LOAN AGREEMENT
dated as of December 12, 2000
among
CVTI RECEIVABLES CORP.
as Borrower
and
COVENANT TRANSPORT, INC.,
as Master Servicer
and
THREE PILLARS FUNDING CORPORATION,
as Lender
and
SUNTRUST EQUITABLE SECURITIES CORPORATION,
as Administrator
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1 Defined Terms................................................. 1
Section 1.2 Other Definitional Provisions................................. 17
Section 1.3 Other Terms................................................... 17
Section 1.4 Computation of Time Periods................................... 18
ARTICLE II LENDER'S COMMITMENT, BORROWING PROCEDURES
AND LENDER NOTE
Section 2.1 Lender's Commitment........................................... 18
Section 2.2 Borrowing Procedures.......................................... 18
Section 2.3 Funding....................................................... 18
Section 2.4 Representation and Warranty................................... 18
Section 2.5 Early Termination of Lender's Commitment...................... 19
Section 2.6 Voluntary Termination of Lender's Commitment; Reduction of
Facility Limit................................................ 19
Section 2.7 Note.......................................................... 19
ARTICLE III INTEREST, FEES, ETC.
Section 3.1 Interest Rates................................................ 20
Section 3.2 Interest, Payment Dates....................................... 20
Section 3.3 Interest Allocations.......................................... 21
Section 3.4 Fees.......................................................... 21
Section 3.5 Computation of Interest and Fees.............................. 21
ARTICLE IV REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS
Section 4.1 Repayments and Prepayments.................................... 21
Section 4.2 Application of Collections.................................... 22
Section 4.3 Application of Certain Payments............................... 23
Section 4.4 Due Date Extension............................................ 23
Section 4.5 Making of Payments............................................ 23
ARTICLE V SECURITY INTEREST
Section 5.1 Grant of Security............................................. 24
Section 5.2 Administrator Appointed Attorney-in-Fact...................... 25
Section 5.3 Administrator May Perform..................................... 25
Section 5.4 Release of Collateral......................................... 25
ARTICLE VI INCREASED COSTS, ETC.
Section 6.1 Increased Costs............................................... 26
Section 6.2 Funding Losses................................................ 27
Section 6.3 Withholding Taxes............................................. 27
ARTICLE VII CONDITIONS TO BORROWING
Section 7.1 Initial Loan.................................................. 28
Section 7.2 All Loans..................................................... 30
ARTICLE VIII REPRESENTATIONS AND WARRANTIES
Section 8.1 Organization and Good Standing, etc........................... 30
Section 8.2 Power and Authority; Due Authorization........................ 31
Section 8.3 No Violation.................................................. 31
Section 8.4 Validity and Binding Nature................................... 31
Section 8.5 Government Approvals.......................................... 31
Section 8.6 Solvency...................................................... 31
Section 8.7 Margin Regulations............................................ 32
Section 8.8 Quality of Title.............................................. 32
Section 8.9 Offices....................................................... 32
Section 8.10 Compliance with Applicable Laws; Licenses, etc................ 32
Section 8.11 No Proceedings................................................ 32
Section 8.12 Investment Company Act, Etc................................... 33
Section 8.13 Eligible Receivables.......................................... 33
Section 8.14 Accuracy of Information....................................... 33
Section 8.15 No Material Adverse Change.................................... 33
Section 8.16 Trade Names and Subsidiaries.................................. 33
Section 8.17 Accounts...................................................... 34
Section 8.18 Sales by Originators.......................................... 34
ARTICLE IX COVENANTS OF BORROWER AND MASTER SERVICER
Section 9.1 Affirmative Covenants......................................... 34
Section 9.2 Negative Covenants of Borrower................................ 40
ARTICLE X SIGNIFICANT EVENTS AND THEIR EFFECT
Section 10.1 Events of Default............................................. 42
Section 10.2 Amortization Events........................................... 42
ARTICLE XI THE MASTER SERVICER
Section 11.1 Covenant as Initial Master Servicer........................... 44
Section 11.2 Certain Duties of Master Servicer............................. 44
Section 11.3 Servicing Compensation........................................ 47
ii
Section 11.4 Agreement Not to Resign....................................... 48
Section 11.5 Designation of Master Servicer................................ 48
Section 11.6 Termination................................................... 48
Section 11.7 Master Servicer Events of Default............................. 48
ARTICLE XII ADMINISTRATOR
Section 12.1 Authorization and Action...................................... 49
Section 12.2 Administrator and Affiliates.................................. 50
ARTICLE XIII ASSIGNMENTS
Section 13.1 Restrictions on Assignments................................... 50
Section 13.2 Documentation................................................. 50
Section 13.3 Rights of Assignee............................................ 51
Section 13.4 Notice of Assignment.......................................... 51
ARTICLE XIV INDEMNIFICATION
Section 14.1 General Indemnity of Borrower................................. 51
Section 14.2 Indemnity of Master Servicer.................................. 51
ARTICLE XV MISCELLANEOUS
Section 15.1 No Waiver; Remedies........................................... 52
Section 15.2 Amendments, Etc............................................... 52
Section 15.3 Notices, Etc.................................................. 52
Section 15.4 Costs, Expenses and Taxes..................................... 53
Section 15.5 Binding Effect; Survival...................................... 53
Section 15.6 Captions and Cross Reference.................................. 54
Section 15.7 Severability.................................................. 54
Section 15.8 Governing Law................................................. 54
Section 15.9 Counterparts.................................................. 54
Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury........... 54
Section 15.11 No Recourse Against Lender.................................... 55
Section 15.12 No Proceedings................................................ 55
Section 15.13 Confidentiality of Agreement.................................. 55
Section 15.14 Entire Agreement.............................................. 55
Exhibits
--------
Exhibit A Form of Borrowing Request (Section 2.2)
Exhibit B Form of Lender Note (Section 2.7)
Exhibit C Form of Monthly Report (Section 9.1(e)(ii))
iii
Exhibit D Form of Borrowing Base Certificate (Section 7.1(k))
Exhibit E Form of Collection Account Agreement
Exhibit F [Reserved]
Exhibit G Form of Originator Note
Exhibit H Form of Withdrawal Certificate (Section 11.2(d))
Schedules
---------
Schedule I Description of Collection Account
Schedule II [Reserved]
Schedule III Form of Contract
Schedule IV Description of Proceedings
Schedule V Collateral Review Requirements
Schedule VI Notice Addresses
iv
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of December 12, 2000,
among CVTI RECEIVABLES CORP., a Nevada corporation ("CVTI" or the "Borrower"),
COVENANT TRANSPORT, INC., a Nevada corporation ("Covenant Nevada"), as initial
master servicer hereunder (in such capacity the "Master Servicer"), THREE
PILLARS FUNDING CORPORATION ("TPFC"), a Delaware corporation (together with its
successors and permitted assigns, "Lender"), and SUNTRUST EQUITABLE SECURITIES
CORPORATION, a Tennessee corporation, as agent and administrator for Lender (in
such capacity, together with its successor and assigns in such capacity, the
"Administrator.")
BACKGROUND
1. Borrower desires that Lender extend financing to Borrower on the
terms and subject to the conditions set forth herein.
2. Lender is willing to provide such financing on the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms.
As used in this Agreement, the following terms have the following
meanings:
Accounts Receivable Turnover Ratio: For any Due Period, the ratio computed as of
the last day of such Due Period by dividing (a) the aggregate amount of Credit
Sales during the most recent twelve Due Periods by (b) the rolling twelve month
average of the aggregate Unpaid Balance of Receivables.
Administrator: As defined in the Preamble
Administrator's Account: As defined in Section 4.5.
Advance Rate: The percentage equal to (a) 100% minus (b) the Reserve Percentage.
Adverse Claim: A Lien, security interest, pledge, charge or encumbrance, or
similar right or claim of any Person.
Affected Party: Each of Lender, any Liquidity Bank, any Credit Bank, any
permitted assignee of Lender, any Credit Bank or any Liquidity Bank, any Support
Provider and any holder of a
participation interest in the rights and obligations of any Liquidity Bank or
Credit Bank under the Liquidity Agreement or the Credit Agreement, as the case
may be, Administrator and any holding company of Bank.
Affiliate: Of any Person means any other Person that (a) directly or indirectly
controls, is controlled by or is under common control with such Person or (b) is
an officer or director of such Person. A Person shall be deemed to be
"controlled by" another Person if such other Person possesses, directly or
indirectly, power (i) to vote 15% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
partners of such other Person, or (ii) to direct or cause the direction of the
management and policies of such other Person whether by contract or otherwise.
With respect to Covenant Nevada, Covenant Tennessee and CVTI, the term
"Affiliate" shall not include ▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC.
Aggregate Unpaid Balance: At any time, the aggregate Unpaid Balance of all
Eligible Receivables at such time.
Agreement: This Loan Agreement, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
Allocations: As defined in Section 3.3.
Alternative Rate: For any Interest Period, an interest rate per annum equal to
either (a) the LIBOR Rate or (b) if the LIBOR Rate is unavailable for any
reason, the Base Rate.
Alternative Rate Allocation: As defined in Section 3.3.
Amortization Event: Any of the events described in Section 10.2.
Applicable Margin: As defined in the Fee Letter.
