CREDIT AGREEMENT
by and among
COVENANT ASSET MANAGEMENT, INC.,
as Borrower,
COVENANT TRANSPORT, INC.
BANK OF AMERICA, N.A.,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
December 13, 2000
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.1. Definitions.........................................................2
1.2. Rules of Interpretation............................................29
1.3. Accounting for Acquisitions........................................30
ARTICLE II
The Credit Facilities
2.1. Revolving Loans....................................................32
2.2. Use of Proceeds....................................................36
2.3. Notes..............................................................36
2.4. Swing Line.........................................................37
ARTICLE III
Letters of Credit
3.1. Letters of Credit..................................................39
3.2. Reimbursement and Participations...................................39
ARTICLE IV
Eurodollar Funding, Fees, and Payment Conventions
4.1. Interest Rate Options..............................................43
4.2. Conversions and Elections of Subsequent Interest Periods...........43
4.3. Payment of Interest................................................44
4.4. Prepayments of Eurodollar Rate Loans...............................44
4.5. Manner of Payment..................................................44
4.6. Fees...............................................................45
4.7. Pro Rata Payments..................................................46
4.8. Computation of Rates and Fees......................................46
4.9. Deficiency Advances; Failure to Purchase Participations............46
4.10. Intraday Funding...................................................47
ARTICLE V
Security
5.1. Security...........................................................48
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5.2 Pledged Stock......................................................48
5.3 Intercompany Notes.................................................48
5.4 Licensing Agreements...............................................49
5.5. Further Assurances.................................................49
5.6. Information Regarding Collateral...................................50
5.7 Intercreditor Matters..............................................50
ARTICLE VI
Change in Circumstances
6.1. Increased Cost and Reduced Return..................................51
6.2. Limitation on Types of Loans.......................................52
6.3. Illegality.........................................................53
6.4. Treatment of Affected Loans........................................53
6.5. Compensation.......................................................53
6.6. Taxes..............................................................54
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
7.1. Conditions of Initial Advance......................................56
7.2. Conditions of Revolving Loans and Letter of Credit.................60
ARTICLE VIII
Representations and Warranties
8.1. Organization and Authority.........................................62
8.2. Loan Documents.....................................................62
8.3. Solvency...........................................................63
8.4. Subsidiaries and Stockholders......................................63
8.5. Ownership Interests................................................63
8.6. Financial Condition................................................63
8.7. Title to Properties................................................64
8.8. Taxes..............................................................64
8.9. Other Agreements...................................................64
8.10. Litigation.........................................................65
8.11. Margin Stock.......................................................65
8.12. Regulated Company..................................................65
8.13. Patents, Etc.......................................................66
8.14. No Untrue Statement................................................66
8.15. No Consents, Etc...................................................66
8.16. Employee Benefit Plans.............................................66
8.17. No Default.........................................................67
8.18. Environmental Laws.................................................67
8.19. Employment Matters.................................................68
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ARTICLE IX
Affirmative Covenants
9.1. Financial Reports, Etc.............................................69
9.2. Maintain Properties................................................70
9.3. Existence, Qualification, Etc......................................70
9.4. Regulations and Taxes..............................................71
9.5. Insurance..........................................................71
9.6. True Books.........................................................71
9.7. Right of Inspection................................................71
9.8. Observe all Laws...................................................71
9.9. Governmental Licenses..............................................71
9.10. Covenants Extending to Other Persons...............................72
9.11. Officer's Knowledge of Default.....................................72
9.12. Suits or Other Proceedings.........................................72
9.13. Notice of Environmental Complaint or Condition.....................72
9.14. Environmental Compliance...........................................72
9.15. Indemnification....................................................73
9.16. Further Assurances.................................................73
9.17. Employee Benefit Plans.............................................73
9.18. Continued Operations...............................................74
9.19. New Subsidiaries...................................................74
9.20 Intercompany Advances..............................................76
9.21 Collateral.........................................................76
ARTICLE X
Negative Covenants
10.1. Financial Covenants................................................77
10.2. Acquisitions.......................................................77
10.3. Liens..............................................................78
10.4. Indebtedness.......................................................79
10.5. Transfer of Assets.................................................80
10.6. Investments........................................................80
10.7. Merger or Consolidation............................................81
10.8. Restricted Payments................................................81
10.9. Transactions with Affiliates.......................................81
10.10. Compliance with ERISA, the Code and Foreign Benefit Laws...........82
10.11. Fiscal Year........................................................82
10.12. Dissolution, Etc...................................................82
10.13. Limitations on Sales and Leasebacks................................82
10.14. Change in Control..................................................83
10.15. Rate Hedging Obligations...........................................83
10.16. Negative Pledge Clauses............................................83
10.17. Compensation; Reimbursement of Expenses............................83
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10.18. Change in Accountants..............................................84
10.19. Modification of Indebtedness and Certain Documentation.............84
10.20. Partnerships.......................................................84
10.21. Restrictive Agreements.............................................84
ARTICLE XI
Events of Default and Acceleration
11.1. Events of Default..................................................86
11.2. Agent to Act.......................................................89
11.3. Cumulative Rights..................................................89
11.4. No Waiver..........................................................89
11.5. Allocation of Proceeds.............................................89
ARTICLE XII
The Agent
12.1. Appointment, Powers, and Immunities................................91
12.2. Reliance by Agent..................................................91
12.3. Defaults...........................................................92
12.4. Rights as Lender...................................................92
12.5. Indemnification....................................................92
12.6. Non-Reliance on Agent and Other Lenders............................93
12.7. Resignation of Agent...............................................93
ARTICLE XIII
Miscellaneous
13.1. Assignments and Participations.....................................94
13.2. Notices............................................................95
13.3. Right of Set-off; Adjustments......................................97
13.4. Survival...........................................................97
13.5. Expenses...........................................................97
13.6. Amendments and Waivers.............................................98
13.7. Counterparts; Facsimile Signatures.................................98
13.8. Termination........................................................99
13.9. Indemnification; Limitation of Liability...........................99
13.10. Severability......................................................100
13.11. Entire Agreement..................................................100
13.12. Agreement Controls................................................100
13.13. Usury Savings Clause..............................................100
13.14. Governing Law; Waiver of Jury Trial...............................101
EXHIBIT A Applicable Commitment Percentages.............................A-1
EXHIBIT B Form of Assignment and Acceptance.............................B-1
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EXHIBIT C Notice of Appointment (or Revocation) of Authorized
Representative................................................C-1
EXHIBIT D-1 Form of Borrowing Notice--Revolving Loans...................D-1-1
EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans..................D-2-1
EXHIBIT E Form of Interest Rate Selection Notice........................E-1
EXHIBIT F-1 Form of Note................................................F-1-1
EXHIBIT F-2 Form of Swing Line Note.....................................F-2-1
EXHIBIT G Form of Opinion of Borrower's Counsel.........................G-1
EXHIBIT H Compliance Certificate........................................H-1
EXHIBIT I-1 Form of Parent Guaranty Agreement...........................I-1-1
EXHIBIT I-2 Form of Subsidiary Guaranty Agreement.......................I-2-1
EXHIBIT J-1 Form of Second Amended and Restated Parent Stock Pledge
and Security Agreement......................................J-1-1
EXHIBIT J-2 Form of Second Amended and Restated Guarantor Stock Pledge
and Security Agreement......................................J-2-1
EXHIBIT K Form of Borrowing Base Certificate............................K-1
EXHIBIT L Form of Commitment Increase Agreement.........................L-1
EXHIBIT M Form of Added Lender Agreement................................M-1
EXHIBIT N-1 Form of Borrower Intercompany Note Pledge Agreement.........N-1-1
EXHIBIT O-1 Form of Guarantor Security Agreement........................O-1-1
Schedule 5.6 Information Regarding Collateral..............................S-1
Schedule 8.4 Subsidiaries and Investments in Other Persons.................S-2
Schedule 8.6 Indebtedness..................................................S-3
Schedule 8.7 Liens.........................................................S-4
Schedule 8.8 Tax Matters...................................................S-5
Schedule 8.10 Litigation....................................................S-6
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 13, 2000 (the "Agreement"),
is made by and among COVENANT ASSET MANAGEMENT, INC., a Nevada corporation (the
"Borrower"), COVENANT TRANSPORT, INC., a Nevada corporation and the owner of
100% of the issued and outstanding common stock of the Borrower (the "Parent"),
BANK OF AMERICA, N.A., a national banking association organized and existing
under the laws of the United States, in its capacity as a Lender ("Bank of
America"), and each other financial institution executing and delivering a
signature page hereto and each other financial institution which may hereafter
execute and deliver an instrument of assignment with respect to this Agreement
pursuant to Section 13.1 (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"), and
BANK OF AMERICA, N.A., a national banking association organized and existing
under the laws of the United States, in its capacity as agent for the Lenders
(in such capacity, and together with any successor agent appointed in accordance
with the terms of Section 12.7, the "Agent");
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility of up to $120,000,000, the proceeds of
which are to be used as provided in Section 2.2 hereof and which shall include a
letter of credit facility of up to $10,000,000 for the issuance of standby and
commercial letters of credit and a swing line facility of up to $5,000,000; and
WHEREAS, the Lenders are willing to make such revolving credit, swing
line, and letter of credit facilities available to the Borrower upon the terms
and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
ARTICLE I
Definitions and Terms
1.1 Definitions. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon exercise
of an option or warrant for, or conversion of securities into, such
equity interest, or (ii) assets of another Person which constitute all
or substantially all of the assets of such Person or of a line or lines
of business conducted by such Person.
"Acquisition Adjustments" means the adjustments to certain
financial terms and computations more particularly described in Section
1.3.
"Added Lender" has the meaning set forth in Section 2.1(f).
"Advance" means a borrowing under the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower or the Parent; or (ii) which
beneficially owns or holds 5% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation, 5%
or more of the equity interest) of the Borrower or the Parent; or 5% or
more of any class of the outstanding voting stock (or in the case of a
Person which is not a corporation, 5% or more of the equity interest)
of which is beneficially owned or held by the Borrower or the Parent.
The term "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 ownership of voting stock, by contract or
otherwise.
"Applicable Commitment Percentage" means, for each Lender at
any time, a fraction, with respect to the Revolving Credit Facility and
the Letter of Credit Facility, the numerator of which shall be such
Lender's Revolving Credit Commitment and the denominator of which shall
be the Total Revolving Credit Commitment, which Applicable Commitment
Percentage for each Lender as of the Closing Date is as set forth in
Exhibit A; provided that the Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any assignments to or
by such Lender effected in accordance with Section 13.1 or in
connection with any increase in the Total Revolving Credit Commitment
pursuant to Section 2.1(f).
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for
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such Type of Loan on the signature pages hereof or such other office of
such Lender (or an affiliate of such Lender) as such Lender may from
time to time specify to the Agent and the Borrower by written notice in
accordance with the terms hereof as the office by which its Loans of
such Type are to be made and maintained.
"Applicable Margin" means that percent per annum which shall
be based upon the Consolidated Leverage Ratio for the Four-Quarter
Period most recently ended, set forth as the Applicable Margin in the
Pricing Grid and subject to further adjustment as therein provided.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Applicable Unused Fee" means that percent per annum, based
upon the Consolidated Leverage Ratio for the Four-Quarter Period most
recently ended, set forth as the Applicable Unused Fee in the Pricing
Grid and subject to further adjustment as therein provided.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to Section 13.1.
"Authorized Representative" means (i) with respect to matters
regarding the Borrower, any of the President or any Vice President of
the Borrower or, with respect to financial matters, the chief financial
officer of the Borrower, or any other Person expressly designated by
the Board of Directors of the Borrower (or the appropriate committee
thereof) as an Authorized Representative of the Borrower, as set forth
from time to time in a certificate in the form of Exhibit C and (ii)
with respect to matters regarding the Parent or any Subsidiary of the
Parent (other than the Borrower), any of the President or any Vice
President of the Parent or, with respect to financial matters, the
chief financial officer of the Parent, or any other Person expressly
designated by the Board of Directors of the Parent (or the appropriate
committee thereof) as an Authorized Representative of the Parent, as
set forth from time to time in a certificate in the form of Exhibit C.
"Bank of America" means Bank of America, N.A. and its
successors.
"BAS" means Banc of America Securities LLC and its successors.
"Base Rate" means, for any day, at the election of the
Borrower (as indicated in the applicable Borrowing Notice or Interest
Rate Selection Notice), either (i) the rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus one percent
(1.0%) and (b) the Prime Rate for such day ("Base Rate Option 1"), or
(ii) the Federal
3
Funds Rate for such day plus one-half of one percent (0.50%) plus the
Applicable Margin ("Base Rate Option 2"). Any change in the Base Rate,
as elected, due to a change in the Prime Rate or the Federal Funds Rate
shall be effective on the effective date of such change in the Prime
Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate, as elected by the
Borrower.
"Base Rate Option 1" has the meaning assigned to such term in
the definition of "Base Rate" herein.
"Base Rate Option 2" has the meaning assigned to such term in
the definition of "Base Rate" herein.
"Base Rate Refunding Loan" means a Base Rate Loan (having a
Base Rate determined by Base Rate Option 1) or Swing Line Loan made
either to (i) satisfy Reimbursement Obligations arising from a drawing
under a Letter of Credit or (ii) pay Bank of America in respect of
Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account maintained
with the Agent, which may be maintained at one or more offices of the
Agent or an agent of the Agent.
"Borrowing Base" means the sum of 90% of the total net book
value of Eligible Revenue Equipment, less the aggregate amount
outstanding under the Senior Notes, determined at the end of each
fiscal quarter and certified by the Borrower and the Parent in a
Borrowing Base Certificate.
"Borrowing Base Certificate" means a certificate in the form
attached hereto as Exhibit K and incorporated herein by reference.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility or a Swing Line Loan, in the forms of Exhibits D-1 and D-2,
respectively.
"Business Day" means, (i) except as expressly provided in
clause (ii), any day which is not a Saturday, Sunday or a day on which
banks in the States of New York and North Carolina are authorized or
obligated by law, executive order or governmental decree to be closed
and, (ii) with respect to the selection, funding, interest rate,
payment, and Interest Period of any Eurodollar Rate Loan, any day which
is a Business Day, as described above, and on which the relevant
international financial markets are open for the transaction of
business contemplated by this Agreement in London, England, New York,
New York and Charlotte, North Carolina.
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"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) other than David
Parker, Jacqueline Parker, or Clyde Fuller or any such "group"
including any of them (the "Exempt Group") either (A) becomes
the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act ), directly or indirectly, of Voting Securities
of the Parent (or securities convertible into or exchangeable
for such Voting Securities) representing 50% or more of the
combined voting power of all Voting Securities of the Parent
(on a fully diluted basis) or (B) otherwise has the ability,
directly or indirectly, to elect a majority of the board of
directors of the Parent;
(ii) during any period of up to 24 consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such 24-month period were directors of the Parent
shall cease for any reason (other than the death, disability,
removal or retirement of a director of the Parent so long as
an officer of the Parent replaces such Person as a director or
such Person is replaced as a director by a Person whose
election or appointment is approved by a majority of the board
of directors at the time of such replacement) to constitute a
majority of the board of directors of the Parent;
(iii) any Person or two or more Persons acting in
concert, other than the Exempt Group, shall have acquired by
contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation thereof, will result in
its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or
policies of the Borrower or the Parent; or
(iv) the Parent shall cease to own, beneficially and
of record 100% of the issued and outstanding shares of capital
stock or other equity interest of the Borrower and each other
Subsidiary of the Parent existing on the Closing Date or
thereafter acquired or organized.
"CIP" means CIP, Inc., a Nevada corporation.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Parent, the Lenders and the Agent and on
which the conditions set forth in Section 7.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
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"Collateral" means, collectively, all property of the Parent,
the Borrower or any Subsidiary of either the Parent or the Borrower, or
any other Person in which the Agent or any Lender is granted a Lien
under any Security Instrument as security for all or any portion of the
Obligations or any other obligation arising under any Loan Document.
"Collateral Agent" means Bank of America in its capacity as
Collateral Agent under each of the Security Instruments and the
Intercreditor Agreement for the benefit of the Agent, the Lenders and
the holders of the Senior Notes, and any successor thereto acting in
such capacity.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Parent referred to as of the
Closing Date in Section 8.6(a).
"Consolidated EBITDAR" means, with respect to the Parent and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the sum of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income,
(iv) depreciation, (v) amortization, and (vi) Consolidated Lease
Payments, all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis, subject to Acquisition Adjustments.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to the Parent and its Subsidiaries for any Four-Quarter Period ending
on the date of computation thereof, the ratio of (i) Consolidated
EBITDAR for such period less (without duplication) taxes on income paid
in cash during such period, subject to Acquisition Adjustments, to (ii)
the sum of Consolidated Fixed Charges for such period plus twenty-five
percent (25%) of Revolving Credit Outstandings as of the date of
computation.
"Consolidated Fixed Charges" means, with respect to the Parent
and its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the sum of, without duplication, (i) Consolidated
Interest Expense for such period, (ii) current maturities of
Consolidated Indebtedness during such period, and (iii) Consolidated
Lease Payments for such period, all determined on a consolidated basis
in accordance with GAAP applied on a Consistent Basis, subject to
Acquisition Adjustments.
"Consolidated Indebtedness" means all Indebtedness for Money
Borrowed of the Parent and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the Parent
and its Subsidiaries, including without limitation (i) the current
amortized portion of debt discounts to the extent included in gross
interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Rate Hedging Obligation)
payable in connection with the incurrence of Indebtedness to the extent
included in gross interest expense and
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(iii) the portion of any payments made in connection with Capital
Leases allocable to interest expense, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis, subject to
Acquisition Adjustments; provided, however, that Consolidated Interest
Expense shall include the amount of payments in respect of Synthetic
Lease Obligations and the Permitted Receivables Securitization that are
in the nature of interest.
"Consolidated Lease Payments" means the gross amount of all
lease or rental payments, whether or not characterized as rent, of the
Parent and its Subsidiaries, excluding payments in respect of Capital
Leases constituting Indebtedness or in respect of Synthetic Lease
Obligations, all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis, subject to Acquisition Adjustments.
"Consolidated Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) Consolidated Total Adjusted
Indebtedness (determined as at such date) to (ii) Consolidated EBITDAR
(for the Four-Quarter Period ending on, (or most recently ended prior
to), such date), subject to Acquisition Adjustments.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Parent and its
Subsidiaries (including payments received by the Parent and its
Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by
Persons in which investment is permitted pursuant to this Agreement and
not related to an extraordinary event), less all operating and
non-operating expenses of the Parent and its Subsidiaries including
taxes on income, all determined on a consolidated basis in accordance
with GAAP applied on a Consistent Basis; but excluding (for all
purposes other than compliance with Section 10.1(a)) as income: (i) net
gains on the acquisition, retirement, sale or other disposition of
capital stock and other securities of the Parent or its Subsidiaries,
(ii) net gains on the collection of proceeds of life insurance
policies, (iii) any write-up of any asset, and (iv) any other net gain
or credit of an extraordinary nature as determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis, subject to
Acquisition Adjustments.
"Consolidated Shareholders' Equity" means, as of any date on
which the amount thereof is to be determined, (i) the sum of the
following in respect of the Parent and its Subsidiaries (determined on
a consolidated basis and excluding any upward adjustment after the
Closing Date due to revaluation of assets): (a) the amount of issued
and outstanding share capital, (b) the amount of additional paid-in
capital and retained earnings (or, in the case of a deficit, minus the
amount of such deficit), and (c) the amount of any foreign currency
translation adjustment (if positive, or, if negative, minus the amount
of such translation adjustment), (ii) minus the amount of any treasury
stock, all as determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Tangible Net Worth" means, as of any date on
which the amount thereof is to be determined, Consolidated
Shareholders' Equity minus the net book value
7
of all assets of the Parent and its Subsidiaries which would be treated
as intangible assets, such as (without limitation) goodwill (whether
representing the excess of cost over book value of assets acquired or
otherwise), capitalized expenses, unamortized debt discount and
expense, consignment inventory rights, patents, trademarks, trade
names, copyrights, franchises and licenses, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Total Adjusted Indebtedness" means the sum of,
without duplication, (i) Consolidated Indebtedness, (ii) the amount of
the present value of all future Consolidated Lease Payments (calculated
using a reasonable discount rate acceptable to the Agent) for which the
Parent or any Subsidiary of the Parent is obligated, and (iii) all
Contingent Obligations consisting of a guaranty of Indebtedness for
Money Borrowed of the Parent and its Subsidiaries, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis, subject to Acquisition Adjustments.
"Consolidated Total Assets" means, as of any date on which the
amount thereof is to be determined, the net book value of all assets of
the Parent and its Subsidiaries as determined on a consolidated basis
in accordance with GAAP applied on a Consistent Basis.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness,
lease, dividend, guaranty, letter of credit or other obligation (each a
"primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise
acquire any such primary obligation or any property constituting direct
or indirect security therefor, or (b) to advance or provide funds (i)
for the payment or discharge of any such primary obligation, or (ii) to
maintain working capital or equity capital of the primary obligor in
respect of any such primary obligation or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or
financial condition of such primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor thereof to make payment of such primary obligation, or (d)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation shall be deemed to be
an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 4.2 hereof of a Eurodollar Rate Loan
as a Eurodollar Rate Loan from one Interest Period to the next Interest
Period.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to Section 4.2 of one Type of Loan into another
Type of Loan.
8
"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of entering into any agreement therefor, the sum of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Parent or any
Subsidiary of the Parent to be transferred in connection therewith,
(ii) the amount of any cash and fair market value of other property
(excluding property described in clause (i) and the unpaid principal
amount of any debt instrument) given as consideration, (iii) the amount
(determined by using the face amount or the amount payable at maturity,
whichever is greater) of any Indebtedness incurred, assumed or acquired
by the Parent or any Subsidiary of the Parent in connection with such
Acquisition, (iv) all additional purchase price amounts in the form of
earnouts and other contingent obligations that should be recorded on
the financial statements of the Parent and its Subsidiaries in
accordance with GAAP, (v) all amounts paid in respect of covenants not
to compete, consulting agreements that should be recorded on financial
statements of the Parent and its Subsidiaries in accordance with GAAP,
and other affiliated contracts in connection with such Acquisition,
(vi) the aggregate fair market value of all other consideration given
by the Parent or any Subsidiary of the Parent in connection with such
Acquisition, and (vii) out of pocket transaction costs for the services
and expenses of attorneys, accountants and other consultants incurred
in effecting such transaction, and other similar transaction costs so
incurred. For purposes of determining the Cost of Acquisition for any
transaction, (A) the capital stock of the Parent shall be valued (I) in
the case of capital stock that is then designated as a national market
system security by the National Association of Securities Dealers, Inc.
("NASDAQ") or is listed on a national securities exchange, the average
of the last reported bid and ask quotations or the last prices reported
thereon, and (II) with respect to any other shares of capital stock, as
determined by the Board of Directors of the Parent and, if requested by
the Agent, determined to be a reasonable valuation by the independent
public accountants referred to in Section 9.1(a), (B) the capital stock
of any Subsidiary of the Parent shall be valued as determined by the
Board of Directors of such Subsidiary and, if requested by the Agent,
determined to be a reasonable valuation by the independent public
accountants referred to in Section 9.1(a), and (C) with respect to any
Acquisition accomplished pursuant to the exercise of options or
warrants or the conversion of securities, the Cost of Acquisition shall
include both the cost of acquiring such option, warrant or convertible
security as well as the cost of exercise or conversion.
"Credit Parties" means, collectively, the Borrower, the
Parent, each Guarantor and each other Person granting a Lien on, or
collaterally assigning, Collateral pursuant to any Security Instrument.
"CTI" means Covenant Transport, Inc., a Tennessee corporation,
a Subsidiary of the Parent and an Affiliate of the Borrower.
"CVTI" means CVTI Receivables Corp., a Nevada corporation.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
9
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate (determined by Base Rate Option 1),
(ii) with respect to Base Rate Loans, Swing Line Loans, Reimbursement
Obligations, fees, and other amounts payable in respect of (x)
Obligations or (y) (except as otherwise expressly provided therein) the
obligations of any Credit Party other than the Borrower under any of
the other Loan Documents, a rate of interest per annum which shall be
two percent (2%) above the Base Rate (determined by Base Rate Option 1)
and (iii) in any case, the maximum rate permitted by applicable law, if
lower.
"Direct Foreign Subsidiary" of any Person means a Subsidiary
other than a Domestic Subsidiary of such Person a majority of whose
Voting Securities, or a majority of whose Subsidiary Securities, are
owned by such Person or a Domestic Subsidiary of such Person.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Domestic Subsidiary" of any Person means any Subsidiary of
such Person organized under the laws of the United States of America,
any state or territory thereof or the District of Columbia.
"Eligible Assignee" means (i) a Lender, (ii) an Affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 13.1, the Borrower,
such approval not to be unreasonably withheld (provided that the
incurrence by the Borrower of additional costs pursuant to Section 6.6
as a result of such assignment shall constitute a reasonable basis for
withholding such consent) or delayed by the Borrower or the Agent, and
such approval to be deemed given by the Borrower (in the absence of
notice to the contrary, effective upon receipt) within two Business
Days after notice of such proposed assignment has been provided by the
assigning Lender to the Borrower; provided, however, that neither the
Borrower, the Parent nor an Affiliate of the Borrower or the Parent
shall qualify as an Eligible Assignee.
"Eligible Revenue Equipment" means any equipment, including
all tractors, trucks, trailers and similar equipment used in the
conduct of the trucking business of the Parent and its Subsidiaries and
not constituting inventory, owned by the Parent or any Subsidiary of
the Parent which (i) is subject to no Lien other than Liens permitted
by Section 10.3 (a), (b) or (c), (ii) is in salable and good working
condition, and (iii) is not stored or located (or as to motor vehicles,
garaged or otherwise permanently located) at a location other than a
place of business of the Parent or any Subsidiary of the Parent.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
10
(a) Government Securities;
(b) obligations of any corporation organized under
the laws of any state of the United States of America or under
the laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following
the date of issuance thereof and rated in an investment grade
rating category by S&P and Moody's; and
(c) interest bearing demand or time deposits issued
by any Lender or certificates of deposit maturing within one
year from the date of issuance thereof and issued by a bank or
trust company organized under the laws of the United States or
of any state thereof having capital surplus and undivided
profits aggregating at least $400,000,000 and being rated "A"
or better by S&P or "A" or better by Moody's.
"Employee Benefit Plan" means (i) any employee benefit plan,
including any Pension Plan, within the meaning of Section 3(3) of ERISA
which (A) is maintained for employees of the Parent or any of its ERISA
Affiliates, or any Subsidiary of the Parent or is assumed by the Parent
or any of its ERISA Affiliates, or any Subsidiary of the Parent in
connection with any Acquisition or (B) has at any time been maintained
for the employees of the Parent, any current or former ERISA Affiliate,
or any Subsidiary of the Parent and (ii) any plan, arrangement,
understanding or scheme maintained by the Parent or any Subsidiary of
the Parent that provides retirement, deferred compensation, employee or
retiree medical or life insurance, severance benefits or any other
benefit covering any employee or former employee and which is
administered under any Foreign Benefit Law or regulated by any
Governmental Authority other than the United States of America.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning, any environmental matters or conditions,
environmental protection or conservation, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended; the Superfund Amendments and Reauthorization
Act of 1986, as amended; the Resource Conservation and Recovery Act, as
amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all
regulations promulgated thereunder, and any other "Superfund" or
"Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Parent or the Borrower,
respectively, means any Person or trade or business which is a member
of a group which is under common control with the Parent or the
Borrower, respectively, who together with the Parent or the
11
Borrower, respectively, is treated as a single employer within the
meaning of Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
--------------------------
Rate 1- Reserve Requirement Margin
"Event of Default" means any of the occurrences set forth as
such in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Existing Facility" means that certain term loan, revolving
credit and letter of credit facility provided to Borrower by ABN AMRO
Bank N.V., as Agent, the Banks named therein, and the Letter of Credit
Banks named therein, in the maximum aggregate principal amount of
$130,000,000, established pursuant to that certain Amended and Restated
Credit Agreement dated as of June 18, 1999, as amended by Amendment to
Amended and Restated Loan Agreement dated as of June 6, 2000.
"Facility Guaranties" means, collectively, the following
Guaranty Agreements, as each of the same may be amended, supplemented,
amended and restated, or otherwise modified from time to time:
(i) that certain Parent Guaranty Agreement dated as
of December 13, 2000 by the Parent in favor of the Agent and
the Lenders, substantially in the form of Exhibit I-1 attached
hereto;
(ii) that certain Subsidiary Guaranty Agreement dated
as of December 13, 2000 by the Guarantors other than the
Parent ("Subsidiary Guarantors") in favor of the Agent and the
Lenders, substantially in the form of Exhibit I-2 attached
hereto; and
(iii) any additional Guaranty Agreement delivered to
the Agent pursuant to Section 9.19 hereof, substantially in
the form of Exhibit I-2 attached hereto (with appropriate
conforming changes).
"Facility Termination Date" means such date as all of the
following shall have occurred: (a) the Borrower shall have permanently
terminated the Revolving Credit Facility and the Swing Line by payment
in full of all Revolving Credit Outstandings and Letter of Credit
Outstandings and Swing Line Outstandings, together with all accrued and
unpaid interest thereon, except for the undrawn portion of Letters of
Credit as have been
12
fully cash collateralized in a manner consistent with the terms of
Section 11.1(B), (b) all Swap Agreements shall have been terminated,
expired or cash collateralized on terms acceptable to the Agent, (c)
all Revolving Credit Commitments and Letter of Credit Commitments shall
have terminated or expired and (d) the Borrower shall have fully,
finally and irrevocably paid and satisfied in full all Obligations
(other than Obligations consisting of continuing indemnities and other
contingent Obligations of the Borrower or any Guarantor that may be
owing to the Lenders pursuant to the Loan Documents and expressly
survive termination of this Agreement);
"FASB 133" means Statement of Financial Accounting Standards
No. 133.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent (in its individual capacity) on such day on such
transactions as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the
Parent and its Subsidiaries commencing on January 1 of each calendar
year and ending on December 31 of each calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Parent and its Subsidiaries, taken together as
one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
Accountants, or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
13
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guarantors" means, at any date, the Parent, CTI, and all
other Subsidiaries of the Parent at such date who have executed and
delivered a Facility Guaranty and related documents at such date as
required hereunder.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials and lead), the generation, handling,
storage, transportation, disposal, treatment, release, discharge or
emission of which is subject to any Environmental Law.
"Increased Commitment Date" has the meaning set forth in
Section 2.1(f).
"Increasing Lender" has the meaning set forth in Section
2.1(f).
"Indebtedness" means as to any Person, without duplication,
(a) all Indebtedness for Money Borrowed of such Person, (b) all Rate
Hedging Obligations of such Person, (c) all indebtedness secured by any
Lien on any property or asset owned or held by such Person regardless
or whether the indebtedness secured thereby shall have been assumed by
such Person or is non-recourse to the credit of such Person, and (d)
all Contingent Obligations of such Person, including all such items
incurred by any partnership or joint venture as to which such Person is
liable as a general partner or joint venturer.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation, all obligations under Capital
Leases, all amounts outstanding under Permitted Receivables
Securitizations, all Synthetic Lease Obligations, all amounts
outstanding under the Senior Notes, all Subordinated Indebtedness, the
deferred purchase price of any property or services, the aggregate face
amount of all surety bonds, letters of credit, and bankers'
acceptances, and (without duplication) all payment and reimbursement
obligations in respect thereof whether or not matured, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including reimbursement agreements and conditional
sales or similar title retention agreements), including all such items
incurred by any partnership or joint venture as to which such Person is
liable as a general partner or joint venturer, other than trade
payables and accrued expenses incurred in the ordinary course of
business.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto:
14
(a) the rate per annum equal to the rate determined
by the Agent to be the offered rate that appears on the page
of the Telerate screen that displays an average British
Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period,
or
(b) in the event the rate referenced in the preceding
subsection (a) does not appear on such page or service or such
page or service shall cease to be available, the rate per
annum equal to the rate determined by the Agent to be the
offered rate on such other page or other service that displays
an average British Bankers Association Interest Settlement
Rate for deposits in Dollars (for delivery on the first day of
such Interest Period) with a term equivalent to such Interest
Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such
Interest Period, or
(c) in the event the rates referenced in the
preceding subsections (a) and (b) are not available, the rate
per annum determined by the Agent as the rate of interest
(rounded upward to the next 1/100th of 1%) at which deposits
in Dollars for delivery on the first day of such Interest
Period in same day funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted by
Bank of America and with a term equivalent to such Interest
Period would be offered by Bank of America's London Branch to
major banks in the offshore Dollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period.
"Intercompany Borrowing Notes" means, collectively, each of
(i) the promissory note of CTI, dated January 1, 2000, payable to the
order of the Borrower in the principal amount of $100,000,000, (ii) the
promissory note of Harold Ives Trucking Co., dated January 1, 2000,
payable to the order of the Borrower in the principal amount of
$75,000,000, (iii) the promissory note of Southern Refrigerated
Transport, Inc., dated January 1, 2000, payable to the order of the
Borrower in the principal amount of $30,000,000, (iv) the promissory
note of CIP, dated January 1, 2000, payable to the order of the
Borrower in the principal amount of $1,000,000, (v) the promissory note
of Covenant.com, Inc., dated January 1, 2000, payable to the order of
the Borrower in the principal amount of $1,000,000, and (vi) any other
promissory note at any time outstanding issued by the Parent or any
Subsidiary of the Parent in favor of the Parent, the Borrower or any
other Subsidiary of the Parent, in form and substance acceptable to the
Agent and the Required Lenders, which evidences a loan or other advance
from the Parent, the Borrower or such other Subsidiary of the Parent to
the Parent or any Subsidiary of the Parent.
"Intercompany Investment Notes" means, collectively, each of
(i) the promissory note of CTI, dated January 1, 2000, payable to the
order of the Parent in the principal amount of $100,000,000, and
subsequently endorsed and assigned (with recourse) by the Parent to the
order of the Borrower as a capital contribution pursuant to that
certain
15
Conveyance Agreement dated as of January 1, 2000 by and between Parent
and Borrower (the "Conveyance Agreement"), (ii) the promissory note of
Southern Refrigerated Transport, Inc., dated January 1, 2000, payable
to the order of CTI in the principal amount of $10,693,014 and
subsequently endorsed and assigned (with recourse) by CTI to the order
of the Parent as a distribution, and thereafter endorsed and assigned
(with recourse) by the Parent to the order of the Borrower as a capital
contribution pursuant to the Conveyance Agreement and (iii) the
promissory note of Terminal Trucker Broker, Inc., dated January 1,
2000, payable to the order of CTI in the principal amount of $4,647,439
and subsequently endorsed and assigned (with recourse) by CTI to the
Parent as a distribution, and thereafter endorsed and assigned (with
recourse) by the Parent to the Borrower as a capital contribution
pursuant to the Conveyance Agreement.
"Intercompany Note Pledge Agreements" means, collectively, (i)
that certain Intercompany Note Pledge Agreement dated as of the Closing
Date in favor of the Collateral Agent for the ratable benefit of the
Agent and the Lenders and the holders of the Senior Notes executed by
the Borrower pledging and collectively assigning to the Collateral
Agent for the benefit of the Agent and the Lenders and the holders of
the Senior Notes each Intercompany Note, substantially in the form of
Exhibit N-1 attached hereto and incorporated herein by reference, and
(ii) any additional Intercompany Note Pledge Agreement delivered to the
Collateral Agent by the Parent or any Subsidiary pursuant to the
provisions of Article V and Section 9.19 hereof, substantially in the
form of Exhibit N-1 attached hereto and incorporated herein by
reference (with appropriate conforming changes), each as amended,
restated, supplemented or otherwise modified.
"Intercompany Notes" means, collectively, each Intercompany
Borrowing Note and each Intercompany Investment Note.
"Intercreditor Agreement" means that certain Second Amended
and Restated Master Collateral and Intercreditor Agreement dated as of
the Closing Date by and among the Collateral Agent, the Agent, the
Lenders and the holders of the Senior Notes.
"Interest Period" means, for each Eurodollar Rate Loan, a
period commencing on the date such Eurodollar Rate Loan is made or
Converted or Continued and ending, at the Borrower's option, on the
date one, two, three or six months thereafter as notified to the Agent
by the Authorized Representative in accordance with the terms hereof;
provided that,
(a) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day (unless such
extension would cause the applicable Interest Period to end in
the succeeding calendar month, in which case such Interest
Period shall end on the next preceding Business Day); and
(b) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day
16
in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or
the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in
the form of Exhibit E.
"Issuing Bank" means initially Bank of America and thereafter
any Lender which succeeds Bank of America as issuer of Letters of
Credit under Article III.
"Letter of Credit" means a standby or commercial letter of
credit issued by the Issuing Bank pursuant to Article III hereof for
the account of the Borrower (or the Borrower and any Subsidiary of the
Parent) in favor of a Person advancing credit or securing an obligation
on behalf of the Borrower or any Subsidiary of the Parent.
"Letter of Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to acquire Participations in
respect of Letters of Credit and Reimbursement Obligations up to an
aggregate amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Letter of Credit
Commitment, as the same may be increased or decreased from time to time
pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
Article III hereof providing for the issuance by the Issuing Bank for
the account of the Borrower of Letters of Credit in an aggregate stated
amount at any time outstanding not exceeding the Total Letter of Credit
Commitment minus outstanding Reimbursement Obligations.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount available to be drawn under all
Letters of Credit then issued plus Reimbursement Obligations then
outstanding.
"Licensing Agreements" means, collectively, each written
license agreement, in form and substance satisfactory to the Agent, by
and among the Borrower or any other Credit Party, as licensee, and CIP,
as licensor, pursuant to which the Borrower or such Credit Party or
Parties will have the right to use all trademarks, trade names,
goodwill, rights under certain license agreements regarding source
code, internally developed software, and certain know-how conducive to
the operation of a trucking company, and shall pay royalties to CIP, in
connection with such use in amounts established by such license
agreement, including but not limited to that certain Intellectual
Property License and Services Agreement dated October 1, 1999 by and
between CIP, as licensor, and CTI, as licensee, and that certain
Intellectual Property License and Services Agreement dated October 1,
1999 by and between CIP, as licensor, and Southern Refrigerated
Transport, Inc., as licensee.
17
"Licensor Acknowledgement and Agreement" means the licensor
consent, waiver and estoppel certificates described in Section 5.4.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Parent and any
Subsidiary of the Parent shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which
title to the property has been retained by or vested in some other
Person for security purposes.
"Loan" or Loans" means any of the Revolving Loans or the Swing
Line Loans.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the Intercreditor Agreement, the
Applications and Agreements for Letters of Credit and all Subordination
Agreements, and all other instruments and documents heretofore or
hereafter executed or delivered to or in favor of any Lender (including
the Issuing Bank) or the Agent or the Collateral Agent in connection
with the Loans made and transactions contemplated under this Agreement,
but excluding documents or instruments evidencing Swap Agreements, as
the same may be amended, supplemented or replaced from the time to
time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations, prospects or condition,
financial or otherwise, of the Parent and its Subsidiaries taken as a
whole, (ii) the ability of any Credit Party to pay or perform its
respective obligations, liabilities and indebtedness under the Loan
Documents as such payment or performance becomes due in accordance with
the terms thereof, or (iii) the rights, powers and remedies of the
Agent or any Lender under any Loan Document or the validity, legality
or enforceability thereof.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"Notes" means, collectively, the Swing Line Note and the
Revolving Notes.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the Reimbursement
Obligations and otherwise in respect of the Letters of Credit, (iii)
all liabilities of Borrower to any Lender (or any affiliate of any
Lender) which arise under a Swap Agreement, and (iv) the payment and
performance of all other obligations,
18
liabilities and Indebtedness of the Borrower to the Lenders (including
the Issuing Bank), the Agent, the Collateral Agent or BAS hereunder,
under any one or more of the other Loan Documents or with respect to
the Loans.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, any corporate, organizational or partnership
action (including any required shareholder, member or partner action),
or other similar official action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of organization, certificate of
limited partnership or other applicable organizational or charter
documents relating to the creation of such entity.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings, Swing Line Outstandings and Revolving Credit
Outstandings on such date.
"Participation" means, (i) with respect to any Lender (other
than the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
liability of the Issuing Bank in respect of a Letter of Credit issued
by the Issuing Bank in accordance with the terms hereof and (ii) with
respect to any Lender (other than Bank of America) and a Swing Line
Loan, the extension of credit represented by the participation of such
Lender hereunder in the liability of Bank of America in respect of a
Swing Line Loan made by Bank of America in accordance with the terms
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Parent or
the Borrower or any of their respective ERISA Affiliates or is assumed
by the Parent or the Borrower or any of their respective ERISA
Affiliates in connection with any Acquisition or (ii) has at any time
been maintained for the employees of the Parent or the Borrower or any
current or former ERISA Affiliate.
19
"Permitted Receivables Securitization" means limited recourse
or nonrecourse sales and assignments of accounts receivable of Borrower
or any Subsidiary of the Parent to one or more special purpose
entities, in connection with the issuance of obligations by such
special purpose entities secured by such accounts, the proceeds of the
issuance of which obligations shall be made available to the Borrower
or such Subsidiary of the Parent, as applicable, all pursuant to the
terms and conditions of the Receivables Purchase Agreement.
"Permitted Share Repurchases" means purchases by the Parent of
the common stock of the Parent made on the open market, on terms
acceptable to the Agent and in compliance with applicable regulations,
which purchases in the aggregate shall be subject to the limitations
set forth in Section 10.8.
"Person" means an individual, partnership, corporation,
limited liability company, limited liability partnership, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pledge Agreements" means, collectively, the following Pledge
Agreements, as each of the same may be amended, supplemented (including
by Pledge Agreement Supplement), amended and restated, or otherwise
modified from time to time:
(i) that certain Second Amended and Restated Parent
Stock Pledge and Security Agreement dated as of December 13,
2000 by the Parent in favor of the Collateral Agent, for the
ratable benefit of the Agent and the Lenders and the holders
of the Senior Notes, amending and restating that certain
Amended and Restated Parent Stock Pledge and Security
Agreement dated as of June 6, 2000 by the Parent in favor of
the Prior Collateral Agent, substantially in the form of
Exhibit J-1 attached hereto;
(ii) that certain Second Amended and Restated
Guarantor Stock Pledge and Security Agreement dated as of
December 13, 2000 by CTI in favor of the Collateral Agent, for
the ratable benefit of the Agent and the Lenders and the
holders of the Senior Notes, amending and restating that
certain Amended and Restated Guarantor Stock Pledge and
Security Agreement dated as of June 6, 2000 by CTI in favor of
the Prior Collateral Agent, substantially in the form of
Exhibit J-2 attached hereto;
(iii) any additional Pledge Agreement delivered to
the Collateral Agent pursuant to Article V or Section 9.19
hereof, substantially in the form attached hereto as Exhibit
J-1 (with appropriate conforming changes); and
(iv) with respect to any Subsidiary Securities issued
by a Direct Foreign Subsidiary of the Parent or the Borrower,
any additional or substitute charge, agreement, document,
instrument or conveyance, in form and substance acceptable to
the Agent and the Collateral Agent,
20
conferring under applicable foreign law upon the Collateral
Agent for the ratable benefit of the Agent and the Lenders and
the holders of the Senior Notes a Lien upon such Subsidiary
Securities as are owned by the Parent, the Borrower or any
Domestic Subsidiary of the Parent or the Borrower.
"Pledge Agreement Supplement" means, with respect to each
Pledge Agreement, the Pledge Agreement Supplement in the form affixed
as an Exhibit to such Pledge Agreement.
"Pledged Interests" means the Subsidiary Securities required
to be pledged as Collateral pursuant to Article V or Section 9.19 or
the terms of any Pledge Agreement.
"Pricing Grid" means:
Applicable
Consolidated Leverage Applicable Unused
Tier Ratio Margin Fee
---- ----- ------ ---
V Greater than or equal to 1.25% 0.25%
2.50 to 1.00
IV Less than 2.50 to 1.00 and 1.125% 0.225%
Greater than or equal to
2.25 to 1.00
III Less than 2.25 to 1.00 and 1.00% 0.20%
Greater than or equal to
2.00 to 1.00
II Less than 2.00 to 1.00 and 0.875% 0.175%
Greater than or equal to
1.75 to 1.00
I Less than 1.75 to 1.00 0.75% 0.150%
The Applicable Margin and Applicable Unused Fee shall be established at
the end of each fiscal quarter of the Parent (each, a "Determination
Date"). Any change in the Applicable Margin or Applicable Unused Fee
following each Determination Date shall be determined based upon the
computations set forth in the certificate furnished to the Agent
pursuant to Section 9.1(a)(ii) and Section 9.1(b)(ii), subject to
review and approval of such computations by the Agent, and shall be
effective commencing on the fifth Business Day following the date such
certificate is received until the fifth Business Day following the date
on which a new certificate is delivered or is required to be delivered,
whichever shall first occur. From the Closing Date to the fifth
Business Day following the date the certificate referred to in the
preceding sentence for the fiscal period ended as at the first
Determination Date to occur after the Closing Date is delivered or is
required
21
to be delivered (whichever shall first occur), the Applicable Margin
and Applicable Unused Fee shall be Tier III. Notwithstanding the
provisions of the two preceding sentences, if the Borrower shall fail
to deliver any such certificate within the time period required by
Section 9.1, then the Applicable Margin and Applicable Unused Fee shall
be Tier V from the date such certificate was due until the fifth
Business Day following the date the appropriate certificate is so
delivered.
"Prime Rate" means the per annum rate of interest established
from time to time by Bank of America as its prime rate, which rate may
not be the lowest rate of interest charged by Bank of America to its
customers.
"Principal Office" means the principal office of Bank of
America, presently located at 101 North Tryon Street, 15th Floor, NC1
001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services,
or such other office and address as the Agent may from time to time
designate.
"Prior Collateral Agent" means First Union National Bank, as
Collateral Agent under the Prior Intercreditor Agreement.
"Prior Intercreditor Agreement" means that certain Amended and
Restated Master Collateral and Intercreditor Agreement dated as of June
6, 2000 by and among the Prior Collateral Agent, the holders of the
Senior Notes, ABN AMRO Bank, N.V., and the other participating
creditors (including the Lenders) party thereto.
"Rate Hedge Value" means, with respect to each contract,
instrument or other arrangement creating a Rate Hedging Obligation, the
net obligations of the Borrower, the Parent, or any Subsidiary of the
Parent thereunder equal to the termination value thereof as determined
in accordance with its provisions (if such Rate Hedging Obligation has
been terminated) or the mark to market value thereof as determined on
the basis of available quotations from any recognized dealer in, or
from Bloomberg or other similar service providing market quotations
for, the applicable Rate Hedging Obligation (if such Rate Hedging
Obligation has not been terminated).
"Rate Hedging Obligations" means, without duplication, any and
all obligations of the Borrower or any Subsidiary, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or
acquired (including all renewals, extensions and modifications thereof
and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates, including fuel prices, applicable to such party's assets,
liabilities or exchange transactions, including, but not limited to,
Dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options,
puts, warrants and those commonly known as interest rate "swap"
agreements and forward fuel purchase contracts, commitments, or
options; (ii) all other "derivative instruments" as defined in FASB 133
and which are subject to the reporting requirements of FASB 133; and
(iii) any and all cancellations,
22
buybacks, reversals, terminations or assignments of any of the
foregoing. For purposes of any computation hereunder, each Rate Hedging
Obligation shall be valued at the Rate Hedge Value thereof.
"Receivables Purchase Agreement" means, collectively, (i) that
certain Receivables Purchase Agreement dated as of December 12, 2000 by
and among CTI, as an Originator, Southern Refrigerated Transport, Inc.,
as an Originator, and CVTI, as Purchaser, and (ii) that certain Loan
Agreement dated as of December 12, 2000 by and among CVTI, as Borrower,
the Parent, as Master Servicer, Three Pillars Funding Corporation, as
Lender, and SunTrust Equitable Securities Corporation, as
Administrator, each reasonably acceptable in form and substance to the
Agent and the Required Lenders.
"Registrar" means, with respect to any Subsidiary Securities,
any Person authorized or obligated to maintain records of the
registration of ownership or transfer of ownership of interests in such
Subsidiary Securities, and in the event no such Person shall have been
expressly designated by the related Subsidiary, shall mean (i) as to
any corporation or limited liability company, its Secretary (or
comparable official), and (ii) as to any partnership, its general
partner (or managing general partner if one shall have been appointed).
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank and the Lenders to the extent of their
respective Participations (including by the receipt by the Issuing Bank
of proceeds of Loans pursuant to Section 2.1(c)(iii)) for amounts
theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating (i) if there
shall be fewer than three (3) Lenders, 100% of the aggregate Credit
Exposures of all Lenders on such date, and (ii) if there shall be three
(3) or more Lenders, more than 50% of the aggregate Credit Exposures of
all the Lenders on such date. For purposes of the preceding sentence,
the amount of the "Credit Exposure" of each Lender shall be equal at
all times (a) other than following the occurrence and during the
continuance of an Event of Default, to its Revolving Credit Commitment,
and (b) following the occurrence and during the continuance of an Event
of Default, to the sum of (i) the aggregate principal amount of such
Lender's Applicable Commitment Percentage of Revolving Credit
Outstandings plus (ii) the amount of such Lender's Applicable
Commitment Percentage of Letter of Credit Outstandings and Swing Line
Outstandings; provided that, for the purpose of this definition only,
(A) if any Lender shall have failed to fund its Applicable Commitment
Percentage of any Advance, then the Revolving Credit Commitment of such
Lender shall be deemed reduced by the amount it so failed to fund for
so long as such failure shall continue and such Lender's Credit
Exposure attributable to such failure shall be deemed held by any
Lender making more than its Applicable Commitment Percentage of such
23
Advance to the extent it covers such failure, (B) if any Lender shall
have failed to pay to the Issuing Bank upon demand its Applicable
Commitment Percentage of any drawing under any Letter of Credit
resulting in an outstanding Reimbursement Obligation (whether by
funding its Participation therein or otherwise), such Lender's Credit
Exposure attributable to all Letter of Credit Outstandings shall be
deemed to be held by the Issuing Bank until such Lender shall pay such
deficiency amount to the Issuing Bank together with interest thereon as
provided in Section 4.9 and (C) if any Lender shall have failed to pay
to Bank of America on demand its Applicable Commitment Percentage of
any Swing Line Loan (whether by funding its Participation therein or
otherwise), such Lender's Credit Exposure attributable to all Swing
Line Outstandings shall be deemed to be held by Bank of America until
such Lender shall pay such deficiency amount to Bank of America
together with interest thereon as provided in Section 4.9.
"Reserve Requirement" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward
to the next 1/100th of 1%) in effect on such day, whether or not
applicable to any Lender, under regulations issued from time to time by
the Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate
Loan shall be adjusted automatically as of the effective date of any
change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of the Parent or any Subsidiary Securities (other than those
payable or distributable solely to the Parent, or those payable or
distributable to a Subsidiary of the Parent which are subsequently paid
or distributed by such Subsidiary to the Parent, provided that any
amount received by the Parent and not used to finance a Permitted Share
Repurchase within thirty (30) days of its receipt shall be contributed
as capital to the Borrower, other than amounts used by the Parent to
make cash dividend payments as permitted by Section 10.8) now or
hereafter outstanding, except a dividend payable solely in shares of a
class of stock or equity interest to the holders of that class; (b) any
redemption, conversion, exchange, retirement or similar payment,
purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of the Parent or any Subsidiary Securities
(other than those payable or distributable solely to the Parent) now or
hereafter outstanding; (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of Parent or any Subsidiary
Securities of its Subsidiaries now or hereafter outstanding; and (d)
any issuance and sale of Subsidiary Securities of any Subsidiary of the
Parent or of the Borrower, (or any option, warrant or right to acquire
such stock) other than in the case of Subsidiaries of the Borrower, to
the Borrower or another of its Subsidiaries and in the case of any
other Subsidiaries of the Parent, to the Parent or one of its
Subsidiaries.
"Revolving Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to make Revolving Loans to the
Borrower up to an aggregate
24
principal amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Revolving Credit
Commitment.
"Revolving Credit Facility" means the facility described in
Section 2.1 hereof providing for Loans to the Borrower by the Lenders
in the aggregate principal amount of the Total Revolving Credit
Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Revolving Loans
then outstanding.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to Section 11.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving Credit Outstandings, Swing Line Outstandings and
Letter of Credit Outstandings and cancellation of all Letters of
Credit, together with all accrued and unpaid interest thereon.
"Revolving Loan" means any borrowing pursuant to an Advance
under the Revolving Credit Facility in accordance with Section 2.1.
"Revolving Notes" means, collectively, the promissory notes of
the Borrower evidencing Revolving Loans executed and delivered to the
Lenders as provided in Section 2.3 substantially in the form of Exhibit
F-1, with appropriate insertions as to amounts, dates and names of
Lenders.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"Security Agreements" means, collectively, the following
Security Agreements, pursuant to which the Borrower and each Guarantor
has granted or will grant to the Collateral Agent for the benefit of
the Agent, the Lenders and the holders of the Senior Notes a Lien in
the rights of the Borrower and each such Guarantor in the Licensing
Agreements, as each of the same may be amended, supplemented, amended
and restated, or otherwise modified from time to time:
(i) that certain Guarantor Security Agreement dated
as of December 13, 2000 by CTI and Southern Refrigerated
Transport, Inc. in favor of the Collateral Agent, for the
ratable benefit of the Agent and the Lenders and the holders
of the Senior Notes, substantially in the form of Exhibit O-1
attached hereto; and
(ii) any additional Security Agreement delivered to
the Collateral Agent pursuant to Section 9.19 or Article V
hereof, substantially in the form attached hereto as Exhibit
O-1 (with appropriate conforming changes).
25
"Security Instruments" means, collectively, the Pledge
Agreements, the Intercompany Note Pledge Agreements, the Security
Agreements, the Licensor Acknowledgement and Agreement, and all other
agreements (including control agreements), instruments and other
documents, whether now existing or hereafter in effect, pursuant to
which the Borrower, the Parent or any Subsidiary of the Parent or of
the Borrower or other Person shall grant or convey to the Collateral
Agent for the benefit of the Agent, the Lenders and the holders of the
Senior Notes a Lien in, or any other Person shall acknowledge any such
Lien in, property as security for all or any portion of the Obligations
or any other obligation under any Loan Document, as any of them may be
amended, modified or supplemented from time to time.
"Senior Note Purchase Agreement" means that certain Note
Purchase Agreement dated as of May 15, 2000 among the Borrower, the
Parent and the holders of the Senior Notes, as amended, restated,
supplemented or otherwise modified or replaced to the extent
permissible under Sections 10.4 and 10.19.
"Senior Notes" means, collectively, the $25,000,000 in
aggregate principal amount of 7.39% Guaranteed Senior Notes, due
October 1, 2005, issued pursuant to the terms of the Senior Note
Purchase Agreement, as amended, restated, supplemented or otherwise
modified, or replaced, refinanced or refunded to the extent permissible
under Sections 10.4 and 10.19 hereof (issued initially by the Borrower
to each of Connecticut General Life Insurance Company, on behalf of one
or more separate accounts, Connecticut General Life Insurance Company
and Life Insurance Company of North America).
"Servicing Agreements" means, collectively, each written
servicing agreement, in form and substance acceptable to the Agent, by
and between Covenant.com, Inc. and the Borrower and certain other
Credit Parties pursuant to which Covenant.com, Inc. provides management
information system services to such entities in return for a fee
determined by such servicing agreement.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(a) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
(b) it is then able and expects to be able to pay
its debts as they mature; and
(c) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Stated Termination Date" means December 13, 2003.
26
"Subordinated Indebtedness" means, (i) as at the Closing Date,
Indebtedness for Money Borrowed then outstanding of the Borrower or any
Guarantor which is subject to a Subordination Agreement or otherwise is
fully subordinated in writing on terms acceptable to the Agent and the
Required Lenders to the Obligations and, as applicable, other
obligations of the Credit Parties under the Loan Documents, and (ii)
from and after the Closing Date, in addition, such other Indebtedness
for Money Borrowed of the Borrower or any Guarantor permitted to be
incurred hereunder and which is subject to a Subordination Agreement or
otherwise is fully subordinated in writing on terms acceptable to the
Agent and the Required Lenders to the Obligations and, as applicable,
other obligations of the Credit Parties under the Loan Documents.
"Subordination Agreement" means a Subordination Agreement in
form and substance satisfactory to the Agent and the Required Lenders,
executed and delivered by the Borrower or any Guarantor which has
issued Subordinated Indebtedness and by the holder or holders of such
Subordinated Indebtedness.
"Subsidiary" of any Person means any corporation or other
entity in which more than 50% of its outstanding Voting Securities or
more than 50% of all equity interests is owned directly or indirectly
by such Person, and/or by one or more of such Person's Subsidiaries,
and when used in this Agreement without reference to such Person shall
include both a Subsidiary of the Parent and a Subsidiary of the
Borrower; provided, however, that CVTI shall only be included as a
Subsidiary of the Parent in the references to "Subsidiary" or
"Subsidiaries" included in Sections 8.1(a) and (b), 8.4 (except for the
last sentence thereof), 8.8, 8.9, 8.10, 9.1(f) and (g), 9.3, 9.4, 9.6,
9.7, 9.8, 9.9, 9.11, 9.12 and 10.14.
"Subsidiary Securities" means the shares of capital stock or
the other equity interests issued by or equity participations in any
Subsidiary of the Borrower or of the Parent (excluding CVTI, and
specifically including the capital stock of the Borrower, all of which
is owned by the Parent), whether or not constituting a "security" under
Article 8 of the Uniform Commercial Code as in effect in any
jurisdiction.
"Swap Agreement" means one or more agreements between the
Borrower and any Person with respect to Indebtedness evidenced by any
or all of the Notes, on terms mutually acceptable to Borrower and such
Person and approved by the Required Lenders, which agreements create
Rate Hedging Obligations; provided, however, that no such approval of
the Lenders shall be required to the extent such agreements are entered
into between the Borrower and any Lender or any affiliate of any
Lender.
"Swing Line" means the revolving line of credit established by
Bank of America in favor of the Borrower pursuant to Section 2.4.
"Swing Line Loans" means loans made by Bank of America to the
Borrower pursuant to Section 2.4.
27
"Swing Line Note" means the promissory note of the Borrower
evidencing the Swing Line executed and delivered to Bank of America as
provided in Section 2.3 substantially in the form of Exhibit F-2.
"Swing Line Outstandings" means, as of any date of
determination, the aggregate principal amount of all Swing Line Loans
then outstanding.
