances or make capital
contributions to, or guarantee, endorse, or otherwise be or become directly or
contingently liable in connection with, the obligations, stock or dividends of,
or invest in, own, purchase or otherwise acquire stock, assets or obligations
of Persons, other than the Guarantor, Subsidiaries or corporations which
immediately after such transactions will be Subsidiaries; provided, however,
that the aggregate principal amount of such loans, advances and capital
contributions, plus the aggregate amount of such contingent liabilities, plus
the aggregate amount of investment in such stock, assets or obligations shall
not exceed $2,000,000 at any time outstanding for the Guarantor and all
Subsidiaries.
(k) Limitation on Loans to Affiliates. Permit at any
time to remain outstanding in an aggregate amount, loans or other forms of
extension of credit, (A) from itself, any Subsidiary or Affiliate, directly or
indirectly, to (i) Cardinal in excess of $25,000,000, (ii) GITC in excess of
$35,000,000 and (iii) CLC in excess of $4,000,000, and (B) from any Person
other than itself, a Subsidiary or Affiliate, directly or indirectly, to (i)
Cardinal in excess of $1,000,000, (ii) GITC in excess of $3,000,000 and (iii)
CLC in excess of $1,000,000, any other provision in this Guaranty to the
contrary notwithstanding.
(l) Limitation on Capital Expenditures. Incur, on a
consolidated basis, Capital Expenditures, less the amount received from the
sale of assets during the corresponding fiscal year, of greater than (i)
$25,000,000 in the aggregate during the Guarantor's 1994 fiscal year, and (ii)
$35,000,000 in the aggregate during the Guarantor's 1995 fiscal year and each
following fiscal year. For purposes of this Section 8(l) "Capital
Expenditures" means any expenditure by a Person for fixed or capital assets
determined in accordance with GAAP.
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(m) Negative Pledges. Enter into or permit any of their
Subsidiaries to enter into any agreement (excluding any Loan Document)
prohibiting (i) the creation or assumption of any Lien upon their respective
properties, revenues or assets, whether now owned or hereafter acquired, or
their ability to amend or otherwise modify any Loan Document to which they are
a party or (ii) the ability of any Subsidiary to make any payments, directly or
indirectly, to the Guarantor by way of dividends, advances, repayments of loans
or advances, reimbursements of management and other intercompany charges,
expenses and accruals or other returns on investments or (iii) any other
agreement or arrangement which restricts the ability of any Subsidiary to make
any payment, directly or indirectly to the Guarantor.
(n) Limitation on Investor Certificates. Permit at any
time to remain outstanding, Investor Certificates, regardless of Series or
Class, in an aggregate principal amount greater than $60,000,000. Capitalized
terms used in this Section 8(n) shall have the meaning ascribed to them in The
Pooling And Servicing Agreement.
SECTION 9. Event of Default. An Event of Default hereunder shall
occur:
(a) If the Guarantor shall fail to pay the Obligations when
the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by the
Guarantor (or any of its officers) under or in connection with any Loan
Document, any Reimbursement Document, or any Letter of Credit shall prove to
have been incorrect in any material respect when made or deemed made; or
(c) If the Guarantor shall fail to observe or perform any
other covenant, condition or agreement hereunder for a period of 30 days after
(i) an officer of the Guarantor (with the title of secretary, treasurer, vice
president or higher) has knowledge of such failure or (ii) after written notice
thereof shall have been given to the Guarantor by the Agent or any Bank; or
(d) The Guarantor or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or 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 Guarantor or any of its Subsidiaries 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 or reorganization or relief of debtors, or
seeking the entry of an
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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 30
days, or any of the actions sought in such proceeding (including, without
limitation, 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 Guarantor or any of its
Subsidiaries shall take any corporate action to authorize any of the actions
set forth above in this subsection (d); or
(e) Any judgment or order for the payment of money in excess
of $1,000,000 shall be rendered against Guarantor or any of its Subsidiaries
and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(f) Any ERISA Event shall have occurred with respect to a
Plan and, 30 days after notice thereof shall have been given to the Guarantor
by the Banks, (i) such ERISA Event shall still exist and (ii) the sum
(determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans
with respect to which an ERISA Event shall have occurred and then exist (or, in
the case of a Plan with respect to which an ERISA Event described in clauses
(iii) through (vi) of the definition of ERISA Event shall have occurred and
then exist, the liability related thereto) is equal to or greater than
$5,000,000; or
(g) The Guarantor or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount which, when aggregated with
all other amounts required to be paid to Multiemployer Plans by the Guarantor
and its ERISA Affiliates as Withdrawal Liability (determined as of the date of
such notification), exceeds $10,000,000 in the aggregate; or
(h) If an Event of Default shall occur under the Credit
Agreement, under any Letter of Credit, any Reimbursement Document or any other
Loan Document; or
(i) The Guarantor or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Debt (excluding Debt under
the Credit Agreement) of the Guarantor or such Subsidiary (as the case may be),
in excess of $1,000,000 (exclusive of ERISA liabilities determined as of such
date), when the same becomes due and payable (whether by scheduled maturity,
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required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Debt and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt in excess of $1,000,000 shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required payment),
redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each prior to the stated
maturity thereof; or
(j) Any material provision of this Guaranty shall at any
time for any reason cease to be valid or binding on the Guarantor, or shall be
declared to be null and void, or the validity or enforceability thereof shall
be contested by the Guarantor or any Governmental Authority, or the Guarantor
shall deny that it has any or further liability or obligation under this
Guaranty; or
(k) The occurrence of any event or condition which the
Majority Banks reasonably determine has a Material Adverse Effect; or
(l) (i) Any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934), directly or indirectly, of securities of the Guarantor (or other
securities convertible into such securities) representing fifty-one (51%) or
more of the combined voting power of all securities of the Guarantor entitled
to vote in the election of directors, other than securities having such power
only by reason of the happening of a contingency; or (ii) during any period of
up to twelve (12) consecutive months, individuals who at the beginning of such
twelve (12) month period were directors of the Guarantor shall cease for any
reason, except formal retirement or death, to constitute a majority of the
board of directors of the Guarantor; (for purpose of the foregoing a "Person"
shall be deemed not to include any employee stock ownership plan or trust, any
employee stock purchase plan maintained, sponsored or established by the
Guarantor or its Subsidiaries or any Plan).