Bank: SunTrust Bank, a Georgia banking corporation.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, (11
U.S.C.ss.101, et seq.) as amended.
Base Rate: (a) On any date, if any Event of Default or Servicer Event of Default
has occurred, a fluctuating rate of interest per annum equal to the higher of
the Prime Rate or the Federal Funds Rate most recently determined by Bank plus
0.50%; (b) On any date, if no Event of Default or Servicer Event of Default has
occurred, the lower of the Prime Rate or the Federal Funds Rate most recently
determined by Bank plus 0.50%.
Borrower: As defined in the Preamble.
Borrowing Base: At any time an amount equal to (a) the Advance Rate times (b) an
amount equal to (i) the Aggregate Unpaid Balance at such time, minus (ii) the
aggregate Excess Concentration Amount for all Obligors at such time.
Borrowing Base Certificate: As defined in Section 7.1(k).
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Borrowing Base Deficit: An amount equal to the excess of (a) the aggregate
principal amount of all outstanding Loans under the Lender Note over (b) the sum
of the Borrowing Base plus all Collections on deposit in the Collection Account.
Borrowing Request: As defined in Section 2.2.
Business Day: Any day on which (a) Bank is not authorized or required to be
closed for business in Atlanta, Georgia and (b) commercial banks in New York
City are not authorized or required to be closed and, in the case of a Rate
Setting Day, banks are open for business in London, England.
Closing Date: The date of the first Loan hereunder.
Code: The Internal Revenue Code of 1986, as amended, or any successor statute
thereto, including the regulations promulgated thereunder.
Collateral: As defined in Section 5.1(a)(iv).
Collateral Review: As defined in Section 9.1(e)(v).
Collection Account: Collectively, (i) the Primary Collection Account and (ii)
that certain bank account numbered ▇▇▇▇▇▇▇▇ maintained with Diamond State Bank,
each of which is identified as "CVTI Collection Account", in Borrower's name and
pledged, on a first-priority basis, to Administrator pursuant to Section 5.1(a).
Collection Account Agreement: Any agreement by and among Borrower, Master
Servicer, Originators, Administrator and a Collection Account Bank, in
substantially the form attached hereto as Exhibit E or such other form approved
by Administrator, specifying the rights of Lender and Administrator in the
Collection Account.
Collection Account Bank: Any bank holding the Collection Account.
Collection Policy: Those collection and credit policies of each Originator with
respect to its respective Receivables, as amended from time to time in
accordance with this Agreement.
Collections: (a) all payments received in respect of the Receivables, in the
form of cash, checks, wire transfers, ACH transfers or any other form of payment
in accordance with the terms of a Receivable or otherwise, (b) all proceeds from
the sale or other disposition of any collateral securing a Receivable, (c) any
repurchase amounts, (d) any insurance proceeds or sales tax refund payments
received in respect of a Receivable and (e) any indemnification, recourse
payments or other amounts payable to Borrower or any Originator in respect of a
Receivable pursuant to this Agreement, the Receivables Purchase Agreement or
otherwise.
Commercial Paper Notes: Short-term promissory notes issued by Lender to fund its
Loans or investments in receivables or other financial assets.
Commercial Paper Rate: For any day during any Interest Period, the per annum
rate equivalent to the sum of (a) the weighted average of the per annum rates
paid or payable by TPFC from
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time to time as interest on or otherwise in respect of the Commercial Paper
Notes issued by TPFC that are allocated, in whole or in part, by Administrator
(on behalf of TPFC) to fund or maintain the advances outstanding under Lender
Note, and (b) the commissions and charges charged by placement agents and
commercial paper dealers with respect to such Commercial Paper Notes.
Commitment Termination Date: The earliest to occur of (a) the Scheduled
Commitment Termination Date, (b) the date of any termination of Lender's
Commitment pursuant to Section 2.5, (c) the date of any termination of Lender's
Commitment, in whole, by Borrower pursuant to Section 2.6, and (d) the effective
date on which Lender's Commitment is terminated pursuant to Section 10.3.
Concentration Limit: (a) For any Obligor that is not a Special Obligor whose
short term unsecured debt rating is (i)greater than or equal to A2 by S&P and P2
by ▇▇▇▇▇'▇ and less than or equal to A1+ by S&P or P1 by ▇▇▇▇▇'▇, 6.0% of the
Aggregate Unpaid Balance; (ii) equal to A3 by S&P and P3 by ▇▇▇▇▇'▇, 4% of the
Aggregate Unpaid Balance; (b) for any Obligor that is not a Special Obligor who
does not have a short term unsecured debt rating, but who has a long term
unsecured debt rating which is (i) greater than or equal to A - by S&P and A3 by
▇▇▇▇▇'▇ and less than or equal to AAA by S&P and Aaa by ▇▇▇▇▇'▇, 6% of the
Aggregate Unpaid Balance or (ii) greater than or equal to BBB- by S&P and Baa3
by ▇▇▇▇▇'▇ and less than or equal to BBB+ by S&P and Baa1 by ▇▇▇▇▇'▇, 4% of the
Aggregate Unpaid Balance and (c) for any Obligor that is not a Special Obligor
who (i) has no short term or long term unsecured debt rating by both S&P and
▇▇▇▇▇'▇ or (ii) has any long term unsecured debt that is not rated at least BBB-
by S&P and Baa3 by ▇▇▇▇▇'▇, 2% of the Aggregate Unpaid Balance. The
Concentration Limit for a Special Obligor shall be 6%.
Consolidated Tangible Net Worth: At any date, with respect to any Person, the
consolidated stockholders' equity of such Person and its consolidated
Subsidiaries, plus the principal amount of subordinated debt of such Person,
minus (to the extent reflected in determining such consolidated stockholders'
equity) all intangible assets (determined in accordance with GAAP) as reported
in the audited consolidated financial statements of such Person for the fiscal
year in question.
Contract: Either a written agreement between an Originator and a Person, or an
invoice delivered to a Person by an Originator, pursuant to which such Person is
obligated to pay such Originator for services.
Covenant Nevada: As defined in the Preamble.
Covenant Tennessee: Covenant Transport, Inc., a Tennessee corporation and
wholly-owned Subsidiary of Covenant Nevada.
Covered Taxes: As defined in Section 6.3(a).
CP Allocation: As defined in Section 3.3.
Credit Advance: A drawing under a letter of credit issued pursuant to a Credit
Agreement for the account of Lender, a loan to Lender under a Credit Agreement
or any other advance or
4
disbursement of funds to Lender or for Lender's account pursuant to a Credit
Agreement or any such letter of credit, in each case to the extent such drawing,
loan, advance or disbursement has not been repaid or reimbursed to Credit Bank
in accordance with the related Credit Agreement.
Credit Agreement: Includes any program-wide agreement entered into by any Credit
Bank providing for the issuance of one or more letters of credit for the account
of Lender, the issuance of one or more surety bonds for which Lender is
obligated to reimburse the applicable Credit Bank for any drawings hereunder,
the sale by Lender to any Credit Bank of receivables or other financial assets
owned or held by Lender (or portions thereof) and/or the making of loans and/or
other extensions of credit to Lender in connection with its commercial paper
program, together with any cash collateral agreement, letter of credit, surety
bond or other agreement or instrument executed and delivered in connection
therewith (but excluding the Liquidity Agreement, or similar agreement, or any
voluntary advance agreement).
Credit Bank: Includes Bank and any other or additional bank or other Person
(other than Borrower or other customer of Lender or any liquidity provider as
such) now or hereafter extending credit or a purchase commitment to or for the
account of Lender or issuing a letter of credit, surety bond or other
instrument, in each case to support any obligations arising under or in
connection with Lender's commercial paper program.
Credit Sales: For any Due Period, the aggregate amount of all trade receivables
with credit terms of any kind originated by the Originators during such Due
Period.
Cut-Off Date: November 30, 2000.
CVTI : As defined in the Preamble.
Days Sales Outstanding Ratio: For any Due Period, the ratio computed as of the
last day of such Due Period by dividing (a) 360 by (b) the Accounts Receivable
Turnover Ratio for such Due Period.
Debt: Of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all indebtedness of such Person for the deferred
purchase price of property or services (other than property and services
purchased, and expense accruals and deferred compensation items arising, in the
ordinary course of business), (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments (other than performance,
surety and appeal bonds arising in the ordinary course of business), (d) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, to the extent
required to be so recorded, (f) all reimbursement, payment or similar
obligations of such Person, contingent or otherwise, under acceptance, letter of
credit or similar facilities (other than letters of credit in support of trade
obligations or in connection with workers' compensation, unemployment insurance,
old-age pensions and other social security benefits in the ordinary course of
business), (g) all net obligations of such Person in respect of interest rate
swap, cap, collar, swaption, option or similar
5
agreements, (h) all obligations arising in connection with a sale or other
transfer of any of such Person's financial assets which are, or are intended to
be, classified as loans for federal tax purposes, (i) all Debt referred to in
clauses (a) through (h) above guaranteed directly or indirectly by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss in respect of such Debt, (iii) to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for property
or services irrespective of whether such property is received or such services
are rendered) or (iv) otherwise to assure a creditor against loss in respect of
such Debt, and (j) all Debt referred to in clauses (a) through (h) above secured
by (or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any lien, security interest or other charge or
encumbrance upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Debt.
