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COVENANT ASSET MANAGEMENT, INC.
COVENANT TRANSPORT, INC.
$25,000,000
7.39% Guaranteed Senior Notes due October 1, 2005
PPN: 22283# AA 6
NOTE PURCHASE AGREEMENT
Dated as of May 15, 2000
Closing Date: June 6, 2000
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TABLE OF CONTENTS
Section Page
1. BACKGROUND; AUTHORIZATION OF NOTES....................................1
1.1. Background...................................................1
1.2. Authorization of Notes.......................................1
2. SALE AND PURCHASE OF NOTES............................................2
3. CLOSING...............................................................2
4. CONDITIONS TO CLOSING.................................................2
4.1. Representations and Warranties...............................2
4.2. Performance; No Default......................................3
4.3. Compliance Certificates......................................3
4.4. Opinions of Counsel..........................................3
4.5. Purchase Permitted By Applicable Law, etc....................3
4.6. Sale of Other Notes..........................................4
4.7. Payment of Purchasers' Counsel Fees..........................4
4.8. Private Placement Number.....................................4
4.9. Changes in Corporate Structure...............................4
4.10. Prepayment of Outstanding Notes..............................4
4.11. Subsidiary Guaranty..........................................4
4.12. Intercreditor Agreement......................................4
4.13. Bank Loan Agreement..........................................4
4.14. Transaction Fee..............................................5
4.15. Proceedings and Documents....................................5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................5
5.1. Organization; Power and Authority............................5
5.2. Authorization, etc...........................................5
5.3. Disclosure...................................................6
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates...................................................6
5.5. Financial Statements.........................................7
5.6. Compliance with Laws, Other Instruments, etc.................7
5.7. Governmental Authorizations, etc.............................8
5.8. Litigation; Observance of Agreements, Statutes and Orders....8
5.9. Taxes........................................................8
5.10. Title to Property; Leases....................................8
5.11. Licenses, Permits, etc.......................................9
5.12. Compliance with ERISA........................................9
5.13. Private Offering by the Company.............................10
5.14. Use of Proceeds; Margin Regulations.........................10
5.15. Existing Indebtedness; Future Liens.........................11
5.16. Foreign Assets Control Regulations, etc.....................11
5.17. Status under Certain Statutes...............................11
5.18. Environmental Matters.......................................11
5.19. Solvency....................................................12
6. REPRESENTATIONS OF THE PURCHASERS....................................12
6.1. Purchase for Investment.....................................12
6.2. Source of Funds.............................................12
6.3. Authorization, etc..........................................14
7. INFORMATION AS TO COMPANY............................................14
7.1. Financial and Business Information..........................14
7.2. Officer's Certificate.......................................17
7.3. Inspection..................................................17
8. PREPAYMENT OF THE NOTES..............................................18
8.1. Required Prepayments........................................18
8.2. Optional Prepayments with Make-Whole Amount.................18
8.3. Allocation of Partial Prepayments...........................19
8.4. Maturity; Surrender, etc....................................19
8.5. Purchase of Notes...........................................19
8.6. Make-Whole Amount...........................................19
9. AFFIRMATIVE COVENANTS................................................22
9.1. Compliance with Law.........................................22
9.2. Insurance...................................................22
9.3. Maintenance of Properties...................................23
9.4. Payment of Taxes and Claims.................................23
9.5. Corporate Existence, etc....................................23
9.6. Compliance with Parent Guarantee............................24
10. NEGATIVE COVENANTS...................................................24
10.1. Transactions with Affiliates................................24
10.2. Merger, Consolidation, etc..................................24
10.3. Sales of Assets.............................................25
10.4. Disposal of Ownership of a Subsidiary.......................25
10.5. Sale-and-Leaseback Transactions.............................26
10.6. Maintenance of Consolidated Tangible Net Worth..............26
10.7. Limitation on Total Debt; Limitation on Funded Debt
Incurrence..............................................26
10.8. Restricted Payments.........................................27
10.9. Restricted Investments......................................27
10.10. Fixed Charges Coverage......................................27
10.11. Liens.......................................................27
10.12. Line of Business............................................29
10.13. Subsidiary Guaranty.........................................30
11. EVENTS OF DEFAULT....................................................30
12. REMEDIES ON DEFAULT, ETC.............................................32
12.1. Acceleration................................................32
12.2. Other Remedies..............................................33
12.3. Rescission..................................................33
12.4. No Waivers or Election of Remedies, Expenses, etc...........33
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................34
13.1. Registration of Notes.......................................34
13.2. Transfer and Exchange of Notes..............................34
13.3. Replacement of Notes........................................34
14. PAYMENTS ON NOTES....................................................35
14.1. Place of Payment............................................35
14.2. Home Office Payment.........................................35
15. EXPENSES, ETC........................................................35
15.1. Transaction Expenses........................................35
15.2. Survival....................................................36
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.........36
17. AMENDMENT AND WAIVER.................................................36
17.1. Requirements................................................36
17.2. Solicitation of Holders of Notes............................37
17.3. Binding Effect, etc.........................................37
17.4. Notes held by Company, etc..................................37
18. NOTICES..............................................................38
19. REPRODUCTION OF DOCUMENTS............................................38
20. CONFIDENTIAL INFORMATION.............................................38
21. SUBSTITUTION OF PURCHASER............................................39
22. MISCELLANEOUS........................................................40
22.1. Successors and Assigns......................................40
22.2. Payments Due on Non-Business Days...........................40
22.3. Severability................................................40
22.4. Construction................................................40
22.5. Counterparts................................................40
22.6. Governing Law...............................................41
SCHEDULE A -- Information Relating To Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 10.9 -- Restricted Investments
SCHEDULE 10.11 -- Liens
EXHIBIT 1.2 -- Form of 7.39% Guaranteed Senior Note due
October 1, 2005
EXHIBIT 4.4(a) -- Form of Opinion of Counsel for the Company
and the Parent
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the
Purchasers
EXHIBIT 4.11 -- Form of Subsidiary Guaranty
EXHIBIT 4.12 -- Form of Intercreditor Agreement
EXHIBIT 9.6 -- Parent Guarantee
COVENANT ASSET MANAGEMENT, INC.
639 ISBELL ROAD, SUITE 390
RENO, NEVADA 89509
7.39% GUARANTEED SENIOR NOTES DUE OCTOBER 1, 2005
Dated as of May 15, 2000
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Each of Covenant Asset Management, Inc., a Nevada corporation
(the "Company"), and Covenant Transport, Inc., a Nevada corporation (the
"Parent"), agrees with you as follows:
1. BACKGROUND; AUTHORIZATION OF NOTES.
1.1. Background.
You and each of the Other Purchasers are the holders of 7.39%
Guaranteed Senior Notes due October 1, 2005 (the "Old Notes") issued by Covenant
Transport, Inc., a Tennessee corporation ("CTI"). The Old Notes are secured,
pari passu with the Bank Lenders, pursuant to the Security Documents and the
Master Collateral and Intercreditor Agreement dated as of October 15, 1995 among
you and the Other Purchasers and the Bank Lenders, as heretofore amended. In
order to permit a reorganization of the Parent and its Subsidiaries, you and the
Other Purchasers have agreed to the prepayment of the Old Notes at the price of
100% of the principal amount thereof, plus interest accrued thereon to the date
of prepayment. The prepayment will be financed in part through the issuance and
sale by the Company of new senior notes, as hereafter provided, to you and the
Other Purchasers. For purposes of the Collateral, this Agreement is intended to
be the successor to the separate Note Purchase Agreements dated as of October
15, 1995 among CTI, the Parent and the purchasers named therein.
1.2. Authorization of Notes.
The Company will authorize the issue and sale of $25,000,000 aggregate
principal amount of its 7.39% Guaranteed Senior Notes due October 1, 2005 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the Other Agreements). The Notes
will be guaranteed by the Parent and by each of the Subsidiaries and will be
substantially in the form set out in Exhibit 1.2, with such changes therefrom,
if any, as may be approved by you and the Company. The Notes also will be
secured, pari passu with the Bank Lenders, by the Collateral pursuant to an
amendment of the Security Documents and an amendment and restatement of the
Master Collateral and Intercreditor Agreement to so provide. Certain capitalized
terms used in this Agreement are defined in Schedule B; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "Other Agreements")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "Other Purchasers"), providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your obligation hereunder and the obligations of the
Other Purchasers under the Other Agreements are several and not joint
obligations and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or non-performance by any Other
Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Gardner, Carton & Douglas, at 10:00
a.m., New York time, at a closing (the "Closing") on June 6, 2000 or on such
other Business Day thereafter on or prior to June 9, 2000 as may be agreed upon
by the Company and you and the Other Purchasers. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number 6728004257 at First Union National Bank, ABA# 053000219, for
credit to Covenant Asset Management, Inc. If at the Closing the Company shall
fail to tender such Notes to you as provided above in this Section 3, or any of
the conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. Representations and Warranties.
The representations and warranties of the Company and the Parent in
this Agreement shall be correct when made and at the time of the Closing.
4.2. Performance; No Default.
The Company and the Parent shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by them prior to or at the Closing and after giving effect to
the issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14) no Default or Event of Default shall have
occurred and be continuing. The Company, the Parent or any Subsidiary shall not
have entered into any transaction since the date of the most recent financial
statements referred to in Schedule 5.5 that would have been prohibited by
Section 10 had such Section applied since such date.
4.3. Compliance Certificates.
(a) Officer's Certificate. Each of the Company and the Parent shall have
delivered to you an Officer's Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections 4.1, 4.2
and 4.9 have been fulfilled.