"Synthetic Lease Obligations" means (i) specifically the
obligations of CTI under the Participation Agreement dated March 29,
1996 among CTI, Lease Plan North America, Inc. and ABN AMRO Bank N.V.,
Atlanta Agency, as Participant and Agent, and (ii) generally all other
monetary obligations of a lessee under any tax retention or other
synthetic leases which is treated as an operating lease under GAAP but
the liabilities under which are or would be characterized as
indebtedness of such Person for tax purposes or upon the insolvency of
such Person. The amount of Synthetic Lease Obligations in respect of
any synthetic lease at any date of determination thereof shall be equal
to the aggregate purchase price of any property subject to such lease
less the aggregate amount of payments of rent theretofore made which
reduce the lessee's obligations under such synthetic lease and which
are not the financial equivalent of interest.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Parent or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA or was deemed such under Section
4062(e) of ERISA; or (iii) the termination of a Pension Plan, the
filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section
4041 of ERISA; or (iv) the institution of proceedings to terminate a
Pension Plan by the PBGC; or (v) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan; or (vi) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302
of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section 4241
or Section 4245 of ERISA, respectively; or (ix) any event or condition
which results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA; or (x) any
event or condition with respect to any Employee Benefit Plan which is
regulated by any Foreign Benefit Law that results in the termination of
such Employee Benefit Plan or the revocation of such Employee Benefit
Plan's authority to operate under the applicable Foreign Benefit Law.
"Total Letter of Credit Commitment" means an amount not to
exceed $10,000,000.
28
"Total Revolving Credit Commitment" means a principal amount
equal to $120,000,000, as reduced from time to time in accordance with
Section 2.1(e) and as increased from time to time in accordance with
Section 2.1(f)
"Transplace.com" means Transplace.com, LLC, an Affiliate of
the Parent.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
a Eurodollar Rate Loan).
"Voting Securities" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
1.2. Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Articles 1, 8 or 9 of the Tennessee
Uniform Commercial Code shall have the meaning given therein unless
otherwise defined herein, except to the extent that the Uniform
Commercial Code of another jurisdiction is controlling, in which case
such terms shall have the meaning given in the Uniform Commercial Code
of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references in any
Loan Document to articles, sections, paragraphs, clauses, annexes,
appendices, exhibits and schedules are references to articles,
sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules in or to such Loan Document.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and vice versa, as the
context may require.
(f) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
29
(g) References to "including" means including without limiting
the generality of any description preceding such term, and such term
shall not limit a general statement to matters similar to those
specifically mentioned.
(h) Except as otherwise expressly provided, all dates and
times of day specified herein shall refer to such dates and times at
Charlotte, North Carolina.
(i) Whenever interest rates or fees are established in whole
or in part by reference to a numerical percentage expressed as "___%",
such arithmetic expression shall be interpreted in accordance with the
convention that 1% = 100 basis points.
(j) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(k) Any reference to an officer of the Borrower or the Parent
or any other Person by reference to the title of such officer shall be
deemed to refer to each other officer of such Person, however titled,
exercising the same or substantially similar functions.
(l) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted
therein and in the Loan Documents.
1.3 Accounting for Acquisitions.
With respect to any Acquisition consummated on or after the Closing
Date and prior to the Facility Termination Date, the following shall apply:
(a) As to each Acquisition that is accounted for as a
"purchase," for each of the four Four-Quarter Periods ending next
following the date of such Acquisition, (i) Consolidated EBITDAR shall
include the results of operations of the Person or assets so acquired
on a historical pro forma basis as if such Acquisition had been
consummated as a "pooling of interests," and which amounts may include
such adjustments as are permitted under Regulation S-X of the
Securities and Exchange Commission and reasonably satisfactory to the
Agent but (ii) for purposes of determining compliance with the
provisions of Section 10.1(a), any increase in Consolidated Net Income
resulting solely from such pro forma treatment of such Acquisition
shall be disregarded; and
(b) For each of the four Four-Quarter Periods ending next
following the date of each Acquisition, Consolidated Fixed Charges
shall include the results of operations of the Person or assets so
acquired, which amounts shall be determined on a historical pro forma
basis as if such Acquisition had been consummated as a "pooling of
interests;"
30
provided, however, Consolidated Interest Expense shall be adjusted on a
historical pro forma basis to (i) eliminate interest expense accrued
during such period on any Indebtedness repaid in connection with such
Acquisition and (ii) include interest expense on any Indebtedness
(including Indebtedness hereunder) incurred, acquired or assumed in
connection with such Acquisition ("Incremental Debt") calculated (x) as
if all such Incremental Debt had been incurred as of the first day of
such Four-Quarter Period and (y) at the following interest rates: (I)
for all periods subsequent to the date of the Acquisition and for
Incremental Debt assumed or acquired in the Acquisition and in effect
prior to the date of Acquisition, at the actual rates of interest
applicable thereto, and (II) for all periods prior to the actual
incurrence of such Incremental Debt, equal to the average daily rate of
interest actually applicable to such Incremental Debt hereunder or
under other financing documents applicable thereto as at the end of
each affected Four-Quarter Period, as the case may be.
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ARTICLE II
The Credit Facilities
2.1 Revolving Loans.
(a) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, provided, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Notes as a result of an Event of Default; provided
further, however, that immediately after giving effect to each such Advance, the
amount of Revolving Credit Outstandings plus Letter of Credit Outstandings plus
Swing Line Outstandings shall not exceed the lesser of (A) the Total Revolving
Credit Commitment or (B) the Borrowing Base. Within such limits and subject to
the other terms and conditions of this Agreement, the Borrower may borrow, repay
and reborrow under the Revolving Credit Facility on a Business Day from the
Closing Date until, but (as to borrowings and reborrowings) not including, the
Revolving Credit Termination Date.
(b) Amounts. Except as otherwise permitted by the Lenders from
time to time, the amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings shall not exceed at any time the
lesser of (i) the Total Revolving Credit Commitment or (ii) the Borrowing Base,
and, in the event there shall be outstanding any such excess, the Borrower shall
immediately make such payments and prepayments as shall be necessary to comply
with this restriction. Each Advance under the Revolving Credit Facility, other
than Base Rate Refunding Loans, shall be in an amount of at least $1,000,000,
and, if greater than $1,000,000, an integral multiple of $1,000,000.
(c) Advances.
(i) An Authorized Representative shall give the Agent (1)
irrevocable telephonic notice of each Eurodollar Rate Loan (whether
representing an additional borrowing or the Continuation of a borrowing
hereunder or the Conversion of a borrowing hereunder from a Base Rate
Loan to a Eurodollar Rate Loan) prior to 10:30 A.M. on the date three
Business Days prior to the day of such proposed Loan and (2)
irrevocable telephonic notice of each Base Rate Loan (other than Base
Rate Refunding Loans and automatic Conversions to the extent the same
are effected without notice pursuant to Section 2.1(c)(iii) and Article
VI respectively, and whether representing an additional borrowing
hereunder or the Conversion of borrowing hereunder from Eurodollar Rate
Loans to Base Rate Loans) prior to 10:30 A.M. on the day of such
proposed Revolving Loan. Each such notice shall be effective upon
receipt by the Agent, shall specify the amount of the borrowing, the
type of Revolving Loan (Base Rate Option 1 or Base Rate Option 2 or
Eurodollar Rate), the date of borrowing and, if a Eurodollar
32
Rate Loan, the Interest Period to be used in the computation of
interest. The Authorized Representative shall provide the Agent written
confirmation of each such telephonic notice in the form of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with
appropriate insertions; provided, that failure to provide such
confirmation shall not affect the validity of such telephonic notice.
Notice of receipt of such Borrowing Notice or Interest Rate Selection
Notice, as the case may be, together with the amount of each Lender's
portion of an Advance requested thereunder, shall be provided by the
Agent to each Lender by telefacsimile transmission with reasonable
promptness, but (provided the Agent shall have received such notice by
10:30 A.M.) not later than 1:00 P.M. on the same day as the Agent's
receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each
borrowing under this Section 2.1, each Lender shall, pursuant to the
terms and subject to the conditions of this Agreement, make the amount
of the Advance or Advances to be made by it on such day available by
wire transfer to the Agent in the amount of its pro rata share,
determined according to such Lender's Applicable Commitment Percentage
of the Revolving Loan or Revolving Loans to be made on such day. Such
wire transfer shall be directed to the Agent at the Principal Office
and shall be in the form of Dollars constituting immediately available
funds. The amount so received by the Agent shall, subject to the terms
and conditions of this Agreement, be made available to the Borrower by
delivery of the proceeds thereof to the Borrower's Account or otherwise
as shall be directed in the applicable Borrowing Notice by the
Authorized Representative and reasonably acceptable to the Agent.
(iii) Notwithstanding the foregoing, if a drawing is made
under any Letter of Credit, such drawing is honored by the Issuing
Bank, and the Borrower shall not immediately fully reimburse the
Issuing Bank in respect of such drawing from other funds available to
the Borrower, (A) provided that the conditions to making a Revolving
Loan as herein provided shall then be satisfied, the Reimbursement
Obligation arising from such drawing shall be paid to the Issuing Bank
by the Agent without the requirement of notice to or from the Borrower
from immediately available funds which shall be advanced as a Base Rate
Refunding Loan to the Agent at its Principal Office by each Lender
under the Revolving Credit Facility in an amount equal to such Lender's
Applicable Commitment Percentage of such Reimbursement Obligation, and
(B) if the conditions to making a Revolving Loan as herein provided
shall not then be satisfied, each of the Lenders shall fund by payment
to the Agent (for the benefit of the Issuing Bank) at its Principal
Office in immediately available funds the purchase from the Issuing
Bank of their respective Participations in the related Reimbursement
Obligation based on their respective Applicable Commitment Percentages
of the Total Letter of Credit Commitment. If a drawing is presented
under any Letter of Credit in accordance with the terms thereof and the
Borrower shall not immediately reimburse the Issuing Bank in respect
thereof, then notice of such drawing or payment shall be provided
promptly by the Issuing Bank to the Agent and the Agent shall provide
notice to each Lender by telephone or telefacsimile transmission. If
notice to the Lenders of a drawing under any Letter of Credit is given
by the Agent at or before 12:00 noon on any Business Day, each Lender
shall either make a Base Rate Refunding Loan or fund the purchase of
its
33
Participation as specified above in the amount of such Lender's
Applicable Commitment Percentage of such drawing or payment and shall
pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before
2:30 P.M. on the same Business Day. If such notice to the Lenders is
given by the Agent after 12:00 noon on any Business Day, each Lender
shall either make such Base Rate Refunding Loan or fund such purchase
before 12:00 noon on the next following Business Day.
(d) Repayment of Revolving Loans. The principal amount of each
Revolving Loan shall be due and payable to the Agent for the benefit of each
Lender in full on the Revolving Credit Termination Date, or earlier as
specifically provided herein. The principal amount of any Revolving Loan may be
prepaid in whole or in part on any Business Day, upon (A) at least three (3)
Business Days' irrevocable telephonic notice in the case of each Revolving Loan
that is a Eurodollar Rate Loan from an Authorized Representative (effective upon
receipt) to the Agent prior to 10:30 A.M. and (B) irrevocable telephonic notice
in the case of each Revolving Loan that is a Base Rate Loan from an Authorized
Representative (effective upon receipt) to the Agent prior to 10:30 A.M. on the
day of such proposed repayment. The Authorized Representative shall provide the
Agent written confirmation of each such telephonic notice but failure to provide
such confirmation shall not effect the validity of such telephonic notice. All
prepayments of Revolving Loans made by the Borrower shall be in the amount of
$1,000,000 or such greater amount which is an integral multiple of $1,000,000,
or the amount equal to all Revolving Credit Outstandings, or such other amount
as necessary to comply with Section 2.1(b).
(e) Reductions. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed
in writing), of such reduction. Each such reduction shall be in the aggregate
amount of $2,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the Loans
or Swing Line Loans to the extent that the principal amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
exceeds the Total Revolving Credit Commitment after giving effect to such
reduction, together with accrued and unpaid interest on the amounts prepaid.
(f) Increases.
(i) The Borrower shall have the right, without the consent of
the Banks, subject to the terms of this Section 2.1(f), to effectuate
from time to time, at any time prior to the then effective Revolving
Credit Termination Date, an increase in the Total Revolving Credit
Commitment under this Agreement by adding to this Agreement one or more
banks or other financial institutions acceptable to the Agent, who
shall, upon completion of the requirements of this Section 2.1(f)
constitute a "Lender" or "Lenders" hereunder (each an "Added Lender"),
or by allowing one or more Lenders in their sole
34
discretion to increase their respective Revolving Credit Commitment
hereunder (each an "Increasing Lender"), so that such increased
Revolving Credit Commitments shall equal the increase in the Total
Revolving Credit Commitment effectuated pursuant to this Section
2.1(f); provided that (i) the aggregate increased Revolving Credit
Commitment or added Revolving Credit Commitment to be effected shall be
in an amount not less than $10,000,000, and, if greater than
$10,000,000, an integral multiple of $5,000,000, (ii) no increase in or
added Revolving Credit Commitments pursuant to this Section 2.1(f)
shall result in the Total Revolving Credit Commitment exceeding
$160,000,000, (iii) no Lender's Revolving Credit Commitment shall be
increased under this Section 2.1(f) without the consent of such Lender,
(iv) there shall not exist any Default or Event of Default immediately
prior to and immediately after giving effect to such increased or added
Commitment, (v) there shall not, immediately after giving effect to
such increased or added Commitment, exist any violation or default
under Section 10.11 of the Senior Note Purchase Agreement (as in effect
on the date hereof) arising from the attachment of additional Liens
granted under this Agreement and the Security Instruments to the
increased amount of the Total Revolving Credit Commitment, and (vi)
there shall not at any prior time have been any reduction of the Total
Revolving Credit Commitment pursuant to Section 2.1(e). The Borrower
shall deliver or pay, as applicable, to the Agent not later than ten
(10) Business Days prior to any such increase in the Total Revolving
Credit Commitment each of the following items with respect to each
Added Lender and Increasing Lender:
(A) a written notice of Borrower's intention to
increase the Total Revolving Credit Commitment pursuant to
this Section 2.1(f), which shall specify each Added Lender and
Increasing Lender, if any, the changes in amounts of Revolving
Credit Commitments that will result, and such other
information as is reasonably requested by the Agent;
(B) documents in the form of Exhibit L or Exhibit M,
as may be required by the Agent, executed and delivered by
each Added Lender and each Increasing Lender, pursuant to
which it becomes a party hereto or increases its Revolving
Credit Commitment, as the case may be;
(C) if requested by the applicable Lender, Notes or
replacement Notes, as the case may be, executed and delivered
by Borrower; and
(D) a non-refundable processing fee of $3,500 with
respect to each Added Lender or Increasing Lender for the sole
account of the Agent.
(ii) Upon receipt of any notice referred to in clause (i)(A)
above, the Agent shall promptly notify each Lender thereof. Upon
execution and delivery of such documents and the payment of such fee
(the "Increased Commitment Date"), each such Added Lender shall
constitute a "Lender" for all purposes under this Agreement and related
documents without any acknowledgment by or the consent of the other
Lenders, with a Revolving Credit Commitment as specified in such
documents, or such Lender's Revolving Credit Commitment shall increase
as specified in such documents, as the case
35
may be. Immediately upon the effectiveness of the addition of such
Added Lender or the increase in the Revolving Credit Commitment of such
Increasing Lender under this Section 2.1(f), (i) the respective
Applicable Commitment Percentages of the Lenders shall be deemed
modified as appropriate to correspond to such changed Total Revolving
Credit Commitment, and (ii) if there are at such time outstanding any
Revolving Credit Outstandings, each Lender whose Applicable Commitment
Percentage has been decreased as a result of the increase in the Total
Revolving Credit Commitment shall be deemed to have assigned, without
recourse, to each Added Lender and Increasing Lender such portion of
such Lender's Revolving Credit Outstandings as shall be necessary to
effectuate such adjustment in Applicable Commitment Percentages. Each
Increasing Lender and Added Lender (i) shall be deemed to have assumed
such portion of such Revolving Credit Outstandings and (ii) shall fund
to each other Lender on the Increased Commitment Date the amount of
Revolving Credit Outstandings assigned to it by such Lender. Borrower
agrees to pay to the Lenders on demand any and all amounts resulting
from break funding charges to the extent payable pursuant to this
Agreement as a result of any such prepayment of Revolving Credit
Outstandings occasioned by the foregoing increase in Revolving Credit
Commitments and the reallocation of the Applicable Commitment
Percentages.
(iii) This section shall supercede any provisions in Section
13.1 and 13.6 to the contrary.
2.2 Use of Proceeds. The proceeds of the Loans made pursuant to
the Revolving Credit Facility hereunder shall be used by the Borrower for: (i)
general working capital needs and other corporate purposes, including the making
of Acquisitions permitted hereunder, (ii) to repay, together with proceeds from
the Permitted Receivables Securitization, all Indebtedness outstanding under the
Existing Facility, (iii) to make loans, dividends or other distributions to the
Parent, which will use such proceeds as permitted herein, including without
limitation Permitted Share Repurchases, and (iv) to make loans and advances to
any Guarantor, which loan or advance shall be evidenced by an Intercompany
Borrowing Note which has been delivered to the Collateral Agent together with an
instrument of endorsement or assignment thereof executed in blank and which is
subject to the terms of Intercompany Note Pledge Agreements.
2.3 Notes.
(a) Revolving Notes. Revolving Loans made by each Lender shall be
evidenced by the Revolving Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Total Revolving
Credit Commitment, which Revolving Note shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
(b) Swing Line Note. The Swing Line Outstandings shall be
evidenced by a separate Swing Line Note payable to the order of the Bank of
America in the amount of the Swing Line, which Note shall be dated the Closing
Date and shall be duly completed, executed and delivered by the Borrower.
36
2.4 Swing Line. (a) Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit Facility
in an efficient manner and to minimize the transfer of funds between the Agent
and the Lenders, Bank of America shall make available Swing Line Loans to the
Borrower prior to the Revolving Credit Termination Date. Bank of America shall
not be obligated to make any Swing Line Loan pursuant hereto (i) if to the
actual knowledge of Bank of America the Borrower is not in compliance with all
the conditions to the making of Revolving Loans set forth in this Agreement,
(ii) if after giving effect to such Swing Line Loan, the Swing Line Outstandings
exceed $5,000,000, or (iii) if after giving effect to such Swing Line Loan, the
sum of the Swing Line Outstandings, Revolving Credit Outstandings and Letter of
Credit Outstandings exceeds lesser of (i) the Borrowing Base or (ii) the Total
Revolving Credit Commitment. Each Swing Line Loan shall mature, and the
principal amount thereof, together with any accrued interest thereon, shall be
payable (if not previously prepaid) in full to Bank of America on the fifth
Business Day after such Swing Line Loan is made. The Borrower may, subject to
the conditions set forth in the preceding sentence, borrow, repay and reborrow
under this Section 2.4. Unless notified to the contrary by Bank of America,
borrowings under the Swing Line shall be made in the minimum amount of $100,000
or, if greater, in amounts which are integral multiples of $100,000, or in the
amount necessary to effect a Base Rate Refunding Loan, upon written request by
telefacsimile transmission, effective upon receipt, by an Authorized
Representative of the Borrower made to Bank of America not later than 12:30 P.M.
on the Business Day of the requested borrowing. Each such Borrowing Notice shall
specify the amount of the borrowing and the date of borrowing, and shall be in
the form of Exhibit D-2, with appropriate insertions. Unless notified to the
contrary by Bank of America, each repayment of a Swing Line Loan shall be in an
amount which is an integral multiple of $100,000 or the aggregate amount of all
Swing Line Outstandings.
(b) The interest payable on Swing Line Loans is solely for the
account of Bank of America. Swing Line Loans shall bear interest solely at the
Base Rate, as elected by the Borrower. All accrued and unpaid interest on Swing
Line Loans shall be payable on the dates and in the manner provided in Section
4.3 with respect to interest on Base Rate Loans, and the Swing Line Loans shall
accrue interest at the Default Rate in such circumstances as set forth in
Section 4.3.
(c) Upon the making of a Swing Line Loan in accordance with the
terms hereof, each Lender shall be deemed to have purchased from Bank of America
a Participation therein in an amount equal to that Lender's Applicable
Commitment Percentage of such Swing Line Loan. Upon demand made by Bank of
America, each Lender shall, according to its Applicable Commitment Percentage of
such Swing Line Loan, promptly provide to Bank of America its purchase price
therefor in an amount equal to its Participation therein. Any Advance made by a
Lender pursuant to demand of Bank of America of the purchase price of its
Participation shall when made be deemed to be (i) provided that the conditions
to making Revolving Loans shall be satisfied, a Base Rate Refunding Loan under
Section 2.1, and (ii) in all other cases, the funding by each Lender of the
purchase price of its Participation in such Swing Line Loan. The obligation of
each Lender to so provide its purchase price to Bank of America shall be
absolute and unconditional and shall not be affected by the occurrence of an
Event of Default or any other occurrence or event.
37
(d) The Borrower, at its option and subject to the terms hereof,
may request an Advance pursuant to Section 2.1 in an amount sufficient to repay
Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to Bank of America the amount necessary to repay such
Swing Line Outstandings (which Bank of America shall then apply to such
repayment) and credit any balance of the Advance in immediately available funds
in the manner directed by the Borrower pursuant to Section 2.1(c)(ii). The
proceeds of such Advances shall be paid to Bank of America for application to
the Swing Line Outstandings and the Lenders shall then be deemed to have made
Loans in the amount of such Advances. The Swing Line shall continue in effect
until the Revolving Credit Termination Date, at which time all Swing Line
Outstandings and accrued interest thereon shall be due and payable in full.
38
ARTICLE III
Letters of Credit
3.1 Letters of Credit. The Issuing Bank agrees, subject to the
terms and conditions of this Agreement, upon request of the Borrower to issue
from time to time for the account of the Borrower (or the Borrower and any
Subsidiary of the Parent) Letters of Credit upon delivery to the Issuing Bank of
an Application and Agreement for Letter of Credit relating thereto in form and
content acceptable to the Issuing Bank; provided, that (i) the Issuing Bank
shall not be obligated to issue (or renew) any Letter of Credit if it has been
notified by the Agent or has actual knowledge that a Default or Event of Default
has occurred and is continuing, (ii) the Letter of Credit Outstandings shall not
exceed the Total Letter of Credit Commitment and (iii) no Letter of Credit shall
be issued (or renewed) if, after giving effect thereto, Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing Line Outstandings
shall exceed the lesser of (i) the Borrowing Base or (ii) the Total Revolving
Credit Commitment. No Letter of Credit shall have an expiry date (including all
rights of the Borrower or any beneficiary named in such Letter of Credit to
require renewal) or payment date occurring later than the earlier to occur of
one year after the date of its issuance or the seventh Business Day prior to the
Stated Termination Date.
3.2 Reimbursement and Participations.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts required
to pay all drafts drawn or purporting to be drawn under the Letters of Credit
and all reasonable expenses incurred by the Issuing Bank in connection with the
Letters of Credit, and in any event and without demand to place in possession of
the Issuing Bank (which shall include Advances under the Revolving Credit
Facility if permitted by Section 2.1 and Swing Line Loans if permitted by
Section 2.4) sufficient funds to pay all debts and liabilities arising under any
Letter of Credit. The Issuing Bank agrees to give the Borrower prompt notice of
any request for a draw under a Letter of Credit. The Issuing Bank may charge any
account the Borrower may have with it for any and all amounts the Issuing Bank
pays under a Letter of Credit, plus charges and reasonable expenses as from time
to time agreed to by the Issuing Bank and the Borrower; provided that to the
extent permitted by Section 2.1(c)(iii) and Section 2.4, amounts shall be paid
pursuant to Advances under the Revolving Credit Facility or, if the Borrower
shall elect, by Swing Line Loans. The Borrower agrees to pay the Issuing Bank
interest on any Reimbursement Obligations not paid when due hereunder at the
Default Rate.
(b) In accordance with the provisions of Section 2.1(c), the
Issuing Bank shall notify the Agent of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall automatically
acquire on the date of issuance thereof in accordance with the terms hereof, a
Participation in the liability of the Issuing Bank in respect of each Letter of
Credit in an amount equal to such Lender's Applicable Commitment Percentage of
such liability, and to the extent that the Borrower is obligated to pay
39
the Issuing Bank under Section 3.2(a), each Lender (other than the Issuing Bank)
thereby shall absolutely, unconditionally and irrevocably assume, and shall be
unconditionally obligated to pay to the Issuing Bank, its Applicable Commitment
Percentage of the liability of the Issuing Bank under such Letter of Credit in
the manner and with the effect provided in Section 2.1(c)(iii).
(d) Simultaneously with the making of each payment by a Lender to
the Issuing Bank pursuant to Section 2.1(c)(iii)(B), such Lender shall,
automatically and without any further action on the part of the Issuing Bank or
such Lender, acquire a Participation in an amount equal to such payment
(excluding the portion thereof constituting interest accrued prior to the date
the Lender made its payment) in the related Reimbursement Obligation of the
Borrower. Each Lender's obligation to make payment to the Agent for the account
of the Issuing Bank pursuant to Section 2.1(c)(iii) and Section 3.2(c), and the
right of the Issuing Bank to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and shall be
made without any offset, abatement, withholding or reduction whatsoever. In the
event the Lenders have purchased Participations in any Reimbursement Obligation
as set forth above, then at any time payment (in fully collected, immediately
available funds) of such Reimbursement Obligation, in whole or in part, is
received by the Issuing Bank from the Borrower, the Issuing Bank shall promptly
pay to each Lender an amount equal to its Applicable Commitment Percentage of
such payment from the Borrower.
(e) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of such quarter. Upon the
request of any Lender from time to time, the Issuing Bank shall deliver to the
Agent, and the Agent shall deliver to such Lender, any other information
reasonably requested by such Lender with respect to each Letter of Credit
outstanding.
(f) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Article VII, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank consistent
with the then current practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such practices and
procedures and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 or, if the Issuing Bank
shall elect by express reference in an affected Letter of Credit, the
International Chamber of Commerce International Standby Practices commonly
referred to as "ISP98", or any subsequent amendment or revision of either
thereof.
(g) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver,
40
attorney in fact or other legal representative of a party who is authorized
under such Letter of Credit to draw or issue any drafts or other documents.
(h) Without limiting the generality of the provisions of Section
13.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing
Bank, each other Lender, the Agent and the Collateral Agent from and against any
and all claims and damages, losses, liabilities, reasonable costs and expenses
which the Issuing Bank, such other Lender, the Agent or the Collateral Agent may
incur (or which may be claimed against the Issuing Bank, such other Lender, the
Agent or the Collateral Agent) by any Person by reason of or in connection with
the issuance or transfer of or payment or failure to pay under any Letter of
Credit; provided that the Borrower shall not be required to indemnify the
Issuing Bank, any other Lender, the Agent or the Collateral Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, (i) caused by the willful misconduct or gross negligence of the
party to be indemnified or (ii) caused by the failure of the Issuing Bank to pay
under any Letter of Credit after the presentation to it of a request for payment
strictly complying with the terms and conditions of such Letter of Credit,
unless such payment is prohibited by any law, regulation, court order or decree.
The indemnification and hold harmless provisions of this Section 3.2(h) shall
survive repayment of the Obligations, occurrence of the Revolving Credit
Termination Date, the Facility Termination Date and expiration or termination of
this Agreement.
(i) Without limiting Borrower's rights as set forth in Section
3.2(h), the obligation of the Borrower to immediately reimburse the Issuing Bank
for drawings made under Letters of Credit and the Issuing Bank's right to
receive such payment shall be absolute, unconditional and irrevocable, and such
obligations of the Borrower shall be performed strictly in accordance with the
terms of this Agreement and such Letters of Credit and the related Application
and Agreement for any Letter of Credit, under all circumstances whatsoever,
including the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the obligation supported by the Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "Related LC
Documents");
(ii) any amendment or waiver of or any consent to or departure
from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other than
the defense of payment in accordance with the terms of this Agreement)
or other rights which the Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be
acting), the Agent, the Collateral Agent, the Lenders or any other
Person, whether in connection with the Loan Documents, the Related LC
Documents or any unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit
(or any persons or entities for whom
41
such beneficiary or any such transferee may be acting), the Agent, the
Lenders or any other Person;
(v) any draft, statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever so long as any such document
appeared to comply with the terms of the Letter of Credit;
(vi) the existence, character, quality, quantity, condition,
value, or delivery (including the time, place, manner or order thereof)
of property described or purportedly described in documents presented
in connection with any Letter of Credit or the existence, nature or
extent of any insurance relating thereto;
(vii) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by the Agent,
with or without notice to or approval by the Borrower in respect of any
of Borrower's Obligations; or
(viii) any other circumstance or happening whatsoever where
the Issuing Bank has acted in good faith, whether or not similar to any
of the foregoing.
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ARTICLE IV
Eurodollar Funding, Fees, and Payment Conventions
4.1 Interest Rate Options. Eurodollar Rate Loans and Base Rate
Loans may be outstanding at the same time and, so long as no Default or Event of
Default shall have occurred and be continuing, the Borrower shall have the
option to elect the Type of Loan and the duration of the initial and any
subsequent Interest Periods and to Convert Revolving Loans in accordance with
Sections 2.1(c)(i) and 4.2, as applicable; provided, however, (a) there shall
not be outstanding at any one time Eurodollar Rate Loans having more than eight
(8) different Interest Periods, (b) each Eurodollar Rate Loan (including each
Conversion into and each Continuation as a Eurodollar Rate Loan) shall be in an
amount of $1,000,000 or, if greater than $1,000,000, an integral multiple of
$1,000,000, and (c) no Eurodollar Rate Loan shall have an Interest Period that
extends beyond the Stated Termination Date. If the Agent does not receive a
Borrowing Notice or an Interest Rate Selection Notice giving notice of election
of the duration of an Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by
Sections 2.1(c)(i) and 4.2, as applicable, the Borrower shall be deemed to have
elected to obtain or Convert such Loan to (or Continue such Loan as) a Base Rate
Loan (having a Base Rate determined by Base Rate Option 1) until the Borrower
notifies the Agent in accordance with Section 4.2. The Borrower shall not be
entitled to elect to Continue any Loan as or Convert any Loan into a Eurodollar
Rate Loan if a Default or Event of Default shall have occurred and be
continuing.
4.2 Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth in the definition of "Interest Period" and in
Section 4.1 and Article VI, the Borrower may:
(a) upon delivery of telephonic notice to the Agent (which shall
be irrevocable) on or before 10:30 A.M. on any Business Day, Convert any
Eurodollar Rate Loan to a Base Rate Loan, having a Base Rate as elected by the
Borrower, on the last day of the Interest Period for such Eurodollar Rate Loan;
and
(b) upon delivery of telephonic notice to the Agent (which shall
be irrevocable) on or before 10:30 A.M. on any Business Day, Convert any Base
Rate Loan having a Base Rate determined by Base Rate Option 1 to a Base Rate
Loan having a Base Rate determined by Base Rate Option 2, or Convert any Base
Rate Loan having a Base Rate determined by Base Rate Option 2 to a Base Rate
Loan having a Base Rate determined by Base Rate Option 1; and
(c) provided that no Default or Event of Default shall have
occurred and be continuing, upon delivery of telephonic notice to the Agent
(which shall be irrevocable on or before 10:30 A.M. three (3) Business Days'
prior to the date of such Conversion or Continuation:
(i) elect a subsequent Interest Period for any Eurodollar Rate
Loan to begin on the last day of the then current Interest Period for
such Eurodollar Rate Loan; or
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(ii) Convert any Base Rate Loan to a Eurodollar Rate Loan on
any Business Day.
Each such notice shall be effective upon receipt by the Agent, shall specify the
amount of the Eurodollar Rate Loan affected, and, if a Continuation as or
Conversion into a Eurodollar Rate Loan, the Interest Period to be used in the
computation of interest. The Authorized Representative shall provide the Agent
written confirmation of each such telephonic notice in the form of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with appropriate
insertions but failure to provide such confirmation shall not affect the
validity of such telephonic notice. Notice of receipt of such Borrowing Notice
or Interest Rate Selection Notice, as the case may be, shall be provided by the
Agent to each Lender by telefacsimile transmission with reasonable promptness,
but (provided the Agent shall have received such notice by 10:30 A.M.) not later
than 1:00 P.M. on the same day as the Agent's receipt of such notice. All such
Continuations or Conversions of Loans shall be effected pro rata based on the
Applicable Commitment Percentages of the Lenders.
4.3 Payment of Interest. The Borrower shall pay interest on the
outstanding and unpaid principal amount of each Revolving Loan, commencing on
the first date of such Revolving Loan until such Revolving Loan shall be repaid,
at the applicable Base Rate or Eurodollar Rate as designated by the Borrower in
the related Borrowing Notice or Interest Rate Selection Notice or as otherwise
provided hereunder. Interest on each Revolving Loan shall be paid on the earlier
of (a) in the case of any Base Rate Loan, quarterly in arrears of the last
Business Day of each December, March, June and September, commencing on December
31, 2000, until the Revolving Credit Termination Date, at which date the entire
principal amount of and all accrued interest on the Revolving Loans shall be
paid in full, (b) in the case of any Eurodollar Rate Loan, on last day of the
applicable Interest Period for such Eurodollar Rate Loan and if such Interest
Period extends for more than three (3) months, at intervals of three (3) months
after the first day of such Interest Period, and (c) upon payment in full of the
related Revolving Loan; provided, however, that if any Event of Default shall
occur and be continuing, all amounts outstanding hereunder shall bear interest
thereafter until paid in full at the Default Rate.
4.4 Prepayments of Eurodollar Rate Loans. Whenever any payment of
principal shall be made in respect of any Revolving Loan hereunder, whether at
maturity, on acceleration, by optional or mandatory prepayment or as otherwise
required or permitted hereunder, with the effect that any Eurodollar Rate Loan
shall be prepaid in whole or in part prior to the last day of the Interest
Period applicable to such Eurodollar Rate Loan, such payment of principal shall
be accompanied by the additional payment, if any, of accrued and unpaid interest
thereon, and as required by Section 6.5.
4.5 Manner of Payment. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount required
to be paid by or on behalf of the Borrower to the Lenders, the Issuing Bank, the
Agent, the Collateral Agent, or Bank of America with respect to any Revolving
Loan, Letter of Credit, Reimbursement Obligation, or Swing Line Loan, shall be
made to the Agent at the Principal Office (or, as applicable, to the Collateral
Agent) in Dollars in immediately available funds without condition or deduction
for any setoff,
44
recoupment, deduction or counterclaim on or before 12:30 P.M. on the date such
payment is due. The Agent may, but shall not be obligated to, debit the amount
of such payment from any one or more ordinary deposit accounts of the Borrower
with the Agent.
(b) Any payment made by or on behalf of the Borrower that is not
made both in Dollars in immediately available funds and prior to 12:30 P.M. on
the date such payment is to be made shall constitute a non-conforming payment.
Any such non-conforming payment shall not be deemed to be received until the
later of (i) the time such funds become available funds and (ii) the next
Business Day. Any non-conforming payment may constitute or become a Default or
Event of Default as otherwise provided herein. Interest shall continue to accrue
at the Default Rate on any principal or fees as to which no payment or a
non-conforming payment is made from the date such amount was due and payable
until the later of (i) the date such funds become available funds or (ii) the
next Business Day.
(c) In the event that any payment hereunder or under any of the
Notes or any other Loan Document becomes due and payable on a day other than a
Business Day, then such due date shall be extended to the next succeeding
Business Day unless provided otherwise under the definition of "Interest
Period"; provided, however, that interest and applicable fees shall continue to
accrue during the period of any such extension; and provided further, however,
that in no event shall any such due date be extended beyond the Revolving Credit
Termination Date.
4.6 Fees
(a) Unused Fee. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay to
the Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee equal to the Applicable Unused Fee
multiplied by the average daily amount by which the Total Revolving Credit
Commitment exceeds the sum of (i) Revolving Credit Outstandings without giving
effect to Swing Line Outstandings except in the case of Bank of America plus
(ii) Letter of Credit Outstandings. Such fees shall be due in arrears on the
last Business Day of each December, March, June, and September, commencing on
December 31, 2000, to and on the Revolving Credit Termination Date.
Notwithstanding the foregoing, so long as any Lender fails to make available any
portion of its Revolving Credit Commitment when requested, such Lender shall not
be entitled to receive payment of its pro rata share of such fee until such
Lender shall make available such portion.
(b) Letter of Credit Facility Fees. The Borrower shall pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn on
each outstanding Letter of Credit at a rate equal to the Applicable Margin. Such
fees shall be due and payable with respect to each Letter of Credit quarterly in
arrears on the last day of each December, March, June and September, the first
such payment to be made on the first such date occurring after the Closing Date.
(c) Letter of Credit Fronting and Administrative Fees. The
Borrower shall pay to the Issuing Bank a fronting fee of one-eighth of one
percent (1/8 %) per annum on the initial aggregate amount available to be drawn
on each outstanding Letter of Credit, such fee to be due
45
and payable in full with respect to each Letter of Credit on the quarterly date
established in Section 4.6(b) for the payment of Letter of Credit facility fees
next following the date of issuance (or renewal) of such Letter of Credit. The
Borrower shall also pay to the Issuing Bank such administrative fee and other
fees, if any, in connection with the Letters of Credit in such amounts and at
such times as the Issuing Bank and the Borrower shall agree from time to time.
(d) Agent Fees. The Borrower agrees to pay to the Agent, for the
Agent's individual account, an annual Agent's fee, such fee to be payable in
such amounts and at such dates as from time to time agreed to by the Borrower
and Agent in writing.
4.7 Pro Rata Payments. Except as otherwise specified herein, (a)
each payment on account of the principal of and interest on Loans, the fees
described in Sections 4.6(a) and 4.6(b), and Swing Line Loans and Reimbursement
Obligations as to which the Lenders have funded their respective Participations
which remain outstanding, shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, and (b) the
Agent will promptly distribute to the Lenders in immediately available funds
payments received in fully collected, immediately available funds from the
Borrower.
4.8 Computation of Rates and Fees. Interest on all Base Rate Loans
computed by reference to the Prime Rate shall be computed on the basis of a year
of 365/366 days and calculated for actual days elapsed. Except as provided
above, all interest rates (including each Eurodollar Rate and the Default Rate)
and fees shall be computed on the basis of a year of 360 days and calculated for
actual days elapsed.
4.9 Deficiency Advances; Failure to Purchase Participations. No
Lender shall be responsible for any default of any other Lender in respect to
such other Lender's obligation to make any Loan or Advance hereunder or to fund
its purchase of any Participation hereunder nor shall the Revolving Credit
Commitment or Letter of Credit Commitment of any Lender hereunder be increased
as a result of such default of any other Lender. Without limiting the generality
of the foregoing or the provisions of Section 4.10, in the event any Lender
shall fail to advance funds to the Borrower as herein provided, the Agent may in
its discretion, but shall not be obligated to, advance under the applicable Note
in its favor as a Lender all or any portion of such amount or amounts (each, a
"deficiency advance") and shall thereafter be entitled to payments of principal
of and interest on such deficiency advance in the same manner and at the same
interest rate or rates to which such other Lender would have been entitled had
it made such Advance under its Note; provided that, (i) such defaulting Lender
shall not be entitled to receive payments of principal, interest or fees with
respect to such deficiency advance until such deficiency advance (together with
interest thereon as provided in clause (ii)) shall be paid by such Lender and
(ii) upon payment to the Agent from such other Lender of the entire outstanding
amount of each such deficiency advance, together with accrued and unpaid
interest thereon, from the most recent date or dates interest was paid to the
Agent by a Borrower on each Loan comprising the deficiency advance at the
Federal Funds Rate, then such payment shall be credited against the applicable
Note of the Agent in full payment of such deficiency advance and such Borrower
shall be deemed to have borrowed the amount of such deficiency advance from such
other Lender as of the most recent date or dates, as the case may be, upon which
any payments of interest were made by such Borrower thereon. In the event any
Lender shall fail to
46
fund its purchase of a Participation after notice from the Issuing Bank or Bank
of America as the Swing Line lender, as applicable, such Lender shall pay to the
Issuing Bank or Bank of America as the Swing Line lender, as applicable, such
amount on demand, together with interest at the Federal Funds Rate on the amount
so due from the date of such notice to the date such purchase price is received
by the Issuing Bank or Bank of America as the Swing Line lender, as applicable.
4.10 Intraday Funding. Without limiting the provisions of Section
4.9, unless the Borrower or any Lender has notified the Agent not later than
12:00 Noon of the Business Day before the date any payment (including in the
case of Lenders any Advance) to be made by it is due, that it does not intend to
remit such payment, the Agent may, in its discretion, assume that Borrower or
each Lender, as the case may be, has timely remitted such payment in the manner
required hereunder and may, in its discretion and in reliance thereon, make
available such payment (or portion thereof) to the Person entitled thereto as
otherwise provided herein. If such payment was not in fact remitted to the Agent
in the manner required hereunder, then:
(i) if Borrower failed to make such payment, each Lender shall
forthwith on demand repay to the Agent the amount of such assumed
payment made available to such Lender, together with interest thereon
in respect of each day from and including the date such amount was made
available by the Agent to such Lender to the date such amount is repaid
to the Agent at the Federal Funds Rate; and
(ii) if any Lender failed to make such payment, the Agent
shall be entitled to recover such corresponding amount forthwith upon
the Agent's demand therefor, the Agent promptly shall notify the
Borrower, and the Borrower shall promptly pay such corresponding amount
to the Agent in immediately available funds upon receipt of such
demand. The Agent also shall be entitled to recover interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to
the date such corresponding amount is recovered by the Agent, (A) from
such Lender at a rate per annum equal to the daily Federal Funds Rate
or (B) from the Borrower, at a rate per annum equal to the interest
rate applicable to the Loan which includes such corresponding amount.
Until the Agent shall recover such corresponding amount together with
interest thereon, such corresponding amount shall constitute a
deficiency advance within the meaning of Section 4.9. Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill
its commitments hereunder or to prejudice any rights which the Agent or
the Borrower may have against any Lender as a result of any default by
such Lender hereunder.
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ARTICLE V
Security
5.1 Security. As security for the full and timely payment and
performance of all Obligations, the Borrower shall, and shall cause all other
Credit Parties to, on or before the Closing Date, do or cause to be done all
things necessary in the opinion of the Agent and its counsel to grant to the
Collateral Agent for the benefit of the Agent and the Lenders and the holders of
the Senior Notes a duly perfected first priority security interest in all
Collateral subject to no prior Lien or other encumbrance or restriction on
transfer (other than restrictions on transfer imposed by applicable securities
laws).
5.2 Pledged Stock. Without limiting the generality of Section 5.1,
the Parent and each other Guarantor having rights in any Subsidiary Securities
shall on the Closing Date deliver to the Collateral Agent, in form and substance
satisfactory to the Agent and the Collateral Agent, (A) a Pledge Agreement which
shall pledge to the Collateral Agent for the benefit of the Agent and the
Lenders and the holders of the Senior Notes (i) 65% of the Voting Securities of
each Direct Foreign Subsidiary (or if the Parent and its Subsidiaries shall own
less than 65%, then all of the Voting Securities owned by them) and 100% of the
other Subsidiary Securities of such Direct Foreign Subsidiary, and (ii) all of
the Subsidiary Securities of all Domestic Subsidiaries of the Parent, (B) if
such Subsidiary Securities are in the form of certificated securities, such
certificated securities, together with undated stock powers or other appropriate
transfer documents endorsed in blank pertaining thereto, (C) if such Subsidiary
Securities do not constitute securities and the Subsidiary has not elected to
have such interests treated as securities under Article 8 of the Uniform
Commercial Code, a control agreement (containing the provisions described in
Section 9.19(e)) from the Registrar of such Subsidiary Securities, and (D)
Uniform Commercial Code financing statements reflecting the Lien in favor of the
Collateral Agent on such Subsidiary Securities, each in form and substance
acceptable to the Agent and the Collateral Agent, and shall take such further
action and deliver or cause to be delivered such further documents as required
by the Security Instruments or otherwise as the Collateral Agent or the Agent
may request to effect the transactions contemplated by this Article V. The
Borrower and the Parent shall, and shall cause each of their Subsidiaries to,
pledge to the Collateral Agent for the benefit of the Agent and the Lenders and
the holders of the Senior Notes (and as appropriate to reaffirm its prior pledge
of) all of the Subsidiary Securities which may be issued or acquired after the
Closing Date, and to deliver to the Collateral Agent all of the documents and
instruments in connection therewith as are required pursuant to the terms of
Section 9.19 and of the Security Instruments.
5.3 Intercompany Notes. Without limiting the generality of Section
5.1, the Borrower, as security for all Obligations, shall on the Closing Date
deliver to the Collateral Agent, in form and substance satisfactory to the
Lenders, (A) an Intercompany Note Pledge Agreement which shall pledge to the
Collateral Agent for the benefit of the Agent and the Lenders and the holders of
the Senior Notes all of the Intercompany Notes then or thereafter existing, and
(B) each original Intercompany Note then existing with undated endorsements or
other appropriate transfer documents duly executed in blank affixed thereto,
together with an estoppel notice in form and substance satisfactory to the Agent
and the Collateral Agent executed
48
by the issuer thereof, and shall take such further action and deliver or cause
to be delivered then or thereafter such further documents as required by the
Security Instruments or otherwise as the Collateral Agent or the Agent may
request to effect the transactions contemplated by this Article V. Each
Intercompany Borrowing Note executed and delivered after the Closing Date shall
immediately be delivered by the holder thereof to the Collateral Agent in the
same manner as in clause (B) of the immediately preceding sentence together
with, as applicable, a new Intercompany Note Pledge Agreement (substantially in
the form of Exhibit N-1 attached hereto, with appropriate conforming changes) if
the holder of such Intercompany Borrowing Note did not execute and deliver an
Intercompany Note Pledge Agreement on the Closing Date, or such supplement to or
revision of the Intercompany Note Pledge Agreement delivered on the Closing Date
as the Agent or the Collateral Agent deems necessary for the creation and
attachment of a Lien therein in favor of the Collateral Agent for the benefit of
the Agent, the Lenders and the holders of the Senior Notes.
5.4 Licensing Agreements. Without limiting the generality of
Section 5.1, the Borrower and the Subsidiary Guarantors, as security for all
Obligations and obligations under each Facility Guaranty, shall on the Closing
Date deliver, or cause to be delivered, to the Collateral Agent, in form and
substance satisfactory to the Agent and the Collateral Agent, (i) a certified
copy of each Licensing Agreement then existing, (ii) the Security Agreements,
which shall grant a Lien to the Collateral Agent for the benefit of the Agent,
the Lenders and the holders of the Senior Notes in all of the Licensing
Agreements then or thereafter existing, and (iii) licensor consent, waiver and
estoppel certificates, in form and substance acceptable to the Agent and the
Collateral Agent, executed by CIP, with respect to all Licensing Agreements
assigned pursuant to the terms of the Security Agreements, and shall take such
further action and deliver or cause to be delivered then or thereafter such
further documents as required by the Security Instruments or otherwise as the
Collateral Agent or the Agent may request to effect the transactions
contemplated by this Article V. The Parent and the Borrower shall deliver, or
cause to be delivered, a certified copy of each Licensing Agreement entered into
after the Closing Date within five (5) Business Days of its effectiveness,
together with licensor consent, waiver and estoppel certificates, in form and
substance acceptable to the Agent and the Collateral Agent, executed by CIP,
with respect to the pledge of each such Licensing Agreement.
5.5 Further Assurances. At the request of the Agent or the
Collateral Agent, the Borrower will or will cause all other Credit Parties, as
the case may be, to execute, by its duly authorized officers, alone or with the
Agent or the Collateral Agent, any certificate, instrument, financing statement,
control agreement, statement or document, or to procure any such certificate,
instrument, statement or document, or to take such other action (and pay all
connected costs) which the Agent or the Collateral Agent reasonably deems
necessary from time to time to create, continue or preserve the Liens in
Collateral (and the perfection and priority thereof) of the Collateral Agent
contemplated hereby and by the other Loan Documents and specifically including
all Subsidiary Securities, Intercompany Notes, interests in Licensing Agreements
and all other Collateral acquired by the Borrower or other Credit Party after
the Closing Date. The Collateral Agent is hereby irrevocably authorized to
execute and file or cause to be filed, with or if permitted by applicable law
without the signature of the Borrower or any Credit Party appearing thereon, all
Uniform Commercial Code financing statements reflecting the Borrower or any
other Credit Party as "debtor" and the Collateral Agent as "secured party",
49
and continuations thereof and amendments thereto, as the Agent or the Collateral
Agent reasonably deems necessary or advisable to give effect to the transactions
contemplated hereby and by the other Loan Documents.
5.6 Information Regarding Collateral. The Borrower represents,
warrants and covenants that (i) the chief executive office of the Borrower and
each other Credit Party (each, a "Grantor") at the Closing Date is located at
the address or addresses specified on Schedule 5.6, and (ii) Schedule 5.6
contains a true and complete list of (a) the exact legal name, jurisdiction of
formation, and address of each Grantor, (b) the exact legal name, jurisdiction
of formation, and each location of the chief executive office of each Grantor at
any time since December 1, 1995, and (c) each trade name, trademark or other
trade style used by any Grantor since January 1, 2000 and the purposes for which
it was used. Borrower shall not change, and shall not permit any other Grantor
to change, its name, jurisdiction of formation (whether by reincorporation,
merger or otherwise), the location of its chief executive office, or use or
permit any other Grantor to use, any additional trade name, trademark or other
trade style, except upon giving not less than thirty (30) days' prior written
notice to the Agent and the Collateral Agent and taking or causing to be taken
all such action at Borrower's or such other Grantor's expense as may be
reasonably requested by the Agent or the Collateral Agent to perfect or maintain
the perfection of the Lien of the Collateral Agent in Collateral.
5.7 Intercreditor Matters. Each Lender from time to time party
hereto, the Agent and the Borrower hereby consent to and agree with the terms of
the Intercreditor Agreement and such Lenders hereby (i) acknowledge and agree
that each Lien in all Collateral now owned or hereafter acquired and all
remedies available with respect to such Collateral are subject to the terms of
the Intercreditor Agreement, and (ii) direct the Agent on their behalf to enter
into the Intercreditor Agreement and irrevocably consents to the service by Bank
of America in the capacity of Collateral Agent.
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ARTICLE VI
Change in Circumstances
6.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Rate Loans, its Note, or its obligation to make Eurodollar
Rate Loans, or change the basis of taxation of any amounts payable to
such Lender (or its Applicable Lending Office) under this Agreement or
its Note in respect of any Eurodollar Rate Loans (other than taxes
imposed on the overall net income of such Lender by the jurisdiction in
which such Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Reserve Requirement utilized in the determination of the Eurodollar
Rate) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Lender (or
its Applicable Lending Office), including the Revolving Credit
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the London interbank market any other condition affecting
this Agreement or its Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Loans or to reduce any sum received or receivable by such Lender
(or its Applicable Lending Office) under this Agreement or its Note with respect
to any Eurodollar Rate Loans, then the Borrower shall pay to such Lender on
demand such amount or amounts as will compensate such Lender for such increased
cost or reduction. If any Lender requests compensation by the Borrower under
this Section 6.1(a), the Borrower may, by notice to such Lender (with a copy to
the Agent), suspend the obligation of such Lender to make or Continue Loans of
the Type with respect to which such compensation is requested, or to Convert
Loans of any other Type into Loans of such Type, until the event or condition
giving rise to such request ceases to be in effect (in which case the provisions
of Section 6.4 shall be applicable); provided that such suspension shall not
affect the right of such Lender to receive the compensation so requested.
51
(b) If, after the date hereof, any Lender shall have determined
that the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this Section 6.1 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 6.1 shall furnish to the Borrower and the Agent
a statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
(d) The provisions of this Section 6.1 shall continue in effect
notwithstanding the Facility Termination Date.
6.2 Limitation on Types of Loans. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
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6.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of Section 6.4 shall be applicable).
6.4 Treatment of Affected Loans. If the obligation of any Lender
to make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section 6.1
or 6.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans, having a Base Rate as
elected by the Borrower, on the last day(s) of the then current Interest
Period(s) for Affected Loans (or, in the case of a Conversion required by
Section 6.3 hereof, on such earlier date as such Lender may specify to the
Borrower with a copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 6.1 or 6.3
hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, having a Base Rate as elected by the
Borrower, and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead
into (or shall remain as) Base Rate Loans, having a Base Rate as
elected by the Borrower.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 6.1 or 6.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 6.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
6.5 Compensation. Upon the request of any Lender, the Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
53
(i) any payment, prepayment, or Conversion of a Eurodollar
Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 11.1) on a date other
than the last day of the Interest Period for such Loan; or
(ii) any failure by the Borrower (for any reason, including
the failure of any condition precedent specified in Article VII to be
satisfied, other than the failure of such Lender to make a Loan
notwithstanding satisfaction of all conditions precedent thereto) to
borrow, Convert, Continue, or prepay a Eurodollar Rate Loan on the date
for such borrowing, Conversion, Continuation, or prepayment specified
in the relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Agreement.
The provisions of this Section 6.5 shall continue in effect
notwithstanding the Facility Termination Date.
6.6 Taxes. (a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Lender and
the Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement or any other Loan Document
to any Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 6.6) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 13.2, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender, the Agent and
the Collateral Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 6.6) paid by such Lender, the
Agent or the Collateral Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
54
(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 (including Form W-8BEN or W-8EC1) or W-9, as appropriate, or any successor
form prescribed by the Internal Revenue Service, and (iii) any other form or
certificate required by any taxing authority (including any certificate required
by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that
such Lender is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Agreement or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to Section
6.6(d) (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
6.6(a) or 6.6(b) with respect to Taxes imposed by the United States; provided,
however, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or
for the account of any Lender pursuant to this Section 6.6, then such Lender
will agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Lender, is not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent the original or a certified copy
of a receipt evidencing such payment.
(h) The provisions of this Section 6.6 shall continue in effect
notwithstanding the Facility Termination Date.
55
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
7.1 Conditions of Initial Advance. The obligation of the Lenders
to make the initial Advance under the Revolving Credit Facility, and of the
Issuing Bank to issue any Letter of Credit, and of Bank of America to make any
Swing Line Loan, is subject to the conditions precedent that:
(a) the Agent shall have received on the Closing Date, in
form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of each of this Agreement, the
Notes, the initial Facility Guaranties of the Parent and each
direct and indirect Domestic Subsidiary of the Parent or the
Borrower, the Security Instruments, the Intercreditor
Agreement, the other Loan Documents, together with all
schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions
contemplated thereby of counsel to the Credit Parties dated
the Closing Date, addressed to the Agent and the Lenders and
satisfactory to Smith Helms Mulliss & Moore, L.L.P., special
counsel to the Agent, substantially in the form of Exhibit G;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Credit Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(iv) specimen signatures of officers or other
appropriate representatives executing the Loan Documents on
behalf of each of the Credit Parties, certified by the
secretary or assistant secretary of such Credit Party;
(v) the Organizational Documents of each of the
Credit Parties certified as of a recent date by the Secretary
of State of its state of organization;
(vi) Operating Documents of each of the Credit
Parties certified as of the Closing Date as true and correct
by its secretary or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of
formation of each of the Credit Parties as to the due
existence and good standing of such Person;
(viii) appropriate certificates of qualification to
do business, good standing and, where appropriate, authority
to conduct business under assumed
56
name, issued in respect of each of the Credit Parties as of a
recent date by the Secretary of State or comparable official
of each jurisdiction in which the failure to be qualified to
do business or authorized so to conduct business could have a
Material Adverse Effect, provided that any such certificate
which is required but not delivered on the Closing Date, as
disclosed to the Agent and the Lenders in that certain letter
from counsel to the Borrower dated November 21, 2000, shall be
delivered to the Agent not later than ten (10) weeks following
the Closing Date;
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated
the Closing Date demonstrating compliance with the financial
covenants contained in Sections 10.1(a) through 10.1(c) and
10.8 as of the end of the fiscal quarter most recently ended
prior to the Closing Date, substantially in the form of
Exhibit H;
(xi) evidence of all insurance required by the Loan
Documents;
(xii) an initial Borrowing Base Certificate for the
most recently ended fiscal quarter, an initial Borrowing
Notice and, if elected by the Borrower, Interest Rate
Selection Notice;
(xiii) evidence of the filing of Uniform Commercial
Code financing statements and, as appropriate, amendments to
previously filed financing statements, reflecting the filing
in all places required by applicable law to perfect the Liens
of the Collateral Agent under the Security Instruments as a
first priority Lien as to items of Collateral in which a
security interest may be perfected by the filing of financing
statements, subject to the terms of the Intercreditor
Agreement, and such other documents and/or evidence of other
actions as may be necessary under applicable law to perfect
the Liens of the Collateral Agent under the Security
Instruments as a first priority Lien in and to such other
Collateral as the Agent may require, subject to the terms of
the Intercreditor Agreement, including without limitation:
(A) the delivery by the Parent, the
Borrower, and other applicable Credit Parties of all
stock certificates evidencing Pledged Interests,
accompanied in each case by duly executed stock
powers (or other appropriate transfer documents) in
blank affixed thereto; and
(B) the delivery by the Parent, the
Borrower, and other applicable Credit Parties of
certificates of the Registrar of each partnership or
limited liability company Subsidiary of the Parent
evidencing the due registration on the registration
books of such Person of the Lien in favor of the
Agent conferred under the Security Instruments;
57
(xiv) evidence that all fees payable by the Borrower
on the Closing Date to the Agent, BAS and the Lenders have
been paid in full, including the due diligence expenses of the
Agent and the fees and expenses of counsel for the Agent to
the extent invoiced prior to or on the Closing Date (which may
include amounts constituting reasonable estimates of such fees
and expenses incurred or to be incurred in connection with the
transaction; provided that no such estimate shall thereafter
preclude the final settling of accounts as to such fees and
expenses);
(xv) Uniform Commercial Code search results showing
only those Liens as are acceptable to the Lenders;
(xvi) a certificate of the President or chief
financial officer of the Borrower as to the matters described
in Section 7.1(b);
(xvii) evidence satisfactory to the Agent of the
termination of the Existing Facility, repayment of all amounts
owing by the Borrower thereunder, and either the release of
all Liens granted in respect thereof or the continuation
thereof pursuant to the terms of the Security Instruments;
(xviii) evidence satisfactory to the Agent that all
letters of credit issued under the Existing Facility have been
terminated and returned to the issuers thereof;
(xix) evidence satisfactory to the Agent that CTI and
Southern Refrigerated Transport, Inc. have entered into,
together with all other parties thereto, the Receivables
Purchase Agreement, satisfactory in form and substance to the
Agent and the Lenders, and has received proceeds of the
Permitted Receivables Securitization as described in the
Receivables Purchase Agreement in the amount of not less than
$25,000,000, and has applied such proceeds to the repayment of
the Existing Facility;
(xx) copies of all Licensing Agreements to which the
Borrower and each Guarantor is party with CIP, certified by
the Secretary or an Assistant Secretary or the Borrower or
such Guarantor, respectively, to be true, correct and complete
copies thereof;
(xxi) copies of each of the Senior Notes, the Senior
Note Purchase Agreement, all documents governing or evidencing
the Synthetic Lease Obligations, and all documents governing
or evidencing the Permitted Receivables Securitization, all as
in effect as of the Closing Date, certified by the Secretary
or an Assistant Secretary of the Borrower to be true, correct
and complete copies thereof;
58
(xxii) copies of each of the Servicing Agreements as
in effect as of the Closing Date, certified by the Secretary
or an Assistant Secretary of the Borrower and each Guarantor
party thereto to be true, correct and complete copies thereof;
(xxiii) all Intercompany Notes with undated
endorsements or other instruments of transfer duly executed in
blank affixed thereto, together with estoppel notices, in form
and substance satisfactory to the Agent and the Collateral
Agent, executed by the issuers thereof;
(xxiv) evidence of the resignation of the Prior
Collateral Agent, as provided for in Section 5.4 of the Prior
Intercreditor Agreement;
(xxv) evidence of approval of the appointment of the
Collateral Agent and of the Security Instruments by the
holders of the Senior Notes;
(xxvi) licensor consent, waiver and estoppel
certificates, in form and substance acceptable to the Agent
and the Collateral Agent, executed by CIP with respect to all
Licensing Agreements assigned pursuant to the terms of the
Security Agreements; and
(xxvii) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known to
the Agent or the Lenders any event, condition, situation or
status since the date of the information contained in the
financial and business projections, budgets, pro forma data
and forecasts concerning the Credit Parties delivered to the
Agent prior to the Closing Date that has had or could
reasonably be expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall be
pending or threatened which could reasonably be likely to
result in a Material Adverse Effect; and
(iii) the Credit Parties shall have received all
approvals, consents and waivers, and shall have made or given
all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the
occurrence of any default under, conflict with or violation of
(A) any applicable law, rule, regulation, order or decree of
any Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Credit
Parties is a party or by which any of them or their properties
is bound, except for such approvals, consents, waivers,
filings and notices the receipt, making or giving of which
will not have a Material Adverse Effect.