Default Rate: As defined in Section 3.1(c).
Default Ratio: With respect to any Due Period, the ratio (expressed as a
percentage) computed as of the last day of such Due Period, by dividing (a) the
Unpaid Balance of Receivables that became Defaulted Receivables during such Due
Period by (b) Credit Sales for the Due Period four (4) months prior to such Due
Period.
Defaulted Receivable: Any Receivable (a) which has been, or should have been,
written off as uncollectible by the Master Servicer in accordance with the
Collection Policy, (b) as to which, at the end of any Due Period, any payment,
or part thereof, remains unpaid for 91 days or more past the due date for such
payment, determined by reference to the original contractual payment terms of
such Receivable or (c) as to which the Obligor thereon has suffered an Event of
Bankruptcy.
Delinquency Ratio: With respect to any Due Period, the ratio (expressed as a
percentage) computed as of the last day of such Due Period, by dividing (a) the
Unpaid Balance of Receivables which are Delinquent Receivables as of the last
day of such Due Period by (b) an amount equal to the Aggregate Unpaid Balance as
of the last day of such Due Period, minus the aggregate Excess Concentration
Amount as of the last day of such Due Period.
Delinquent Receivables: A Receivable (other than a Defaulted Receivable) as to
which all or any part of a scheduled payment remains unpaid for 61 days or more
from the original due date for such payment.
Deposit Date: As defined in Section 11.2(d)(ii).
Dilution Horizon Ratio: With respect to any Due Period, the ratio computed as of
the last day of such Due Period by dividing (a) Credit Sales for such Due Period
by (b) an amount equal to the Aggregate Unpaid Balance as of the last day of
such Due Period, minus the aggregate Excess Concentration Amount as of the last
day of such Due Period.
6
Dilution Ratio: With respect to any Due Period, the ratio (expressed as a
percentage) computed as of the last day of such Due Period, by dividing (a)
Dilutions for such Due Period by (b) Credit Sales for the Due Period one month
prior to such Due Period.
Dilution Reserve: With respect to any Due Period the product of (a) the sum of
(i) the product of (1) the Stress Factor times (2) the Expected Dilution Ratio
plus (ii) the product of (1) the positive difference, if any, between (x) the
Dilution Spike Rate less (y) the Expected Dilution Ratio times (2) a ratio
computed by dividing (A) the Dilution Spike Rate by (B) the Expected Dilution
Ratio times (b) the Dilution Horizon Ratio.
Dilutions: With respect to any Due Period, the aggregate amount of returns, net
credits, and any other non-cash reductions to the Credit Sales that occurred or
were made, granted or incurred during such Due Period.
Dilution Spike Rate: With respect to any Due Period, the highest Dilution Ratio
over the most recent twelve-month period.
Distribution Date: The 22nd day of each month (beginning in the month
immediately following the month in which the initial Loan is made hereunder) or,
if such day is not a Business Day, the Business Day immediately thereafter.
Documents: All documentation relating to the Receivables including, without
limitation, the Contracts, billing statements and computer records and programs.
Dollar(s) and the sign $: Lawful money of the United States of America.
Due Period: Each calendar month.
Eligible Receivables: Each Receivable:
(a) that was created in compliance, in all material respects, with the
Collection Policy in the regular and ordinary course of the business of the
related Originator;
(b) that was created pursuant to a Contract that complies, in all
material respects, with the related Originator's standard administration and
documentation policies and procedures;
(c) [reserved];
(d) that is not a Delinquent Receivable or a Defaulted Receivable;
(e) as to which, at the time of the sale of such Receivable to
Borrower, the related Originator was the sole owner thereof and had good and
marketable title thereto, free and clear of all Liens and Adverse Claims, and
which was sold or contributed to Borrower pursuant to the Receivables Purchase
Agreement;
(f) that is not an obligation of the government of the United States or
any Governmental Authority;
7
(g) the assignment of which by the related Originator to Borrower
pursuant to the Receivables Purchase Agreement does not contravene or conflict
with any law, rule or regulation or any contractual or other restriction,
limitation or encumbrance, and the sale or assignment of which does not require
the consent of the Obligor thereof;
(h) which is denominated and payable in Dollars and is only payable in
the United States of America;
(i) the Obligor of which is a United States resident;
(j) the Obligor of which is not an Affiliate of any Originator or a
Governmental Authority;
(k) that arises under a Contract which has been duly authorized and
which, together with such Receivable, is in full force and effect and such
Contract, together with such Receivable, constitutes the legal, valid and
binding payment obligation of the Obligor with respect thereto, enforceable
against such Obligor in accordance with its terms and is not subject to any
right of rescission, setoff, counterclaim or defense (including the defense of
usury) or to any repurchase obligation or return right;
(l) that does not contravene any applicable requirements of law
(including without limitation all laws, rules and regulations relating to truth
in lending, fair credit billing, fair credit reporting, fair debt collection
practices and privacy) and which complies with all applicable requirements of
law and with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any governmental
authority required to be obtained, effected or given by the related Originator
in connection with the creation or the execution, delivery and performance of
such Receivable, have been duly obtained, effected or given and are in full
force and effect;
(m) that complies with all applicable requirements of the Collection
Policy;
(n) as to which each of Borrower's and Administrator's (for the benefit
of the Secured Parties) first priority security interest in such Receivable has
been perfected under the applicable UCC and other applicable laws;
(o) as to which the Master Servicer or any Originator is in possession
of the related Receivable File;
(p) which provides for repayment in full of the Unpaid Balance thereof
within 30 days of the date of the creation thereof;
(q) the terms of which have not been modified or waived except as
permitted under the Collection Policy and this Agreement; and
(r) which constitutes an "account" or "chattel paper" under and as
defined in Article 9 of the UCC of all applicable jurisdictions.
8
ERISA: The Employee Retirement Income Security Act of 1974, as it may be amended
from time to time and the regulations promulgated thereunder.
Event of Bankruptcy: Shall be deemed to have occurred with respect to a Person
if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect to such
Person under any law relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts; or an order for relief in respect of
such Person shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for such Person or
for any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall fail to, or admit in writing its
inability to, pay its debts generally as they become due, or, if a corporation
or similar entity, its board of directors shall vote to implement any of the
foregoing.
Event of Default: Any of the events described in Section 10.1.
Excess Concentration Amount: At any time with respect to any Obligor, the
amount, if any, by which the aggregate Unpaid Balance of all Receivables of such
Obligor exceeds the Concentration Limit for such Obligor, in each case, at such
time.
Expected Dilution Ratio: With respect to any Due Period, the rolling
twelve-month average Dilution Ratio for the most recently ended twelve-month
period.
Facility Limit: As defined in Section 2.1.
Federal Funds Rate: For any period, a fluctuating interest rate equal for each
day during such period to the weighted average of the federal funds rates as
quoted by Bank and confirmed in the Federal Reserve Board Statistical Release as
H.15(519), or any successor or substitute publication selected by Bank (or, if
such day is not a Business Day, for the next preceding Business Day), or if, for
any reason, such rate is not available on any day, the rate determined in the
sale opinion of Bank, to be the rate at which federal funds are being offered
for sale in the national federal funds market at 9:00 a.m. (New York time).
Federal Reserve Board: The Board of Governors of the Federal Reserve System and
any successor thereto.
Fee Letter: As defined in Section 3.4.
9
Fees: All fees and other amounts payable by Borrower to Administrator or Lender
pursuant to the Fee Letter.
Fiscal Year: Each calendar year.
GAAP: Generally accepted United States accounting principles as in effect from
time to time.
Governmental Authority: The United States of America, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Indemnified Amounts: As defined in Section 14.1.
Indemnified Party: As defined in Section 14.1.
Initial Purchase Date: The first Purchase Date to occur under the Receivables
Purchase Agreement.
Interest Period: With respect to any Loan: (a) the period commencing on the date
of the initial funding of such Loan and ending on, but excluding, the Business
Day immediately preceding the next following Distribution Date; and (b)
thereafter, each period commencing on, and including, the Business Day
immediately preceding a Distribution Date and ending on, but excluding, the
Business Day immediately preceding the next following Distribution Date;
provided, however, that if any Interest Period for any Loan that commences
before the Commitment Termination Date would otherwise end on a date occurring
after such Commitment Termination Date, such Interest Period shall end on such
Commitment Termination Date and the duration of each such Interest Period that
commences on or after the Commitment Termination Date, if any, shall be of such
duration as shall be selected by Administrator.
IRS: The Internal Revenue Service.
Lender: As defined in the Preamble.
Lender Note: As defined in Section 2.7.
Lender's Commitment: As defined in Section 2.1.
Liabilities: With respect to any Person, all obligations of such Person which
would, in accordance with GAAP, be classified on a balance sheet as liabilities,
including, without limitation, (a) Debt secured by Liens against property of
such Person whether or not such Person is liable for the payment thereof and (b)
deferred liabilities.