(b) Secretary's Certificate. Each of the Company and the Parent shal
have delivered to you a certificate certifying as to the resolutions
attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and the Agreements.
4.4. Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing (a) from Scudder Law Firm P.C., counsel for
the Company and the Parent, covering the matters set forth in Exhibit 4.4(a)
(and each of the Company and the Parent instructs its counsel to deliver such
opinion to you) and (b) from Gardner, Carton & Douglas, your special counsel in
connection with such transactions, substantially in the form set forth in
Exhibit 4.4(b) and covering such other matters incident to such transactions as
you may reasonably request.
4.5. Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted. On the date
hereof, you represent that there would be no violation of this Section 4.5,
based upon your present knowledge.
4.6. Sale of Other Notes.
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7. Payment of Purchasers' Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.8. Private Placement Number.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes
by Gardner, Carton & Douglas.
4.9. Changes in Corporate Structure.
Except as specified in Schedule 4.9, neither the Company nor the Parent
shall have changed its jurisdiction of incorporation or been a party to any
merger or consolidation and neither the Company nor the Parent shall have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.
4.10. Prepayment of Outstanding Notes.
CTI shall have prepaid its outstanding 7.39% Guaranteed Senior Notes
due October 1, 2005 in the principal amount of $25,000,000 at a price of 100% of
such principal amount, plus interest accrued to the date of such prepayment.
4.11. Subsidiary Guaranty.
Each Subsidiary shall have executed and delivered the Subsidiary
Guaranty in substantially the form of the attached Exhibit 4.11.
4.12. Intercreditor Agreement.
The Bank Lenders and you and the Other Purchasers shall have entered
into an amendment and restatement of the Master Collateral and Intercreditor
Agreement in substantially the form of the attached Exhibit 4.12 (the
"Intercreditor Agreement").
4.13. Bank Loan Agreement.
The Company shall have delivered to you a correct and complete copy of
the Bank Loan Agreement.
4.14. Transaction Fee.
The Company shall have paid a transaction fee of $10,000 in the
aggregate to you and the Other Purchasers, by wire transfer of immediately
available funds to Chase NYC/CTR/BNF=CIGNA Private Placements/AC=9009001802,
ABA#021000021.
4.15. Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you, and you shall have received all
such counterpart originals or certified or other copies of such documents as you
or they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Each of the Company and the Parent represents and warrants to you that:
5.1. Organization; Power and Authority.
Each of the Company and the Parent is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each of the Company and the Parent
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Other
Agreements and the Notes and to perform the provisions hereof and thereof.
5.2. Authorization, etc.
This Agreement and the Other Agreements and the Notes have been duly
authorized by all necessary corporate action on the part of each of the Company
and the Parent, and
(a) this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
and
(b) this Agreement, including the Parent Guarantee, constitutes a legal,
valid and binding obligation of the Parent enforceable against the
Parent in accordance with its terms,
except (in each case) as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
The Subsidiary Guaranty has been duly authorized by all necessary
corporate action on the part of each Subsidiary and upon execution and delivery
thereof will constitute the legal, valid and binding obligation of each
Subsidiary, enforceable against each Subsidiary in accordance with its terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.3. Disclosure.
Except as disclosed in Schedule 5.3, this Agreement, the documents,
certificates or other writings delivered to you by or on behalf of the Company
in connection with the transactions contemplated hereby (including the Parent's
annual report for the year ended December 31, 1999, its proxy statement for the
2000 annual meeting of stockholders, and all forms 10-Q filed with the
Securities and Exchange Commission subsequent to December 31, 1999 and prior to
the date of Closing) and the financial statements listed in Schedule 5.5, taken
as a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made. Except as expressly
described in Schedule 5.3, or in one of the documents, certificates or other
writings identified therein, or in the financial statements listed in Schedule
5.5, since December 31, 1999, there has been no change in the financial
condition, operations, business, properties or prospects of the Company, the
Parent or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Memorandum or in the
other documents, certificates and other writings delivered to you by or on
behalf of the Company specifically for use in connection with the transactions
contemplated hereby.
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and correct
lists (i) of the Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, the
percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Parent (or the Company, as
the case may be) and each other Subsidiary, (ii) of the Company's and
the Parent's Affiliates, other than Subsidiaries, and (iii) of the
Company's and the Parent's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by
the Company, the Parent and the Subsidiaries have been validly issued,
are fully paid and nonassessable and are owned by the Company, the
Parent or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is
duly qualified as a foreign corporation or other legal entity and is in
good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure
to be so qualified or in good standing could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and
proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate
law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns outstanding
shares of capital stock or similar equity interests of such Subsidiary.
5.5. Financial Statements.
The Company and the Parent have delivered to you and each Other
Purchaser copies of the consolidated financial statements of the Parent and its
Subsidiaries listed on Schedule 5.5. All of said financial statements (including
in each case the related schedules and notes) fairly present in all material
respects the consolidated financial position of the Parent and its Subsidiaries
as of the respective dates specified in such Schedule and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company and the Parent
of this Agreement and the Notes will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any Lien in
respect of any property of the Company, the Parent or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which the
Company, the Parent or any Subsidiary is bound or by which the Company, the
Parent or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company, the Parent or
any Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company, the Parent
or any Subsidiary.
The execution, delivery and performance by each Subsidiary of the
Subsidiary Guaranty will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of such Subsidiary under, any agreement, or corporate charter or
by-laws, to which such Subsidiary is bound or by which such Subsidiary or any of
its properties may be bound or affected, (ii) conflict with or result in a
breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to such Subsidiary or (iii) violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to such Subsidiary.
5.7. Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company and the Parent of this
Agreement or the Notes or the execution, delivery or performance by each
Subsidiary of the Subsidiary Guaranty.
5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Company or the Parent,
threatened against or affecting the Company, the Parent or any
Subsidiary or any property of the Company, the Parent or any Subsidiary
in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) None of the Company, the Parent and any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by
which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without
limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.9. Taxes.
The Parent, the Company and their Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company, the Parent or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. Neither the Company nor the Parent knows of any basis for any other
tax or assessment that could reasonably be expected to have a Material Adverse
Effect. The charges, accruals and reserves on the books of the Company, the
Parent and the Subsidiaries in respect of Federal, state or other taxes for all
fiscal periods are adequate. The Federal income tax liabilities of the Parent
have been determined by the Internal Revenue Service and paid for all fiscal
years up to and including the fiscal year ended December 31, 1996.
5.10. Title to Property; Leases.
The Company, the Parent and the Subsidiaries have good and sufficient
title to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company, the Parent or any Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement. All leases that individually or in
the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.
5.11. Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company, the Parent and the Subsidiaries own or use all licenses,
permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually
or in the aggregate are Material, without known conflict with the
rights of others;
(b) to the best knowledge of the Company and the Parent, no product of the
Company or the Parent or their Subsidiaries infringes in any material
respect any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(c) to the best knowledge of the Company and the Parent, there is no
Material violation by any Person of any right of the Company, the
Parent or any of the Subsidiaries with respect to any patent,
copyright, service mark, trademark, trade name or other right owned or
used by the Company, the Parent or any of the Subsidiaries.
5.12. Compliance with ERISA.
(a) The Company, the Parent and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except
for such instances of noncompliance as have not resulted in and could
not reasonably be expected to result in a Material Adverse Effect.
Neither the Company or the Parent nor any ERISA Affiliate has incurred
any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans
(as defined in Section 3 of ERISA), and no event, transaction or
condition has occurred or exists that could reasonably be expected to
result in the incurrence of any such liability by the Company, the
Parent or any ERISA Affiliate, or in the imposition of any Lien on any
of the rights, properties or assets of the Company, the Parent or any
ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or
to such penalty or excise tax provisions or to Section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), if any, determined as of
the end of such Plan's most recently ended plan year on the basis of
the actuarial assumptions specified for funding purposes in such Plan's
most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities. The term "benefit liabilities" has the meaning specified
in section 4001 of ERISA and the terms "current value" and "present
value" have the meaning specified in section 3 of ERISA.
(c) The Company, the Parent and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company, the Parent and the
Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject
to the prohibitions of section 406 of ERISA or in connection with which
a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of
your representation in Section 6.2 as to the sources of the funds used
to pay the purchase price of the Notes to be purchased by you.
5.13. Private Offering by the Company.
Neither the Company nor the Parent nor anyone acting on behalf of the
Company or the Parent has offered the Notes or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than you and the Other
Purchasers. Neither the Company nor the Parent nor anyone acting on behalf of
the Company or the Parent has taken, or will take, any action that would subject
the issuance or sale of the Notes to the registration requirements of Section 5
of the Securities Act.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute any of the value of the consolidated
assets of the Company and its Subsidiaries and the Company does not have any
present intention that margin stock will constitute any of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.
5.15. Existing Indebtedness; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of the Company, the
Parent and the Subsidiaries as of March 31, 2000, since which date
there has been no Material change in the amounts, interest rates,
sinking funds, installment payments or maturities of the Indebtedness
of the Company or its Subsidiaries. Neither the Company or the Parent
nor any Subsidiary is in default and (except as contemplated by the
Intercreditor Agreement) no waiver of default is currently in effect,
in the payment of any principal or interest on any Indebtedness of the
Company, the Parent or such Subsidiary and no event or condition exists
with respect to any Indebtedness of the Company, the Parent or any
Subsidiary that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Indebtedness
to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company, the Parent
nor any Subsidiary have agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of their
property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.11.
5.16. Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. Status under Certain Statutes.
None of the Company, the Parent or any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as
amended.
5.18. Environmental Matters.
None of the Company, the Parent or any Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company, the Parent or any of the
Subsidiaries or any of their respective real properties now or formerly owned,
leased or operated by any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case, such
as could not reasonably be expected to result in a Material Adverse Effect.