59
7.2 Conditions of Revolving Loans and Letters of Credit. The
obligations of the Lenders to make any Revolving Loans, and the Issuing Bank to
issue (or renew) Letters of Credit and Bank of America to make Swing Line Loans,
hereunder on or subsequent to the Closing Date are subject to the satisfaction
of the following conditions:
(a) the Agent or, in the case of Swing Line Loans, Bank of
America shall have received a Borrowing Notice if required by Article
II;
(b) the representations and warranties of the Credit Parties
set forth in Article VIII and in each of the other Loan Documents shall
be true and correct in all material respects on and as of the date of
such Advance, Swing Line Loan or Letter of Credit issuance or renewal,
with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in Section 8.6(a)
shall be deemed (solely for the purpose of the representation and
warranty contained in such Section 8.6(a) but not for the purpose of
any cross reference to such Section 8.6(a) or to the financial
statements described therein contained in any other provision of
Section 8.6 or elsewhere in Article VIII) to be those financial
statements most recently delivered to the Agent and the Lenders
pursuant to Section 9.1 from the date financial statements are
delivered to the Agent and the Lenders in accordance with such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letters of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each Advance,
Swing Line Loan or the issuance of a Letter of Credit, no Default or
Event of Default specified in Article XI shall have occurred and be
continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance
of all outstanding Revolving Loans for each Lender shall not
exceed such Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Participations
in Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total Letter
of Credit Commitment;
60
(iii) a Swing Line Loan, the Swing Line Outstandings
shall not exceed $5,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a Letter of
Credit or renewal thereof, the sum of Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing
Line Outstandings shall not exceed the lesser of (i) the Total
Revolving Credit Commitment or (ii) the Borrowing Base.
61
ARTICLE VIII
Representations and Warranties
The Borrower represents and warrants with respect to itself and to its
Subsidiaries and each other Credit Party, and the Parent represents and warrants
with respect to itself and to its Subsidiaries (which representations and
warranties shall survive the delivery of the documents mentioned herein and the
making of Loans and issuing of Letters of Credit), that:
8.1 Organization and Authority.
(a) The Borrower, the Parent and each of their Subsidiaries
and each other Credit Party is a corporation, limited liability company
or partnership, as the case may be, duly organized and validly existing
under the laws of the jurisdiction of its formation;
(b) The Borrower, the Parent and each of their Subsidiaries
and each other Credit Party (x) has the requisite power and authority
to own its properties and assets and to carry on its business as now
being conducted and as contemplated in the Loan Documents, and (y) is
qualified to do business in every jurisdiction in which failure so to
qualify could have a Material Adverse Effect, provided that CTI is in
the process of becoming qualified to transact business in the state of
Ohio, as disclosed to the Agent and the Lenders on or prior to the
Closing Date in that certain letter from counsel to the Borrower dated
November 21, 2000, and such failure to be so qualified could have a
Material Adverse Effect, although it is the reasonable belief of the
Borrower and the Parent that this is not likely;
(c) The Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Credit Party (other than the Borrower) has the power
and authority to execute, deliver and perform the Facility Guaranties
and each of the other Loan Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which any Credit Party is a party will be the legal, valid and binding
obligation or agreement, as the case may be, of such Credit Party,
enforceable against such Credit Party in accordance with its terms,
subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of
general principles of equity (whether considered in a proceeding at law
or in equity).
8.2 Loan Documents. The execution, delivery and performance by
each Credit Party of each of the Loan Documents to which it is a party:
62
(a) have been duly authorized by all requisite Organizational
Action of such Credit Party required for the lawful execution, delivery
and performance thereof;
(b) do not violate any provisions of (i) any applicable law,
rule or regulation, (ii) any judgment, writ, order, determination,
decree or arbitral award of any Governmental Authority or arbitral
authority binding on such Credit Party or its properties, or (iii) the
Organizational Documents or Operating Documents of such Credit Party;
(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which such Credit Party is a party, or by which the
properties or assets of such Credit Party are bound; and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of such Credit Party
or any Subsidiary of the Borrower or the Parent except any Liens in
favor of the Agent and the Lenders created by the Security Instruments.
8.3 Solvency. Each Credit Party is Solvent after giving effect to
the transactions contemplated by the Loan Documents.
8.4 Subsidiaries and Stockholders. The Borrower and the Parent
have no Subsidiaries other than those Persons listed as Subsidiaries thereof in
Schedule 8.4 and additional Subsidiaries created or acquired after the Closing
Date in compliance with Section 9.19; Schedule 8.4 states as of the date hereof
the organizational form of each entity, the authorized and issued capitalization
of each Subsidiary listed thereon, the number of shares or other equity
interests of each class of capital stock or interest issued and outstanding of
each such Subsidiary and the number and/or percentage of outstanding shares or
other equity interest (including options, warrants and other rights to acquire
any interest) of each such class of capital stock or other equity interest owned
by the Parent, the Borrower or by any such Subsidiary thereof; the outstanding
shares or other equity interests of each such Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable; and
Borrower, the Parent and each such Subsidiary owns beneficially and of record
all the shares and other interests it is listed as owning in Schedule 8.4, free
and clear of any Lien except for Liens in favor of the Collateral Agent, for the
benefit of the Agent and the Lenders and the holders of the Senior Notes. Each
Subsidiary of the Parent (other than the Borrower) existing as of the Closing
Date has entered into a Facility Guaranty delivered at Closing.
8.5 Ownership Interests. Neither the Borrower nor the Parent owns
an interest in any Person other than the Persons listed in Schedule 8.4, equity
investments in Persons not constituting Subsidiaries permitted under Section
10.6 and additional Subsidiaries created or acquired after the Closing Date in
compliance with Section 9.19.
8.6 Financial Condition.
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(a) The Parent has heretofore furnished to each Lender an
audited consolidated and related consolidating balance sheet of the
Parent and its Subsidiaries as at December 31, 1999 and the notes
thereto and the related consolidated statements of income,
stockholders' equity and cash flows for the Fiscal Year then ended as
examined and certified by PricewaterhouseCoopers, LLP, and unaudited
consolidated and consolidating interim financial statements of the
Parent and its Subsidiaries consisting of a consolidated and
consolidating balance sheets and related consolidated statements of
income, stockholders' equity and cash flows, in each case without
notes, for and as of the end of the nine (9) month period ending
September 30, 2000. Except as set forth therein, such financial
statements (including the notes thereto) present fairly the financial
condition of the Parent and its Subsidiaries as of the end of such
Fiscal Year and nine (9) month period and results of their operations
and the changes in its stockholders' equity for the Fiscal Year and
interim period then ended, all in conformity with GAAP applied on a
Consistent Basis, subject however, in the case of unaudited interim
statements to year end audit adjustments;
(b) since the later of (i) the date of the audited financial
statements delivered pursuant to Section 8.6(a) hereof or (ii) the date
of the audited financial statements most recently delivered pursuant to
Section 9.1(a) hereof, there has not occurred any event, condition or
circumstance which has had or could reasonably be expected to have a
Material Adverse Effect, nor have the businesses or properties of the
Parent or any Subsidiary been materially adversely affected as a result
of any fire, explosion, earthquake, accident, strike, lockout,
combination of workers, flood, embargo or act of God; and
(c) except as set forth in the financial statements referred
to in Section 8.6(a) or in Schedule 8.6 or permitted by Section 10.4,
neither the Parent nor any Subsidiary of the Parent has incurred, other
than in the ordinary course of business, any material Indebtedness,
Contingent Obligation or other commitment or liability which remains
outstanding or unsatisfied.
8.7 Title to Properties. The Borrower, the Parent and each of
their Subsidiaries and each other Credit Party has good and marketable title to
all its real and personal properties, subject to no transfer restrictions or
Liens of any kind, except for the transfer restrictions and Liens described in
Schedule 8.7 and Liens permitted by Section 10.3.
8.8 Taxes. Except as set forth in Schedule 8.8, the Borrower, the
Parent and each of their Subsidiaries has filed or caused to be filed all
federal, state and local tax returns which are required to be filed by it and,
except for taxes and assessments being contested in good faith by appropriate
proceedings diligently conducted and against which reserves reflected in the
financial statements described in Section 8.6(a) or Sections 9.1(a) or (b) and
satisfactory to the Borrower's independent certified public accountants have
been established, have paid or caused to be paid all taxes as shown on said
returns or on any assessment received by it, to the extent that such taxes have
become due.
8.9 Other Agreements. No Credit Party nor any Subsidiary thereof
is
64
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
agreement or instrument to which such Credit Party or any Subsidiary
thereof is a party, which default has, or if not remedied within any
applicable grace period could reasonably be likely to have, a Material
Adverse Effect.
8.10 Litigation. Except as set forth in Schedule 8.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower or the Parent, threatened by or against the Borrower
or the Parent or any of their Subsidiaries or any other Credit Party or
affecting the Borrower or the Parent or any of their Subsidiaries or any other
Credit Party or any properties or rights of the Borrower or the Parent or any of
their Subsidiaries or any other Credit Party, which could reasonably be likely
to have a Material Adverse Effect.
8.11 Margin Stock. The proceeds of the borrowings made hereunder
will be used by the Borrower only for the purposes expressly authorized herein.
None of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock (other than shares of common stock of the Parent to be purchased by
the Parent in connection with a Permitted Share Repurchase, provided that all
such Permitted Share Repurchases have been (to the extent consummated prior to
the date hereof) and will be consummated, and the shares of stock so purchased
have been (to the extent acquired prior to the date hereof) and will be retired,
or limited in amount, as shall be necessary for compliance with Regulation U (12
CFR Part 221) as the same may be applicable to Permitted Share Repurchases from
time to time), or for any other purpose which violates or which would be
inconsistent with Regulation U (12 CFR Part 221) or Regulation X (12 CFR Part
224) of the Board. Neither the Borrower, the Parent, nor any agent acting in
their behalf has taken or will take any action which might cause this Agreement
or any of the documents or instruments delivered pursuant hereto or any use of
proceeds of Loans to violate any regulation of the Board or to violate the
Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as
amended, or any state securities laws, in each case as in effect on the date
hereof.
8.12 Regulated Company. No Credit Party is (i) an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (15 U.S.C. ss. 80a-1, et seq.) or (ii) a
"holding company" or a "subsidiary company" or "affiliate" of a "holding
company" as such terms are defined in the Public Utility Holding Company Act of
1935, as amended. The application of the proceeds of the Loans and repayment
thereof by the Borrower and the performance by the Borrower and the other Credit
Parties of the transactions contemplated by the Loan Documents will not violate
any provision of said Act, or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder, in each case as in effect on the
date hereof.
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8.13 Patents, Etc. The Borrower and each other Credit Party owns or
has the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets, copyrights and know-how necessary to or used in the
conduct of its businesses as now conducted and as contemplated by the Loan
Documents, without known conflict with any patent, license, franchise,
trademark, trade secret, trade name, copyright, other proprietary right of any
other Person; all the foregoing which is not owned by the Borrower or such
Credit Party is licensed thereto by CIP pursuant to a Licensing Agreement, which
Licensing Agreement has been collaterally assigned, and a Lien in the rights of
such parties therein has been granted to the Collateral Agent for the benefit of
the Agent, the Lenders and the holders of the Senior Notes pursuant to the
Security Agreements.
8.14 No Untrue Statement. Neither this Agreement nor any other Loan
Document or certificate or document executed and delivered by or on behalf of
the Borrower or any other Credit Party in accordance with or pursuant to any
Loan Document contains any misrepresentation or untrue statement of material
fact or omits to state a material fact necessary, in light of the circumstance
under which it was made, in order to make any such warranty, representation or
statement contained therein not misleading.
8.15 No Consents, Etc. Neither the respective businesses or
properties of the Credit Parties or any Subsidiary thereof, nor any relationship
among the Credit Parties or any Subsidiary thereof and any other Person, nor any
circumstance in connection with the execution, delivery and performance of the
Loan Documents and the transactions contemplated thereby, is such as to require
a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person on the part
of any Credit Party as a condition to the execution, delivery and performance
of, or consummation of the transactions contemplated by the Loan Documents,
which, if not obtained or effected, would be reasonably likely to have a
Material Adverse Effect, or if so, such consent, approval, authorization,
filing, registration or qualification has been duly obtained or effected, as the
case may be.
8.16 Employee Benefit Plans.
(a) The Borrower, the Parent and each ERISA Affiliate are in
compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder and in compliance with all
Foreign Benefit Laws with respect to all Employee Benefit Plans except
for any required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired. Each
Employee Benefit Plan that is intended to be qualified under Section
401(a) of the Code has been determined or the Borrower or the Parent or
their Subsidiaries is in the process of obtaining a determination by
the Internal Revenue Service to be so qualified, each trust related to
such plan has been determined to be exempt under Section 501(a) of the
Code, and each Employee Benefit Plan subject to any Foreign Benefit Law
has received the required approvals by any Governmental Authority
regulating such Employee Benefit Plan. No material liability has been
incurred by the Borrower or the Parent or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to any
Employee Benefit Plan or any Multiemployer Plan;
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(b) Neither the Borrower, the Parent nor any ERISA Affiliate
has (i) engaged in a nonexempt prohibited transaction described in
Section 4975 of the Code or Section 406 of ERISA affecting any of the
Employee Benefit Plans or the trusts created thereunder which could
subject any such Employee Benefit Plan or trust to a material tax or
penalty on prohibited transactions imposed under Internal Revenue Code
Section 4975 or ERISA, (ii) incurred any accumulated funding deficiency
with respect to any Employee Benefit Plan, whether or not waived, or
any other liability to the PBGC which remains outstanding other than
the payment of premiums and there are no premium payments which are due
and unpaid, (iii) failed to make a required contribution or payment to
a Multiemployer Plan, (iv) failed to make a required installment or
other required payment under Section 412 of the Code, Section 302 of
ERISA or the terms of such Employee Benefit Plan, or (v) failed to make
a required contribution or payment, or otherwise failed to operate in
compliance with any Foreign Benefit Law regulating any Employee Benefit
Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither the Borrower, the Parent, nor any ERISA Affiliate has
incurred any unpaid withdrawal liability with respect to any
Multiemployer Plan;
(d) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, or
the funding of which is regulated by any Foreign Benefit Law did not,
as of the most recent valuation date for each such plan, exceed the
then current value of the assets of such Employee Benefit Plan
allocable to such benefits;
(e) To the best of the Borrower's and the Parent's knowledge,
each Employee Benefit Plan which is subject to Title IV of ERISA or the
funding of which is regulated by any Foreign Benefit Law, maintained by
the Borrower or the Parent or any ERISA Affiliate, has been
administered in accordance with its terms in all material respects and
is in compliance in all material respects with all applicable
requirements of ERISA, applicable Foreign Benefit Law and other
applicable laws, regulations and rules;
(f) The consummation of the Loans provided for herein will
not involve any prohibited transaction under ERISA which is not subject
to a statutory or administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after
due inquiry, is threatened concerning or involving any Employee Benefit
Plan;
8.17 No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
8.18 Environmental Laws. Except as listed on Schedule 8.18, the
Borrower, the Parent, and each of their Subsidiaries is in compliance with all
applicable Environmental Laws
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and has been issued and currently maintains all required federal, state and
local permits, licenses, certificates and approvals except for any
non-compliance that could not reasonably be expected to cause any Material
Adverse Effect. Except as listed on Schedule 8.18, neither the Borrower, the
Parent, nor any of their Subsidiaries has been notified of any pending or
threatened action, suit, proceeding or investigation, and neither the Borrower,
the Parent, nor any of their Subsidiaries is aware of any fact or facts, which
(a) call into question, or could reasonably be expected to call into question,
compliance by the Borrower, the Parent, or any of their Subsidiaries with any
Environmental Laws, (b) could reasonably be expected to form the basis of a
meritorious proceeding, to suspend, revoke or terminate any license, permit or
approval necessary for the operation of the Borrower's, the Parent's, or any of
their Subsidiaries' business or facilities or for the generation, handling,
storage, treatment or disposal of any Hazardous Materials, or (c) could
reasonably be expected to form the basis of a meritorious proceeding to cause
any property of the Borrower, the Parent, or any of their Subsidiaries or other
Credit Party to be subject to any restrictions on ownership, use, occupancy or
transferability under any Environmental Law.
8.19 Employment Matters. (a) None of the employees of the Borrower,
the Parent, or any of their Subsidiaries is subject to any collective bargaining
agreement and there are no strikes, work stoppages, election or decertification
petitions or proceedings, unfair labor charges, equal opportunity proceedings,
or other material labor/employee related controversies or proceedings pending
or, to the best knowledge of the Borrower or the Parent, threatened against the
Borrower, the Parent, or any of their Subsidiaries or between the Borrower, the
Parent, or any of their Subsidiaries and any of its employees, other than
employee grievances arising in the ordinary course of business which could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) Except to the extent a failure to maintain compliance would
not have a Material Adverse Effect, the Borrower, the Parent and each of their
Subsidiaries is in compliance in all respects with all applicable laws, rules
and regulations pertaining to labor or employment matters, including without
limitation those pertaining to wages, hours, occupational safety and taxation
and there is neither pending or threatened any litigation, administrative
proceeding nor, to the knowledge of the Borrower and the Parent, any
investigation, in respect of such matters which, if decided adversely, could
reasonably be likely, individually or in the aggregate, to have a Material
Adverse Effect.
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ARTICLE IX
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, each of the Borrower and the Parent, as
applicable, will, and where applicable will cause each of their Subsidiaries to:
9.1 Financial Reports, Etc. (a) As soon as practical and in any
event within 90 days after the end of each Fiscal Year of the Parent, deliver or
cause to be delivered to the Agent and each Lender (i) consolidated and
consolidating balance sheets of the Parent and its Subsidiaries as at the end of
such Fiscal Year, and the notes thereto, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows, and the
respective notes thereto, for such Fiscal Year, setting forth (other than for
consolidating statements) comparative financial statements for the preceding
Fiscal Year, all prepared in accordance with GAAP applied on a Consistent Basis
and containing, with respect to the consolidated financial statements, opinions
of PricewaterhouseCoopers, LLP, or other such independent certified public
accountants selected by the Parent and approved by the Agent, which are
unqualified as to the scope of the audit performed and as to the "going concern"
status of the Parent and without any exception not acceptable to the Required
Lenders, and (ii) a certificate of an Authorized Representative demonstrating
compliance with Sections 10.1(a) through 10.1(c) and 10.8, which certificate
shall be in the form of Exhibit H;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Agent and each Lender (i) consolidated and consolidating balance
sheets of the Parent and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows for such fiscal quarter and for the period
from the beginning of the then current Fiscal Year through the end of such
reporting period, and accompanied by a certificate of an Authorized
Representative to the effect that such financial statements present fairly the
financial position of the Parent and its Subsidiaries as of the end of such
fiscal period and the results of their operations and the changes in their
financial position for such fiscal period, in conformity with the standards set
forth in Section 8.6(a) with respect to interim financial statements, and (ii) a
certificate of an Authorized Representative containing computations for such
quarter comparable to that required pursuant to Section 9.1(a)(ii);
(c) together with each delivery of the financial statements
required by Section 9.1(a)(i), deliver to the Agent and each Lender a letter
from the Parent's accountants specified in Section 9.1(a)(i) stating that in
performing the audit necessary to render an opinion on the financial statements
delivered under Section 9.1(a)(i), they obtained no knowledge of any Default or
Event of Default by the Borrower or the Parent in the fulfillment of the terms
and provisions of this Agreement insofar as they relate to financial matters
(which at the date of such statement remains uncured); or if the accountants
have obtained knowledge of such Default or Event of Default, a statement
specifying the nature and period of existence thereof;
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(d) promptly upon their becoming available to the Parent, the
Parent shall deliver to the Agent and each Lender a copy of (i) all regular or
special reports or effective registration statements which Parent or any of its
Subsidiaries shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by the Parent or any of its Subsidiaries to its shareholders,
bondholders or the financial community in general, and (iii) any management
letter or other report submitted to the Parent, the Borrower or any of their
Subsidiaries by independent accountants in connection with any annual, interim
or special audit of the Borrower or any of its Subsidiaries;
(e) as soon as practical and in any event within forty-five (45)
days after the end of each fiscal quarter, the Borrower shall deliver to the
Agent and each Lender a Borrowing Base Certificate in the form of Exhibit K;
(f) together with each delivery of the financial statements
required by Section 9.1(a) and (b), an unaudited balance sheet for CVTI as of
the end of the fiscal period included in such financial statements and the
related unaudited statements of income, stockholders' equity and cash flows for
CVTI for such period, together with consolidating statements or other
reconciliations reflecting all eliminations or adjustments necessary to
reconcile such financial statements to the consolidated financial statements of
the Parent and its Subsidiaries; and
(g) promptly, from time to time, deliver or cause to be delivered
to the Agent and each Lender such other information regarding the Parent's, the
Borrower's, or any Subsidiary's operations, business affairs and financial
condition as the Agent or such Lender may reasonably request.
The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement.
9.2 Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens,
other than Liens in favor of the Collateral Agent, for the benefit of the Agent
and the Lenders and the holders of the Senior Notes, all trademarks, trade
names, patents, copyrights, trade secrets, know-how, and other intellectual
property and proprietary information (or adequate licenses thereto), in each
case as are reasonably necessary to conduct its business as currently conducted
or as contemplated hereby, all in accordance with customary and prudent business
practices.
9.3 Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 10.7, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
70
ownership or lease of property or the nature of its business makes such license
or qualification necessary except where the failure to so qualify would not have
a Material Adverse Effect.
9.4 Regulations and Taxes. Comply in all material respects with
all statutes and governmental regulations and pay all taxes, assessments,
governmental charges, claims for labor, supplies, rent and any other obligation
which, if unpaid, would become a Lien against any of its properties, except
liabilities being contested in good faith by appropriate proceedings diligently
conducted provided that (i) adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP and
(ii) any Lien arising in connection with any such contest shall be permitted to
exist to the extent provided in Section 10.3.
9.5 Insurance. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated,
(b) maintain general public liability insurance at all times with responsible
insurance carriers against liability on account of damage to persons and
property and (c) maintain insurance under all applicable workers' compensation
laws (or in the alternative, maintain required reserves if self-insured for
workers' compensation purposes) and against loss by reason of business
interruption, such policies of insurance to have such limits, deductibles,
exclusions, co-insurance and other provisions providing no less coverages than
are maintained by similar businesses that are similarly situated and to be in
form reasonably satisfactory to the Agent. Each of the policies of insurance
described in this Section 9.5 shall provide that the insurer shall give the
Agent not less than thirty (30) days' prior written notice before any such
policy shall terminate or be terminated, lapse or be altered in any manner.
9.6 True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by GAAP
with respect to doubtful accounts and all taxes, assessments, charges, levies
and claims and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements.
9.7 Right of Inspection. Permit any Person designated by any
Lender or the Agent to visit and inspect at any time any of the properties,
corporate books and financial reports of the Borrower, the Parent, or any of
their Subsidiaries (provided that any such visit or inspection shall be at the
Borrower's expense (i) during the continuance of an Event of Default and (ii)
otherwise up to once during any Fiscal Year), and to discuss its affairs,
finances and accounts with its principal officers and, if applicable,
independent certified public accountants, all at reasonable times, at reasonable
intervals and with reasonable prior notice.
9.8 Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business, except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.
9.9 Governmental Licenses. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental Authorities
as are required for the conduct of its
71
business as currently conducted and as contemplated by the Loan Documents,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
9.10 Covenants Extending to Other Persons. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower and the Parent in Sections 9.2 through 9.9,
and 9.18 inclusive.
9.11 Officer's Knowledge of Default. Upon any officer of the
Borrower or the Parent obtaining knowledge of any Default or Event of Default
hereunder or under any other obligation of the Borrower, the Parent or any of
their Subsidiaries or any other Credit Party to any Lender, or any event,
development or occurrence which could reasonably be expected to have a Material
Adverse Effect, cause such officer or an Authorized Representative to promptly
notify the Agent of the nature thereof, the period of existence thereof, and
what action the Borrower, the Parent, such Subsidiary or other Credit Party
proposes to take with respect thereto.
9.12 Suits or Other Proceedings. Upon any officer of the Borrower
or the Parent obtaining knowledge of any litigation or other proceedings being
instituted against the Borrower or the Parent or any of their Subsidiaries or
other Credit Party, or any attachment, levy, execution or other process being
instituted against any assets of the Borrower or the Parent or any of their
Subsidiaries or any other Credit Party, making a claim or claims in an aggregate
amount greater than $3,000,000 not otherwise covered by insurance, promptly
deliver to the Agent written notice thereof stating the nature and status of
such litigation, dispute, proceeding, levy, execution or other process.
9.13 Notice of Environmental Complaint or Condition. Promptly
provide to the Agent true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims or citations received by the Borrower or
the Parent or any of their Subsidiaries relating to any (a) violation or alleged
violation by the Borrower or the Parent or any of their Subsidiaries of any
applicable Environmental Law; (b) release or threatened release by the Borrower
or the Parent or any of their Subsidiaries, or by any Person handling,
transporting or disposing of any Hazardous Material on behalf of Borrower or the
Parent or any of their Subsidiaries, or at any facility or property owned or
leased or operated by Borrower or the Parent or any of their Subsidiaries, of
any Hazardous Material, except where occurring legally pursuant to a permit or
license; or (c) liability or alleged liability of Borrower or the Parent or any
of their Subsidiaries for the costs of cleaning up, removing, remediating or
responding to a release of Hazardous Materials.
9.14 Environmental Compliance. If Borrower or the Parent or any of
their Subsidiaries shall receive any letter, notice, complaint, order,
directive, claim or citation alleging that Borrower or the Parent or any of
their Subsidiaries has violated any Environmental Law, has released any
Hazardous Material, or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower, the
Parent and any such Subsidiary shall, within the time period permitted and to
the extent required by the applicable Environmental Law or the Governmental
Authority responsible for enforcing such Environmental Law, remove or remedy, or
cause the applicable Subsidiary to remove or remedy, such violation or release
or satisfy such liability.
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9.15 Indemnification. Without limiting the generality of Section
13.9, each of the Parent, the Borrower and any respective Subsidiary of either
of them hereby agrees to indemnify and hold the Agent, the Collateral Agent and
the Lenders and any affiliate of any Lender party to a Swap Agreement, and their
respective officers, directors, employees and agents, harmless from and against
any and all claims, losses, penalties, liabilities, damages and expenses
(including assessment and cleanup costs and reasonable attorneys', consultants'
or other expert fees, expenses and disbursements) arising directly or indirectly
from, out of or by reason of (a) the violation of any Environmental Law by the
Borrower or the Parent or any of their Subsidiaries or with respect to any
property owned, operated or leased by the Borrower or the Parent or any of their
Subsidiaries or (b) the handling, storage, transportation, treatment, emission,
release, discharge or disposal of any Hazardous Materials by or on behalf of the
Borrower or the Parent or any of their Subsidiaries, or on or with respect to
property owned or leased or operated by the Borrower or the Parent or any of
their Subsidiaries. The provisions of this Section 9.15 shall continue in effect
notwithstanding the Facility Termination Date.
9.16 Further Assurances. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent and the Collateral Agent such further instruments,
documents, certificates, financing and continuation statements, and do and cause
to be done such further acts that may be reasonably necessary or advisable in
the reasonable opinion of the Agent to carry out more effectively the provisions
and purposes of this Agreement, the Security Instruments and the other Loan
Documents.
9.17 Employee Benefit Plans.
(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Agent of (a) the establishment of
any new Pension Plan (which notice shall include a copy of such plan),
(b) the commencement of contributions to any Employee Benefit Plan to
which the Borrower, the Parent, or any of their ERISA Affiliates was
not previously contributing, (c) any material increase in the benefits
of any existing Employee Benefit Plan, (d) each funding waiver request
filed with respect to any Pension Plan and all communications received
or sent by the Borrower, the Parent or any ERISA Affiliate with respect
to such request and (e) the failure of the Borrower, the Parent or any
ERISA Affiliate to make a required installment or payment under Section
302 of ERISA or Section 412 of the Code (in the case of Employee
Benefit Plans regulated by the Code or ERISA) or under any Foreign
Benefit Law (in the case of Employee Benefit Plans regulated by any
Foreign Benefit Law) by the due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Employee Benefit Plan or any trust created
thereunder, deliver to the Agent a notice specifying the nature
thereof, what action the Borrower, the Parent or any ERISA Affiliate
has taken, is taking or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto; and
73
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (a), (b) and (c), deliver to the
Agent copies of (a) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code, (b) all notices received
by the Parent, Borrower or any ERISA Affiliate of the PBGC's or any
Governmental Authority's intent to terminate any Pension Plan or to
have a trustee appointed to administer any Pension Plan, (c) each
Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by the Borrower, the Parent or any ERISA Affiliate with
the Internal Revenue Service with respect to each Employee Benefit Plan
and (d) all notices received by the Borrower, the Parent or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA.
The Borrower and the Parent will notify the Agent in writing within
five (5) Business Days of the Borrower, the Parent or any ERISA
Affiliate obtaining knowledge or reason to know that the Borrower, the
Parent or any ERISA Affiliate has filed or intends to file a notice of
intent to terminate any Pension Plan under a distress termination
within the meaning of Section 4041(c) of ERISA.
9.18 Continued Operations. Continue at all times to conduct its
business of transporting freight and engage principally in the same line or
lines of business of transporting freight substantially as heretofore conducted.
9.19 New Subsidiaries. Simultaneously with the acquisition or
creation of any Subsidiary of the Borrower or the Parent, the Borrower and the
Parent shall cause to be delivered to the Agent and the Collateral Agent (or to
either of them as may be specified) each of the following:
(a) to the Agent, if such Subsidiary is a Domestic Subsidiary,
a Facility Guaranty executed by such Subsidiary substantially in the
form of Exhibit I-2 (with appropriate conforming changes);
(b) if the Subsidiary Securities issued by such Subsidiary
that are, or are required to become, Pledged Interests, shall be owned
by the Borrower or by a Subsidiary of the Parent or the Borrower who
has not then executed and delivered to the Collateral Agent a Pledge
Agreement granting a Lien to the Collateral Agent, for the ratable
benefit of the Agent and the Lenders and the holders of the Senior
Notes, in such equity interests, a Pledge Agreement executed by the
Borrower or by the Subsidiary that directly owns such Subsidiary
Securities substantially in the form attached hereto as Exhibit J-1,
with appropriate conforming changes (or, as to the Pledged Interests
issued by any Direct Foreign Subsidiary of the Borrower or the Parent,
in a form acceptable to the Agent and the Collateral Agent), and if
such Subsidiary Securities shall be owned by the Parent or a Subsidiary
of the Parent who has previously executed a Pledge Agreement, a Pledge
Agreement Supplement in the form required by such Pledge Agreement
pertaining to such Subsidiary Securities;
(c) to the Collateral Agent, if the Pledged Interests issued
by such Subsidiary constitute securities under Article 8 of the Uniform
Commercial Code (i) the certificates
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representing 100% of such Subsidiary Securities and (ii) duly executed,
undated stock powers or other appropriate powers of assignment in blank
affixed thereto;
(d) if such Subsidiary is party to any Licensing Agreements, a
Security Agreement in the form of Exhibit O-1 attached hereto (with
appropriate conforming changes), or supplements in form and substance
acceptable to the Agent and the Collateral Agent to any such documents
delivered on the Closing Date, together with certified copies of each
Licensing Agreement, licensor consent, waiver and estoppel certificates
executed by CIP, in form and substance satisfactory to the Agent and
the Collateral Agent, and all such other instruments, agreements and
documents as required to be delivered pursuant to Article V, by the
Borrower and the Guarantors, on the Closing Date;
(e) if such Subsidiary has issued or is the holder of any
Intercompany Borrowing Notes, an Intercompany Note Pledge Agreement in
the form attached hereto as Exhibit N-1 (with appropriate conforming
changes) executed by the holder of each such Intercompany Borrowing
Note, or if such Intercompany Borrowing Notes shall be held by the
Borrower or any other Credit Party who has previously executed an
Intercompany Note Pledge Agreement, a supplement to or revision of such
Intercompany Note Pledge Agreement as the Agent or the Collateral Agent
deems necessary for the creation and attachment of a Lien therein in
favor of the Collateral Agent for the benefit of the Agent, the Lenders
and the holders of the Senior Notes, together with, to the Collateral
Agent, the original of each such Intercompany Borrowing Note with
undated endorsements or other instruments of transfer duly executed in
blank affixed thereto, estoppel notices in form and substance
satisfactory to the Agent and the Collateral Agent executed by the
issuer of each such Intercompany Borrowing Note, and all such other
instruments, agreements and documents as required pursuant to Article V
of the Borrower and the Guarantors on the Closing Date;
(f) (i) Uniform Commercial Code financing statements on form
UCC-1 or otherwise duly executed by the pledgor as "Debtor" and naming
the Collateral Agent, for the benefit of the Agent and the Lenders and
the holders of the Senior Notes, as "Secured Party," in form, substance
and number sufficient in the reasonable opinion of the Collateral Agent
and the Agent and its special counsel to be filed in all Uniform
Commercial Code filing offices and in all jurisdictions in which filing
is necessary or advisable to perfect in favor of the Collateral Agent,
for the benefit of the Agent and the Lenders and the holders of the
Senior Notes, the Lien on such Subsidiary Securities and (ii) if the
Pledged Interests issued by such Subsidiary do not constitute
securities and such Subsidiary has not elected to have such interests
treated as securities under Article 8 of the applicable Uniform
Commercial Code, a control agreement from the Registrar of such
Subsidiary, in form and substance acceptable to the Agent and the
Collateral Agent and in which the Registrar (1) acknowledges that the
pledgor is at the date of such acknowledgment the sole record and, to
its knowledge, beneficial owner of such Subsidiary Securities, (2)
acknowledges the Lien in favor of the Collateral Agent, for the benefit
of the Agent and the Lenders and the holders of the Senior Notes,
conferred under the Pledge Agreements and that such Lien will be
reflected on the registry for such
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Subsidiary Securities, (3) agrees that it will not register any
transfer of such Subsidiary Securities nor acknowledge any Lien in
favor of any other Person on such Subsidiary Securities, without the
prior written consent of the Collateral Agent and the Agent, in each
instance, until it receives notice from the Collateral Agent that all
Liens on such Collateral in favor of the Collateral Agent, for the
benefit of the Agent and the Lenders and the holders of the Senior
Notes, have been released or terminated, and (4) agrees that upon
receipt of notice from the Collateral Agent or the Agent that an Event
of Default has occurred and is continuing and that the Subsidiary
Securities identified in such notice have been transferred to a
transferee identified in such notice, it will duly record such transfer
of Subsidiary Securities on the appropriate registry without requiring
further consent from the pledgor and shall thereafter treat the
transferee as the sole record and beneficial owner of such Subsidiary
Securities pending further transfer, notwithstanding any contrary
instruction received from the pledgor;
(g) an opinion of counsel to such Subsidiary dated as of the
date of delivery of the Facility Guaranty and other Loan Documents
provided for in this Section 9.19 and addressed to the Collateral
Agent, the Agent, the holders of the Senior Notes and the Lenders, in
form and substance reasonably acceptable to the Agent and the
Collateral Agent (which opinion may include assumptions and
qualifications of similar effect to those contained in the opinions of
counsel delivered pursuant to Section 7.1(a)); and
(h) current copies of the Organizational Documents and
Operating Documents of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if
required by such Organizational Documents, Operating Documents or
applicable law, of the shareholders, members or partners) of such
Subsidiary authorizing the actions and the execution and delivery of
documents described in this Section 9.19.
9.20 Intercompany Advances. (a) If the Borrower, the Parent or any
Subsidiary of the Parent or of the Borrower makes any loan or advance to the
Parent, or to any Subsidiary of the Parent or of the Borrower, whether in
connection with a Permitted Share Repurchase or as a borrowing of funds
constituting Indebtedness for Money Borrowed, such loan or advance must be
evidenced by an Intercompany Borrowing Note which is subject to the terms of the
Intercompany Note Pledge Agreement and shall have been delivered to the
Collateral Agent together with undated endorsements or other instruments of
transfer duly executed in blank affixed thereto.
(b) Any intercompany advance or other distribution received by the
Parent (as permitted by this Agreement) and not used to finance a Permitted
Share Repurchase within thirty (30) days of its receipt shall be contributed
immediately thereafter as capital to the Borrower (other than amounts used by
the Parent to make cash dividend payments as permitted by Section 10.8).
9.21 Collateral. The Collateral shall at all times secure payment
and performance of the Obligations on a basis which shall not be subordinated
to, or be on less than a pari passu basis with, the obligations of the Borrower
under the Senior Notes.
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ARTICLE X
Negative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, neither the Borrower nor the Parent will, nor will
either permit any Subsidiary to:
10.1 Financial Covenants.
(a) Consolidated Tangible Net Worth. Permit Consolidated Tangible
Net Worth to be less than (i) $136,223,081 from the Closing Date until (but
excluding) the last day of the fiscal quarter that includes the Closing Date
(the "Closing Date Quarter"), and (ii) as at the last day of each fiscal quarter
of the Parent ending after the Closing Date and until (but excluding) the last
day of the next following fiscal quarter of the Parent, the sum of (A) the
amount of Consolidated Tangible Net Worth required to be maintained pursuant to
this Section 10.1(a) as at the end of the immediately preceding fiscal quarter
(or, in the case of the Closing Date Quarter, required to be maintained as of
the Closing Date), plus (B) 50% of Consolidated Net Income (with no reduction
for net losses during any period) for the fiscal quarter of the Parent ending on
such day (including within "Consolidated Net Income" certain items otherwise
excluded, as provided for in the definition of "Consolidated Net Income"), plus
(C) 100% of the aggregate amount of all increases in the stated capital and
additional paid-in capital accounts of the Parent resulting from the issuance,
sale or exchange of equity securities or other capital investments.
(b) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio
as of the end of any Four-Quarter Period to be greater than 3.00 to 1.00.
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio as of the end of any Four-Quarter
Period to be less than 1.20 to 1.00.
10.2 Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same as one or more
line or lines of business conducted by the Borrower, the Parent, or its
Subsidiaries, (ii) no Default or Event of Default shall have occurred and be
continuing either immediately prior to or immediately after giving effect to
such Acquisition, (iii) the Person acquired shall be a wholly-owned Subsidiary,
or be merged into the Parent or a wholly-owned Subsidiary of the Parent,
immediately upon consummation of the Acquisition (or if assets are being
acquired, the acquiror shall be the Parent or a wholly-owned Subsidiary of the
Parent), (iv) if the Cost of Acquisition shall exceed $50,000,000, the Required
Lenders shall consent to such Acquisition in their discretion, and (v) after
giving effect to such Acquisition, the aggregate Costs of Acquisition incurred
in any Fiscal Year (on a noncumulative basis, with the effect that amounts not
incurred in any Fiscal Year may not be carried forward to a subsequent period)
shall not exceed twenty percent (20%) of Consolidated Total Assets as of the end
of the immediately preceding Fiscal Year.
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10.3 Liens. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower, the Parent, or any of
their Subsidiaries (except for Transplace.com), other than
(a) Liens created under the Security Instruments in favor of
the Collateral Agent for the benefit of the Agent and the Lenders and
the holders of the Senior Notes, and otherwise existing as of the date
hereof and as set forth in Schedule 8.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted, and with respect to which adequate reserves are being
maintained in accordance with GAAP, which Liens are not yet exercisable
to effect the sale or seizure of property subject thereto;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens arising in the
ordinary course of business and in existence less than 90 days from the
date of creation thereof for amounts not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted, and with respect to which adequate reserves are being
maintained in accordance with GAAP, which Liens are not yet exercisable
to effect the sale or seizure of property subject thereto;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, surety and appeal bonds (not in
excess of $5,000,000), contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower,
the Parent or any of their Subsidiaries and which do not materially
detract from the value of the property to which they attach or
materially impair the use thereof to the Borrower, the Parent or any of
their Subsidiaries;
(f) purchase money Liens to secure Indebtedness permitted
under Section 10.4(d); provided that no such Lien shall extend to any
property other than the assets purchased with the proceeds of such
Indebtedness, and provided further that such Liens shall be permitted
only to the extent permitted under the Senior Note Purchase Agreement;
(g) Liens arising in connection with Capital Leases permitted
under Section 10.4; provided that no such Lien shall extend to any
property other than the assets subject
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to such Capital Leases, and provided further that such Liens shall be
permitted only to the extent permitted under the Senior Note Purchase
Agreement; and
(h) Liens on accounts receivable and proceeds thereof arising
in connection with the transfer thereof pursuant to a Permitted
Receivables Securitization.
10.4 Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth
in Schedule 8.6, including without limitation the Senior Notes and the
Synthetic Lease Obligations described in clause (i) of the definition
of such term; provided, none of the instruments and agreements
evidencing or governing such Indebtedness shall be amended, modified or
supplemented after the Closing Date to change any terms of
subordination, repayment or rights of enforcement, conversion, put,
exchange or other rights from such terms and rights as in effect on the
Closing Date;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) purchase money Indebtedness not to exceed an aggregate
outstanding principal amount at any time of $25,000,000;
(e) Indebtedness arising from Rate Hedging Obligations
permitted under Section 10.15;
(f) Subordinated Indebtedness;
(g) unsecured intercompany Indebtedness for loans and advances
made by the Borrower or any Subsidiary to the Parent or any other
Guarantor which (i) in each instance are evidenced by Intercompany
Borrowing Notes that have been delivered to the Collateral Agent in
compliance with the terms of the Intercompany Note Pledge Agreements
and (ii) collectively do not exceed at any time in aggregate principal
amount the sum of Revolving Credit Outstandings at such time plus
amounts available at such time under the Revolving Credit Facility for
borrowing by the Borrower as Revolving Loans;
(h) additional unsecured Indebtedness for Money Borrowed not
otherwise covered by clauses (a) through (g) above, provided that the
aggregate outstanding principal amount of all such other Indebtedness
permitted under this clause (h) shall in no event exceed $5,000,000 at
any time;
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(i) Indebtedness arising in connection with any Permitted
Receivables Securitization; and
(j) Indebtedness extending the maturity of, or renewing,
refunding or refinancing, in whole or in part, Indebtedness incurred
under clauses (a), (d), (f) and (h) of this Section 10.4, provided that
(A) the terms of any such extension, renewal, refunding or refinancing
Indebtedness (and of any agreement or instrument entered into in
connection therewith) are no less favorable to the Agent and the
Lenders than the terms of the Indebtedness as in effect prior to such
action, and provided further that immediately before and immediately
after giving effect to any such extension, renewal, refunding or
refinancing, no Default or Event of Default shall have occurred and be
continuing, and (B) notwithstanding anything in the foregoing to the
contrary, any renewal, refunding or refinancing of the Senior Notes,
the Synthetic Lease Obligations, or the Permitted Receivables
Securitization shall require the consent of the Agent and the Required
Lenders.
10.5 Transfer of Assets. Sell, lease, transfer or otherwise dispose
of any assets of Borrower, Parent or any Subsidiary of either, other than (a)
dispositions of inventory in the ordinary course of business, (b) dispositions
of equipment or other property that is substantially worn, damaged, obsolete or,
in the judgment of the Borrower or the Parent, no longer best used or useful in
its business or that of any Subsidiary, (c) dispositions of accounts receivable
in connection with a Permitted Receivables Securitization, (d) transfers of
assets necessary to give effect to merger or consolidation transactions
permitted by Section 10.7, and (e) the disposition of Eligible Securities in the
ordinary course of management of the investment portfolios of the Borrower, the
Parent, and their Subsidiaries.
10.6 Investments. Purchase, own, invest in (by capital
contribution, purchase of equity interest or otherwise) or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except:
(a) securities of any Person acquired in an Acquisition
permitted hereunder, or securities
acquired in connection with a Permitted Share Repurchase;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set
forth in Schedule 8.4;
(d) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss; and
(e) investments in Subsidiaries which are Guarantors (and
including Transplace.com) and investments by the Parent in the
Borrower;
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(f) loans by the Borrower or any Subsidiary to the Parent or
to any other Guarantor as described in Section 10.4(g);
(g) additional loans, advances and investments not otherwise
covered by clauses (a) through (f) above in an aggregate principal
amount at any time outstanding not to exceed $5,000,000.
10.7 Merger or Consolidation. (a) Consolidate with or merge into
any other Person, or (b) permit any other Person to merge into it; provided,
however, (i) any Subsidiary of the Borrower may merge or transfer all or
substantially all of its assets into or consolidate with the Borrower or any
wholly-owned Subsidiary of the Borrower, (ii) any other Subsidiary of the Parent
(other than the Borrower) may merge with the Parent or any other Subsidiary of
the Parent, (iii) any other Person may merge into or consolidate with the
Borrower or the Parent or any wholly-owned Subsidiary (the Borrower, the Parent
or such Subsidiary being the surviving corporation) and (iv) any Subsidiary
(other than the Borrower) may merge into or consolidate with any other Person in
order to consummate an Acquisition permitted by Section 10.2, provided further,
that any resulting or surviving entity shall execute and deliver such agreements
and other documents, including a Facility Guaranty, and take such other action
as the Agent may require to evidence or confirm its express assumption of the
obligations and liabilities of its predecessor entities under the Loan
Documents.
10.8 Restricted Payments. Make any Restricted Payment or apply or
set apart any of their assets therefor or agree to do any of the foregoing,
other than (i) Permitted Share Repurchases and (ii) cash dividends declared by
the board of directors of the Parent in the ordinary course of business
consistent with past practice and paid thereby to its stockholders; provided
that the sum of (i) and (ii) from the Closing Date until the Stated Termination
Date, shall not exceed the sum of $24,000,000 plus 50% of the Consolidated Net
Income for each fiscal quarter commencing September 30, 2000 (such amount
reduced by 100% of the amount of any negative Consolidated Net Income during any
such period).
10.9 Transactions with Affiliates. Other than transactions
permitted under Sections 10.6 and 10.7, enter into any transaction after the
Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Parent, except (a) that such Persons may render services to
the Parent or its Subsidiaries for compensation at substantially the same or
more favorable rates generally paid by Persons engaged in the same or similar
businesses for the same or similar services, (b) that the Parent or any
Subsidiary may render services to such Persons for compensation at the same
rates generally charged by the Parent or such Subsidiary and (c) in either case
in the ordinary course of business and pursuant to the reasonable requirements
of the Parent's (or any Subsidiary's) business consistent with past practice of
the Parent and its Subsidiaries and upon fair and reasonable terms no less
favorable to the Parent (or any Subsidiary) than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate, and all the
foregoing shall at all times be applicable with respect to each Licensing
Agreement and each Servicing Agreement and the fees payable in connection
therewith.
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10.10 Compliance with ERISA, the Code and Foreign Benefit Laws. With
respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of the Borrower, the Parent or any
ERISA Affiliate to the PBGC or to any Governmental Authority; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower, the Parent or any ERISA
Affiliate may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; or
(e) engage, or permit any Subsidiary or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or the Parent or any ERISA Affiliate or
increase the obligation of the Borrower or the Parent or any ERISA
Affiliate to a Multiemployer Plan; or
(g) fail, or permit the Borrower or the Parent or any ERISA
Affiliate to fail, to establish, maintain and operate each Employee
Benefit Plan in compliance in all material respects with the provisions
of ERISA, the Code, all applicable Foreign Benefit Laws and all other
applicable laws and the regulations and interpretations thereof.
10.11 Fiscal Year. Change its Fiscal Year.
10.12 Dissolution, Etc. Wind up, liquidate or dissolve (voluntarily
or involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 10.7.
10.13 Limitations on Sales and Leasebacks. Enter into any
arrangement or arrangements with any Person providing for the leasing by the
Borrower, the Parent or any Subsidiary of either of real or personal property,
whether now owned or hereafter acquired in a single transaction or series of
related transactions, which has been or is to be sold or transferred by the
Borrower, the Parent or any of their Subsidiaries to such Person or to any other
Person to
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whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of the Borrower, the Parent or any of their
Subsidiaries, except for any such arrangements entered into in connection with
(i) the Synthetic Lease Obligations and (ii) the truck and trailer leasing
program in an aggregate amount not to exceed in any Fiscal Year the sum of (A)
$25,000,000 plus (B) 50% of the aggregate amount of Consolidated Net Income for
each fiscal quarter commencing with the fiscal quarter ended September 30, 2000
(such amount reduced by 100% of the amount of any negative Consolidated Net
Income during any such fiscal quarter), as presently conducted and disclosed to
the Agent and Lenders and hereafter conducted in accordance with such past
practices; provided that not later than ten (10) Business Days prior to any
additional truck or trailer sale and leaseback occurring after the Closing Date,
the Parent and the Borrower shall deliver (i) an adjusted Borrowing Base
Certificate giving pro forma effect to such sale and leaseback and (ii) a
certificate of an Authorized Representative demonstrating pro forma compliance
with the financial covenants contained in Article X, substantially in the form
of Exhibit H, the covenant calculations in which shall be determined on a
historical pro forma basis as of the Four-Quarter Period most recently ended and
shall give pro forma effect to all lease payments incurred, acquired or assumed
in connection with such transaction calculated as if all such lease payments had
been incurred as of the first day of such Four-Quarter Period.
10.14 Change of Control. Cause, suffer or permit to exist or occur
any Change of Control.
10.15 Rate Hedging Obligations. Incur any Rate Hedging Obligations
or enter into any agreements, arrangements, devices or instruments relating to
Rate Hedging Obligations, except (i) pursuant to Swap Agreements in an aggregate
notional amount not to exceed at any time 50% of the Total Revolving Credit
Commitment or as otherwise agreed by the Borrower and the Agent and (ii) diesel
fuel forward purchase contracts, commitments and options entered into in the
ordinary course of business, consistent with past practices, and not for
speculative purposes.
10.16 Negative Pledge Clauses. Enter into or cause, suffer or permit
to exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any of the Borrower, the Parent or any of their Subsidiaries
(other than Transplace.com) to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for Liens on shares acquired in connection with a Permitted
Share Repurchase, Liens on any other shares of "margin stock" as such term is
defined in Regulation U (12 CFR Part 221) of the Board, and Liens on accounts
receivable transferred in a Permitted Receivables Securitization; provided that
the Borrower, the Parent and any of their Subsidiaries may enter into such an
agreement in connection with, and that applies only to, property acquired with
the proceeds of purchase money Indebtedness permitted hereunder subject to any
Lien permitted by this Agreement and not released after the date hereof, when
such prohibition or limitation is by its terms effective only against the assets
subject to such Lien.
10.17 Compensation; Reimbursement of Expenses.
(a) Pay any salary, fees, and other direct and indirect
remuneration and compensation to any of its directors and executive
officers in an amount in excess of
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those amounts paid to directors and executive officers of comparable
companies engaged in the same general type of business and in similar
financial condition;
(b) Reimburse any stockholder, officer, director, employee or
agent of the Borrower, the Parent, or any Subsidiary thereof for any
expenses incurred by such Person other than reasonable expenses
incurred for or on behalf of the Borrower, the Parent or any Subsidiary
of either in the ordinary course of business.
10.18 Change in Accountants. Change its independent public
accountants.
10.19 Modification or Prepayment of Indebtedness and Certain
Documentation.
(a) Amend, modify or change in any manner any term or
condition of any Indebtedness described in Section 10.4(a), (d), (f),
(g), (h), (i) or (j), other than as permitted by Section 10.4(j), or
any Subordination Agreement, the Senior Note Purchase Agreement, any
Senior Note, the Receivables Purchase Agreement or any other document
governing or evidencing a Permitted Receivables Securitization, or any
document governing or evidencing Synthetic Lease Obligations, so that
the terms and conditions thereof are any less favorable to the Agent
and the Lenders than the terms thereof as of the Closing Date or as
thereafter initially entered into in compliance with the terms of this
Agreement, or amend or modify any Licensing Agreement or Servicing
Agreement in any respect such as to diminish any security interest
granted to the Collateral Agent therein or in any other Collateral
under any of the Security Documents or deprive the Borrower or any
Guarantor or other Subsidiary of the Parent as a party to any such
Licensing Agreement or Servicing Agreement of any license or right
granted thereunder necessary or conducive to the operation of its
trucking business;
(b) Terminate, or cause, offer or permit to occur the
termination of, any of the provisions of the Permitted Receivables
Securitization, any of the Licensing Agreements or any of the Servicing
Agreements;
(c) At any time that the "Fixed Charges Coverage Ratio" as
defined in the Senior Note Purchase Agreement (as in effect on the date
hereof) is less than or equal to 1.50 to 1.00, repay any Senior Notes
or terminate the Senior Note Purchase Agreement without the written
consent of the Required Lenders.
10.20 Partnerships. Become or be a general partner in any general or
limited partnership except any partnership holding, solely, all or a portion of
the equity interest in Transplace.com.
10.21 Restrictive Agreements. Enter into or cause, suffer or permit
to exist any other agreement or arrangement with any other Person which
prohibits, limits or restricts the ability of (i) any Subsidiary of the Parent
or of the Borrower to make any payments, directly or indirectly, to the Parent
or the Borrower, respectively, by way of dividends, advances, repayments of
loans or advances, or other returns on investments, or (ii) any such Subsidiary
to make any payment, directly or indirectly, of amounts owing under the
Intercompany Notes, to the Borrower or the
84
Parent, or (iii) the Parent to make any equity investment in, capital
contribution to or loan or advance to the Borrower or to any other Subsidiary of
the Parent.