LIBOR Rate: For any Interest Period, the rate per annum on the Rate Setting Day
of such Interest Period shown on Telerate Page 3750 or any successor page as the
composite offered rate for London interbank deposits for one month, as shown
under the heading "USD" as of 11:00 a.m. (London time); provided that in the
event no such rate is shown, the LIBOR Rate shall be the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of one percent) based on the rates
at which Dollar deposits for one month are displayed on the Reuters Screen as of
11:00
10
a.m. (London time) on the Rate Setting Day (it being understood that if at least
two such rates appear on such page, the rate will be the arithmetic mean of such
displayed rates); provided further, that in the event fewer than two such rates
are displayed, or if no such rate is relevant, the LIBOR Rate shall be the rate
per annum equal to the average of the rates at which deposits in Dollars are
offered by Administrator at approximately 11:00 a.m. (London time) on the Rate
Setting Day to prime banks in the London interbank market for a one month.
Lien: Any mortgage, pledge, assignment, lien, security interest or other charge
or encumbrance of any kind, including the retained security title of a
conditional vendor or a lessor.
Liquidity Agreement: Includes (a) the Liquidity Asset Purchase Agreement
(regarding CVTI, dated as of December 12, 2000, among Lender, as borrower, Bank,
as liquidity agent for the Liquidity Banks, SunTrust Equitable Securities
Corporation, as administrator for Lender, and the Liquidity Banks, and (b) any
other agreement hereafter entered into by Lender providing for the sale by
Lender of Loans (or portions thereof), or the making of loans or other
extensions of credit to Lender secured by security interests in the Loans (or
portions thereof), to support all or part of Lender's payment obligations under
the Commercial Paper Notes or to provide an alternate means of funding Lender's
investments in accounts receivable or other financial assets, in each case as
amended, supplemented or otherwise modified from time to time.
Liquidity Bank: Includes Bank and the various financial institutions as are, or
may become, parties to the Liquidity Agreement, as purchasers thereunder.
Loan: Any amount disbursed as principal by Lender to Borrower under this
Agreement.
LockBox: As defined in Section 11.2(c).
Loss Horizon Ratio: With respect to any Due Period, the ratio computed as of the
last day of such Due Period by dividing (a) the sum of (i) Credit Sales for such
Due Period plus (ii) Credit Sales for the immediately preceding Due Period, plus
(iii) Credit Sales for the second (2nd) immediately preceding Due Period, plus
(iv) Credit Sales for the third (3rd) immediately preceding Due Period, by (b)
an amount equal to the Aggregate Unpaid Balance as of the last day of such Due
Period, minus the aggregate Excess Concentration Amount for all Obligors as of
the last day of such Due Period.
Loss Reserve: With respect to any Due Period, the product of (a) the highest
rolling three-month average Default Ratio over the most recent twelve Due
Periods, (b) the Loss Horizon Ratio and (c) the Stress Factor.
Mail Payments: As defined in Section 11.2(c) hereof.
Master Servicer: Covenant Nevada, or its successor in interest, or any successor
Master Servicer appointed as provided in Section 11.5.
Material Adverse Effect: With respect to any event or circumstance, a material
adverse effect on: (a) the business, assets, financial condition or operations
of Borrower, Originators or Master Servicer; (b) the ability of Master Servicer,
Originators or Borrower to perform their respective obligations under this
Agreement or any other Transaction Document; (c) the validity,
11
enforceability or collectibility of this Agreement or any other Transaction
Document; (d) the existence, perfection or priority of (i) Administrator's (for
the benefit of the Secured Parties) security interest in the Collateral, or (ii)
Borrower's ownership interest in the Receivables; (e) the validity,
enforceability or collectibility of the Receivables; or (f) the ability of the
Originators to generate Receivables of a credit quality at least equal to those
existing on the Closing Date.
Month End Date: The last day of each calendar month.
Monthly Report: As defined in Section 9.1(e)(ii).
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc.
Obligations: All obligations (monetary or otherwise) of Borrower to Lender,
Administrator, any Affected Party or any Indemnified Party and their respective
successors, permitted transferees and assigns arising under or in connection
with this Agreement, Lender Note and each other Transaction Document, in each
case however created, arising or evidenced, whether direct or indirect, absolute
or contingent, now or hereafter existing, or due or to become due.
Obligor: With respect to any Receivable, the Person or Persons obligated to make
payments with respect to such Receivable, including any guarantor thereof.
Originators: Covenant Tennessee , and Southern Refrigerated, in their respective
capacities as originators under the Receivables Purchase Agreement.
Originator Note: Collectively, (a) the subordinated promissory note dated as of
the initial Purchase Date issued by Borrower to Covenant Tennessee pursuant to
the Receivables Purchase Agreement, (b) the subordinated promissory note dated
as of the initial Purchase Date issued by Borrower to Southern Refrigerated
pursuant to the Receivables Purchase Agreement and (c) any other promissory
notes subsequently issued by Borrower to Covenant Tennessee and/or Southern
Refrigerated pursuant to the Receivables Purchase Agreement, which promissory
notes in each case shall be in the form of Exhibit G hereto.
Originator Payables: (a) the obligation of any Originator to make a payment,
pursuant to Section 2.4 of the Receivables Purchase Agreement, for any
Receivable that was represented to be an Eligible Receivables was not an
Eligible Receivable on the date such Receivable was sold by such Originator to
Borrower, and (b) all other amounts owed by such Originator to Borrower from
time to time pursuant to this Agreement or the Receivables Purchase Agreement.
Permitted Investments: At any time:
(a) marketable obligations issued by, or the full and timely payment of
which is directly and fully guaranteed or insured by, the United States
government or any other government with an equivalent rating, or any agency or
instrumentality thereof when such marketable obligations are backed by the full
faith and credit of the United States government or such other equivalently
rated government, as the case may be, but excluding any securities which are
derivatives of such obligations;
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(b) time deposits, bankers' acceptances and certificates of deposit of
any domestic commercial bank or any United States branch or agency of a foreign
commercial bank which (i) has capital, surplus and undivided profits in excess
of $100,000,000 and which has a commercial paper or certificate of deposit
rating meeting the requirements specified in clause (c) below (or equivalent
rating from the Rating Agencies) or (ii) is set forth in a list (which may be
updated from time to time) (A) approved by Administrator and (B) with respect to
which a written statement has been obtained from each of the Rating Agencies to
the effect that the rating of the Commercial Paper Notes will not be downgraded
or withdrawn solely as a result of the acquisition of such investments;
(c) commercial paper which is (i) rated at least as high as the
Commercial Paper Notes by the Rating Agencies, or (ii) set forth in a list
(which may be updated from time to time) (A) approved by Administrator and (B)
with respect to which a written statement has been obtained from each of the
Rating Agencies to the effect that the rating of the Commercial Paper Notes will
not be downgraded or withdrawn solely as a result of the acquisition of such
investments;
(d) secured repurchase obligations for underlying securities of the
types described in clauses (a) and (b) above entered into with any bank of the
type described in clause (b) above; and
(e) freely redeemable shares in money market funds which invest solely
in obligations, bankers' acceptances, time deposits, certificates of deposit,
repurchase agreements and commercial paper of the types described in clause (a)
through (d) above, without regard to the limitations as to the maturity of such
obligations, bankers' acceptances, time deposits, certificates of deposit,
repurchase agreements or commercial paper set forth below, which are rated at
least "AAm" or "AAmg" or their equivalent by at least one Rating Agency,
provided that there is no r-highlighter affixed to such rating.
Person: An individual, partnership, limited liability company, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, government or any agency or political subdivision
thereof or any other entity.
Primary Collection Account: That certain bank account numbered 000428869474
maintained with Bank of America, N.A.
Prime Rate: As of any date of determination, the rate of interest most recently
announced by Bank at its principal office in Atlanta, Georgia as its prime rate
(it being understood that at any one time there shall exist only one such prime
rate so announced, which rate is not necessarily intended to be the lowest rate
of interest determined by Bank in connection with extensions of credit).
Program Documents: The Liquidity Agreement, the Credit Agreement, the Voluntary
Advance Agreement, the documents under which Administrator performs its
obligations with respect to Lender's commercial paper program and the other
documents to be executed and delivered in connection therewith, as amended,
supplemented or otherwise modified from time to time.
Purchase Date: As defined in the Receivables Purchase Agreement.
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Rate Setting Day: For any Interest Period, two (2) Business Days prior to the
commencement of such Interest Period. In the event such day is not a Business
Day, then the Rate Setting Day shall be the immediately preceding Business Day.
Rating Agencies: S&P and Moody's.
Receivable: With respect to any Obligor, the indebtedness of such Obligor under
a Contract arising from the rendering of services, and includes the right to
payment of any interest, finance, returned check or late charges and other
obligations of such Obligor with respect thereto.
Receivable File: With respect to a Receivable, (a) the Contract giving rise to
the Receivable and other evidences of the Receivable including, without
limitation, tapes, discs, punch cards and related property and rights and (b)
each UCC financing statement related thereto, if any.
Receivables Purchase Agreement: The Receivables Purchase Agreement, dated as of
December 12, 2000, by and between Covenant Tennessee, Southern Refrigerated and
Borrower, as such Receivables Purchase Agreement may be amended, supplemented or
otherwise modified from time to time with the prior written consent of
Administrator.
