RECEIVABLES PURCHASE AGREEMENT
Dated as of December 12, 2000
between
CVTI RECEIVABLES CORP.
as Purchaser,
COVENANT TRANSPORT, INC.
as an Originator,
and
SOUTHERN REFRIGERATED TRANSPORT, INC.
as an Originator
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1 Certain Defined Terms......................................... 1
Section 1.2 Accounting and UCC Terms...................................... 3
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES
Section 2.1 Purchase and Contribution of Receivables...................... 3
Section 2.2 Purchase Price................................................ 4
Section 2.3 Payment of Purchase Price..................................... 4
Section 2.4 Deemed Collections............................................ 5
Section 2.5 Adjustments................................................... 6
Section 2.6 Finance Charges............................................... 6
Section 2.7 Allocations of Collections.................................... 6
ARTICLE III CONDITIONS TO PURCHASES
Section 3.1 Conditions Precedent to Purchaser's Initial Purchase.......... 6
Section 3.2 Conditions Precedent to All Purchases......................... 7
Section 3.3 Conditions Precedent to Originator's Initial Sale............. 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Parties................. 8
Section 4.2 Additional Representations of the Originator.................. 9
ARTICLE V GENERAL COVENANTS
Section 5.1 Affirmative Covenants of the Originator.......................12
Section 5.2 Negative Covenants of the Originator......................... 15
ARTICLE VI ADMINISTRATION AND COLLECTION OF PURCHASED RECEIVABLES
Section 6.1 Collection Procedures........................................ 17
Section 6.2 Purchase Information......................................... 17
Section 6.3 Compliance Statements........................................ 18
Section 6.4 Allocations and Applications of Collections.................. 18
Section 6.5 Termination...................................................18
Section 6.6 Responsibilities of the Originator........................... 18
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ARTICLE VII PURCHASE TERMINATION EVENTS
Section 7.1 Purchase Termination Events...................................19
Section 7.2 Remedies..................................................... 20
ARTICLE VIII INDEMNIFICATION
Section 8.1 Indemnities by the Originator.................................21
ARTICLE IX THE ORIGINATOR NOTE
Section 9.1 Originator Note.............................................. 22
Section 9.2 Restrictions on Transfer of Originator Note.................. 23
ARTICLE X MISCELLANEOUS
Section 10.1 Amendments, Etc...............................................23
Section 10.2 Notices, Etc................................................. 24
Section 10.3 No Waiver; Remedies.......................................... 24
Section 10.4 Binding Effect; Governing Law................................ 24
Section 10.5 Costs, Expenses and Taxes.................................... 24
Section 10.6 No Bankruptcy Petition........................................25
Section 10.7 Acknowledgment of Assignments................................ 25
Section 10.8 Waiver of Setoff............................................. 25
Section 10.9 Severability..................................................25
Section 10.10 Counterparts..................................................25
Section 10.11 Grant of License to Use Trademarks........................... 26
Section 10.12 Jurisdiction; Consent to Service of Process...................26
Section 10.13 Third Party Beneficiaries.................................... 26
Section 10.14 Confirmation of Intent........................................26
Section 10.15 Confidentiality of Agreement................................. 27
Section 10.16 Section and Paragraph Headings................................27
Exhibits
--------
Exhibit A Form of Originator Note
Exhibit B Form of Purchase Report
Schedules
---------
Schedule I Offices Where Books, Records, Etc., Evidencing Receivables are
Kept
Schedule II List of Trade Names
ii
Schedule III Authorized Officers of Originator
Schedule IV Notice Addresses of Parties
iii
RECEIVABLES PURCHASE AGREEMENT
RECEIVABLES PURCHASE AGREEMENT, dated as of December 12, 2000, by and between
COVENANT TRANSPORT, INC., a Tennessee corporation ("Covenant Tennessee" or an
"Originator") and SOUTHERN REFRIGERATED TRANSPORT, INC., an Arkansas corporation
("Southern Refrigerated") or an "Originator" and together with Covenant
Tennessee, the "Originators"), and CVTI Receivables Corp, a Nevada corporation
("CVTI" or the "Purchaser"), as Purchaser.
W I T N E S S E T H:
WHEREAS, each Originator intends to sell Receivables to the Purchaser
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, to obtain the necessary funds to purchase such Receivables,
the Purchaser, the Master Servicer, Three Pillars Funding Corporation and
SunTrust Equitable Securities Corporation, as Administrator, have entered into
the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms.
Capitalized terms used in this Agreement but not defined herein shall
have the meanings assigned to such terms in the Loan Agreement. This Agreement
is the Receivables Purchase Agreement referred to in the Loan Agreement. As used
in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
Additional Receivable: Any Receivable which shall be purchased by, or
contributed to, the Purchaser on any Purchase Date other than the Closing Date.
Authorized Officers: Those officers of each Originator designated in Schedule
III hereto (or in such other Schedule as may be delivered to the parties hereto
from time to time) as duly authorized to execute and deliver this Agreement and
any instruments or documents in connection herewith on behalf of each Originator
and to take, from time to time, all other actions on behalf of each Originator
in connection herewith.
Available Funds: As defined in Section 2.3(b)(i).
Business Day: A day on which each Originator and Purchaser is open at its
respective address specified in this Receivables Purchase Agreement for the
purpose of conducting its business,
except that, in respect of such performance or rights under this Agreement as
involve the Administrator, such term shall have the meaning assigned to it by
the Loan Agreement.
Contributed Receivables: As defined in Section 2.1(c).
Cost Discount: As of any Month End Date, the product of (i) the Days Sales
Outstanding Ratio for the Due Period ending on such Month End Date, times (ii)
the Cost Rate for such Month End Date.
Cost Rate: For any day during a Due Period means a rate equal to (a) the sum of
(i) the LIBOR Rate for such Due Period, plus (ii) 2.00% divided by (b) 360.
Fair Market Value Discount: With respect to any Receivable, (i) the Unpaid
Balance of such Receivable, times (ii) the sum of the most recently calculated
Loss Discount, plus the most recently calculated Cost Discount.
Incipient Purchase Termination Event: Any condition, act or event specified in
Section 7.1 that, with the giving of notice or the lapse of time, or both, would
become a Purchase Termination Event.
Ineligible Receivable: As defined in Section 2.4.
Initial Contributed Receivables: As defined in Section 2.1(b).
Loan Agreement: The Loan Agreement, dated as of December 12, 2000, among the
Purchaser, as borrower, Covenant Nevada, as master servicer, Three Pillars
Funding Corporation, as lender, and SunTrust Equitable Securities Corporation,
as administrator, as amended, supplemented or otherwise modified from time to
time.
Loss Discount: As of any Month End Date means the ratio, expressed as a
percentage, of (i) the losses recognized for all Receivables during the period
equal to twelve calendar months ending on such Month End Date divided by (ii)
the Collections on all Receivables received during such period.
Purchase Date: Each Business Day occurring prior to the Purchase Termination
Date on which Purchaser purchases Receivables from an Originator pursuant to the
terms hereof.
Purchase Price: As defined in Section 2.2.
Purchase Report: A report in the form of Exhibit B.
Purchase Termination Date: The date on which the Purchaser's obligation to
purchase Receivables shall terminate pursuant to Section 7.1.
Purchase Termination Event: As defined in Section 7.1.
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Purchased Asset: As defined in Section 2.1(a).
Purchaser: As defined in the Preamble.
Section 1.2 Accounting and UCC Terms.
All accounting terms not specifically defined herein shall be construed
in accordance with GAAP; and all terms used in Article 9 of the UCC that are
used but not specifically defined herein are used herein as defined therein.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.1 Purchase and Contribution of Receivables.
(a) Each Originator hereby sells, absolutely assigns, transfers and
conveys to the Purchaser on each Purchase Date, on the terms and subject to the
conditions specifically set forth herein, all of its respective right, title and
interest, in, to and under (i) all Receivables (other than Contributed
Receivables), now existing or arising hereafter and prior to the Purchase
Termination Date, and all payment and enforcement rights (but not any
obligations) to, in and under the related Contracts, (ii) all Collections and
other monies due or to become due with respect to the foregoing, (iii) all
Related Security for the Receivables, (iv) all lockboxes and accounts to which
Collections are sent, and all funds and investments from time to time therein,
(v) all books and records related to the foregoing and (vi) all proceeds of the
foregoing, including, without limitation, insurance proceeds relating thereto
(collectively, the "Purchased Assets").
(b) (b) In consideration of the capital stock of the Purchaser issued
to Covenant Tennessee and Southern Refrigerated, each Originator agrees to
contribute, and does hereby contribute to the Purchaser, and the Purchaser
hereby accepts from such Originator, all of such Originator's right, title and
interest in and to (i) Receivables, and all of the rights described in clauses
(ii) through (vi) of Section 2.1(a) related thereto, starting with the oldest
such Receivable such that the aggregate Unpaid Balance of all such Receivables
shall be as close as possible to, but not less than, $2,000,000 (the "Initial
Contributed Receivables") and (ii) all other Contributed Receivables.
(c) On each Purchase Date, all of such Originator's right, title and
interest in and to the newly created Receivables (other than Receivables
indicated on a Purchase Report as having been contributed by such Originator to
the Purchaser (such Receivables, together with the Initial Contributed
Receivables, the "Contributed Receivables")) and the other Purchased Assets
shall be sold, absolutely assigned, transferred and conveyed to the Purchaser by
the sale, absolute assignment, transfer and conveyance set forth in paragraph
(a) above without any further action by such Originator or the Purchaser; all
Contributed Receivables (other than the Initial
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Contributed Receivables) shall be contributed to the Purchaser on the date they
are created without further action by such Originator or the Purchaser.