SECTION 10. Remedies Upon Default. Upon the occurrence and
continuation of an Event of Default hereunder:
(a) The Majority Banks may, but shall not be obligated, by
notice to the Guarantor declare the obligations of the Guarantor under this
Guaranty to be forthwith due and payable, and the same
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shall thereupon become due and payable without demand, presentment, protest or
further notice of any kind, all of which are hereby expressly waived.
(b) The Banks may take whatever action at law or in equity
may appear necessary or desirable to collect payments then due or thereafter to
become due hereunder or to enforce observance or performance of any covenant,
condition or agreement of the Guarantor under this Guaranty.
SECTION 11. Subordination. The Guarantor hereby subordinates all
indebtedness of any Borrower owing to it, whether now existing or hereafter
arising, to the full and prompt payment of (a) the Borrowers' Obligations to
the Banks under the Credit Agreement, the Letters of Credit, the Notes and any
other Loan Document and (b) the reasonable fees and expenses of the Agent and
Banks, including counsel fees. So long as permitted by and there is no Default
under the Credit Agreement or under any Letter of Credit or any Reimbursement
Document, the Guarantor may continue to receive and retain payments on the
subordinated indebtedness when and as the same becomes due. Any amounts
received by the Guarantor as a payment on the subordinated indebtedness
subsequent to any such Default shall be retained and held in trust by the
Guarantor for the benefit of the Banks or any successors or assigns of the
rights and benefits of the Banks under the Credit Agreement and under any
Letter of Credit outstanding at such time.
SECTION 12. Amendments, Etc. No amendment or waiver of any provision
of this Guaranty, and no consent to any departure by the Guarantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Agent and the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given, provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, (a) limit the liability of the Guarantor
hereunder, (b) postpone any date fixed for payment hereunder, or (c) change the
number of Banks required to take any action hereunder.
SECTION 13. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telecopier, telegraphic, telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered:
(a) If to the Guarantor:
Carolina Freight Corporation
N.C. Highway 150 East
P. O. Box 1000
Cherryville, North Carolina 28021
Attention: Treasurer and Chief Financial Officer
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(b) If to any Bank, at its Domestic Lending Office
specified in the Credit Agreement;
(c) If to the Agent:
Citibank, N.A.
c/o Citicorp North America, Inc.
400 Perimeter Center Terrace
Suite 600
Atlanta, Georgia 30346
Attention: Kirk P. Lakeman, Vice President
With a copy of any notice given pursuant to Section
9 to:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attention: Barbara A. Cohen, Vice President
Hunton & Williams
NationsBank Plaza - Suite 4100
600 Peachtree Street, N.E.
Atlanta, Georgia 30308-2216
Attention: Jon I. Larson
All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively.
SECTION 14. No Waiver; Remedies. No failure on the part of the Agent
or any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver 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. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 15. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.1 of the Credit Agreement to
authorize the Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.1 of the Credit Agreement, each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank to or for the credit or the account of the Guarantor
against any and all of the Obligations
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of the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether such Bank shall have made any demand under this Guaranty and although
such Obligations may be unmatured. Each Bank agrees promptly to notify the
Guarantor after any such set-off and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Bank may have.
SECTION 16. Continuing Guaranty; Assignments under Credit Agreement.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments and all Letters of Credit, (ii) be binding upon the
Guarantor, its successors and assigns, and (iii) inure to the benefit of, and
be enforceable by, the Agent, the Banks and their respective successors,
transferees and assigns, subject to the provisions of the Credit Agreement.
Without limiting the generality of the foregoing clause (iii), but subject to
the provision of the Credit Agreement, any Bank may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitment,
the Advances owing to it and any Note held by it) to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to such Bank herein or otherwise,
subject, however, to the provisions of Section 8.7 of the Credit Agreement.
SECTION 17. Costs, Expenses and Taxes. The Guarantor agrees to pay
on demand (i) all reasonable costs and expenses in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Guaranty and any other documents which may be delivered in connection with
this Guaranty (including, without limitation, the reasonable fees and expenses
of counsel for the Agent with respect thereto, with respect to advising the
Agent as to its rights and responsibilities, or the perfection, protection or
preservation of rights or interests, under this Guaranty and any other
documents to be delivered hereunder and with respect to negotiations with the
Guarantor regarding any Default or any events or circumstances that may give
rise to a Default) and (ii) all costs and expenses of the Agent and the Banks
in connection with the enforcement of this Guaranty (including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 17) and the other documents to be
delivered hereunder, whether in any action, suit or litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally or
otherwise (including, without limitation, the
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reasonable fees and expenses of counsel for the Agent and each Bank with
respect thereto). In addition, the Guarantor shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Guaranty and such other
documents and agrees to save the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission
to pay such taxes and fees. The Banks agree to submit a certificate as to all
costs, expenses, taxes and fees payable by the Guarantor pursuant to this
Section 17 and any such certificates shall be conclusive as to the amount
thereof, absent manifest error. The Guarantor shall have no liability under
this Section 17 in respect of any such costs, expenses, taxes or fees which are
paid by the Borrowers.