Regulatory Change: Relative to any Affected Party: (a) any change in (or the
adoption, implementation, change in the phase-in or commencement of
effectiveness of) any: (i) United States Federal or state law or foreign law
applicable to such Affected Party, (ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of law) applicable to
such Affected Party of (A) any court or government authority charged with the
interpretation or administration of any law referred to in clause (a)(i), or of
(B) any fiscal, monetary or other authority having jurisdiction over such
Affected Party, or (iii) GAAP or regulatory accounting principles applicable to
such Affected Party and affecting the application to such Affected Party of any
law, regulation, interpretation, directive, requirement or request referred to
in clause (a)(i) or (a)(ii) above; (b) any change in the application to such
Affected Party of any existing law, regulation, interpretation, directive,
requirement, request or accounting principles referred to in clause (a)(i),
(a)(ii) or (a)(iii) above; or (c) the issuance, publication or release of any
regulation, interpretation, directive, requirement or request of a type
described in clause (a)(ii) above to the effect that the obligations of any
Liquidity Bank under the Liquidity Agreement are not entitled to be included in
the zero percent category of off-balance sheet assets for purposes of any
risk-weighted capital guidelines applicable to such Liquidity Bank or any
related Affected Party.
Related Security: With respect to any Receivable, (a) all right, title and
interest, but none of the obligations, of the related Originator, in, to and
under other Liens and property subject to Liens from time to time purporting to
secure payment of such Receivable, whether pursuant to the Contract related to
such Receivable or otherwise, (b) all UCC Financing Statements or similar
instruments covering any collateral securing payment of such Receivable, (c) all
guaranties, indemnities, insurance and other agreements (including the related
Receivable File) or arrangement and other collateral of whatever character from
time to time supporting or securing payment of such Receivable, whether pursuant
to the Contract relating to such Receivable or otherwise relating to such
Receivable and (d) all other instruments and all rights under the
14
documents in the Receivable File relating to such Receivables and all rights
(but not obligations) relating to such Receivables.
Reporting Date: As defined in Section 9.1(e)(ii).
Requirements of Law: For any Person or any of its property shall mean the
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person or any of its property, and
any statute, law, treaty, rule or regulation, or determination of an arbitrator
or Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or businesses or to which such Person or any of
its property or businesses is subject, whether federal, state or local.
Reserve Floor: For any Due Period, 12.1%.
Reserve Percentage: The percentage equal to the greater of (a) the sum of (i)
the Loss Reserve, (ii) the Dilution Reserve, (iii) the Yield Reserve, and (iv)
the Servicing Reserve and (b) the Reserve Floor.
Reuters Screen: The display page designated as "LIBO" on the Reuter Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to the LIBOR Rate).
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
Scheduled Commitment Termination Date: December 11, 2001.
Secured Obligations: As defined in Section 5.1(b).
Secured Parties: The holders from time to time of the Secured Obligations
including, without limitation, Lender and Administrator.
Servicer Event of Default: As defined in Section 11.7.
Servicing Fee: As to any Due Period, the monthly fee payable to Master Servicer,
which, so long as Covenant Nevada is Master Servicer, shall be equal to the
Servicing Fee Rate divided by 12 multiplied by the aggregate Unpaid Balance of
the Receivables at the beginning of such Due Period. The Servicing Fee for any
successor Master Servicer shall be equal to the fee reasonably agreed to by
Administrator and such successor.
Servicing Fee Rate: 1.80%.
Servicing Reserve: With respect to any Due Period, the product of (a) the
highest Days Sales Outstanding Ratio during the most recent twelve-month period,
(b) the Stress Factor, (c) 2.40% and (d) 1/360.
Significant Event: Any Amortization Event.
15
Solvent: With respect to any Person that as of the date of determination both
(a)(i) the then fair saleable value of the property of such Person is (A)
greater than the total amount of liabilities (including contingent liabilities)
of such Person and (B) not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (ii) such Person's capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due; and (b) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
Southern Refrigerated: Southern Refrigerated Transport, Inc., an Arkansas
corporation.
Special Obligor: So long as it does not have any debt rating by both S&P and
Moody's, EGL Eagle Global Logistics.
Stated Maturity Date: December 11, 2001; provided, however, that such date may
be accelerated pursuant to Section 10.3.
Stress Factor: 2.0.
Subsidiary: With respect to any Person, a corporation of which such Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares as have more than 50% of the ordinary voting power for the
election of directors.
Support Provider: Includes any entity now or hereafter extending credit or
liquidity support or having a commitment to extend credit or liquidity support
to or for the account of, or to make loans to or purchases from, Lender or
issuing a letter of credit, surety bond or other instrument to support any
obligations arising under or in connection with the commercial paper program of
Lender.
Telerate Page 3750: The display designated as "Page 3750" on the Telerate
Service (or such other page as may replace "Page 3750" on that service or
another service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
Interest Settlement Rate for Dollars).
Transaction Documents: This Agreement, the Receivables Purchase Agreement,
Lender Note, the Fee Letter, the Originator Note and the other instruments,
certificates, agreements, reports and documents to be executed and delivered
under or in connection with this Agreement or the Receivables Purchase Agreement
(except the Program Documents), as any of the foregoing may be amended,
supplemented, amended and restated, or otherwise modified from time to time in
accordance with this Agreement and the Receivables Purchase Agreement. Each such
document is a Transaction Document.
16
UCC: The Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.
Unmatured Significant Event: Any event that, if it continues uncured, will, with
lapse of time or notice or lapse of time and notice, constitute a Significant
Event.
Unpaid Balance: With respect to any Receivable the aggregate amount required to
prepay in full the principal of, and all interest, finance, prepayment and other
fees or charges of any kind payable in respect of, such Receivable.
Voluntary Advance Agreement: The Voluntary Advance Agreement, dated as of March
11, 1999, among Lender, Administrator and Bank, as it may be amended,
supplemented or otherwise modified from time to time.
Yield Reserve: With respect to any Due Period, the product of (a) the highest
Days Sales Outstanding Ratio during the most recent twelve-month period, (b) the
Stress Factor, (c) the Prime Rate as in effect on the last day of such Due
Period and (d) 1/360.
Section 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement have the meanings as so defined herein when used in Lender Note or any
other Transaction Document, certificate, report or other document made or
delivered pursuant hereto.
(b) Each term defined in the singular form in Section 1.1 or elsewhere
in this Agreement shall mean the plural thereof when the plural form of such
term is used in this Agreement, Lender Note or any other Transaction Document,
certificate, report or other document made or delivered pursuant hereto, and
each term defined in the plural form in Section 1.1 shall mean the singular
thereof when the singular form of such term is used herein or therein.
(c) The words "hereof," "herein," "hereunder" and similar terms when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
Section 1.3 Other Terms.
All accounting terms not specifically defined herein shall be construed
in accordance with GAAP. All terms used in Article 9 of the UCC and not
specifically defined herein, are used herein as defined in such Article 9.
Section 1.4 Computation of Time Periods.
Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding."
17
ARTICLE II
LENDER'S COMMITMENT, BORROWING PROCEDURES
AND LENDER NOTE
Section 2.1 Lender's Commitment.
On the terms and subject to the conditions set forth in this Agreement,
Lender agrees to make loans to Borrower on a revolving basis from time to time
(the "Lender's Commitment") before the Commitment Termination Date in such
amounts as may be from time to time requested by Borrower pursuant to Section
2.2; provided, however, that the aggregate principal amount of all Loans from
time to time outstanding hereunder shall not exceed the lesser of (a)
$62,000,000 (the "Facility Limit") and (b) the Borrowing Base. Within the limits
of Lender's Commitment, Borrower may borrow, prepay and reborrow under this
Section 2.1.
Section 2.2 Borrowing Procedures.
Borrower (or the Master Servicer on its behalf) may request a Loan
hereunder by giving notice to Administrator of a proposed borrowing not later
than 2:00 p.m. (New York City time), two Business Days prior to the proposed
date of such borrowing (or such lesser period of time as Lender may consent);
provided that Borrower shall not request, and Lender shall not make, Loans more
than two times during any Due Period. Each such notice (herein called a
"Borrowing Request") shall be in the form of Exhibit A and shall include the
date and amount of such proposed borrowing. Any Borrowing Request given by
Borrower (or the Master Servicer on its behalf) pursuant to this Section 2.2
shall be irrevocable and binding on Borrower.
Section 2.3 Funding.
Subject to the satisfaction of the conditions precedent set forth in
Article VII with respect to such Loan and the limitations set forth in Section
2.1, Lender shall make the proceeds of such requested Loan available to
Administrator at its office in Atlanta, Georgia in same day funds on the
proposed date of borrowing. Upon receipt by Administrator of such funds,
Administrator will make such funds available to Borrower at such office on such
date. Each borrowing shall be on a Business Day and shall be in an amount of at
least $1,000,000 and in integral multiples of $500,000.
Section 2.4 Representation and Warranty.
Each request for a borrowing pursuant to Section 2.2 shall
automatically constitute a representation and warranty by Borrower to
Administrator and Lender that on the requested date of such borrowing (a) the
representations and warranties contained in Article VIII will be true and
correct as of such requested date as though made on such date, (b) no
Significant Event or Unmatured Significant Event has occurred and is continuing
or will result from such borrowing, and (c) after giving effect to such
requested borrowing, the aggregate principal balance of the outstanding Loans
hereunder will not exceed the lesser of the Borrowing Base and the Facility
Limit.
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Section 2.5 Early Termination of Lender's Commitment.