(a) None of the Company, the Parent or any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.
(b) None of the Company, the Parent or any Subsidiary has (i) stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them (ii) disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws, in each case in any manner
that could reasonably be expected to result in a Material Adverse
Effect.
(c) All buildings on all real properties now owned, leased or operated by
the Company, the Parent or any Subsidiary are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
5.19. Solvency.
The Parent, the Company and each Subsidiary (after giving due
consideration to any rights of contribution among such Persons) have each
received fair consideration and reasonably equivalent value for the incurrence
of its obligations hereunder or as contemplated hereby. After giving effect to
the transactions contemplated herein, (i) the fair value of the assets of each
of the Parent, the Company and each Subsidiary (both at fair valuation and at
present fair saleable value) exceeds its liabilities, (ii) each of the Parent,
the Company and each Subsidiary is able to and expects to be able to pay its
debts as they mature, and (iii) each of the Parent, the Company and each
Subsidiary has capital sufficient to carry on its business as conducted and as
proposed to be conducted.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1. Purchase for Investment.
You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and similar State securities laws, and may
be resold only if registered pursuant to the provisions of the Securities Act
and such State laws or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the Notes. You
represent that you are an "accredited investor" as defined in Regulation 230.501
issued pursuant to the Securities Act.
6.2. Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source does not include assets allocated to any separate account
maintained by you in which any employee benefit plan (or its related
trust) has any interest, other than a separate account that is
maintained solely in connection with your fixed contractual obligations
under which the amounts payable, or credited, to such plan and to any
participant or beneficiary of such plan (including any annuitant) are
not affected in any manner by the investment performance of the
separate account
(b) the Source is an "insurance company general account" as such term is
defined in the Department of Labor Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995) ("PTE 95-60") and as of the date
of this Agreement there is no "employee benefit plan" with respect to
which the aggregate amount of such general account's reserves and
liabilities for the contracts held by or on behalf of such employee
benefit plan and all other employee benefit plans maintained by the
same employer (and affiliates thereof as defined in Section V(a)(1) of
PTE 95-60) or by the same employee organization (in each case
determined in accordance with the provisions of PTE 95-60) exceeds 10%
of the total reserves and liabilities of such general account (as
determined under PTE 95-60) (exclusive of separate account liabilities)
plus surplus as set forth in the National Association of Insurance
Commissioners Annual Statement filed with your state of domicile; or
(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a
bank collective investment fund, within the meaning of PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company
in writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(d) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
paragraph (c); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this
paragraph (e); or
(g) the Source is the assets of one or more employee benefit plans that are
managed by an "in-house asset manager," as that term is defined in PTE
96-23 and such purchase and holding of the Notes is exempt under PTE
96-23; or
(h) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
6.3. Authorization, etc.
This Agreement has been duly authorized by all necessary corporate
action by you, and this Agreement constitutes a legal, valid and binding
obligation of you enforceable against the you in accordance with its terms
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information.
The Parent shall deliver to each holder of Notes that is an
Institutional Investor (if any), provided that the Parent (as the case may be)
shall have been notified of the identity of such holder and shall have been
provided the proper address for notice:
(a) Quarterly Statements -- within 60 days after the end of each quarterly
fiscal period in each fiscal year of the Parent (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Parent and its Subsidiaries as at
the end of such quarter, and
(ii) consolidated statements of income, changes in stockholders' equity
and cash flows of the Parent and its Subsidiaries for such quarter and
(in the case of the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Parent's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a) with respect to the Parent;
(b) Annual Statements -- within 100 days after the end of each fiscal yea
of the Company and the Parent, duplicate copies of,
(i) a consolidated balance sheet of the Parent and its Subsidiaries, as at
the end of such year, and
(ii) consolidated statements of income, changes in shareholders' equity and
cash flows of the Parent and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied
(A) by an opinion thereon of independent certified public accountants
of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the
financial position of the companies being reported upon and their
results of operations and cash flows and have been prepared in
conformity with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in accordance
with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, and
(B) a certificate of such accountants stating that they have reviewed
this Agreement and stating further whether, in making their audit, they
have become aware of any condition or event that then constitutes a
Default or an Event of Default, and, if they are aware that any such
condition or event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants shall not
be liable, directly or indirectly, for any failure to obtain knowledge
of any Default or Event of Default unless such accountants should have
obtained knowledge thereof in making an audit in accordance with
generally accepted auditing standards or did not make such an audit),
provided that the delivery within the time period specified above of
the Parent's Annual Report on Form 10-K for such fiscal year (together
with the Parent's annual report to shareholders, if any, prepared
pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
with the requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's certificate
described in clause (B) above, shall be deemed to satisfy the
requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available, one
copy of (i) each financial statement, report, notice or proxy statement
sent by the Parent or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by the
Company, the Parent or any Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements made
available generally by the Company, the Parent or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any event
within five Business Days after a Responsible Officer becoming aware of
the existence of any Default or Event of Default or that any Person has
given any notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in Section
11(f), a written notice specifying the nature and period of existence
thereof and what action the Company or the Parent (as applicable) is
taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days after a
Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that
the Parent or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in section
4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect
on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company, the
Parent or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the incurrence
of any liability by the Parent or any ERISA Affiliate pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Parent or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or excise
tax provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably be
expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Parent,
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect;
(g) Requested Information -- with reasonable promptness, such other data
and information relating to the business, operations, affairs,
financial condition, assets or properties of the Parent, the Company or
any Subsidiary or relating to the ability of the Parent or the Company
to perform its obligations hereunder and under the Notes as from time
to time may be reasonably requested by any such holder of Notes; and
(h) Rule 144A Information -- promptly upon request, such financial and
other information as such Institutional Investor may reasonably
determine to be necessary in order to permit compliance with the
information requirements of Rule 144A under the Securities Act (or any
successor provision) in connection with the resale of the Notes, except
at such times as the Parent is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act.
7.2. Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer of the Parent (as the case may be)
setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Parent was in
compliance with the requirements of Section 10 during the quarterly or
annual period covered by the statements then being furnished (including
with respect to each such Section, where applicable, the calculations
of the maximum or minimum amount, ratio or percentage, as the case may
be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the
Parent, the Company and the Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including any such event or
condition resulting from the failure of the Parent, the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature
and period of existence thereof and what action the Parent shall have
taken or proposes to take with respect thereto.
7.3. Inspection.
Each of the Parent and the Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Parent
to visit the principal executive office of the Parent and the Company,
to discuss the affairs, finances and accounts of the Parent, the
Company and the Subsidiaries with the Parent's and the Company's
officers, and (with the consent of the Parent, which consent will not
be unreasonably withheld) their independent public accountants, and
(with the consent of the Parent, which consent will not be unreasonably
withheld) to visit the other offices and properties of the Parent, the
Company and each Subsidiary, all at such reasonable times and as often
as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the expense
of the Parent to visit and inspect any of the offices or properties of
the Parent, the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Parent authorizes said
accountants to discuss the affairs, finances and accounts of the
Parent, the Company and the Subsidiaries), all at such reasonable
business times and as often as may be reasonably requested.
8. PREPAYMENT OF THE NOTES.
8.1. Required Prepayments.
On October 1, 2001 and on each October 1 thereafter to and including
October 1, 2004 the Company will prepay $5,000,000 principal amount (or such
lesser principal amount as shall then be outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium, provided that upon any
partial prepayment of the Notes pursuant to Section 8.2 or Section 8.7 or
purchase of the Notes permitted by Section 8.5 the principal amount of each
required prepayment of the Notes becoming due under this Section 8.1 on and
after the date of such prepayment or purchase shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment or purchase.
8.2. Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than $1,000,000 in aggregate principal amount of Notes in the case of a
partial prepayment, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less and 20 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
8.3. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
8.4. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of any
Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as the "PX Screen" on the Bloomberg Financial Market Service (or such other
display as may replace the PX Screen on Bloomberg Financial Market Service) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date, or
(ii) if such yields are not reported as of such time or the yields reported as
of such time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement. Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between (1) the actively traded U.S. Treasury security with the
Remaining Average Life closest to and greater than the Remaining Average Life
and (2) the actively traded U.S. Treasury security with the duration closest to
and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
8.7. Change in Control.
(a) Notice of Change in Control or Control Event. The Company will, within
five Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control or Control Event, give written
notice of such Change in Control or Control Event to each holder of
Notes. In the case that a Change in Control has occurred, such notice
shall contain and constitute an offer to prepay Notes as described in
subparagraph (b) of this Section 8.7 and shall be accompanied by the
certificate described in subparagraph (e) of this Section 8.7.
(b) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.7 shall be an offer to prepay, in
accordance with and subject to this Section 8.7, all, but not less than
all, the Notes held by each holder (in this case only, "holder" in
respect of any Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on a date specified
in such offer (the "Proposed Prepayment Date") that is not less than 10
days and not more than 30 days after the date of such offer (if the
Proposed Prepayment Date shall not be specified in such offer, the
Proposed Prepayment Date shall be the 30th day after the date of such
offer).
(c) Rejection. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.7 by causing a notice of such acceptance to
be delivered to the Company at least five days prior to the Proposed
Prepayment Date. A failure by a holder of Notes to respond to an offer
to prepay made pursuant to this Section 8.7 shall be deemed to
constitute a rejection of such offer by such holder.
(d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.7 shall be at 100% of the principal amount of such Notes,
together with interest on such Notes accrued to the date of prepayment.
The prepayment shall be made on the Proposed Prepayment Date.