SECTION 18. Severability. If any provision of this Guaranty shall be
held invalid by any court of competent jurisdiction, such holding shall not
invalidate any other provision hereof.
SECTION 19. Governing Law and Jurisdiction. (a) Governing Law. THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE AGENT,
THE BANKS AND THE GUARANTOR HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS; (b) Jurisdiction. The Guarantor hereby irrevocably and
unconditionally submits to the nonexclusive jurisdiction of a New York State
court or federal court of the United States of America sitting in New York
City, and any appellate court from any appeal thereof, in any action or
proceeding arising out of or relating to this Guaranty, and hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
SECTION 20. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
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SECTION 21. Counterparts. This Guaranty may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 22. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
LAW, THE AGENT, THE BANKS AND THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS GUARANTY, THE CREDIT AGREEMENT, ANY RELATED DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (ORAL OR WRITTEN), OR ACTIONS OF THE
AGENT, THE BANKS, THE BORROWERS OR THE GUARANTOR. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE BANKS ENTERING INTO THE CREDIT AGREEMENT.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer as of the date first above written.
CAROLINA FREIGHT CORPORATION
This Guaranty is accepted By:
this ___ day of March, ---------------------------
1994. Name: John B. Yorke
Title: Vice President
CITIBANK, N.A.,
As Agent
By:
------------------------
Name:
-------------------
Title:
------------------
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Exhibit 1
Sites Listed on National
Priorities List
Carolina Freight Carriers Corporation was notified by letter from the
United States Environmental Protection Agency of potential liability in
connection with the Petroleum Products Corporation site in Hollywood, Florida.
209
Exhibit 2
Liens
210
AFFILIATE GUARANTY AGREEMENT
Dated as of March 15, 1994
From
CARRIER COMPUTER SERVICES, INC.
To
CITIBANK, N.A.
as Agent
211
AFFILIATE GUARANTY AGREEMENT
TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Guaranty; Maximum Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Guaranty of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 4. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 6. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Keeping of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Maintenance of Properties, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Dividends, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Compliance With ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Loans, Advances and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Limitation on Loans to Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 9. Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 10. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 11. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 12. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 13. Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 14. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 15. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 16. Continuing Guaranty; Assignments under Credit Agreement . . . . . . . . . . . . . . . 16
SECTION 17. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 18. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 19. Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(i)
212
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 20. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 21. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 22. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(ii)
213
AFFILIATE GUARANTY AGREEMENT
THIS AFFILIATE GUARANTY AGREEMENT, dated as of March 15, 1994 (the
"Guaranty"), made by Carrier Computer Services, Inc., a corporation organized
and existing under the laws of North Carolina (the "Guarantor"), in favor of
the Banks (the "Banks") listed as parties to the Credit Agreement (as defined
below) and Citibank, N.A., as agent (the "Agent") for the Banks.
PRELIMINARY STATEMENTS.
(1) The Banks and the Agent have entered into a Secured Revolving
Credit and Letter of Credit Agreement, dated as of March 15, 1994 (said
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Carolina Freight
Carriers Corporation, a corporation organized and existing under the laws of
North Carolina, and Red Arrow Freight Lines, Inc., a corporation organized and
existing under the laws of Texas (individually, a "Borrower" and collectively,
the "Borrowers"). The Guarantor may receive a portion of the proceeds of the
Advances under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement,
including the issuance of Letters of Credit by Citibank.
(2) It is a condition precedent to the making of Advances by the
Banks and the issuance of Letters of Credit by Citibank under the Credit
Agreement that the Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to make Advances and Citibank to issue Letters of Credit under
the Credit Agreement, the Guarantor hereby agrees with the Agent for its
benefit and the benefit of the Banks, including Citibank as issuer of the
Letters of Credit, as follows:
SECTION 1. Guaranty; Maximum Obligation. (a) The Guarantor hereby
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Borrowers now
or hereafter existing under the Credit Agreement, the Notes, all Letters of
Credit (including any deemed Letters of Credit, pursuant to Section 2.13(a) of
the Credit Agreement, issued by Citibank) and under or respecting any
application or agreement executed by or binding upon the Borrowers in
connection with any Letters of Credit (collectively, the "Reimbursement
Documents"), whether for principal, interest, fees, expenses or otherwise (such
obligations being the "Obligations"), and agrees to pay any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent or the
Banks in enforcing any rights under this Guaranty. Without limiting the
generality of the foregoing, the Guarantor's liability shall extend to all
amounts which constitute part of the Obligations and would
214
be owed by the Borrowers to the Agent or the Banks under the Credit Agreement,
the Notes, the Reimbursement Documents, the Letters of Credit and any other
Loan Documents but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Borrower. For purposes of this Guaranty, the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include Citibank in its
capacity as a Bank.
(b) Notwithstanding any other provision herein, the obligations of
the Guarantor hereunder shall not exceed in the aggregate an amount equal to
98% of the greater of (i) Guarantor's Fair Value immediately prior to the
effectiveness of this Guaranty and (ii) Guarantor's Fair Value (excluding its
liability under this Guaranty) at the time a demand is made by the Agent
hereunder. As used herein, "Guarantor's Fair Value" means the amount by which
the value of the Guarantor's assets exceed its liabilities (absolute or
contingent) assuming such assets are valued at the price at which they could be
sold to a willing buyer in an arms length transaction where the Guarantor is
not under undue pressure to conclude the sale.