(d) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase by the
Purchaser and a sale by such Originator of the Purchased Assets (or, in the case
of Contributed Receivables, as a contribution by such Originator to the
Purchaser) and not as a lending transaction. All sales and contributions of
Receivables by each Originator hereunder shall be without recourse to, or
representation or warranty of any kind (express or implied) by, such Originator,
except as otherwise specifically provided herein. The foregoing sale, absolute
assignment, transfer and conveyance does not constitute and is not intended to
result in a creation or assumption by the Purchaser of any obligation of such
Originator or any other Person in connection with the Purchased Assets,
including, without limitation any obligation to any Obligor.
Section 2.2 Purchase Price.
The amount payable by the Purchaser (the "Purchase Price") for the
newly created Receivables sold on any Purchase Date to the Purchaser under this
Agreement shall equal the aggregate Unpaid Balance of such Receivables less the
Fair Market Value Discount for such Receivables.
Section 2.3 Payment of Purchase Price.
(a) On the Closing Date, the Purchaser shall pay the Purchase Price for
the purchase to be made from such Originator with respect to the Receivables
existing on or prior to the Closing Date (other than the Initial Contributed
Receivables) (i) in cash in an amount equal to the amount received by the
Purchaser from the Lender in connection with the first Loan made pursuant to the
Loan Agreement and (ii) by the issuance of an Originator Note in the initial
principal amount equal to the remainder of the Purchase Price owing after
subtracting the amount paid in cash.
(b) On each Purchase Date falling after the Closing Date until the
Purchase Termination Date, on the terms and subject to the conditions of this
Agreement, the Purchaser shall pay to such Originator the Purchase Price for the
Receivables and other Purchased Assets purchased from such Originator on such
Purchase Date as follows:
(i) First, by paying to such Originator a portion of the
Purchase Price due by depositing into such account as such Originator
shall specify immediately available funds from monies held by or on
behalf of the Purchaser solely to the extent that such monies do not
constitute Collections that are required to be segregated and held by
the Master Servicer or distributed to the Administrator or the Lender
pursuant to the Loan Agreement on the next Distribution Date or
required to be paid to the Master Servicer as the Servicer's Fee on the
next Distribution Date, or otherwise necessary to pay current expenses
of the Purchaser (in its reasonable discretion) (such available monies,
the
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"Available Funds"), subject to the terms of the Loan Agreement. Any
Collections that have been paid to such Originator during any Due
Period shall be credited towards the Purchaser's obligation pursuant
to this clause first; provided, however, that, if Collections paid to
such Originator exceed the Purchase Price for Receivables and the
other Purchased Assets purchased from such Originator for such Due
Period, or, absent a cash payment, the Purchaser shall not have
sufficient cash to meet its payment obligations pursuant to the Loan
Agreement, such Originator shall turn over such excess to the
Purchaser; and
(ii) Second, by increasing the principal amount outstanding
under the Originator Note issued to such Originator; provided, however,
that the aggregate of the principal amounts outstanding at any time
under the Originator Notes may not exceed the lesser of (a) $1,860,000
and (b) 3% of the Facility Limit; and
(iii) Third, unless the Purchase Termination Date has
occurred, at the option of such Originator, by accepting a contribution
to the Purchaser's capital in an amount equal to the remaining unpaid
balance of such Purchase Price in exchange for the capital stock of the
Purchaser issued to the Originator making such contribution.
To the extent that (x) the amount due pursuant to Section 2.2 with respect to
all Receivables created or originated by such Originator that arose during the
corresponding Due Period is exceeded by (y) the amount paid to such Originator
during such Due Period pursuant to the foregoing sentences for such Receivables,
and such excess is not turned over to the Purchaser pursuant to clause first
above, such excess shall be treated as a reduction in the principal amount of
the Originator Note, effective as of the last day of the related Due Period;
provided, however, that if at any time the unpaid principal amount of the
Originator Note has been reduced to zero, such Originator shall pay the
Purchaser the remainder owed with respect thereto in immediately available
funds.
(c) All payments hereunder shall be made not later than 3:00 p.m. (New
York time) on the date specified therefor in lawful money of the United States
of America in same day funds (i) if to an Originator, to the bank account
designated in writing by such Originator to the Purchaser and (ii) if to the
Purchaser, to the Collection Account. Whenever any payment to be made hereunder
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day.
(d) Except as expressly set forth herein, neither Originator shall have
any right under this Agreement, by implication or otherwise, to repurchase from
the Purchaser any Purchased Asset nor to rescind or otherwise retroactively
affect any purchase of any Purchased Asset after the Purchase Date relating
thereto.
Section 2.4 Deemed Collections.
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If any of the representations or warranties of any Originator contained
in subsection (a) or (b) of Section 4.2 was not true with respect to any
Receivable as of the applicable Purchase Date (any such Receivable, an
"Ineligible Receivable"), such Originator shall pay to the Purchaser a deemed
Collection equal to the Unpaid Balance of such Ineligible Receivable on the next
Purchase Date or, if the Purchase Termination Date has occurred, on the next
Business Day. Prior to the Purchase Termination Date, but subject to the next
sentence, such deemed Collection shall be paid (a) by reducing the Purchase
Price payable by the Purchaser to such Originator on the applicable Purchase
Date pursuant to Section 2.2 hereof, and (b) to the extent such deemed
Collection exceeds the Purchase Price payable on such Purchase Date, by reducing
the amount of the Originator Note on such Purchase Date (or, once the amount of
the Originator Note has been reduced to zero, by making a cash payment to an
account designated by the Purchaser). On or subsequent to the Purchase
Termination Date or if such amount is necessary to enable the Purchaser to make
any payment required to be made on such date under the Loan Agreement, such
deemed Collection shall be paid by wire transfer of cash to the Collection
Account.
Section 2.5 Adjustments.
Each Originator may make an adjustment in the principal amount or
finance or other charges accrued or payable with respect to a Receivables,
provided that such adjustment is made in accordance with the Collection Policy
and the Loan Agreement. The aggregate amount of all such adjustments made by
such Originator subsequent to each Purchase Date shall be due and payable to the
Purchaser on the next Purchase Date following the date of processing in respect
thereof or, if the Purchase Termination Date has occurred, on the next Business
Day following such date of processing. The amounts due to the Purchaser pursuant
to the preceding sentence shall be paid on the due date therefor (a) by reducing
the Purchase Price, if any, payable by the Purchaser on such date, and (b) to
the extent the amount due exceeds the Purchase Price payable on such date, or if
a payment of cash is necessary so that the Purchaser can make the payments due
on the next Distribution Date pursuant to the Loan Agreement, by wire transfer
of cash to the Collection Account.
Section 2.6 Finance Charges.
Finance charges, late charge revenue, other fees and charges and other
similar items, whenever created (whether prior to or after the occurrence of a
Purchase Termination Event) and whenever received (prior to or after the
occurrence of a Purchase Termination Event), accrued in respect of Receivables
shall be the property of the Purchaser and all Collections with respect thereto
shall be allocated and treated as Collections in respect of Receivables.
Section 2.7 Allocations of Collections.
For purposes of determining the Unpaid Balances of Receivables at any
time, the Purchaser and each Originator agrees that such Originator shall apply
all Collections on a Receivable by Receivable basis.
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ARTICLE III
CONDITIONS TO PURCHASES
Section 3.1 Conditions Precedent to Purchaser's Initial Purchase.
The obligation of the Purchaser to purchase Receivables hereunder on
the occasion of the Closing Date is subject to the conditions precedent (any one
or more of which can be waived by the Purchaser) that (a) the Loan Agreement and
the other Transaction Documents shall be in full force and effect and all
conditions to the initial advance under the Loan Agreement shall have been
satisfied or waived, (b) the Purchaser shall have received on or before the
Closing Date the following, each (unless otherwise indicated) dated the day of
such sale and in form and substance satisfactory to the Purchaser and (c) the
conditions set forth in clauses (iii), (iv) and (v) shall have been satisfied:
(i) a copy of duly adopted resolutions of the Board of
Directors of each Originator authorizing or ratifying the execution,
delivery and performance, respectively, of the Transaction Documents to
which it is a party, certified by the Secretary or Assistant Secretary
of such Originator;
(ii) a duly executed certificate of the Secretary or an
Assistant Secretary of each Originator certifying the names and true
signatures of the Authorized Officers authorized on behalf of such
Originator to sign the Transaction Documents to which it is a party;
(iii) the Administrator shall be satisfied with each
Originator's systems, computer programs, related materials, computer
tapes, disks and cassettes, procedures and record keeping relating to
and required for the collection of Receivables by the Purchaser, and
the Administrator shall be reasonably satisfied that the procedures of
each Originator for the preparation, storage and retrieval of such
materials are sufficient to permit the administration and collection of
the Receivables by a servicer without the participation of such
Originator or the Purchaser;
(iv) each Originator shall have filed and recorded, at its own
expense, UCC-1 financing statements with respect to the Purchased
Assets in such manner and in such jurisdictions as are necessary or
desirable to perfect the Purchaser's ownership interest thereof under
the UCC and delivered a file-stamped copy of such UCC-1 financing
statements or other evidence of such filings to the Purchaser and the
Administrator on or prior to the date hereof; and all other action
necessary or desirable, in the opinion of the Purchaser or the
Administrator, to establish the Purchaser's ownership of the Purchased
Assets shall have been duly taken;
(v) the Purchaser and the Administrator shall have received
photocopies of reports of UCC searches in the central filing office of
each Originator and any necessary
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local offices of each Originator with respect to the Purchased Assets
reflecting the absence of Liens thereon, except the Liens created
hereunder, pursuant to the Loan Agreement in favor of the
Administrator and except for Liens as to which the Purchaser has
received executed UCC termination statements; and
(vi) the Purchaser and the Administrator shall have received
such other documents, certificates and opinions as the Purchaser or the
Administrator may request.
Section 3.2 Conditions Precedent to All Purchases.