(e) Officer's Certificate. Each offer to prepay the Notes pursuant to this
Section 8.7 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is
made pursuant to this Section 8.7; (iii) the principal amount of each
Note offered to be prepaid; (iv) the interest that would be due on each
Note offered to be prepaid, accrued to the Proposed Prepayment Date;
(v) that the conditions of this Section 8.7 have been fulfilled; and
(vi) in reasonable detail, the nature and date of the Change in
Control.
(f) "Change in Control" Defined. "Change in Control" means any of
the following events or circumstances: if any person (as such term is
used in section 13(d) and section 14(d)(2) of the Exchange Act as in
effect on the date of the Closing) or related persons constituting a
group (as such term is used in Rule l3d-5 under the Exchange Act),
other than the Parker Family, either (i) become the "beneficial owners"
(as such term is used in Rule l3d-3 under the Exchange Act as in effect
on the date of the Closing), directly or indirectly, of more than 50%
of the total voting power of all classes then outstanding of the
Company's or the Parent's voting stock or (ii) shall have acquired
substantially all the assets of the Company or the Parent.
(g) "Control Event" Defined. "Control Event" means: (i) the execution by
the Company, the Parent or any of their Subsidiaries or Affiliates of
any agreement or letter of intent with respect to any proposed
transaction or event or series of transactions or events which,
individually or in the aggregate, may reasonably be expected to result
in a Change in Control, (ii) the execution of any written agreement
which, when fully performed by the parties thereto, would result in a
Change in Control, or (iii) the making of any written offer by any
person (as such term is used in section 13(d) and section 14(d)(2) of
the Exchange Act as in effect on the date of the Closing) or related
persons constituting a group (as such term is used in Rule l3d-5 under
the Exchange Act as in effect on the date of the Closing) to the
holders of the common stock of the Company or the Parent (as the case
may be), which offer, if accepted by the requisite number of holders,
would result in a Change in Control.
(h) "Parker Family" Defined. "Parker Family" means David R. Parker
(President and Chairman of the Board of the Parent on the date of
Closing), Jacqueline Parker and Clyde M. Fuller (collectively, the
"Founders"), in respect of any individual, (i) the heirs, legatees,
descendants and blood relatives to the third-degree of consanguinity of
the Founders and (ii) any trusts for the exclusive benefit of, or any
corporation, partnership or limited partnership that is wholly-owned
by, any such individual referred to in clause (i), and his/her spouse
and lineal descendants, so long as such individual has the exclusive
right to control each such trust, corporation, partnership or limited
partnership.
All calculations contemplated in this Section 8.7 involving the capital stock of
any Person, shall be made with the assumption that all convertible Securities of
such Person then outstanding and all convertible Securities issuable upon the
exercise of any warrants, options and other rights outstanding at such time were
converted at such time and that all options, warrants and similar rights to
acquire shares of capital stock of such Person were exercised at such time.
9. AFFIRMATIVE COVENANTS.
Each of the Parent and the Company (as the case may be) covenants that
so long as any of the Notes are outstanding:
9.1. Compliance with Law.
The Company and the Parent will and will cause each of their
Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
9.2. Insurance.
The Company and the Parent will and will cause each of their
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
9.3. Maintenance of Properties.
The Company and the Parent will and will cause each of their
Subsidiaries to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section shall not
prevent the Company, the Parent or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company or the Parent (as the
case may be) has concluded that such discontinuance could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company and the Parent will and will cause each of their
Subsidiaries to file all tax returns required to be filed in any jurisdiction
and to pay and discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies imposed on
them or any of their properties, assets, income or franchises, to the extent
such taxes and assessments have become due and payable and before they have
become delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties or assets of the Company, the Parent
or any Subsidiary, provided that the Company, the Parent or any Subsidiary need
not pay any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Company, the Parent or such Subsidiary (as
the case may be) on a timely basis in good faith and in appropriate proceedings,
and the Company, the Parent or such Subsidiary (as the case may be) has
established adequate reserves therefor in accordance with GAAP on the books of
the Company, the Parent or such Subsidiary (as the case may be) or (ii) the
nonpayment of all such taxes and assessments in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
9.5. Corporate Existence, etc.
The Company and the Parent will at all times preserve and keep in full
force and effect its corporate existence. Subject to Sections 10.2 through 10.5
(inclusive), the Company and the Parent will at all times preserve and keep in
full force and effect the corporate existence of each of its Subsidiaries
(unless merged into the Company or a Subsidiary of the Company) and all rights
and franchises of the Company, the Parent and the Subsidiaries unless, in the
good faith judgment of the Company or the Parent (as the case may be), the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
9.6. Compliance with Parent Guarantee.
The Parent will at all times comply with the terms of the Parent
Guarantee.
10. NEGATIVE COVENANTS.
Each of the Company and the Parent covenants that so long as any of the
Notes are outstanding:
10.1. Transactions with Affiliates.
Each of the Company and the Parent will not and will not permit any
Subsidiary to enter into directly or indirectly any transaction or Material
group of related transactions (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service) with
any Affiliate (other than the Parent, the Company or another Subsidiary), except
in the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
10.2. Merger, Consolidation, etc.
Each of the Company and the Parent will not, and will not permit any of
the Subsidiaries to, consolidate with or merge with any other corporation or
convey, transfer or lease substantially all of its assets in a single
transaction or series of transactions to any Person (except that a Subsidiary
(other than the Company) may (x) consolidate with or merge with, or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to, a Wholly-Owned Subsidiary of the Company or the
Parent and (y) convey, transfer or lease all of its assets in compliance with
the provisions of Section 10.3), provided that the foregoing restriction does
not apply to the consolidation or merger of the Company or the Parent with, or
the conveyance, transfer or lease of substantially all of the assets of the
Company or the Parent in a single transaction or series of transactions to, any
Person so long as:
(a) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company or the Parent as an
entirety, as the case may be (the "Successor Corporation"), shall be a
solvent corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia;
(b) if the Company or the Parent, as the case may be, is not the Successor
Corporation, such corporation shall have executed and delivered to each
holder of Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the
Notes (if applicable); and
(c) immediately after giving effect to such transaction no Default or Even
of Default would exist.
No such conveyance, transfer or lease of substantially all of the assets of the
Company or the Parent shall have the effect of releasing the Company, the Parent
or any Successor Corporation from its liability under this Agreement or the
Notes.
10.3. Sales of Assets.
The Company and the Parent will not, and will not permit any Subsidiary
to, make any Transfer, provided that the foregoing restriction does not apply to
a Transfer if:
(a) the property that is the subject of such Transfer constitutes either
(i) inventory held for sale, or (ii) equipment, fixtures, supplies or
materials no longer required in the operation of the business of the
Parent, the Company or such Subsidiary or that is obsolete, and, in the
case of any Transfer described in clause (i) or clause (ii), such
Transfer is in the ordinary course of business (an "Ordinary Course
Transfer");
(b) either (i) such Transfer is from a Subsidiary to the Company or the
Parent or to a Wholly-Owned Subsidiary, or (ii) such Transfer is from
the Company or the Parent to a Wholly-Owned Subsidiary, so long as
immediately before and immediately after the consummation of such
transaction, and after giving effect thereto, no Default or Event of
Default exists or would exist (each such Transfer, an "Intergroup
Transfer"); and
(c) such Transfer is not an Ordinary Course Transfer or an Intergroup
Transfer (such transfers collectively referred to as "Excluded
Transfers"), and all of the following conditions shall have been
satisfied with respect thereto (the date of the consummation of such
Transfer of property being referred to herein as the "Property
Disposition Date"): (i) such Transfer does not involve a Substantial
Portion of the property of the Parent and its Subsidiaries, (ii) in the
good faith opinion of the Company and the Parent, the Transfer is in
exchange for consideration with a Fair Market Value at least equal to
that of the property exchanged, and is in the best interests of the
Company and the Parent, and (iii) immediately after giving effect to
such transaction no Default or Event of Default would exist.
"Substantial Portion" means, with respect to any Transfer of property,
any portion of property of the Parent and its Subsidiaries, if the Disposition
Value of such property, when added to the Disposition Value of all other
property of the Parent and its Subsidiaries that was subject to a Transfer
(other than an Excluded Transfer) during the period commencing on the date of
Closing and ending on and including the Property Disposition Date of such
property exceeds an amount equal to 10% of Consolidated Assets determined as of
the end of the then most recently ended fiscal quarter of the Parent.
10.4. Disposal of Ownership of a Subsidiary.
The Company and the Parent will not, and will not permit any Subsidiary
to, sell or otherwise dispose of any shares of Subsidiary Stock, nor will the
Company or the Parent permit any such Subsidiary to issue, sell or otherwise
dispose of any shares of its own Subsidiary Stock, provided that the foregoing
restrictions do not apply to:
(a) the issue of directors' qualifying shares by any such Subsidiary;
(b) any such Transfer of Subsidiary Stock constituting an Intergroup
Transfer;
(c) any such Transfer of Subsidiary Stock that does not constitute a
Restricted Payment; and
(d) the Transfer of all of the Subsidiary Stock of a Subsidiary of the
Company or the Parent owned by the Company or the Parent, as the case
may be, and their other Subsidiaries if: (i) such Transfer satisfies
the requirements of Section 10.3(c), (ii) in connection with such
Transfer the entire Investment (whether represented by stock, Debt,
claims or otherwise) of the Company or the Parent and their other
Subsidiaries in such Subsidiary is sold, transferred or otherwise
disposed of to a Person other than (A) the Company or the Parent, (B)
another Subsidiary not being simultaneously disposed of, or (C) an
Affiliate, and (iii) the Subsidiary being disposed of has no continuing
Investment in any other Subsidiary not being simultaneously disposed of
or in the Company or the Parent.