SECTION 2. Guaranty of Payment. This is a guaranty of payment and not
of collection, and the Guarantor expressly waives any right to require that any
action be brought against a Borrower or any other guarantor of amounts due
under the Credit Agreement, the Notes, the Reimbursement Documents, the Letters
of Credit or any other Loan Documents or to require that resort be had to any
security. If the Borrower shall fail to pay the Obligations when and as the
same becomes due (whether at maturity, by acceleration or call for prepayment
or otherwise), the Guarantor, upon demand, without notice other than such
demand and without the necessity of further action by the Banks, shall promptly
and fully make such payment. The Guarantor shall pay all reasonable costs and
expenses, including reasonable counsel fees and expenses, paid or incurred by
the Bank, in connection with the enforcement of the requirement of the
Borrowers to pay the Obligations. All payments by the Guarantor shall be made
in lawful money of the United States of America. Each default in the payment
of the Obligations shall give rise to a separate cause of action hereunder, and
separate suits may be brought hereunder as each cause of action arises.
SECTION 3. Guaranty Absolute. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes, any Letter of Credit, the Reimbursement Documents and any
other Loan Documents, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional irrespective
of:
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(i) any lack of validity or enforceability of the
Credit Agreement, any Letter of Credit, the Reimbursement
Documents, the Notes, any other Loan Documents or any other
agreement or instrument relating thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any
consent to departure from the Credit Agreement, the Notes, any
Letter of Credit, the Reimbursement Documents or any other
Loan Documents, including, without limitation, any increase in
the Obligations resulting from the extension of additional
credit to the Borrowers or any of their respective
Subsidiaries or otherwise;
(iii) any taking, exchange, release or
non-perfection of any collateral, or any taking, release or
amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the Obligations, or any
manner of sale or other disposition of any collateral for all
or any of the Obligations or any other assets of a Borrower or
any of its Subsidiaries;
(v) any change, restructuring or termination of the
corporate structure or existence of a Borrower or any of its
Subsidiaries; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, a
Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Agent or any Bank upon the
insolvency, bankruptcy or reorganization of a Borrower or otherwise, all as
though such payment had not been made.
SECTION 4. Waiver. The Guarantor hereby unconditionally waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Obligations and this Guaranty and any requirement that the Agent
or any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right or take any action against
the Borrowers or any other person or entity or any collateral.
SECTION 5. Subrogation. The Guarantor will not exercise any rights
which it may acquire by way of subrogation under this
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216
Guaranty, by any payment made hereunder or otherwise, until all the Obligations
and all other amounts payable under this Guaranty shall have been paid in full
and the Commitments shall have expired or terminated. If any amount shall be
paid to the Guarantor on account of such subrogation rights at any time prior
to the later of (x) the payment in full of the Obligations and all other
amounts payable under this Guaranty and (y) the expiration or termination of
the Commitments, such amount shall be held in trust for the benefit of the
Agent and the Banks and shall forthwith be paid to the Agent to be credited and
applied upon the Obligations, whether matured or unmatured, in accordance with
the terms of the Credit Agreement or to be held by the Agent as collateral
security for any Obligations thereafter existing. If (i) the Guarantor shall
make payment to the Agent or the Banks of all or any part of the Obligations,
(ii) all the Obligations and all other amounts payable under this Guaranty
shall be paid in full, (iii) the Commitments shall have expired or terminated,
and (iv) at such time no Letter of Credit is outstanding, the Agent and the
Banks will, at the Guarantor's request, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Obligations resulting from such payment by the Guarantor.
SECTION 6. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) The Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
indicated at the beginning of this Agreement.
(b) The execution, delivery and performance by the
Guarantor of this Guaranty are within the Guarantor's corporate powers, have
been duly authorized by all necessary corporate action, and do not contravene
(i) the Guarantor's articles of incorporation or by-laws or (ii) in any
material respect, any law or any contractual restriction binding on or
affecting the Guarantor.
(c) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or regulatory body is
required for the due execution, delivery and performance by the Guarantor of
this Guaranty.
(d) This Guaranty is the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance
with its respective terms.
(e) The balance sheet of the Guarantor as at December 31,
1993, and the related statement of income and retained earnings of the
Guarantor for the fiscal year then ended, copies of
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217
which have been furnished to each Bank, fairly present the financial condition
of the Guarantor at such date and the results of the operations of the
Guarantor for the period ended on such date, all in accordance with GAAP, and
since December 31, 1993, there has been no Material Adverse Effect in such
condition or operations.
(f) There is no pending or threatened action or
proceeding affecting the Guarantor before any court, governmental agency or
arbitrator, which may have a Material Adverse Effect on the financial condition
or operations of the Guarantor or which purports to affect the legality,
validity or enforceability of this Guaranty.
(g) The Guarantor has filed or caused to be filed all tax
returns required to be filed by it and has paid all taxes shown to be due and
payable by it on said returns or on any assessments made against it, except
those which are being contested in good faith by appropriate proceedings and
for which reasonable reserves, as may be required by GAAP, are being maintained
on its books.
(h) The Guarantor has not received an Environmental
Complaint which the Guarantor believes would have a Material Adverse Effect,
regarding the Guarantor or its operations (including, without limitation,
on-site or off-site waste disposal), or any real property now owned, operated,
leased or used by the Guarantor or with respect to the Guarantor's operations
on formerly owned real property.