The obligation of the Purchaser to pay for each Receivable on each
Purchase Date (including the Closing Date) shall be subject to the further
conditions precedent (any one of which can be waived by the Purchaser) that on
such Purchase Date:
(a) the following statements shall be true (and the acceptance by each
Originator of the Purchase Price for any Receivables on any Purchase Date shall
constitute a representation and warranty by such Originator that on such
Purchase Date such statements are true):
(i) the representations and warranties of each Originator
contained in Sections 4.1 and 4.2 shall be correct on and as of such
Purchase Date as though made on and as of such date; and
(ii) no Purchase Termination Event or Incipient Purchase
Termination Event shall have occurred and be continuing;
(b) each Originator shall have clearly and unambiguously marked its
accounting records evidencing the Receivables being purchased hereunder on such
Purchase Date with a legend stating that such Receivables have been sold to the
Purchaser in accordance with this Agreement;
(c) no material change shall have occurred after the Closing Date with
respect to each Originator's systems, computer programs, related materials,
computer tapes, disks and cassettes, procedures and record keeping relating to
and required for the collection of the Receivables by such Originator which
makes them not sufficient and satisfactory in order to permit the purchase,
administration and collection of the Receivables by the Purchaser in accordance
with the terms and intent of this Agreement; and
(d) the Purchaser shall have received such other approvals, opinions or
documents as the Purchaser may reasonably request.
Section 3.3 Conditions Precedent to Originator's Initial Sale.
The obligation of each Originator to make its initial sale is subject
to the conditions precedent that such Originator shall have received on or
before the date of such sale the
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following, each (unless otherwise indicated) dated the day of such sale and in
form and substance satisfactory to such Originator:
(a) a copy of duly adopted resolutions of the Board of Directors of the
Purchaser authorizing this Agreement, the documents to be delivered by the
Purchaser hereunder and the transactions contemplated hereby, certified by the
Secretary or Assistant Secretary of the Purchaser; and
(b) a duly executed certificate of the Secretary or Assistant Secretary
of the Purchaser certifying the names and true signatures of the officers
authorized on its behalf to sign this Agreement and the other documents to be
delivered by it hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Parties.
The Purchaser and each Originator each represents and warrants as to
itself as follows:
(a) Each Originator and the Purchaser, has been duly organized and is
validly existing and in good standing under the laws of the state of its
organization, with full corporate power and authority to own its properties and
to conduct its business as presently conducted. Each Originator and the
Purchaser is duly qualified to do business and is in good standing as a foreign
entity (or is exempt from such requirements), and has obtained all necessary
licenses and approvals, in the jurisdiction where its principal place of
business and chief executive office are located and in each other jurisdiction
in which failure to so qualify or to obtain such licenses and approvals would
have a material adverse effect on the conduct of such Originator's or the
Purchaser's business or on the ability of such Originator or the Purchaser, as
the case may be, to perform its obligations under this Agreement.
(b) The sale and contribution of Receivables and the other Purchased
Assets pursuant to this Agreement, the performance of its obligations under this
Agreement and the consummation of the transactions herein contemplated have been
duly authorized by all requisite corporate action and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to this Agreement or the other Transaction
Documents) upon any of its property or assets, pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject, nor will such action result in any violation of
the provisions of its organizational documents or of any statute or any order,
rule or regulation of any federal or state court or governmental agency or body
having jurisdiction over it or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
any such regulatory authority or other such governmental agency or body is
9
required to be obtained by or with respect to each Originator or the Purchaser
for the sale or contribution of Receivables and the other Purchased Assets or
the consummation of the transactions contemplated by this Agreement.
(c) This Agreement has been duly executed and delivered by each
Originator and the Purchaser and constitutes a valid and legally binding
obligation of such Originator and the Purchaser, respectively, enforceable
against such Originator and the Purchaser, respectively, in accordance with its
terms, except that the enforceability thereof may be subject to (a) the effects
of any applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship or other laws, regulations and administrative orders affecting
the rights of creditors generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or law).
(d) There is no pending or, to its knowledge after due inquiry,
threatened action or proceeding affecting it or any of its Subsidiaries before
any court, governmental agency or arbitrator, that may reasonably be expected to
materially and adversely affect its condition (financial or otherwise),
operations, properties or prospects, or its ability to perform its obligations
under this Agreement, or that purports to affect the legality, validity or
enforceability of this Agreement. None of the transactions contemplated hereby
is or is threatened to be restrained or enjoined (temporarily, preliminarily or
permanently).
Section 4.2 Additional Representations of the Originators.
Each Originator additionally represents and warrants as follows:
(a) Eligible Receivable. Unless otherwise specified in the applicable
Purchase Report, all Receivables sold, contributed and absolutely assigned to
the Purchaser hereunder on the Closing Date are Eligible Receivables as of the
Closing Date and all Receivables sold and absolutely assigned to the Purchaser
hereunder on any Purchase Date subsequent to the Closing Date will be Eligible
Receivables as of such Purchase Date.
(b) Sale of Receivables. Each Originator is, as of the time of the
transfer to the Purchaser of each Receivable being sold or contributed to the
Purchaser on the Closing Date, and will be, as of the time of the transfer to
the Purchaser of each Receivable sold or contributed to the Purchaser on any
subsequent Purchase Date, the sole owner of such Receivable, free from any lien,
security interest, encumbrance or other right, title or interest of any Person.
Each Receivable existing on the Closing Date has been, and in the case of
Additional Receivables sold or contributed hereafter, such Additional
Receivables will be, on the applicable Purchase Date, conveyed to the Purchaser
free and clear of any Lien. There is no effective financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) now on file or registered in any public office filed by or against
any Originator or any Subsidiary of any Originator or purporting to be filed on
behalf of any Originator or any Subsidiary of any Originator covering any
interest of any kind in any Purchased Assets which are being, or which hereafter
will be, sold or contributed to the Purchaser, and no Originator will execute
nor will
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there be on file in any public office any effective financing statement (or
similar statement or instrument of registration under the laws of any
jurisdiction) or statements relating to such Purchased Assets, except in each
case any financing statements filed in respect of and covering the purchase of
the Purchased Assets by the Purchaser pursuant to this Agreement and the
security interest created pursuant to the Loan Agreement. All filings and
recordings (including pursuant to the UCC) required to perfect the title of the
Purchaser in each Purchased Asset sold or contributed hereunder have been
accomplished and are in full force and effect and each Originator shall, at its
expense, perform all acts and execute all documents necessary or reasonably
requested by the Purchaser or the Administrator at any time and from time to
time to evidence, perfect, maintain and enforce the title or the security
interest of the Purchaser or the Administrator in the Purchased Assets and the
priority thereof.
(c) Accuracy of Information. All information heretofore furnished by,
or on behalf of, each Originator to the Purchaser or the Administrator in
connection with any Transaction Document, or any transaction contemplated
thereby, is true and accurate in every material respect (without omission of any
information necessary to prevent such information from being materially
misleading).
(d) Location of Office and Records. The principal place of business and
chief executive office of Covenant Tennessee, and the office where all Documents
are kept, is located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The principal place of business and chief executive office of Southern
Refrigerated, and the office where all Documents are kept, is located at ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(e) Trade Names. Set forth on Schedule II hereto is a complete and
accurate list of the trade names of each Originator and its Subsidiaries for the
six-year period preceding the date of this Agreement.
(f) Financial Statements. Each Originator has heretofore furnished to
the Purchaser and the Administrator copies of Covenant Nevada's consolidated and
consolidating balance sheet and statement of income and changes in financial
condition as of and for the Fiscal Years ended December 31, 1998 and December
31, 1999, audited by and accompanied by the opinion of PricewaterhouseCoopers
LLP, independent public accountants. Except as disclosed in writing to the
Administrator prior to the date of this Agreement, such financial statements
present fairly in all material respects the financial condition and results of
operations of such Originator and its consolidated subsidiaries as of such dates
and for such periods; such balance sheets and the notes thereto disclose all
liabilities, direct or contingent, of such Originator and its consolidated
subsidiaries as of the dates thereof required to be disclosed by GAAP and such
financial statements were prepared in accordance with GAAP applied on a
consistent basis. Since September 30, 2000, there has been no material adverse
change in the condition (financial or otherwise), operations, properties, assets
or prospects of any Originator, except as disclosed in writing to the
Administrator on or prior to the date hereof.
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(g) No Consent. No action, consent or approval of, registration or
filing with or any other action by any Governmental Authority is or will be
required in connection with execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement, except such as have been made or obtained and are in full force and
effect.
(h) Administrator Can Perform. Upon the delivery by an Originator to
the Administrator of the computer tapes, disks, cassettes and related materials
(in a generally acceptable readable format) relating to the administration of
the Receivables pursuant to Section 6.2, the Administrator shall have been
furnished with all materials and data necessary to permit immediate collection
of the Receivables by the Administrator, or any party designated by the
Administrator, without the participation of such Originator in such collection.
(i) Security Interest of Purchaser. This Agreement constitutes a valid
sale, transfer and absolute assignment to the Purchaser of all right, title and
interest in the Purchased Assets. Upon the filing of the financing statements
described in Section 3.1(c)(iv), the Purchaser shall have a first priority
perfected ownership interest in the Purchased Assets and the Contributed
Receivables (except to the extent such first priority perfected security
interest was assigned to the Administrator pursuant to the Loan Agreement).
Except as otherwise provided in this Agreement, no Originator nor any Subsidiary
thereof (other than Purchaser) nor any Person claiming through or under any
Originator or any Subsidiary thereof (other than Purchaser) has any claim to or
interest in any Collection Account.
(j) No Material Adverse Change. Since September 30, 2000, there has
been no material adverse change in the collectibility of the Receivables or each
Originator's ability to perform its obligations under any Transaction Document.
(k) Solvency. Both before and after giving effect to the transactions
contemplated herein, each Originator is Solvent.
ARTICLE V
GENERAL COVENANTS
Section 5.1 Affirmative Covenants of the Originator.