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ARTICLE XI
Events of Default and Acceleration
11.1 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of Article II or Article III or Article IV,
at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or
other Obligation or of any fees or other amounts payable to any of the
Lenders or the Agent on the date on which the same shall be due and
payable; or
(c) if default shall be made in the performance or observance
of any covenant set forth in Section 9.7, 9.11, 9.12, 9.19, 9.20 or
Article X;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for thirty (30) or more days after the earlier of receipt of
notice of such default by the Authorized Representative from the Agent
or an officer of the Borrower or of the Parent becomes aware of such
default, or if a default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision
contained in any of the other Loan Documents (beyond any applicable
grace period, if any, contained therein) or in any instrument or
document evidencing or creating any obligation, guaranty, or Lien in
favor of the Agent or any of the Lenders or delivered to the Agent or
any of the Lenders in connection with or pursuant to this Agreement or
any of the Obligations, or if any Loan Document ceases to be in full
force and effect (other than as expressly provided for hereunder or
thereunder or with the express written consent of the Agent), or if
without the written consent of the Lenders, this Agreement or any other
Loan Document shall be disaffirmed or shall terminate, be terminable or
be terminated or become void or unenforceable for any reason whatsoever
(other than as expressly provided for hereunder or thereunder or with
the express written consent of the Agent); or
(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with
respect to (A) the Senior Notes, (B) the Permitted Receivables
Securitization, (C) the Synthetic Lease Obligations, or (D) any other
Indebtedness (other than the Loans and other Obligations) of the
Borrower, the Parent or any Subsidiary of either in an amount or Rate
Hedge Value, as applicable, not
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less than $2,500,000 in the aggregate outstanding, or (ii) a default,
which is not waived, in the performance, observance or fulfillment of
any term or covenant contained in (A) the Senior Note Purchase
Agreement, (B) the Receivables Purchase Agreement, (C) any document
governing or evidencing the Synthetic Lease Obligations, or (D) any
agreement or instrument under or pursuant to which any such
Indebtedness or Rate Hedging Obligation may have been issued, created,
assumed, guaranteed or secured by the Borrower, the Parent or any
Subsidiary of the Parent, or (iii) with respect to any such Rate
Hedging Obligation, any termination event shall occur as to which the
Borrower, the Parent or any Subsidiary of the Parent is the "affected
party" under the agreement or instrument governing such Rate Hedging
Obligation, or (iv) any other event of default as specified in any
agreement or instrument under or pursuant to which any such
Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower, the Parent or any Subsidiary of either, and
such default or event of default or termination shall continue for more
than the period of grace, if any, therein specified, or such default or
event of default or termination event shall permit the holder of or
counterparty to any such Indebtedness (or any agent or trustee acting
on behalf of one or more holders or counterparties) to accelerate the
maturity of any such Indebtedness or terminate any agreement or
instrument governing any such Rate Hedging Obligation; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower, the Parent or any other Credit Party pursuant
to or in connection with any Loan Document, or otherwise, shall be
false or misleading in any material respect when given; or
(g) if the Borrower, the Parent or any Subsidiary of either or
other Credit Party shall be unable to pay its debts generally as they
become due; file a petition to take advantage of any insolvency
statute; make an assignment for the benefit of its creditors; commence
a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its
property; file a petition or answer seeking liquidation, reorganization
or arrangement or similar relief under the federal bankruptcy laws or
any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or the Parent or any
Subsidiary of either or other Credit Party or of the whole or any
substantial part of its properties and such order, judgment or decree
continues unstayed and in effect for a period of sixty (60) days, or
approve a petition filed against the Borrower or the Parent or any
Subsidiary of either or other Credit Party seeking liquidation,
reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state, which petition is not dismissed within
sixty (60) days; or if, under the provisions of any other law for the
relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of the Borrower or the Parent or any
Subsidiary of either or other Credit Party or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against the Borrower
or the
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Parent or any Subsidiary of either or other Credit Party any proceeding
or petition seeking reorganization, arrangement or similar relief under
the federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state which proceeding or petition
remains undismissed for a period of sixty (60) days; or if the Borrower
or the Parent or any Subsidiary of either or other Credit Party takes
any action to indicate its consent to or approval of any such
proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount
not covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $2,000,000 is rendered against the Borrower
or the Parent or any Subsidiary of either, or (ii) there is any
attachment, injunction or execution against any of the Borrower's or
Parent's or either of their Subsidiaries' properties for any amount in
excess of $2,000,000 in the aggregate; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged,
unbonded or undismissed for a period of thirty (30) days; or
(j) if the Borrower, the Parent or any Subsidiary of either
shall, other than in the ordinary course of business (as determined by
past practices), suspend all or any part of its operations material to
the conduct of the business of the Borrower, the Parent or such
Subsidiary for a period of more than 60 days; or
(k) if there shall occur and not be waived an Event of Default
as defined in any of the other Loan Documents;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Agent may, and at the direction of the Required
Lenders shall, declare any obligation of the Lenders and the
Issuing Bank to make further Revolving Loans and Swing Line
Loans or to issue additional Letters of Credit terminated,
whereupon the obligation of each Lender to make further
Revolving Loans, of Bank of America to make further Swing Line
Loans, and of the Issuing Bank to issue additional Letters of
Credit, hereunder shall terminate immediately, and (ii) the
Agent shall at the direction of the Required Lenders, at their
option, declare by notice to the Borrower any or all of the
Obligations to be immediately due and payable, and the same,
including all interest accrued thereon and all other
obligations of the Borrower to the Agent and the Lenders,
shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything
contained herein or in any instrument evidencing the
Obligations to the contrary notwithstanding; provided,
however, that notwithstanding the above, if there shall occur
an Event of Default under clause (g) or (h) above, then the
obligation of the Lenders to make Revolving Loans, of Bank of
America to make Swing Line Loans, and of the Issuing Bank to
issue Letters of Credit hereunder shall automatically
terminate and any and all of the Obligations shall be
immediately due and payable without
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the necessity of any action by the Agent or the Required
Lenders or notice to the Agent or the Lenders; and
(B) the Agent and each of the Lenders shall have all
of the rights and remedies available under the Loan Documents
or under any applicable law.
11.2 Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, subject to the provisions of Article XII, the
Agent may, and at the direction of the Required Lenders shall, proceed to
protect and enforce their rights and remedies contained herein or in any other
Loan Document, or as may be otherwise available at law or in equity.
11.3 Cumulative Rights. No right or remedy herein conferred upon
the Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right or
remedy shall be cumulative and shall be in addition to every other such right or
remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute, or otherwise.
11.4 No Waiver. No course of dealing between the Borrower or the
Parent and any Lender or the Agent or any failure or delay on the part of any
Lender or the Agent in exercising any rights or remedies under any Loan Document
or otherwise available to it shall operate as a waiver of any rights or remedies
and no single or partial exercise of any rights or remedies shall operate as a
waiver or preclude the exercise of any other rights or remedies hereunder or of
the same right or remedy on a future occasion.
11.5 Allocation of Proceeds. If an Event of Default has occurred
and not been waived, and the maturity of the Notes has been accelerated pursuant
to Article XI hereof, all payments received by the Agent hereunder, including
amounts allocated and made available by the Collateral Agent to the Agent in
respect of the obligations and liabilities of the Credit Parties under the Loan
Documents, in respect of any principal of or interest on the Obligations or any
other amounts payable by the Borrower hereunder, shall be applied by the Agent
in the following order:
(a) the reasonable expenses incurred in connection with
retaking, holding, preserving, processing, maintaining or preparing for
sale, lease or other disposition of, any Collateral, including
reasonable attorney's fees and legal expenses pertaining thereto
(b) amounts due to the Lenders and the Issuing Bank pursuant
to Sections 4.6(a), 4.6(b), 4.6(c), and 13.5;
(c) amounts due to the Agent pursuant to Section 4.6(d);
(d) payments of interest on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to Bank of America);
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(e) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to Bank of America);
(f) amounts due to the Issuing Bank, the Agent, the Lenders
and others pursuant to Sections 3.2(h), 9.15 and 13.9;
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the
recipients, including amounts due to any of the Lenders or their
affiliates in respect of Obligations consisting of liabilities under
any Swap Agreement with any of the Lenders or their affiliates on a pro
rata basis according to the amounts owed; and
(h) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
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ARTICLE XII
The Agent
12.1 Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 12.5 and
the first sentence of Section 12.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and the Loan Documents and shall
not be a trustee or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made
in or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them
under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or
any other document referred to or provided for therein or for any
failure by any Credit Party or any other Person to perform any of its
obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any
condition or to inspect the property (including the books and records)
of any Credit Party or any of its Subsidiaries or affiliates; and
(d) shall not be responsible for any action taken or omitted
to be taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The term "Agent" as used in the Loan
Documents shall not connote any fiduciary or other implied obligation under
applicable law, and is used solely as a matter of market custom to connote an
administrative relationship between independent contracting parties.
12.2 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any certification, notice, instrument,
writing, or other communication (including, without limitation, any thereof by
telephone or telefacsimile) believed by it to be genuine and correct and to have
been signed, sent or made by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel for any Credit
Party), independent accountants, and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until the
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Agent receives and accepts an Assignment and Acceptance executed in accordance
with Section 13.1 hereof. As to any action not expressly mandated by this
Agreement, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required to take any
action unless it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking any such action.
12.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 12.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
12.4 Rights as Lender. With respect to its Revolving Credit
Commitment and the Loans made by it and Letters of Credit issued by it, Bank of
America (and any successor acting as Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. Bank of America (and any successor
acting as Agent) and its affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, make investments in, provide
services to, and generally engage in any kind of lending, trust, or other
business with any Credit Party or any of its Subsidiaries or affiliates as if it
were not acting as Agent, and Bank of America (and any successor acting as
Agent) and its affiliates may accept fees and other consideration from any
Credit Party or any of its Subsidiaries or affiliates for services in connection
with this Agreement or otherwise without having to account for the same to the
Lenders.
12.5 Indemnification. The Lenders agree to indemnify the Agent and
each of its affiliates, and their respective officers, employees and agents
(each, an "Agent Indemnitee") (to the extent not reimbursed under Section 13.9
hereof, but without limiting the obligations of the Borrower under such Section)
ratably in accordance with their respective Revolving Credit Commitments, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including reasonable attorneys' fees), or
disbursements of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against any Agent Indemnitees (including by any Lender) in any
way relating to or arising out of any Loan Document or the transactions
contemplated thereby or any action taken or omitted by any Agent Indemnitee
under any Loan Document; provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified; provided further, however, that no
action or omission taken or occurring at the
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direction of the Required Lenders shall constitute either gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any costs or
expenses payable by the Borrower under Section 13.5, to the extent that the
Agent is not promptly reimbursed for such costs and expenses by the Borrower.
The agreements contained in this Section 12.5 shall survive payment in full of
the Loans and all other amounts payable under this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Loan Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or any of its Subsidiaries or
affiliates that may come into the possession of the Agent or any of its
affiliates.
12.7 Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent which shall be a
commercial bank organized under the laws of the United States of America having
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor, such successor shall
thereupon succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article XII shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
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ARTICLE XIII
Miscellaneous
13.1 Assignments and Participations. (a) Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Revolving Note, and its Revolving Credit Commitment); provided,
however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this Agreement,
any such partial assignment shall be in an amount at least equal to $5,000,000
or an integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and its Revolving Note (except that any assignment by Bank of America
shall not include its rights, benefits or duties as the Issuing Bank or as the
provider of Swing Line Loans); and
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the form of
Exhibit B hereto, together with any Revolving Note subject to such assignment
and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Revolving Notes are issued to the assignor and the assignee. If the assignee is
not incorporated under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Agent certification as to
exemption from deduction or withholding of Taxes in accordance with Section 6.6.
(b) The Agent shall maintain at its address referred to in Section
13.2 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Revolving Credit Commitment of, and principal amount of the Revolving Loans
owing to, each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
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(c) Upon its receipt of an Assignment and Acceptance executed by
the parties thereto, together with any Revolving Note subject to such assignment
and payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit B
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment or its
Loans); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in Article VI and the right of set-off contained in Section
13.3, and (iv) the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Revolving Loans and its Revolving
Note and to approve any amendment, modification, or waiver of any provision of
this Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such
Revolving Loans or Revolving Note, extending any scheduled principal payment
date or date fixed for the payment of interest on such Revolving Loans or
Revolving Note, or extending its Revolving Credit Commitment).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any portion of
its Revolving Loans and its Revolving Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning the Borrower
or any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants).
(g) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Agent, the
Lenders, or any of them. The Borrower may not assign or otherwise transfer to
any other Person any right, power, benefit, or privilege (or any interest
therein) conferred hereunder or under any of the other Loan Documents, or
delegate (by assumption or otherwise) to any other Person any duty, obligation,
or liability arising hereunder or under any of the other Loan Documents, and any
such purported assignment, delegation or other transfer shall be void.
13.2 Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of
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transmission to such party, in the case of notice by telefacsimile (where the
proper transmission of such notice is either acknowledged by the recipient or
electronically confirmed by the transmitting device), or (iii) on the fifth
Business Day after the day on which mailed to such party, if sent prepaid by
certified or registered mail, return receipt requested, in each case delivered,
transmitted or mailed, as the case may be, to the address or telefacsimile
number, as appropriate, set forth below or such other address or number as such
party shall specify by notice hereunder:
(a) if to the Borrower or to the Parent:
Covenant Asset Management, Inc.
400 Birmingham Highway
Chattanooga, Tennessee 37419
Attn: Joey B. Hogan
Telephone: (423) 821-1212
Telefacsimile: (423) 821-5442
(b) if to the Agent:
Bank of America, N.A.
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-____
Telefacsimile: (704) 386-9923
with a copy to:
Bank of America, N.A.
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
(d) if to any other Credit Party, at the address set
forth on the signature page of the Facility Guaranty
or Security Instrument executed by such Credit Party,
as the case may be.
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13.3 Right of Set-off; Adjustments. (a) Upon the occurrence and
during the continuance of any Event of Default, each Lender (and each of its
affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its affiliates)
to or for the credit or the account of the Parent or the Borrower (other than
any such deposits being held in trust for the benefit of any non-Credit Party
third parties) against any and all of the obligations of the Parent or the
Borrower now or hereafter existing under this Agreement and the Note held by
such Lender, irrespective of whether such Lender shall have made any demand
under this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 13.3 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
(b) If any Lender (a "benefited Lender") shall at any time receive
any payment of all or part of the Loans owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Revolving Loans owing to it, or interest thereon, such benefited Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Revolving Loans owing to it, or shall
provide such other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefited Lender to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefited Lender or is
repaid in whole or in part by such benefited Lender in good faith settlement of
a pending or threatened avoidance claim, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery or
settlement payment, but without interest. The Borrower agrees that any Lender so
purchasing a participation from a Lender pursuant to this Section 13.3 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Person were the direct creditor of the Borrower in the amount of such
participation.
13.4 Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
Revolving Credit Commitment hereunder or the Borrower has continuing obligations
hereunder unless otherwise provided herein.
13.5 Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Agreement, the other Loan Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for the Agent (with limitations as agreed by the Agent) with respect
thereto
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and with respect to advising the Agent as to its rights and responsibilities
under the Loan Documents. The Borrower further agrees to pay on demand all costs
and expenses of the Agent and the Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses and the cost of internal
counsel), in connection with the enforcement (whether through negotiations,
legal proceedings, or otherwise) of the Loan Documents and the other documents
to be delivered hereunder, including any costs and expenses paid by the Agent or
the Lenders to the Collateral Agent pursuant to Section 5.6 of the Intercreditor
Agreement.
13.6 Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower or other applicable Credit
Party party to such Loan Document and either the Required Lenders or (as to Loan
Documents other than the Credit Agreement) the Agent on behalf of the Required
Lenders (and, if Article XII or the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or waiver shall, unless
signed by each Lender directly affected thereby, (i) increase the Revolving
Credit Commitments or the Letter of Credit Commitments of such Lenders (other
than increases in Revolving Credit Commitments effected pursuant to Section
2.1(f)), (ii) reduce the principal of or rate of interest on any Loan or any
fees or other amounts payable hereunder, (iii) postpone any date fixed for the
payment of any scheduled installment of principal of or interest on any Loan or
any fees or other amounts payable hereunder or for termination of any Revolving
Credit Commitment, (iv) change the percentage of the Total Revolving Credit
Commitment or of the unpaid principal amount of the Notes which shall be
required for the Lenders or any of them to take any action under this Section
13.6 or any other provision of this Agreement, or change or amend this Section
13.6 or the definition of Required Lenders, or (v) release any Guarantor or all
or substantially all of the Collateral except as expressly contemplated in the
Loan Documents; and provided, further, that no such amendment or waiver that
affects the rights, privileges or obligations of (A) Bank of America as provider
of Swing Line Loans, shall be effective unless signed in writing by Bank of
America, or (B) of the Issuing Bank as issuer of Letters of Credit shall be
effective unless signed in writing by the Issuing Bank, or (C) Bank of America
as Agent shall be effective unless signed in writing by Bank of America.
No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
13.7 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
fully-executed counterpart. Signatures on communications and other documents may
be transmitted by facsimile only with the consent of the Agent in its sole and
absolute discretion in each instance. The effectiveness of any such signatures
accepted by the Agent shall, subject to applicable law, have the same force and
effect as manual signatures and shall be binding on all parties. The Agent may
also require that any such signature be confirmed by a manually-signed hard copy
thereof. Each party hereto hereby adopts as an original executed
98
signature page each signature page hereafter furnished by such party to the
Agent (or an agent of the Agent) bearing (with the consent of the Agent) a
facsimile signature by or on behalf of such party. Nothing contained in this
Section shall limit the provisions of Section 12.2.
13.8 Termination. This Agreement shall terminate on the Facility
Termination Date, except that (x) those provisions which by the express terms
thereof continue in effect notwithstanding the Facility Termination Date, and
(y) obligations in the nature of continuing indemnities or expense reimbursement
obligations not yet due and payable, shall continue in effect. Notwithstanding
the foregoing, if after receipt of any payment of all or any part of the
Obligations, the Agent, the Issuing Bank or any Lender (including the Swing Line
Lender) is for any reason compelled to surrender such payment to any Person
because such payment is determined to be void or voidable as a preference,
impermissible setoff, a diversion of trust funds or for any other reason or
elects to repay any such amount in good faith settlement of a pending or
threatened avoidance claim, (i) this Agreement (including the provisions
pertaining to Participations in Letters of Credit, Reimbursement Obligations,
and Swing Line Loans) shall continue in full force (or be reinstated, as the
case may be) and the Borrower shall be liable to, and shall indemnify and hold
the Agent, the Issuing Bank or such Lender harmless for, the amount of such
payment surrendered until the Agent, the Issuing Bank or such Lender shall have
been finally and irrevocably paid in full, and (ii) in the event any portion of
any amount so required to be surrendered by the Agent or the Issuing Bank or the
Swing Line Lender shall have been distributed to the Lenders, the Lenders shall
promptly repay such amounts to the Agent or the Issuing Bank or the Swing Line
Lender on demand therefor. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent, the Issuing Bank or the Lenders in reliance upon such payment, and
any such contrary action so taken shall be without prejudice to the Agent's, the
Issuing Bank's or the Lenders' rights under this Agreement and shall be deemed
to have been conditioned upon such payment having become final and irrevocable.
13.9 Indemnification; Limitation of Liability. (a) Each of the
Borrower and the Parent agrees to indemnify and hold harmless the Agent, the
Collateral Agent and each Lender and each of their affiliates and their
respective officers, directors, employees, agents, and advisors (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation, or proceeding or preparation of defense in connection therewith) the
Loan Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted primarily from
such Indemnified Party's gross negligence or willful misconduct. In the case of
an investigation, litigation or other proceeding to which the indemnity in this
Section 13.9 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, the Parent
or either of their respective directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated. Each of the Borrower and the Parent agrees that no Indemnified
Party shall have any liability (whether direct or
99
indirect, in contract or tort or otherwise) to it, any of its Subsidiaries, any
Guarantor, or any security holders or creditors thereof arising out of, related
to or in connection with the transactions contemplated herein, except to the
extent that such liability is found in a final non-appealable judgment by a
court of competent jurisdiction to have directly resulted from such Indemnified
Party's gross negligence or willful misconduct. Each of the Borrower and the
Parent agrees not to assert any claim against the Agent, the Collateral Agent,
any Lender, any of their affiliates, or any of their respective directors,
officers, employees, attorneys, agents, and advisers, on any theory of
liability, for special, indirect, consequential, or punitive damages arising out
of or otherwise relating to the Loan Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the Loans.
(b) The agreements and obligations of the Borrower and the Parent
contained in this Section 13.9 shall continue in effect notwithstanding the
Facility Termination Date.
13.10 Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
13.11 Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
13.12 Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
13.13 Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in
100
excess of the Highest Lawful Rate, then any such excess shall be cancelled
automatically and, if previously paid, shall at such Lender's option be applied
to the outstanding amount of the Loans made hereunder or be refunded to the
Borrower. As used in this paragraph, the term "Highest Lawful Rate" means the
maximum lawful interest rate, if any, that at any time or from time to time may
be contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
13.14 Governing Law; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TENNESSEE
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
HAMILTON, STATE OF TENNESSEE, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER
HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER
PROVIDED IN SECTION 13.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED
FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF TENNESSEE.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE
101
BORROWER OR ANY OF THE BORROWER'S PROPERTY OR ASSETS MAY BE FOUND OR
LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY
SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS
WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.
(f) THE BORROWER HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY
HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO
THE TERMS HEREOF IS AN INCONVENIENT FORUM.
[Signatures on following pages]
102
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
COVENANT ASSET MANAGEMENT, INC.
WITNESS:
Not required. By: /s/ Joey B. Hogan
----------------------------
Name: Joey B. Hogan
Title: Treasurer, Chief Financial Officer
- -----------------------------
COVENANT TRANSPORT, INC.
WITNESS:
Not required. By: /s/ Joey B. Hogan
----------------------------
Name: Joey B. Hogan
Title: Treasurer, Chief Financial Officer
- -----------------------------
BANK OF AMERICA, N.A.,
as Agent for the Lenders
By: /s/ Susan J. Ryan
Name: Susan J. Ryan
Title: Vice President
Signature Page 1 of 6
BANK OF AMERICA, N.A.
By: /s/ Sybil H. Weldon
Name: Sybil H. Weldon
Title: Senior Vice President
Lending Office for Base Rate Loans:
Bank of America, N.A.
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
Bank of America, N.A.
ABA# 053000196
Account No.: 136 621 225 0600
Reference: Covenant Transport
Attention: Agency Services
Lending Office for Eurodollar Rate Loans:
Bank of America, N.A.
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
Bank of America, N.A.
ABA# 053000196
Account No.: 136 621 225 0600
Reference: Covenant Transport
Attention: Agency Services
Signature Page 2 of 6
FLEET NATIONAL BANK
By: /s/ Robert L.Wallace
Name: Robert L. Wallace
Title: Managing Director
Lending Office for Base Rate Loans:
Fleet National Bank
100 Federal Street, MADE 10008D
Boston, Massachusetts 02110
Attention: Richard T. Bridge, Jr.
Telephone: 617-434-4082
Telefacsimile: 617-434-4366
Wire Transfer Instructions:
Fleet National Bank
ABA# 011000138
Account No.: 151035166156
Reference: Covenant Transport
Attention: ________________
Lending Office for Eurodollar Rate Loans:
Fleet National Bank
100 Federal Street, MADE 10008D
Boston, Massachusetts 02110
Attention: Richard T. Bridge, Jr.
Telephone: 617-434-4082
Telefacsimile: 617-434-4366
Wire Transfer Instructions:
Fleet National Bank
ABA# 011000138
Account No.: 151035166156
Reference: Covenant Transport
Attention: ________________
Signature Page 3 of 6
SUNTRUST BANK
By: /s/ Renee D. Drake
Name: Renee D. Drake
Title: Vice President
Lending Office for Base Rate Loans:
SunTrust Bank
201 4th Avenue, 5th Floor
Nashville, Tennessee 37230
Attention: Leigh Ann Gregory
Telephone: 615-748-5461
Telefacsimile: 615-748-4611
Wire Transfer Instructions:
SunTrust Bank
ABA# 064-000-046
Account No.: 9191004800
Reference: Covenant Transport
Attention: Participation Desk
Lending Office for Eurodollar Rate Loans:
SunTrust Bank
201 4th Avenue, 5th Floor
Nashville, Tennessee 37230
Attention: Leigh Ann Gregory
Telephone: 615-748-5461
Telefacsimile: 615-748-4611
Wire Transfer Instructions:
SunTrust Bank
ABA# 064-000-046
Account No.: 9191004800
Reference: Covenant Transport
Attention: Participation Desk
Signature Page 4 of 6
BANK ONE, N.A.
By: /s/ Kenneth J. Kramer
Name: Kenneth J. Kramer
Title: Managing Director
Lending Office for Base Rate Loans:
Bank One, N.A.
1 Bank One Plaza, IL1-0634
Chicago, Illinois 60670
Attention: John Beirne
Telephone: 312-732-3659
Telefacsimile: 312-732-4840
Wire Transfer Instructions:
Bank One, N.A.
ABA# 071-000-013
Account No.: 481152860000
Reference: Covenant Transport
Attention: _________________
Lending Office for Eurodollar Rate Loans:
Bank One, N.A.
1 Bank One Plaza, IL1-0634
Chicago, Illinois 60670
Attention: John Beirne
Telephone: 312-732-3659
Telefacsimile: 312-732-4840
Wire Transfer Instructions:
Bank One, N.A.
ABA# 071-000-013
Account No.: 481152860000
Reference: Covenant Transport
Attention: _________________
Signature Page 5 of 6
FIRST UNION NATIONAL BANK
By: /s/ Todd Kidd
Name: Todd Kidd
Title: Vice President
Lending Office for Base Rate Loans:
First Union National Bank
11th Floor Widener Building
1 South Pennsylvania Square, PA4827
Philadelphia, Pennsylvania 19107
Attention: Peter Hill
Telephone: 215-973-7050
Telefacsimile: 215-973-6054
Wire Transfer Instructions:
First Union National Bank
ABA# 031201467
Account No.: 145316-5103160
Reference: Covenant
Attention: Peter Hill
Lending Office for Eurodollar Rate Loans:
First Union National Bank
11th Floor Widener Building
1 South Pennsylvania Square, PA4827
Philadelphia, Pennsylvania 19107
Attention: Peter Hill
Telephone: 215-973-7050
Telefacsimile: 215-973-6054
Wire Transfer Instructions:
First Union National Bank
ABA# 031201467
Account No.: 145316-5103160
Reference: Covenant
Attention: Peter Hill
Signature Page 6 of 6
EXHIBIT A
Applicable Commitment Percentages
Applicable
Revolving Credit Commitment
Lender Commitment Percentage
Bank of America, N.A. $30,000,000 25.0000000 %
SunTrust Bank $25,000,000 20.8333333 %
First Union National Bank $25,000,000 20.8333333 %
Fleet National Bank $25,000,000 20.8333333 %
Bank One, N.A. $15,000,000 12.5000000 %
A-1
EXHIBIT B
Form of Assignment and Acceptance
Reference is made to the Credit Agreement dated as of December 13, 2000
(the "Credit Agreement") among Covenant Asset Management, Inc., a Nevada
corporation (the "Borrower"), Covenant Transport, Inc., a Nevada corporation,
the Lenders (as defined in the Credit Agreement) and Bank of America, N.A., as
agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are
used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, WITHOUT
RECOURSE and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents as of the date hereof equal to the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Loan Documents. After
giving effect to such sale and assignment, the Assignee's Revolving Credit
Commitment and the amount of the Revolving Loans owing to the Assignee will be
as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any Credit
Party or the performance or observance by any Credit Party of any of its
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Revolving Note held by the
Assignor and requests that the Agent exchange such Revolving Note for new
Revolving Notes payable to the order of the Assignee in an amount equal to the
Revolving Credit Commitment assumed by the Assignee pursuant hereto and to the
Assignor in an amount equal to the Revolving Credit Commitment retained by the
Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 9.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are
reasonably
B-1
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (vi) attaches any U.S. Internal
Revenue Service or other forms required under Section 6.6.
4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Revolving Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Revolving Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Tennessee.
8. This Assignment and Acceptance may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
B-2
Schedule 1
Percentage interest assigned: ________%
Assignee's Revolving Credit Commitment: $_______
Aggregate outstanding principal amount
of Revolving Loans assigned: $_______
Principal amount of Revolving Note
payable to Assignee: $_______
Principal amount of Revolving Note
payable to Assignor: $_______
Effective Date (if other than date
of acceptance by Agent): *_______, ____
[NAME OF ASSIGNOR], as Assignor
By:
Title:
Dated: ____________________, 20__
[NAME OF ASSIGNEE], as Assignee
By:
Title:
Domestic Lending Office:
Eurodollar Lending Office:
______________________________
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Agent.
B-3
Accepted [and Approved] **
this ___ day of ___________, 20 _
BANK OF AMERICA, N.A., as Agent
By:
-------------------------------------
Title:
[Approved this ____ day
of ____________, ____
[NAME OF BORROWER]
By: ]**
-------------------------------------
Title:
** Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee".
B-4
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized Representative
Reference is hereby made to the Credit Agreement dated as of December
13, 2000 (the "Agreement") among Covenant Asset Management, Inc., a Nevada
corporation (the "Borrower"), Covenant Transport, Inc., a Nevada corporation
(the "Parent"), the Lenders (as defined in the Agreement), and Bank of America,
N.A., as Agent for the Lenders ("Agent"). Capitalized terms used but not defined
herein shall have the respective meanings therefor set forth in the Agreement.
The [Borrower][Parent] hereby nominates, constitutes and appoints each
individual named below as an Authorized Representative under the Loan Documents,
and hereby represents and warrants that (i) set forth opposite each such
individual's name is a true and correct statement of such individual's office
(to which such individual has been duly elected or appointed), a genuine
specimen signature of such individual and an address for the giving of notice,
and (ii) each such individual has been duly authorized by the [Borrower][Parent]
to act as Authorized Representative under the Loan Documents:
Name and Address Office Specimen Signature
__________________________ _________________________ _______________________
__________________________
__________________________
__________________________ _________________________ _______________________
__________________________
__________________________
[Borrower][Parent] hereby revokes (effective upon receipt hereof by the Agent)
the prior appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, ____.
[COVENANT ASSET MANAGEMENT, INC.]
[COVENANT TRANSPORT, INC.]
By:________________________________________
Name:______________________________________
Title:_____________________________________
C-1
EXHIBIT D-1
Form of Borrowing Notice - Revolving Loans
To: Bank of America, N.A.,
as Agent
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704)386-9923
Reference is hereby made to the Credit Agreement dated as of December
13, 2000 (the "Agreement") among Covenant Asset Management, Inc. (the
"Borrower"), Covenant Transport, Inc., a Nevada corporation, the Lenders (as
defined in the Agreement), and Bank of America, N.A., as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent that Revolving Loans of the type and amount set forth below be made
on the date indicated:
Type of Revolving Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
--------- ------ ------ ------------
Base Rate Loan:
Option 1 ______________ _______________ ________________
Option 2 ______________ _______________ ________________
Eurodollar Rate Loan ______________ _______________ ________________
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $1,000,000 or if greater an integral multiple of $1,000,000; unless
a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan.
The Borrower hereby requests that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrower as follows: [insert
transmittal instructions] .
The undersigned hereby certifies that:
1. No Default or Event of Default has occurred and is continuing either
now or after giving effect to the borrowing described herein; and
D-1-1
2. All the representations and warranties set forth in Article VIII of
the Agreement and in the Loan Documents (other than those expressly stated to
refer to a particular date) are true and correct as of the date hereof except
that the reference to the financial statements in Section 8.6(a) of the
Agreement shall be deemed (solely for the purpose of the representation and
warranty contained in such Section 8.6(a) but not for the purpose of any cross
reference to such Section 8.6(a) or to the financial statements described
therein contained in any other provision of Section 8.6 or elsewhere in Article
VIII) to refer to those financial statements most recently delivered to you
pursuant to Section 9.1 of the Agreement (it being understood that any financial
statements delivered pursuant to Section 9.1(b) have not been certified by
independent public accountants).
3. All conditions contained in the Agreement to the making of any Loan
requested hereby have been met or satisfied in full .
COVENANT ASSET MANAGEMENT, INC.
BY:_______________________________________
Authorized Representative
DATE:_____________________________________
D-1-2
EXHIBIT D-2
Form of Borrowing Notice--Swing Line Loans
To: Bank of America, N.A.,
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704)386-9923
Reference is hereby made to the Credit Agreement dated as of December
13, 2000 (the "Agreement") among Covenant Asset Management, Inc. (the
"Borrower"), Covenant Transport, Inc., a Nevada corporation, the Lenders (as
defined in the Agreement), and Bank of America, N.A., as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to Bank of America that a Swing Line Loan of the amount set forth below be made
on the date indicated:
Amount(1) Date of Loan
__________________ __________, ____
- -----------------------
(1) Must be $100,000 or if greater an integral multiple of $100,000, unless
a Base Rate Refunding Loan.
The Borrower hereby requests that the proceeds of Swing Line Loans
described in this Borrowing Notice be made available to the Borrower as follows:
[insert transmittal instructions] .
The undersigned hereby certifies that:
1. No Default or Event of Default has occurred and is continuing either
now or after giving effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article VIII of
the Agreement and in the Loan Documents (other than those expressly stated to
refer to a particular date) are true and correct as of the date hereof except
that the reference to the financial statements in Section 8.6(a) of the
Agreement shall be deemed (solely for the purpose of the representation and
warranty contained in such Section 8.6(a) but not for the purpose of any cross
reference to such Section 8.6(a) or to the financial statements described
therein contained in any other provision of Section 8.6 or elsewhere in Article
VIII) to refer to those financial statements most recently delivered to you
pursuant to Section 9.1 of the Agreement (it being understood that any financial
D-2-1
statements delivered pursuant to Section 9.1(b) have not been certified by
independent public accountants).
3. All conditions contained in the Agreement to the making of any Loan
requested hereby have been met or satisfied in full.
COVENANT ASSET MANAGEMENT, INC.
BY:_______________________________________
Authorized Representative
DATE:_____________________________________
D-2-2
EXHIBIT E
Form of Interest Rate Selection Notice
To: Bank of America, N.A., as Agent
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of December
13, 2000 (the "Agreement") among Covenant Asset Management, Inc. (the
"Borrower"), Covenant Transport, Inc., a Nevada corporation, the Lenders (as
defined in the Agreement), and Bank of America, N.A., as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Agent of the following selection of a type of Loan and Interest Period:
Type of Revolving Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
--------- ------ ------ ------------
Base Rate Loan:
Option 1 ______________ _______________ ________________
Option 2 ______________ _______________ ________________
Eurodollar Rate Loan ______________ _______________ ________________
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $1,000,000 or if greater an integral multiple of $1,000,000, unless
a Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan.
COVENANT ASSET MANAGEMENT, INC.
BY:_______________________________________
Authorized Representative
DATE:_____________________________________
E-1
EXHIBIT F-1
Form of Note
Promissory Note
(Revolving Loan)
$___________________ ___________, ___________
December __, 2000
FOR VALUE RECEIVED, COVENANT ASSET MANAGEMENT, INC., a Nevada
corporation having its principal place of business located in Chattanooga,
Tennessee (the "Borrower"), hereby promises to pay to the order of
_______________________________________________ (the "Lender"), in its
individual capacity, at the office of BANK OF AMERICA, N.A., as agent for the
Lenders (the "Agent"), located at 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the Agent
may designate in writing) at the times set forth in the Credit Agreement dated
as of ________________, _____ among the Borrower, Covenant Transport, Inc., a
Nevada corporation, the financial institutions party thereto (collectively, the
"Lenders") and the Agent (the "Agreement" --all capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Agreement),
in lawful money of the United States of America, in immediately available funds,
the principal amount of ___________ DOLLARS ($__________) or, if less than such
principal amount, the aggregate unpaid principal amount of all Revolving Loans
made by the Lender to the Borrower pursuant to the Agreement on the Revolving
Credit Termination Date or such earlier date as may be required pursuant to the
terms of the Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at the
rates provided in Articles II and IV of the Agreement. All or any portion of the
principal amount of Loans may be prepaid or required to be prepaid as provided
in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest thereon evidenced by this Revolving Note shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
F-1-1
This Revolving Note is one of the Revolving Notes referred to in the
Agreement and is issued pursuant to and entitled to the benefits and security of
the Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Revolving Loans evidenced hereby were or
are made and are to be repaid. This Note is subject to certain restrictions on
transfer or assignment as provided in the Agreement.
This Revolving Note shall be governed by and construed in accordance
with the laws of the State of Tennessee.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law all defenses based on suretyship or
impairment of collateral and the benefits of all provisions of law for stay or
delay of execution or sale of property or other satisfaction of judgment against
any of them on account of liability hereon until judgment be obtained and
execution issued against any other of them and returned unsatisfied or until it
can be shown that the maker or any other party hereto had no property available
for the satisfaction of the debt evidenced by this instrument, or until any
other proceedings can be had against any of them, also their right, if any, to
require the holder hereof to hold as security for this Revolving Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
COVENANT ASSET MANAGEMENT, INC.
WITNESS:
____________________________ By:__________________________________________
Name:________________________________________
____________________________ Title:_______________________________________
F-1-2
EXHIBIT F-2
Form of Swing Line Note
Promissory Note
(Swing Line Loan)
$5,000,000 ________, ________
_________ __,_____
FOR VALUE RECEIVED, COVENANT ASSET MANAGEMENT, INC., a Nevada
corporation having its principal place of business located in Chattanooga,
Tennessee (the "Borrower"), hereby promises to pay to the order of BANK OF
AMERICA, N.A. (the "Lender"), in its individual capacity, at the office of BANK
OF AMERICA, N.A., as agent for the Lenders (the "Agent"), located at 101 North
Tryon Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other
place or places as the Agent may designate in writing) at the times set forth in
the Credit Agreement dated as of ________________, _____ among the Borrower,
Covenant Transport, Inc., a Nevada corporation, the financial institutions party
thereto (collectively, the "Lenders") and the Agent (the "Agreement" --all
capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Agreement), in lawful money of the United States of
America, in immediately available funds, the principal amount of FIVE MILLION
DOLLARS ($5,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Swing Line Loans made by the Lender to the
Borrower pursuant to the Agreement on the Revolving Credit Termination Date or
such earlier date as may be required pursuant to the terms of the Agreement, and
to pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates provided in Articles
II and IV of the Agreement. All or any portion of the principal amount of Swing
Line Loans may be prepaid or required to be prepaid as provided in the
Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest shall bear interest which shall be payable on demand at the
Default Rate until such principal and interest have been paid in full. Further,
in the event of such acceleration, this Note, and all other indebtedness of the
Borrower to the Lender shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are hereby
waived by the Borrower.
In the event this Swing Line Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360 day year for
the actual number of days in the interest period.
F-2-1
This Swing Line Note is the Swing Line Note referred to in the
Agreement and is issued pursuant to and entitled to the benefits and security of
the Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Swing Line Loans evidenced hereby were
or are made and are to be repaid. This Note is subject to certain restrictions
on transfer or assignment as provided in the Agreement.
This Swing Line Note shall be governed by and construed in accordance
with the laws of the State of Tennessee.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law all defenses based on suretyship or
impairment of collateral and the benefits of all provisions of law for stay or
delay of execution or sale of property or other satisfaction of judgment against
any of them on account of liability hereon until judgment be obtained and
execution issued against any other of them and returned unsatisfied or until it
can be shown that the maker or any other party hereto had no property available
for the satisfaction of the debt evidenced by this instrument, or until any
other proceedings can be had against any of them, also their right, if any, to
require the holder hereof to hold as security for this Swing Line Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
COVENANT ASSET MANAGEMENT, INC.
WITNESS:
____________________________ By:__________________________________________
Name:________________________________________
____________________________ Title:_______________________________________
F-2-2
EXHIBIT G
Form of Opinion of Borrower's Counsel
December _____, 2000
Bank of America, N.A., as Agent
Bank of America Corporate Center
Charlotte, North Carolina 28255-0065
The banks listed on Schedule A hereto
Ladies and Gentlemen:
We have acted as counsel to Covenant Transport, Inc., a Tennessee
corporation ("CTI"), Covenant Asset Management, Inc., a Nevada corporation
("CAM"), Covenant.com, Inc., a Nevada corporation ("Covenant.com"), CIP, Inc., a
Nevada corporation ("CIP"), Tony Smith Trucking, Inc., an Arkansas corporation
("Tony Smith"), Southern Refrigerated Transport, Inc., an Arkansas corporation
("SRT"), Harold Ives Trucking Co., an Arkansas corporation ("HITCO"), Terminal
Truck Broker, Inc., an Arkansas corporation ("TTB"), and Covenant Transport,
Inc., a Nevada corporation (the "Parent"; CTI, CAM, Covenant.com, CIP, Tony
Smith, SRT, HITCO, TTB, and the Parent, together, the "Credit Parties"), in
connection with (i) the Credit Agreement (the "Credit Agreement"), dated as of
December 13, 2000, by and among the Parent, CAM, the banks signatory thereto
(the "Banks"), and Bank of America, N.A., as Agent (the "Agent"), and consented
to by each of the Credit Parties, and (ii) the other documents executed in
connection therewith to which any of the Credit Parties are a party. Terms used
herein and not defined herein have their respective defined meanings as set
forth in the Credit Agreement and in the Accord (as defined below); provided,
however, that in the event of any conflict in the definitions contained in the
Credit Agreement (on the one hand) and the Accord (on the other hand), the
definitions in the Credit Agreement shall control.
This opinion is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage, and other limitations, all as
more particularly described in the Accord, and this letter should be read in
conjunction with the Accord. The law covered by the opinions expressed herein is
limited to the federal law of the United States, the law of the State of Nevada,
and the law of the State of Tennessee. For purposes hereof, and notwithstanding
any contrary choice of law provision therein, we have assumed that the Loan
Documents will be governed by the internal laws of the State of Tennessee.
G-1
Bank of America, N.A., as Agent
December ____, 2000
Page 2
In connection with this representation, we have examined copies of
fully executed counterparts of the following documents (items (a) through (i)
below are collectively referred to herein as (the "Transaction Documents")):
(a) the Credit Agreement;
(b) the Notes;
(c) the Facility Guaranties;
(d) the Pledge Agreements;
(e) the Intercompany Note Pledge Agreements and the Intercompany
Notes with endorsements in blank affixed thereto;
(f) the Certificates (as hereinafter defined), together with stock
powers in blank affixed thereto;
(g) the Security Instruments;
(h) the Intercreditor Agreement; and
(i) the Financing Statements (as hereinafter defined).
We also have considered such matters of law and of fact, including the
examination of originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Articles of Incorporation and Bylaws of each of the
Credit Parties, (ii) resolutions of the respective Boards of Directors of each
of the Credit Parties with respect to the Transaction Documents, and (iii) such
other records and documents of the Credit Parties, certificates of officers or
other representatives of the Credit Parties, certificates of public officials,
and such other documents, certificates, opinions, and records as we have deemed
appropriate for the opinions and confirmations herein set forth.
With your permission in rendering the opinions and confirmations set
forth herein, we have relied upon the following assumptions in addition to the
assumptions set forth in the Accord, without any investigation or inquiry on our
part:
(i) that the only interest, fees, and other charges contracted for
or to be reserved, charged, taken, or paid in connection with
the Obligations are those set forth in the Loan Documents, and
that all such interest, fees, and charges will be reserved,
charged, taken, and applied by the Agent and the Banks solely
as described in the Loan Documents; and
(ii) the accuracy of the records, documents, certificates, and
information provided to us, including the representations and
warranties in the Transaction Documents.
G-2
Bank of America, N.A., as Agent
December ____, 2000
Page 3
Based upon the foregoing, and subject to the other exceptions,
assumptions, and qualifications set forth or incorporated herein by reference,
it is our opinion that:
1. Each of the Credit Parties was duly organized as a corporation, and
is existing under the laws of its respective jurisdiction of incorporation as
set forth above, and each is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which a failure to
be so qualified reasonably would be expected to have a Material Adverse Effect,
except as previously disclosed to the Agent in writing, and each has the power
and authority to own its properties and carry on its business as now being
conducted. For the purposes of the opinion as to corporate existence of each of
the Credit Parties under the laws of its respective jurisdiction of
incorporation, we have relied with your permission on the certificates of
existence attached hereto as Exhibits A-1 through A-9.
2. Each of the Credit Parties (a) has the corporate power to execute and
deliver the Transaction Documents to which it is a party, and to perform its
obligations thereunder; (b) has duly authorized the execution and delivery of
the Transaction Documents to which it is a party and all performance by it
thereunder; and (c) has duly executed and delivered the Transaction Documents to
which it is a party.
3. The execution and delivery by each Credit Party of the Transaction
Documents to which it is a party do not, the borrowings under the Credit
Agreement by CAM will not, and performance by each Credit Party of its
agreements in each of the Transaction Documents to which it is a party does not,
result in any:
(i) violation of such Credit Party's Articles of Incorporation or
Bylaws;
(ii) violation of any existing federal or state constitution,
statute, or, to our knowledge, regulation, rule, or order, to
which any Credit Party or its properties is subject;
(iii) breach of or default under any material written agreement
known to us to which any Credit Party or its assets is
subject; provided, however, that we express no opinion as to
the likelihood that borrowings under the Credit Agreement may
result in a breach of, or default under, the financial
covenants of the Senior Note Purchase Agreements;
(iv) creation or imposition of any contractual lien or security
interest in, on, or against any Credit Party's assets under
any material written agreements known to us, other than under
the Transaction Documents; or
(v) violation of any judicial or administrative decree, writ,
judgment, or order to which, to our knowledge, any Credit
Party or its assets are subject.
For purposes of this letter, "material written agreements known to us" means the
agreements filed as exhibits to the Parent's most recent 10-Q and the Senior
Note Purchase Agreement.
G-3
Bank of America, N.A., as Agent
December ____, 2000
Page 4
4. Each Transaction Document and each Security Instrument
executed by any Credit Party is enforceable against such Credit Party
in all material respects; provided, however, that our opinion as to the
enforceability of such documents is subject to the following
qualifications and exceptions: (a) in the case of all Loan Documents to
the General Qualifications (including the Bankruptcy and Insolvency
exceptions, the Equitable Principle Limitation, and all other
applicable Other Common Qualifications) contained in the Accord (the
"General Qualifications"); and (b) we express no opinion herein as to
the enforceability of any provision in any document which purports to
waive any right to trial by jury or select any governing law or forum
for litigation.
5. Based upon our actual knowledge of the operations and affairs of the
Credit Parties and except as disclosed in the Credit Agreement, there is no
pending or overtly threatened, action, suit, investigation, or proceeding before
or by any court, or governmental department, commission, board, bureau,
instrumentality, agency, or arbitral authority which calls into question the
validity or enforceability of any of the Transaction Documents, or the titles to
their respective offices or authority of any officers, members, or partners, as
applicable of the Borrower or any other Credit Party or an adverse result in
which could reasonably be expected to have a Material Adverse Effect.
6. Based upon our actual knowledge of the operations and affairs of the
Credit Parties, there exists no event, circumstance, or condition (except that
we express no opinion to financial reporting or accounting matters) which,
immediately upon giving effect to the Transaction Documents, would constitute a
Default or Event of Default under the Credit Agreement.
7. None of the transactions contemplated by the Credit Agreement,
including, without limitation, the use of the proceeds of the Loans provided for
in the Transaction Documents, will violate or result in a violation of Section 7
of the Exchange Act or regulation T, U, or X of the Board of Governors of the
Federal Reserve System.
8. The rate or rates of interest provided for in the Transaction
Documents, including all late payment charges and any Default Rate or
Post-Maturity Rate provided for therein, do not and will not violate or conflict
with, or give rise to any defense to payment of the Obligations or to any claim,
counterclaim, setoff, or recoupment under, any usury or other law or regulation
of the State of Tennessee governing the maximum rate of interest or amount of
other charges that may be charged or incurred in transactions or the type
contemplated under the Transaction Documents.
9. No consent, approval, authorization, or other action by, or notice
to or filing with, any court or administrative or governmental body of the
United States or the State of Tennessee is required in connection with the
execution and delivery by any Credit Party of the Transaction Documents to which
such Credit Party is a party or the incurrence by any Credit Party of its
G-4
Bank of America, N.A., as Agent
December ____, 2000
Page 5
obligations thereunder, except such consents, approvals, authorizations,
registrations, or filings as have been made or obtained and are in full force
and effect.
10. The Collateral Agent, for the benefit of the Agent and the Lenders
and the holders of the Senior Notes, shall have perfected its security interest
in the Subsidiary Securities and in the Intercompany Notes upon taking delivery
of the original stock certificates and stock powers executed in blank and the
original Intercompany Notes endorsed (with recourse) over to the Collateral
Agent. No filings or recordations are necessary to perfect such security
interests, and, assuming the Collateral Agent does not have knowledge of any
adverse claim, the security interests as so perfected will have priority over
any other consensual security interests in the same securities or notes.
11. All of the Pledged Interests are duly authorized, validly issued,
fully paid and nonassessable, and free of any preemptive rights except rights in
favor of each record owner of such Pledged Interest. Except as specified on
Schedule B attached hereto, all Pledged Interests constitute "securities" within
the meaning of Article 8 of the Uniform Commercial Code, and are represented by
the Certificates listed on such Schedule B (the "Certificates"). The stock
powers affixed to the Certificates as delivered to you have been duly executed
in blank by a duly authorized representative of the pledgor of the related
Pledged Interest. Such stock powers conform to the requirements of applicable
law and the Organization Documents and Operating Documents of the issuer of the
related Pledged Interests with effect that such stock powers are sufficient to
permit the sale or transfer of the related Pledged Interests by you in
accordance with the terms of the applicable Pledge Agreement, subject to
applicable state and federal securities laws.
12. The endorsements affixed to the Intercompany Notes as delivered to
you have been executed in blank by a duly authorized representative of the
Borrower. Such endorsements of the Borrower conform to the requirements of
applicable law with the effect that such endorsements are sufficient to permit
the sale or transfer of the related Intercompany Notes by you in accordance with
the terms of the Intercompany Note Pledge Agreements, subject to applicable
state and federal securities laws.
13. The Security Instruments are effective to create a valid security
interest in favor of the Collateral Agent for the benefit of the Agent, the
Lenders, and the holders of the Senior Notes in the Collateral described
therein.
14. The Uniform Commercial Code Financing Statements on Form UCC-1
described on Schedule C attached hereto (collectively, the "Financing
Statements") have been duly executed and delivered to the Agent and are in form,
number, and content sufficient (together with the tender of necessary filing
fees) for filing with the respective filing offices described on Schedule C with
the effect that, upon such filing, the Collateral Agent shall have a duly
perfected security interest in all the Collateral described in the Security
Instruments to the extent that a security interest in such Collateral can be
perfected by the filing of financing statements under the Uniform Commercial
Code as in effect in the appropriate jurisdictions.
G-5
Bank of America, N.A., as Agent
December ____, 2000
Page 6
Based upon the foregoing, and subject to the other exceptions,
assumptions, and qualifications set forth or incorporated by reference herein,
and noting in particular that we do not serve as litigation counsel to any of
the Credit Parties, we inform you that we are aware of only the actions or
proceedings pending against the Parent or CAM that are listed on Schedule 8.10
to the Credit Agreement. Based upon management's descriptions of such actions,
we do not believe such actions or proceedings would be likely, individually or
in the aggregate, to have a Materially Adverse Effect upon CAM and Parent, taken
as a whole. We are not aware of any overtly threatening written communication.
The opinions expressed herein are matters of professional
judgment and not a guarantee of result. This opinion letter is solely
for the information of the addressee and is not to be quoted in whole
or in part or otherwise referred to (except in a list of closing
documents), nor is it to be filed with any governmental entity or
provided to any other person without our prior written consent. Other
than the addressee, no one is entitled to rely upon this opinion. The
opinion is based upon the law and our knowledge of the facts as of the
date hereof. We assume no duty to communicate with you with respect to
any matter that comes to our attention hereafter.
Very truly yours,
SCUDDER LAW FIRM, P.C., L.L.O.
By:___________________________________
Mark A. Scudder, Principal
MAS:lkh
Enclosure
G-6
SCHEDULE A
Bank of America, N.A.
Bank of America Corporate Center
Charlotte, North Carolina 28255-0065
First Union Securities, Inc.
150 4th Avenue North, Suite 200
Nashville, TN 37219
Bank One
1 Bank One Place
Mail Suite IL 1-0324
Chicago, IL 60670
SunTrust Bank
6410 Popler Ave., Suite 320
Memphis, TN 38119
Fleet National Bank
100 Federal Street
Transportation Division, MA DE 10008D
Boston, MA 02110
G-7
SCHEDULE B
CERTIFICATES
G-8
SCHEDULE C
FINANCING STATEMENTS
G-9
EXHIBITS A-1 THROUGH A-9
G-10
EXHIBIT H
Compliance Certificate
Bank of America, N.A.,
as Agent
101 North Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Bank of America, N.A.,
as Agent
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
Reference is hereby made to the Credit Agreement dated as of December
13 2000 (the "Agreement") among Covenant Asset Management, Inc., a Nevada
corporation (the "Borrower"), Covenant Transport, Inc., a Nevada corporation,
the Lenders (as defined in the Agreement) and Bank of America, N.A., as Agent
for the Lenders ("Agent"). Capitalized terms used but not otherwise defined
herein shall have the respective meanings therefor set forth in the Agreement.
The undersigned, a duly authorized and acting Authorized Representative, hereby
certifies to you as of __________ (the "Determination Date") as follows:
1. Calculations:
a. Consolidated Tangible Net Worth (Section 10.01(a))
Consolidated Tangible Net Worth: $________________
Required Tangible Net Worth shall not be less than $136,223,081 at any
time during the Fiscal Quarter which contains the Closing Date.
Thereafter, for each Fiscal Quarter, at no time shall Consolidated
Tangible Net Worth be less than the sum of:
(a) Minimum Consolidated Net Worth $________________
Required for previous Fiscal Quarter
H-1
(b) 50% of Consolidated Net Income $________________
for Fiscal Quarter
(c) 100% of the net proceeds of $________________
any equity issuance during
Fiscal Quarter
(d) Total: sum of (a) plus (b) plus (c) $________________
b. Consolidated Leverage Ratio (Section 10.01(b))
The ratio of Consolidated Total Adjusted Indebtedness (determined as at
such date) to (ii) Consolidated EBITDAR shall not exceed 3.00 to 1.00,
calculated at the end of each Four Quarter Period.
(a) Consolidated Total Adjusted Indebtedness $________________
With respect to the Parent and its Subsidiaries,
i. Obligations under Capital Leases $__________
ii. Amounts outstanding under Permitted
Receivables Securitizations $__________
iii. Synthetic Lease Obligations $__________
iv. Amounts outstanding under Senior
Notes $__________
v. Subordinated Indebtedness $__________
vi. Other Indebtedness for Money
Borrowed $__________
vii. Present value of Consolidated
Lease Payments $__________
viii. Contingent Obligations (Guaranties) $__________
TOTAL: [i + ii +iii+ iv + v + vi +
vii + viii] = $__________
(b) Consolidated EBITDAR $
================
i. Consolidated Net Income $__________
ii. Consolidated Interest Expense $__________
iii. Taxes on income $__________
iv. Depreciation $__________
v. Amortization $__________
vi. Consolidated Lease Payments $__________
TOTAL: [i + ii +iii+ iv + v + vi] = $__________
(c) Actual Ratio of (a) to (b) $________________
H-2
Maximum Ratio: 3.00 to 1.00
--------------------------------------
c. Consolidated Fixed Charge Coverage Ratio (Section 10.01(c))
The ratio of (i) Consolidated EBITDAR for such period less (without
duplication) taxes on income paid in cash during such period, to (ii)
the sum of Consolidated Fixed Charges for such period plus twenty-five
percent (25%) of Revolving Credit Outstandings as of the date of
computation shall not be less than 1.20 to 1.00, calculated at the end
of each Fiscal Quarter.
(a) Consolidated EBITDAR (from (b) above) $________________
(b) Taxes on income paid in cash $________________
(c) (a) minus (b) $________________
(d) Consolidated Fixed Charges $________________
i. Consolidated Interest Expense $________________
ii. Current maturities of
Consolidated Indebtedness $________________
iii. Consolidated Lease Payments
$________________
TOTAL: [i + ii +iii] =
$________________
(e) 25% times Revolving Credit Outstandings $________________
(f) (d) plus (e) $________________
(c) Actual Ratio of (c) to (f) $________________
Minimum Ratio: 1.20 to 1.00
--------------------------------------
d. Restricted Payments (Section 10.8)
The sum of the aggregate amount of Permitted Share Repurchases plus the
aggregate amount of cash dividends declared by the board of directors
of the Parent and paid thereby to its stockholders from the Closing
Date until the Stated Termination Date shall not exceed [$20,000,000]
plus [50]% of Consolidated Net Income for each Fiscal Quarter
commencing [__________] (as reduced by 100% of the amount of any
negative Consolidated Net Income during any such period).
(a) Permitted Share Repurchases $________________
(aggregate amount since Closing Date)
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(b) Permitted cash dividends by Parent $________________
(aggregate amount since Closing Date)
(c) Sum of (a) plus (b) $________________
(d) $20,000,000 $20,000,000
(e) 50% of the total aggregate amount of $________________
Consolidated Net Income for each
Fiscal Quarter ending since the
Closing Date
(f) 100% of the total aggregate amount of $________________
negative Consolidated Net Income for
each Fiscal Quarter ending since the
Closing Date
(g) Sum of (d) plus (e), less (f) $________________
Amount in (c) shall not exceed, at any time, the amount in (g).
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2. No Default
A. Since __________ (the date of the last similar
certification), (a) the Borrower has not defaulted in the keeping,
observance, performance or fulfillment of its obligations pursuant to
any of the Loan Documents; and (b) no Default or Event of Default
specified in Article XI of the Agreement has occurred and is
continuing.
B. If a Default or Event of Default has occurred since
__________ (the date of the last similar certification), the Borrower
proposes to take the following action with respect to such Default or
Event of Default: ____________________________________________________.
(Note, if no Default or Event of Default has occurred, insert
"Not Applicable").
The Determination Date is the date of the last required financial
statements submitted to the Lenders in accordance with Section 9.1 of the
Agreement.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, ____.
By:______________________________________
Authorized Representative
Name:_____________________________________
Title:____________________________________
H-5
EXHIBIT I-1
Form of Parent Guaranty Agreement
See attached.
I-1-1
PARENT GUARANTY AGREEMENT
Dated December 13, 2000
THIS PARENT GUARANTY AGREEMENT (this "Guaranty") made by
COVENANT TRANSPORT, INC., a Nevada corporation (the "Guarantor"), in favor of
the financial institutions signatory to the Credit Agreement referenced below as
lenders and any assignees which may become "Lenders" as provided therein
(collectively, the "Lenders"), the Lenders that may serve from time to time as
the "Issuing Bank" under said Credit Agreement (the "Issuing Bank"), and Bank of
America, N.A., as Agent under said Credit Agreement (the "Agent"). Capitalized
terms used herein and not otherwise defined shall have the meaning ascribed to
them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, Covenant Asset Management, Inc., a Nevada corporation
(the "Borrower"), a wholly-owned subsidiary of the Guarantor, has entered into a
certain Credit Agreement, dated of even date herewith, with the Guarantor, the
Lenders signatories thereto, the Issuing Bank, and the Agent (as amended,
modified, supplemented, restated, or replaced from time to time, the "Credit
Agreement"), pursuant to which the Lenders, the Issuing Bank and the Agent have
agreed to provide a revolving credit and letter of credit facility for the
benefit of the Borrower;
WHEREAS, a material part of the consideration given in
connection with and as an inducement to the execution and delivery of the Credit
Agreement by the Lenders, the Issuing Bank, and the Agent was the obligation of
the Parent to enter into this Guaranty Agreement, and the Lenders, the Issuing
Bank and the Agent are unwilling to make Loans, to purchase participations in
the Letters of Credit and to issue Letters of Credit, unless the Guarantor
guarantees the payment and performance of each and every one of the Obligations;
WHEREAS, the Subsidiaries of the Parent have separately
entered into a Subsidiary Guaranty Agreement dated as of December 13, 2000, in
favor of the Lenders, the Issuing Bank and the Agent, guaranteeing payment and
performance of the Obligations under the Credit Agreement;
WHEREAS, the Guarantor has agreed to enter into this Guaranty
in order to ensure the benefits of the credit to be provided to the Borrower
under the Credit Agreement, and will materially benefit from the Loans and
Advances made and to be made, and the Letters of Credit issued and to be issued,
under the Credit Agreement; and
NOW, THEREFORE, in order to induce the Lenders to make Loans
and to purchase participations in Letters of Credit and to induce the Issuing
Bank to issue Letters of Credit and to induce the Agent to perform its duties as
Agent, all as provided under the Credit Agreement, and for other good and
valuable consideration received by the Guarantor, the parties hereto agree as
follows:
ARTICLE I.