(i) (i) No Reportable Event has occurred and is
continuing with respect to any Plan; (ii) the PBGC has not instituted
proceedings to terminate any Plan; (iii) neither the Guarantor, any ERISA
Affiliate, nor any duly-appointed administrator of a Plan (A) has incurred any
liability to PBGC with respect to any Plan other than for premiums not yet due
or payable, or (B) has instituted or intends to institute proceedings to
terminate any Plan under Sections 4041 or 4041A of ERISA or withdraw from any
Multiemployer Plan; (iv) no "accumulated funding deficiency" (as defined in
ERISA Section 302 or Internal Revenue Code Section 412) exists with respect to
any Plan, whether or not waived; (v) each Plan of the Guarantor has been
administered and funded in accordance with its terms and with all provisions of
the Code and ERISA applicable thereto; and (vi) the Guarantor has not incurred
any liability with respect to any welfare plan (as defined in ERISA Section
3(i)) or for "welfare benefits" (as defined in Code Section 419) that is not
reflected on the financial statements of the Guarantor.
(j) The Guarantor has never caused or permitted any
Hazardous Material to be placed, held, located, released, generated, treated,
stored or disposed of on, under, over or in
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218
connection with activities at any real property now owned, operated, leased or
used by the Guarantor or any part thereof or with respect to the Guarantor's
operations on formerly owned real property, other than quantities of petroleum
and chemical products or hazardous wastes permissible under the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et
seq., as amended, or other Hazardous Materials properly and legally stored
(or, in case of hazardous wastes, disposed of in accordance with regulations
promulgated under RCRA), necessary for the operation of the business of the
Guarantor or its tenants and the maintenance of fuel storage tanks in
compliance with Relevant Environmental Laws. No real property now owned,
operated, leased or used by Guarantor has been used (whether by Guarantor or,
to the best knowledge of Guarantor, by any other Person) as a dump site or
storage (whether permanent or temporary) site for any Hazardous Material other
than quantities of petroleum and chemical products or hazardous wastes
permissible under RCRA, or other Hazardous Materials properly and legally
stored (or, in case of hazardous wastes, disposed of in accordance with
regulations promulgated under RCRA), necessary for the operation of the
business of the Guarantor or its tenants and the maintenance of fuel storage
tanks in compliance with Relevant Environmental Laws.
(k) To the best of Guarantor's knowledge, after due
inquiry, the Guarantor knows of no locations where any Hazardous Material or
Asbestos from any real property now or formerly owned, operated, leased or used
by Guarantor has been stored, treated, recycled or disposed of, except in
compliance with Relevant Environmental Laws.
(l) There are no Environmental Liens on or affecting any
real property owned, operated, leased or used by Guarantor.
(m) To the best of Guarantor's knowledge, after due
inquiry, the Guarantor has obtained all permits, certificates, licenses,
approvals, registrations and other authorizations which are required for the
operation of its facilities under all Relevant Environmental Laws and is in
material compliance with all Relevant Environmental Laws.
(n) Except as shown on Exhibit 1, the Guarantor has not
received notice that it generated, transported or arranged for the
transportation of any Hazardous Material to any site listed on the National
Priorities List under The Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601, et. seq., as
amended, or any similar list under any analogous state statute.
(o) There are no environmental, health or safety
conditions existing or reasonably expected to exist at any real property owned,
operated, leased or used by the Guarantor which
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might require any construction or other capital costs within the next 5 years
in order to assure compliance with Relevant Environmental Laws and which the
Guarantor believes would have a Material Adverse Effect.
(p) To the best of the Guarantor's knowledge, neither
this Guaranty nor any other document, certificate or statement furnished to the
Agent or the Banks by or on behalf of the Guarantor in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading.
(q) The Guarantor has complied in all material respects
with all applicable statutes, rules, regulations, orders and restrictions of
any Governmental Authority having or claiming jurisdiction, the violation of
which would have a Material Adverse Effect.
(r) There are no conditions precedent to the
effectiveness of this Guaranty that have not been satisfied or waived.
(s) The Guarantor has, independently and without reliance
upon the Agent or any Bank and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty.
SECTION 7. Affirmative Covenants. The Guarantor covenants and agrees
that, so long as any part of the Obligations shall remain unpaid, any Letter of
Credit shall be outstanding or any Bank shall have any Commitment, the
Guarantor will, unless the Majority Banks shall otherwise consent in writing:
(a) Corporate Existence. Maintain its corporate
existence and its qualification to do business in all states where such
qualifications is necessary.
(b) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent contested in good faith by appropriate
proceedings and for which reasonable reserves, as may be required by GAAP, are
being maintained.
(c) Maintenance of Insurance. Maintain insurance with
responsible and reputable insurance companies or associations covering such
risk as is usually carried by companies engaged in
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similar businesses and owning similar properties in the same general areas in
which the Guarantor operates.
(d) Visitation Rights. At any reasonable time and from
time to time, permit the Agent or any of the Banks or any agents or
representatives thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Guarantor and
to discuss the affairs, finances and accounts of the Guarantor with any of its
officers or directors and with its independent certified public accountants.
(e) Keeping of Books. Keep proper books of record and
account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Guarantor in accordance with
GAAP.
(f) Maintenance of Properties, Etc. Maintain and
preserve all of its properties which are used or useful in the conduct of its
business in good working order and condition, ordinary wear and tear excepted.