So long as the Purchaser shall have any interest in any Purchased
Asset, each Originator shall, unless the Purchaser otherwise consents in
writing:
(a) Financial Statements, Reports, Etc. Deliver or cause to be
delivered to the Purchaser and the Administrator:
(i) as soon as available and in any event within 95 days after
the end of each Fiscal Year of Covenant Nevada, a balance sheet of
Covenant Nevada as of the end of such year and statements of income and
retained earnings and of source and application
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of funds of Covenant Nevada for the period commencing at the end of
the previous Fiscal Year and ending with the end of such year, in each
case setting forth comparative figures for the previous Fiscal Year,
certified without material qualification in a manner satisfactory to
the Purchaser and the Administrator by PricewaterhouseCoopers LLP or
other nationally recognized, independent public accountants acceptable
to the Administrator (it being understood that delivery of Covenant
Nevada's Form 10-K for such Fiscal Year filed with the Securities and
Exchange Commission will satisfy the foregoing requirement), together
with a certificate of such accounting firm stating that in the course
of the regular audit of the business of Covenant Nevada, which audit
was conducted in accordance with GAAP, such accounting firm has
obtained no knowledge that a Purchase Termination Event or Incipient
Purchase Termination Event has occurred and is continuing, or if, in
the opinion of such accounting firm, such a Purchase Termination Event
or Incipient Purchase Termination Event has occurred and is
continuing, a statement as to the nature thereof;
(ii) as soon as available and in any event within 45 days
after the end of each fiscal quarter, quarterly balance sheets and
quarterly statements of source and application of funds and quarterly
statements of income and retained earnings of Covenant Nevada,
certified by the chief financial or executive officer or controller of
Covenant Nevada (which certification shall state that such balance
sheets and statements fairly present the financial condition and
results of operations for such fiscal quarter, subject to year-end
audit adjustments) (it being understood that delivery of Covenant
Nevada's Form 10-Q filed with the Securities and Exchange Commission
for such fiscal quarter will satisfy the foregoing requirement),
delivery of which balance sheets and statements shall be accompanied by
a certificate of such chief financial or executive officer or
controller to the effect that no Purchase Termination Event or
Incipient Purchase Termination Event has occurred and is continuing;
and
(iii) as soon as possible and in any event within one Business
Day after any officer of Covenant Nevada becomes aware of the
occurrence of a Servicer Event of Default, a Purchase Termination Event
or Incipient Purchase Termination Event or an event that, with the
giving of notice or time elapse, or both, would constitute a Servicer
Event of Default, an officer's certificate of Covenant Nevada setting
forth details of such event and the action that the Master Servicer
proposes to take with respect thereto.
(b) Compliance with Laws, Etc. Comply, and cause all of the Receivables
to comply, in all material respects with all applicable laws, rules, regulations
and orders applicable to each Originator and the Receivables, including, without
limitation, rules and regulations relating to truth in lending, retail
installment sales, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices, privacy environmental matters,
labor, taxation and ERISA, where in any such case failure to so comply could
reasonably be expected to have an adverse impact on the Receivables or the
amount of Collections thereunder, or on the ability of such Originator to
perform its obligations hereunder or under the other Transaction Documents to
which it is a party.
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(c) Preservation of Corporate Existence. Preserve and maintain in all
material respects its corporate existence, corporate rights (charter and
statutory) and franchises.
(d) Visitation Rights. Permit the Purchaser, the Administrator or their
duly authorized representatives, attorneys or auditors to inspect the
Receivables, the Documents and the related accounts, records and computer
systems, software and programs used or maintained by each Originator at such
times as the Purchaser or the Administrator may reasonably request. Upon
instructions from the Purchaser or the Administrator, each Originator shall
release any Document to the Purchaser or the Administrator, as the case may be.
(e) Keeping of Records and Books of Account. Maintain and implement, or
cause to be maintained or implemented, administrative and operating procedures
necessary or advisable for the administration of all Receivables, and, until the
delivery to the Purchaser or its designee, keep and maintain, or cause to be
kept and maintained, all documents, books, records and other information
necessary or advisable for the administration of all Receivables.
(f) Performance and Compliance with Receivables. Duly fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivables and the related Contracts, including complying with all requirements
of law applicable thereto, and will do nothing to impair the right, title and
interest of the Purchaser in the Purchased Assets; provided, however, that an
adjustment or compromise of a Receivable pursuant to Section 2.5 shall not be
deemed to be a violation of this paragraph.
(g) Location of Records. Keep the chief executive office of Covenant
Tennessee located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
keep originals or duplicates of any Documents that it maintains at, and only at,
said offices and keep the chief executive office of Southern Refrigerated
located at ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and keep originals or
duplicates of any Documents that it maintains at, and only at, said offices. No
Originator will move its chief executive office or permit any Documents and
books evidencing the purchased Receivables that it may maintain to be moved
unless (i) such Originator shall have given to the Purchaser and the
Administrator not less than 45 days' prior written notice thereof, clearly
describing the new location, and (ii) such Originator shall have taken such
action, satisfactory to the Purchaser and the Administrator, to maintain the
title or ownership of the Purchaser and any security interest of, or any filing
in respect of title of, the Purchaser or the Administrator in the Purchased
Assets at all times fully perfected and in full force and effect. No Originator
may, in any event, move the location where it conducts any administration of the
Receivables from ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the case may be, without the prior written
consent of the Administrator.
(h) Collection Policy. Comply in all material respects with the
Collection Policy.
(i) Insurance. Keep its insurable properties adequately insured at all
times by financially sound and responsible insurers; maintain such other
insurance, to such extent and
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against such risks, including fire and other risks insured against by extended
coverage, as is customary with companies of the same or similar size in the same
or similar businesses; maintain in full force and effect public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by it or any Subsidiary, as the case may be, in such
amounts and with such deductibles as are customary with companies of the same or
similar size in the same or similar businesses and in the same geographic area;
and maintain such other insurance as may be required by law.
(j) Obligations and Taxes. Pay and discharge promptly when due all
material obligations incurred or arising, all sales tax and all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become in
default, as well as all material lawful claims for labor, materials and supplies
or otherwise which, if unpaid, might become a Lien or charge upon such
properties or any part thereof; provided, however, that it and each Subsidiary
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
for which each Originator shall have set aside on its books adequate reserves
with respect thereto in accordance with GAAP.
(k) Obligations with Respect to Receivables. Use all reasonable
measures to assist the Purchaser in preventing or minimizing any loss being
realized on a Receivable in which the Purchaser owns an interest and take all
reasonable steps to assist the Purchaser in recovering the full amount of such
loss. Each Originator shall, at its own expense, take any such steps as are
necessary to maintain perfection of the security interest, if any, associated
with a Receivable in the related goods and merchandise subject thereto.
(l) Furnishing Copies, Etc. Furnish to the Purchaser and the
Administrator (i) upon the Purchaser's or the Administrator's request, a
certificate of the chief financial or executive officer of such Originator
certifying, as of the date thereof, that no Purchase Termination Event has
occurred and is continuing; (ii) promptly after obtaining knowledge that a
Receivable was, at the time of the Purchaser's purchase thereof, not an Eligible
Receivable (unless specified as such pursuant to Section 4.2(a)), notice
thereof; and (iii) promptly following request therefor, such other information,
documents, records or reports with respect to the Purchased Assets or the
conditions or operations, financial or otherwise, of such Originator, as the
Purchaser or the Administrator may from time to time reasonably request.
(m) Obligation to Record and Report. To the fullest extent permitted by
GAAP and by applicable law, record each purchase of Purchased Assets hereunder
as a sale on its books and records, reflect each such purchase in its financial
statements as a sale and recognize gain or loss, as the case may be, on each
such purchase.
(n) Continuing Compliance with the Uniform Commercial Code. At its
expense perform all acts and execute all documents necessary or reasonably
requested by the Purchaser or
15
the Administrator at any time to evidence, perfect, maintain and enforce the
title or the security interest of the Purchaser or the Administrator in the
Purchased Assets and the priority thereof. Each Originator will execute and
deliver financing statements relating to or covering the Purchased Assets
(reasonably satisfactory in form and substance to the Purchaser) and, where
permitted by law, such Originator will authorize the Administrator to file one
or more financing statements signed only by the Administrator. Each Originator
shall cause its computer records, master data processing records and other books
and records relating to the Receivables to be marked, with a legend stating that
the Receivables have been sold, absolutely assigned and transferred to the
Purchaser. Each Originator shall deliver the Receivable Files related to each
Receivable to the Administrator upon request by the Purchaser or the
Administrator; provided that while any Document is in custody of such
Originator, such Originator will hold the same for the benefit of the Purchaser.
No Originator will execute any effective financing statement (or similar
statement or instrument of registration under the laws of any jurisdiction) or
statements relating to any Purchased Assets, except any financing statements
filed or to be filed in respect of and covering the purchase of the Purchased
Assets by the Purchaser pursuant to this Agreement and the security interest
created in favor of the Administrator pursuant to the Loan Agreement.
(o) Proceeds of Purchased Receivables. In the event that any Originator
receives any amounts in respect of Receivables, deposit or otherwise credit, or
cause to be deposited or otherwise credited, such amounts in accordance with the
procedures set forth in Section 11.2 of the Loan Agreement.
(p) Further Action Evidencing Purchases. Provide such cooperation,
information and assistance, and prepare and supply the Purchaser, the Master
Servicer and the Administrator with such data regarding the performance by the
Obligors of their obligations under the Receivables and the performance by such
Originator of its obligations under the Transaction Documents, as may be
reasonably requested by the Purchaser, the Master Servicer and the Administrator
from time to time.
(q) Trade Names. Promptly notify the Purchaser and the Administrator of
any new trade names of such Originator.
Section 5.2 Negative Covenants of the Originator.
So long as the Purchaser shall have any interest in any Receivables, no
Originator shall, unless the Purchaser otherwise consents in writing:
(a) Liens. Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Lien upon or with respect to, any
Purchased Asset, or assign any right to receive proceeds in respect thereof
except as created or imposed by this Agreement or the Loan Agreement.