10.5. Sale-and-Leaseback Transactions.
The Company and the Parent will not, and will not permit any Subsidiary
to, enter into any Sale-and-Leaseback Transaction other than Sale-and-Leaseback
Transactions covering not more than $25,000,000 of over the road equipment in
the aggregate in any fiscal year.
10.6. Maintenance of Consolidated Tangible Net Worth.
The Company and the Parent will not permit Consolidated Tangible Net
Worth at any time to be less than the sum of
(a) $136,000,000 plus
(b) an aggregate amount equal to 50% of Consolidated Net Income (but, in
each case, only if a positive number) for each completed fiscal year,
beginning with the fiscal year ended 1999.
10.7. Limitation on Total Debt; Limitation on Funded Debt Incurrence.
(a) The Company and the Parent will not permit the ratio of Consolidated
Total Debt to Consolidated EBITDAR to exceed 3.0 to 1.0 at any time.
(b) The Company and the Parent will not, and will not permit any Subsidiary
to, incur any Funded Debt for borrowed money unless the lender or
holder of such Funded Debt shall have become a party to the
Intercreditor Agreement, provided that the restriction set forth in
this clause (b) shall not apply to Funded Debt evidenced by a purchase
money security interest in property acquired with such Funded Debt or
to any Capital Leases of revenue equipment or other property.
10.8. Restricted Payments.
(a) The Company and the Parent will not, and will not permit any Subsidiary
to, at any time, declare or make, or incur any liability to declare or
make, any Restricted Payment, unless immediately after giving effect to
such action:
(i) the aggregate amount of Restricted Payments of the Company, the Parent
and the Subsidiaries declared or made during the period commencing on
the date of Closing, and ending on the date such Restricted Payment is
declared or made, inclusive, would not exceed the sum of
(A) $25,000,000, plus
(B) 50% of Consolidated Net Income for each fiscal quarter
commencing after December 31, 1999 (or minus 100% of Consolidated Net
Income for such fiscal quarter if Consolidated Net Income for such
fiscal quarter is a loss); and
(ii) no Default or Event of Default would exist.
(b) The Company and the Parent will not, nor will they permit any
Subsidiary to, authorize a Restricted Payment that is not payable
within 60 days of authorization.
10.9. Restricted Investments.
The Company and the Parent will not, and will not permit any Subsidiary
to, make any Restricted Investment, except that the Parent may invest in
Transplace.com, directly or through a newly-created Subsidiary of the Parent,
not more than $7,000,000 in the form of cash and the non-asset based
transportation logistics business (consisting of customer lists, office
furniture, computer hardware and software, lease, trade names, trademarks,
goodwill, know-how and employee relationships) of Terminal Truck Broker, Inc., a
Wholly-Owned Subsidiary of Parent.
10.10. Fixed Charges Coverage.
The Company and the Parent will not permit the Fixed Charges Coverage
Ratio to be less than 2.0 to 1.0 at any time.
10.11. Liens.
The Company and the Parent will not, and will not permit any Subsidiary
to, directly or indirectly create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property or asset (including any document or instrument in respect of goods or
accounts receivable) of the Company, the Parent or any such Subsidiary, whether
now owned or held or hereafter acquired, or any income or profits therefrom
(whether or not provision is made for the equal and ratable securing of the
Notes in accordance with the last paragraph of this Section 10.11), or assign or
otherwise convey any right to receive income or profits, except:
(a) Liens existing on the date of this Agreement and securing Debt
of the Parent and its Subsidiaries referred to in item (a) of Schedule
10.11;
(b) Liens for taxes, assessments or other governmental charges the payment
of which is not at the time required by Section 9.4;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred
in the ordinary course of business for sums not yet due or the payment
of which is not at the time required by Section 9.4;
(d) Liens (other than any Lien imposed by ERISA) incurred or deposits made
in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security
or retirement benefits, or (ii) to secure (or to obtain letters of
credit that secure) the performance of tenders, statutory obligations,
surety bonds, appeal bonds (not in excess of $2,500,000), bids, leases
(other than Capital Leases), performance bonds, purchase, construction
or sales contracts and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred purchase
price of property;
(e) any attachment or judgment Lien, unless the judgment it secures (i)
shall not, within 30 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been
discharged within 30 days after the expiration of any such stay or (ii)
exceeds $2,500,000;
(f) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case
incidental to, and not interfering with, the ordinary conduct of the
business of the Company, the Parent or any of the Subsidiaries,
provided that such Liens do not, in the aggregate, materially detract
from the value of such property;
(g) Liens on property or assets of the Company or the Parent or any
Subsidiary securing Debt owing to the Company, the Parent or to any
Wholly-Owned Subsidiary;
(h) any Lien existing on property of a Person immediately prior to its
being consolidated with or merged into the Company, the Parent or a
Subsidiary or its becoming a Subsidiary, or any Lien existing on any
property acquired by the Company, the Parent or any Subsidiary at the
time such property is so acquired (whether or not the Debt secured
thereby shall have been assumed), provided that (i) no such Lien shall
have been created or assumed in contemplation of such consolidation or
merger or such Person's becoming a Subsidiary or such acquisition of
property, and (ii) each such Lien shall extend solely to the item or
items of property so acquired and, if required by the terms of the
instrument originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection with such
acquired property;
(i) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (a) or (h) of this Section 10.11, provided that (i) the
principal amount of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity
thereof reduced, (ii) such Lien is not extended to any other property,
and (iii) immediately after such extension, renewal or refunding no
Default or Event of Default would exist;
(j) a Lien on the headquarters building and the real estate upon which such
building is situated which Lien is confined solely to such assets and
secures Debt permitted to be incurred as Headquarters Financing Debt
pursuant to Section 10.7(a); and
(k) other Liens not otherwise permitted by paragraphs (a) through (j),
provided that immediately after giving effect to any such other Lien,
the sum of (i) the amount secured by the additional Liens under this
paragraph (k) plus (ii) the amount of Debt then outstanding of the
Subsidiaries (exclusive of Debt of any Subsidiary owed to the Company,
the Parent or to any Wholly-Owned Subsidiary), shall not at such time
exceed 40% of Consolidated Tangible Net Worth.
For the purposes of this Section 10.11, any Person becoming a Subsidiary after
the date of this Agreement shall be deemed to have incurred all of its then
outstanding Liens at the time it becomes a Subsidiary, and any Person extending,
renewing or refunding any Debt secured by any Lien shall be deemed to have
incurred such Lien at the time of such extension, renewal or refunding.
If, notwithstanding the prohibition contained herein, either the
Company or the Parent shall create, assume or permit to exist any Lien upon any
of its property or assets, or the property or assets of any Subsidiary, whether
now owned or hereafter acquired, other than those permitted by the provisions of
paragraphs (a) through (j) of this Section 10.11, it will make or cause to be
made effective provision whereby the Notes will be secured equally and ratably
with any and all other obligations thereby secured, such security to be pursuant
to agreements reasonably satisfactory to the Required Holders and, in any such
case, the Notes shall have the benefit, to the fullest extent that, and with
such priority as, the holders of the Notes may be entitled under applicable law,
of an equitable Lien on such property. Such violation of this Section 10.11 will
constitute an Event of Default, whether or not provision is made for an equal
and ratable Lien pursuant to this Section 10.11, provided, however, that an
Event of Default shall not occur if the holder of such Lien is a party to the
Intercreditor Agreement and provision for an equal and ratable Lien shall have
been made to the holders of Notes as contemplated by the terms of the
Intercreditor Agreement.
10.12. Line of Business.
Each of the Company and the Parent will not, and will not permit any of
the Subsidiaries to, engage in any business if, as a result, the general nature
of the business in which the Company, the Parent and the Subsidiaries, taken as
a whole, would then be engaged would be substantially changed from the general
nature of the business in which the Company, the Parent and the Subsidiaries,
taken as a whole, are engaged on the date of this Agreement.
10.13. Subsidiary Guaranty.
The Company will not create or acquire any Subsidiary unless,
immediately upon such creation or acquisition, the Company causes such
Subsidiary to become a signatory to the Subsidiary Guaranty.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration
or otherwise;
(b) the Company defaults in the payment of any interest on any Note for
more than five days after the same becomes due and payable;
(c) the Company or the Parent (as the case may be) defaults in the
performance of or compliance with any term contained in Sections 7.1(d)
and 10.1 through 10.13 (inclusive);
(d) the Company or the Parent (as the case may be) defaults in the
performance of or compliance with any term contained herein (other than
those referred to in paragraphs (a), (b) and (c) of this Section 11,
but including Section 9.6) and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company or the Parent receiving
written notice of such default from any holder of a Note (any such
written notice to be identified as a "notice of default" and to refer
specifically to this paragraph (d) of Section 11);
(e) any representation or warranty made in writing by or on behalf of the
Company, the Parent or any Subsidiary, or by any officer of the
Company, the Parent or any Subsidiary in this Agreement, the Subsidiary
Guaranty or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect
in any material respect on the date as of which made;
(f) (i) the Company, the Parent or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount of at
least $2,500,000 beyond any period of grace provided with respect
thereto, or (ii) the Company, the Parent or any Subsidiary is in
default in the performance of or compliance with any term of any
evidence of any Indebtedness in an aggregate outstanding principal
amount of at least $2,500,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a
consequence of such default or condition such Indebtedness has become,
or has been declared (or one or more Persons are entitled to declare
such Indebtedness to be), due and payable before its stated maturity or
before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity interests), (x)
the Company, the Parent or any Subsidiary has become obligated to
purchase or repay Indebtedness before its regular maturity or before
its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $2,500,000, or (y) one or more Persons
have the right to require the Company, the Parent or any Subsidiary so
to purchase or repay such Indebtedness;
(g) the Company, the Parent or any Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing;
(h) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by the Company, the Parent or any
Subsidiary, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving
a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company, the Parent or any of
Subsidiary, or any such petition shall be filed against the Company,
the Parent or any Subsidiary and such petition shall not be dismissed
within 60 days;
(i) a final judgment or judgments for the payment of money aggregating in
excess of $2,500,000 are rendered against one or more of the Company,
the Parent and the Subsidiaries and which judgments are not, within 30
days after entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within 30 days after the expiration of such stay;
or
(j) if (i) any Plan shall fail to satisfy the minimum funding standards
of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or
granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Company, the Parent or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $2,500,000, (iv) the Company, the Parent or any ERISA Affiliate
shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the
Company, the Parent or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company, the Parent or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the
liability of the Company, the Parent or any Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse Effect.