(g) Reporting Requirements. Furnish to the Banks:
(i) as soon as possible and in any event within
five days after the occurrence of each Default or Event of
Default, a statement of the Chief Financial Officer of the
Guarantor setting forth details of such Default or Event of
Default and the action which the Guarantor has taken and
proposes to take with respect thereto;
(ii) promptly and in any event within 15 days
after the Guarantor or any ERISA Affiliate knows or has reason
to know that any ERISA Event has occurred, a statement of the
Chief Financial Officer of the Guarantor describing such ERISA
Event and the action, if any, which the Guarantor or such
ERISA Affiliate proposes to take with respect thereto;
(iii) promptly and in any event within 5 Business
Days after receipt thereof by the Guarantor or any ERISA
Affiliate, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed
to administer any Plan;
(iv) promptly and in any event within 5 Business
Days after receipt thereof by the Guarantor or any ERISA
Affiliate from the sponsor of a Multiemployer Plan a copy of
each notice received by the Guarantor or any ERISA Affiliate
concerning (x) the imposition of Withdrawal Liability by a
Multiemployer Plan, (y) the reorganization or termination,
within the meaning of Title IV of ERISA,
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of any Multiemployer Plan or (z) the amount of liability
incurred or which may be incurred, by the Guarantor or any
ERISA Affiliate in connection with any event described in
clause (x) or (y) above;
(v) promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court
or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which would have a
Material Adverse Effect;
(vi) upon the Agent's written request, copies of all
reports and notices which the Guarantor files under ERISA with
the Internal Revenue Service or the PBGC or the U.S.
Department of Labor or which the Guarantor receives from the
PBGC; and
(vii) such other information respecting the business,
properties, operations or condition, financial or otherwise,
of the Guarantor as any Bank through the Agent may from time
to time reasonably request.
(h) ERISA. The Guarantor shall make prompt payments of
contributions required by the terms of each Plan or meet the minimum funding
standards applicable.
SECTION 8. Negative Covenants. The Guarantor covenants and agrees
that, so long as any part of the Obligations shall remain unpaid, any Letter of
Credit shall be outstanding or any Bank shall have any Commitment, the
Guarantor will not, without the prior written consent of the Majority Banks:
(a) Guaranties. Guarantee, endorse or otherwise become
directly or contingently liable to guarantee, endorse or otherwise become
directly or contingently liable in connection with the obligations of any
Person, except that: (i) the Guarantor may guarantee, endorse or otherwise
become directly or contingently liable in connection with the obligations of
any Person, to the Banks; (ii) the Guarantor may guarantee or otherwise be or
become directly or contingently liable in connection with guaranty agreements
(or similar agreements) currently in effect; and (iii) the Guarantor may
endorse in the ordinary course of business negotiable instruments in the course
of collection.
(b) Debt. Incur, assume, or suffer to exist any Debt for
borrowed funds or Capital Leases except for: (i) Debt for borrowed funds or
under Capital Leases existing on the date of this Guaranty or arising under the
Credit Agreement; (ii) Debt for borrowed funds or under Capital Leases incurred
pursuant to financial contractual agreements made and entered into, and
disclosed in writing to the Banks prior to the date of this
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Guaranty; (iii) trade payables and contractual obligations to suppliers and
customers incurred in the ordinary course of business; (iv) accrued pension
fund and other Plan obligations and liabilities (provided, however, that such
Debt does not result in the existence of any Event of Default under any other
provision of this Guaranty); (v) deferred taxes; and (vi) Debt resulting from
endorsements of negotiable instruments received in the ordinary course of its
business.
(c) Dividends, Etc. Declare or make any dividend payment
or other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of capital stock of the
Guarantor.
(d) Mergers, Etc. 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,
or acquire all or substantially all of the assets of, any Person.
(e) Compliance With ERISA. (i) Terminate or permit any
ERISA Affiliate to terminate any Plan maintained for employees of the Guarantor
and covered by Title IV of ERISA so as to result in any material (in the
reasonable opinion of the Banks) liability of the Guarantor to the PBGC, (ii)
enter into any Prohibited Transaction (as defined in Section 4975 of the Code
and in ERISA) involving any Plan which results in any material (in the
reasonable opinion of the Banks) liability of the Guarantor to PBGC, (iii)
cause any occurrence of any Reportable Event which results in any material (in
the reasonable opinion of the Banks) liability of the Guarantor to PBGC, or
(iv) allow or suffer to exist any other event or condition known to the
Guarantor which results in any material (in the reasonable opinion of the
Banks) liability of the Guarantor to PBGC.
(f) Limitation on Liens. Create, assume, or suffer to
exist any Lien of any kind in any of its properties or assets, now owned or
hereafter acquired, except for: (i) Liens for taxes or assessments or
governmental charges, levies or imposts not yet due or being contested in good
faith by appropriate proceedings and for which reasonable reserves, as may be
required by GAAP, are being maintained; (ii) Liens on real property, fixtures
and tangible personal property existing on the date hereof and listed on
Exhibit 2 attached hereto; (iii) purchase money Liens on real property,
fixtures and tangible personal property containing customary terms (including
leases in the nature of Capital Leases of equipment); (iv) Liens granted in
connection with tangible personal property on terms not less favorable than the
terms of the original purchase money financing; (v) carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like liens arising in the
ordinary course of business, payment for which is not yet due or
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which are being contested in good faith and by appropriate proceedings; (vi)
pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (vii) deposits to secure the
performance of utilities, leases, statutory obligations and surety and appeal
bonds and other obligations of a like nature incurred in the ordinary course of
business; (viii) bankers' Liens arising by statute or under customary terms
regarding depository relationships on deposits held by financial institutions
with whom the Guarantor has a banker-customer relationship; (ix) Liens in favor
of a Bank arising by operation of laws or under customary terms regarding
depository relationships relating to bankers' liens on deposits held by such
Bank or in connection herewith; (x) easements, right-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of Guarantor; and (xi) typical
restrictions imposed by licenses and leases of software (including location and
transfer restrictions).