16
(b) Change in Business. Make any material change in the nature of its
business as carried on at the date hereof or engage in or conduct any business
or activity that is materially inconsistent with such business.
(c) Extension or Amendment of Purchased Receivables. Extend, amend or
otherwise modify, or attempt or purport to extend, amend or, otherwise modify,
the terms of any Receivables other than in accordance with the Collection Policy
and the terms of the Loan Agreement.
(d) Change in Payment Instructions to Obligors. Instruct the Obligors
on any Receivables to make any payments with respect to such Receivables to any
place other than the places specified in Section 6.1.
(e) Sale of Receivables. Sell Receivables or transfer any interest in
the Receivables to any Person other than the Purchaser.
(f) Cause a Default. Take any action which would cause the Purchaser to
be in default under the Loan Agreement, a copy of which has been furnished to
such Originator, unless such action shall have been approved and the default
waived by prior written approval of the Administrator and the Purchaser.
(g) Mergers; Sales of Assets. Sell all or substantially all of its
property and assets to, or consolidate with or merge into, any other
corporation, if the effect of such sale or merger would cause a "default" or "an
event of default" under this Agreement or the Loan Agreement.
(h) No Amendments. (i) Amend, supplement or otherwise modify this
Agreement or (ii) otherwise take or fail to take any action under this Agreement
that could adversely affect the Purchaser's interests hereunder or the
Administrator's interests under the Loan Agreement.
(i) Accounting Changes. Make any material change (i) in accounting
treatment and reporting practices except as permitted or required by GAAP, (ii)
in tax reporting treatment except as permitted or required by law, (iii) in the
calculation or presentation of financial and other information contained in any
reports delivered hereunder, or (iv) in any financial policy of any Originator
if such change could have an adverse effect on the Receivables or the collection
thereof.
(j) Maintenance of Separate Existence. (i) Fail to do all things
necessary to maintain its corporate existence separate and apart from the
Purchaser including, without limitation, holding regular meetings of its
shareholders and Board of Directors (or executing unanimous written consents in
lieu thereof) and maintaining appropriate books and records (including current
minute books); (ii) except as required by applicable law, suffer any limitation
on the authority of its own directors and officers or partners to conduct its
business and affairs in accordance with their independent business judgment, or
authorize or suffer any Person other than its own officers and directors to act
on its behalf with respect to matters (other than matters customarily delegated
to others under powers of attorney) for which a corporation's own officers
17
and directors would customarily be responsible; (iii) fail to (A) maintain or
cause to be maintained by an agent of such Originator under such Originator's
control physical possession of all its books and records, (B) maintain
capitalization adequate for the conduct of its business, (C) account for and
manage all of its liabilities separately from those of any other Person,
including, without limitation, payment by it of all payroll and other
administrative expenses and taxes from its own assets, (D) segregate and
identify separately all of its assets from those of any other Person, (E)
maintain employees, or pay its employees, officers and agents for services
performed for such Originator or (F) allocate shared overhead fairly and
reasonably; or (iv) commingle its funds with those of the Purchaser or use the
Purchaser's funds for other than the uses permitted hereunder.
ARTICLE VI
ADMINISTRATION AND COLLECTION OF PURCHASED RECEIVABLES
Section 6.1 Collection Procedures.
(a) On or before the Closing Date, each Originator and the Purchaser
shall have established and shall maintain thereafter the system of collecting
and processing Collections of Receivables in accordance with Section 11.2 of the
Loan Agreement.
(b) Any funds held by any Originator representing Collections of
Receivables shall, until deposited in the Collection Account or applied to the
Purchase Price of Receivables in accordance with this Agreement, be held in
trust by such Originator for and as the Administrator's property.
(c) Each Originator hereby irrevocably waives any right to set off
against, or otherwise deduct from, any Collections.
(d) Each Originator acknowledges that such Originator shall have no
right, title or interest in and to the Collection Account and hereby
subordinates its rights in each LockBox to the Administrator.
Section 6.2 Purchase Information.
(a) On each Reporting Date, each Originator shall prepare and deliver
to the Purchaser and the Administrator a duly completed Purchase Report with
respect to Receivables created during the immediately preceding Due Period and
with respect to activity in such Receivables.
(b) The Purchaser and each Originator agree that, upon request of the
Purchaser, each Originator shall provide the Purchaser with all information
required to prepare periodic reports that may be required to be furnished to the
Administrator pursuant to the Loan Agreement, as promptly as possible on each
Business Day on the basis of the sales and collections figures transmitted the
previous day to such Originator's central computer processing center.
18
(c) Upon discovery of any error in any report furnished to Purchaser or
the Administrator, the Administrator, the Purchaser and such Originator shall
confer and shall agree upon any necessary adjustments to correct any such
errors. Until correction of such error, all Collections relating to such errors
shall be retained in the Collection Account, to the extent such Collections have
been deposited in the Collection Account pursuant to the terms hereof. Unless
the Administrator has received actual notice of any discrepancy, the
Administrator and the Purchaser may rely on such reports for all purposes
hereunder.
Section 6.3 Compliance Statements.
Each Originator shall deliver, or cause to be delivered, to the
Purchaser and the Administrator, on or before the date that is 95 days after the
end of each Fiscal Year, an officer's certificate signed by the Chief Executive
Officer, the President or any Vice President of such Originator, dated as of the
last day of the preceding Fiscal Year, stating that (a) a review of the
activities of such Originator during the preceding Fiscal Year period and of its
performance under this Agreement has been made under such officer's supervision
and (b) to the best of such officer's knowledge, based on such review, such
Originator has fulfilled its obligations under this Agreement throughout such
Fiscal Year and has complied in all respects with the Collection Policy, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof.
Section 6.4 Allocations and Applications of Collections.
Collections shall be allocated and distributed by the Administrator in
accordance with the provisions of the Loan Agreement and Section 2.7.
Section 6.5 Termination.
Each Originator's obligation to sell Receivables under this Agreement
shall terminate on the Purchase Termination Date; provided, however, that
finance charges, late charges and other fees, charges and similar items in
respect of the Receivables sold or contributed prior to the Purchase Termination
Date shall continue to be the property of the Purchaser after the Purchase
Termination Date notwithstanding that such amounts may arise or accrue after the
Purchase Termination Date.
Section 6.6 Responsibilities of the Originator.
Notwithstanding anything herein to the contrary (a) each Originator
shall perform all its obligations under the Collection Policy related to the
Receivables to the same extent as if such Receivables had not been transferred
to the Purchaser hereunder, (b) the exercise by the Purchaser of any of its
rights hereunder shall not relieve any Originator from its obligations with
respect to the Receivables and (c) except as provided by law, the Purchaser
shall not have any obligation or liability with respect to any Receivables or
the underlying Contracts, nor shall the Purchaser be obligated to perform any of
the obligations or duties of any Originator thereunder.
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Each Originator hereby agrees to act as subservicer with respect to all
Receivables conveyed by such Originator to the Purchaser hereunder and, with
respect thereto shall be a "subservicer" under the Loan Agreement. Accordingly,
in connection with such Receivables conveyed by such Originator to the Purchaser
hereunder, each Originator hereby assumes all of the responsibilities and
obligations under the Loan Agreement of the Master Servicer with respect to the
servicing of all Receivables conveyed by it to the Purchaser hereunder.
ARTICLE VII
PURCHASE TERMINATION EVENTS
Section 7.1 Purchase Termination Events.
If any of the following events (each, a "Purchase Termination Event")
shall occur and be continuing:
(a) any representation or warranty made or deemed made by or on behalf
of any Originator under or in connection with this Agreement or any Purchase
Report or other information or report delivered by any Originator pursuant
hereto shall prove to have been false or incorrect in any material respect when
made or deemed made; provided, however, that the falsity or incorrectness of any
representation made pursuant to Section 4.2(a) with respect to any Receivable
shall not constitute a Purchase Termination Event so long as such Originator has
complied with its obligations in respect of such Receivable pursuant to Section
2.4;
(b) any Originator shall fail to (i) perform or observe any term,
covenant or agreement contained in Section 5.1(c), 5.1(d), 5.1(g), 5.1(h),
5.1(i), 5.1(j), 5.1(k), 5.1(l), 5.1 (m) or 5.1 (n), or (ii) make any payment or
deposit to be made by it hereunder within three Business Days after the same
became due and payable;
(c) any Originator shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for ten days;
(d) any Originator shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
shall make a general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the actions set forth above in this
subsection (d) or any Originator shall be the subject of an Event of Bankruptcy;
(e) any Originator transfers, sells or otherwise disposes of (whether
in one transaction or a series of transactions) all or substantially all of its
assets; or
(f) the Loan Agreement shall cease to be in full force and effect, a
Significant Event shall have occurred under the Loan Agreement or the Lender's
Commitment under the Loan Agreement shall be terminated;
20
then, and in any such event, the Purchaser may, by notice to such Originator,
declare its obligation to purchase Receivables from such Originator to be
terminated, whereupon such obligation shall forthwith be terminated; provided,
however, that in the case of any event described in subsection (d) above, such
termination shall automatically occur upon the happening of such event. No
termination under this Section 7.1 of the Purchaser's obligation to purchase
Receivables shall affect the then-existing obligations of such Originator
hereunder (other than such Originator's obligations to sell Receivables to the
Purchaser pursuant hereto).
Section 7.2 Remedies.
If a Purchase Termination Event has occurred and is continuing:
(a) The Purchaser (and its assignees) shall have all of the rights and
remedies provided to a secured creditor or a purchaser of accounts or chattel
paper under the UCC by applicable law in respect thereto.