THE GUARANTEE
1.01. The Guarantee. The Guarantor hereby unconditionally and
irrevocably, guarantees to the Lenders, the Issuing Bank and the Agent, and any
transferee, in whole or in part, of the Obligations or this Guaranty
(collectively, the "Guaranteed Parties" and each, individually, a "Guaranteed
Party"), the full and prompt payment and performance of all the Obligations and
all costs, charges and expenses (including reasonable attorneys' fees) incurred
or sustained by such Guaranteed Party in enforcing the obligations of the
Guarantor hereunder. If any portion of the Obligations is not paid when due,
whether at stated maturity, by acceleration or otherwise, the Guarantor
unconditionally and irrevocably hereby agrees to and will pay same when due,
without resort by the Guaranteed Parties to any other person or party. The
obligation of the Guarantor to the Guaranteed Parties hereunder is primary,
absolute, and unconditional, except as may be specifically set forth herein. The
Guarantor hereby acknowledges that this Guaranty is a guaranty of payment and
not of collection and that the liability of the Guarantor under this Guaranty
shall be immediate and primary and shall not be contingent upon the exercise or
enforcement by the Guaranteed Parties, or any of them, of any remedies the
Guaranteed Parties may have against the Borrower or any other person or the
enforcement of any lien or realization of any collateral any Guaranteed Party
may at any time possess for any of the Obligations. The Guarantor's obligations
are secured by various Security Instruments referred to in the Credit Agreement,
including without limitation the Second Amended and Restated Parent Stock Pledge
and Security Agreement dated as of the date hereof, and all other agreements
(including control agreements), instruments and other documents, whether now
existing or hereafter in effect, pursuant to which the Guarantor shall grant or
convey to the Collateral Agent for the benefit of the Agent, the Lenders, the
Issuing Bank, and the holders of the Senior Notes a Lien in, or pursuant to
which any other Person shall acknowledge any such Lien in, property as security
for all or any portion of the Obligations or any other obligation under any Loan
Document, as any of them may be amended, modified or supplemented from time to
time.
1.02. Guarantee Unconditional.
(a) This Guaranty is continuing in nature and shall be
effective with respect to the full amount of all outstanding Obligations, now
existing or hereafter made or extended, regardless of the amount. The Guarantor
acknowledges and agrees that the number and amounts of outstanding Obligations
may fluctuate from time to time hereafter, and that the Borrower may make
payments to, and reborrow from, the Guaranteed Parties from time to time
hereafter. The Guarantor expressly agrees that this Guaranty shall continue in
full force and effect notwithstanding such fluctuations and payments, regardless
of any invalidity of the underlying obligations and whether or not any
Obligations are outstanding at any particular time, until the occurrence of the
Facility Termination Date.
(b) The Guarantor hereby waives notice of the Guaranteed
Parties' acceptance of this Guaranty and the creation, extension or renewal of
the Revolving Credit or Letter of Credit
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Commitments, or of any Loan, Letter of Credit, Reimbursement Obligation or other
Obligation. The Guarantor hereby consents and agrees that, at any time or times,
without notice to or further approval from any Guarantor, and without in any way
affecting the obligations of the Guarantor hereunder, the Guaranteed Party may,
with or without consideration (i) release, compromise with, or agree not to sue,
in whole or in part, the Borrower, the Guarantor or any other obligor,
guarantor, endorser or surety on any Loan, Letter of Credit, Reimbursement
Obligation or other Obligation, (ii) renew, extend, accelerate, or increase or
decrease the principal amount of any Revolving Credit or Letter of Credit
Commitment, Loan, Letter of Credit, Reimbursement Obligation or other
Obligation, either in whole or in part, (iii) amend, waive, or otherwise modify
any of the terms of any Revolving Credit or Letter of Credit Commitment, Loan,
Letter of Credit, Reimbursement Obligation or other Obligation, or of any
Security Instrument, Loan Document, mortgage, deed to secure debt, deed of
trust, security agreement, or other undertaking of the Borrower or any other
obligor, endorser, guarantor or surety in connection with any Revolving Credit
or Letter of Credit Commitment, Loan, Letter of Credit, Reimbursement Obligation
or other Obligation, and (iv) apply any payment received from the Borrower or
from any other obligor, guarantor, endorser or surety on any Loan, Reimbursement
Obligation or other Obligation to any of the liabilities of the Borrower or of
such other obligor, guarantor, endorser, or surety which such Guaranteed Party
may choose.
(c) The Guarantor hereby consents and agrees that any
Guaranteed Party may at any time or times, either with or without consideration,
surrender, release or receive any property or other collateral of any kind or
nature whatsoever held by it or for its account securing any Loan, Reimbursement
Obligation or other Obligation, or substitute any collateral so held by such
Guaranteed Party for other collateral of like or different kind, without notice
to or further consent from the Guarantor, and such surrender, receipt, release
or substitution shall not in any way affect the obligations of the Guarantor
hereunder. Any Guaranteed Party shall have full authority to adjust, compromise,
and receive less than the amount due upon any such collateral, and may enter
into any accord and satisfaction agreement with respect to the same as such
Guaranteed Party may deem advisable without affecting the obligations of the
Guarantor hereunder. No Guaranteed Party shall be under any duty to undertake to
collect upon such collateral or any part thereof, and the Guarantor's
obligations hereunder shall not be affected by any Guaranteed Party's alleged
negligence or mistake in judgment in handling, disposing of, obtaining, or
failing to collect upon or perfect a security interest in, any such collateral.
1.03. Waiver. The Guarantor hereby waives presentment, demand,
protest, and notice of dishonor of any of the liabilities guaranteed hereby. No
Guaranteed Party shall have any duty or obligation (i) to proceed or exhaust any
remedy against the Borrower, any other obligor, guarantor, endorser, or surety
on any Loan, Reimbursement Obligation or other Obligation, or any security held
by any Guaranteed Party for any Loan, Reimbursement Obligation or other
Obligation, or (ii) to give any notice whatsoever to the Borrower, the
Guarantor, or any other obligor, guarantor, endorser, or surety on any Loan,
Reimbursement Obligation or other Obligation, before bringing suit, exercising
rights to any such security or instituting proceedings of any kind against the
Guarantor, or the Borrower, and the Guarantor hereby waives any requirement for
such actions by any Guaranteed Party. The Guarantor agrees that each Guaranteed
Party shall have a Lien for all the Guarantor's obligations hereunder upon all
deposits or deposit accounts, of any kind, or any interest in any
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deposits or deposit accounts, now or hereafter pledged, mortgaged, transferred
or assigned to such Guaranteed Party or otherwise in the possession or control
of such Guaranteed Party for any purpose (other than solely for safekeeping or
in its capacity as a trustee) for the account or benefit of such Guarantor,
including any balance of any deposit account or of any credit of such Guarantor
with the Guaranteed Party, whether now existing or hereafter established, and
hereby authorizes each Guaranteed Party from and after the occurrence of an
Event of Default at any time or times with or without prior notice to apply such
balances or any part thereof to such of the Guarantor's obligations to the
Guaranteed Parties then due and in such amounts as provided for in the Credit
Agreement or otherwise as they may elect. For the purposes of this Section 1.03,
all remittances and property shall be deemed to be in the possession of a
Guaranteed Party as soon as the same may be put in transit to it by mail or
carrier or by other bailee.
1.04. Subordination. Until the occurrence of the Facility
Termination Date, the Guarantor hereby unconditionally subordinates in right of
payment all present and future debts, liabilities, and obligations now or
hereafter owing to the Guarantor (i) of the Borrower, to the payment in full of
the Borrower's Obligations, (ii) of every other Guarantor (an "obligated
guarantor"), to the payment in full of the obligations of such obligated
guarantor owing to any Guaranteed Party and arising under the Loan Documents,
and (iii) of each other Person now or hereafter constituting a Credit Party, to
the payment in full of the obligations of such Credit Party owing to any
Guaranteed Party and arising under the Loan Documents, provided, however, that
the Guarantor may receive payment of any such debts, liabilities or obligations
so long as no Event of Default shall have occurred and be continuing under the
Credit Agreement or hereunder. All monies received from the Borrower or for its
account by the Guarantor with respect to such debts, liabilities or obligations
after the occurrence and during the continuance of an Event of Default under the
Credit Agreement or hereunder shall be received in trust for the Guaranteed
Parties, and promptly upon receipt be paid over to the Agent upon its request
until the Obligations are fully paid, satisfied and performed, all without
prejudice to and without in any way affecting the obligations of the Guarantor
hereunder.
1.05. Waiver of Subrogation. The Guarantor hereby waives to
the fullest extent possible as against the Borrower and its assets any and all
rights, whether at law, in equity, by agreement or otherwise, to subrogation,
indemnity, reimbursement, contribution, or any other similar claim, cause of
action or remedy that otherwise would arise out of the Guarantor's performance
of its obligations to the Guaranteed Parties under this Guaranty. The preceding
waiver is intended by the Guarantor and the Guaranteed Parties to be for the
benefit of the Borrower or any of its successors and permitted assigns as an
absolute defense to any action by the Guarantor against the Borrower or its
assets that arise out of the Guarantor's having made any payment to any
Guaranteed Parties with respect to any of the Borrower's liabilities guaranteed
hereunder.
1.06. Bankruptcy of Borrower. Upon the bankruptcy of the
Borrower, no Guaranteed Party's rights hereunder shall be affected or impaired
by its omission to prove all or any portion of its claim, and the Guaranteed
Parties may in their discretion value or refrain from valuing any security held
by them without in any way releasing, reducing or otherwise affecting the
Guarantor's obligations hereunder. Until the occurrence of the Facility
Termination Date, the
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Guaranteed Parties shall have the right to include in their claim the amount of
all claims of the Guarantor against the Borrower and to receive the full amount
of all distributions in respect thereto, such distributions being hereby
assigned and transferred to the Guaranteed Parties. The Guarantor agrees that
this Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of the liabilities hereby guaranteed are
rescinded or must otherwise be returned or restored by the Guaranteed Parties
upon the insolvency or bankruptcy of the Borrower, the Guarantor or any other
obligor, guarantor, endorser or surety on the Loans, the Reimbursement
Obligations or any other Obligations, all as though such payment had not been
made.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.01 Reaffirmation of Credit Agreement. In order to induce the
Guaranteed Parties to accept this Guaranty, to issue their Revolving Credit and
Letter of Credit Commitments, to make Loans, to purchase participations in
Letters of Credit, and to issue Letters of Credit, all as provided in the Credit
Agreement, the Guarantor hereby repeats and reaffirms the Representations and
Warranties contained in the Credit Agreement to the extent that any such
representation or warranty relates to the Guarantor or any of its Subsidiaries,
as of the date of this Guaranty and as of each subsequent date that such
Representations and Warranties are deemed repeated pursuant to the Credit
Agreement.
2.02. Survival. All representations and warranties under this
Guaranty shall survive the execution and delivery of this Guaranty, and all
investigation and inquiry by the Guaranteed Parties.
ARTICLE III.
EVENTS OF DEFAULT
3.01. Events of Default. Each of the following shall
constitute an "Event of Default," unless waived by the Agent in writing,
whatever the reason for such event and whether it shall be voluntary or
involuntary, or within or without the control of the Guarantor, or be effected
by operation of law or pursuant to any judgment or order of any court or any
order, rule or regulation of any governmental or non-governmental body:
(a) The Guarantor shall default in the payment, observance or
performance of any obligation hereunder; or
(b) An "Event of Default" under and as defined in the Credit
Agreement or under any other Loan Document shall have occurred and be
continuing.
3.02. Remedies. If any Event of Default shall have occurred
and be continuing, the Agent, for itself and on behalf of the Lenders and the
Issuing Bank, in addition to enforcing all other rights and remedies available
to it under Applicable Law, under the Loan Documents and otherwise,
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may accelerate the Obligations and call upon this Guaranty. Any amounts not paid
when due under this Guaranty Agreement shall bear interest at the Default Rate.
ARTICLE IV.
MISCELLANEOUS
4.01. Rights Cumulative. This Guaranty is in addition to, and
is not intended to supersede or be a substitute for any other suretyship
agreement or instrument that the Guaranteed Parties may hold in connection with
the Loans, the Reimbursement Obligations or the other Obligations.
4.02 Attorney-in-Fact. To the extent permitted by law, the
Guarantor hereby appoints the Agent, for the benefit of the Guaranteed Parties,
as the Guarantor's attorney-in-fact for the purposes of carrying out the
provisions of this Guaranty Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is coupled with an interest and is
irrevocable; provided, that the Agent shall have and may exercise rights under
this power of attorney only upon the occurrence and during the continuance of an
Event of Default.
4.03. Rules of Interpretation. The rules of interpretation
contained in Sections 1.2(c) through 1.2(l) of the Credit Agreement shall be
applicable to this Guaranty Agreement and are hereby incorporated by reference.
All representations and warranties contained herein shall survive the delivery
of documents and any extension of credit referred to herein or guaranteed
hereby.
4.04. Entire Agreement. This Guaranty contains the entire
agreement between the parties relating to the subject matter hereof, and no
provision hereof may be waived or modified except by a writing executed by the
Guarantor and the Agent, on behalf of the Lenders, the Issuing Bank and the
other Guaranteed Parties. There is no understanding that any Person other than
the Guarantor shall execute this Guaranty. The Guarantor's execution of this
Guaranty was not based upon any facts or materials provided by the Guaranteed
Parties, nor was the Guarantor induced to execute this Guaranty by any
representation, statement or information made or furnished by the Agent, any
Issuing Bank or any Lender. The Guarantor further acknowledges and agrees that
the Guarantor assumes sole responsibility for independently obtaining any
information or reports deemed necessary in reaching any decision to execute this
Guaranty.
4.05. General Unsecured Claims. Except as otherwise provided
herein or in any Security Instrument, from the date hereof until the occurrence
of the Facility Termination date, the Guarantor shall ensure that at all times
the claims of the Guaranteed Parties hereunder against the Guarantor will rank
at least pari passu with the claims of all its other creditors save those whose
claims are preferred by any bankruptcy, insolvency or other similar laws of
general application.
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4.06. Waivers. The failure or forbearance of any Guaranteed
Party on any occasion to exercise any rights or remedies hereunder or otherwise
granted to it by law or another agreement shall not affect the obligations of
the Guarantor hereunder and shall not constitute a waiver of such right or
remedy or preclude the later or further exercise thereof. Time is of the essence
of this Guaranty and the Guarantor's obligations hereunder.
4.07. Notices. Any notice or demand which any Guaranteed Party
may be required to give to the Guarantor may be served, at such Guaranteed
Party's option, on the Guarantor in person, by telecopy or by sending the same
by reputable overnight courier or by registered or certified mail, addressed to
the address of the Guarantor indicated on the signature page hereof or at such
other address as the Guarantor shall specify by written notice delivered to such
Guaranteed Party. Any notice in person, by telecopier or by such courier, shall
be effective when received at the address set forth below. Any notice by mail
shall be deemed to have been received on the fifth Business Day following that
on which it is mailed.
4.08. Successors and Assigns. This Guaranty shall bind and
inure to the benefit of the successors of the Guarantor and the successors and
assigns of the Guaranteed Parties.
4.09. Severability of Provisions. If any provision of this
Guaranty or the application thereof to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Guaranty or the
application of such provision to the other Persons or circumstances, other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each provision of this Guaranty shall be valid and enforceable to
the full extent permitted by law.
4.10. Counterparts. This Guaranty Agreement may be executed in
any number of counterparts each of which when so executed and delivered shall be
deemed an original, and it shall not be necessary in making proof of this
Guaranty Agreement to produce or account for more than one such counterpart
executed by the Guarantor against whom enforcement is sought.
4.11. Governing Law; Judicial Proceedings; Waiver of Jury
Trial. (a) This Guaranty and the rights and obligations of the Guarantor
hereunder shall be construed in accordance with, and be governed by, the laws
(without giving effect to the conflict of law principles thereof) of the State
of Tennessee.
(b) ANY JUDICIAL PROCEEDING BROUGHT AGAINST THE GUARANTOR WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS, MAY BE BROUGHT IN ANY
COURT OF COMPETENT JURISDICTION IN THE STATE OF TENNESSEE, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE GUARANTOR (A) ACCEPTS, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED
APPELLATE COURT, AND IRREVOCABLY AGREES (WITHOUT WAIVING ANY RIGHT TO APPEAL) TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, AND (B) IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO
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THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. THE GUARANTOR HEREBY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, (WITH A COPY BY
OVERNIGHT COURIER), AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 4.07, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED ON
THE FIFTH DAY AFTER SUCH SERVICE IS DEPOSITED IN THE MAIL. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE AGENT, ANY ISSUING BANK OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE GUARANTOR AGAINST THE LENDERS, THE ISSUING BANK OR
THE AGENT, INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
SHALL BE BROUGHT ONLY IN A COURT LOCATED IN THE CITY OF CHATTANOOGA, STATE OF
TENNESSEE. THE GUARANTOR, THE AGENT, EACH ISSUING BANK AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH ANY ARE PARTIES
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER AND WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE
AGREEMENT DATE OR BEFORE OR AFTER PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF
THE GUARANTOR'S OBLIGATIONS HEREUNDER OR THEREUNDER.
4.12. Limitation of Liability. None of the Guaranteed Parties,
nor any affiliates thereof, shall have any liability with respect to, and EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE GUARANTOR HEREBY WAIVES, RELEASES
AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES (AS OPPOSED TO DIRECT DAMAGES) SUFFERED BY THE GUARANTOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH.
4.13. Indemnification. Without limitation of Section 13.9 of
the Credit Agreement or any other indemnification provision in the Credit
Agreement or any other Loan Document, the Guarantor agrees to indemnify and hold
harmless each Guaranteed Party and each of their affiliates and their respective
officers, directors, employees, agents, and advisors (each, an "Indemnified
Party") from and against any and all claims, damages, losses, liabilities,
costs, and expenses (including, without limitation, reasonable attorneys' fees)
that may be incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason
-8-
of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of defense in connection therewith) the
Loan Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans or other extension of credit under the
Loan Documents, except to the extent such claim, damage, loss, liability, cost,
or expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 4.13 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by such Guarantor or any other Credit Party, any of their respective
directors, shareholders or creditors, or an Indemnified Party or any other
Person, or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated.
4.14. Captions. Captions in this Agreement are included for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose.
4.15 Swap Agreements. All obligations of the Borrower under
Swap Agreements to which any Lender or its affiliates are a party shall be
deemed to be Obligations guaranteed hereby (unless otherwise agreed in writing
by such Lender), and Lender or affiliate of a Lender party to any such Swap
Agreement shall be deemed to be a Guaranteed Party hereunder.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
-9-
IN WITNESS WHEREOF, Guarantor has executed this Parent
Guaranty Agreement, as of the date first above written.
GUARANTOR:
COVENANT TRANSPORT, INC., a
Nevada corporation
By: __________________________
Title: ______________________
Address for Notices:
400 Birmingham Highway
Chattanooga, Tennessee 37404
Telecopier No.: (423) 821-5442
Telephone No.: (423) 821-1212
Attention: Joey B. Hogan
Treasurer
EXHIBIT I-2
Form of Subsidiary Guaranty Agreement
See attached.
I-2-1
SUBSIDIARY GUARANTY AGREEMENT
Dated December 13, 2000
THIS SUBSIDIARY GUARANTY AGREEMENT (this "Guaranty") made by
the corporations executing the signature page of this Agreement as Guarantors
(each a "Guarantor" and collectively as "Guarantors"), in favor of the financial
institutions signatory to the Credit Agreement referenced below as lenders and
any assignees which may become "Lenders" as provided therein (collectively, the
"Lenders"), the Lenders that may serve from time to time as the "Issuing Bank"
under said Credit Agreement (the "Issuing Bank"), and Bank of America, N.A., as
Agent under said Credit Agreement (the "Agent"). Capitalized terms used herein
and not otherwise defined shall have the meaning ascribed to them in the Credit
Agreement.
W I T N E S S E T H:
WHEREAS, Covenant Asset Management, Inc., a Nevada corporation
(the "Borrower") has entered into a certain Credit Agreement, dated of even date
herewith, with Covenant Transport, Inc., a Nevada corporation (the "Parent"),
the Lenders signatories thereto, the Issuing Bank, and the Agent (as amended,
modified, supplemented, restated, or replaced from time to time, the "Credit
Agreement"), pursuant to which the Lenders, the Issuing Bank and the Agent have
agreed to provide a revolving credit and letter of credit facility for the
benefit of the Borrower;
WHEREAS, a material part of the consideration given in
connection with and as an inducement to the execution and delivery of the Credit
Agreement by the Lenders, the Issuing Bank, and the Agent was the obligation of
the Borrower and the Parent to cause each Guarantor to enter into this Guaranty
Agreement, and the Lenders, the Issuing Bank and the Agent are unwilling to make
Loans, to purchase participations in the Letters of Credit and to issue Letters
of Credit, unless the Guarantors guarantee the payment and performance of each
and every one of the Obligations;
WHEREAS, the Parent has separately entered into a Parent
Guaranty Agreement dated as of December 13, 2000, in favor of the Lenders, the
Issuing Bank and the Agent, guarantying payment and performance of the
Obligations under the Credit Agreement;
WHEREAS, each Guarantor is a direct or indirect Subsidiary of
the Parent and a member, along with the Borrower, of the Parent's consolidated
group of companies, and the making of the Loans and other extensions of credit
under the Credit Agreement will enhance the overall financial strength and
stability of the Parent's consolidated group of companies, including the
Borrower and the Guarantors;
WHEREAS, the Guarantors have agreed to enter into this
Guaranty in order to ensure the benefits of the credit to be provided to the
Borrower under the Credit Agreement;
NOW, THEREFORE, in order to induce the Lenders to make Loans
and to purchase participations in Letters of Credit and to induce the Issuing
Bank to issue Letters of Credit and to induce the Agent to perform its duties as
Agent, all as provided under the Credit Agreement, and for other good and
valuable consideration received by the Guarantors, the parties hereto agree as
follows:
ARTICLE I.
THE GUARANTEE
1.01. The Guarantee. (a) Each Guarantor hereby unconditionally
and irrevocably, and jointly and severally, guarantees to the Lenders, the
Issuing Bank and the Agent, and any transferee, in whole or in part, of the
Obligations or this Guaranty (collectively, the "Guaranteed Parties" and each,
individually, a "Guaranteed Party"), the full and prompt payment and performance
of all the Obligations and all costs, charges and expenses (including reasonable
attorneys' fees) incurred or sustained by such Guaranteed Party in enforcing the
obligations of the Guarantors hereunder. If any portion of the Obligations is
not paid when due, whether at stated maturity, by acceleration or otherwise,
each Guarantor unconditionally and irrevocably, and jointly and severally,
hereby agrees to and will pay same when due, without resort by the Guaranteed
Parties to any other person or party. The obligation of each Guarantor to the
Guaranteed Parties hereunder is primary, absolute, unconditional, joint and
several, except as may be specifically set forth herein. Each Guarantor hereby
acknowledges that this Guaranty is a guaranty of payment and not of collection
and that the liability of each Guarantor under this Guaranty shall be immediate
and primary and shall not be contingent upon the exercise or enforcement by the
Guaranteed Parties, or any of them, of any remedies the Guaranteed Parties may
have against the Borrower or any other person or the enforcement of any lien or
realization of any collateral any Guaranteed Party may at any time possess for
any of the Obligations. The Guarantors' obligations hereunder are secured by
various Security Instruments referred to in the Credit Agreement, including
without limitation the Second Amended and Restated Guarantor Stock Pledge and
Security Agreement, the Intercompany Note Pledge Agreement, the Guarantor
Security Agreement, and all other agreements (including control agreements),
instruments and other documents, whether now existing or hereafter in effect,
pursuant to which any Guarantor shall grant or convey to the Collateral Agent
for the benefit of the Agent, the Lenders, the Issuing Bank and the holders of
the Senior Notes a Lien in, or pursuant to which any other Person shall
acknowledge any such Lien in, property as security for all or any portion of the
Obligations or any other obligation under any Loan Document, as any of them may
be amended, modified or supplemented from time to time.
(b) It is the intention of the Guarantors and the Guaranteed
Parties that each Guarantor's obligations hereunder shall be in, but not in
excess of, the maximum amount (the "Maximum Guaranty Liability") permitted by
applicable federal bankruptcy, state insolvency, fraudulent conveyance or
transfer or similar laws ("Applicable Law"). To that end, but only to the extent
such obligations would otherwise be subject to avoidance under Applicable Law if
any Guarantor is not deemed to have received valuable consideration, fair value
or reasonably equivalent value for its obligations hereunder, such Guarantor's
obligations hereunder shall be reduced to that amount which, after giving effect
thereto, would not render such Guarantor
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insolvent, or leave such Guarantor with an unreasonably small capital to conduct
its business, or cause such Guarantor to have incurred debts (or intended to
have incurred debts) beyond its ability to pay such debts as they mature, at the
time such obligations are deemed to have been incurred under Applicable Law. As
used herein, the terms "insolvent" and "unreasonably small capital" shall
likewise be determined in accordance with Applicable Law. This section is
intended solely to preserve the rights of the Guaranteed Parties hereunder to
the maximum extent permitted by Applicable Law, and none of the Guarantors nor
any other Persons shall have any right or claim under this section that would
not otherwise be available under Applicable Law. Each Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Guaranty Liability of such Guarantor without impairing this Guaranty or
affecting the rights and remedies of the Guaranteed Parties hereunder.
(c) If and to the extent that any Guarantor shall, under this
Guaranty make a payment (a "Guarantor Payment") of all or any portion of the
Obligations, then such Guarantor shall be entitled to contribution and
indemnification from, and shall be reimbursed by, each of the other Guarantors
(collectively the "Contributing Guarantors") in an amount, for each such
Contributing Guarantor, equal to a fraction of such Guarantor Payment, the
numerator of which fraction is such Contributing Guarantor's Allocable Amount of
such Guarantor Payment and the denominator of which is the sum of all of the
Allocable Amounts of such Guarantor Payment of all of the Contributing
Guarantors. As of any date of determination thereof and with respect to any
Guarantor Payment, the "Allocable Amount" of each Contributing Guarantor shall
be equal to the maximum amount of liability which could be asserted against such
Contributing Guarantor under this Guaranty with respect to such Guarantor
Payment without (i) rendering such Contributing Guarantor insolvent, (ii)
leaving such Contributing Guarantor with unreasonably small capital to conduct
its business, or (iii) causing such Contributing Guarantor to have incurred
debts beyond its ability to pay such debts as they mature. As used in this
Section 1.01(c), the terms "insolvent" and "unreasonably small capital" shall be
determined in accordance with Applicable Laws. This Section 1.01(c) is intended
only to define the relative rights and obligations of the Guarantors with
respect to any and all Guarantor Payments, and nothing set forth in this Section
1.01(c) is intended to or shall otherwise modify, affect or impair the
obligations of the Guarantors, jointly and severally, to pay any or all of the
Obligations as and when the same shall become due and payable in accordance with
the terms of this Guaranty. Each of the Guarantors hereby acknowledges that the
rights of contribution and indemnification hereunder shall constitute assets in
favor of each Guarantor to which such contribution and indemnification is owing
hereunder. The agreements contained in this Section 1.01(c) shall continue in
full force and effect and may not be terminated or otherwise revoked by any
Guarantor until all of the Obligations have been indefeasibly paid in full, all
Commitments have terminated or expired, all Letters of Credit have been returned
for cancellation, and the Credit Agreement and the other Loan Documents shall
have been terminated in accordance with the terms thereof.
1.02. Guarantee Unconditional.
(a) This Guaranty is continuing in nature and shall be
effective with respect to the full amount of all outstanding Obligations, now
existing or hereafter made or extended, regardless of the amount. Each Guarantor
acknowledges and agrees that the number and
3
amounts of outstanding Obligations may fluctuate from time to time hereafter,
and that the Borrower may make payments to, and reborrow from, the Guaranteed
Parties from time to time hereafter. Each Guarantor expressly agrees that this
Guaranty shall continue in full force and effect notwithstanding such
fluctuations and payments, regardless of any invalidity of the underlying
obligations and whether or not any Obligations are outstanding at any particular
time, until the occurrence of the Facility Termination Date.
(b) Each Guarantor hereby waives notice of the Guaranteed
Parties' acceptance of this Guaranty and the creation, extension or renewal of
the Revolving Credit and Letter of Credit Commitments, or of any Loan, Letter of
Credit, Reimbursement Obligation or other Obligation. Each Guarantor hereby
consents and agrees that, at any time or times, without notice to or further
approval from any Guarantor, and without in any way affecting the obligations of
any Guarantor hereunder, the Guaranteed Party may, with or without consideration
(i) release, compromise with, or agree not to sue, in whole or in part, the
Borrower, any Guarantor or any other obligor, guarantor, endorser or surety on
any Loan, Letter of Credit, Reimbursement Obligation or other Obligation, (ii)
renew, extend, accelerate, or increase or decrease the principal amount of any
Revolving Credit and Letter of Credit Commitment, Loan, Letter of Credit,
Reimbursement Obligation or other Obligation, either in whole or in part, (iii)
amend, waive, or otherwise modify any of the terms of any Revolving Credit and
Letter of Credit Commitment, Loan, Letter of Credit, Reimbursement Obligation or
other Obligation, or of any Security Instrument, Loan Document, mortgage, deed
to secure debt, deed of trust, security agreement, or other undertaking of the
Borrower or any other obligor, endorser, guarantor or surety in connection with
any Revolving Credit and Letter of Credit Commitment, Loan, Letter of Credit,
Reimbursement Obligation or other Obligation, and (iv) apply any payment
received from the Borrower or from any other obligor, guarantor, endorser or
surety on any Loan, Reimbursement Obligation or other Obligation to any of the
liabilities of the Borrower or of such other obligor, guarantor, endorser, or
surety which such Guaranteed Party may choose.
(c) Each Guarantor hereby consents and agrees that any
Guaranteed Party may at any time or times, either with or without consideration,
surrender, release or receive any property or other collateral of any kind or
nature whatsoever held by it or for its account securing any Loan, Reimbursement
Obligation or other Obligation, or substitute any collateral so held by such
Guaranteed Party for other collateral of like or different kind, without notice
to or further consent from any Guarantor, and such surrender, receipt, release
or substitution shall not in any way affect the obligations of any Guarantor
hereunder. Any Guaranteed Party shall have full authority to adjust, compromise,
and receive less than the amount due upon any such collateral, and may enter
into any accord and satisfaction agreement with respect to the same as such
Guaranteed Party may deem advisable without affecting the obligations of any
Guarantor hereunder. No Guaranteed Party shall be under any duty to undertake to
collect upon such collateral or any part thereof, and each Guarantor's
obligations hereunder shall not be affected by any Guaranteed Party's alleged
negligence or mistake in judgment in handling, disposing of, obtaining, or
failing to collect upon or perfect a security interest in, any such collateral.
1.03. Waiver. Each Guarantor hereby waives presentment,
demand, protest, and notice of dishonor of any of the liabilities guaranteed
hereby. No Guaranteed Party shall have any duty or obligation (i) to proceed or
exhaust any remedy against the Borrower, any other
4
obligor, guarantor, endorser, or surety on any Loan, Reimbursement Obligation or
other Obligation, or any security held by any Guaranteed Party for any Loan,
Reimbursement Obligation or other Obligation, or (ii) to give any notice
whatsoever to the Borrower, any Guarantor, or any other obligor, guarantor,
endorser, or surety on any Loan, Reimbursement Obligation or other Obligation,
before bringing suit, exercising rights to any such security or instituting
proceedings of any kind against any Guarantor, or the Borrower, and each
Guarantor hereby waives any requirement for such actions by any Guaranteed
Party. Each Guarantor agrees that each Guaranteed Party shall have a Lien for
all the Guarantor's obligations hereunder upon all deposits or deposit accounts,
of any kind, or any interest in any deposits or deposit accounts, now or
hereafter pledged, mortgaged, transferred or assigned to such Guaranteed Party
or otherwise in the possession or control of such Guaranteed Party for any
purpose (other than solely for safekeeping or in its capacity as a trustee) for
the account or benefit of such Guarantor, including any balance of any deposit
account or of any credit of such Guarantor with the Guaranteed Party, whether
now existing or hereafter established, and hereby authorizes each Guaranteed
Party from and after the occurrence of an Event of Default at any time or times
with or without prior notice to apply such balances or any part thereof to such
of the Guarantor's obligations to the Guaranteed Parties then due and in such
amounts as provided for in the Credit Agreement or otherwise as they may elect.
For the purposes of this Section 1.03, all remittances and property shall be
deemed to be in the possession of a Guaranteed Party as soon as the same may be
put in transit to it by mail or carrier or by other bailee.
1.04. Subordination. Until the occurrence of the Facility
Termination Date, each Guarantor hereby unconditionally subordinates in right of
payment all present and future debts, liabilities, and obligations now or
hereafter owing to such Guarantor (i) of the Borrower, to the payment in full of
the Borrower's Obligations, (ii) of every other Guarantor (an "obligated
guarantor"), to the payment in full of the obligations of such obligated
guarantor owing to any Guaranteed Party and arising under the Loan Documents,
and (iii) of each other Person now or hereafter constituting a Credit Party, to
the payment in full of the obligations of such Credit Party owing to any
Guaranteed Party and arising under the Loan Documents, provided, however, that
each Guarantor may receive payment of any such debts, liabilities or obligations
so long as no Event of Default shall have occurred and be continuing under the
Credit Agreement or hereunder. All monies received from the Borrower or for its
account by any Guarantor with respect to such debts, liabilities or obligations
after the occurrence and during the continuance of an Event of Default under the
Credit Agreement or hereunder shall be received in trust for the Guaranteed
Parties, and promptly upon receipt be paid over to the Agent upon its request
until the Obligations are fully paid, satisfied and performed, all without
prejudice to and without in any way affecting the obligations of such Guarantor
hereunder.
1.05. Waiver of Subrogation. Each Guarantor hereby waives to
the fullest extent possible as against the Borrower and its assets any and all
rights, whether at law, in equity, by agreement or otherwise, to subrogation,
indemnity, reimbursement, contribution, or any other similar claim, cause of
action or remedy that otherwise would arise out of such Guarantor's performance
of its obligations to the Guaranteed Parties under this Guaranty. The preceding
waiver is intended by each Guarantor and each of the Guaranteed Parties to be
for the benefit of the Borrower or any of its successors and permitted assigns
as an absolute defense to any action by any Guarantor against the Borrower or
its assets that arise out of such Guarantor's having
5
made any payment to any Guaranteed Parties with respect to any of the Borrower's
liabilities guaranteed hereunder.
1.06. Bankruptcy of Borrower. Upon the bankruptcy of the
Borrower, no Guaranteed Party's rights hereunder shall be affected or impaired
by its omission to prove all or any portion of its claim, and the Guaranteed
Parties may in their discretion value or refrain from valuing any security held
by them without in any way releasing, reducing or otherwise affecting any
Guarantor's obligations hereunder. Until the occurrence of the Facility
Termination Date, the Guaranteed Parties shall have the right to include in
their claim the amount of all claims of each Guarantor against the Borrower and
to receive the full amount of all distributions in respect thereto, such
distributions being hereby assigned and transferred to the Guaranteed Parties.
Each Guarantor agrees that this Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the liabilities
hereby guaranteed is rescinded or must otherwise be returned or restored by the
Guaranteed Parties upon the insolvency or bankruptcy of the Borrower, any
Guarantor or any other obligor, guarantor, endorser or surety on the Loans, the
Reimbursement Obligations or any other Obligations, all as though such payment
had not been made.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.01. Reaffirmation of Credit Agreement. In order to induce
the Guaranteed Parties to accept this Guaranty, to issue their Revolving Credit
and Letter of Credit Commitments, to make Loans, to purchase participations in
Letters of Credit, and to issue Letters of Credit, all as provided in the Credit
Agreement, each Guarantor hereby repeats and reaffirms the Representations and
Warranties contained in the Credit Agreement to the extent that any such
representation or warranty relates to such Guarantor or any of its Subsidiaries,
as of the date of this Guaranty and as of each subsequent date that such
Representations and Warranties are deemed repeated pursuant to the Credit
Agreement.
2.02. Survival. All representations and warranties under this
Guaranty shall survive the execution and delivery of this Guaranty, and all
investigation and inquiry by the Guaranteed Parties.
ARTICLE III.
EVENTS OF DEFAULT
3.01. Events of Default. Each of the following shall
constitute an "Event of Default," unless waived by the Agent in writing,
whatever the reason for such event and whether it shall be voluntary or
involuntary, or within or without the control of any Guarantor, or be effected
by operation of law or pursuant to any judgment or order of any court or any
order, rule or regulation of any governmental or non-governmental body:
6
(a) Any Guarantor shall default in the payment, observance or
performance of any obligation hereunder; or
(b) An "Event of Default" under and as defined in the Credit
Agreement or under any other Loan Document shall have occurred and be
continuing.
3.02. Remedies. If any Event of Default shall have occurred
and be continuing, the Agent, for itself and on behalf of the Lenders and the
Issuing Bank, in addition to enforcing all other rights and remedies available
to it under Applicable Law, under the Loan Documents and otherwise, may
accelerate the Obligations and call upon this Guaranty. Any amounts not paid
when due under this Guaranty Agreement shall bear interest at the Default Rate.
ARTICLE IV.
MISCELLANEOUS
4.01. Rights Cumulative. This Guaranty is in addition to, and
is not intended to supersede or be a substitute for any other suretyship
agreement or instrument that the Guaranteed Parties may hold in connection with
the Loans, the Reimbursement Obligations or the other Obligations.
4.02 Attorney-in-Fact. To the extent permitted by law, each
Guarantor hereby appoints the Agent, for the benefit of the Guaranteed Parties,
as such Guarantor's attorney-in-fact for the purposes of carrying out the
provisions of this Guaranty Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is coupled with an interest and is
irrevocable; provided, that the Agent shall have and may exercise rights under
this power of attorney only upon the occurrence and during the continuance of an
Event of Default.
4.03. Rules of Interpretation. The rules of interpretation
contained in Sections 1.2(c) through 1.2(l) of the Credit Agreement shall be
applicable to this Guaranty Agreement and are hereby incorporated by reference.
All representations and warranties contained herein shall survive the delivery
of documents and any extension of credit referred to herein or guaranteed
hereby.
4.04. Entire Agreement. This Guaranty contains the entire
agreement between the parties relating to the subject matter hereof, and no
provision hereof may be waived or modified except by a writing executed by the
Guarantors and the Agent, on behalf of the Lenders, the Issuing Bank and the
other Guaranteed Parties. The Guarantors' execution of this Guaranty was not
based upon any facts or materials provided by the Guaranteed Parties, nor was
any Guarantor induced to execute this Guaranty by any representation, statement
or information made or furnished by the Agent, any Issuing Bank or any Lender.
Each Guarantor further acknowledges and agrees that such Guarantor assumes sole
responsibility for independently obtaining any information or reports deemed
necessary in reaching any decision to execute this Guaranty.
7
4.05. General Unsecured Claims. Except as otherwise provided
herein or in any Security Instrument from the date hereof until the occurrence
of the Facility Termination Date, each Guarantor shall ensure that at all times
the claims of the Guaranteed Parties hereunder against such Guarantor will rank
at least pari passu with the claims of all its other creditors save those whose
claims are preferred by any bankruptcy, insolvency or other similar laws of
general application.
4.06. Waivers. The failure or forbearance of any Guaranteed
Party on any occasion to exercise any rights or remedies hereunder or otherwise
granted to it by law or another agreement shall not affect the obligations of
any Guarantor hereunder and shall not constitute a waiver of such right or
remedy or preclude the later or further exercise thereof. Time is of the essence
of this Guaranty and each Guarantor's obligations hereunder.
4.07. Notices. Any notice or demand which any Guaranteed Party
may be required to give to any Guarantor may be served, at such Guaranteed
Party's option, on such Guarantor in person, by telecopy or by sending the same
by reputable overnight courier or by registered or certified mail, addressed to
the address of such Guarantor indicated on the signature page hereof or at such
other address as such Guarantor shall specify by written notice delivered to
such Guaranteed Party. Any notice in person, by telecopier or by such courier,
shall be effective when received at the address set forth below. Any notice by
mail shall be deemed to have been received on the fifth Business Day following
that on which it is mailed.
4.08. Successors and Assigns. This Guaranty shall bind and
inure to the benefit of the successors of the Guarantors and the successors and
assigns of the Guaranteed Parties.
4.09. Severability of Provisions. If any provision of this
Guaranty or the application thereof to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Guaranty or the
application of such provision to the other Persons or circumstances, other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each provision of this Guaranty shall be valid and enforceable to
the full extent permitted by law.
4.10. Counterparts. This Guaranty Agreement may be executed in
any number of counterparts each of which when so executed and delivered shall be
deemed an original, and it shall not be necessary in making proof of this
Guaranty Agreement to produce or account for more than one such counterpart
executed by the Guarantor against whom enforcement is sought.
4.11. Governing Law; Judicial Proceedings; Waiver of Jury
Trial. (a) This Guaranty and the rights and obligations of the Guarantors
hereunder shall be construed in accordance with, and be governed by, the laws
(without giving effect to the conflict of law principles thereof) of the State
of Tennessee.
(b) ANY JUDICIAL PROCEEDING BROUGHT AGAINST ANY GUARANTOR WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS, MAY BE BROUGHT IN ANY
COURT OF COMPETENT JURISDICTION IN THE STATE OF TENNESSEE, AND, BY EXECUTION AND
DELIVERY OF THIS
8
AGREEMENT, EACH GUARANTOR (A) ACCEPTS, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT, AND
IRREVOCABLY AGREES (WITHOUT WAIVING ANY RIGHT TO APPEAL) TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AND (B) IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM. EACH GUARANTOR HEREBY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON IT MAY BE
MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, (WITH A COPY BY
OVERNIGHT COURIER), AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 4.07, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED ON
THE FIFTH DAY AFTER SUCH SERVICE IS DEPOSITED IN THE MAIL. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE AGENT, ANY ISSUING BANK OR ANY LENDER TO BRING
PROCEEDINGS AGAINST ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY ANY GUARANTOR AGAINST THE LENDERS, THE ISSUING BANK OR
THE AGENT, INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
SHALL BE BROUGHT ONLY IN A COURT LOCATED IN THE CITY OF CHATTANOOGA, STATE OF
TENNESSEE. EACH GUARANTOR, THE AGENT, EACH ISSUING BANK AND EACH LENDER HEREBY
WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH ANY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER AND WHETHER ARISING OR
ASSERTED BEFORE OR AFTER THE AGREEMENT DATE OR BEFORE OR AFTER PAYMENT,
OBSERVANCE AND PERFORMANCE IN FULL OF EACH GUARANTOR'S OBLIGATIONS HEREUNDER OR
THEREUNDER.
4.12. Limitation of Liability. None of the Guaranteed Parties,
nor any affiliates thereof, shall have any liability with respect to, and EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED HEREIN, EACH GUARANTOR HEREBY WAIVES, RELEASES
AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES (AS OPPOSED TO DIRECT DAMAGES) SUFFERED BY SUCH GUARANTOR IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH.
9
4.13. Indemnification. Without limitation of Section 13.9 of
the Credit Agreement or any other indemnification provision in the Credit
Agreement or any other Loan Document, each Guarantor agrees to indemnify and
hold harmless each Guaranteed Party and each of their affiliates and their
respective officers, directors, employees, agents, and advisors (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of defense in connection therewith) the
Loan Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans or other extension of credit under the
Loan Documents, except to the extent such claim, damage, loss, liability, cost,
or expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 4.13 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by such Guarantor or any other Credit Party, any of their respective
directors, shareholders or creditors, or an Indemnified Party or any other
Person, or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated.
4.14. Joint and Several Liability. Each of the Guarantors
shall be jointly and severally liable under this Guaranty.
4.15. Captions. Captions in this Agreement are included for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose.
4.16 Swap Agreements. All obligations of the Borrower under
Swap Agreements to which any Lender or its affiliates are a party shall be
deemed to be Obligations guaranteed hereby (unless otherwise agreed in writing
by such Lender), and Lender or affiliate of a Lender party to any such Swap
Agreement shall be deemed to be a Guaranteed Party hereunder.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
10
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty,
as of the date first above written.
GUARANTORS:
Address for Notices: HAROLD IVES TRUCKING CO.
TERMINAL TRUCK BROKER, INC.
c/o Covenant Transport, Inc. COVENANT.COM, INC.
400 Birmingham Highway CIP, INC.
Chattanooga, Tennessee 37404 SOUTHERN REFRIGERATED TRANSPORT, INC.
Attention: Joey B. Hogan TONY SMITH TRUCKING, INC.
Chief Financial Officer COVENANT TRANSPORT, INC., a Tennessee
Telecopier No.: (423) 821-5442 corporation
Telephone No.: (423) 821-1212
By:__________________________________
Name: Joey B. Hogan
Title: Treasurer
EXHIBIT J-1
Form of Second Amended and Restated Parent
Stock Pledge and Security Agreement
See attached.
J-1-1
SECOND AMENDED AND RESTATED PARENT
STOCK PLEDGE AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED PARENT STOCK PLEDGE AND
SECURITY AGREEMENT (this "Agreement"), dated as of December 13, 2000, made by
COVENANT TRANSPORT, INC., a Nevada corporation (the "Pledgor"), to BANK OF
AMERICA, N.A., a national banking association, acting as Collateral Agent under
the Intercreditor Agreement (as defined below) for the benefit of the
Participating Creditors (as defined below) (in such capacity, and together with
any successor thereto, the "Collateral Agent" or the "Secured Party").
W I T N E S S E T H:
WHEREAS, Connecticut General Life Insurance Company, on behalf
of one or more separate accounts, Connecticut General Life Insurance Company and
Life Insurance Company of North America (collectively, together with their
successors and assigns, the "Noteholders") have heretofore purchased $25,000,000
in aggregate principal amount of 7.39% Guaranteed Senior Notes, due October 1,
2005 (the "Notes"), issued by Covenant Asset Management, Inc. (formerly known as
Covenant Leasing, Inc.), a Nevada corporation (the "Borrower"), pursuant to that
certain Note Purchase Agreement (as the same may hereafter be amended, modified,
supplemented, refinanced or replaced, the "Note Agreement"), dated as of May 15,
2000, between the Noteholders, the Borrower and the Pledgor. The Notes are
guaranteed by the Pledgor pursuant to the Note Agreement (the "Parent Note
Guarantee") and by the Subsidiary Guarantors (as hereinafter defined) pursuant
to a Subsidiary Guaranty dated as of May 15, 2000 (as it may hereafter be
amended, modified, supplemented, refinanced or replaced, and together with any
other guaranty agreement hereafter executed and delivered by any Subsidiary
Guarantor pursuant to the terms of the Note Agreement, the "Subsidiary Note
Guaranty"); and
WHEREAS, the Borrower has entered into a certain Credit
Agreement (as amended, modified, supplemented, restated, or replaced from time
to time, the "Credit Agreement"), dated of even date herewith, with the Parent,
the financial institutions signatory thereto as lenders (together with each
other institution from time to time party to the Credit Agreement as a lender,
the "Lenders"), the Issuing Bank thereunder, and Bank of America, N.A., as
administrative agent (together with any successor thereto, the "Agent"; the
Lenders, the Issuing Bank and the Agent being collectively called the "Bank
Creditors"), pursuant to which the Bank Creditors have agreed to provide a
revolving credit facility and a letter of credit facility for the benefit of the
Obligors (as hereinafter defined); and
WHEREAS, the revolving credit facility and letter of credit
facility are being provided pursuant to the Credit Agreement to refinance those
certain revolving credit and letter of credit facilities provided to the
Borrower pursuant to the Prior Credit Agreement (as hereinafter defined); and
WHEREAS, the Pledgor has guaranteed the Obligations (as
hereinafter defined) of the Borrower arising under the Credit Agreement,
pursuant to the Parent Guaranty Agreement (as amended, modified, supplemented,
restated, or replaced from time to time, the "Parent Bank
Guaranty"), dated of even date herewith, executed by the Pledgor in favor of the
Bank Creditors; and
WHEREAS, the Subsidiary Guarantors have guaranteed the
Obligations of the Borrower arising under the Credit Agreement, pursuant to the
Subsidiary Guaranty Agreement (as amended, modified, supplemented, restated, or
replaced from time to time, and together with any other guaranty agreement
hereafter executed and delivered by any Subsidiary Guarantor pursuant to the
terms of the Credit Agreement, the "Subsidiary Bank Guaranty"), dated of even
date herewith, executed by the Subsidiary Guarantors in favor of the Bank
Creditors; and
WHEREAS, the Noteholders previously entered into an Amended
and Restated Master Collateral and Intercreditor Agreement, dated as of June 6,
2000, among the Noteholders, the Prior Bank Creditors (as hereinafter defined)
and the Prior Collateral Agent, and acknowledged and agreed to by the Obligors,
(the "Prior Intercreditor Agreement"), in order to acknowledge their agreement
that the Obligors' obligations to each of the Noteholders under the Notes and
Note Agreement and the Prior Bank Creditors under the Prior Credit Agreement
would be secured on a pari passu basis, and to set forth their respective rights
in respect of any and all security or collateral securing the obligations of the
Obligors or any other guarantor to the Noteholders under the Notes and Note
Agreement or to the Prior Bank Creditors under the Prior Credit Agreement; and
WHEREAS, the Pledgor previously entered into an Amended and
Restated Parent Stock Pledge and Security Agreement, dated as of June 6, 2000,
among the Pledgor and the Prior Collateral Agent, for the benefit of the
Noteholders and the Prior Bank Creditors (the "Prior Stock Pledge and Security
Agreement"), in order to secure the prompt and complete payment, performance and
observance of the Obligations under the Note Agreement and the Prior Credit
Agreement, which security interest is intended to be continued hereby as to the
Noteholders; and
WHEREAS, the Noteholders and the Bank Creditors under the
Credit Agreement (together, the "Participating Creditors") have agreed that the
Borrower's obligations to each of them under the Note Agreement and the Credit
Agreement shall be secured on a pari passu basis, and are entering into the
Second Amended and Restated Master Collateral and Intercreditor Agreement dated
as of the date hereof (as it may hereafter be amended, modified, supplemented,
refinanced or replaced, the "Intercreditor Agreement"), with Bank of America,
N.A. as the Collateral Agent, to amend and restate the Prior Intercreditor
Agreement insofar as the revolving credit and letter of credit facilities
provided under the Credit Agreement refinance and replace those revolving credit
and letter of credit facilities provided pursuant to the Prior Credit Agreement,
and to set forth their respective rights in respect of any and all security or
collateral now or hereafter securing the current Obligations of the Borrower or
any other Obligor to the Noteholders under the Notes and Note Agreement or the
Bank Creditors under the Credit Agreement; and
WHEREAS, subject to the terms and conditions of the
Intercreditor Agreement, the Noteholders and the Bank Creditors have appointed
the Collateral Agent to serve as collateral agent under this Agreement, and the
Collateral Agent has agreed to serve as collateral agent under this Agreement;
and
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WHEREAS, the Collateral Agent, for the benefit of the
Participating Creditors, and the Pledgor are entering into this Second Amended
and Restated Parent Stock Pledge and Security Agreement to amend and restate the
Prior Stock Pledge and Security Agreement to secure or continue to secure the
prompt and complete payment, performance and observance of the Obligations under
the Note Agreement, the Credit Agreement and the other Credit Transaction
Documents (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants contained herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Pledgor hereby agrees in favor of Secured Party as follows:
1. DEFINED TERMS.
(a) When used herein, the following terms shall have the
following meanings:
"Actionable Default" shall mean any Event of Default under and
as defined in the Credit Agreement or any Event of Default under and as
defined in the Note Agreement.
"Affiliate" shall mean any Person (other than the Pledgor) (i)
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Pledgor, (ii) which beneficially owns or holds 5% or more of any class
of the voting stock of the Pledgor, (iii) of which the Pledgor or the
Borrower or shareholders of the Pledgor beneficially own or hold 5% or
more of the voting stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest), or (iv) who is a
member of the Board of Directors of the Pledgor or a member of the
immediate family of any such Person. The term "immediate family" of any
Person shall include the spouse, brothers, sisters and descendants of
such Person. The term "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 stock, by contract or otherwise. The term "voting stock" means
the shares of stock or other equity interest of a Person that, in the
normal course of affairs, have the power to elect directors or the
members of any policy making board of such Person.
"Agent" shall have the meaning set forth in the recitals
hereto.
"Bank Creditors" shall have the meaning set forth in the
recitals hereto.
"Bank Guaranty" shall mean, collectively, the Parent Bank
Guaranty and the Subsidiary Bank Guaranty.
"Borrower" shall mean Covenant Asset Management, Inc.
(formerly known as Covenant Leasing, Inc.), a Nevada corporation.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Tennessee; provided,
however, in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of
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Secured Party's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the
State of Tennessee, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority
and for purposes of definitions related to such provisions.
"Collateral Agent" shall have the meaning set forth in the
recitals hereto.
"Credit Agreement" shall have the meaning set forth in the
recitals hereto.
"Credit Transaction Documents" shall mean the Note Agreement,
the Notes, the Notes Guarantee, the Bank Guaranty, the Credit
Agreement, the Security Documents, the other Loan Documents (as defined
in the Credit Agreement) and the Intercreditor Agreement.
"CTI" means Covenant Transport, Inc., a Tennessee corporation,
and its successors and assigns.
"Intercreditor Agreement" shall have the meaning set forth in
the recitals hereto.
"Lenders" shall have the meaning set forth in the recitals
hereto.
"Lien", as applied to the property or assets (or the income or
profits therefrom) of any Person, shall mean (in each case, whether the
same is consensual or nonconsensual or arises by contract, operation of
law, legal process or otherwise): any mortgage, security interest,
lien, pledge, attachment, financing statement, levy, charge, or other
encumbrance of any kind in respect of any property or assets of such
Person, or upon the income or profits therefrom. For this purpose, the
Pledgor shall be deemed to own subject to a Lien any asset that it has
acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Note Agreement" shall have the meaning set forth in the
recitals hereto.
"Noteholders" shall have the meaning set forth in the recitals
hereto.
"Notes" shall have the meaning set forth in the recitals
hereto.
"Notes Guarantee" shall mean, collectively, the Parent Note
Guarantee and the Subsidiary Note Guaranty.
"Obligations" shall mean all indebtedness, obligations or
liabilities (including, without limitation, all principal, interest,
premium, fees, reimbursement obligations, indemnity obligations,
collection costs and other amounts) now or hereafter owing by any or
all of the Obligors to any or all of the Participating Creditors and/or
the Collateral Agent under any or all of the Credit Transaction
Documents (and specifically including all
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"Obligations" as defined in the Credit Agreement and the obligations of
the Parent under the Parent Bank Guaranty).
"Obligors" shall mean the Borrower, the Pledgor, the
Subsidiary Guarantors, and any other guarantor of the Obligations
arising under the Notes and the Note Agreement or the Credit Agreement.
"Parent Bank Guaranty" shall have the meaning set forth in the
recitals hereto.
"Parent Note Guarantee" shall have the meaning set forth in
the recitals hereto.
"Participating Creditors" shall have the meaning set forth in
the recitals hereto.
"Person" means an individual, corporation, partnership,
limited liability company, trust or unincorporated organization, a
government or any agency or political subdivision thereof.
"Pledged Securities" shall have the meaning assigned to such
term in Section 4.2 hereof.
"Pledged Stock" shall have the meaning assigned to such term
in Section 3 hereof.
"Pledgor" shall mean Covenant Transport, Inc., a Nevada
corporation.
"Post-Maturity Rate" shall mean (i) when used in respect of
Obligations owing to any Noteholder, the applicable default or
post-maturity rate specified in the Note Agreement or the Notes, (ii)
when used in respect of Obligations owing to any Bank Creditor, the
applicable Default Rate (as defined in the Credit Agreement), and (iii)
when used in respect of any other Obligations hereunder, the highest of
any of the foregoing default or post-maturity rates.
"Prior Bank Creditors" shall mean ABN AMRO Bank, N.V. ("ABN"),
as agent under the Prior Credit Agreement, and ABN, AmSouth Bank, N.A.
(successor by merger to First American National Bank), Bank of America,
N.A., Bank One, N.A., and SunTrust Bank, as lenders under the Prior
Credit Agreement.
"Prior Collateral Agent" shall mean First Union National Bank,
as Collateral Agent under the Prior Intercreditor Agreement.
"Prior Credit Agreement" shall mean that certain Amended and
Restated Credit Agreement dated as of June 18, 1999 among CTI, the
Borrower, and the Prior Bank Creditors, as further amended in that
certain Amendment to Amended and Restated Credit Agreement dated as of
June 6, 2000 among CTI, the Borrower, and the Prior Bank Creditors (as
the same may have been amended, restated, supplemented or otherwise
modified from time to time).
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"Prior Intercreditor Agreement" shall have the meaning set
forth in the recitals hereto.
"Security Document" shall mean each of the documents and
agreements defined as a "Security Document" in the Note Agreement or a
"Security Instrument" in the Credit Agreement and shall include any and
all agreements, assignments, mortgages, deeds or other similar
documents under which the Collateral Agent in now or hereafter granted
a Lien in any collateral to secure the Obligations, including without
limitation this Agreement.
"Subsidiary Bank Guaranty" shall have the meaning set forth in
the recitals hereto.
"Subsidiary Guarantors" shall mean Covenant.com, Inc.
(formerly known as Covenant Acquisition Co. and C & F Acquisition Co.),
a Nevada corporation, CIP, Inc. (formerly known as Intellectual
Property Co.), a Nevada corporation, Southern Refrigerated Transport,
Inc., an Arkansas corporation, Tony Smith Trucking, Inc., an Arkansas
corporation, Harold Ives Trucking Co., an Arkansas corporation,
Terminal Truck Broker, Inc., an Arkansas corporation, CTI, and any
other subsidiary, direct or indirect, of the Pledgor that may hereafter
become a party to a guaranty agreement pursuant to the terms of the
Credit Agreement or the Note Agreement.
"Subsidiary Note Guaranty" shall have the meaning set forth in
the recitals hereto.
(b) The definitions in this Section 1 shall apply equally to
both the singular and plural forms of the terms defined, with the exception of
the term "Borrower." Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles and Sections shall be deemed
references to Articles and Sections of this Agreement unless the context shall
otherwise require. All references herein to any Person, other than an Obligor,
shall be deemed to include such Person's successors, transferees and assigns.
All references herein to any Obligor shall be deemed to include such Obligor's
successors. All references herein to any Credit Transaction Document shall be to
such document as the terms thereof may have been amended, supplemented, waived
or otherwise modified from time to time in accordance with the terms thereof and
hereof.
2. SECURITY FOR OBLIGATIONS ETC. This Agreement is for the
benefit of the Secured Party, as collateral agent for the benefit of the
Participating Creditors, to secure the prompt and complete payment, performance
and observance of the Obligations, including without limitation all Obligations
incurred by the Pledgor pursuant to each of the Parent Note Guarantee and the
Parent Bank Guaranty.