(k) any Subsidiary defaults in the performance of or compliance with any
term contained in the Subsidiary Guaranty or the Subsidiary Guaranty
ceases to be in full force and effect as a result of acts taken by the
Company, the Parent or any Subsidiary or is declared to be null and
void in whole or in material part by a court or other governmental or
regulatory authority having jurisdiction or the validity or
enforceability thereof shall be contested by any of the Company, the
Parent or any Subsidiary or any of them renounces any of the same or
denies that it has any or further liability thereunder.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company or the Parent
described in paragraph (g) or (h) of Section 11 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause
(vi) of paragraph (g) by virtue of the fact that such clause
encompasses clause (i) of paragraph (g)) has occurred, all the Notes
then outstanding shall automatically become immediately due and
payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in principal amount of the Notes at
the time outstanding may at any time at its or their option, by notice
or notices to the Company or the Parent, declare all the Notes then
outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section 11
has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to the Company or the Parent,
declare all the Notes held by it or them to be immediately due and
payable.
Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. Each of the Company
and the Parent acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company or the Parent (except as herein specifically provided for) and
that the provision for payment of a Make-Whole Amount by the Company or the
Parent (as the case may be) in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the holders of not less than 51% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company or the Parent (as the case may be) has paid all overdue interest on
the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are
due and payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company and the Parent under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all reasonable costs and expenses of such holder
incurred in any enforcement or collection under this Section 12, including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1.2. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $1,000,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $1,000,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representations set forth in
Section 6.2.
13.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is
a nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $50,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at the offices of the Purchasers in such jurisdiction. The
Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either the
principal office of the Company in such jurisdiction or the principal office of
a bank or trust company in such jurisdiction.
14.2. Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company or the Parent (as the case may be) will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below your name in
Schedule A, or by such other method or at such other address as you shall have
from time to time specified to the Company or the Parent in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by you or your
nominee you will, at your election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits of this Section
14.2 to any Institutional Investor that is the direct or indirect transferee of
any Note purchased by you under this Agreement and that has made the same
agreement relating to such Note as you have made in this Section 14.2.
15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or subsequent holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including: (a) the costs
and expenses incurred in enforcing or defending (or determining whether or how
to enforce or defend) any rights under this Agreement, the Notes, the Subsidiary
Guaranty or the Security Documents or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement, the Notes, the Subsidiary Guaranty or the Security Documents, or by
reason of being a holder of any Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated hereby and by the Notes. The
Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
15.2. Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement, the Notes, the Subsidiary Guaranty and
the Security Documents, the purchase or transfer by you of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of you or any other holder of a Note. All statements
contained in any certificate or other instrument delivered by or on behalf of
the Company or the Parent pursuant to this Agreement shall be deemed
representations and warranties of the Company or the Parent (as the case may be)
under this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding among you, the Company and
the Parent and supersede all prior agreements and understandings relating to the
subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement, the Subsidiary Guaranty and the Notes may be amended,
and the observance of any term hereof or of the Subsidiary Guaranty or the Notes
may be waived (either retroactively or prospectively), with (and only with) the
written consent of the Company, the Parent and the Required Holders, except that
(a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6
or 21 hereof, or any defined term (as it is used therein), will be effective as
to you unless consented to by you in writing, and (b) no amendment or waiver
may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the
Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Company or
the Parent (as applicable) will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each holder of outstanding Notes
promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite holders of Notes.
(b) Payment. Neither the Company nor the Parent will directly or indirectly
pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or grant any
security, to any holder of Notes as consideration for or as an
inducement to the entering into by any holder of Notes or any waiver or
amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted,
on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company and the Parent without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company or the
Parent and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company, the Parent or
any of their Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified for
such communications in Schedule A, or at such other address as you or
it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing, or
(iii) if to the Company or the Parent, to the address set forth at the
beginning hereof to the attention of the Chief Financial Officer, or at
such other address as the Company or the Parent (as the case may be)
shall have specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by you at the Closing (except the Notes themselves), and (c)
financial statements, certificates and other information previously or hereafter
furnished to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and you
may destroy any original document so reproduced. Each of the Company and the
Parent agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company, the Parent or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company, the Parent or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company, the Parent or any Subsidiary or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly available. You
will maintain the confidentiality of such Confidential information in accordance
with procedures adopted by you in good faith to protect confidential information
of third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company or the Parent (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory authority having jurisdiction
over you, (vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about your investment portfolio or (viii) any other Person
to which such delivery or disclosure may be necessary or appropriate (w) to
effect compliance with any law, rule, regulation or order applicable to you, (x)
in response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company or the
Parent in connection with the delivery to any holder of a Note of information
required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company or the
Parent (as the case may be) embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. Governing Law.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Nevada
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
* * * * *
REMAINDER OF PAGE INTENTIONALLY BLANK
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you,
the Company and the Parent.
Very truly yours,
COMPANY:
COVENANT ASSET MANAGEMENT, INC.,
a Nevada corporation
By: /s/ Joey B. Hogan
Name: Joey B. Hogan
Title: Chief Financial Officer & Treasurer
PARENT:
COVENANT TRANSPORT, INC.,
a Nevada corporation
By: /s/ Joey B. Hogan
Name: Joey B. Hogan
Title: Chief Financial Officer & Treasurer
The foregoing is agreed to as of the date thereof.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
ON BEHALF OF ONE OR MORE SEPARATE ACCOUNTS
By: CIGNA Investments, Inc.
By: /s/ Stephen A. Osborn
Name: Stephen A. Osborn
Title: Managing Director
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc.
By: /s/ Stephen A. Osborn
Name: Stephen A. Osborn
Title: Managing Director
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA Investments, Inc.
By: /s/ Stephen A. Osborn
Name: Stephen A. Osborn
Title: Managing Director
SCHEDULE A -- Information Relating To Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 10.9 -- Restricted Investments
SCHEDULE 10.11 -- Liens
EXHIBIT 1.2 -- Form of 7.39% Guaranteed Senior Note due
October 1, 2005
EXHIBIT 4.4(a) -- Form of Opinion of Counsel for the Company
and the Parent
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the
Purchasers
EXHIBIT 4.11 -- Form of Subsidiary Guaranty
EXHIBIT 4.12 -- Form of Intercreditor Agreement
EXHIBIT 9.6 -- Parent Guarantee
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
- - ----------------------------- ---------------------
CONNECTICUT GENERAL LIFE INSURANCE $5,000,000
COMPANY, on behalf of one or more separate accounts 5,000,000
Nominee Name in which Notes are to be issued: CIG & Co.
(1) All payments by Federal Funds wire transfer of immediately available
funds to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
with the following accompanying information:
OBI=Covenant Asset Management, Inc. 7.39% Guaranteed Senior
Notes due October 1, 2005; PPN 22283# AA 6; [and application
(as among principal, premium and interest of the payment being
made); contact name and phone]
(2) Notices related to payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing - S-206
900 Cottage Grove Road
Hartford, CT 06152-2309
with a copy to:
Chase Manhattan Bank
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, NY 10081
Attention: CIGNA Private Placements
Fax: (212) 552-3107/1005
(3) All other communications:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: (860) 726-7203
Tax ID #13-3574027
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
- - ----------------------------- ---------------------
CONNECTICUT GENERAL LIFE INSURANCE $5,000,000
COMPANY 5,000,000
Nominee Name in which Notes are to be issued: CIG & Co.
(1) All payments by Federal Funds wire transfer of immediately available
funds to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
with the following accompanying information:
OBI=Covenant Asset Management, Inc. 7.39% Guaranteed Senior
Notes due October 1, 2005; PPN 22283# AA 6; [and application
(as among principal, premium and interest of the payment being
made); contact name and phone]
(2) Notices related to payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing - S-206
900 Cottage Grove Road
Hartford, CT 06152-2309
with a copy to:
Chase Manhattan Bank
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, NY 10081
Attention: CIGNA Private Placements
Fax: (212) 552-3107/1005
(3) All other communications:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: (860) 726-7203
Tax ID #13-3574027
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
- - ----------------------------- ---------------------
LIFE INSURANCE COMPANY OF NORTH AMERICA $5,000,000
Nominee Name in which Notes are to be issued: CIG & Co.
(1) All payments by Federal Funds wire transfer of immediately available
funds to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
with the following accompanying information:
OBI=Covenant Asset Management, Inc. 7.39% Guaranteed Senior
Notes due October 1, 2005; PPN 22283# AA 6; [and application
(as among principal, premium and interest of the payment being
made); contact name and phone]
(2) Notices related to payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing - S-206
900 Cottage Grove Road
Hartford, CT 06152-2309
with a copy to:
Chase Manhattan Bank
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, NY 10081
Attention: CIGNA Private Placements
Fax: (212) 552-3107/1005
(3) All other communications:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: (860) 726-7203
Tax ID #13-3574027
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or indirectly through
one or more intermediaries Controls, or is Controlled by, or, is under common
Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of voting or equity
interests of the Company or any Subsidiary or any corporation of which the
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Company.