(b) The Purchaser (and its assignees) may at any time (i) notify the
respective Obligors of the Purchaser's ownership of the Receivables and may
direct that payment of all amounts due or to become due under the Receivables be
made directly to the Purchaser or its designee or (ii) give notice, or require
that each Originator, at such Originator's expense, give notice of such
ownership to each such Obligor and direct that all payments be made directly to
the Purchaser or its designee.
(c) The Purchaser (and its assignees) may elect to (i) ▇▇▇ for
collection on any Receivables or (ii) sell any Receivables to any Person for a
price that is acceptable to the Purchaser (or its assignees). In connection with
any such sale, the Purchaser or its assignees shall have the right to assign its
rights under this Agreement to a third party. Any such Receivable shall cease to
be a Receivable for all purposes under this Agreement as of the effective date
of such sale.
(d) Each Originator shall, upon the Purchaser's (or its assignee's)
request and at such Originator's expense (i) assemble all of such Originator's
documents, instruments and other records (including, without limitation, credit
files and computer tapes or disks) that (A) evidence or will evidence or record
Receivables sold or contributed by such Originator, (B) evidence the underlying
Contracts relating to such Receivables and (C) are otherwise necessary or
desirable to effect Collections of such Receivables and (ii) deliver such
documents to the Purchaser or its designee at a place designated by the
Purchaser or, at the Purchaser's option, provide the Purchaser or its designee
with access thereto.
(e) Each Originator hereby irrevocably authorizes the Purchaser or its
designee or assignees to take any and all steps in such Originator's name and on
such Originator's behalf necessary or desirable, in the reasonable opinion of
the Purchaser, designee or assignee, to collect all amounts due under the
Receivables and the other Purchased Assets, including, without
21
limitation, endorsing such Originator's name on checks and other instruments
representing Collections, enforcing the Receivables and the other Purchased
Assets and exercising all rights and remedies in respect thereof.
(f) Each Originator will (i) deliver to the Purchaser, its designees or
assignees all computer programs, material and data necessary to the immediate
collection of the Receivables by the Purchaser, or a party designated by the
Purchaser, with or without the participation of such Originator and (ii) make
such arrangements with respect to the collection of the Receivables as may be
reasonably required by the Administrator.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnities by the Originators.
Without limiting any other rights that the Purchaser may have hereunder
or under applicable law, each Originator hereby agrees to indemnify the
Purchaser (and its assignees) and each Indemnified Party, on an after-tax basis,
from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees) (all the foregoing being collectively referred to as
"Indemnified Amounts") arising out of or resulting from this Agreement or in
respect of any Receivable, any related Contract or any other Purchased Asset,
excluding, however, Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of the Purchaser or such
Indemnified Party, as the case may be. Without limiting or being limited by the
foregoing, each Originator shall pay on demand to the Purchaser or any
Indemnified Party any and all amounts necessary to indemnify such Person from
and against any and all Indemnified Amounts relating to or resulting from:
(a) reliance on any representation or warranty or statement made or
deemed made by any Originator (or any of their respective officers) under or in
connection with this Agreement or in any certificate, report or document
delivered pursuant hereto that, in any such case, shall have been false or
incorrect when made or deemed made;
(b) the failure by any Originator to comply with any applicable law,
rule or regulation with respect to any Receivable or the related Contract, or
the nonconformity of any Receivable or the related Contract with any such
applicable law, rule or regulation;
(c) the failure to have filed or pay any recording or other similar tax
with respect to, or any delay in filing or payment of any recording or other
similar tax with respect to, financing statements or other similar instruments
or documents under the Uniform Commercial Code of any applicable jurisdiction or
other applicable laws with respect to the Purchaser's or any assignee's interest
in any Purchased Asset;
22
(d) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or services related to any such
Receivable or the furnishing or failure to furnish such merchandise or services;
(e) any failure of any Originator to perform its duties or obligations
under this Agreement or the applicable Contract;
(f) any products liability or warranty claim arising out of or in
connection with merchandise, insurance or services that are the subject of any
Receivable;
(g) the commingling of Collections of Receivables at any time with
other funds of any Originator, regardless or whether such commingling shall be
permitted by the Transaction Documents;
(h) any investigation, litigation or proceeding related to this
Agreement or in respect of any Receivable or any Contract;
(i) the payment by the Purchaser of any taxes owed by any Originator,
including, but not limited to, federal, state or local income taxes, excise
taxes or business taxes; or
(j) the failure to vest, and maintain vested, in the Purchaser a valid
and enforceable (i) ownership interest or (ii) a first priority perfected
security interest in the items described in Section 2.1(a) (except to the extent
such first priority perfected security interest was assigned to the
Administrator pursuant to the Loan Agreement).
Notwithstanding the foregoing, no Originator shall under any
circumstances indemnify the Purchaser (or its assignees) for any Indemnified
Amounts that result solely from a default by an Obligor with respect to a
Receivable other than as described in clause (d) above or resulting from the
circumstances described in clause (b) or (e) above.
ARTICLE IX
THE ORIGINATOR NOTE
Section 9.1 Originator Note.
(a) On the Closing Date, the Purchaser shall issue to each Originator a
revolving subordinated note in the form attached hereto as Exhibit A (the
"Originator Note"). The principal amount of the Originator Note outstanding from
time to time shall be determined in accordance with Sections 2.3, 2.4, and 2.5.
It is understood and agreed that no cash shall be paid to any Originator in
respect of the Originator Note as a result of the principal amount of the
Originator Note decreasing pursuant to the calculations in Sections 2.4 and 2.5.
Anything to the
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contrary notwithstanding, the Purchaser shall have the right (but not the
obligation) to offset or adjust the Originator Note by any amounts owed by any
Originator to the Purchaser under this Agreement.
(b) Until the Obligations have been indefeasibly paid in full in cash,
no payments (whether for principal or interest) may be made, directly or
indirectly, by the Purchaser on the Originator Note except from amounts received
by the Purchaser under the Loan Agreement. Each Originator agrees not to ask,
demand, ▇▇▇ for or take or receive from the Purchaser in cash or other property
by set-off (including, without limitation, from or by way of collateral),
payment of all or any part of the Originator Note, except as permitted by the
Loan Agreement. Each Originator agrees that upon any distribution of all or any
of the assets of the Purchaser to creditors of the Purchaser upon the
dissolution, winding up, total or partial liquidation, arrangement,
reorganization, adjustment, protection, relief, or composition of the Purchaser
or its debts, any payment or distribution of any kind in respect of the
Originator Note that otherwise would be payable or deliverable upon or with
respect to the Originator Note, directly or indirectly, by set-off or in any
other manner, including, without limitation, from or by way of collateral, shall
be paid or delivered directly to the Administrator for application (in the case
of cash) to or as collateral (in the case of non-cash property or securities)
for the payment or prepayment in full of, the Obligations until the Obligations
shall have been indefeasibly paid in full in cash. All payments or distributions
upon or with respect to the Originator Note that are received by any Originator
contrary to the provisions of the Loan Agreement or the Originator Note shall be
received in trust for the benefit of the Secured Parties, shall be segregated
from other funds and property held by such Originator and shall be forthwith
paid over to the Administrator in the same form as so received (with any
necessary endorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of non-cash property or securities) for the payment or
prepayment in full of, the Obligations until the Obligations shall have been
indefeasibly paid in full in cash. Each Originator agrees that no payment or
distribution to the Secured Parties pursuant to the provisions of the Originator
Note shall entitle such Originator to exercise any rights or subrogation in
respect thereof until the Obligations shall have been indefeasibly paid in full
in cash. Each Originator and the Purchaser each hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and the Originator Note and any requirement that any Secured Party
protect, secure, perfect or insure any security interest or lien on any property
subject thereto or exhaust any right or take any action against the Purchaser or
any other Person or any Collateral.
(c) Each Originator agrees and confirms that the Originator Note
represents solely the right to receive certain amounts from funds available to
the Purchaser under the Loan Agreement and that the Originator Note does not
represent a security interest in the Receivables or their proceeds. No payments
may be received, directly or indirectly, by any Originator (and if received,
such Originator agrees to return such payments to the Purchaser) on the
Originator Note unless all amounts required pursuant to the Loan Agreement to be
paid have been paid.
(d) Each Originator agrees and confirms that the Administrator shall
not have any duty whatsoever to such Originator as holder of the Originator Note
and that the Administrator
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shall not be liable to such Originator for any action taken or omitted to be
taken with respect to the Originator Note.
Section 9.2 Restrictions on Transfer of Originator Note.
Neither the Originator Note, nor any right of any Originator to receive
payments thereunder, shall be assigned, transferred, exchanged, pledged,
hypothecated, participated or otherwise conveyed.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments, Etc.
No amendment, modification or waiver of any provision of this
Agreement, or consent to any departure by any Originator therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Purchaser and the Administrator and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 10.2 Notices, Etc.
All notices and other communications provided for hereunder shall be in
writing (including telegraphic, facsimile or cable communication) and mailed,
telegraphed, transmitted, cabled or delivered, at its address set forth on
Schedule IV; or, as to each party, at such other address as shall be designated
by such party in a written notice to the other parties. All such notices and
communications shall when mailed or telecopied be effective when deposited in
the mails, or transmitted by facsimile, respectively, except that notices to the
Purchaser pursuant to Article II shall not be effective until received by the
Purchaser.
Section 10.3 No Waiver; Remedies.
No failure on the part of the Purchaser to exercise, and no delay in
exercising, any right under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 10.4 Binding Effect; Governing Law.
This Agreement shall be binding upon and inure to the benefit of each
Originator and the Purchaser and their respective successors and assigns, except
that no Originator shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Purchaser and the
Administrator. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and
25
effect until such time, after the Purchase Termination Date, until the Purchaser
shall not have any interest in any Purchased Asset and all obligations of each
Originator hereunder shall have been paid in full; provided, however, that the
indemnification provisions of Article VIII shall be continuing and shall survive
any termination of this Agreement. This Agreement and the Originator Note shall
be governed by, and construed in accordance with, the laws of the State of New
York without regard to the conflict of laws principles thereof (other than
Section 5-1401 of the New York General Obligations Law).