3. PLEDGED STOCK. As used herein, the term "Pledged Stock"
shall mean all of the issued and outstanding shares of every class of capital
stock of the Subsidiaries of the Pledgor set forth on Schedule 1, and all other
shares of such stock or other equity interests issued
-6-
by or equity participations in any Subsidiary of the Pledgor which may be now or
hereafter owned by the Pledgor. The Pledgor represents and warrants that on the
date hereof (a) the Pledged Stock consists of the number and type of shares of
the capital stock of the Subsidiaries of the Pledgor as described on Schedule 1
attached hereto; (b) the Pledgor is the holder of record and sole beneficial
owner of such Pledged Stock; and (c) the Pledged Stock constitutes the
percentage of the issued and outstanding capital stock of each of such
Subsidiaries as set forth on Schedule 1.
4. PLEDGE OF SECURITIES, ETC.
4.1 Pledge. To secure the full and timely payment,
performance, and observance of the Obligations and for the purposes set forth in
Section 2, the Pledgor hereby pledges and grants to the Secured Party a security
interest in the Pledged Stock, together with (i) the certificates representing
such Pledged Stock accompanied by stock powers duly executed in blank by the
Pledgor, (ii) all dividends (whether in cash, stock, warrants, options, or other
securities), cash, instruments or other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any and all
of the Pledged Stock, and (iii) all proceeds of any of the foregoing; and the
Pledgor hereby assigns, transfers, hypothecates and sets over to the Secured
Party all of the Pledgor's right, title and interest in and to the Pledged Stock
(and in and to the certificates or instruments evidencing the items described in
clauses (i) and (ii) above) to be held by the Secured Party, upon the terms and
conditions set forth in this Agreement. The Pledgor agrees to deliver to the
Secured Party the items described in clause (i) above on the date hereof, and
all certificates and instruments evidencing the items described in clause (ii)
above promptly upon the Pledgor's receipt thereof.
4.2 Definition of Pledged Securities and Collateral. The
Pledged Stock and all items described in clause (ii) of Section 4.1 are
hereinafter called the "Pledged Securities", and the Pledged Securities,
together with all other securities and monies and other property pledged to the
Secured Party hereunder and any proceeds of any of the foregoing, are
hereinafter called the "Collateral".
5. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Secured
Party shall have the right to appoint one or more agents for the purpose of
retaining physical possession of the Pledged Stock or any other Collateral
pledged hereunder, which may be held (if applicable and in the discretion of the
Secured Party) in the name of the Pledgor, endorsed or assigned in blank or in
favor of the Secured Party or any nominee or nominees of the Secured Party or an
agent appointed by the Secured Party.
6. VOTING, ETC. Unless and until an Actionable Default shall
have occurred and be continuing or would be caused thereby, the Pledgor shall be
entitled to vote any and all Pledged Stock and to give consents, waivers or
ratifications in respect thereof; provided that no vote shall be cast or any
consent, waiver or ratification given or any action taken which would violate or
be inconsistent with any of the terms of this Agreement or any other Credit
Transaction Document; provided, further, that the Pledgor shall give the Secured
Party at least ten (10) days' written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right if
the exercise or non-exercise of such right potentially may violate or be
inconsistent with the aforementioned agreements. All such rights of the Pledgor
to vote and to give
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consents, waivers and ratifications shall cease in case an Actionable Default
shall occur and be continuing, and Section 8 hereof shall become applicable.
7. DIVIDENDS AND OTHER DISTRIBUTIONS. In accordance with
Section 4.1, the Pledgor shall at all times be required to deliver to the
Collateral Agent, promptly upon receipt thereof, each of the following, which
the Secured Party shall be allowed to retain as part of the Collateral:
(a) all other or additional stock or securities or
property (other than cash) paid or distributed by way of dividend in
respect of the Pledged Securities;
(b) all other or additional stock or other securities
or property (including cash) paid or distributed in respect of the
Pledged Securities by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(c) all other or additional stock or other securities
or property which may be paid in respect of the Pledged Securities by
reason of any consolidation, merger, exchange of stock, conveyance of
assets, liquidation or similar corporate reorganization.
Unless an Actionable Default shall have occurred and be continuing or
would be caused thereby, all cash dividends payable in respect of the Pledged
Securities shall be paid to the Pledgor, but only to the extent (if any)
permitted by the Credit Transaction Documents. Upon the occurrence and at all
times during the continuance of an Actionable Default, the Secured Party shall
be entitled to receive directly, and to retain as part of the Collateral, all
such cash dividends. In the event that at any such time any such cash dividends
are paid directly to the Pledgor, the Pledgor shall hold the same in trust for
the benefit of the Collateral Agent and shall promptly cause all such cash
dividends to be delivered to the Agent.
7.1 Additional Interests. The Pledgor agrees and
covenants that it will cause each Subsidiary of the Pledgor not to issue any
stock or other securities in addition to or in substitution for the Pledged
Stock set forth on Schedule 1 except to the Pledgor. If the Pledgor shall at any
time acquire or hold any additional Pledged Stock, including any Pledged Stock
issued by any Subsidiary not listed on Schedule I hereto which is required to be
subject to a Lien pursuant to the terms hereof or of Article V or Article IX of
the Credit Agreement or any other provision of any Credit Transaction Document
(any such shares or other equity interests or equity participations being
referred to herein as the "Additional Interests"), the Pledgor shall deliver to
the Secured Party for the benefit of the Participating Creditors (i) a revised
Schedule I hereto reflecting the ownership and pledge of such Additional
Interests, (ii) a Pledge Agreement Supplement in the form of Exhibit A hereto
with respect to such Additional Interests duly completed and executed by the
Pledgor, (iii) any other document required in connection with such Additional
Interests as described in Section 4.1 or as otherwise required by the Credit
Transaction Documents and (iv) any other instruments, agreements, financing
statements (and amendments thereto and continuations thereof), assignments,
control agreements, or other
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writings as the Secured Party may request from time to time to protect or
enforce the Collateral Agent's Lien and security interest in the Additional
Interests for the benefit of the Participating Creditors. The Pledgor shall
comply with the requirements of this Section 7.1 concurrently with the
acquisition of any such Additional Interests; provided, however, that the
failure to comply with the provisions of this Section 7.1 shall not impair the
Lien on Additional Interests conferred by the Pledgor to the Collateral Agent
for the benefit of the Participating Creditors hereunder.
8. DEFAULT; REMEDIES. In case an Actionable Default shall have
occurred and be continuing, the Secured Party shall be entitled to exercise all
of the rights, powers and remedies (whether vested in it by this Agreement or
any other Credit Transaction Document, or by law, and including, without
limitation, all rights and remedies of a secured party of a debtor in default
under the Code) for the protection and enforcement of its rights in respect of
the Collateral, and the Secured Party shall be entitled, without limitation, to
exercise the following rights, which the Pledgor hereby agrees to be
commercially reasonable:
(i) upon the declaration by the applicable Participating
Creditor of any or all of the Obligations to be immediately due and
payable or upon any or all of such Obligations otherwise becoming due
and payable, to foreclose or otherwise enforce the Secured Party's
security interest in or other Lien hereunder on any or all of the
Collateral in any manner permitted by law or provided for in this
Agreement;
(ii) to recover from the Pledgor all cost and expenses,
including, without limitation, reasonable attorney's fees, incurred or
paid by or on behalf of the Secured Party in exercising or enforcing
any right, power, or remedy with respect to any or all of the
Collateral provided to the Secured Party by this Agreement or by
applicable law;
(iii) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 7 to the Pledgor and to
enforce the payment of the Pledged Securities and to exercise all of
the rights, powers, and remedies of the Pledgor thereunder;
(iv) to transfer all or any part of the Collateral into the
Secured Party's name or the name of its nominee or nominees;
(v) to vote all or any part of the Collateral (whether or not
transferred into the name of the Secured Party) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise
act with respect thereto as though it were the outright owner thereof;
(vi) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral in one or more parcels, or any interest therein, at any
public or private sale at any exchange, broker's board or at any of the
Secured Party's offices or elsewhere, without, to the fullest extent
permitted by law, demand of performance or advertisement of intention
to sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of
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which are hereby expressly and irrevocably waived by the Pledgor), for
cash, on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or prices and
on such terms as the Secured Party in its sole discretion may
determine; the Pledgor agrees that at least ten (10) days' notice of
sale to the Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification; the Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given; the Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
any such sale may, without further notice, be made at the time and
place to which it was so adjourned; the Pledgor hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling the Collateral and
any other security for the Obligations or otherwise; at any such sale,
unless prohibited by applicable law, the Secured Party may bid for and
purchase all or any part of the Collateral so sold free from any such
right or equity of redemption; and the Secured Party shall not be
liable for failure to collect or realize upon any or all of the
Collateral or for any delay in so doing nor shall the Secured Party be
under any obligation to take any action whatsoever with regard thereto.
Pledgor recognizes that the Secured Party may be unable to effect a
public sale of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities
Act"), and applicable state law, and may be otherwise delayed or
adversely affected in effecting any sale by reason of present or future
restrictions thereon imposed by governmental authorities, and that as a
consequence of such prohibitions and restrictions the Secured Party may
be compelled (i) to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things,
to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof, or (ii) to seek
regulatory approval of any proposed sale or sales, or (iii) to limit
the amount of Collateral sold to any Person or group. The Pledgor
agrees and acknowledges that private sales so made may be at prices and
upon terms less favorable to Pledgor than if such Collateral was sold
either at public sales or at private sales not subject to other
regulatory restrictions, and that the Secured Party has no obligation
to delay the sale of any of the Collateral for the period of time
necessary to permit the issuer of the Pledged Stock to register or
otherwise qualify it, even if such issuer would agree to register or
otherwise qualify such Collateral for public sale under the Securities
Act or applicable state law. The Pledgor further agrees, to the extent
permitted by applicable law, that the use of private sales made under
the foregoing circumstances to dispose of the Collateral shall be
deemed to be dispositions in a commercially reasonable manner. The
Pledgor hereby acknowledges that a ready market may not exist for the
Pledged Stock if it is not traded on a national securities exchange or
quoted on an automated quotation system and agrees and acknowledges
that in such event the Pledged Stock may be sold for an amount less
than a pro rata share of the fair market value of the issuer's assets
minus its liabilities. In addition to the foregoing, the Secured Party
may exercise
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such other rights and remedies as may be available under the Credit
Transaction Documents, at law (including without limitation the Code)
or in equity;
(vii) to settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to
all or any part of the Collateral;
(viii) to execute all such contracts, agreements, deeds,
documents and instruments; to bring, defend and abandon all such
actions, suits and proceedings; and to take all actions in relation to
all or any part of the Collateral as the Secured Party in its sole
discretion may determine;
(ix) to appoint managers, agents, officers and servants for
any of the purposes mentioned in the foregoing provisions of this
Section 8 and to dismiss the same, all as the Secured Party in its sole
discretion may determine; and
(x) generally, to take all such other action as the Secured
Party in its sole discretion may determine as incidental or conducive
to any of the matters or powers mentioned in the foregoing provisions
of this Section 8 and which the Secured Party may or can do lawfully
and to use the name of the Pledgor for the purposes aforesaid and in
any proceedings arising therefrom.
9. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Secured Party provided for in this Agreement or any other Credit Transaction
Document or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Secured Party
of any one or more of the rights, powers or remedies provided for in this
Agreement or any other Credit Transaction Document or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Secured Party of all such other rights,
powers or remedies, and no failure or delay on the part of the Secured Party to
exercise any such right, power or remedy shall operate as a waiver thereof.
10. APPLICATION OF PROCEEDS. All monies collected by the
Secured Party upon any sale or other disposition of the Collateral, together
with all other monies received by the Secured Party hereunder, shall be applied
in accordance with the terms of the Intercreditor Agreement.
11. PURCHASERS OF COLLATERAL. Upon any sale of any of the
Collateral hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Secured Party or
the officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Secured Party or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
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12. FURTHER ASSURANCES. The Pledgor agrees that it will join
with the Secured Party in executing and, at its own expense, file and refile
under the Code such financing statements, continuation statements and other
documents in such offices as the Secured Party may deem necessary or appropriate
and wherever required or permitted by law in order to perfect and preserve the
Secured Party's security interest in the Collateral and hereby authorizes the
Secured Party to file financing statements and amendments thereto relative to
all or any part of the Collateral without the signature of the Pledgor where
permitted by law, and agrees to do such further acts and things and to promptly
execute and deliver to the Secured Party such additional conveyances,
assignments, agreements and instruments as the Secured Party may reasonably
require or deem advisable to carry into effect the purposes of this Agreement or
to further assure and confirm unto the Secured Party its rights, powers and
remedies hereunder.
All filing fees, advances, charges, costs and expenses, including
reasonable attorneys' fees, incurred or paid by the Collateral Agent or any
Participating Creditor in exercising any right, power or remedy conferred by
this Pledge Agreement, or in the enforcement thereof, shall become a part of the
Obligations secured hereunder and shall be paid to the Collateral Agent for the
benefit of the Participating Creditors by the Pledgor immediately upon demand
therefor, and any amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the date of
demand until paid in full at the Post-Maturity Rate.
13. THE SECURED PARTY AS COLLATERAL AGENT.
(a) The Secured Party will hold in accordance with this
Agreement and the other Credit Transaction Documents all items of the Collateral
at any time received under this Agreement. It is expressly understood and agreed
that the obligations of the Secured Party as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement, the
Intercreditor Agreement, and the other Credit Transaction Documents.
(b) The Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Secured Party accords other similar property held in a similar
capacity as collateral agent, it being understood that the Secured Party shall
not have responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Collateral.
14. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants that (i) it is the legal record and beneficial owner of,
and has good and marketable title to, the Pledged Stock described in Section 3
hereof, subject to no pledge, Lien, mortgage, hypothecation, security interest,
charge, option or other encumbrance whatsoever, except the Liens and security
interests created by this Agreement or expressly permitted by this Agreement or
the other Credit Transaction Documents; (ii) it has full power, authority and
legal right to pledge all the Pledged Stock pursuant to this Agreement; (iii) no
consent of any other party (including,
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without limitation, any stockholder or creditor of the Pledgor or any
Subsidiary) and no order, consent, license, permit, approval, validation or
authorization of, exemption by, notice to or registration, recording, filing or
declaration with, any governmental or public body or authority is required to be
obtained by the Pledgor in connection with the execution, delivery or
performance of this Agreement or consummation of the transactions contemplated
hereby, including, without limitation, the exercise by the Secured Party of the
voting or other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of the Pledged Securities by laws affecting the
offering and sale of securities generally (or except as may already have been
obtained); (iv) all shares of Pledged Stock have been duly and validly issued,
are fully paid and nonassessable; (v) the pledge and delivery of the Pledged
Securities pursuant to this Agreement creates a valid and perfected first
priority security interest in the Pledged Securities, and the proceeds thereof,
which security interest is not subject to any prior Lien or encumbrance or any
agreement purporting to grant to any third party a Lien or encumbrance on the
property or assets of the Pledgor which would include the Pledged Securities;
(vi) execution, delivery, and performance of this Agreement will not violate, or
cause default under or result in a Lien (other than the Secured Party's security
interest and Lien hereunder) upon any property of the Pledgor pursuant to, any
applicable law, rule or regulation or any agreement, indenture, judgment, order,
decree, or instrument binding upon or affecting the Pledgor or any of the
Collateral; (vii) all information heretofore, herein, or hereafter supplied to
the Secured Party by or on behalf of the Pledgor with respect to any of the
Collateral is or will be true and correct in all material respects at the time
so supplied; and (viii) the Pledgor has delivered to the Secured Party all
instruments, documents, and chattel paper, and other items of Collateral in
which the Secured Party's security interest or Lien hereunder must be perfected
by possession, together with such additional writings, including, without
limitation, duly executed blank and undated assignments and stock powers, with
respect thereto as the Secured Party shall request.
15. COVENANTS OF THE PLEDGOR.
(a) The Pledgor covenants and agrees that (i) the
Pledgor will defend the Secured Party's right, title and security interest in
and to the Pledged Securities and the proceeds thereof against the claims and
demands of all persons whomsoever; (ii) the Pledgor will have like title to and
right to pledge any other property at any time hereafter pledged to the Secured
Party as Collateral hereunder and will likewise defend the right thereto and
security interest therein of the Secured Party; (iii) the Pledgor shall do all
acts that may be necessary to maintain, preserve, and protect the Collateral;
(iv) the Pledgor shall not sell or encumber or otherwise dispose of or transfer
any Collateral or any right or interest therein, and the Pledgor shall keep the
Collateral free of all levies, security interests or other liens, charges or
encumbrances except those Liens and security interests created by this Agreement
or expressly permitted by this Agreement or the other Credit Transaction
Documents or those approved in writing by the Secured Party; and (v) the Pledgor
will not, with respect to any Collateral, enter into any shareholder agreements,
voting agreements, voting trusts, trust deeds, irrevocable proxies or any other
similar agreements or instruments.
(b) At no time shall any Pledged Stock (i) be held or
maintained in the form of a security entitlement or credited to any securities
account or (ii) which constitutes a "security" (or as to which the issuer
thereof has elected to have treated as a "security") under
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Article 8 of the Code, be maintained in the form of uncertificated securities.
With respect to Pledged Stock that are "securities" under the Code, or as to
which the issuer thereof has elected at any time to have such interests treated
as "securities" under the Code, such Pledged Stock is, and shall at all times
be, represented by the share certificates listed on Schedule I hereto, which
share certificates, with stock powers duly executed in blank by the Pledgor
(which blank stock powers shall be sufficient to transfer title from the Pledgor
once completed and dated), have been delivered to the Agent or are being
delivered to the Agent simultaneously herewith or, in the case of Additional
Interests as defined in Section 7.1, shall be delivered pursuant to Section 7.1.
At no time shall the Pledgor elect, or cause or allow any Subsidiary Guarantor
or other issuer of Pledged Stock to elect, not to treat any Pledged Stock as a
"security" under Article 8 of the Code if such election is available.
16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of
the Pledgor under this Agreement shall be absolute and unconditional in
accordance with its terms and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: (a) any change in the time, place or manner of payment of,
or in any other term of, all or any of the Obligations, any waiver, indulgence,
renewal, extension, amendment or modification of or addition, consent or
supplement to or deletion from or any other action or inaction under or in
respect of the Credit Transaction Documents or any of the other documents,
instruments or agreements relating to the Obligations or any other instrument or
agreement referred to therein or any assignment or transfer of any thereof; (b)
any lack of validity or enforceability of the Credit Transaction Documents or
any other documents, instruments or agreement referred to therein or any
assignment or transfer of any thereof; (c) any furnishing of any additional
security to the Secured Party or any Participating Creditor, or any assignee
thereof or any acceptance thereof or any release of any security by the Secured
Party or any Participating Creditor or any assignee thereof; (d) any limitation
on any party's liability or obligations under any such instrument or agreement
or any invalidity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof; (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor or the Borrower, or any action taken with
respect to this Agreement by any trustee or receiver, or by any court, in any
such proceeding, whether or not the Pledgor shall have notice or knowledge of
any of the foregoing; or (f) any exchange, release or nonperfection of any other
collateral, or any release, or amendment or waiver of or consent to departure
from any guaranty or security, for all or any of the Obligations.
17. NOTICES, ETC. All notices, requests and other
communications provided for hereunder shall be in writing and personally
delivered (including overnight courier), mailed by certified or registered mail,
postage prepaid and return receipt requested, or telecopied (all telecopier
notices promptly to be confirmed by mail or personal delivery), at the address
and telecopier number of each party specified on the signature page hereof, or
at such other address or telecopier number as may be hereafter designated by
notice as herein provided. All such notices and communications shall be
effective or deemed delivered or furnished (i) if given by mail, on the third
business day after such communication is deposited in the mail, addressed as
provided herein, (ii) if given by telecopier, when such communication is
transmitted to the appropriate number determined as provided herein and the
appropriate answer-back is received or receipt is otherwise
-14-
acknowledged, and (iii) if given by hand delivery or overnight courier, when
left at the address of the addressee addressed as provided above; except that
notices of a change of address or telecopier number shall not be effective until
actually received.
18. POWER OF ATTORNEY. The Pledgor hereby absolutely and
irrevocably constitutes and appoints the Secured Party the Pledgor's true and
lawful agent and attorney-in-fact, with full power of substitution, in the name
of the Pledgor: (a) to execute and do all such assurances, acts and things which
the Pledgor ought to do but has failed to do under the covenants and provisions
contained in this Agreement; (b) to take any and all such action as the Secured
Party may, in its sole discretion, determine as necessary or advisable for the
purpose of maintaining, preserving or protecting the security constituted by
this Agreement or any of the rights, remedies, powers or privileges of the
Secured Party under this Agreement; and (c) generally, in the name of the
Pledgor exercise all or any of the powers, authorities, and discretion conferred
on or reserved to the Secured Party by or pursuant to this Agreement, and
(without prejudice to the generality of any of the foregoing) to seal and
deliver or otherwise perfect any instrument or document of conveyance,
agreement, or act as the Secured Party may deem proper in or for the purpose of
exercising any of such powers, authorities or discretion. The Pledgor hereby
ratifies and confirms, and hereby agrees to ratify and confirm, whatever lawful
acts the Secured Party shall do or purport to do in the exercise of the power of
attorney granted to the Secured Party pursuant to this Section 18, which power
of attorney, being given for security, is irrevocable.
19. REINSTATEMENT. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against the Pledgor or the Borrower for liquidation or reorganization, should
the Pledgor or the Borrower become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of their respective assets, and shall continue to be effective
or be reinstated, as the case may be, if at any time payment and performance of
the Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee
of the Obligations, whether as a "voidable preference", "fraudulent conveyance"
or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
20. TERMINATION, RELEASE. Subject to Section 19 hereof, this
Agreement shall terminate upon the first day following the occurrence of the
Facility Termination Date (as defined in the Credit Agreement) and the repayment
in full of all Obligations.
21. MISCELLANEOUS.
(a) The Pledgor agrees with the Secured Party that each of the
obligations and liabilities of the Pledgor to the Secured Party under this
Agreement may be enforced against the Pledgor without the necessity of joining
the Borrower, any other holders of pledges of or security interests in any of
the Collateral, or any other Person as a party. This Agreement and the
Intercreditor Agreement contain the entire agreement between the Secured Party
and the Pledgor with respect to the Collateral and supersedes all prior
agreements, commitments,
-15-
understandings, negotiations, or correspondence between them with respect
thereto. This Agreement shall create a continuing security interest in the
Collateral. This Agreement may be changed, waived, discharged or terminated only
in accordance with the provisions of the Credit Transaction Documents. Unless
otherwise defined herein, terms defined in Article 9 of the Code in the State of
Tennessee are used herein as therein defined. The headings in this Agreement are
for purposes of reference only and shall not limit or define the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute one instrument. In the
event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.
(b) This Pledge Agreement, and the terms, covenants and
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto, and to their respective successors and assigns, except that the Pledgor
shall not be permitted to assign this Pledge Agreement or any interest herein or
in the Collateral, or any part thereof, or otherwise pledge, encumber or grant
any option with respect to the Collateral, or any part thereof, or any cash or
property held by the Agent as Collateral under this Pledge Agreement. Without
limiting the generality of the foregoing sentence of this Section 21(b), any
Participating Creditor may assign to one or more Persons, or grant to one or
more Persons participations in or to, all or any part of its rights and
obligations under the Credit Agreement (to the extent permitted by the Credit
Agreement) and the Note Agreement (to the extent permitted by the Note
Agreement); and to the extent of any such assignment or participation such other
Person shall, to the fullest extent permitted by law, thereupon become vested
with all the benefits in respect thereof granted to such Participating Creditor
herein or otherwise, subject however, to the provisions of the various Credit
Transaction Documents. All references herein to the Collateral Agent or the
Secured Party and to the Participating Creditors shall include any successor
thereof or permitted assignee, and any other obligees from time to time of the
Obligations.
(c) The Secured Party, for the benefit of the Participating
Creditors, and the Pledgor hereby consent to and agree with the terms of the
Intercreditor Agreement and hereby acknowledge and agree that each Lien in all
Collateral now owned or hereafter acquired and all remedies available with
respect to such Collateral are subject to the terms of the Intercreditor
Agreement.
22. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed by the internal laws of the State of Tennessee.
23. Judicial Proceedings; Waiver of Jury Trial. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST THE PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF TENNESSEE, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PLEDGOR (A) ACCEPTS, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY
RELATED APPELLATE COURT, AND IRREVOCABLY AGREES (WITHOUT WAIVING ANY RIGHT TO
APPEAL) TO BE BOUND BY ANY
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JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, AND (B) IRREVOCABLY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED (WITH A COPY BY OVERNIGHT COURIER), AT ITS
ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 17
HEREOF, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED ON THE FIFTH DAY AFTER
SUCH SERVICE IS DEPOSITED IN THE MAIL. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
THE SECURED PARTY TO BRING PROCEEDINGS AGAINST THE PLEDGOR IN THE COURTS OF ANY
OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE PLEDGOR AGAINST THE SECURED
PARTY OR ANY PARTICIPATING CREDITOR INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT
SHALL BE BROUGHT ONLY IN A COURT LOCATED IN THE CITY OF CHATTANOOGA, STATE OF
TENNESSEE. THE PLEDGOR AND THE SECURED PARTY, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH
ANY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER AND
WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE AGREEMENT DATE OR BEFORE OR
AFTER PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF THE PLEDGOR'S OBLIGATIONS
HEREUNDER OR THEREUNDER.
24. Limitation of Liability. Neither the Secured Party nor any
Participating Creditor, nor any affiliate thereof, shall have any liability with
respect to, and EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE PLEDGOR
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES (AS OPPOSED TO DIRECT DAMAGES) SUFFERED BY THE
PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
25. Indemnification. Without limitation of Section 13.9 of the
Credit Agreement or any other indemnification provision in the Credit Agreement
or any other Credit Transaction Document, the Pledgor agrees to indemnify and
hold harmless the Secured Party, the Participating Creditors, and each of their
affiliates, and their respective officers, directors, employees, agents, and
advisors (each, an "Indemnified Party"), from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable
-17-
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of defense in connection therewith) the
Credit Transaction Documents, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the extensions of credit under the
Credit Transaction Documents except to the extent such claim, damage, loss,
liability, cost, or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct. In the case of an investigation,
litigation or other proceeding to which the indemnity in this Section 25
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the Borrower, the Pledgor or any other
Obligor, any of their respective directors, shareholders or creditors, or an
Indemnified Party or any other Person, or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated.
26. Swap Agreements. All obligations of the Borrower under
Swap Agreements (as defined in the Credit Agreement) to which any Participating
Creditor or its affiliates are a party shall be deemed to be Obligations secured
hereby (unless otherwise agreed in writing by such Participating Creditor), and
each Participating Creditor or affiliate of a Participating Creditor party to
any such Swap Agreement shall be deemed to be a Secured Party hereunder.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to
be executed by its duly authorized officer as of the date first above written.
COVENANT TRANSPORT, INC.,
a Nevada corporation
By:______________________________________
Name: Joey B. Hogan
Title: Treasurer
Address for Notices:
Covenant Transport, Inc.
400 Birmingham Highway
Chattanooga, Tennessee 37404
Telecopier No.: (423) 821-5442
Telephone No.: (423) 821-1212
Attention: Joey B. Hogan
Treasurer
ACCEPTED BY:
BANK OF AMERICA, N.A.,
as Collateral Agent
By:______________________________________
Name:
Title:
Address for Notices:
Bank of America, N.A.
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
Second Amended and Restated Parent Stock Pledge and Security Agreement
Signature Page 1 of 1
SCHEDULE 1
Pledged Stock
Percentage of
Name of Corporation Number and Type of Shares Certificate No(s). Total Shares
- ------------------- ------------------------- ------------------ --------------
Covenant Transport, Inc. a 2,000 shares of no par value 4 100%
Tennessee corporation common stock
Covenant Asset Management, 10,000 shares of $.01 par value 2 100%
Inc., a Nevada corporation common stock
Southern Refrigerated 300 shares of $1.00 par value 5 100%
Transport, Inc.,an Arkansas common stock
corporation
Tony Smith Trucking, Inc., an 1,000 shares of $1.00 par value 00004 100%
Arkansas corporation common stock
S-1
EXHIBIT A
STOCK PLEDGE AND SECURITY AGREEMENT SUPPLEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT SUPPLEMENT (as from time to
time amended, modified or restated, this " Supplement"), dated as of
_______________, 20__ is made by and between COVENANT TRANSPORT, INC., a Nevada
corporation (the "Pledgor"), and BANK OF AMERICA, N.A., a national banking
association, as Collateral Agent for the Participating Creditors (as described
in the Pledge Agreement referred to below) All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Pledge Agreement (as defined below).
WHEREAS, the Pledgor is required under the terms of the Credit
Transaction Documents and that certain Second Amended and Restated Parent Stock
Pledge and Security Agreement dated as of December ___, 2000 by the Pledgor in
favor of the Collateral Agent for the benefit of the Participating Creditors (as
from time to time amended, modified, supplemented or amended and restated, the
"Pledge Agreement"), to cause certain Pledged Stock held by it and listed on
Annex A to this Supplement (the "Additional Interests") to be specifically
identified as subject to the Pledge Agreement; and
WHEREAS, a material part of the consideration given in connection with
and as an inducement to the execution and delivery of the various Credit
Transaction Documents by the Participating Creditors was the obligation of the
Pledgor to pledge to the Collateral Agent for the benefit of the Participating
Creditors the Additional Interests, whether then owned or subsequently acquired
or created; and
WHEREAS, the Pledgor has acquired rights in the Additional Interests
and desires to pledge, and evidence its prior pledge, to the Collateral Agent
for the benefit of the Participating Creditors all of the Additional Interests
in accordance with the terms of the Pledge Agreement and the other Credit
Transaction Documents;
NOW, THEREFORE, the Pledgor hereby agrees as follows with the
Collateral Agent, for the benefit of the Participating Creditors:
The Pledgor hereby reaffirms and acknowledges the pledge and collateral
assignment to, and the grant of security interest in, the Additional Interests
contained in the Pledge Agreement and pledges and collaterally assigns to the
Collateral Agent for the benefit of the Participating Creditors, and grants to
the Collateral Agent for the benefit of the Participating Creditors a first
priority lien and security interest in, the Additional Interests and all of the
following:
(a) all dividends (whether in cash, stock, warrants, options,
or other securities), cash, instruments or other property from time to
time received, receivable, or otherwise distributed in respect of or in
exchange for any and all of the Additional Interests;
A-1
(b) all other property hereafter delivered to the Collateral
Agent in substitution for or as an addition to any of the foregoing,
and all certificates and instruments representing or evidencing such
property; and
(c) all proceeds of any of the foregoing.
The Pledgor hereby acknowledges, agrees and confirms by its execution of this
Supplement that the Additional Interests constitute "Pledged Stock" under and
are subject to the Pledge Agreement, and the items of property referred to in
clauses (a) through (c) above (the "Additional Collateral") shall collectively
constitute "Collateral" under and are subject to the Pledge Agreement. Each of
the representations and warranties with respect to Pledged Stock and Collateral
contained in the Pledge Agreement is hereby made by the Pledgor with respect to
the Additional Interests and the Additional Collateral, respectively. The
Pledgor further represents and warrants that a true, correct and complete
revised Schedule I to the Pledge Agreement reflecting the Additional Interests
and all other Pledged Stock is attached hereto and hereby incorporated by
reference into the Pledge Agreement, and that all other documents required to be
furnished to the Collateral Agent pursuant to Section 4.1 of the Pledge
Agreement in connection with the Additional Collateral have been delivered or
are being delivered simultaneously herewith to the Collateral Agent.
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed by its authorized officer as of the day and year first above written.
PLEDGOR:
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Acknowledged and accepted:
BANK OF AMERICA, N.A.,
as Collateral Agent for the Participating Creditors
By:__________________________________
Name:________________________________
Title:_______________________________
A-2
ANNEX A
(to Pledge Agreement Supplement of __________ dated __________)
Additional Interests
Name of Corporation Number and Type of Shares Certificate No(s). Percentage of Total Shares
- ------------------- ------------------------- ------------------ --------------------------
A-3
REVISED SCHEDULE I TO SECURITIES PLEDGE AGREEMENT
Date: _________
SCHEDULE 1
Pledged Stock
Name of Corporation Number and Type of Shares Certificate No(s). Percentage of Total Shares
- ------------------- ------------------------- ------------------ --------------------------
A-4
EXHIBIT J-2
Form of Second Amended and Restated Guarantor
Stock Pledge and Security Agreement
See attached.
J-2-1
SECOND AMENDED AND RESTATED GUARANTOR
STOCK PLEDGE AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED GUARANTOR STOCK PLEDGE AND
SECURITY AGREEMENT (this "Agreement"), dated as of December 13, 2000, made by
COVENANT TRANSPORT, INC., a Tennessee corporation (the "Pledgor"), to BANK OF
AMERICA, N.A., a national banking association, acting as Collateral Agent under
the Intercreditor Agreement (as defined below) for the benefit of the
Participating Creditors (as defined below) (in such capacity, and together with
any successor thereto, the "Collateral Agent" or the "Secured Party").
W I T N E S S E T H:
WHEREAS, Connecticut General Life Insurance Company, on behalf
of one or more separate accounts, Connecticut General Life Insurance Company and
Life Insurance Company of North America (collectively, together with their
successors and assigns, the "Noteholders") have heretofore purchased $25,000,000
in aggregate principal amount of 7.39% Guaranteed Senior Notes, due October 1,
2005 (the "Notes"), issued by Covenant Asset Management, Inc., a Nevada
corporation (the "Borrower"), pursuant to that certain Note Purchase Agreement
(as the same may hereafter be amended, modified, supplemented, refinanced or
replaced, the "Note Agreement"), dated as of May 15, 2000, between the
Noteholders, the Borrower and Covenant Transport, Inc., a Nevada corporation
(the "Parent"). The Notes are guaranteed by the Parent pursuant to the Note
Agreement (the "Parent Note Guarantee"), and by the Subsidiary Guarantors (as
hereinafter defined), including Pledgor, pursuant to a Subsidiary Guaranty dated
as of May 15, 2000 (as it may hereafter be amended, modified, supplemented,
refinanced or replaced, and together with any other guaranty agreement hereafter
executed and delivered by any Subsidiary Guarantor pursuant to the terms of the
Note Agreement, the "Subsidiary Note Guaranty"); and
WHEREAS, the Borrower has entered into a certain Credit
Agreement (as amended, modified, supplemented, restated, or replaced from time
to time, the "Credit Agreement"), dated of even date herewith, with the Parent,
the financial institutions signatory thereto as lenders (together with each
other institution from time to time party to the Credit Agreement as a lender,
the "Lenders"), the Issuing Bank thereunder, and Bank of America, N.A., as
administrative agent (together with any successor thereto, the "Agent"; the
Lenders, the Issuing Bank and the Agent being collectively called the "Bank
Creditors"), pursuant to which the Bank Creditors have agreed to provide a
revolving credit facility and a letter of credit facility for the benefit of the
Obligors (as hereinafter defined); and
WHEREAS, the revolving credit facility and letter of credit
facility are being provided pursuant to the Credit Agreement to refinance those
certain revolving credit and letter of credit facilities provided to the
Borrower pursuant to the Prior Credit Agreement (as hereinafter defined); and
WHEREAS, the Pledgor has guaranteed the Obligations (as
hereinafter defined) of the Borrower arising under the Credit Agreement,
pursuant to the Subsidiary Guaranty Agreement
(as amended, modified, supplemented, restated, or replaced from time to time,
and together with any other guaranty agreement hereafter executed and delivered
by any Subsidiary Guarantor pursuant to the terms of the Credit Agreement, the
"Subsidiary Bank Guaranty"), dated of even date herewith, executed by the
Pledgor and certain other Subsidiary Guarantors in favor of the Bank Creditors;
and
WHEREAS, the Parent has guaranteed the Obligations of the
Borrower arising under the Credit Agreement, pursuant to the Parent Guaranty
Agreement (as amended, modified, supplemented, restated, or replaced from time
to time, the "Parent Bank Guaranty"), dated of even date herewith, executed by
the Parent in favor of the Bank Creditors; and
WHEREAS, the Noteholders previously entered into an Amended
and Restated Master Collateral and Intercreditor Agreement, dated as of June 6,
2000, among the Noteholders, the Prior Bank Creditors (as hereinafter defined)
and the Prior Collateral Agent, and acknowledged and agreed to by the Obligors,
(the "Prior Intercreditor Agreement"), in order to acknowledge their agreement
that the Obligors' obligations to each of the Noteholders under the Notes and
Note Agreement and the Prior Bank Creditors under the Prior Credit Agreement
would be secured on a pari passu basis, and to set forth their respective rights
in respect of any and all security or collateral securing the obligations of the
Obligors or any other guarantor to the Noteholders under the Notes and Note
Agreement or to the Prior Bank Creditors under the Prior Credit Agreement; and
WHEREAS, the Pledgor previously entered into an Amended and
Restated Guarantor Stock Pledge and Security Agreement, dated as of June 6,
2000, among the Pledgor and the Prior Collateral Agent, for the benefit of the
Noteholders and the Prior Bank Creditors (the "Prior Stock Pledge and Security
Agreement"), in order to secure the prompt and complete payment, performance and
observance of the Obligations under the Note Agreement and the Prior Credit
Agreement, which security interest is intended to be continued hereby as to the
Noteholders; and
WHEREAS, the Noteholders and the Bank Creditors under the
Credit Agreement (together, the "Participating Creditors") have agreed that the
Borrower's obligations to each of them under the Note Agreement and the Credit
Agreement shall be secured on a pari passu basis, and are entering into the
Second Amended and Restated Master Collateral and Intercreditor Agreement dated
as of the date hereof (as it may hereafter be amended, modified, supplemented,
refinanced or replaced, the "Intercreditor Agreement"), with Bank of America,
N.A. as Collateral Agent, to amend and restate the Prior Intercreditor Agreement
insofar as the revolving credit and letter of credit facilities provided under
the Credit Agreement refinance and replace those revolving credit and letter of
credit facilities provided pursuant to the Prior Credit Agreement, and to set
forth their respective rights in respect of any and all security or collateral
now or hereafter securing the current Obligations of the Borrower or any other
Obligor to the Noteholders under the Notes and Note Agreement or the Bank
Creditors under the Credit Agreement; and
WHEREAS, subject to the terms and conditions of the
Intercreditor Agreement, the Noteholders and the Bank Creditors have appointed
the Collateral Agent to serve as collateral agent
-2-
under this Agreement, and the Collateral Agent has agreed to serve as collateral
agent under this Agreement; and
WHEREAS, the Collateral Agent, for the benefit of the
Participating Creditors, and the Pledgor are entering into this Second Amended
and Restated Guarantor Stock Pledge and Security Agreement to amend and restate
the Prior Stock Pledge and Security Agreement to secure or continue to secure
the prompt and complete payment, performance and observance of the Obligations
under the Note Agreement, the Credit Agreement and the other Credit Transaction
Documents (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants contained herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Pledgor hereby agrees in favor of Secured Party as follows:
1. DEFINED TERMS.
(a) When used herein, the following terms shall have the
following meanings:
"Actionable Default" shall mean any Event of Default under and
as defined in the Credit Agreement or any Event of Default under and as
defined in the Note Agreement.
"Affiliate" shall mean any Person (other than the Pledgor) (i)
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Pledgor, (ii) which beneficially owns or holds 5% or more of any class
of the voting stock of the Pledgor, (iii) of which the Pledgor or
shareholders of the Pledgor beneficially own or hold 5% or more of the
voting stock (or in the case of a Person which is not a corporation, 5%
or more of the equity interest), or (iv) who is a member of the Board
of Directors of the Pledgor or a member of the immediate family of any
such Person. The term "immediate family" of any Person shall include
the spouse, brothers, sisters and descendants of such Person. The term
"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 stock, by contract or
otherwise. The term "voting stock" means the shares of stock or other
equity interest of a Person that, in the normal course of affairs, have
the power to elect directors or the members of any policy making board
of such Person.
"Agent" shall have the meaning set forth in the recitals
hereto.
"Bank Creditors" shall have the meaning set forth in the
recitals hereto.
"Bank Guaranty" shall mean, collectively, the Parent Bank
Guaranty and the Subsidiary Bank Guaranty.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Tennessee; provided,
however, in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of
-3-
Secured Party's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the
State of Tennessee, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority
and for purposes of definitions related to such provisions.
"Collateral Agent" shall have the meaning set forth in the
recitals hereto.
"Credit Agreement" shall have the meaning set forth in the
recitals hereto.
"Credit Transaction Documents" shall mean the Note Agreement,
the Notes, the Notes Guarantee, the Bank Guaranty, the Credit
Agreement, the Security Documents, the other Loan Documents (as defined
in the Credit Agreement) and the Intercreditor Agreement.
"CTI" means Covenant Transport, Inc., a Tennessee corporation,
and its successors and assigns.
"Intercreditor Agreement" shall have the meaning set forth in
the recitals hereto.
"Lenders" shall have the meaning set forth in the recitals
hereto.
"Lien", as applied to the property or assets (or the income or
profits therefrom) of any Person, shall mean (in each case, whether the
same is consensual or nonconsensual or arises by contract, operation of
law, legal process or otherwise): any mortgage, security interest,
lien, pledge, attachment, financing statement, levy, charge, or other
encumbrance of any kind in respect of any property or assets of such
Person, or upon the income or profits therefrom. For this purpose, the
Pledgor shall be deemed to own subject to a Lien any asset that it has
acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Note Agreement" shall have the meaning set forth in the
recitals hereto.
"Noteholders" shall have the meaning set forth in the recitals
hereto.
"Notes" shall have the meaning set forth in the recitals
hereto.
"Notes Guarantee" shall mean, collectively, the Parent Note
Guarantee and the Subsidiary Note Guaranty.
"Obligations" shall mean all indebtedness, obligations or
liabilities (including, without limitation, all principal, interest,
premium, fees, reimbursement obligations, indemnity obligations,
collection costs and other amounts, ) now or hereafter owing by any or
all of the Obligors to any or all of the Participating Creditors and/or
the Collateral Agent under any or all of the Credit Transaction
Documents (and specifically including all
-4-
"Obligations" as defined in the Credit Agreement and the obligations of
the Subsidiary Guarantors under the Subsidiary Bank Guaranty).
"Obligors" shall mean the Borrower, the Pledgor, the other
Subsidiary Guarantors, the Parent and each other guarantor of the
Obligations arising under the Notes and the Note Agreement or the
Credit Agreement.
"Parent" shall have the meaning set forth in the recitals
hereto.
"Parent Bank Guaranty" shall have the meaning set forth in the
recitals hereto.
"Parent Note Guarantee" shall have the meaning set forth in
the recitals hereto.
"Participating Creditors" shall have the meaning set forth in
the recitals hereto.
"Person" means an individual, corporation, partnership,
limited liability company, trust or unincorporated organization, a
government or any agency or political subdivision thereof.
"Pledged Securities" shall have the meaning assigned to such
term in Section 4.2 hereof.
"Pledged Stock" shall have the meaning assigned to such term
in Section 3 hereof.
"Pledgor" shall mean Covenant Transport, Inc., a Tennessee
corporation.
"Post-Maturity Rate" shall mean (i) when used in respect of
Obligations owing to any Noteholder, the applicable default or
post-maturity rate specified in the Note Agreement or the Notes, (ii)
when used in respect of Obligations owing to any Bank Creditor, the
applicable Default Rate (as defined in the Credit Agreement), and (iii)
when used in respect of any other Obligations hereunder, the highest of
any of the foregoing default or post-maturity rates.
"Prior Bank Creditors" shall mean ABN AMRO Bank, N.V. ("ABN"),
as agent under the Prior Credit Agreement, and ABN, AmSouth Bank, N.A.
(successor by merger to First American National Bank), Bank of America,
N.A., Bank One, N.A., and SunTrust Bank, as lenders under the Prior
Credit Agreement.
"Prior Collateral Agent" shall mean First Union National Bank,
as Collateral Agent under the Prior Intercreditor Agreement.
"Prior Credit Agreement" shall mean that certain Amended and
Restated Credit Agreement dated as of June 18, 1999 among CTI, the
Borrower, and the Prior Bank Creditors, as further amended in that
certain Amendment to Amended and Restated Credit Agreement dated as of
June 6, 2000 among CTI, the Borrower, and the Prior Bank
-5-
Creditors (as the same may have been amended, restated, supplemented or
otherwise modified from time to time).
"Prior Intercreditor Agreement" shall have the meaning set
forth in the recitals hereto.
"Security Document" shall mean each of the documents and
agreements defined as a "Security Document" in the Note Agreement or a
"Security Instrument" in the Credit Agreement and shall include any and
all agreements, assignments, mortgages, deeds or other similar
documents under which the Collateral Agent is now or hereafter granted
a Lien in any collateral to secure the Obligations, including without
limitation this Agreement.
"Subsidiary Bank Guaranty" shall have the meaning set forth in
the recitals hereto.
"Subsidiary Guarantors" shall mean Covenant.com, Inc.
(formerly known as Covenant Acquisition Co. and C & F Acquisition Co.),
a Nevada corporation, CIP, Inc. (formerly known as Intellectual
Property Co.), a Nevada corporation, Southern Refrigerated Transport,
Inc., an Arkansas corporation, Tony Smith Trucking, Inc., an Arkansas
corporation, Harold Ives Trucking Co., an Arkansas corporation,
Terminal Truck Broker, Inc., an Arkansas corporation, Pledgor, and any
other subsidiary, direct or indirect, of the Parent that may hereafter
become a party to a guaranty agreement pursuant to the terms of the
Credit Agreement or the Note Agreement.
"Subsidiary Note Guaranty" shall have the meaning set forth in
the recitals hereto.
(b) The definitions in this Section 1 shall apply equally to
both the singular and plural forms of the terms defined, with the exception of
the term "Borrower." Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles and Sections shall be deemed
references to Articles and Sections of this Agreement unless the context shall
otherwise require. All references herein to any Person, other than an Obligor,
shall be deemed to include such Person's successors, transferees and assigns.
All references herein to any Obligor shall be deemed to include such Obligor's
successors. All references herein to any Credit Transaction Document shall be to
such document as the terms thereof may have been amended, supplemented, waived
or otherwise modified from time to time in accordance with the terms thereof and
hereof.
2. SECURITY FOR OBLIGATIONS ETC. This Agreement is for the
benefit of the Secured Party, as collateral agent for the benefit of the
Participating Creditors, to secure the prompt and complete payment, performance
and observance of the Obligations, including without limitation all Obligations
incurred by the Pledgor pursuant to each of the Subsidiary Note Guaranty and the
Subsidiary Bank Guaranty.
-6-
3. PLEDGED STOCK. As used herein, the term "Pledged Stock"
shall mean all of the issued and outstanding shares of every class of capital
stock of the Subsidiaries of the Pledgor set forth on Schedule 1, and all other
shares of such stock or other equity interests issued by or equity
participations in any Subsidiary of the Pledgor which may be now or hereafter
owned by the Pledgor. The Pledgor represents and warrants that on the date
hereof (a) the Pledged Stock consists of the number and type of shares of the
capital stock of the Subsidiaries of the Pledgor as described on Schedule 1
attached hereto; (b) the Pledgor is the holder of record and sole beneficial
owner of such Pledged Stock; and (c) the Pledged Stock constitutes the
percentage of the issued and outstanding capital stock of each of such
Subsidiaries as set forth on Schedule 1.
4. PLEDGE OF SECURITIES, ETC.
4.1 Pledge. To secure the full and timely payment,
performance, and observance of the Obligations and for the purposes set forth in
Section 2, the Pledgor hereby pledges and grants to the Secured Party a security
interest in the Pledged Stock, together with (i) the certificates representing
such Pledged Stock accompanied by stock powers duly executed in blank by the
Pledgor, (ii) all dividends (whether in cash, stock, warrants, options, or other
securities), cash, instruments or other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any and all
of the Pledged Stock, and (iii) all proceeds of any of the foregoing; and the
Pledgor hereby assigns, transfers, hypothecates and sets over to the Secured
Party all of the Pledgor's right, title and interest in and to the Pledged Stock
(and in and to the certificates or instruments evidencing the items described in
clauses (i) and (ii) above) to be held by the Secured Party, upon the terms and
conditions set forth in this Agreement. The Pledgor agrees to deliver to the
Secured Party the items described in clause (i) above on the date hereof, and
all certificates and instruments evidencing the items described in clause (ii)
above promptly upon the Pledgor's receipt thereof.
4.2 Definition of Pledged Securities and Collateral. The
Pledged Stock and all items described in clause (ii) of Section 4.1 are
hereinafter called the "Pledged Securities", and the Pledged Securities,
together with all other securities and monies and other property pledged to the
Secured Party hereunder and any proceeds of any of the foregoing, are
hereinafter called the "Collateral".
5. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Secured
Party shall have the right to appoint one or more agents for the purpose of
retaining physical possession of the Pledged Stock or any other Collateral
pledged hereunder, which may be held (if applicable and in the discretion of the
Secured Party) in the name of the Pledgor, endorsed or assigned in blank or in
favor of the Secured Party or any nominee or nominees of the Secured Party or an
agent appointed by the Secured Party.
6. VOTING, ETC. Unless and until an Actionable Default shall
have occurred and be continuing or would be caused thereby, the Pledgor shall be
entitled to vote any and all Pledged Stock and to give consents, waivers or
ratifications in respect thereof; provided that no vote shall be cast or any
consent, waiver or ratification given or any action taken which would violate or
be inconsistent with any of the terms of this Agreement or any other Credit
Transaction Document; provided, further, that the Pledgor shall give the Secured
Party at least ten (10) days'
-7-
written notice of the manner in which it intends to exercise, or the reasons for
refraining from exercising, any such right if the exercise or non-exercise of
such right potentially may violate or be inconsistent with the aforementioned
agreements. All such rights of the Pledgor to vote and to give consents, waivers
and ratifications shall cease in case an Actionable Default shall occur and be
continuing, and Section 8 hereof shall become applicable.
7. DIVIDENDS AND OTHER DISTRIBUTIONS. In accordance with
Section 4.1, the Pledgor shall at all times be required to deliver to the
Collateral Agent, promptly upon receipt thereof, each of the following, which
the Secured Party shall be allowed to retain as part of the Collateral:
(a) all other or additional stock or securities or
property (other than cash) paid or distributed by way of dividend in
respect of the Pledged Securities;
(b) all other or additional stock or other securities
or property (including cash) paid or distributed in respect of the
Pledged Securities by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(c) all other or additional stock or other securities
or property which may be paid in respect of the Pledged Securities by
reason of any consolidation, merger, exchange of stock, conveyance of
assets, liquidation or similar corporate reorganization.
Unless an Actionable Default shall have occurred and be continuing or
would be caused thereby, all cash dividends payable in respect of the Pledged
Securities shall be paid to the Pledgor, but only to the extent (if any)
permitted by the Credit Transaction Documents. Upon the occurrence and at all
times during the continuance of an Actionable Default, the Secured Party shall
be entitled to receive directly, and to retain as part of the Collateral, all
such cash dividends. In the event that at any such time any such cash dividends
are paid directly to the Pledgor, the Pledgor shall hold the same in trust for
the benefit of the Collateral Agent and shall promptly cause all such cash
dividends to be delivered to the Agent.
7.1 Additional Interests. The Pledgor agrees and
covenants that it will cause each Subsidiary of the Pledgor not to issue any
stock or other securities in addition to or in substitution for the Pledged
Stock set forth on Schedule 1 except to the Pledgor. If the Pledgor shall at any
time acquire or hold any additional Pledged Stock, including any Pledged Stock
issued by any Subsidiary not listed on Schedule I hereto which is required to be
subject to a Lien pursuant to the terms hereof or of Article V or Article IX of
the Credit Agreement or any other provision of any Credit Transaction Document
(any such shares or other equity interests or equity participations being
referred to herein as the "Additional Interests"), the Pledgor shall deliver to
the Secured Party for the benefit of the Participating Creditors (i) a revised
Schedule I hereto reflecting the ownership and pledge of such Additional
Interests, (ii) a Pledge Agreement Supplement in the form of Exhibit A hereto
with respect to such Additional Interests duly completed and executed by the
Pledgor, (iii) any other document required in connection with
-8-
such Additional Interests as described in Section 4.1 or as otherwise required
by the Credit Transaction Documents and (iv) any other instruments, agreements,
financing statements (and amendments thereto and continuations thereof),
assignments, control agreements, or other writings as the Secured Party may
request from time to time to protect or enforce the Collateral Agent's Lien and
security interest in the Additional Interests for the benefit of the
Participating Creditors. The Pledgor shall comply with the requirements of this
Section 7.1 concurrently with the acquisition of any such Additional Interests;
provided, however, that the failure to comply with the provisions of this
Section 7.1 shall not impair the Lien on Additional Interests conferred by the
Pledgor to the Collateral Agent for the benefit of the Participating Creditors
hereunder.
8. DEFAULT; REMEDIES. In case an Actionable Default shall have
occurred and be continuing, the Secured Party shall be entitled to exercise all
of the rights, powers and remedies (whether vested in it by this Agreement or
any other Credit Transaction Document, or by law, and including, without
limitation, all rights and remedies of a secured party of a debtor in default
under the Code) for the protection and enforcement of its rights in respect of
the Collateral, and the Secured Party shall be entitled, without limitation, to
exercise the following rights, which the Pledgor hereby agrees to be
commercially reasonable:
(i) upon the declaration by the applicable Participating
Creditor of any or all of the Obligations to be immediately due and
payable or upon any or all of such Obligations otherwise becoming due
and payable, to foreclose or otherwise enforce the Secured Party's
security interest in or other Lien hereunder on any or all of the
Collateral in any manner permitted by law or provided for in this
Agreement;
(ii) to recover from the Pledgor all cost and expenses,
including, without limitation, reasonable attorney's fees, incurred or
paid by or on behalf of the Secured Party in exercising or enforcing
any right, power, or remedy with respect to any or all of the
Collateral provided to the Secured Party by this Agreement or by
applicable law;
(iii) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 7 to the Pledgor and to
enforce the payment of the Pledged Securities and to exercise all of
the rights, powers, and remedies of the Pledgor thereunder;
(iv) to transfer all or any part of the Collateral into the
Secured Party's name or the name of its nominee or nominees;
(v) to vote all or any part of the Collateral (whether or not
transferred into the name of the Secured Party) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise
act with respect thereto as though it were the outright owner thereof;
(vi) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral in one or more parcels, or any interest therein, at any
public or private sale at any exchange, broker's board or at any
-9-
of the Secured Party's offices or elsewhere, without, to the fullest
extent permitted by law, demand of performance or advertisement of
intention to sell or of the time or place of sale or adjournment
thereof or to redeem or otherwise (all of which are hereby expressly
and irrevocably waived by the Pledgor), for cash, on credit or for
other property, for immediate or future delivery without any assumption
of credit risk, and for such price or prices and on such terms as the
Secured Party in its sole discretion may determine; the Pledgor agrees
that at least ten (10) days' notice of sale to the Pledgor of the time
and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification; the Secured
Party shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given; the Secured Party may adjourn any
public or private sale from time to time by announcement at the time
and place fixed therefor, and any such sale may, without further
notice, be made at the time and place to which it was so adjourned; the
Pledgor hereby waives and releases to the fullest extent permitted by
law any right or equity of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of
marshaling the Collateral and any other security for the Obligations or
otherwise; at any such sale, unless prohibited by applicable law, the
Secured Party may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption;
and the Secured Party shall not be liable for failure to collect or
realize upon any or all of the Collateral or for any delay in so doing
nor shall the Secured Party be under any obligation to take any action
whatsoever with regard thereto. Pledgor recognizes that the Secured
Party may be unable to effect a public sale of the Collateral by reason
of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state law, and may be
otherwise delayed or adversely affected in effecting any sale by reason
of present or future restrictions thereon imposed by governmental
authorities, and that as a consequence of such prohibitions and
restrictions the Secured Party may be compelled (i) to resort to one or
more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire the Collateral for
their own account, for investment and not with a view to the
distribution or resale thereof, or (ii) to seek regulatory approval of
any proposed sale or sales, or (iii) to limit the amount of Collateral
sold to any Person or group. The Pledgor agrees and acknowledges that
private sales so made may be at prices and upon terms less favorable to
Pledgor than if such Collateral was sold either at public sales or at
private sales not subject to other regulatory restrictions, and that
the Secured Party has no obligation to delay the sale of any of the
Collateral for the period of time necessary to permit the issuer of the
Pledged Stock to register or otherwise qualify it, even if such issuer
would agree to register or otherwise qualify such Collateral for public
sale under the Securities Act or applicable state law. The Pledgor
further agrees, to the extent permitted by applicable law, that the use
of private sales made under the foregoing circumstances to dispose of
the Collateral shall be deemed to be dispositions in a commercially
reasonable manner. The Pledgor hereby acknowledges that a ready market
may not exist for the Pledged Stock if it is not traded on a national
securities exchange or quoted on an automated quotation system and
agrees and acknowledges that in such event the Pledged Stock may be
sold for an amount less
-10-
than a pro rata share of the fair market value of the issuer's assets
minus its liabilities. In addition to the foregoing, the Secured Party
may exercise such other rights and remedies as may be available under
the Credit Transaction Documents, at law (including without limitation
the Code) or in equity;
(vii) to settle, adjust, compromise and arrange all accounts,
controversies, questions, claims and demands whatsoever in relation to
all or any part of the Collateral;
(viii) to execute all such contracts, agreements, deeds,
documents and instruments; to bring, defend and abandon all such
actions, suits and proceedings; and to take all actions in relation to
all or any part of the Collateral as the Secured Party in its sole
discretion may determine;
(ix) to appoint managers, agents, officers and servants for
any of the purposes mentioned in the foregoing provisions of this
Section 8 and to dismiss the same, all as the Secured Party in its sole
discretion may determine; and
(x) generally, to take all such other action as the Secured
Party in its sole discretion may determine as incidental or conducive
to any of the matters or powers mentioned in the foregoing provisions
of this Section 8 and which the Secured Party may or can do lawfully
and to use the name of the Pledgor for the purposes aforesaid and in
any proceedings arising therefrom.
9. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Secured Party provided for in this Agreement or any other Credit Transaction
Document or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Secured Party
of any one or more of the rights, powers or remedies provided for in this
Agreement or any other Credit Transaction Document or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Secured Party of all such other rights,
powers or remedies, and no failure or delay on the part of the Secured Party to
exercise any such right, power or remedy shall operate as a waiver thereof.