Lender's Commitment shall terminate and Lender shall have no obligation
to make any further Loans (or to fund any increase in any existing Loan), on the
earliest date of termination of (a) the Liquidity Banks' commitments under the
Liquidity Agreement or (b) the Credit Banks' commitments under the Credit
Agreement. Administrator agrees to use its reasonable efforts to give Borrower
at least 30 days' prior written notice of the termination of Lender's Commitment
pursuant to clause (a) or (b) above.
Section 2.6 Voluntary Termination of Lender's Commitment; Reduction of
Facility Limit.
Borrower may, in its sole discretion for any reason upon at least 10
days' notice to Administrator (with a copy to Lender), terminate Lender's
Commitment in whole, or, reduce in part the unused portion of the Facility
Limit; provided, however that (a) each such partial reduction will be in a
minimum amount of $5,000,000 or a higher integral multiple of $1,000,000 and
shall not reduce the Facility Limit below $25,000,000, and (b) in connection
therewith Borrower shall comply with Section 3.2(b) and Section 4.1(b).
Section 2.7 Note.
Each Loan from Lender shall be evidenced by a single promissory grid
note (herein, as amended, modified, extended or replaced from time to time,
called the "Lender Note") substantially in the form set forth in Exhibit B, with
appropriate insertions, payable to the order of Lender. Borrower hereby
irrevocably authorizes Administrator in connection with Lender Note to make (or
cause to be made) appropriate notations on the grid attached to Lender Note (or
on any continuation of such grid, or at Administrator's option, in its records),
which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal of, and the interest rate and Interest Period applicable
to the Loans evidenced thereby. Such notations shall be rebuttably presumptive
evidence of the subject matter thereof, absent manifest error; provided,
however, that the failure to make any such notations shall not limit or
otherwise affect any Obligations of Borrower.
ARTICLE III
INTEREST, FEES, ETC.
Section 3.1 Interest Rates.
Borrower hereby promises to pay interest on the unpaid principal amount
of each Loan (or each portion thereof) for the period commencing on the date of
such Loan until such Loan is paid in full, as follows:
(a) at all times while the making or maintenance of such Loan (or the
applicable portion thereof) by Lender is funded by the issuance of Commercial
Paper Notes of Lender, during each Interest Period, at a rate per annum equal to
the sum of (i) the Commercial Paper Rate applicable to such Interest Period,
plus (ii) the Applicable Margin;
19
(b) at all times while the making or maintenance of such Loan (or the
applicable portion thereof) by Lender is funded during each Interest Period
pursuant to the Liquidity Agreement or the Voluntary Advance Agreement, at a
rate per annum equal to the sum of (i) the Alternative Rate applicable to such
Interest Period, plus (ii) the Applicable Margin; and;
(c) notwithstanding the provisions of the preceding clauses (a) and
(b), in the event that a Significant Event or an Unmatured Significant Event has
occurred and is continuing, at a rate per annum (the "Default Rate") equal to
the Base Rate applicable from time to time (but not less than the interest rate
in effect for such Loan as at the date of such Significant Event), plus a margin
of 3.00%.
After the date any principal amount of any Loan is due and payable
(whether on the Stated Maturity Date, upon acceleration or otherwise) or after
any other monetary Obligation of Borrower arising under this Agreement shall
become due and payable, Borrower shall pay (to the extent permitted by law, if
in respect of any unpaid amounts representing interest) interest (after as well
as before judgment) on such amounts at a rate per annum equal to the Default
Rate. No provision of this Agreement or Lender Note shall require the payment or
permit the collection of interest in excess of the maximum permitted by
applicable law.
Section 3.2 Interest, Payment Dates.
Interest accrued on each Loan shall be payable, without duplication:
(a) on the Stated Maturity Date;
(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Loan;
(c) on each Distribution Date prior to the Stated Maturity Date and
thereafter on the last day of each Interest Period; and
(d) on that portion of any Loan the Stated Maturity Date of which is
accelerated pursuant to Section 10.3, immediately upon such acceleration.
Section 3.3 Interest Allocations.
Administrator shall from time to time and in its sole discretion
determine whether interest in respect of the Loans then outstanding, or any
portion thereof, shall be calculated by reference to the Commercial Paper Rate
(such portion being herein called a "CP Allocation") or the Alternative Rate
(such portion being herein called an "Alternative Rate Allocation", and together
with a CP Allocation individually called an "Allocation", and collectively,
"Allocations"); provided, however, that, Administrator shall use its reasonable
efforts to allocate all or substantially all of the Loans from Lender to a CP
Allocation; provided further, however, that Administrator may determine, at any
time and in its sole discretion, that the Commercial Paper Rate is unavailable
or otherwise not desirable, in which case the Loans from Lender will be
allocated to an Alternative Rate Allocation (unless the Default Rate is in
effect).
Section 3.4 Fees.
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Borrower agrees to pay Administrator and Lender certain fees in the
amounts and on the dates set forth in the letter agreement executed in
connection herewith between Borrower, Administrator and Lender (as the same may
be amended, supplemented or otherwise modified, the "Fee Letter").
Section 3.5 Computation of Interest and Fees.
All interest and fees shall be computed on the basis of the actual
number of days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days.
ARTICLE IV
REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS
Section 4.1 Repayments and Prepayments.
Borrower shall repay in full the unpaid principal amount of each Loan
on the Stated Maturity Date. Prior thereto, Borrower:
(a) may, from time to time on any Business Day, make a prepayment, in
whole or in part, of the outstanding principal amount of any Loans; provided,
however, that, unless otherwise consented to by Administrator, all such
voluntary prepayments shall require at least two Business Days' (or, in the case
of a voluntary prepayment of $10,000,000 or more, at least seven Business Days')
prior written notice to Administrator and all such voluntary partial prepayments
shall be in a minimum amount of $1,000,000 and an integral multiple of $100,000;
(b) shall, on each date when any reduction in the Facility Limit shall
become effective pursuant to Section 2.6, make a prepayment of the Loans in an
amount equal to the excess, if any, of the aggregate outstanding principal
amount of the Loans over the Facility Limit as so reduced;
(c) shall, immediately upon any acceleration of the Stated Maturity
Date of any Loans pursuant to Section 10.3, repay all Loans, unless, pursuant to
Section 10.3(a), only a portion of all Loans is so accelerated, in which event
Borrower shall repay the accelerated portion of the Loans; and
(d) may, if at any time a Borrowing Base Deficit shall exist, make a
prepayment (out of funds set aside pursuant to Section 4.2(d))of the Loans in an
amount equal to such Borrowing Base Deficit, such payment to be made within
three (3) Business Days. Each such prepayment shall be subject to the payment of
any amounts required by Section 6.2.
Each payment or prepayment shall be subject to the payment of any
amounts required by Section 6.2 resulting from a prepayment or payment of a Loan
on a day other than the last day of the Interest Period for such Loan.
Section 4.2 Application of Collections.
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(a) All Collections deposited in the Collection Account shall be
distributed by the Master Servicer at such times and in the order of priority
set forth in this Section 4.2.
(b) On each Distribution Date prior to the Commitment Termination Date,
the Master Servicer shall distribute from Collections on deposit in the
Collection Account on such Distribution Date, the following amounts, without
duplication, in the following order of priority:
first, to Administrator on behalf of Lender, interest accrued on the
Loans during the related Interest Period (plus, if applicable, the amount of
interest on the Loans accrued for any prior Interest Period to the extent such
amount has not been distributed to Lender, and to the extent permitted by law,
interest thereon);
second, to Administrator on behalf of the appropriate Persons, all Fees
accrued during such Due Period (plus, if applicable, the amount of Fees accrued
for any prior Due Period to the extent such amount has not been distributed to
Lender or Administrator);
third, if the Master Servicer is not Covenant Nevada or an Affiliate of
Covenant Nevada, to the Master Servicer, the accrued Servicing Fee payable for
the related Due Period (plus, if applicable, the amount of Servicing Fee payable
for any prior Due Period to the extent such amount has not been distributed to
Master Servicer);
fourth, to Administrator on behalf of Lender, as a repayment of
principal of the Loans, an amount equal to the Borrowing Base Deficit, if any;
fifth, to Administrator on behalf of the appropriate Persons, all other
Obligations then payable by Borrower under this Agreement;
sixth, if the Master Servicer is Covenant Nevada or an Affiliate of
Covenant Nevada, to the Master Servicer, the accrued Servicing Fee payable for
the related Due Period (plus, if applicable, the amount of Servicing Fee payable
for any prior Due Period to the extent such amount has not been distributed to
Master Servicer); and
seventh, so long as no Significant Event or Unmatured Significant Event
shall be continuing, the balance, if any, to Borrower.
(c) On and after the Commitment Termination Date, Administrator shall,
on the last day of each Interest Period, distribute from the Collection Account
the following amounts, without duplication, in the following order of priority:
first, to Administrator on behalf of Lender, the accrued but unpaid
interest on the Loans;
second, to Administrator on behalf of the appropriate Persons, all
accrued but unpaid Fees;
third, if the Master Servicer is not Covenant Nevada or an Affiliate of
Covenant Nevada, to the Master Servicer, the accrued but unpaid Servicing Fee;
22
fourth, to Administrator on behalf of Lender, the outstanding principal
amount of the Loans;
fifth, to Administrator on behalf of the appropriate Persons, all other
Obligations payable by Borrower under this Agreement;
sixth, if the Master Servicer is Covenant Nevada or an Affiliate of
Covenant Nevada, to the Master Servicer, the accrued but unpaid Servicing Fee;
and
seventh, once all amounts described in clauses first through sixth have
been paid in full, the balance, if any, to Borrower.