"Bank Loan Agreement" means the Amended and Restated Credit
Agreement, dated as of June 18, 1999 between the Company, CTI, the banks
signatory thereto and ABN AMRO Bank N.V as Agent, as further amended by an
Amendment to Amended and Restated Credit Agreement dated as of June 6, 2000, as
such agreement may hereafter be amended or modified.
"Bank Lenders" means the banks from time to time party to the
Bank Loan Agreement.
"Business Day" means (a) for the purposes of Section 8.6 only,
any day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in New York, Connecticut or Nevada are
required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person
and a Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.
"Change in Control" has the meaning set forth in Section 8.7.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"Collateral" is defined in the Intercreditor Agreement.
"Company" means Covenant Asset Management, Inc., a Nevada
corporation.
"Consolidated Assets" means the total assets of the Parent and
its Subsidiaries that would be shown as assets on a consolidated balance sheet
of the Company and its Subsidiaries prepared in accordance with GAAP, after
eliminating all amounts properly attributable to minority interests, if any, in
the stock and surplus of Subsidiaries.
"Consolidated Income Available for Fixed Charges" means, for
any period, Consolidated Net Income for such period plus all amounts deducted in
the computation thereof on account of (a) Fixed Charges and (b) taxes imposed on
or measured by income or excess profits.
"Confidential Information" is defined in Section 20.
"Consolidated Net Income" means, for any period, the net
income (or loss) of the Parent and its Subsidiaries for such period (taken as a
cumulative whole), as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between the Parent and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Parent and its Subsidiaries in
accordance with GAAP, provided that there shall be excluded:
(a) the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with the Parent
or a Subsidiary, and the income (or loss) of any Person, substantially all of
the assets of which have been acquired in any manner, realized by such other
Person prior to the date of acquisition,
(b) the income (or loss) of any Person (other than a
Subsidiary) in which the Parent or any Subsidiary has an ownership interest,
except to the extent that any such income has been actually received by the
Company or such Subsidiary in the form of cash dividends or similar cash
distributions,
(c) the undistributed earnings of any Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary,
(d) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period,
(e) excepted as permitted by GAAP, any aggregate net gain (but
not any aggregate net loss) during such period arising from the sale,
conversion, exchange or other disposition of capital assets (such term to
include, without limitation, (i) all non-current assets and, without
duplication, (ii) the following, whether or not current: all fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets, and all Securities),
(f) except as permitted by GAAP, any gains resulting from any
write-up of any assets (but not any loss resulting from any write-down of any
assets),
(g) any net gain from the collection of the proceeds of life
insurance policies,
(h) any gain arising from the acquisition of any Security, or
the extinguishment, under GAAP, of any Debt, of the Parent or any Subsidiary,
(i) any deferred credit representing the excess of equity in
any Subsidiary at the date of acquisition over the cost of the investment in
such Subsidiary,
(j) in the case of a successor to the Parent by consolidation
or merger or as a transferee of its assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets, and
(k) any portion of such net income that cannot be freely
converted into United States Dollars.
"Consolidated Tangible Net Worth" means, at any time,
(a) the total assets of the Parent and its Subsidiaries that
would be shown as assets on a consolidated balance sheet of the Parent and its
Subsidiaries as of such time prepared in accordance with GAAP, after eliminating
all amounts properly attributable to minority interests, if any, in the stock
and surplus of Subsidiaries, minus
(b) the total liabilities of the Parent and its Subsidiaries
that would be shown as liabilities on a consolidated balance sheet of the Parent
and its Subsidiaries as of such time prepared in accordance with GAAP, minus
(c) the net book amount of all assets of the Parent and its
Subsidiaries (after deducting any reserves applicable thereto) that would be
shown as intangible assets on a consolidated balance sheet of the Parent and its
Subsidiaries as of such time prepared in accordance with GAAP.
"Consolidated Total Debt" means, as of any date of
determination, the total of all Debt of the Parent and its Subsidiaries
outstanding on such date, after eliminating all offsetting debits and credits
between the Parent and its Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Parent and its Subsidiaries in accordance with GAAP, provided, however,
that Consolidated Total Debt shall not include the first $13,000,000 of any
Headquarters Financing Debt that may be outstanding at such time.
"Control Event" has the meaning set forth in Section 8.7.
"CTI" is defined in Section 1.1.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities evidenced by bonds, debentures, note or
other similar instruments;
(c) its liabilities for the deferred purchase price of
property or services acquired by such Person (excluding accounts payable arising
in the ordinary course of business and payable on customary trade terms, but
including all liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(d) its Capital Lease Obligations;
(e) its redemption obligations in respect of mandatorily
redeemable Preferred Stock;
(f) its obligations to purchase securities or other property
that arise out of or in connection with the sale of the same or substantially
similar securities or property;
(g) its obligations, whether fixed or contingent, to reimburse
any other Person for amounts paid under a letter of credit or similar
instrument;
(h) its obligations in respect of interest rate and currency
swaps and similar obligations obligating it to make payments, whether
periodically or upon the happening of a contingency, except that if any
agreement relating to such obligations provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligations shall be the net amount thereof;
(i) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(j) any Guaranty of such Person of liabilities of a type
described in any of clauses (a) through (i) hereof; and
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (j) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"Default Rate" means that rate of interest that is 2% per
annum above the rate of interest stated in clause (a) of the first paragraph of
the Notes.
"Disposition Value" means, at any time, with respect to any
property
(a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Parent, and
(b) in the case of property that constitutes Subsidiary Stock,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that
the book value of such Subsidiary Stock represents of the book value of
all of the outstanding capital stock of such Subsidiary (assuming, in
making such calculations, that all Securities convertible into such
capital stock are so converted and giving full effect to all
transactions that would occur or be required in connection with such
conversion) determined at the time of the disposition thereof, in good
faith by the Parent.
"Distribution" means, in respect of any corporation,
association or other business entity:
(a) dividends or other distributions or payments on capital
stock or other equity interest of such corporation, association or
other business entity (except distributions in such stock or other
equity interest); and
(b) the redemption or acquisition of such stock or other
equity interests or of warrants, rights or other options to purchase
such stock or other equity interests (except when solely in exchange
for such stock or other equity interests) unless made,
contemporaneously, from the net proceeds of a sale of such stock or
other equity interests.
"EBITDAR" means, for any period, Consolidated Net Income for
such period plus, to the extent deducted in determining such Consolidated Net
Income, (i) Interest Charges, (ii) depreciation, (iii) amortization, (iv) Lease
Rentals and (v) consolidated tax expense. In addition, EBITDAR for any period
shall include the net income plus interest charges, depreciation, amortization,
lease rentals (other than Capital Leases) and tax expense of any entity the
capital stock, assets business or other ownership interests of which were
acquired by the Parent of any of its Subsidiaries during such period (with pro
forma adjustments from the date of such acquisition).
"Environmental Laws" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Parent
under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Transfer" is defined in Section 10.3.
"Fair Market Value" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"Fixed Charges" means, with respect to any period, the sum of
(a) Interest Charges for such period and (b) Lease Rentals for such period.
"Fixed Charges Coverage Ratio" means, at any time, the ratio
of (a) Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters of the Parent ending on, or most recently ended
prior to, such time to (b) Fixed Charges for such period.
"Funded Debt" means, with respect to any Person, all Debt of
such Person that by its terms or by the terms of any instrument or agreement
relating thereto matures, or that is otherwise payable or unpaid, one year or
more from, or is directly or indirectly renewable or extendible at the option of
the obligor in respect thereof to a date one year or more (including, without
limitation, an option of such obligor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of one
year or more) from, the date of the creation thereof, provided that Funded Debt
shall include, as at any date of determination, current maturities of Funded
Debt.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State
or other political subdivision thereof, or
(ii) any jurisdiction in which the Parent or any
Subsidiary conducts all or any part of its business, or whic
asserts jurisdiction over any properties of the Parent or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"Headquarters Financing Debt" means the Debt incurred to
finance the Headquarters Transaction:
(a) in a single transaction (or series of integrated
transactions),
(b) prior to October 31, 1997,
(c) in an aggregate principal amount up to $15,000,000;
provided that only $13,000,000 of such amount shall be excluded from
the definition of "Consolidated Total Debt,"
(d) that (if unsecured) is subject to a Headquarters Financing
Intercreditor Agreement, and
(e) no Default or Event of Default existed at the time of such
incurrence or immediately after giving effect to such incurrence of
Debt;
provided that any Sale-and-Leaseback Transaction in connection with the
Headquarters Transaction shall be deemed to be Headquarters Financing Debt.
For purposes of this definition of Headquarters Financing
Debt, the term "Headquarters Financing Intercreditor Agreement" means an
intercreditor agreement (in form and substance acceptable to the holders of the
Notes) among the holder(s) of such Headquarters Financing Debt and the holders
of Notes, the Bank Lenders and each other party who may be a party to the
Intercreditor Agreement at the time of the incurrence of Headquarters Financing
Debt, provided, however, that such Headquarters Financing Intercreditor
Agreement shall not provide for the sharing of any collateral held by or for the
benefit of the holders of Notes, the Bank Lenders or any other party to the
Intercreditor Agreement.
"Headquarters Transaction" means the financing of the Parent's
headquarters facility constructed at Highway 11 and New Cummings Road, Tiftonia,
Tennessee.
"Holder" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 13.1.