Section 10.5 Costs, Expenses and Taxes.
In addition to the rights of indemnification granted to the Purchaser
under Article VIII, each Originator agrees to pay on demand all costs and
expenses of the Purchaser and the Administrator in connection with the
preparation, execution and delivery of this Agreement, the Loan Agreement and
the other agreements and documents to be delivered hereunder and thereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Purchaser and the Administrator with respect thereto and with
respect to advising the Purchaser and the Administrator as to their rights and
remedies under this Agreement, and all costs and expenses (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement and the documents to be delivered hereunder. In addition, each
Originator agrees to pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents to be delivered hereunder,
and agrees to hold the Purchaser harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omitting to
pay such taxes and fees.
Section 10.6 No Bankruptcy Petition.
Each Originator covenants and agrees that prior to the date which is
one year and one day after the payment in full of all Senior Indebtedness (as
defined in the Originator Note) it will not institute against, or join any other
Person in instituting against, the Purchaser or the Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law. This Section
10.6 shall survive the termination of this Agreement.
Section 10.7 Acknowledgment of Assignments.
Each Originator hereby acknowledges and consents to the assignment by
the Purchaser of the Purchased Assets and the rights of the Purchaser under this
Agreement to the Administrator pursuant to the Loan Agreement. Each Originator
further acknowledges that, in accordance with the terms of the Loan Agreement,
the Administrator may, under certain circumstances, exercise some or all of the
rights of the Purchaser hereunder.
Section 10.8 Waiver of Setoff.
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Except as expressly set forth in this Agreement, all payments hereunder
by each Originator to the Purchaser or by the Purchaser to each Originator shall
be made without setoff, counterclaim or other defense and each of the Purchaser
and each Originator hereby waives any and all of its rights to assert any right
of setoff, counterclaim or other defense to the making of a payment due
hereunder to such Originator or the Purchaser, as the case may be; provided,
however; that, notwithstanding the foregoing, the Purchaser hereby reserves any
and all of its rights to assert any such right of setoff, counterclaim or other
defense against each Originator with respect to the Purchase Price of
Receivables purchased from such Originator.
Section 10.9 Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 10.10 Counterparts.
This Agreement and any amendment or supplement hereto or any waiver
granted in connection herewith may be executed in any number of counterparts and
by the different parties on separate counterparts and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same agreement. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.
Section 10.11 Grant of License to Use Trademarks.
For the sole purpose of enabling the Purchaser (or its assignees) to
perform the functions of servicing and collecting the Receivables upon a
Purchase Termination Event, each Originator hereby grants to the Purchaser (or
its assignees) an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Originator) to use, license, or
sublicense any copyright, trade name, trademark or similar rights or properties
now owned or hereafter acquired by such Originator, 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. The aforementioned servicing and collecting functions shall be
performed in accordance with customary business practices and in a manner which
will not materially adversely affect any of such licenses or licensed items.
Purchaser acknowledges that each of the Originators has granted a collateral
assignment or a lien on all of its respective rights and interests in such
intellectual property as security with respect to that certain Credit Agreement
by and among Covenant Asset Management, Inc., Covenant Transport, Inc., Bank of
America, N.A., and lenders identified therein, dated December 13, 2000.
27
Section 10.12 Jurisdiction; Consent to Service of Process.
(a) Each Originator and the Purchaser hereby submit to the nonexclusive
jurisdiction of any United States District Court for the Southern District of
New York and of any New York state court sitting in New York, New York for
purposes of all legal proceedings arising out of, or relating to, the
Transaction Documents or the transactions contemplated thereby. Each Originator
and the Purchaser hereby irrevocably waive, to the fullest extent possible, any
objection it may now or hereafter have to the venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.
Nothing in this Section 10.12 shall affect the right of the Administrator or
Lender to bring any action or proceeding against any Originator and the
Purchaser or its property in the courts of other jurisdictions.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, ANY TRANSACTION DOCUMENT OR
ANY MATTER ARISING THEREUNDER.
Section 10.13 Third Party Beneficiaries.
Each of the Secured Parties shall be third-party beneficiaries of this
Agreement.
Section 10.14 Confirmation of Intent.
It is the express intent of the parties hereto that the sale and
contribution to the Purchaser pursuant to Section 2.1 hereof of all of each
Originator's right, title and interest, in, to and under all Purchased Assets
and the Contributed Receivables shall be treated under applicable state law and
Federal bankruptcy law as a sale or contribution, as the case may be, by such
Originator to the Purchaser. However, if it is determined contrary to the
express intent of the parties that the transfer is not a sale or contribution,
as the case may be, and that all or any portion of the assets described in
Section 2.1 continue to be property of such Originator, then such Originator
hereby grants to the Purchaser a security interest in all of such Originator's
right, title and interest in, to and under all such assets and this Agreement
shall constitute a security agreement under applicable law. Each Originator, the
Purchaser and the Administrator shall, to the extent consistent with the Loan
Agreement and this Agreement, take such action as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the assets
described in Section 2.1, such interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the terms of this Agreement and the Loan Agreement.
Section 10.15 Confidentiality of Agreement.
Unless otherwise consented to by the Administrator, each Originator
hereby agrees that it will not disclose the contents of any Transaction
Document, or any other confidential or proprietary information furnished by the
Administrator, the Lender or the Purchaser, to any
28
Person other than its Affiliates (which Affiliates shall have executed an
agreement satisfactory in form and in substance to the Administrator to be bound
by the provisions of this Section 10.15), auditors and attorneys or as required
by applicable law.
Section 10.16 Section and Paragraph Headings.
Section and paragraph headings used in this Agreement are provided
solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement.
[Remainder of Page Intentionally Left Blank]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CVTI RECEIVABLES CORP.,
as Purchaser
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO
COVENANT TRANSPORT, INC.,
a Tennessee corporation, as Originator
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO
SOUTHERN REFRIGERATED
TRANSPORT, INC.,
an Arkansas corporation, as Originator
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO
Exhibit A
ORIGINATOR NOTE
New York, New York
_______, 2000
FOR VALUE RECEIVED, CVTI Receivables Corp, a Nevada corporation
("CVTI") promises to pay to [ORIGINATOR] at the office of
[_________________________________], the principal sum equal to the aggregate
amount due and owing to [Originator] pursuant to Section 2.3 of the Receivables
Purchase Agreement as adjusted from time to time pursuant to Sections 2.4 and
2.5 of the Receivables Purchase Agreement (as the same may be increased or
decreased from time to time), on the date which is twelve months following the
Purchase Termination Date under the Receivables Purchase Agreement.
Section 1.01. Receivables Purchase Agreement. This Note is an
"Originator Note" described in, and is subject to the terms and conditions set
forth in, the Receivables Purchase Agreement, dated as of December 12, 2000 (as
amended, supplemented, or otherwise modified from time to time, the "Receivables
Purchase Agreement"), between CVTI, as the Purchaser, Covenant Tennessee, as
Originator, and Southern Refrigerated, as Originator. Reference is hereby made
to the Receivables Purchase Agreement for a statement of certain other rights
and obligations of CVTI and each Originator. In the case of any conflict between
the terms of this Note and the terms of the Receivables Purchase Agreement, the
terms of the Receivables Purchase Agreement shall control.
Section 1.02. Definitions. Capitalized terms used (but not defined)
herein have the meanings ascribed thereto in the Receivables Purchase Agreement
or in the Loan Agreement (as defined in the Receivables Purchase Agreement). In
addition, as used herein, the following terms have the following meanings:
"Final Maturity Date" means the date that falls one year and one day
after the later of (x) the Purchase Termination Date and (y) the date on which
the principal amount of the Loans shall have been reduced to zero and all other
amounts payable by CVTI to Lender, the Administrator, the Affected Parties and
Indemnified Parties under the Transaction Documents shall have been paid in
full.
"Junior Liabilities" means all obligations of CVTI to [Originator]
under this Note.
"Senior Agent" means the Administrator.
31
"Senior Indebtedness" means all (a) obligations of CVTI under the Loan
Agreement dated as of December 12, 2000 (as in effect from time to time, the
"Loan Agreement") among CVTI, Covenant Transport, Inc. ("Covenant Nevada" or the
"Master Servicer") Three Pillars Funding Corporation (the "Lender") and SunTrust
Equitable Securities Corporation, as Administrator (the "Administrator") and any
renewal, extension, restatement or refunding thereof and (b) all obligations of
CVTI to the Senior Interest Holders, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due on or before the Final Maturity Date.
"Senior Interest Holders" means, collectively, the Senior Agent and the
Indemnified Parties.
"Subordination Provisions" means, collectively, clauses (a) through (k)
of Section 1.07 hereof.
Section 1.03. Interest. Subject to the Subordination Provisions, CVTI
promises to pay interest on the aggregate unpaid principal amount of this Note
outstanding on each day at a variable rate per annum equal to ________________.
Section 1.04. Interest Payment Dates. Subject to the Subordination
Provisions, CVTI shall pay accrued interest on this Note on each Distribution
Date and on the Final Maturity Date (or, if any such day is not a Business Day,
the next succeeding Business Day). CVTI also shall pay accrued interest on the
principal amount of each prepayment hereof on the date of each such prepayment.
Section 1.05. Basis of Computation. Interest accrued hereunder shall be
computed for the actual number of days elapsed on the basis of a 360-day year.
Section 1.06. Principal Payment Dates. Subject to the Subordination
Provisions, any unpaid principal of this Note shall be paid on the Final
Maturity Date (or, if such date is not a Business Day, the next succeeding
Business Day). Subject to the Subordination Provisions, the principal amount of
and accrued interest on this Note may be prepaid on any Business Day without
premium or penalty.