(g) Loans, Advances and Investments. Make or permit to
remain outstanding any loan or advance or make any capital contribution to, or
guarantee, endorse or otherwise be or become directly or contingently liable in
connection with, the obligations, stock or dividends of, or invest in, own,
purchase or otherwise acquire any stock, assets or obligations of, any Person.
(h) Limitation on Loans to Affiliates. Permit at any
time to remain outstanding, loans or other forms of extension of credit, to any
Affiliate.
SECTION 9. Event of Default. An Event of Default hereunder shall
occur:
(a) If the Guarantor shall fail to pay the Obligations when
the same becomes due and payable; or
(b) Any representation or warranty made or deemed made by the
Guarantor (or any of its officers) under or in connection with any Loan
Document, any Reimbursement Document, or any Letter of Credit shall prove to
have been incorrect in any material respect when made or deemed made; or
(c) If the Guarantor shall fail to observe or perform any
other covenant, condition or agreement hereunder for a period of 30 days after
(i) an officer of the Guarantor (with the title of secretary, treasurer, vice
president or higher) has knowledge of such failure or (ii) after written notice
thereof shall have been given to the Guarantor by the Agent or any Bank; or
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(d) The Guarantor shall generally not pay its debts as such
debts become due, or 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 Guarantor 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 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 30 days,
or any of the actions sought in such proceeding (including, without limitation,
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 Guarantor shall take any corporate
action to authorize any of the actions set forth above in this subsection (d);
or
(e) Any judgment or order for the payment of money in excess
of $1,000,000 shall be rendered against Guarantor or any of its Affiliates and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(f) Any ERISA Event shall have occurred with respect to a
Plan and, 30 days after notice thereof shall have been given to the Guarantor
by the Banks, (i) such ERISA Event shall still exist and (ii) the sum
(determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans
with respect to which an ERISA Event shall have occurred and then exist (or, in
the case of a Plan with respect to which an ERISA Event described in clauses
(iii) through (vi) of the definition of ERISA Event shall have occurred and
then exist, the liability related thereto) is equal to or greater than
$5,000,000; or
(g) The Guarantor or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount which, when aggregated with
all other amounts required to be paid to Multiemployer Plans by the Guarantor
and its ERISA Affiliates as Withdrawal Liability (determined as of the date of
such notification), exceeds $10,000,000 in the aggregate; or
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(h) If an Event of Default shall occur under the Credit
Agreement, under any Letter of Credit, any Reimbursement Document or any other
Loan Document; or
(i) The Guarantor or any of its Affiliates shall fail to pay
any principal of or premium or interest on any Debt (excluding Debt under the
Credit Agreement) of the Guarantor or such Affiliate (as the case may be), in
excess of $1,000,000 (exclusive of ERISA liabilities determined as of such
date), when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any such
Debt and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt in excess of $1,000,000 shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required payment),
redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each prior to the stated
maturity thereof; or
(j) Any material provision of this Guaranty shall at any
time for any reason cease to be valid or binding on the Guarantor, or shall be
declared to be null and void, or the validity or enforceability thereof shall
be contested by the Guarantor or any Governmental Authority, or the Guarantor
shall deny that it has any or further liability or obligation under this
Guaranty; or
(k) The occurrence of any event or condition which the
Majority Banks reasonably determine has a Material Adverse Effect; or
(l) (i) Any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934), directly or indirectly, of securities of the Guarantor (or other
securities convertible into such securities) representing fifty-one (51%) or
more of the combined voting power of all securities of the Guarantor entitled
to vote in the election of directors, other than securities having such power
only by reason of the happening of a contingency; or (ii) during any period of
up to twelve (12) consecutive months, individuals who at the beginning of such
twelve (12) month period were directors of the Guarantor shall cease for any
reason, except formal retirement or death, to constitute a majority of the
board of directors of the Guarantor; (for purpose of the foregoing a "Person"
shall be deemed not to include any employee stock
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ownership plan or trust, any employee stock purchase plan maintained, sponsored
or established by the Guarantor or any Plan).
SECTION 10. Remedies Upon Default. Upon the occurrence and
continuation of an Event of Default hereunder:
(a) The Majority Banks may, but shall not be obligated, by
notice to the Guarantor declare the obligations of the Guarantor under this
Guaranty to be forthwith due and payable, and the same shall thereupon become
due and payable without demand, presentment, protest or further notice of any
kind, all of which are hereby expressly waived.
(b) The Banks may take whatever action at law or in equity
may appear necessary or desirable to collect payments then due or thereafter to
become due hereunder or to enforce observance or performance of any covenant,
condition or agreement of the Guarantor under this Guaranty.
SECTION 11. Subordination. The Guarantor hereby subordinates all
indebtedness of any Borrower owing to it, whether now existing or hereafter
arising, to the full and prompt payment of (a) the Borrowers' Obligations to
the Banks under the Credit Agreement, the Letters of Credit, the Notes and any
other Loan Document and (b) the reasonable fees and expenses of the Agent and
Banks, including counsel fees. So long as permitted by and there is no Default
under the Credit Agreement or under any Letter of Credit or any Reimbursement
Document, the Guarantor may continue to receive and retain payments on the
subordinated indebtedness when and as the same becomes due. Any amounts
received by the Guarantor as a payment on the subordinated indebtedness
subsequent to any such Default shall be retained and held in trust by the
Guarantor for the benefit of the Banks or any successors or assigns of the
rights and benefits of the Banks under the Credit Agreement and under any
Letter of Credit outstanding at such time.