"Indebtedness" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Institutional Investor" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 10% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
"Intercreditor Agreement" is defined in Section 4.12.
"Interest Charges" means, for any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Parent and its Subsidiaries and all other items required
to be eliminated in the course of the preparation of consolidated financial
statements of the Parent and its Subsidiaries in accordance with GAAP): (a) all
interest in respect of Debt of the Parent and its Subsidiaries (including
imputed interest on Capital Lease Obligations) deducted in determining
Consolidated Net Income for such period, together with all interest capitalized
or deferred during such period and not deducted in determining Consolidated Net
Income for such period, and (b) all debt discount and expense amortized or
required to be amortized in the determination of Consolidated Net Income for
such period.
"Intergroup Transfer" is defined in Section 10.3.
"Investment" means any investment, made in cash or by delivery
of property, by the Parent or any of its Subsidiaries (i) in any Person, whether
by acquisition of stock, indebtedness or other obligation or Security, or by
loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.
"Lease Rentals" means, with respect to any period, the sum of
the rental and other obligations required to be paid during such period by the
Parent or any Subsidiary as lessee under all leases of real or personal property
(other than Capital Leases), excluding any amount required to be paid by the
lessee (whether or not therein designated as rental or additional rental) on
account of maintenance and repairs, insurance, taxes, assessments, water rates
and similar charges, provided that, if at the date of determination, any such
rental or other obligations are contingent or not otherwise definitely
determinable by the terms of the related lease, the amount of such obligations
(i) shall be assumed to be equal to the prorated amount of such obligations for
the period of 12 consecutive calendar months immediately preceding the date of
determination or (ii) if the related lease was not in effect during such
preceding 12-month period, shall be the amount estimated by a Senior Financial
Officer on a reasonable basis and in good faith.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or prospects of
the Parent and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or properties
of the Parent and its Subsidiaries taken as a whole, or (b) the ability of the
Company or the Parent to perform its obligations under this Agreement and the
Notes, or (c) the ability of any Subsidiary to perform its obligations under the
Subsidiary Guaranty, or (d) the validity or enforceability of this Agreement,
the Notes or the Subsidiary Guaranty.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company or the Parent (as the
case may be) whose responsibilities extend to the subject matter of such
certificate.
"Ordinary Course Transfer" has the meaning set forth in
Section 10.3.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"Parent" means Covenant Transport, Inc., a Nevada corporation.
"Parent Guarantee" means the guarantee by the Parent in
accordance with the terms specified in Exhibit 9.6 to this Agreement.
"Parker Family" is defined in Section 8.7.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Parent or any ERISA
Affiliate or with respect to which the Parent or any ERISA Affiliate may have
any liability.
"Preferred Stock" means any class of capital stock of a
corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.
"property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.
"Property Disposition Date" is defined in Section 10.3.
"QPAM Exemption" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
"Required Holders" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Parent or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and
any other officer of the Company or the Parent (as the context requires) with
responsibility for the administration of the relevant portion of this agreement.
"Restricted Investments" means all Investments except the
following:
(a) property to be used in the ordinary course of business of
the Parent and its Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of the Parent and its Subsidiaries;
(c) Investments in one or more Subsidiaries or any Person that
concurrently with such Investment becomes a Subsidiary;
(d) Investments existing on the date of the Closing and
disclosed in Schedule 10.9;
(e) Investments in United States Governmental Securities,
provided that such obligations mature within 365 days from the date of
acquisition thereof;
(f) Investments in certificates of deposit issued by an
Acceptable Bank, provided that such obligations mature within 365 days
from the date of acquisition thereof;
(g) Investments in commercial paper given the highest rating
by a credit rating agency of recognized national standing and maturing
not more than 270 days from the date of creation thereof;
(h) Investments in Repurchase Agreements;
(i) Investments in tax-exempt obligations of any state of the
United States of America, or any municipality of any such state, in
each case rated "A" or better by S&P, "A2" or better by Moody's or an
equivalent rating by any other credit rating agency of recognized
national standing, provided that such obligations mature within 365
days from the date of acquisition thereof; and
(j) Investments in fuel hedging agreements entered into in the
ordinary course of business solely for the purpose of hedging exposure
to fuel costs.
For purposes of this Agreement, an Investment shall be valued at the lesser of
(i) cost and (ii) the value at which such Investment is to be shown on the books
of the Company and its Subsidiaries in accordance with GAAP.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (i) that is organized
under the laws of the United States of America or any State thereof,
(ii) that has capital, surplus and undivided profits aggregating at
least $100,000,000, and (iii) whose long-term unsecured debt
obligations (or the long-term unsecured debt obligations of the bank
holding company owning all of the capital stock of such bank or trust
company) shall have been given a rating of "A" or better by S&P, "A2"
or better by Moody's or an equivalent rating by any other credit rating
agency of recognized national standing.
"Acceptable Broker-Dealer" means any Person other than a natural person
(i) which is registered as a broker or dealer pursuant to the Exchange
Act and (ii) whose long-term unsecured debt obligations shall have been
given a rating of "A" or better by S&P, "A2" or better by Moody's or an
equivalent rating by any other credit rating agency of recognized
national standing.
"Moody's" means Moody's Investors Service, Inc.
"Repurchase Agreement" means any written agreement.
(a) that provides for (i) the transfer of one or more
United States Governmental Securities in an aggregate
principal amount at least equal to the amount of the transfer
price to the Parent or any of its Subsidiaries from an
Acceptable Bank or an Acceptable Broker-Dealer against a
transfer of funds (the "Transfer Price") by the Parent or such
Subsidiary to such Acceptable Bank or Acceptable
Broker-Dealer, and (ii) a simultaneous agreement by the Parent
or such Subsidiary, in connection with such transfer of funds,
to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar United States
Governmental Securities for a price not less than the Transfer
Price plus a reasonable return thereon at a date certain not
later than 365 days after such transfer of funds,
(b) in respect of which the Parent or such Subsidiary
shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the
occurrence of any default thereunder, and
(c) in connection with which the Parent or such
Subsidiary, or an agent thereof, shall have taken all action
required by applicable law or regulations to perfect a Lien in
such United States Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"United States Governmental Security" means any direct obligation of,
or obligation guaranteed by, the United States of America, or any
agency controlled or supervised by or acting as an instrumentality of
the United States of America pursuant to authority granted by the
Congress of the United States of America, so long as such obligation or
guarantee shall have the benefit of the full faith and credit of the
United States of America which shall have been pledged pursuant to
authority granted by the Congress of the United States of America.
"Restricted Payment" means any Distribution in respect of the
Parent or any Subsidiary of the Parent (other than on account of capital stock
or other equity interests of a Subsidiary of Parent), including any Distribution
resulting in the acquisition by the Parent of Securities that would constitute
treasury stock, provided that any Distribution of shares of Transplace.com or of
any Subsidiary Stock (where the only substantial asset of such Subsidiary is
equity interests of Transplace.com) to stockholders of the Parent shall not be
deemed a Restricted Payment. For purposes of this Agreement, the amount of any
Restricted Payment made in property shall be the greater of (x) the Fair Market
Value of such property (as determined in good faith by the board of directors
(or equivalent governing body) of the Person making such Restricted Payment) and
(y) the net book value thereof on the books of such Person, in each case
determined as of the date on which such Restricted Payment is made.
"Sale-and-Leaseback Transaction" means a transaction or series
of transactions pursuant to which the Parent or any Subsidiary shall sell or
transfer to any Person (other than the Parent or a Subsidiary) any property,
whether now owned or hereafter acquired, and, as part of the same transaction or
series of transactions, the Parent or any Subsidiary shall rent or lease as
lessee (other than pursuant to a Capital Lease), or similarly acquire the right
to possession or use of, such property or one or more properties which it
intends to use for the same purpose or purposes as such property, provided,
however, that the Headquarters Transaction shall not be included as a
"Sale-and-Leaseback Transaction".
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Security(ies)" has the meaning set forth in section 2(l) of
the Securities Act of 1933, as amended.
"Security Documents" means the Intercreditor Agreement, the
Amended and Restated Borrower Security Agreement dated as of June 6, 2000 made
by the Company in favor of First Union National Bank, the Consolidating Amended
and Restated Guarantor Security Agreement dated as of June 6, 2000 made by each
Subsidiary in favor of First Union National Bank, the Amended and Restated
Parent Stock Pledge and Security Agreement dated as of June 6, 2000 made by the
Parent in favor of First Union National Bank, the Guarantor Stock Pledge and
Security Agreement dated as of June 6, 2000 made by CTI in favor of First Union
National Bank, and the Amended and Restated Trademark Security Agreement dated
as of June 6, 2000 made by CIP, Inc. (formerly known as Intellectual Property
Co.), a Nevada corporation, in favor of First Union National Bank.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company or the
Parent (as the context requires).
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any limited liability company,
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries). Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the
Company or the Parent.
"Subsidiary Guaranty" means the Subsidiary Guaranty in
substantially the form of the Attached Exhibit 4.11.
"Subsidiary Stock" means, with respect to any Person, the
stock (or any options or warrants to purchase stock or other Securities
exchangeable for or convertible into stock) of any Subsidiary of such Person.
"Successor Corporation" is defined in Section 10.2.
"Substantial Portion" is defined in Section 10.3.
"Swap" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Transfer" means, with respect to any Person, any transaction
in which such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, Subsidiary Stock, provided, however,
that the Headquarters Transaction shall not be included as a "Transfer".
"Wholly-Owned Subsidiary" means any Subsidiary of the Parent,
all of the equity securities (except director's qualifying shares) of which are
owned by the Parent and/or the Parent's other Wholly-Owned Subsidiaries.