Section 1.07. Subordination Provisions. CVTI covenants and agrees, and
[Originator], by its acceptance of this Note, likewise covenants and agrees,
that the payment of all Junior Liabilities is hereby expressly subordinated in
right of payment to the payment and performance of the Senior Indebtedness to
the extent and in the manner set forth in the following clauses of this Section
1.07. To the extent this Section 1.07 conflicts with the terms of the Loan
Agreement, the terms of the Loan Agreement shall control.
(a) No payment or other distribution of CVTI's assets of any kind or
character, whether in cash, securities, or other rights or property, shall be
made on account of this Note except to the extent such payment or other
distribution is (i) permitted under the Loan Agreement and (ii) made pursuant to
Section 1.04 or 1.06 of this Note;
32
(b) If an Event of Bankruptcy has occurred with respect to CVTI or the
Purchase Termination Date has occurred, then the Senior Indebtedness shall first
be paid and performed in full and in cash before [Originator] shall be entitled
to receive and to retain any payment or distribution in respect of the Junior
Liabilities. In order to implement the foregoing: (i) all payments and
distributions of any kind or character in respect of the Junior Liabilities to
which [Originator] would be entitled except for this subsection 1.07.(b) shall
be made directly to the Senior Agent (for the benefit of the Senior Interest
Holders); and (ii) [Originator] hereby irrevocably agrees that the Senior Agent,
in the name of [Originator] or otherwise, may demand, ▇▇▇ for, collect, receive
and receipt for any and all such payments or distributions, and file, prove and
vote or consent in any such proceeding with respect to any and all claims of
[Originator] relating to the Junior Liabilities, in each case until the Senior
Indebtedness shall have been paid and performed in full and in cash.
(c) In the event that [Originator] receives any payment or other
distribution of any kind or character from CVTI or from any other source
whatsoever, in respect of the Junior Liabilities, other than as expressly
permitted by the terms of this Note, such payment or other distribution shall be
received in trust for the Senior Interest Holders and shall be turned over by
[Originator] to the Senior Agent (for the benefit of the Senior Interest
Holders) forthwith. All payments and distributions received by the Senior Agent
in respect of this Note, to the extent received in or converted into cash, may
be applied by the Senior Agent (for the benefit of the Senior Interest Holders)
first to the payment of any and all reasonable expenses (including, without
limitation, reasonable attorneys' fees and other legal expenses) paid or
incurred by the Senior Agent or the Senior Interest Holders in enforcing these
Subordination Provisions, or in endeavoring to collect or realize upon the
Junior Liabilities, and any balance thereof shall, solely as between
[Originator] and the Senior Interest Holders, be applied by the Senior Agent
toward the payment of the Senior Indebtedness in a manner determined by the
Senior Agent to be in accordance with the Loan Agreement; but as between the
Purchaser and its creditors, no such payments or distributions of any kind or
character shall be deemed to be payments or distributions in respect of the
Senior Indebtedness.
(d) Upon the final payment in full and in cash of all Senior
Indebtedness, [Originator] shall be subrogated to the rights of the Senior
Interest Holders to receive payments or distributions from CVTI that are
applicable to the Senior Indebtedness until the Junior Liabilities are paid in
full.
(e) These Subordination Provisions are intended solely for the purpose
of defining the relative rights of [Originator], on the one hand, and the Senior
Interest Holders, on the other hand. Nothing contained in the Subordination
Provisions or elsewhere in this Note is intended to or shall impair, as between
CVTI, its creditors (other than the Senior Interest Holders) and [Originator],
CVTI's obligation, which is unconditional and absolute, to pay the Junior
Liabilities as and when the same shall become due and payable in accordance with
the terms hereof and of the Receivables Purchase Agreement or to affect the
relative rights of [Originator] and creditors of CVTI (other than the Senior
Interest Holders).
33
(f) [Originator] shall not, until the Senior Indebtedness have been
finally paid and performed in full and in cash, (i) cancel, waive, forgive,
transfer or assign, or commence legal proceedings to enforce or collect, or
subordinate to any obligation of CVTI, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, or now or hereafter
existing, or due or to become due, other than the Senior Indebtedness, the
Junior Liabilities, or any rights in respect thereof or (ii) convert the Junior
Liabilities into an equity interest in the Purchaser, unless, in the case of
each of clauses (i) and (ii) above, [Originator] shall have received the prior
written consent of the Senior Agent in each case.
(g) [Originator] shall not, without the advance written consent of the
Senior Agent, commence, or join with any other Person in commencing, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law, with
respect to CVTI until at least one year and one day shall have passed since the
Senior Indebtedness shall have been finally paid and performed in full and in
cash.
(h) If, at any time, any payment (in whole or in part) made with
respect to any Senior Indebtedness is rescinded or must be restored or returned
by a Senior Interest Holder (whether in connection with any Event of Bankruptcy
or otherwise), these Subordination Provisions shall continue to be effective or
shall be reinstated, as the case may be, as though such payment had not been
made.
(i) Each of the Senior Interest Holders may, from time to time, to the
extent consistent with the Transaction Documents, at its sole discretion,
without notice to [Originator], and without waiving any of its rights under
these Subordination Provisions, take any or all of the following actions: (i)
retain or obtain an interest in any property to secure any of the Senior
Indebtedness; (ii) retain or obtain the primary or secondary obligations of any
other obligor or obligors with respect to any of the Senior Indebtedness; (iii)
extend or renew for one or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Indebtedness, or release or
compromise any obligation of any nature with respect to any of the Senior
Indebtedness; (iv) amend, supplement, or otherwise modify any Transaction
Document; and (v) release its security interest in, or surrender, release or
permit any substitution or exchange for all or any part of any rights or
property securing any of the Senior Indebtedness, or extend or renew for one or
more periods (whether or not longer than the original period), or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such rights or property.
(j) [Originator] hereby waives: (i) notice of acceptance of these
Subordination Provisions by any of the Senior Interest Holders; (ii) notice of
the existence, creation, non-payment or non-performance of all or any of the
Senior Indebtedness; and (iii) all diligence in enforcement, collection or
protection of, or realization upon the Senior Indebtedness, or any thereof, or
any security therefor.
34
(k) These Subordination Provisions constitute a continuing offer from
CVTI to all Persons who become the holders of, or who continue to hold, Senior
Indebtedness; and these Subordination Provisions are made for the benefit of the
Senior Interest Holders, and the Senior Agent may proceed to enforce such
provisions on behalf of each of such Persons.
Section 1.08. Amendments, Etc. No failure or delay on the part of
[Originator] in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power or
right preclude any other or further exercise thereof or the exercise of any
other power or right. No amendment, modification or waiver of, or consent with
respect to, any provision of this Note shall in any event be effective unless
(a) the same shall be in writing and signed and delivered by CVTI and
[Originator], and (b) all consents required for such actions under the
Transaction Documents shall have been received by the appropriate Persons.
Section 1.09. Limitation on Interest. Notwithstanding anything in this
Note to the contrary, CVTI shall never be required to pay unearned interest on
any amount outstanding hereunder, and shall never be required to pay interest on
the principal amount outstanding hereunder, at a rate in excess of the maximum
interest rate that may be contracted for, charged or received without violating
applicable federal or state law.
Section 1.10. No Negotiation. This Note is not negotiable.
Section 1.11. Governing Law. THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
Section 1.12. Captions. Paragraph captions used in this Note are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its officer thereunto duly authorized on the date first above written.
CVTI RECEIVABLES CORP.
By:___________________________________
Name:_________________________________
Title:________________________________
35
EXHIBIT B
FORM OF PURCHASE REPORT
[NAME OF ORIGINATOR]
CVTI RECEIVABLES CORP.
As of (DATE)
Cut-Off Date
Total Receivables $ Input
Aggregate Unpaid Balance of Receivables AUB $ Calculated
LIBOR Input
12 Month Losses $ Input
12 Month Collections $ Input
Current Month Collections $ Input
Cost Rate (LIBOR + 2.00%/360) CR Calculated
Cost Discount (Days Sale Outstanding CD Calculated
Ratio * CR)
Loss Discount (12 Month Losses/Current LD Calculated
Collections)
Fair Market Value Discount (Aggregate FMVD Calculated
Unpaid Balance * LD + CD)
Purchase Price (AUB - FMVD) PP $ Calculated
Eligible Receivables $ Input
Ineligible Receivables $ Input
Contributed Receivables $ Input
IN WITNESS WHEREOF, the undersigned has duly executed this Purchase Report on
_______, 200_
[NAME OF ORIGINATOR]
By: _________________________
36
Name:
Title:
SCHEDULE I
OFFICES WHERE BOOKS, RECORDS, ETC.
EVIDENCING RECEIVABLES ARE KEPT
Covenant Transport, Inc., a Tennessee Corporation
-------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Southern Refrigerated Transport, Inc.
-------------------------------------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
37
SCHEDULE II
LIST OF TRADE NAMES
Trade Names of the Originators and their Subsidiaries During the Last Six Year
Period:
1. Covenant Transport, Inc.
2. Southern Refrigerated Transport, Inc.
3. ▇▇▇▇▇▇ ▇▇▇▇ Trucking Co.
4. Terminal Truck Broker, Inc.
5. ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
6. CIP, Inc.
7. Abbreviations and modifications of the names listed in 1 through 6.
38
SCHEDULE III
AUTHORIZED OFFICERS OF ORIGINATORS
Authorized Officers for Covenant Tennessee:
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
Authorized Officers for Southern Refrigerated:
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇
39
SCHEDULE IV
NOTICE ADDRESSES OF PARTIES
If to Covenant Transport, Inc. (Tennessee):
▇▇▇▇▇ ▇▇▇▇▇▇,
Covenant Transport, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ph. (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
If to Southern Refrigerated Transport, Inc.:
▇▇▇▇▇ ▇▇▇▇▇▇,
Covenant Transport, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ph. (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
If to CVTI Receivables Corp.:
▇▇▇▇▇ ▇▇▇▇▇▇,
Covenant Transport, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ph. (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
40