10. APPLICATION OF PROCEEDS. All monies collected by the
Secured Party upon any sale or other disposition of the Collateral, together
with all other monies received by the Secured Party hereunder, shall be applied
in accordance with the terms of the Intercreditor Agreement.
11. PURCHASERS OF COLLATERAL. Upon any sale of any of the
Collateral hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Secured Party or
the officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Secured Party or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
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12. FURTHER ASSURANCES. The Pledgor agrees that it will join
with the Secured Party in executing and, at its own expense, file and refile
under the Code such financing statements, continuation statements and other
documents in such offices as the Secured Party may deem necessary or appropriate
and wherever required or permitted by law in order to perfect and preserve the
Secured Party's security interest in the Collateral and hereby authorizes the
Secured Party to file financing statements and amendments thereto relative to
all or any part of the Collateral without the signature of the Pledgor where
permitted by law, and agrees to do such further acts and things and to promptly
execute and deliver to the Secured Party such additional conveyances,
assignments, agreements and instruments as the Secured Party may reasonably
require or deem advisable to carry into effect the purposes of this Agreement or
to further assure and confirm unto the Secured Party its rights, powers and
remedies hereunder.
All filing fees, advances, charges, costs and expenses, including
reasonable attorneys' fees, incurred or paid by the Collateral Agent or any
Participating Creditor in exercising any right, power or remedy conferred by
this Pledge Agreement, or in the enforcement thereof, shall become a part of the
Obligations secured hereunder and shall be paid to the Collateral Agent for the
benefit of the Participating Creditors by the Pledgor immediately upon demand
therefor, and any amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the date of
demand until paid in full at the Post-Maturity Rate.
13. THE SECURED PARTY AS COLLATERAL AGENT.
(a) The Secured Party will hold in accordance with this
Agreement and the other Credit Transaction Documents all items of the Collateral
at any time received under this Agreement. It is expressly understood and agreed
that the obligations of the Secured Party as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement, the
Intercreditor Agreement, and the other Credit Transaction Documents.
(b) The Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Secured Party accords other similar property held in a similar
capacity as collateral agent, it being understood that the Secured Party shall
not have responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Collateral.
14. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants that (i) it is the legal record and beneficial owner of,
and has good and marketable title to, the Pledged Stock described in Section 3
hereof, subject to no pledge, Lien, mortgage, hypothecation, security interest,
charge, option or other encumbrance whatsoever, except the Liens and security
interests created by this Agreement or expressly permitted by this Agreement or
the other Credit Transaction Documents; (ii) it has full power, authority and
legal right to pledge
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all the Pledged Stock pursuant to this Agreement; (iii) no consent of any other
party (including, without limitation, any stockholder or creditor of the Pledgor
or any Subsidiary) and no order, consent, license, permit, approval, validation
or authorization of, exemption by, notice to or registration, recording, filing
or declaration with, any governmental or public body or authority is required to
be obtained by the Pledgor in connection with the execution, delivery or
performance of this Agreement or consummation of the transactions contemplated
hereby, including, without limitation, the exercise by the Secured Party of the
voting or other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of the Pledged Securities by laws affecting the
offering and sale of securities generally (or except as may already have been
obtained); (iv) all shares of Pledged Stock have been duly and validly issued,
are fully paid and nonassessable; (v) the pledge and delivery of the Pledged
Securities pursuant to this Agreement creates a valid and perfected first
priority security interest in the Pledged Securities, and the proceeds thereof,
which security interest is not subject to any prior Lien or encumbrance or any
agreement purporting to grant to any third party a Lien or encumbrance on the
property or assets of the Pledgor which would include the Pledged Securities;
(vi) execution, delivery, and performance of this Agreement will not violate, or
cause default under or result in a Lien (other than the Secured Party's security
interest and Lien hereunder) upon any property of the Pledgor pursuant to, any
applicable law, rule or regulation or any agreement, indenture, judgment, order,
decree, or instrument binding upon or affecting the Pledgor or any of the
Collateral; (vii) all information heretofore, herein, or hereafter supplied to
the Secured Party by or on behalf of the Pledgor with respect to any of the
Collateral is or will be true and correct in all material respects at the time
so supplied; and (viii) the Pledgor has delivered to the Secured Party all
instruments, documents, and chattel paper, and other items of Collateral in
which the Secured Party's security interest or lien hereunder must be perfected
by possession, together with such additional writings, including, without
limitation, duly executed blank and undated assignments and stock powers, with
respect thereto as the Secured Party shall request.
15. COVENANTS OF THE PLEDGOR.
(a) The Pledgor covenants and agrees that (i) the
Pledgor will defend the Secured Party's right, title and security interest in
and to the Pledged Securities and the proceeds thereof against the claims and
demands of all persons whomsoever; (ii) the Pledgor will have like title to and
right to pledge any other property at any time hereafter pledged to the Secured
Party as Collateral hereunder and will likewise defend the right thereto and
security interest therein of the Secured Party; (iii) the Pledgor shall do all
acts that may be necessary to maintain, preserve, and protect the Collateral;
(iv) the Pledgor shall not sell or encumber or otherwise dispose of or transfer
any Collateral or any right or interest therein, and the Pledgor shall keep the
Collateral free of all levies, security interests or other liens, charges or
encumbrances except those Liens and security interests created by this Agreement
or expressly permitted by this Agreement or the other Credit Transaction
Documents or those approved in writing by the Secured Party; and (v) the Pledgor
will not, with respect to any Collateral, enter into any shareholder agreements,
voting agreements, voting trusts, trust deeds, irrevocable proxies or any other
similar agreements or instruments.
(b) At no time shall any Pledged Stock (i) be held or
maintained in the form of a security entitlement or credited to any securities
account or (ii) which constitutes a
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"security" (or as to which the issuer thereof has elected to have treated as a
"security") under Article 8 of the Code, be maintained in the form of
uncertificated securities. With respect to Pledged Stock that are "securities"
under the Code, or as to which the issuer thereof has elected at any time to
have such interests treated as "securities" under the Code, such Pledged Stock
is, and shall at all times be, represented by the share certificates listed on
Schedule I hereto, which share certificates, with stock powers duly executed in
blank by the Pledgor (which blank stock powers shall be sufficient to transfer
title from the Pledgor once completed and dated), have been delivered to the
Agent or are being delivered to the Agent simultaneously herewith or, in the
case of Additional Interests as defined in Section 7.1, shall be delivered
pursuant to Section 7.1. At no time shall the Pledgor elect, or cause or allow
any Subsidiary Guarantor or other issuer of Pledged Stock to elect, not to treat
any Pledged Stock as a "security" under Article 8 of the Code if such election
is available.
16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of
the Pledgor under this Agreement shall be absolute and unconditional in
accordance with its terms and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: (a) any change in the time, place or manner of payment of,
or in any other term of, all or any of the Obligations, any waiver, indulgence,
renewal, extension, amendment or modification of or addition, consent or
supplement to or deletion from or any other action or inaction under or in
respect of the Credit Transaction Documents or any of the other documents,
instruments or agreements relating to the Obligations or any other instrument or
agreement referred to therein or any assignment or transfer of any thereof; (b)
any lack of validity or enforceability of the Credit Transaction Documents or
any other documents, instruments or agreement referred to therein or any
assignment or transfer of any thereof; (c) any furnishing of any additional
security to the Secured Party or any Participating Creditor, or any assignee
thereof or any acceptance thereof or any release of any security by the Secured
Party or any Participating Creditor or any assignee thereof; (d) any limitation
on any party's liability or obligations under any such instrument or agreement
or any invalidity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof; (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor, the Borrower or the Parent, or any action
taken with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not the Pledgor shall have notice or
knowledge of any of the foregoing; or (f) any exchange, release or nonperfection
of any other collateral, or any release, or amendment or waiver of or consent to
departure from any guaranty or security, for all or any of the Obligations.
17. NOTICES, ETC. All notices, requests and other
communications provided for hereunder shall be in writing and personally
delivered (including overnight courier), mailed by certified or registered mail,
postage prepaid and return receipt requested, or telecopied (all telecopier
notices promptly to be confirmed by mail or personal delivery), at the address
and telecopier number of each party specified on the signature page hereof, or
at such other address or telecopier number as may be hereafter designated by
notice as herein provided. All such notices and communications shall be
effective or deemed delivered or furnished (i) if given by mail, on the third
business day after such communication is deposited in the mail, addressed as
provided herein, (ii) if given by telecopier, when such communication is
transmitted to the appropriate number
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determined as provided herein and the appropriate answer-back is received or
receipt is otherwise acknowledged, and (iii) if given by hand delivery or
overnight courier, when left at the address of the addressee addressed as
provided above; except that notices of a change of address or telecopier number
shall not be effective until actually received.
18. POWER OF ATTORNEY. The Pledgor hereby absolutely and
irrevocably constitutes and appoints the Secured Party the Pledgor's true and
lawful agent and attorney-in-fact, with full power of substitution, in the name
of the Pledgor: (a) to execute and do all such assurances, acts and things which
the Pledgor ought to do but has failed to do under the covenants and provisions
contained in this Agreement; (b) to take any and all such action as the Secured
Party may, in its sole discretion, determine as necessary or advisable for the
purpose of maintaining, preserving or protecting the security constituted by
this Agreement or any of the rights, remedies, powers or privileges of the
Secured Party under this Agreement; and (c) generally, in the name of the
Pledgor exercise all or any of the powers, authorities, and discretion conferred
on or reserved to the Secured Party by or pursuant to this Agreement, and
(without prejudice to the generality of any of the foregoing) to seal and
deliver or otherwise perfect any instrument or document of conveyance,
agreement, or act as the Secured Party may deem proper in or for the purpose of
exercising any of such powers, authorities or discretion. The Pledgor hereby
ratifies and confirms, and hereby agrees to ratify and confirm, whatever lawful
acts the Secured Party shall do or purport to do in the exercise of the power of
attorney granted to the Secured Party pursuant to this Section 18, which power
of attorney, being given for security, is irrevocable.
19. REINSTATEMENT. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against the Pledgor, the Borrower or the Parent for liquidation or
reorganization, should the Pledgor, the Borrower or the Parent become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of their respective assets,
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a "voidable
preference", "fraudulent conveyance" or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
20. TERMINATION, RELEASE. Subject to Section 19 hereof, this
Agreement shall terminate upon the first day following the occurrence of the
Facility Termination Date (as defined in the Credit Agreement) and the repayment
in full of all Obligations.
21. MISCELLANEOUS.
(a) The Pledgor agrees with the Secured Party that
each of the obligations and liabilities of the Pledgor to the Secured Party
under this Agreement may be enforced against the Pledgor without the necessity
of joining the Borrower, any other holders of pledges of or security interests
in any of the Collateral, or any other Person as a party. This Agreement and the
Intercreditor Agreement contain the entire agreement between the Secured Party
-15-
and the Pledgor with respect to the Collateral and supersedes all prior
agreements, commitments, understandings, negotiations, or correspondence between
them with respect thereto. This Agreement shall create a continuing security
interest in the Collateral. This Agreement may be changed, waived, discharged or
terminated only in accordance with the provisions of the Credit Transaction
Documents. Unless otherwise defined herein, terms defined in Article 9 of the
Code in the State of Tennessee are used herein as therein defined. The headings
in this Agreement are for purposes of reference only and shall not limit or
define the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
(b) This Pledge Agreement, and the terms, covenants
and conditions hereof, shall be binding upon and inure to the benefit of the
parties hereto, and to their respective successors and assigns, except that the
Pledgor shall not be permitted to assign this Pledge Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Agent as Collateral under this Pledge Agreement.
Without limiting the generality of the foregoing sentence of this Section 21(b),
any Participating Creditor may assign to one or more Persons, or grant to one or
more Persons participations in or to, all or any part of its rights and
obligations under the Credit Agreement (to the extent permitted by the Credit
Agreement) and the Note Agreement (to the extent permitted by the Note
Agreement); and to the extent of any such assignment or participation such other
Person shall, to the fullest extent permitted by law, thereupon become vested
with all the benefits in respect thereof granted to such Participating Creditor
herein or otherwise, subject however, to the provisions of the various Credit
Transaction Documents. All references herein to the Collateral Agent or the
Secured Party and to the Participating Creditors shall include any successor
thereof or permitted assignee, and any other obligees from time to time of the
Obligations.
(c) The Secured Party, for the benefit of the
Participating Creditors, and the Pledgor hereby consent to and agree with the
terms of the Intercreditor Agreement and hereby acknowledge and agree that each
Lien in all Collateral now owned or hereafter acquired and all remedies
available with respect to such Collateral are subject to the terms of the
Intercreditor Agreement.
22. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed by the internal laws of the State of Tennessee.
23. Judicial Proceedings; Waiver of Jury Trial. ANY JUDICIAL
PROCEEDING BROUGHT AGAINST THE PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF TENNESSEE, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PLEDGOR (A) ACCEPTS, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY
RELATED APPELLATE COURT, AND IRREVOCABLY AGREES
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(WITHOUT WAIVING ANY RIGHT TO APPEAL) TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, AND (B) IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS THAT
SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED (WITH A COPY BY OVERNIGHT COURIER), AT ITS ADDRESS SPECIFIED
OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 17 HEREOF, AND
SERVICE SO MADE SHALL BE DEEMED COMPLETED ON THE FIFTH DAY AFTER SUCH SERVICE IS
DEPOSITED IN THE MAIL. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE SECURED PARTY
TO BRING PROCEEDINGS AGAINST THE PLEDGOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE PLEDGOR AGAINST THE SECURED PARTY
OR ANY PARTICIPATING CREDITOR INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT SHALL BE
BROUGHT ONLY IN A COURT LOCATED IN THE CITY OF CHATTANOOGA, STATE OF TENNESSEE.
THE PLEDGOR AND THE SECURED PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH ANY ARE
PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER AND WHETHER ARISING OR
ASSERTED BEFORE OR AFTER THE AGREEMENT DATE OR BEFORE OR AFTER PAYMENT,
OBSERVANCE AND PERFORMANCE IN FULL OF THE PLEDGOR'S OBLIGATIONS HEREUNDER OR
THEREUNDER.
24. Limitation of Liability. Neither the Secured Party nor any
Participating Creditor, nor any affiliate thereof, shall have any liability with
respect to, and EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE PLEDGOR
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES (AS OPPOSED TO DIRECT DAMAGES) SUFFERED BY THE
PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
25. Indemnification. Without limitation of Section 13.9 of the
Credit Agreement or any other indemnification provision in the Credit Agreement
or any other Credit Transaction Document, the Pledgor agrees to indemnify and
hold harmless the Secured Party, the Participating Creditors, and each of their
affiliates, and their respective officers, directors, employees, agents, and
advisors (each, an "Indemnified Party"), from and against any and all
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claims, damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of defense in
connection therewith) the Credit Transaction Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
extensions of credit under the Credit Transaction Documents except to the extent
such claim, damage, loss, liability, cost, or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section 25 applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by the Borrower, the
Pledgor or any other Obligor, any of their respective directors, shareholders or
creditors, or an Indemnified Party or any other Person, or any Indemnified Party
is otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated.
26. Swap Agreements. All obligations of the Borrower under
Swap Agreements (as defined in the Credit Agreement) to which any Participating
Creditor or its affiliates are a party shall be deemed to be Obligations secured
hereby (unless otherwise agreed in writing by such Participating Creditor), and
each Participating Creditor or affiliate of a Participating Creditor party to
any such Swap Agreement shall be deemed to be a Secured Party hereunder.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to
be executed by its duly authorized officer as of the date first above written.
COVENANT TRANSPORT, INC.,
a Tennessee corporation
By:______________________________________
Name: Joey B. Hogan
Title: Treasurer
Address for Notices:
Covenant Transport, Inc.
400 Birmingham Highway
Chattanooga, Tennessee 37404
Telecopier No.: (423) 821-5442
Telephone No.: (423) 821-1212
Attention: Joey B. Hogan
Treasurer
ACCEPTED BY:
BANK OF AMERICA, N.A.,
as Collateral Agent
By:_____________________________________
Name:
Title:
Address for Notices:
Bank of America, N.A.
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
Second Amended and Restated Guarantor Stock Pledge and Security Agreement
Signature Page 1 of 1
SCHEDULE 1
Pledged Stock
Percentage of
Name of Corporation Number and Type of Shares Certificate No(s). Total Shares
- ------------------- ------------------------- ----------------- ------------
Covenant.com, Inc., a Nevada 10,000 shares of $.01 par value 3 100%
corporation common stock
CIP, Inc., a Nevada corporation 10,000 shares of $.01 par value 3 100%
common stock
Harold Ives Trucking Co., an 2,000 shares of $1.00 par value 7 100%
Arkansas corporation common stock
Terminal Truck Broker, Inc., 61 shares of no par value common 13 100%
an Arkansas corporation stock
S-1
EXHIBIT A
STOCK PLEDGE AND SECURITY AGREEMENT SUPPLEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT SUPPLEMENT (as from time to
time amended, modified or restated, this " Supplement"), dated as of
______________ ___, 20__ is made by and between Covenant Transport, Inc., a
Tennessee corporation (the "Pledgor"), and BANK OF AMERICA, N.A., a national
banking association, as Collateral Agent for the Participating Creditors (as
described in the Pledge Agreement referred to below). All capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned
thereto in the Pledge Agreement (as defined below).
WHEREAS, the Pledgor is required under the terms of the Credit
Transaction Documents and that certain Second Amended and Restated Guarantor
Stock Pledge and Security Agreement dated as of December ___, 2000 by the
Pledgor in favor of the Collateral Agent for the benefit of the Participating
Creditors (as from time to time amended, modified, supplemented or amended and
restated, the "Pledge Agreement"), to cause certain Pledged Stock held by it and
listed on Annex A to this Supplement (the "Additional Interests") to be
specifically identified as subject to the Pledge Agreement; and
WHEREAS, a material part of the consideration given in connection with
and as an inducement to the execution and delivery of the various Credit
Transaction Documents by the Participating Creditors was the obligation of the
Pledgor to pledge to the Collateral Agent for the benefit of the Participating
Creditors the Additional Interests, whether then owned or subsequently acquired
or created; and
WHEREAS, the Pledgor has acquired rights in the Additional Interests
and desires to pledge, and evidence its prior pledge, to the Collateral Agent
for the benefit of the Participating Creditors all of the Additional Interests
in accordance with the terms of the Pledge Agreement and the other Credit
Transaction Documents;
NOW, THEREFORE, the Pledgor hereby agrees as follows with the
Collateral Agent, for the benefit of the Participating Creditors:
The Pledgor hereby reaffirms and acknowledges the pledge and collateral
assignment to, and the grant of security interest in, the Additional Interests
contained in the Pledge Agreement and pledges and collaterally assigns to the
Collateral Agent for the benefit of the Participating Creditors, and grants to
the Collateral Agent for the benefit of the Participating Creditors a first
priority lien and security interest in, the Additional Interests and all of the
following:
(a) all dividends (whether in cash, stock, warrants, options,
or other securities), cash, instruments or other property from time to
time received, receivable, or otherwise distributed in respect of or in
exchange for any and all of the Additional Interests;
A-1
(b) all other property hereafter delivered to the Collateral
Agent in substitution for or as an addition to any of the foregoing,
and all certificates and instruments representing or evidencing such
property; and
(c) all proceeds of any of the foregoing.
The Pledgor hereby acknowledges, agrees and confirms by its execution of this
Supplement that the Additional Interests constitute "Pledged Stock" under and
are subject to the Pledge Agreement, and the items of property referred to in
clauses (a) through (c) above (the "Additional Collateral") shall collectively
constitute "Collateral" under and are subject to the Pledge Agreement. Each of
the representations and warranties with respect to Pledged Stock and Collateral
contained in the Pledge Agreement is hereby made by the Pledgor with respect to
the Additional Interests and the Additional Collateral, respectively. The
Pledgor further represents and warrants that a true, correct and complete
revised Schedule I to the Pledge Agreement reflecting the Additional Interests
and all other Pledged Stock is attached hereto and hereby incorporated by
reference into the Pledge Agreement, and that all other documents required to be
furnished to the Collateral Agent pursuant to Section 4.1 of the Pledge
Agreement in connection with the Additional Collateral have been delivered or
are being delivered simultaneously herewith to the Collateral Agent.
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed by its authorized officer as of the day and year first above written.
PLEDGOR:
By:______________________________________
Name:____________________________________
Title:___________________________________
Acknowledged and accepted:
BANK OF AMERICA, N.A.,
as Collateral Agent for the Participating Creditors
By:__________________________________________
Name:________________________________________
Title:_______________________________________
A-2
ANNEX A
(to Pledge Agreement Supplement of __________ dated __________)
Additional Interests
Percentage of
Name of Corporation Number and Type of Shares Certificate No(s). Total Shares
- ------------------- ------------------------- ----------------- ------------
A-3
REVISED SCHEDULE I TO SECURITIES PLEDGE AGREEMENT
Date: __________
Pledged Stock
Percentage of Total
Name of Corporation Number and Type of Shares Certificate No(s). Shares
- ------------------- ------------------------- ----------------- ------
A-4
EXHIBIT K
Form of Borrowing Base Certificate
Bank of America, N.A., successor
to NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9436
Reference is hereby made to the Credit Agreement dated as of December
13 2000, (as from time to time amended, restated, modified, replaced, or
supplemented the "Agreement") among Covenant Asset Management, Inc., a Nevada
corporation ("Borrower"), Covenant Transport, Inc., a Nevada corporation, the
Lenders (as defined in the Agreement) and Bank of America, N.A., as Agent for
the Lenders ("Agent"). Capitalized terms used but not otherwise defined herein
shall have the respective meanings therefor set forth in the Agreement. The
undersigned, duly authorized and acting Authorized Representatives of the
Borrower and the Parent, hereby certifies to you as of _____________, 20___ (the
"Determination Date") as follows:
Availability under Revolving Credit Facility
I. Eligible Revenue Equipment
Borrowing
Revenue Equipment: Gross Eligible Advance % Base Amount
- ----------------- ----- -------- --------- -----------
Southern Refrigerated Transport, Inc. ______ ______ ______ ______
Covenant Transport, Inc. ______ ______ ______ ______
Total: ______ ______ ______ ______ (I)
II. Aggregate Senior Note Outstandings: ______ (II)
TOTAL BORROWING BASE (I-II): __________________________*
*Not to exceed Total Revolving
Credit Commitment.
K-1
III.
1. Total Borrowing Base: $______________________
2. Revolving Credit Outstandings $______________________
3. Availability [1-2] $_____________________*
* If negative, immediate prepayment of the amount of such deficit is
required.
IN WITNESS WHEREOF, we have executed this Certificate this __ day of
__________, 20___.
COVENANT ASSET MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
COVENANT TRANSPORT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
K-2
EXHIBIT L
Form of Commitment Increase Agreement
Date: ___________________
Bank of America, N.A.,
as Agent
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
Covenant Asset Management, Inc.
400 Birmingham Highway
Chattanooga, Tennessee 37419
Attn: _________________
Telephone: (___) ___-____
Telefacsimile: (___) ___-____
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of December 13, 2000 (as
amended, restated, modified, supplemented or renewed from time to time, the
"Credit Agreement") among Covenant Asset Management, Inc., a Nevada corporation
(the "Borrower"), Covenant Transport, Inc., a Nevada corporation, the Lenders
referred to therein, and Bank of America, N.A., as administrative agent (in such
capacity, "Agent"). Terms defined in the Credit Agreement are used herein as
therein defined.
This Commitment Increase Agreement is made and delivered pursuant to
Section 2.1(f) of the Credit Agreement.
Subject to the terms and conditions of Section 2.1(f) of the Credit
Agreement, _______________________________ ("Increasing Lender") will increase
its Revolving Credit Commitment to an amount equal to $___________, on the
Increased Commitment Date applicable to it. The Increasing Lender hereby
confirms and agrees that with effect on and after such Increased Commitment
Date, the Revolving Credit Commitment of the Increasing Lender shall be
increased to the amount set forth above, and the Increasing Lender shall have
all of the rights and be obligated to perform all of the obligations of a Lender
under the Credit Agreement with a Revolving Credit Commitment in the amount set
forth above.
Effective the on the Increased Commitment Date applicable to it, the
Increasing Lender (i) accepts and assumes from the assigning Lenders, without
recourse, such assignment of
L-1
Revolving Credit Outstandings as shall be necessary to effectuate the
adjustments in the pro rata shares of Lenders contemplated by Section 2.1(f) of
the Credit Agreement, and (ii) agrees to fund on such Increased Commitment Date
such assumed amounts of Revolving Credit Outstandings to Agent for the account
of the assigning Lenders in accordance with the provisions of the Credit
Agreement, in the amount notified to Increasing Lender by Agent.
THIS COMMITMENT INCREASE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF TENNESSEE, NOTWITHSTANDING ITS
EXECUTION OUTSIDE SUCH STATE.
IN WITNESS WHEREOF, Increasing Lender has caused this Commitment
Increase Agreement to be duly executed and delivered in _____________,
______________, by its proper and duly authorized officer as of the day and year
first above written.
[INCREASING LENDER]
By:______________________________________
Name:____________________________________
Title:___________________________________
CONSENTED TO as of ___________________:
COVENANT ASSET MANAGEMENT, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
BANK OF AMERICA, N.A.,
as Agent
By:____________________________________
Name:__________________________________
Title:_________________________________
L-2
EXHIBIT M
Form of Added Lender Agreement
Date: ___________________
Bank of America, N.A.,
as Agent
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
Covenant Asset Management, Inc.
400 Birmingham Highway
Chattanooga, Tennessee 37419
Attn: _________________
Telephone: (___) ___-____
Telefacsimile: (___) ___-____
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of December 13, 2000 (as
amended, restated, modified, supplemented or renewed from time to time, the
"Credit Agreement") among Covenant Asset Management, Inc., a Nevada corporation
(the "Borrower"), Covenant Transport, Inc., a Nevada corporation the Lenders
referred to therein, and Bank of America, N.A., as administrative agent (in such
capacity, "Agent"). Terms defined in the Credit Agreement are used herein as
therein defined.
This Added Lender Agreement is made and delivered pursuant to Section
2.1(f) of the Credit Agreement.
Subject to the terms and conditions of Section 2.1(f) of the Credit
Agreement, _________________________ (the "Added Lender") will become a party to
the Credit Agreement as a Lender, with a Revolving Credit Commitment equal to
$___________, on the Increased Commitment Date applicable to it. The Added
Lender hereby confirms and agrees that with effect on and after such Increased
Commitment Date, the Added Lender shall be and become a party to the Credit
Agreement as a Lender and have all of the rights and be obligated to perform all
of the obligations of a Lender thereunder with a Revolving Credit Commitment in
the amount set forth above.
Effective the on the Increased Commitment Date applicable to it, the
Added Lender (i) accepts and assumes from the assigning Lenders, without
recourse, such assignment of Revolving Credit Outstandings as shall be necessary
to effectuate the adjustments in the pro rata
M-1
shares of the Lenders contemplated by Section 2.1(f) of the Credit Agreement,
and (ii) agrees to fund on such Increased Commitment Date such assumed amounts
of Revolving Credit Outstandings to Agent for the account of the assigning
Lenders in accordance with the provisions of the Credit Agreement, in the amount
notified to the Added Lender by the Agent. The following administrative details
apply to the Added Lender:
(A) Lending Office(s):
-----------------
Lender name: ______________________________
Address: ______________________________
______________________________
______________________________
______________________________
Attention: ______________________________
Telephone: (___)_________________________
Facsimile: (___)_________________________
Lender name: ______________________________
Address: ______________________________
______________________________
______________________________
______________________________
Attention: ______________________________
Telephone: (___)_________________________
Facsimile: (___)_________________________
(B) Notice Address:
--------------
Lender name: ______________________________
Address: ______________________________
______________________________
______________________________
______________________________
Attention: ______________________________
Telephone: (___)_________________________
Facsimile: (___)_________________________
(C) Payment Instructions:
--------------------
Account No.: ______________________________
At: ______________________________
______________________________
______________________________
______________________________
Reference: ______________________________
Attention: ______________________________
M-2
THIS ADDED LENDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF TENNESSEE, NOTWITHSTANDING ITS EXECUTION OUTSIDE
SUCH STATE.
IN WITNESS WHEREOF, the Added Lender has caused this Added Lender
Agreement to be duly executed and delivered in _____________, ______________, by
its proper and duly authorized officer as of the day and year first above
written.
[ADDED LENDER]
By:______________________________________
Name:____________________________________
Title:___________________________________
CONSENTED TO as of ___________________:
COVENANT ASSET MANAGEMENT, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
BANK OF AMERICA, N.A.,
as Agent
By:____________________________________
Name:__________________________________
Title:_________________________________
M-3
EXHIBIT N-1
Form of Borrower Intercompany Note Pledge Agreement
See attached.
N-1-1
INTERCOMPANY NOTE PLEDGE AGREEMENT
THIS INTERCOMPANY NOTE PLEDGE AGREEMENT (as from time to time amended,
restated, modified or supplemented, the "Note Pledge Agreement") is made and
entered into as of this 13th day of December, 2000 by and between COVENANT ASSET
MANAGEMENT, INC., a Nevada Corporation (the "Pledgor" or "Borrower"), and BANK
OF AMERICA, N.A., a national banking association organized and existing under
the laws of the United States, acting as Collateral Agent under the
Intercreditor Agreement (defined below) for the benefit of the Participating
Creditors (as defined below) (in such capacity, and together with any successor
thereto, the "Collateral Agent" or the "Secured Party"). All capitalized terms
used but not otherwise defined herein shall have the respective meanings
assigned thereto in the Intercreditor Agreement.
W I T N E S S E T H:
WHEREAS, Connecticut General Life Insurance Company, on behalf of one
or more separate accounts, Connecticut General Life Insurance Company and Life
Insurance Company of North America (collectively, together with their successors
and assigns, the "Noteholders") have heretofore purchased $25,000,000 in
aggregate principal amount of 7.39% Guaranteed Senior Notes, due October 1, 2005
(the "Notes"), issued by the Pledgor, pursuant to that certain Note Purchase
Agreement (as the same may hereafter be amended, modified, supplemented,
refinanced or replaced, the "Note Agreement"), dated as of May 15, 2000, between
the Noteholders, the Borrower and Covenant Transport, Inc., a Nevada corporation
(the "Parent"); and
WHEREAS, the Borrower has entered into a certain Credit Agreement (as
amended, modified, supplemented, restated, or replaced from time to time, the
"Credit Agreement"), dated of even date herewith, with the Parent, the financial
institutions signatory thereto as lenders (together with each other institution
from time to time party to the Credit Agreement as a lender, the "Lenders"), the
Issuing Bank thereunder, and Bank of America, N.A., as administrative agent
(together with any successor thereto, the "Agent"; the Lenders, the Issuing Bank
and the Agent being collectively called the "Bank Creditors"), pursuant to which
the Bank Creditors have agreed to provide a revolving credit facility and a
letter of credit facility for the benefit of the Borrower, the Parent, and the
Subsidiary Guarantors; and
WHEREAS, the revolving credit facility and letter of credit facility
are being provided pursuant to the Credit Agreement to refinance those certain
facilities provided to the Borrower pursuant to that certain Amended and
Restated Credit Agreement dated as of June 18, 1999 (the "Prior Credit
Agreement") among Covenant Transport, Inc., a Tennessee corporation, the
Borrower, ABN AMRO Bank, N.V. ("ABN") as agent, and ABN, BankOne, N.A., AmSouth
Bank, N.A. (successor by merger to First American National Bank), Bank of
America, N.A., and SunTrust Bank, as lenders (collectively, with ABN as agent,
the "Prior Bank Creditors"); and
WHEREAS, the Noteholders previously entered into an Amended and
Restated Master Collateral and Intercreditor Agreement, dated as of June 6,
2000, among the Noteholders, the Prior Bank Creditors and the Prior Collateral
Agent, and acknowledged and agreed to by the Borrower
and the Parent, (the "Prior Intercreditor Agreement"), in order to acknowledge
their agreement that the Borrower's obligations to each of the Noteholders under
the Notes and Note Agreement and the Prior Bank Creditors under the Prior Credit
Agreement would be secured on a pari passu basis, and to set forth their
respective rights in respect of any and all security or collateral securing the
obligations of the Borrower, the Parent, or any Subsidiary Guarantor to the
Noteholders under the Notes and Note Agreement or to the Prior Bank Creditors
under the Prior Credit Agreement; and
WHEREAS pursuant to the Prior Credit Agreement, the Note Agreement and
the Security Documents, the Noteholders and the Prior Bank Creditors were
previously granted a security interest in the Intercompany Notes, as defined in
the Credit Agreement, in order to secure the prompt and complete payment,
performance and observance of the Borrower's obligations under the Note
Agreement, which security interest is intended to be continued hereby as to the
Noteholders; and
WHEREAS, the Noteholders and the Bank Creditors under the Credit
Agreement (together, the "Participating Creditors") have agreed that the
Borrower's obligations to each of them under the Note Agreement and the Credit
Agreement shall be secured on a pari passu basis, and are entering into the
Second Amended and Restated Master Collateral and Intercreditor Agreement dated
as of the date hereof (as it may hereafter be amended, modified, supplemented,
refinanced or replaced, the "Intercreditor Agreement") with Bank of America,
N.A. as Collateral Agent, to amend and restate the Prior Intercreditor Agreement
insofar as the revolving credit and letter of credit facilities provided under
the Credit Agreement refinance and replace those revolving credit and letter of
credit facilities provided pursuant to the Prior Credit Agreement, and to set
forth their respective rights in respect of any and all security or collateral
now or hereafter securing the current obligations of the Borrower, the Parent or
any Subsidiary Guarantor to the Noteholders under the Notes and Note Agreement
or to the Bank Creditors under the Credit Agreement; and
WHEREAS, subject to the terms and conditions of the Intercreditor
Agreement, the Noteholders and the Bank Creditors have appointed the Collateral
Agent to serve as collateral agent under this Agreement, and the Collateral
Agent has agreed to serve as collateral agent under this Agreement; and
WHEREAS, to secure or continue to secure, as applicable, the prompt and
complete payment and performance of its Obligations (as defined in the Credit
Agreement) to the Bank Creditors under the Credit Agreement and its obligations
to the Noteholders under the Note Agreement (collectively the "Secured
Obligations"), the Pledgor is willing to pledge and grant to the Secured Party,
for the benefit of the Participating Creditors, a security interest in all
Intercompany Notes, as described in the Credit Agreement, at any time and from
time to time held by and payable to the order of it (or endorsed and assigned to
the order of it) from time to time evidencing indebtedness owing to the Pledgor
from the Parent, each Subsidiary of the Parent, and certain affiliates of
Pledgor, whether now in existence or hereafter issued (the "Pledged Notes"),
including without limitation the Pledged Notes more particularly described on
Schedule I hereto;
2
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. Pledge of Notes; Other Collateral.
(a) As collateral security for the payment and performance of
all Secured Obligations now or hereafter existing, absolute or
contingent, the Pledgor hereby pledges and collaterally assigns to the
Collateral Agent for the benefit of the Participating Creditors, and
grants to the Collateral Agent for the benefit of the Participating
Creditors pursuant to the Tennessee Uniform Commercial Code (the "UCC")
a first priority security interest in, the Pledged Notes and all of the
following:
(i) all cash, securities, rights, and other property
at any time and from time to time declared or distributed in
respect of or in exchange for or as payment for any principal
amount of or interest accrued on, or any other amount due in
accordance with the terms of, any or all of the Pledged Notes,
other than payments of principal and interest under and in
accordance with the terms of such Pledged Notes that are
permitted to be retained by the Pledgor hereunder and under
the other Credit Transaction Documents;
(ii) all other property hereafter delivered to the
Collateral Agent in substitution for or in addition to any of
the foregoing, all certificates and instruments representing
or evidencing such property and all cash, securities,
interest, dividends, rights, and other property at any time
and from time to time declared or distributed in respect of or
in exchange for any or all of the Pledged Notes; and
(iii) all proceeds of any of the foregoing.
All such Pledged Notes, certificates, instruments, cash, securities,
interest, rights and other property referred to in this Section 1, are
herein collectively referred to as the "Collateral." Each of the
Pledged Notes described on Schedule I in effect from time to time are
currently owned by the Pledgor as thereon indicated. The Pledged Notes
as of the Closing Date, each together with an assignment duly executed
in blank by the Pledgor substantially in the form of Exhibit A and an
estoppel notice executed by the obligor thereunder substantially in the
form of Exhibit B, have been delivered to the Collateral Agent.
(b) The Pledgor agrees to deliver all the Collateral to the
Collateral Agent at such location as the Collateral Agent shall from
time to time designate by written notice pursuant to Section 20 hereof
for its custody at all times until termination of this Note Pledge
Agreement in accordance with Section 22 hereof, together with such
instruments of assignment and transfer as requested by the Collateral
Agent.
(c) If the Parent or any Subsidiary of the Parent or of the
Borrower makes any loan or advance to the Pledgor, as permitted by the
Credit Transaction Documents, such
3
loan or advance must be evidenced by an Intercompany Note (whether
previously issued providing for future advances or newly issued as an
additional Intercompany Note) which is subject to the terms of this
Note Pledge Agreement and is deemed a Pledged Note hereunder, and the
Pledgor shall deliver each such additional Pledged Note to the
Collateral Agent, together with (i) an assignment duly executed in
blank by the Pledgor substantially in the form of Exhibit A, (ii) an
estoppel notice executed by the obligor thereunder substantially in the
form of Exhibit B, (iii) a revised Schedule I hereto reflecting the
additional Pledged Note, and (iv) any other document or instrument
required pursuant to the terms of this Note Pledge Agreement.
(d) The Pledgor agrees to deliver all notes, documents,
agreements, financing statements, amendments thereto, assignments or
other writings as the Collateral Agent may request to carry out the
terms of this Note Pledge Agreement or to protect or enforce the Lien
in the Collateral hereunder granted thereby to the Collateral Agent for
the benefit of the Participating Creditors and further agrees to do and
cause to be done all things determined by the Collateral Agent to be
necessary to perfect and keep in full force such Lien, including, but
not limited to, the prompt payment of all documented out-of-pocket fees
and expenses incurred in connection with any filings made to perfect or
continue such Lien. The Pledgor agrees to make appropriate entries upon
its books and records disclosing the Lien in the Collateral hereunder
granted thereby to the Collateral Agent for the benefit of the
Participating Creditors hereunder.
(e) All advances, charges, costs and expenses, including
reasonable attorneys' fees, incurred or paid by the Collateral Agent or
any Participating Creditor in exercising any right, power or remedy
conferred by this Note Pledge Agreement, or in the enforcement thereof,
shall become a part of the Secured Obligations and shall be paid to the
Collateral Agent for the benefit of the Participating Creditors by the
Pledgor immediately upon demand therefor, with interest thereon until
paid in full at the higher of the applicable default or post-maturity
rate specified in the Note Agreement or the Notes, or the applicable
Default Rate as defined in the Credit Agreement.
(f) The Collateral Agent, for the benefit of the Participating
Creditors, and the Pledgor hereby consent to and agree with the terms
of the Intercreditor Agreement and hereby acknowledge and agree that
each Lien in all Collateral now owned or hereafter acquired and all
remedies available with respect to such Collateral are subject to the
terms of the Intercreditor Agreement.
2. Status of Pledged Notes. The Pledgor hereby represents and warrants
to the Collateral Agent for the benefit of the Participating Creditors that (i)
the Pledged Notes payable to it or its order evidence, and constitute the only
instruments evidencing, all indebtedness outstanding from any entity to the
Pledgor, (ii) the Pledgor is the record and beneficial owner of the Pledged
Notes payable to it or its order, such ownership being free and clear of all
Liens, charges, equities, encumbrances and restrictions on pledge or transfer
(other than the pledge hereunder and applicable restrictions pursuant to federal
and state securities laws), (iii) the Pledgor has full corporate power, legal
right and lawful authority to execute this Note Pledge Agreement and to pledge,
assign and transfer the Pledged Notes in the manner and form hereof,
4
and (iv) the pledge, assignment and delivery of the Pledged Notes payable to it
or its order to the Collateral Agent for the benefit of the Participating
Creditors pursuant to this Note Pledge Agreement creates, together with the
delivery of the Pledged Notes, which delivery has heretofore been accomplished,
a valid and perfected first priority security interest in the Pledged Notes in
favor of the Collateral Agent for the benefit of the Participating Creditors,
securing the payment of the Secured Obligations. Except as otherwise expressly
permitted herein or in the other Credit Transaction Documents, none of the
Pledged Notes (nor any interest therein or thereto) shall be sold, transferred
or assigned, nor any Lien created therein other than pursuant to the Credit
Transaction Documents, without the Collateral Agent's prior written consent,
which may be withheld for any reason.
3. Preservation and Protection of Collateral.
(a) The Collateral Agent shall be under no duty or liability
with respect to the collection, protection or preservation of the
Collateral, or otherwise, beyond the use of reasonable care in the
custody and preservation thereof while in its possession.
(b) The Pledgor agrees to pay when due all taxes, charges,
Liens and assessments against the Collateral, unless being contested in
good faith by appropriate proceedings diligently conducted and against
which adequate reserves have been established in accordance with GAAP
and evidenced to the satisfaction of the Collateral Agent and provided
further that all enforcement proceedings in the nature of levy or
foreclosure are effectively stayed. Upon the failure of the Pledgor to
so pay or contest such taxes, charges, Liens or assessments, the
Collateral Agent at its option may pay or contest any of them (the
Collateral Agent having the sole right to determine the legality or
validity and the amount necessary to discharge such taxes, charges,
Liens or assessments).
4. Rights and Remedies Upon Default. Upon the occurrence and during the
continuance of any Actionable Default, the Collateral Agent is given full power
and authority (a) to enforce the Pledged Notes in accordance with their terms,
in its own name or in the name of the Pledgor, and to receive, endorse and
collect all cash, checks and other orders for the payment of money made payable
to the Pledgor representing any interest payment, principal payment or other
distribution payable or distributable in respect of, or otherwise constituting,
the Collateral or any part thereof and to give full discharge for the same, and
(b) to sell, assign and deliver or collect the whole or any part of the
Collateral, or any substitute therefor or any addition thereto, in one or more
sales, with or without any previous demands or demand of performance or, to the
extent permitted by law, notice or advertisement, in such order as the
Collateral Agent may elect; and any such sale may be made either at public or
private sale at the Collateral Agent's place of business or elsewhere, either
for cash or upon credit or for future delivery, at such price as the Collateral
Agent may reasonably deem fair; and the Collateral Agent may be the purchaser of
any or all Collateral so sold and hold the same thereafter in its own right free
from any claim of the Pledgor or right of redemption. Demands of performance,
advertisements and presence of property and sale and notice of sale are hereby
waived to the extent permissible by law. Any sale hereunder may be conducted by
an auctioneer or any officer or agent of the Collateral Agent. The Pledgor
recognizes that the Collateral Agent may be unable to effect a public sale of
5
the Collateral by reason of certain prohibitions contained in the Securities Act
of 1933, as amended (the "Securities Act"), and applicable state law, and may be
otherwise delayed or adversely affected in effecting any sale by reason of
present or future restrictions thereon imposed by governmental authorities, and
that as a consequence of such prohibitions and restrictions the Collateral Agent
may be compelled (i) to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things, to acquire
the Collateral for their own account, for investment and not with a view to the
distribution or resale thereof, or (ii) to seek regulatory approval of any
proposed sale or sales, or (iii) to limit the amount of Collateral sold to any
Person or group. The Pledgor agrees and acknowledges that private sales so made
may be at prices and upon terms less favorable to the Pledgor than if such
Collateral was sold either at public sales or at private sales not subject to
other regulatory restrictions, and that the Collateral Agent has no obligation
to delay the sale of any of the Collateral for the period of time necessary to
permit the issuer of such Collateral to register or otherwise qualify the
Pledged Notes, even if any issuer or maker of the Pledged Notes would agree to
register or otherwise qualify such Collateral for public sale under the
Securities Act or applicable state law. The Pledgor further agrees, to the
extent permitted by applicable law, that the use of private sales made under the
foregoing circumstances to dispose of the Collateral shall be deemed to be
dispositions in a commercially reasonable manner. The Pledgor hereby
acknowledges that a ready market does not exist for the Pledged Notes and agrees
and acknowledges that as a result thereof the Pledged Notes may be sold for an
amount less than the face amount thereof. In addition to the foregoing, the
Secured Party may exercise such other rights and remedies as may be available
under the Credit Transaction Documents, at law (including without limitation the
UCC) or in equity.
5. Proceeds of Sale. All sums received or collected from or on account
of such Collateral from and after the occurrence of any Actionable Default and
the proceeds of the sale of any of the Collateral shall be applied as provided
in the Intercreditor Agreement.
6. Presentments, Demands and Notices. The Collateral Agent shall not be
under any duty or obligation whatsoever to make or give any presentments,
demands for performances, notices of nonperformance, protests, notice of protest
or notice of dishonor in connection with any obligations or evidences of
indebtedness held thereby as collateral, or in connection with any obligations
or evidences of indebtedness which constitute in whole or in part the Secured
Obligations.
7. Anti-Marshalling Provisions. The right is hereby given by the
Pledgor to the Collateral Agent, for the benefit of the Participating Creditors,
to make releases (whether in whole or in part) of all or any part of the
Collateral agreeable to the Collateral Agent without notice to, or the consent,
approval or agreement of other parties and interests, including junior lienors,
which releases shall not impair in any manner the validity of or priority of the
Liens and security interests in the remaining Collateral conferred under such
documents, nor release the Pledgor from personal liability for the Secured
Obligations hereby secured. Notwithstanding the existence of any other security
interest in the Collateral held by the Collateral Agent, for the benefit of the
Participating Creditors, the Collateral Agent shall have the right to determine
the order in which any or all of the Collateral shall be subjected to the
remedies provided in this Note Pledge Agreement. The proceeds realized upon the
exercise of the remedies provided
6
herein shall be applied by the Collateral Agent, for the benefit of the
Participating Creditors, in the manner provided in the Intercreditor Agreement.
The Pledgor hereby waives any and all right to require the marshalling of assets
in connection with the exercise of any of the remedies permitted by applicable
law or provided herein.
8. Attorney-in-Fact. The Pledgor hereby appoints the Collateral Agent
as the Pledgor's attorney-in-fact for the purposes of carrying out the
provisions of this Note Pledge Agreement and taking any action and executing any
instrument which the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment is coupled with an interest
and is irrevocable; provided, that the Collateral Agent shall have and may
exercise rights under this power of attorney only upon the occurrence and during
the continuance of an Actionable Default.
9. Absolute Rights and Obligations. All rights of the Secured Party,
and all obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, the Note Agreement, any other Credit Transaction Document or
any other agreement or instrument relating to any of the Secured
Obligations;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Credit Agreement, the Note Agreement, any other Credit Transaction
Document or any other agreement or instrument relating to any of the
Secured Obligations;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Secured Obligations or of this Note Pledge Agreement.
10. Waiver by Pledgor. The Pledgor waives (to the extent permitted by
applicable law) any right to require the Secured Party or any other obligee of
the Secured Obligations to (a) proceed against any Person, including without
limitation the Parent or any Subsidiary Guarantor, (b) proceed against or
exhaust any collateral securing payment or performance of any of the Secured
Obligations, or (c) pursue any other remedy in its power; and waives (to the
extent permitted by applicable law) any defense arising by reason of any
disability or other defense of any other Person, including without limitation
the Parent or any Subsidiary Guarantor, or by reason of the cessation from any
cause whatsoever of the liability of any other Person, including without
limitation the Parent or any Subsidiary Guarantor. The Collateral Agent may at
any time deliver (without representation, recourse or warranty) the Collateral
or any part thereof to the Pledgor and the receipt thereof by the Pledgor shall
be a complete and full acquittance for the
7
Collateral so delivered, and the Secured Party shall thereafter be discharged
from any liability or responsibility therefor.
11. Payments and Enforcement Rights.
(a) All payments of principal, interest, fees and other
amounts with respect to the Pledged Notes shall be subject to the
pledge hereunder, except for those payments of principal and interest
which, to the extent permitted to be made under the Credit Agreement,
the Note Agreement, or any other Credit Transaction Documents, and the
terms (including any subordination provisions) of the Pledged Notes,
are permitted to be retained by the Pledgor to which each such Pledged
Note is payable, and any such payments may be retained by the Pledgor
free from any Lien hereunder. Upon the occurrence and during the
continuance of any Actionable Default, all such payments and other
amounts received in respect of the Pledged Notes shall be promptly
delivered to the Collateral Agent for the benefit of the Participating
Creditors (together, if the Collateral Agent shall request, with
undated instruments of assignment duly executed in blank affixed to any
negotiable document or instrument so distributed) to be applied to the
Secured Obligations pursuant to Section 5 hereof.
(b) So long as no Actionable Default shall have occurred and
be continuing, the Pledgor shall be entitled to exercise all rights of
enforcement, and other rights and powers pertaining to the Collateral
for all purposes not inconsistent with the terms hereof.
(c) Upon the occurrence and during the continuance of any
Actionable Default, at the option of the Collateral Agent, all rights
of the Pledgor to receive and retain payments in respect of the
Collateral shall cease and shall thereupon be vested in the Collateral
Agent for the benefit of the Participating Creditors.
(d) Upon the occurrence and during the continuance of any
Actionable Default, at the option of the Collateral Agent, all rights
of the Pledgor to exercise rights of enforcement or other rights and
powers in respect of the Pledged Notes which they are authorized to
exercise pursuant to subsection (b) above shall cease and the
Collateral Agent may thereupon (but shall not be obligated to), at its
request, cause such Collateral to be registered in the name of the
Collateral Agent or its nominee or agent for the benefit of the
Participating Creditors and exercise such enforcement and other rights
and powers as appertain to ownership of such Collateral, pursuant to
the power of attorney conferred under Section 8 hereof, and the Pledgor
hereby agrees to provide such further powers of attorney as the
Collateral Agent may request; provided, however, that the Collateral
Agent in its discretion may from time to time refrain from exercising,
and shall not be obligated to exercise, any such enforcement or other
power or right.
12. Power of Sale. Until termination of this Note Pledge Agreement in
accordance with Section 22 hereof, the power of sale and other rights, powers
and remedies granted to the Collateral Agent for the benefit of the
Participating Creditors hereunder shall continue to exist and may be exercised
by the Collateral Agent at any time and from time to time irrespective of
8
the fact that any Secured Obligations or any part thereof may have become barred
by any statute of limitations or that the liability of any Pledgor may have
ceased.
13. Other Rights. The rights, powers and remedies given to the
Collateral Agent for the benefit of the Participating Creditors by this Note
Pledge Agreement shall be in addition to all rights, powers and remedies given
to the Secured Party, for the benefit of the Participating Creditors, by virtue
of any statute or rule of law. Any forbearance or failure or delay by the
Collateral Agent in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy hereunder shall not preclude the further
exercise thereof; and every right, power and remedy of the Secured Party shall
continue in full force and effect until such right, power or remedy is
specifically waived by the Participating Creditors by an instrument in writing,
in accordance with the Intercreditor Agreement.
14. Definitions. All terms used herein shall be defined in accordance
with the appropriate definitions appearing in the UCC, and such definitions are
hereby incorporated herein by reference and made a part hereof.
15. Entire Agreement. This Note Pledge Agreement, together with the
Credit Agreement, the Note Agreement, and the other Credit Transaction
Documents, constitutes and expresses the entire understanding between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, inducements, commitments or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance or usage of the
trade inconsistent with any of the terms hereof. Neither this Note Pledge
Agreement nor any portion or provision hereof may be changed, altered, modified,
supplemented, discharged, canceled, terminated, or amended orally or in any
manner other than by an agreement, in writing signed by the parties hereto.
16. Further Assurances. The Pledgor agrees at its own expense to do
such further acts and things, and to execute and deliver such additional
conveyances, assignments, financing statements, agreements and instruments, as
the Collateral Agent may at any time reasonably request in connection with the
administration or enforcement of this Note Pledge Agreement or related to the
Collateral or any part thereof or in order better to assure and confirm unto the
Collateral Agent its rights, powers and remedies for the benefit of the
Participating Creditors hereunder. The Pledgor hereby consents and agrees that
the issuers of or obligors in respect of the Collateral shall be entitled to
accept the provisions hereof as conclusive evidence of the right of the
Collateral Agent, on behalf of the Participating Creditors, to exercise its
rights hereunder with respect to the Collateral, notwithstanding any other
notice or direction to the contrary heretofore or hereafter given by the Pledgor
or any other Person to any of such issuers or obligors.
17. Binding Agreement; Assignment. This Note Pledge Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and to their respective successors and assigns,
except that the Pledgor shall not be permitted to assign this Note Pledge
Agreement or any interest herein or in the Collateral, or any part thereof, or
otherwise pledge, encumber or grant any option with respect to the Collateral,
or
9
any part thereof, or any cash or property held by the Collateral Agent as
Collateral under this Note Pledge Agreement. Without limiting the generality of
the foregoing sentence of this Section 17, any Participating Creditor may assign
to one or more Persons, or grant to one or more Persons participations in or to,
all or any part of its rights and obligations under the Credit Agreement (to the
extent permitted by the Credit Agreement) and the Note Agreement (to the extent
permitted by the Note Agreement); and to the extent of any such assignment or
participation such other Person shall, to the fullest extent permitted by law,
thereupon become vested with all the benefits in respect thereof granted to such
Participating Creditor herein or otherwise, subject however, to the provisions
of the various Credit Transaction Documents. All references herein to the
Secured Party or the Collateral Agent and to the Participating Creditors shall
include any successor thereof or permitted assignee, and any other obligees from
time to time of the Secured Obligations.
18. Swap Agreements. All obligations of the Borrower under Swap
Agreements to which any Participating Creditor or its affiliates are a party
shall be deemed to be Secured Obligations secured hereby (unless otherwise
agreed in writing by such Participating Creditor), and each Participating
Creditor or affiliate of a Participating Creditor party to any such Swap
Agreement shall be deemed to be a Secured Party hereunder.
19. Severability. In case any Lien, security interest or other right of
the Secured Party, for the benefit of the Participating Creditors, or any
provision hereof shall be held to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect any other Lien,
security interest or other right granted hereby or provision hereof.
20. Counterparts. This Note Pledge Agreement may be executed in any
number of counterparts and all the counterparts taken together shall be deemed
to constitute one and the same instrument.
21. Indemnification. Without limitation of Section 12.9 of the Credit
Agreement or any other indemnification provision in any Credit Transaction
Document, the Pledgor hereby covenants and agrees to pay, indemnify, and hold
the Secured Party, the Participating Creditors, and each of their affiliates,
and their respective officers, directors, employees, agents, and advisors,
harmless from and against any and all other out-of-pocket liabilities, costs,
expenses or disbursements of any kind or nature whatsoever arising in connection
with any claim or litigation by any Person resulting from the execution,
delivery, enforcement, performance and administration of this Note Pledge
Agreement or any of the other Credit Transaction Documents, or the transactions
contemplated hereby or thereby, or in any respect relating to the Collateral or
any transaction pursuant to which the Pledgor has incurred any Secured
Obligation (all the foregoing, collectively, the "indemnified liabilities");
provided, however, that the Pledgor shall not have any obligation to a party
seeking indemnification hereunder with respect to indemnified liabilities
directly arising from the willful misconduct or gross negligence of such party.
The agreements in this subsection shall survive repayment of all Secured
Obligations, termination or expiration of this Note Pledge Agreement in any
manner, including but not limited to termination in accordance with Section 22
hereof, and occurrence of the Facility Termination Date.
10
22. Termination. This Note Pledge Agreement and all obligations of the
Pledgor hereunder shall terminate upon the first day following the occurrence of
the Facility Termination Date and the repayment in full of all Secured
Obligations, at which time the Liens and rights granted to the Collateral Agent
for the benefit of the Participating Creditors hereunder shall automatically
terminate and no longer be in effect, and the Collateral shall automatically be
released from the Liens created hereby. Upon such termination of this Note
Pledge Agreement, the Collateral Agent shall, at the sole expense of the
Pledgor, deliver to the Pledgor the Pledged Notes (and any other property
received as a dividend or distribution or otherwise in respect of the Pledged
Notes then in its custody), together with any cash then constituting the
Collateral, not then sold or otherwise disposed of in accordance with the
provisions hereof and execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request and take such further actions as may be
necessary to effect the same and as shall be reasonably acceptable to the
Collateral Agent.
23. Remedies Cumulative. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Collateral Agent or any
Participating Creditor provided by law or under the Credit Agreement, the Note
Agreement, or the other Credit Transaction Documents. The extensions of credit
to the Borrower pursuant to the Credit Agreement and the Note Agreement shall be
conclusively presumed to have been made or extended, respectively, in reliance
upon the Pledgor's pledge of the Pledged Notes pursuant to the terms hereof.
24. Notices. Any notice required or permitted hereunder shall be given,
(a) with respect to the Pledgor, at the address of the Borrower indicated in the
Intercreditor Agreement and (b) with respect to the Collateral Agent, at the
Collateral Agent's address indicated in the Intercreditor Agreement. All such
notices shall be given and shall be effective as provided in the Intercreditor
Agreement.
25. Governing Law; Venue; Waiver of Jury Trial.
(a) THIS NOTE PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TENNESSEE
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE NOTWITHSTANDING ITS EXECUTION AND DELIVERY OUTSIDE SUCH STATE.
(b) THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS NOTE PLEDGE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF HAMILTON, STATE OF TENNESSEE, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS NOTE PLEDGE AGREEMENT, EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY
11
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY
SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) THE PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER
PROVIDED BY THE INTERCREDITOR AGREEMENT, OR BY ANY OTHER METHOD OF
SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE
OF TENNESSEE.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT
TRANSACTION DOCUMENT IN THE COURTS OF ANY PLACE WHERE THE PLEDGOR OR
ANY OF THE PLEDGOR'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE
PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH
COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY
BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION WITH THE FOREGOING, THE PLEDGOR AND THE
COLLATERAL AGENT ON BEHALF OF THE PARTICIPATING CREDITORS HEREBY AGREE,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND
HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signature pages follow.]
IN WITNESS WHEREOF, the parties have duly executed this Note Pledge
Agreement on the day and year first written above.
PLEDGOR:
COVENANT ASSET MANAGEMENT, INC.
WITNESS:
By:______________________________________
_____________________ Name:____________________________________
Title:___________________________________
INTERCOMPANY NOTE PLEDGE AGREEMENT (Borrower)
Signature Page 1 of 2
COLLATERAL AGENT:
BANK OF AMERICA, N.A.,
as Collateral Agent
By:______________________________________
Name:
Title:
Address for Notices:
Bank of America, N.A.