Section 4.3 Application of Certain Payments.
Each payment of principal of the Loans shall be applied to such Loans
as Borrower shall direct or, in the absence of such notice or during the
existence of a Significant Event or after the Commitment Termination Date, as
Administrator shall determine in its discretion.
Section 4.4 Due Date Extension.
If any payment of principal or interest with respect to any Loan falls
due on a day which is not a Business Day, then such due date shall be extended
to the next following Business Day, and additional interest shall accrue at the
applicable interest rate and be payable for the period of such extension.
Section 4.5 Making of Payments.
All payments of principal of, or interest on, the Loans and of all
Fees, and all amounts to be deposited by Borrower or Master Servicer hereunder,
shall be made by Borrower or Master Servicer, as applicable, no later than 10:00
a.m. (New York City time), on the Business Day when due in lawful money of the
United States of America in same day funds to Bank, as Administrator, Reference:
Three Pillars Funding Corporation/Covenant Transport, Inc., Transaction, Account
No. 880171236, ABA No. ▇▇▇▇▇▇▇▇▇ at Bank's office at ▇▇ ▇▇▇▇ ▇▇▇▇▇ in Atlanta,
Georgia, Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Administrator's Account"). Funds received by
Administrator after 10:00 a.m. New York City time, on the date when due, will be
deemed to have been received by Administrator on its next following Business
Day.
ARTICLE V
SECURITY INTEREST
Section 5.1 Grant of Security.
(a) Borrower hereby assigns and pledges to Administrator (for the
benefit of the Secured Parties), and hereby grants to Administrator (for the
benefit of the Secured Parties) a
23
security interest in all of Borrower's right, title and interest in and to the
following, whether now or hereafter existing and wherever located:
(i) all Receivables, Related Security and Receivable Files;
(ii) all of Borrower's rights, remedies, powers and privileges
in respect of the Receivables Purchase Agreement, including a direct
right to cause any Originator to make payments with respect to
Dilutions or with respect to Receivables that are not Eligible
Receivables pursuant to the Receivables Purchase Agreement;
(iii) the LockBox and the Collection Account and all funds on
deposit therein, together with all certificates and instruments, if
any, from time to time evidencing such accounts, and funds on deposit
and all investments made with such funds, all claims thereunder or in
connection therewith, and interest, dividends, moneys, instruments,
securities and other property from time to time received, receivable or
otherwise distributed in respect of any or all of the foregoing; and
(iv) all products and proceeds (including, without limitation,
insurance proceeds) of, and additions, improvements and accessions to,
and books and records describing or used in connection with, all and
any of the property described above (items (i) through (iv) are
collectively referred to as the "Collateral").
(b) This grant of security secures the payment and performance of all
Obligations of Borrower now or hereafter existing or arising under, or in
connection with, the Loan Agreement, Lender Note and each other Transaction
Document, whether for principal, interest, costs, fees, expenses or otherwise
(all such obligations of Borrower being called the "Secured Obligations").
(c) This grant of security shall create a continuing security interest
in the Collateral and shall:
(i) remain in full force and effect until Administrator's (for
the benefit of the Secured Parties) interest in the Collateral shall
have been released in accordance with Section 5.4;
(ii) be binding upon Borrower, its successors, transferees and
assigns; and
(iii) inure, together with the rights and remedies of
Administrator (for the benefit of the Secured Parties) hereunder, to
the benefit of Administrator and each Secured Party and their
respective successors, transferees and assigns.
Section 5.2 Administrator Appointed Attorney-in-Fact.
Borrower hereby irrevocably appoints Administrator (for the benefit of
the Secured Parties) as Borrower's attorney-in-fact, with full authority in the
place and stead of Borrower and in the name of Borrower or otherwise, from time
to time in Administrator's discretion, after the occurrence and during the
continuation of a Significant Event to take any action and to execute any
instrument which Administrator may deem necessary or advisable to accomplish the
purposes of the Transaction Documents, including, without limitation:
24
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which Administrator may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of Administrator (for the
benefit of the Secured Parties) with respect to any of the Collateral;
(d) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions hereunder;
and
(e) to perform the affirmative obligations of Borrower under the
Transaction Documents.
Administrator agrees to give Borrower and Master Servicer written notice of the
taking of any such action, but the failure to give such notice shall not affect
the rights, power or authority of Administrator with respect thereto. Borrower
hereby acknowledges, consents and agrees that the power of attorney granted
pursuant to this Section 5.2 is irrevocable and coupled with an interest.
Section 5.3 Administrator May Perform.
If Borrower fails to perform any agreement contained herein,
Administrator (for the benefit of the Secured Parties) may itself perform, or
cause performance of such agreement, and the expenses of Administrator incurred
in connection therewith shall be payable by Borrower.
Section 5.4 Release of Collateral.
Administrator's (for the benefit of the Secured Parties) right, title
and interest in the Collateral shall be released effective on the date occurring
after the Commitment Termination Date on which all Secured Obligations shall
have been finally and fully paid and performed.
ARTICLE VI
INCREASED COSTS, ETC.
Section 6.1 Increased Costs.
If any change in Regulation D of the Board of Governors of the Federal
Reserve System, or any Regulatory Change, in each case occurring after the date
hereof:
(a) shall subject any Affected Party to any tax, duty or other charge
with respect to any Loan made or funded by it, or shall change the basis of
taxation of payments to such
25
Affected Party of the principal of or interest on any Loan owed to or funded by
it or any other amounts due under this Agreement in respect of any Loan made or
funded by it (except for changes in the rate of tax on the overall net income of
such Affected Party imposed by the jurisdiction in which such Affected Party's
principal executive office is located); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve included in the determination of
interest rates pursuant to Section 3.1), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Affected Party;
(c) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
(d) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
and the result of any of the foregoing is or would be to (i) increase the cost
to or to impose a cost on (A) an Affected Party funding or making or maintaining
any Loan (including extensions of credit under the Liquidity Agreement, the
Voluntary Advance Agreement or any Credit Advance, or any commitment of such
Affected Party with respect to any of the foregoing), or (B) Administrator for
continuing its or Borrower's relationship with Lender, (ii) to reduce the amount
of any sum received or receivable by an Affected Party under this Agreement,
Lender Note, the Liquidity Agreement, the Voluntary Advance Agreement or the
Credit Agreement with respect thereto, or (iii) in the good faith determination
of such Affected Party, to reduce the rate of return on the capital of an
Affected Party as a consequence of its obligations hereunder, or under the
Liquidity Agreement, the Voluntary Advance Agreement or Credit Agreement, or
arising in connection herewith or therewith to a level below that which such
Affected Party could otherwise have achieved, then after demand by such Affected
Party to Borrower (which demand shall be accompanied by a written statement
setting forth the basis of such demand), Borrower shall pay such Affected Party
such additional amount or amounts as will (in the reasonable determination of
such Affected Party) compensate such Affected Party for such increased cost or
such reduction. Such written statement (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be rebuttably
presumptive evidence of the subject matter thereof.
Section 6.2 Funding Losses.
Borrower hereby agrees that upon demand by any Affected Party (which
demand shall be accompanied by a statement setting forth the basis for the
calculations of the amount being claimed) Borrower will indemnify such Affected
Party against any net loss or expense which such Affected Party may sustain or
incur (including, without limitation, any net loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
Affected Party to fund or maintain any Loan made by Lender to Borrower), as
reasonably determined by such Affected Party, as a result of (a) any payment or
prepayment (including any mandatory prepayment) of any Loan on a date other than
the last day of the Interest Period for such Loan, or (b) any failure of
Borrower to borrow any Loan on a date specified therefor in a
26
related Borrowing Request. Such written statement shall, in the absence of
manifest error, be rebuttably presumptive evidence of the subject matter
thereof.
Section 6.3 Withholding Taxes.
(a) All payments made by Borrower or Master Servicer hereunder shall be
made free and clear of, and without reduction or withholding for or on account
of, any present or future taxes, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority or other taxing authority
excluding, in the case of Administrator and Lender, net income taxes imposed on
Administrator or Lender by the jurisdiction under the laws of which
Administrator or Lender is organized or any political subdivision or taxing
authority thereof or therein (such taxes, excluding such net income taxes, the
"Covered Taxes"). If any Covered Taxes are required to be withheld from any
amounts payable to Administrator or Lender, the amounts so payable to
Administrator or Lender shall be increased to the extent necessary to yield to
Administrator or Lender (after payment of all taxes) all such amounts payable
hereunder at the rates or in the amounts specified herein. Whenever any Covered
Taxes are payable by Borrower or Master Servicer, as promptly as possible
thereafter, Borrower or Master Servicer shall send to Administrator for its own
account or for the account of Lender, as the case may be, a certified copy of an
original official receipt received by Borrower or Master Servicer showing
payment thereof. If Borrower or Master Servicer fails to pay any Covered Taxes
when due to the appropriate taxing authority or fails to remit to Administrator
the required documentary evidence, Borrower or Master Servicer shall indemnify
Administrator and Lender for such Covered Taxes and any incremental taxes that
may become payable by Administrator or Lender as a result of any such failure.