SECTION 12. Amendments, Etc. No amendment or waiver of any provision
of this Guaranty, and no consent to any departure by the Guarantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Agent and the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given, provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, (a) limit the liability of the Guarantor
hereunder, (b) postpone any date fixed for payment hereunder, or (c) change the
number of Banks required to take any action hereunder.
SECTION 13. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
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(including telecopier, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered:
(a) If to the Guarantor:
Carrier Computer Services, Inc.
N.C. Highway 150 East
P. O. Box 1000
Cherryville, North Carolina 28021
Attention: Treasurer and Chief Financial Officer
(b) If to any Bank, at its Domestic Lending Office
specified in the Credit Agreement;
(c) If to the Agent:
Citibank, N.A.
c/o Citicorp North America, Inc.
400 Perimeter Center Terrace
Suite 600
Atlanta, Georgia 30346
Attention: Kirk P. Lakeman, Vice President
With a copy of any notice given pursuant to Section 9
to:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attention: Barbara A. Cohen, Vice President
Hunton & Williams
NationsBank Plaza - Suite 4100
600 Peachtree Street, N.E.
Atlanta, Georgia 30308-2216
Attention: Jon I. Larson
All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, be effective when deposited in the
mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively.
SECTION 14. No Waiver; Remedies. No failure on the part of the Agent
or any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver 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. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
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SECTION 15. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.1 of the Credit Agreement to
authorize the Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.1 of the Credit Agreement, each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank to or for the credit or the account of the Guarantor
against any and all of the Obligations of the Guarantor now or hereafter
existing under this Guaranty, irrespective of whether such Bank shall have made
any demand under this Guaranty and although such Obligations may be unmatured.
Each Bank agrees promptly to notify the Guarantor after any such set-off and
application made by such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Bank under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Bank may have.
SECTION 16. Continuing Guaranty; Assignments under Credit Agreement.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Obligations and all
other amounts payable under this Guaranty and (y) the expiration or termination
of the Commitments and all Letters of Credit, (ii) be binding upon the
Guarantor, its successors and assigns, and (iii) inure to the benefit of, and
be enforceable by, the Agent, the Banks and their respective successors,
transferees and assigns, subject to the provisions of the Credit Agreement.
Without limiting the generality of the foregoing clause (iii), but subject to
the provision of the Credit Agreement, any Bank may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitment,
the Advances owing to it and any Note held by it) to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to such Bank herein or otherwise,
subject, however, to the provisions of Section 8.7 of the Credit Agreement.
SECTION 17. Costs, Expenses and Taxes. The Guarantor agrees to pay
on demand (i) all reasonable costs and expenses in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Guaranty and any other documents which may be delivered in connection with
this Guaranty (including, without limitation, the reasonable fees and expenses
of counsel for the Agent with respect thereto, with respect to advising the
Agent as to its rights and responsibilities, or the perfection, protection or
preservation of
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rights or interests, under this Guaranty and any other documents to be
delivered hereunder and with respect to negotiations with the Guarantor
regarding any Default or any events or circumstances that may give rise to a
Default) and (ii) all costs and expenses of the Agent and the Banks in
connection with the enforcement of this Guaranty (including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 17) and the other documents to be
delivered hereunder, whether in any action, suit or litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally or
otherwise (including, without limitation, the reasonable fees and expenses of
counsel for the Agent and each Bank with respect thereto). In addition, the
Guarantor shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Guaranty and such other documents and agrees to save the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees. The
Banks agree to submit a certificate as to all costs, expenses, taxes and fees
payable by the Guarantor pursuant to this Section 17 and any such certificates
shall be conclusive as to the amount thereof, absent manifest error. The
Guarantor shall have no liability under this Section 17 in respect of any such
costs, expenses, taxes or fees which are paid by the Borrowers.
SECTION 18. Severability. If any provision of this Guaranty shall be
held invalid by any court of competent jurisdiction, such holding shall not
invalidate any other provision hereof.
SECTION 19. Governing Law and Jurisdiction. (a) Governing Law. THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE AGENT,
THE BANKS AND THE GUARANTOR HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS;
(b) Jurisdiction. The Guarantor hereby irrevocably and
unconditionally submits to the nonexclusive jurisdiction of a New York State
court or federal court of the United States of America sitting in New York
City, and any appellate court from any appeal thereof, in any action or
proceeding arising out of or relating to this Guaranty, and hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
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SECTION 20. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
SECTION 21. Counterparts. This Guaranty may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 22. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
LAW, THE AGENT, THE BANKS AND THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS GUARANTY, THE CREDIT AGREEMENT, ANY RELATED DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (ORAL OR WRITTEN), OR ACTIONS OF THE
AGENT, THE BANKS, THE BORROWERS OR THE GUARANTOR. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE BANKS ENTERING INTO THE CREDIT AGREEMENT.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer as of the date first above written.
CARRIER COMPUTER SERVICES, INC.
This Guaranty is accepted By:
this ___ day of March, ---------------------------
1994. Name: John B. Yorke
Title:
---------------------
CITIBANK, N.A.,
As Agent
By:
------------------------
Name:
-------------------
Title:
------------------
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Exhibit 1
Sites Listed on National
Priorities List
232
Exhibit 2
Liens