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
INTERCOMPANY NOTE PLEDGE AGREEMENT (Borrower)
Signature Page 2 of 2
Exhibit A
Form of Assignment
ASSIGNMENT OF PROMISSORY NOTE
KNOW ALL MEN by these presents that the undersigned is the owner and
holder of that certain promissory note dated [_____________] payable by
[_____________] to the undersigned in the original principal amount of
$[_____________] (the "Promissory Note") and has sold, assigned, transferred,
endorsed and set over, and by this assignment does sell, assign, transfer,
endorse and set over to [_____________], all of its right title, and interest in
the Promissory Note, and the obligations described therein and the monies due
and to become due thereunder.
TO HAVE AND TO HOLD the same unto [_____________], its successors and
assigns forever.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
executed as of the [___] day of [_______________], [_____].
[__________________________]
By: __________________________________
Name: ________________________________
Title: _______________________________
A-1
Exhibit B
Form of Estoppel Notice
TO: Bank of America, N.A., as Collateral Agent
TN6-300-02-03
633 Chestnut Street, 2nd Floor
Chattanooga, Tennessee 37450
Attention: Sybil Weldon
Telephone: (423) 752-1222
Telefacsimile: (423) 755-0689
Re: That certain Note Purchase Agreement dated as of May 15, 2000, between
Connecticut General Life Insurance Company, on behalf of one or more
separate accounts, Connecticut General Life Insurance Company and Life
Insurance Company of North America (collectively, together with their
successors and assigns, the "Noteholders"), Covenant Asset Management,
Inc., a Nevada corporation (the "Borrower") and Covenant Transport,
Inc., a Nevada corporation (the "Parent") (as amended, modified,
supplemented, restated or replaced from time to time, the "Note
Agreement"), pursuant to which the Noteholders have heretofore
purchased $25,000,000 in aggregate principal amount of 7.39% Guaranteed
Senior Notes, due October 1, 2005 (the "Senior Notes"), issued by the
Borrower; and that certain Credit Agreement (as amended, modified,
supplemented, restated, or replaced from time to time, the "Credit
Agreement"), dated as of December __, 2000 by an among the Borrower,
the Parent, the financial institutions signatories thereto (the
"Lenders"), the Issuing Bank thereunder (the "Issuing Bank"), and Bank
of America, N.A., as Agent (the "Agent"; the Lenders, the Issuing Bank
and the Agent being collectively called the "Bank Creditors"), pursuant
to which the Bank Creditors have agreed to provide a revolving credit
facility and a letter of credit facility for the benefit of the
Borrower, the Parent, and the other Credit Parties. Capitalized terms
used but not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
The undersigned, _____________________ (the "Issuer") is the issuer of
and obligor under that certain promissory note payable to the order of Covenant
Asset Management, Inc., a Nevada corporation (the "Obligee"), dated
______________, in the principal amount of $_______________ (the "Note").
Issuer acknowledges that the total amount presently outstanding under
the Note is $__________________.
Issuer acknowledges that (i) the Note evidences, and constitutes the
only instrument evidencing, all indebtedness of the Issuer in favor of the
Obligee, and (ii) it has no existing defense, counterclaim, set off, right of
recoupment, claim or demand of any kind or nature whatsoever that can be
asserted to eliminate or reduce all or any part of its liability to pay in full
the indebtedness outstanding under the Note.
2
Issuer acknowledges and recognizes that, pursuant to the terms of the
Intercompany Note Pledge Agreement dated as of December __, 2000 by the Borrower
in favor of the Collateral Agent, upon the occurrence of an Event of Default
under and as defined in the Credit Agreement or the Note Agreement, the
Collateral Agent, for the benefit of the Bank Creditors and the Noteholders, is
given the full power and authority to (i) enforce the Note in accordance with
its terms, in its own name or in the name of the Obligee, (ii) to receive,
endorse and collect all cash, checks and other orders for the payment of money
made payable to the Obligee representing any interest payment, principal payment
or other distribution payable or distributable in respect of the Note and to
give full discharge for the same, and (iii) to sell, assign and deliver or
collect the whole or any part of the Note, or any substitute therefor or any
addition thereto, in one or more sales, with or without any previous demands or
demand of performance or, to the extent permitted by law, notice or
advertisement. Without limiting the foregoing, the Issuer acknowledges and
agrees that upon notice to it by the Collateral Agent of the occurrence of any
such Event of Default, the Issuer shall thereafter deliver all payments under or
in respect of the Note directly to the Collateral Agent or its assignee, as the
Collateral Agent may designate.
ISSUER:
_________________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
3
SCHEDULE I
============================================== ================================ =========================== ========================
Name of Obligor Name of Obligee Date Face Amount
--------------- --------------- ---- -----------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
Covenant Transport, Inc., a Tennessee Covenant Asset Management, Inc. January 1, 2000 $100,000,000
corporation
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
Harold Ives Trucking Co., an Arkansas Covenant Asset Management, Inc. January 1, 2000 $75,000,000
corporation
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
Southern Refrigerated Transport, Inc., an Covenant Asset Management, Inc. January 1, 2000 $30,000,000
Arkansas corporation
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
CIP, Inc., a Nevada corporation Covenant Asset Management, Inc. January 1, 2000 $1,000,000
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
Covenant.com, Inc., a Nevada corporation Covenant Asset Management, Inc. January 1, 2000 $1,000,000
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
Covenant Transport, Inc., a Tennessee Covenant Asset Management, Inc. January 1, 2000 $100,000,000
corporation
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
Southern Refrigerated Transport, Inc., an Covenant Asset Management, Inc. January 1, 2000 $10,693,014
Arkansas corporation
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
- ---------------------------------------------- -------------------------------- --------------------------- ------------------------
Terminal Trucker Broker, Inc., an Arkansas Covenant Asset Management, Inc. January 1, 2000 $4,647,439
corporation
============================================== ================================ =========================== ========================
A-4
EXHIBIT O-1
Form of Guarantor Security Agreement
See attached.
O-1-1
SECOND CONSOLIDATING AMENDED AND RESTATED
GUARANTOR SECURITY AGREEMENT
This Consolidating Amended and Restated Guarantor Security
Agreement, dated as of June 6, 2000, made by the corporations executing the
signature page of this agreement as Pledgors (each a "Pledgor"), each having its
chief executive office and its principal place of business at the addresses set
forth in Schedule II hereto, in favor of FIRST UNION NATIONAL BANK, a national
banking association which is the successor to First Union National Bank of
Georgia, acting as Collateral Agent under the Intercreditor Agreement (defined
below) for the benefit of the Participating Creditors (as defined below) (in
such capacity, the "Collateral Agent" or the "Secured Party").
W I T N E S S E T H:
WHEREAS, Connecticut General Life Insurance Company, on behalf
of one or more separate accounts, Connecticut General Life Insurance Company and
Life Insurance Company of North America (collectively, together with their
successors and assigns, the "Noteholders") have heretofore purchased $25,000,000
in aggregate principal amount of 7.39% Guaranteed Senior Notes, due October 1,
2005 (the "Notes"), issued by Covenant Asset Management, Inc. (formerly known as
Covenant Leasing, Inc.), a Nevada corporation (the "Borrower"), pursuant to
those certain Note Purchase Agreements (as they may hereafter be amended,
modified, supplemented, refinanced or replaced, the "Note Agreements"), dated as
of May 15, 2000, between the Noteholders, the Borrower and Covenant Transport,
Inc., a Nevada corporation (the "Parent"). The Notes are guaranteed by the
Parent pursuant to the Note Agreements (the "Parent Guarantee") and by the
Subsidiary Guarantors (as hereinafter defined) pursuant to a Subsidiary Guaranty
dated as of May 15, 2000 (as it may hereafter be amended, modified,
supplemented, refinanced or replaced, the "Subsidiary Guaranty"); and
WHEREAS, the Note Agreements are intended to be the successors
to the separate Note Purchase Agreements dated as of October 15, 1995 among
Covenant Transport, Inc., a Tennessee corporation ("CTI"), the Parent and the
purchasers named therein (the "1995 Note Agreements"). The 7.39% Guaranteed
Senior Notes due October 1, 2005 issued pursuant to the 1995 Note Agreements
were prepaid in full with the proceeds of the Notes as part of the
reorganization of the Parent and its Subsidiaries; and
WHEREAS, each of the Pledgors has guaranteed or may in the
future guarantee the obligations of the Borrower arising under the Note
Agreements, pursuant to that separate Guaranty Agreement executed or to be
executed by each of the Pledgors in favor of the Noteholders; and
WHEREAS, the Borrower and CTI (collectively, the "Borrowers")
have heretofore entered into a certain Credit Agreement, dated as of January 17,
1995, with the banks signatories thereto (the "Banks"), the Banks serving as
letter of credit banks thereunder, and ABN AMRO Bank N.V. (the "Agent"; the
Banks, the Letter of Credit Banks and the Agent being collectively called the
"Bank Creditors"), as amended by a number of amendments, as amended and restated
by that certain Amended and Restated Credit Agreement dated as of June 18, 1999
among the Borrowers and the Bank Creditors and as further amended by Amendment
to Amended and
Restated Credit Agreement dated as of June __, 2000 among the Borrowers and the
Bank Creditors pursuant to which, inter alia, CTI was released as a borrower (as
amended and restated through the date hereof, and as further amended, modified,
supplemented, restated, or replaced from time to time, the "Credit Agreement"),
pursuant to which the Bank Creditors have agreed to provide a revolving credit,
term loan and letter of credit facility for the benefit of the Obligors; and
WHEREAS, the Parent has guaranteed the obligations of the
Borrower arising under the Credit Agreement, pursuant to the Amended and
Restated Parent Guaranty Agreement (the "Bank Guaranty"), dated as of June __,
2000, executed by the Parent in favor of the Bank Creditors amending and
restating the Guaranty Agreement dated as of January 17, 1995 by the Parent in
favor of the Banks and the Agent; and
WHEREAS, each of the Pledgors has also guaranteed the
obligations of the Borrower arising under the Credit Agreement, pursuant to
Consolidating Amended and Restated Guaranty Agreement dated as of June __, 2000
by the direct and indirect Subsidiaries of the Parent in favor of the Bank
Creditors consolidating, amending and restating (a) the Guaranty Agreement dated
as of March 31, 1997 by C&F Acquisition Co. (now known as Covenant.com, Inc.), a
Nevada corporation, and Intellectual Property Co. (now known as CIP, Inc.), a
Nevada corporation, in favor of the Bank Creditors, (b) the Joinder Agreement
dated as of December 31, 1997 by Bud Meyer Truck Lines, Inc., a Minnesota
corporation, in favor of the Bank Creditors, (c) the Joinder Agreement dated as
of November 13, 1998 by Southern Refrigerated Transport, Inc., an Arkansas
corporation, and Tony Smith Trucking, Inc., an Arkansas corporation, in favor of
the Bank Creditors, and the Joinder Agreement dated as of November 16, 1999 by
Harold Ives Trucking Co., an Arkansas corporation and Terminal Truck Broker,
Inc., an Arkansas corporation, in favor of the Bank Creditors.
WHEREAS, the Noteholders and the Bank Creditors have agreed
that the Grantor's and the Parent's obligations to each of them shall be secured
on a pari passu basis, and have entered into a Master Collateral and
Intercreditor Agreement, dated as of October 15, 1995, among the Noteholders,
the Agent and the Collateral Agent, and acknowledged and agreed to by the
Obligors, as amended by First Amendment to Master Collateral and Intercreditor
Agreement, dated as of March 31, 1997, among the Noteholders, the Agent and the
Collateral Agent, and acknowledged and agreed to by the Obligors, as further
amended by the Second Amendment to Master Collateral and Intercreditor Agreement
dated as of June 18, 1999, among the Noteholders, the Agent and the Collateral
Agent and acknowledged by the Obligors, and as amended and restated by the
Amended and Restated Master Collateral and Intercreditor Agreement dated as of
June __, 2000 among the Noteholders, the Agent and the Collateral Agent and
acknowledged by the Obligors (as amended, restated, supplemented or otherwise
modified from time to time, the "Intercreditor Agreement"), in order to set
forth their respective rights in respect of any and all security or collateral
now or hereafter securing the obligations of the Obligors to the Noteholders or
the Bank Creditors; and
WHEREAS, each of the Pledgors have previously entered into
Security Agreements as follows: (a) Security Agreement dated as of January 17,
1995 by CTI in favor of the Agent, (b) Security Agreement dated as of October
15, 1995 by CTI in favor of the Collateral Agent, as amended by the First
Amendment to Security Agreement dated as of March 31, 1997, (c)
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separate Security Agreements each dated as of March 31, 1997 by Intellectual
Property Co. (now known as CIP, Inc.), a Nevada corporation, and Covenant
Leasing, Inc., a Nevada corporation, in favor of the Collateral Agent, (d)
Security Agreement dated as of December 31, 1997 by Bud Meyer Truck Lines, Inc.,
a Minnesota corporation in favor of the Collateral Agent, (e) Security Agreement
dated as of November 13, 1998 by Southern Refrigerated Transport, Inc., an
Arkansas corporation and Tony Smith Trucking, Inc., an Arkansas corporation in
favor of the Collateral Agent (f) Security Agreement dated as of November 16,
1999 by Harold Ives Trucking Co., an Arkansas corporation and Terminal Truck
Broker, Inc., an Arkansas corporation in favor of the Collateral Agent, whereby
each Pledgor granted to the Collateral Agent a security interest in the
Collateral (as defined below) to secure repayment of the Obligations (as defined
below) which security interests are intended to be continued hereby; and
WHEREAS, subject to the terms and conditions of the
Intercreditor Agreement, the Noteholders and the Bank Creditors have agreed to
appoint the Collateral Agent to serve as collateral agent under this Agreement,
and the Collateral Agent has agreed to serve as collateral agent under this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants contained herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
a. When used herein, the following terms shall have the
following meanings:
"Account Debtor" shall mean any Person who may become
obligated to a Pledgor under, with respect to, or on account of, an
Account.
"Accounts" shall mean all "accounts", as such term is defined
in the Code, now owned or hereafter acquired by each of the Pledgors
and, in any event, including, without limitation (a) all accounts
receivable, other receivables, book debts and other forms of
obligations now owned or hereafter received or acquired by or belonging
or owing to such Pledgor, whether arising out of goods sold or leased
or for services rendered by it or from any other transaction
(including, without limitation, any such obligations which may be
characterized as an account or contract right under the Code), (b) all
accounts receivable, notes receivable and other obligations and
indebtedness of any Affiliate now owned or hereafter received or
acquired by or belonging or owing to such Pledgor, (c) all of such
Pledgor's rights in, to and under all licenses of patents, trademarks,
trade names, service marks, copyrights, trade secrets, know-how or
other intellectual property, or other similar agreements, all leases or
subleases of equipment (including without limitation Revenue Equipment)
or similar agreements, and all purchase orders or receipts now owned or
hereafter acquired by it for goods or services, (d) all monies due or
to become due to such Pledgor under all licenses of patents,
trademarks, trade names, service marks, copyrights, trade secrets,
know-how or other intellectual property, or other similar agreements,
all leases or subleases of equipment (including without limitation
Revenue Equipment) or similar agreements, and all purchase orders and
contracts for the sale of goods or the
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performance of services or both by such Pledgor or in connection with
any other transaction (whether or not yet earned by performance on the
part of such Pledgor) now or hereafter in existence, including, without
limitation, the right to receive the proceeds of said licenses, leases,
subleases, agreements, purchase orders and contracts, and (e) all
collateral security, instruments, guarantees and other general
intangibles of any kind, now or hereafter in existence, given by any
Person with respect by any of the foregoing.
"Actionable Default" shall mean any Event of Default under and
as defined in the Credit Agreement or any Event of Default under and as
defined in the Note Agreements.
"Affiliate" shall mean any Person (other than the Parent) (i)
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Parent, (ii) which beneficially owns or holds 5% or more of any class
of the voting stock of the Parent, (iii) of which the Parent or any
Pledgor or shareholders of the Parent beneficially own or hold 5% or
more of the voting stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest), or (iv) who is a
member of the Board of Directors of the Parent or a member of the
immediate family of any such Person. The term "immediate family" of any
Person shall include the spouse, brothers, sisters and descendants of
such Person. The term "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 stock, by contract or otherwise. The term "voting stock" means
the shares of stock or other equity interest of a Person that, in the
normal course of affairs, have the power to elect directors or the
members of any policy making board of such Person.
"Agent" shall mean ABN AMRO Bank N.V., acting in the capacity
of agent under the Credit Agreement, and any successor thereto.
"Bank Creditors" shall mean the Banks, the Letter of Credit
Banks and the Agent.
"Bank Guaranty" shall have the meaning set forth in the
recitals hereto.
"Bank Subsidiary Guaranty" shall have the meaning set forth in
the recitals hereto.
"Banks" shall have the meaning set forth in the recitals
hereto, and each other institution party to the Credit Agreement as a
"Bank" from time to time..
"Borrower" shall mean Covenant Asset Management, Inc.
(formerly known as Covenant Leasing, Inc.), a Nevada corporation.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Georgia; provided,
however, in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of the Secured
Party's security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of
Georgia, the term "Code" shall
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mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions
related to such provisions.
"Collateral" shall have the meaning assigned to such term in
Section 2 hereof.
"Collection Account" shall mean any account, lockbox or other
depository into which any Pledgor deposits or receives the proceeds of
Accounts.
"Contract" shall mean an indenture, agreement, other
contractual restriction, lease, instrument, deed, certificate or
incorporation or charter, or bylaw.
"Credit Agreement" shall have the meaning set forth in the
third recital paragraph hereof.
"Credit Transaction Documents" shall mean the Note Agreements,
the Notes, the Notes Guarantee, the Credit Agreement, the Security
Documents, the other Loan Documents (as defined in the Credit
Agreement), and the Intercreditor Agreement.
"Intercreditor Agreement" shall have the meaning set forth in
the recitals hereto.
"Lien", as applied to the property or assets (or the income or
profits therefrom) of any Person, shall mean (in each case, whether the
same is consensual or nonconsensual or arises by Contract, operation of
law, legal process or otherwise): any mortgage, lien, pledge,
attachment, financing statement, levy, charge, or other security
interest or encumbrance of any kind in respect of any property or
assets of such Person, or upon the income or profits therefrom. For
this purpose, each of the Pledgors shall be deemed to own subject to a
Lien any asset that it has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset.
"Note Agreements" shall have the meaning set forth in the
recitals hereto.
"Noteholders" shall have the meaning set forth in the recitals
hereto.
"Notes" shall have the meaning set forth in the recitals
hereto.
"Notes Guarantee" shall mean, collectively, the Parent
Guarantee and the Subsidiary Guaranty.
"Obligations" shall mean all indebtedness, obligations or
liabilities (including, without limitation, all principal, interest,
premium, fees, reimbursement obligations, indemnity obligations,
collection costs and other amounts) now or hereafter owing by any
Pledgor and/or any or all of the other Obligors to any or all of the
Participating Creditors and/or the Collateral Agent under any or all of
the Credit Transaction Documents.
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"Obligors" shall mean the Borrower, the Parent, each of the
Pledgors and each other guarantor of the Obligations arising under the
Notes or the Credit Agreement.
"Parent" shall mean Covenant Transport, Inc., a Nevada
corporation.
"Participating Creditors" shall mean the Bank Creditors and
the Noteholders.
"Permitted Lien" shall mean (i) a Lien listed in Schedule I
hereto or consented to in writing by the Secured Party, (ii) a Lien
securing a tax assessment or other governmental charge or levy
(excluding any Lien arising under any of the provisions of the Employee
Retirement Income Security Act of 1975, as amended), the claim of a
materialman, mechanic, carrier, warehouseman or landlord for labor,
materials, supplies or rentals incurred in the ordinary course of
business, or a money judgment rendered by a court or administrative
tribunal, but in each case only if (A) such amount is not due and
payable or, in the case of a tax assessment or other governmental
charge or levy, if payment thereof shall not at the time be required to
be made in accordance with Section 5.1 of the Credit Agreement, (B)
foreclosure, distraint, sale or other similar proceeding shall not have
been commenced or if commenced, such proceeding is being contested in
good faith by appropriate action and any execution in respect thereof
has been bonded or stayed, and (C) such Lien, together with all other
such Liens, secures obligations which do not exceed $100,000 in the
aggregate, (iii) a Lien upon Revenue Equipment securing Purchase Money
Debt, to the extent such Lien is a Permitted Lien under the Credit
Agreement, and (iv) a Lien created in favor of the Secured Party under
any of the Security Documents.
"Person" means an individual, corporation, partnership,
limited liability company, trust or unincorporated organization, a
government or any agency or political subdivision thereof.
"Post-Maturity Rate" shall mean (i) when used in respect of
Obligations owing to any Noteholder, the applicable default or
post-maturity rate specified in the Note Agreements or the Notes, (ii)
when used in respect of Obligations owing to any Bank Creditor, the
applicable default or post-maturity rate specified in the Credit
Agreement, and (iii) when used in respect of any other Obligations
hereunder, the highest of any of the foregoing default or post-maturity
rates.
"Proceeds" shall mean "proceeds", as such term is defined in
the Code, whether now owned or hereafter acquired, and in whatever
form, and, in any event, shall include, without limitation (i) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable
to any Pledgor from time to time with respect to any of the Collateral,
(ii) any and all payments (in any form whatsoever) made or due and
payable to any Pledgor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any governmental body, authority,
bureau or agency (or any person acting under color of governmental
authority), (iii) any recoveries by any Pledgor against third parties
with respect to any litigation or dispute concerning any of the
Collateral, and (iv) any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral, upon
disposition or otherwise.
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"Revenue Equipment" shall mean all tractors, trailers and
other similar equipment now or hereafter used in the operation of any
Pledgor's or any Affiliate's trucking business and owned by such
Pledgor, wherever located, and all replacements and substitutions for,
and accessions to, such equipment.
"Security Document" shall mean each of the documents and
agreements defined as a "Security Document" in the Note Agreements or
the Credit Agreement and shall include any and all agreements,
assignments, mortgages, deeds or other similar documents under which
the Collateral Agent in now or hereafter granted a Lien in any
collateral to secure the Obligations, including without limitation this
Agreement.
"Subsidiary Guarantors" shall mean Covenant.com, Inc.
(formerly known as Covenant Acquisition Co. and C & F Acquisition Co.),
a Nevada corporation, CIP, Inc. (formerly known as Intellectual
Property Co.), a Nevada corporation, Southern Refrigerated Transport,
Inc., an Arkansas corporation, Tony Smith Trucking, Inc., an Arkansas
corporation, Harold Ives Trucking Co., an Arkansas corporation,
Terminal Truck Broker, Inc., an Arkansas corporation, Covenant
Transport, Inc., a Tennessee corporation, and any other Subsidiary,
direct or indirect, of the Parent that may hereafter become a party to
the Subsidiary Guaranty or the Bank Guaranty.
b. The definitions in this Section 1 shall apply equally to
both the singular and plural forms of the terms defined, with the exception of
the term "Borrower." Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles and Sections shall be deemed
references to Articles and Sections of this Agreement unless the context shall
otherwise require. All references herein to any Person, other than an Obligor,
shall be deemed to include such Person's successors, transferees and assigns.
All references herein to any Obligor shall be deemed to include such Obligor's
successors. All references herein to any Credit Transaction Document shall be to
such document as the terms thereof may have been amended, supplemented, waived
or otherwise modified from time to time in accordance with the terms thereof and
hereof.
2. GRANT OF SECURITY INTEREST.
a. To secure the prompt and complete payment, performance and
observance of the Obligations, each of the Pledgors hereby grants to the Secured
Party a security interest in all of such Pledgor's right, title and interest in,
to and under the following whether now owned by or owing to, or hereafter
acquired by or arising in favor of such Pledgor (including, without limitation,
under any trade names, styles or divisions thereof), and regardless of where
located (all of which being hereinafter collectively referred to as the
"Collateral", but excluding, however, any property of such Pledgor which is the
subject of prior financing and for which such Pledgor is prohibited by the terms
of such financing from granting a Lien in favor of the Collateral Agent, for so
long as such prohibition shall remain in effect):
(i) all Accounts;
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(ii) all Revenue Equipment, all leases or subleases
thereof or similar agreements (including all rights of such
Pledgor as lessor or sublessor, or lessee or sublessee,
thereunder), and all general intangibles relating thereto;
(iii) all patents, trademarks, trade names, service
marks, copyrights, trade secrets, know-how and other
intellectual property, all licenses thereof (including all
rights of such Pledgor as licensor or licensee thereunder),
and all general intangibles relating thereto;
(iv) all rights, titles and interest of such Pledgor
in, to or under any and all collection accounts, concentration
accounts, disbursement accounts, cash management accounts,
lockbox accounts, cash collateral accounts and other bank
accounts or other accounts into which there shall be deposited
at any time any Proceeds of the Collateral, and in all monies
or other property of such Pledgor now or hereafter on deposit
therein;
(v) all books and records (including without
limitation credit files, customer lists, computer files,
computer programs, computer printouts, or other computer
material of such Pledgor pertaining to any of the Collateral
described above); and
(vi) all Proceeds of any of the Collateral described
above.
b. In addition, to secure the prompt and complete payment,
performance and observance of the Obligations, each of the Pledgors hereby
grants to Secured Party, a security interest in all property of such Pledgor
held by the Secured Party or any Participating Creditor, including, without
limitation, all property of every description, now or hereafter in the
possession or custody of or in transit to the Secured Party or any Participating
Creditor for any purpose, including safekeeping, collection or pledge, for the
account of such Pledgor, or as to which such Pledgor may have any right or
power.
3. SECURED PARTY'S RIGHTS; LIMITATIONS ON SECURED PARTY'S
OBLIGATIONS.
a. The Secured Party may at any time after the occurrence of
and during the continuance of an Actionable Default, (i) upon notice to the
Pledgors (which may be simultaneous with notice to Account Debtors), notify
Account Debtors that the Accounts have been assigned to the Secured Party and
that payments shall be made directly to the Secured Party, and upon the request
of the Secured Party, such Pledgor shall so notify Account Debtors.
b. Upon reasonable prior notice to the Pledgors and not more
than once per fiscal year of the Pledgors (unless an Actionable Default has
occurred and is continuing in which case no notice is necessary and no such
limit shall apply), the Secured Party shall have the right to
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make test verifications of the Accounts and verifications and appraisals of the
other Collateral in a commercially reasonable manner and the Pledgors agree to
furnish all such assistance and information as the Secured Party may reasonably
require in connection therewith. The Secured Party may at any time while an
Actionable Default has occurred and is continuing, and otherwise no more
frequently than once per fiscal year of the Pledgors, in the Secured Party's own
name or in the name of such Pledgor communicate with Account Debtors, to verify
with such Persons, to the Secured Party's satisfaction, the existence, amount
and terms of any such Accounts. Upon the occurrence and continuation of an
Actionable Default, each Pledgor, at its own expense, shall cause the certified
public accountant then engaged by such Pledgor, to prepare and deliver to the
Secured Party at any time and from time to time promptly upon the Secured
Party's request the following reports: (i) a reconciliation of all Accounts;
(ii) an aging of all Accounts; (iii) trial balances; and (iv) a test
verification of such Accounts as Secured Party may request.
4. REPRESENTATIONS AND WARRANTIES. Each of the Pledgors
hereby represents and warrants that:
a. Except for the security interest granted to the Secured
Party under this Security Agreement and any other Permitted Liens, such Pledgor
is the sole owner of each item of the Collateral in which it purports to grant a
security interest hereunder, having good and marketable title thereto free and
clear of any and all liens, security interests or other encumbrances.
b. No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
as may be set forth on Schedule I hereto, or such as may have been filed by the
Pledgors in favor of the Secured Party pursuant to this Security Agreement.
c. This Security Agreement, upon being deemed effective as
provided in Section 5.21 of the Credit Agreement, will create a valid and
continuing lien on and security interest in favor of the Secured Party in the
Collateral, which lien and security interest will be prior to all other Liens
except those Liens specifically designated on Schedule I as being prior to the
Secured Party's Liens, and except Permitted Liens that would be prior to the
Secured Party's Liens as a matter of law or that were in place prior to the
effectiveness of this Agreement, and will be enforceable as such as against all
third parties.
d. Each of the Pledgors' chief executive office, principal
place of business, corporate offices, all premises within which Collateral is
stored and located, the locations of all of its records concerning the
Collateral and each of the Pledgors' taxpayer identification number, are set
forth on Schedule II hereto, and no Pledgor shall change such chief executive
office, principal place of business, corporate offices or Collateral locations
or location of its records concerning the Collateral, or remove such records
unless it shall have notified the Secured Party in writing at least 30 days
prior to such change and shall take such action as is necessary to cause the
Lien of the Secured Party in the Collateral to continue to be perfected. No
Pledgor shall change its chief executive office, principal place of business,
corporate offices, or location of its records concerning the Collateral without
giving at least thirty (30) days' prior written notice thereof to the Secured
Party.
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e. Since its incorporation, each of the Pledgors has not been
known as or used and each of the Pledgors presently does not use any corporate
name other than its name as set forth in its signature below and those other
corporate, fictitious or trade names (if any) of such Pledgor as disclosed on
Schedule II hereto. If such schedule sets forth any fictitious or trade names
for any Pledgor (collectively, the "Trade Names"), such Pledgor certifies to and
agrees with the Secured Party that: (i) any Collateral arising out of any sales
under and of the Trade Names is the property of and belongs to such Pledgor;
(ii) each of the Trade Names is a trade name or trade style (and not an
independent or separate corporation or other legal entity) by which such Pledgor
may identify or market itself or under which such Pledgor may sell certain
products, render certain services or otherwise conduct some or all of its
business; (iii) any Collateral which arises from any sales made, services
rendered or other business conducted under any of the Trade Names shall be owned
solely by such Pledgor; and (iv) such Pledgor hereby appoints the Secured Party
to be its attorney-in-fact to file such certificates disclosing such Pledgor's
use of the Trade Names and to take such other actions on such Pledgor's behalf
as the Secured Party considers appropriate to comply with any statutes or
regulations relating to the use of fictitious or assumed business names.
f. (i) The Accounts represent bona fide sales of inventory or
the provision of services to customers in the ordinary course of the Pledgors'
business completed in accordance with the terms and provisions contained in the
documents available to the Secured Party with respect thereto and are not
evidenced by a judgment, instrument or chattel paper; (ii) the amounts shown on
any aged receivables trial balance or Borrowing Base Certificate delivered by
the Pledgors to the Secured Party or any Participating Creditor pursuant to the
terms of this Security Agreement or any Credit Transaction Document and on the
Pledgors' books and records and all invoices and statements which may be
delivered to the Secured Party with respect thereto are actually and absolutely
owing to such Pledgor and are not in any way contingent; (iii) no payments have
been or shall be made thereon except payments immediately delivered to a
Collection Account and payments made prior to the date of this Security
Agreement; (iv) there are no setoffs, claims or disputes existing or asserted
with respect thereto and no Pledgor has made any agreement with any Account
Debtor for any deduction therefrom except a discount or allowance allowed by
such Pledgor in the ordinary course of its business for prompt payment; (v) to
the best of each of the Pledgors' knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforcement thereof or tend
to reduce the amount payable thereunder (net of reserves) as shown on the
respective aged receivable trial balances, Borrowing Base Certificates, each of
the Pledgors' books and records and all invoices and statements delivered to the
Secured Party with respect thereto; (vi) to the best of each of the Pledgors'
knowledge, all Account Debtors have the capacity to contract; (vii) no Pledgor
has received notice of proceedings or actions which are threatened or pending
against any Account Debtor which might result in any material adverse change in
such Account Debtor's financial condition; and (viii) no Pledgor has knowledge
that any Account Debtor is unable generally to pay its debts as they become due.
g. With respect to all Revenue Equipment, (i) such property is
located at, or is in transit to, one of the locations set forth on Schedule II,
and (ii) each of the Pledgors has good and merchantable title to such property
and such property is not subject to any lien or security interest or document
whatsoever except for the security interest granted to the Secured Party
hereunder and other Permitted Liens.
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5. COVENANTS. Each of the Pledgors covenants and agrees
with the Secured Party that from and after the date of this Security Agreement
and u ntil the termination of this Security Agreement pursuant to Section 16
hereof:
a. Further Assurances; Pledge of Instruments. At any time and
from time to time, upon the written request of the Secured Party and at the sole
expense of the Pledgors, each of the Pledgors shall promptly and duly execute
and deliver any and all such further instruments and documents and take such
further action as the Secured Party may reasonably deem desirable to obtain for
the Secured Party the full benefits of this Security Agreement and of the
interests, rights and powers herein granted, including (i) using its best
efforts to secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of the Secured Party of any Collateral held by
such Pledgor or in which such Pledgor has any rights not heretofore assigned,
(ii) filing any financing or continuation statements under the Code with respect
to the liens and security interests intended to be granted hereunder or under
any other Credit Transaction Document, and (iii) transferring Collateral to the
Secured Party's possession (if a security interest in such Collateral can be
perfected only by possession). Each of the Pledgors also hereby authorizes the
Secured Party to file any financing or continuation statement without the
signature of such Pledgor to the extent permitted by applicable law. If any
amount payable under or in connection with any of the Collateral is or shall
become evidenced by any instrument, such instrument, other than checks and notes
received in the ordinary course of business (which shall be deposited to a
Collection Account), shall be duly endorsed in a manner satisfactory to the
Secured Party promptly upon such Pledgor's receipt thereof and delivered to the
Secured Party.
b. Maintenance of Records. Each of the Pledgors shall keep and
maintain, at its own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Each of the Pledgors shall mark its books and records pertaining to
the Collateral to evidence this Security Agreement and the security interests
granted hereby. For the Secured Party's further security, each of the Pledgors
agrees that the Secured Party shall have a special property right and security
interest in all of such Pledgor's books and records pertaining to the Collateral
and, upon the occurrence and during the continuation of any Actionable Default,
such Pledgor shall deliver and turn over any such books and records to the
Secured Party or to its representatives at any time on demand of the Secured
Party. Prior to the occurrence of an Actionable Default and upon reasonable
notice from the Secured Party, each of the Pledgors shall permit any
representative of the Secured Party to inspect such books and records and shall
provide photocopies thereof to the Secured Party as more specifically set forth
in Section 5(g) below.
c. Indemnification. In any suit, proceeding or action brought
by the Secured Party relating to any Account or for any sum owing thereunder, or
to enforce any provision of any contract or other agreement relating to an
Account, each of the Pledgors shall save, indemnify and keep the Secured Party
harmless from and against all expense, loss or damage suffered by reason of any
claim, defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder arising out of a breach by such Pledgor of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from such Pledgor, and all such obligations of such Pledgor shall be and
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remain enforceable against, and only against, such Pledgor and shall not be
enforceable against the Secured Party or any Participating Creditor.
d. Compliance with Terms of Accounts, etc. In all material
respects, each of the Pledgors shall perform and comply with all obligations in
respect of all Accounts, contracts and other agreements to which it is a party
or by which it or any of its property is bound.
e. Limitation on Liens on Collateral. Each of the Pledgors
shall not create, permit or suffer to exist, and shall defend the Collateral
against and take such other action as is necessary to remove, any Lien on the
Collateral except for Permitted Liens. Each of the Pledgors shall further defend
the right, title and interest of the Secured Party in and to any of such
Pledgor's rights under the Accounts and to the Revenue Equipment and any other
Collateral, and in and to the Proceeds thereof, against the claims and demands
of all Persons whomsoever other than the holders of Permitted Liens solely with
respect to such Permitted Liens.
f. Limitations on Modifications of Accounts. Upon the
occurrence and during the continuation of any Actionable Default, each of the
Pledgors shall not, without the Secured Party's prior written consent, (i) grant
any extension of the time of payment of any of the Account; (ii) compromise or
settle the same for less than the full amount thereof; (iii) release, in whole
or in part, any Person liable for the payment thereof; or (iv) allow any credit
or discount whatsoever thereon other than trade discounts granted in the
ordinary course of business of such Pledgor.
g. Right of Inspection. Upon reasonable notice to the Pledgors
(unless an Actionable Default has occurred and is continuing, in which case no
notice is necessary), the Secured Party shall at all times have full and free
access during normal business hours to all the books and records and
correspondence of the Pledgors, and the Secured Party or its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and each
of the Pledgors agrees to render to the Secured Party, at such Pledgor's cost
and expense, such clerical and other assistance as may be reasonably requested
with regard thereto. Upon reasonable notice to the Pledgors (unless an
Actionable Default has occurred and is continuing, in which case no notice is
necessary), the Secured Party and its representatives shall also have the right
to enter into and upon any premises where any of the Collateral is located for
the purpose of inspecting the same, observing its use or otherwise protecting
the Secured Party's interests in the Collateral.
h. Continuous Perfection. No Pledgor shall change its name,
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code unless such Pledgor shall have given the Secured Party at
least thirty (30) days' prior written notice thereof and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary
or reasonably requested by the Secured Party to amend such financing statement
or continuation statement so that it is not seriously misleading.
-12-
6. SECURED PARTY'S APPOINTMENT AS ATTORNEY-IN-FACT.
a. Each of the Pledgors hereby irrevocably constitutes and
appoints the Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in its own name, from time to time in the Secured Party's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute and deliver any
and all documents and instruments which may be necessary or reasonably desirable
to accomplish the purposes of this Security Agreement and, without limiting the
generality of the foregoing, hereby grants to the Secured Party the power and
right, on behalf of such Pledgor, without notice to or assent by such Pledgor,
upon the occurrence and during the continuation of an Actionable Default, to do
the following:
(i) in the name of such Pledgor, in its own name or otherwise,
take possession of, endorse and receive payment of any checks, drafts,
notes, acceptances, or other instruments for the payment of monies due
under any Collateral;
(ii) continue any insurance existing pursuant to the terms of
any Credit Transaction Document, and pay all or any part of the
premiums therefor and the costs thereof;
(iii) receive payment of any and all monies, claims, and other
amounts due or to become due at any time arising out of or in respect
of any Collateral;
(iv) ask, demand, collect, receive and give acquittances and
receipts for any and all money due or to become due under any
Collateral;
(v) pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the
Collateral;
(vi) obtain any insurance called for by the terms of any
Credit Transaction Document and pay all or any part of the premiums
therefor and costs thereof;
(vii) direct any party liable for any payment under or in
respect of any of the Collateral to make payment of any and all monies
due or to become due thereunder, directly to the Secured Party or as
the Secured Party shall direct;
(viii) sign and endorse any invoices, assignments,
verifications, and notices in connection with Accounts and other
documents constituting or related to the Collateral;
(ix) file any claim or take or commence any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party for the purpose of collecting any and
all such monies due under any Collateral whenever payable;
-13-
(x) commence and prosecute any suits, actions or proceedings
of law or equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in
respect of any Collateral;
(xi) defend any suit, action or proceeding brought against any
Pledgor with respect to any Collateral if such Pledgor does not defend
such suit, action or proceeding or if the Secured Party believes that
such Pledgor is not pursuing such defense in a manner that will
maximize the recovery with respect to such Collateral;
(xii) settle, compromise or adjust any suit, action, or
proceeding described above and, in connection therewith, give such
discharges or releases as the Secured Party may deem appropriate; and
(xiii) sell, transfer, pledge, make any agreement with respect
to, or otherwise deal with any of the Collateral as fully and
completely as though the Secured Party were the absolute owner thereof
for all purposes, and to do, at the Secured Party's option and such
Pledgor's expense, at any time, or from time to time, all acts and
things which the Secured Party reasonably deems necessary to perfect,
preserve, or realize upon the Collateral and the Secured Party's Lien
thereon in order to effect the intent of this Security Agreement, all
as fully and effectively as such Pledgor might do.
b. Each of the Pledgors hereby ratifies, to the extent
permitted by law, all that said attorneys-in-fact shall lawfully do or cause to
be done by virtue hereof. The power of attorney granted pursuant to this Section
6 is a power coupled with an interest and shall be irrevocable until all Letters
of Credit have been terminated, and all Obligations have been completely
discharged and such Pledgor shall have no further right to borrow any monies or
obtain other extensions of credit or financial accommodations under the Credit
Transaction Documents.
c. The powers conferred on the Secured Party hereunder are
solely to protect the Secured Party's interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Secured Party shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and none of its officers, directors, employees, agents
or representatives shall be responsible to such Pledgor for any failure to act,
and in taking affirmative action, shall be liable only to the extent that such
Persons are finally determined by a court of competent jurisdiction to be guilty
of gross negligence or willful misconduct.
d. Each of the Pledgors also authorizes the Secured Party, at
any time and from time to time upon the occurrence of and during continuance of
an Actionable Default, to (i) communicate in its own name with any party to any
Account with regard to the assignment of the right, title and interest of such
Pledgor in and under the Accounts and other matters relating thereto, and (ii)
execute, in connection with the sale provided for in Section 8 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
7. PERFORMANCE BY SECURED PARTY OF EACH PLEDGOR'S OBLIGATIONS.
If any Pledgor fails to perform or comply with any of its agreements contained
herein or in any of the other Credit Transaction Documents, and the Secured
Party, as provided for
-14-
by the terms of this Security Agreement or any of the other Credit Transaction
Documents, shall itself perform or comply, or otherwise cause performance of or
compliance, with such agreement, the reasonable expenses, including attorneys'
fees, of the Secured Party incurred in connection with such performance or
compliance, together with interest thereon at the applicable Post-Maturity Rate,
shall be payable by such Pledgor to the Secured Party on demand and shall
constitute Obligations secured hereby.
8. REMEDIES; RIGHTS UPON DEFAULT.
a. If any Event of Default shall occur and be continuing, the
Secured Party may exercise in addition to all other rights and remedies granted
to it under this Security Agreement or the other Credit Transaction Documents,
or under any other instrument or agreement securing, evidencing, guaranteeing or
otherwise relating to the Obligations, all rights and remedies that it has as a
secured party under the Code. Without limiting the generality of the foregoing,
each of the Pledgors expressly agrees that in any such event the Secured Party,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon such Pledgor or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the maximum
extent permitted by the Code and other applicable law), may forthwith enter upon
the premises where any Collateral is located through self-help, without judicial
process, without first obtaining a final judgment or giving such Pledgor notice
and opportunity for a hearing on the Secured Party's claim or action, and
without paying rent to such Pledgor, and collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Secured Party shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase for the benefit of the Secured
Party the whole or any part of said Collateral so sold, free of any right or
equity of redemption, which equity of redemption such Pledgor hereby releases.
Such sales may be adjourned and continued from time to time with or without
notice. The Secured Party shall have the right to conduct such sales on such
Pledgor's premises or elsewhere and shall have the right to use such Pledgor's
premises without charge for such time or times as the Secured Party deems
necessary or advisable.
Each of the Pledgors further agrees, at the Secured Party's
request, to assemble the Collateral and make it available to the Secured Party
at such places which the Secured Party shall reasonably select, whether at such
Pledgor's premises or elsewhere. Until the Secured Party is able to effect a
sale, lease, or other disposition of Collateral, the Secured Party shall have
the right to use, operate or administer Collateral on behalf of the Secured
Party, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by the Secured Party. The Secured Party shall have no obligation to
each of the Pledgors to maintain or preserve the rights of such Pledgor as
against third parties with respect to any Collateral while such Collateral is in
the possession of the Secured Party. The Secured Party may, if it so elects,
seek the appointment of a receiver or keeper to take possession of Collateral
and to enforce any of the Secured Party's remedies with respect to such
appointment
-15-
without prior notice or hearing. The Secured Party shall apply the net proceeds
of any such collection, recovery, receipt, appropriation, realization or sale as
provided in Section 8(d) hereof, such Pledgor remaining liable for any
deficiency remaining unpaid after such application, and only after so paying
over such net proceeds and after the payment by the Secured Party of any other
amount required by any provision of law, including Section 9-504(1)(c) of the
Code (but only after the Secured Party has received what the Secured Party
considers reasonable proof of a subordinate party's security interest), need the
Secured Party account for the surplus, if any, to such Pledgor. To the maximum
extent permitted by applicable law, each of the Pledgors waives all claims,
damages, and demands against the Secured Party or any Participating Creditor
arising out of the repossession, liquidation, collection, retention or sale of
the Collateral except to the extent that such claims or damages arise solely out
of the gross negligence or willful misconduct of such party. Each of the
Pledgors agrees that ten (10) days' prior notice by the Secured Party of the
time and place of any public sale or of the time after which a private sale may
take place is reasonable notification of such matters. Each of the Pledgors
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to which the
Secured Party or any Participating Creditor are entitled, such Pledgor also
being liable for any reasonable attorneys' fees incurred by the Secured Party or
the Participating Creditors to collect such deficiency.
b. Each of the Pledgors agrees to pay any and all costs of the
Secured Party and the Participating Creditors, including, without limitation,
reasonable attorneys' fees, incurred in connection with the enforcement of any
of the Secured Party's rights and remedies hereunder.
c. Except as otherwise specifically provided herein, each of
the Pledgors hereby waives presentment, demand, protest or any notice (to the
maximum extent permitted by applicable law) of any kind in connection with this
Security Agreement, any other Credit Transaction Document or any Collateral.
d. The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by the Secured Party
upon receipt, in accordance with the terms of the Intercreditor Agreement.
9. GRANT OF LICENSE TO USE PATENT AND TRADEMARK COLLATERAL.
For the purpose of enabling the Secured Party to exercise rights and remedies
under Section 8 hereof (including, without limiting the terms of Section 8
hereof, in order to take possession of, hold, preserve, process, assemble,
prepare for sale, market for sale, sell, liquidate or otherwise dispose of
Collateral) at such time as the Secured Party shall be lawfully entitled to
exercise such rights and remedies, each of the Pledgors hereby grants to the
Secured Party an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to such Pledgor) to use, transfer, license or
sublicense any patent, trademark, trade secret, copyright or other intellectual
property now owned or hereafter acquired by such Pledgor, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
and automatic machinery software and programs used for the compilation or
printout thereof.
-16-
10. LIMITATION ON SECURED PARTY'S DUTY IN RESPECT OF
COLLATERAL. The Secured Party shall use reasonable care with respect to the
Collateral in its possession or under its control. The Secured Party shall not
have any other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of the Secured Party, or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto. Upon request of such Pledgor, the Secured Party
shall account for any monies received by the Secured Party in respect of any
foreclosure on or disposition of the Collateral.
11. REINSTATEMENT. This Security Agreement shall remain in
full force and effect and continue to be effective should any petition be filed
by or against any Pledgor for liquidation or reorganization, should such Pledgor
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of such
Pledgor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference", "fraudulent conveyance" or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
12. NOTICES. All notices, requests and other communications
provided for hereunder shall be in writing and personally delivered (including
overnight courier), mailed by certified or registered mail, postage prepaid and
return receipt requested, or telecopied (all telecopier notices promptly to be
confirmed by mail or personal delivery), at the address and telecopier number of
each party specified on the signature page hereof, or at such other address or
telecopier number as may be hereafter designated by notice as herein provided.
All such notices and communications shall be effective or deemed delivered or
furnished (i) if given by mail, on the third business day after such
communication is deposited in the mail, addressed as provided herein, (ii) if
given by telecopier, when such communication is transmitted to the appropriate
number determined as provided herein and the appropriate answer-back is received
or receipt is otherwise acknowledged, and (iii) if given by hand delivery or
overnight courier, when left at the address of the addressee addressed as
provided above; except that notices of a change of address or telecopier number
shall not be effective until actually received.
13. SEVERABILITY; COMPLETE AGREEMENT. Any provision of this
Security Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
This Security Agreement is to be read, construed and applied together with the
other Credit Transaction Documents which, taken together, set forth the complete
understanding and agreement of the Secured Party and each of the Pledgors with
respect to the matters referred to herein and therein and supersede all prior
agreements, understandings or inducements whether express or implied, or oral or
written.
-17-
14. NO WAIVER; CUMULATIVE REMEDIES. The Secured Party shall
not by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder, and no waiver shall be valid unless in writing,
signed by the Secured Party and then only to the extent therein set forth. A
waiver by the Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Secured Party
would otherwise have had on any future occasion. No failure to exercise nor any
delay in exercising on the part of the Secured Party, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an instrument in
writing, duly executed by the Secured Party and each of the Pledgors.
15. LIMITATION BY LAW; TIME OF ESSENCE. All rights, remedies
and powers provided in this Security Agreement may be exercised only to the
extent that the exercise thereof does not violate any applicable provision of
law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this
Security Agreement invalid, unenforceable, in whole or in part, or not entitled
to be recorded, registered, or filed under the provisions of any Applicable Law.
Time is of the essence of this Security Agreement.
16. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section
11 hereof, this Security Agreement shall terminate upon the first day following
the termination of the Commitments (as defined in the Credit Agreement), the
cancellation and return of all Letters of Credit and the repayment in full of
all Obligations.
17. SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of each of the Pledgors hereunder shall be binding upon the
successors and assigns of such Pledgor, and shall, together with the rights and
remedies of the Secured Party hereunder, inure to the benefit of the Secured
Party, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the security interest granted to the Secured
Party hereunder. No Pledgor may assign, sell or otherwise transfer an interest
in this Security Agreement.
18. EXECUTION IN COUNTERPARTS. This Security Agreement may be
executed in any number of counterparts, all of which shall collectively and
separately constitute one agreement.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE EFFECTIVE UPON
ACCEPTANCE BY THE SECURED PARTY IN ATLANTA, GEORGIA, AND THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND
-18-
GOVERNED BY, THE LAW OF THE STATE OF GEORGIA WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
20. MUTUAL WAIVER OF JURY TRIAL. ANY JUDICIAL PROCEEDING
BROUGHT AGAINST EACH OF THE PLEDGORS WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF GEORGIA, AND, BY
EXECUTION OF THIS AGREEMENT, EACH OF THE PLEDGORS (A) ACCEPTS, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED
APPELLATE COURT, AND IRREVOCABLY AGREES (WITHOUT WAIVING ANY RIGHT TO APPEAL) TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, AND
(B) IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. EACH OF THE PLEDGORS HEREBY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED (WITH A COPY BY OVERNIGHT
COURIER), AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 12, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED ON THE
FIFTH DAY AFTER SUCH SERVICE IS DEPOSITED IN THE MAIL. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE SECURED PARTY TO BRING PROCEEDINGS AGAINST SUCH PLEDGOR
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY EITHER
PLEDGOR AGAINST THE SECURED PARTY, INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT SHALL BE
BROUGHT ONLY IN A COURT LOCATED IN THE CITY OF ATLANTA, IN THE STATE OF GEORGIA.
EACH OF THE PLEDGORS AND THE SECURED PARTY HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH ANY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER AND WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE
AGREEMENT DATE OR BEFORE OR AFTER PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF
SUCH PLEDGOR'S OBLIGATIONS HEREUNDER OR THEREUNDER.
21. AGREEMENT DELIVERED IN ESCROW. This Agreement is being delivered by
each of the Pledgors to the Secured Party to be held in escrow pursuant to
Section 5.21 of the Credit Agreement. This Agreement and the terms and
provisions hereof shall become operative and effective only upon notice from the
Collateral Agent or the Agent to the Borrower and the Parent following the
occurrence of an Actionable Default, as provided in Section 5.21 of the Credit
Agreement, and the Secured Party shall have no rights hereunder until such time
as this Agreement is deemed effective as provided in Section 5.21 of the Credit
Agreement.
-19-
IN WITNESS WHEREOF, each of the Pledgors has caused this
Consolidating Amended and Restated Guarantor Security Agreement to be executed
and delivered by its duly authorized officer as of the date first set forth
above.
PLEDGORS:
Address for Notices: HAROLD IVES TRUCKING CO.
TERMINAL TRUCK BROKER, INC.
c/o Covenant Transport, Inc. COVENANT.COM, INC.
400 Birmingham Highway CIP, INC.
Chattanooga, Tennessee 37404 SOUTHERN REFRIGERATED TRANSPORT, INC.
Attention: Joey B. Hogan TONY SMITH TRUCKING, INC.
Treasurer COVENANT TRANSPORT, INC., a Tennessee
Telecopier No.: (423) 821-5442 corporation
Telephone No.: (423) 821-1212
By:__________________________________
Name: Joey B. Hogan
Title: Treasurer
ACCEPTED BY:
Address for Notices: FIRST UNION NATIONAL BANK,
as Collateral Agent
First Union National Bank
Capital Management Group
Corporate Trust Department By:__________________________________
999 Peachtree Street Name: April Lipscomb
11th Floor Title: Trust Officer
Atlanta, Georgia 30309
Attention: April Lipscomb
Telecopier No.: (404) 827-7305
Telephone No.: (404) 827-7342
-20-
SCHEDULE I
to
CONSOLIDATING AMENDED AND RESTATED GUARANTOR SECURITY AGREEMENT
Dated as of June __, 2000
PERMITTED LIENS
[complete]
SCHEDULE II
to
CONSOLIDATING AMENDED AND RESTATED GUARANTOR SECURITY AGREEMENT
Dated as of June __, 2000
SCHEDULE OF OFFICES AND RECORDS CONCERNING
COLLATERAL AND OTHER NAMES
I. Chief Executive Office and principal place of business of each of the
Pledgors:
(a) Chief Executive Office:
400 Birmingham Highway, Chattanooga, Tennessee 37404
(b) Principal Place of Business:
411 East Michigan Avenue, P.O. Box 1984, Stuttgart, Arkansas
72160
II. Other Corporate Offices of each of the Pledgors:
None
III. Locations of each of the Pledgors' Records Concerning Collateral:
400 Birmingham Highway, Chattanooga, Tennessee 37404
IV. Locations of each of the Pledgors' Equipment:
411 East Michigan Avenue, P.O. Box 1984, Stuttgart, Arkansas
72160
No. 1 Harold Ives Drive, North Little Rock, Arkansas 72117
VI. Other Corporate, Fictitious or Trade Names of each of the Pledgors:
None
VIII. Tax Identification Number for each of the Pledgors:
Harold Ives Trucking Co.: 72-0555622
Terminal Truck Broker, Inc.: 71-0349128
Schedule 5.6
Information Regarding Collateral
1. Basic Corporate Information
A. Covenant Transport, Inc. (Nevada)
1. Legal Name: Covenant Transport, Inc.
2. Current Address of Chief Executive Office: 400 Birmingham Highway,
Chattanooga, TN 37419
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Nevada
B. Covenant Transport, Inc. (Tennessee)
1. Legal Name: Covenant Transport, Inc.
2. Current Address of Chief Executive Office: 400 Birmingham Highway,
Chattanooga, TN 37419
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Tennessee
C. Covenant Asset Management, Inc.
1. Legal Name: Covenant Asset Management, Inc.
2. Current Address of Chief Executive Office: 639 Isbell Road, Suite 390,
Reno, NV 89509
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Nevada
D. Southern Refrigerated Transport, Inc.
1. Legal Name: Southern Refrigerated Transport, Inc.
2. Current Address of Chief Executive Office: 210 Highway 71 N.,
Ashdown, AR 71822
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Arkansas
E. Tony Smith Trucking, Inc.
1. Legal Name: Tony Smith Trucking, Inc.
2. Current Address of Chief Executive Office: 210 Highway 71 N.,
Ashdown, AR 71822
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Arkansas
F. Harold Ives Trucking Co.
1. Legal Name: Harold Ives Trucking Co.
2. Current Address of Chief Executive Office: Rt. 1 #1 Ives Drive,
Little Rock, AR 72117
S-1
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Arkansas
G. Terminal Truck Broker, Inc.
1. Legal Name: Terminal Truck Broker, Inc.
2. Current Address of Chief Executive Office: 411 East Michigan,
Stuttgart, AR 72160
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Arkansas
H. Covenant.com, Inc.
1. Legal Name: Covenant.com, Inc.
2. Current Address of Chief Executive Office: 6100 Neil Road, Suite 500,
Reno, NV 89511
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Nevada
I. CIP, Inc.
1. Legal Name: CIP, Inc.
2. Current Address of Chief Executive Office: 639 Isbell Road, Suite 390,
Reno, NV 89509
3. Other Locations of Chief Executive Office Since December 1, 1995: None
4. State of Formation: Nevada
2. Trade Names, Trademarks, and Other Trade Styles used by Grantors Since
January 1, 2000 and the Purposes for Which They Were Used:
A. Trade Names
1. Covenant Transport, Inc.
2. Covenant Asset Management, Inc.
3. Southern Refrigerated Transport, Inc.
4. Tony Smith Trucking, Inc.
5. Harold Ives Trucking Co.
6. Terminal Truck Broker, Inc.
7. Covenant.com, Inc.
8. CIP, Inc.
9. Abbreviations and modifications of the names listed in A1. through A8.
B. Trademarks
1. None
C. Trade Styles
1. None
D. Purposes for Which Trade Names Were Used
1. Trade Names were used in the ordinary course of conducting interstate
freight transportation business
S-2
Schedule 8.4
Subsidiaries and Investments in Other Persons
- -------------------------------------------------------------------------------------------------------------------
SUBSIDIARIES OF COVENANT TRANSPORT, INC. (NEVADA)
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Name of Subsidiary/Investment % Owned State of Formation Authorized/Issued Entity Form
Shares
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Covenant Transport, Inc. (TN) 100% Tennessee 3,000/2,000 Corp.
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Covenant Asset Management, Inc. 100% Nevada 10,000/10,000 Corp.
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Southern Refrigerated Transport, Inc. 100% Arkansas 10,000/300 Corp.
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Tony Smith Trucking, Inc. 100% Arkansas 1,000/1,000 Corp.
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- -------------------------------------------------------------------------------------------------------------------
SUBSIDIARIES OF COVENANT TRANSPORT, INC. (TENNESSEE)
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Name of Subsidiary/Investment % Owned State of Formation Authorized/Issued Entity Form
Shares
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Harold Ives Trucking Co. 100% Arkansas 10,000/2,000 Corp.
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Terminal Truck Broker, Inc. 100% Arkansas 1,000/61 Corp.
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
Covenant.com, Inc. 100% Nevada 25,000/10,000 Corp.
- ------------------------------------------ ------------- ---------------------- ---------------------- ------------
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CIP, Inc. 100% Nevada 10,000/10,000 Corp.
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CVTI Receivables Corp. 90% Nevada 1,000/100 Corp.
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SUBSIDIARIES OF SOUTHERN REFRIGERATED TRANSPORT, INC.
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Name of Subsidiary/Investment % Owned State of Formation Authorized/Issued Entity Form
Shares
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CVTI Receivables Corp. 10% Nevada 1,000/100 Corp.
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There are no other Subsidiaries.
S-3
Schedule 8.6
Indebtedness
NONE
S-4
Schedule 8.7
Liens
NONE
S-5
Schedule 8.8
Tax Matters
NONE
S-6
Schedule 8.10
Litigation
NONE
S-7