(b) At least five (5) Business Days prior to the first date on which
any payments, including discount or Fees, are payable hereunder for the account
of Lender, if Lender is not incorporated under the laws of the United States,
Lender agrees to deliver to each of Borrower and Administrator two (2) duly
completed copies of (i) United States Internal Revenue Service Form 1001 or 4224
(or successor applicable form) certifying that such Lender is entitled to
receive payments hereunder without deduction or withholding of any United States
federal income taxes or (ii) United States Internal Revenue Service Form W-8 or
W-9 (or successor applicable form) to establish an exemption from United States
backup withholding tax. Lender shall replace or update such forms as is
necessary or appropriate to maintain any applicable exemption or as is requested
by Administrator or Borrower. If Lender does not deliver the forms described in
this Section 6.3(b), Borrower or Administrator shall withhold United States
federal income taxes from any payments made hereunder at the statutory rate
applicable to payments made to Lender. Lender agrees to indemnify and hold
Borrower and Administrator harmless for any United States federal income taxes,
penalties, interest and other costs and losses incurred or payable by Borrower
or Administrator as a result of either (i) Lender's failure to submit any form
required to be provided pursuant to this Section 6.3(b) or (ii) Borrower's or
Administrator's reliance on any form that Lender has provided pursuant to this
Section 6.3(b).
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ARTICLE VII
CONDITIONS TO BORROWING
The making of any Loan hereunder is subject to the following conditions
precedent:
Section 7.1 Initial Loan.
The obligation of Lender to make the initial Loan hereunder is, in
addition to the conditions precedent specified in Section 7.2, subject to the
condition precedent that Administrator shall have received all of the following,
each duly executed and dated the date of such Loan (or such earlier date as
shall be satisfactory to Administrator), in form and substance satisfactory to
Administrator:
(a) Resolutions. Certified copies of resolutions of the Board of
Directors of Borrower, Master Servicer and each Originator authorizing or
ratifying the execution, delivery and performance, respectively, of the
Transaction Documents to which it is a party, together with a certified copy of
its articles or certificate of incorporation and by-laws.
(b) Consents, etc. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals (if any) with
respect to the Transaction Documents.
(c) Incumbency and Signatures. A certificate of the Secretary or an
Assistant Secretary of each of Borrower, Master Servicer and each Originator
certifying the names of its officer or officers authorized to sign the
Transaction Documents to which it is a party.
(d) Good Standing Certificates. Good standing certificates for
Borrower, Master Servicer and each Originator issued as of a recent date
acceptable to Administrator by (i) the Secretary of State of the jurisdiction of
such Person's incorporation or organization, and (ii) the Secretary of State of
the jurisdiction where such Person's chief executive office and principal place
of business are located.
(e) Financing Statements. (i) Acknowledgment copies of proper financing
statements (Form UCC-1), filed on or prior to the date of the initial Loan,
naming Borrower as debtor and Administrator (for the benefit of the Secured
Parties) as the secured party as may be necessary or, in the opinion of
Administrator, desirable under the UCC to perfect Administrator's (for the
benefit of the Secured Parties) security interest in the Collateral, (ii)
acknowledgment copies of proper financing statements, filed on or prior to the
date of the initial Loan, naming each of Covenant Tennessee and Southern
Refrigerated as seller/debtor, Borrower as purchaser/secured party and
Administrator as assignee as may be necessary or, in the opinion of
Administrator, desirable under the UCC to perfect Borrower's ownership interest
in the Receivables and (iii) executed copies of proper Uniform Commercial Code
Form UCC-3 termination statements, if any, necessary to release all liens and
other Adverse Claims of any Person in the Collateral granted by Borrower or any
Originator.
28
(f) Search Reports. A written search report ("Search Report") provided
to Administrator by a search service acceptable to Administrator listing all
effective financing statements that name Borrower or any Originator as debtor or
assignor and that are filed in the jurisdictions in which filings were made
pursuant to Section 7.1(e) above and in such other jurisdictions that
Administrator shall reasonably request, together with copies of such financing
statements (none of which shall cover any Collateral or interests therein or
proceeds of any thereof), and tax and judgment lien search reports from a Person
satisfactory to Administrator showing no evidence of such lien filed against
Borrower or any Originator; provided, however a Search Report with respect to
the Borrower in Arkansas and the related financing statement may be delivered
with such other documents or opinions as the Administrator may reasonably
request no later than thirty days after the date hereof.
(g) Fee Letter; Payment of Fees. The Fee Letter, together with all
outstanding Fees payable pursuant to the Fee Letter.
(h) Receivables Purchase Agreement. (i) Duly executed and delivered
counterparts of the Receivables Purchase Agreement and all documents, agreements
and instruments contemplated thereby, and (ii) evidence that each of the
conditions precedent to the execution and delivery of the Receivables Purchase
Agreement has been satisfied to Administrator's satisfaction, and that the
initial assignments and transfers under the Receivables Purchase Agreement have
been consummated.
(i) Opinions of Counsel. Opinions of counsel to Borrower, Master
Servicer and the Originators in form and substance satisfactory to
Administrator.
(j) Lender Note. Lender Note, duly executed by Borrower.
(k) Borrowing Base Certificate. A certificate, substantially in the
form of Exhibit D (a "Borrowing Base Certificate"), duly executed by an officer
of Borrower (or the Master Servicer on its behalf) showing a calculation of the
Borrowing Base as of the date of such initial Loan.
(l) Collection Account Agreements. The Collection Account Agreements,
duly executed by all of the parties thereto.
(m) Releases. Releases and termination statements duly executed by each
Person, other than Borrower, that has an interest in the Receivables.
(n) Other. Such other documents, certificates and opinions as
Administrator may request.
Section 7.2 All Loans.
The making of the initial Loan and each subsequent Loan are subject to
the following further conditions precedent that:
(a) No Default, etc. (i) No Significant Event or Unmatured Significant
Event has occurred and is continuing or will result from the making of such
Loan, (ii) the representations
29
and warranties of Borrower and Master Servicer contained in Article VIII are
true and correct as of the date of such requested Loan, with the same effect as
though made on the date of such Loan, and (iii) after giving effect to such
Loan, the aggregate unpaid balance of the Loans will not exceed the Borrowing
Base or the Facility Limit. By making a Borrowing Request, Borrower shall be
deemed to have represented and warranted that items (i), (ii), and (iii) in the
preceding sentence are true and correct.
(b) Borrowing Request, etc. Administrator shall have received a
Borrowing Base Certificate and Borrowing Request for such Loan in accordance
with Section 2.2, together with all items required to be delivered in connection
therewith.
(c) Commitment Termination Date. The Commitment Termination Date shall
not have occurred.
(d) Collateral Review. Administrator shall have received for all Loans
subsequent to the initial Loan on the Closing Date the most-recent Collateral
Review pursuant to Section 9.1(e)(v).
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
In order to induce Lender and Administrator to enter into this
Agreement and, in the case of Lender, to make Loans hereunder, Borrower hereby
represents and warrants to Administrator and Lender as to itself as follows, and
Master Servicer hereby represents and warrants to Lender and Administrator as to
itself as follows:
Section 8.1 Organization and Good Standing, etc.
Each of Borrower and Master Servicer has been duly organized and is
validly existing and in good standing under the laws of its state of
organization, with power and authority to own their respective properties and to
conduct their respective businesses as such properties are presently owned and
such businesses are presently conducted. Each of Borrower and Master Servicer is
duly licensed or qualified to do business as a foreign entity in good standing
in the jurisdiction where its principal place of business and chief executive
office are located and in each other jurisdiction in which the failure to be so
licensed or qualified has had, or would be reasonably likely to have a Material
Adverse Effect.
Section 8.2 Power and Authority; Due Authorization.
Each of Borrower and Master Servicer has (a) all necessary power,
authority and legal right to (i) execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Documents to which it is
a party, and (ii) in the case of Borrower, to borrow on the terms and subject to
the conditions herein provided, and (b) duly authorized, by all necessary
action, the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party and, in the case of Borrower, the
borrowing, and the granting of security therefor, on the terms and conditions
provided herein. Master Servicer had at all
30
relevant times, and now has, all necessary power, authority and legal right to
perform its duties as Master Servicer.
Section 8.3 No Violation.
The consummation of the transactions contemplated by this Agreement and
the other Transaction Documents and the fulfillment of the terms hereof and
thereof will not (a) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, (i) the organizational documents of Borrower or Master Servicer,
or (ii) any indenture, loan agreement, pooling and servicing agreement,
receivables purchase agreement, mortgage, deed of trust, or other agreement or
instrument to which Borrower or Master Servicer is a party or by which any of
them or any of their respective properties is bound, (b) result in or require
the creation or imposition of any Adverse Claim upon any of their respective
properties pursuant to the terms of any such indenture, loan agreement, pooling
and servicing agreement, receivables purchase agreement, mortgage, deed of
trust, or other agreement or instrument, other than pursuant to the terms of the
Transaction Documents, or (c) violate any law or any order, rule, or regulation
applicable to Borrower or Master Servicer or of any court or of any federal,
state or foreign regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Borrower, any Originator or Master
Servicer or any of their respective properties.
Section 8.4 Validity and Binding Nature.
This Agreement is, and the other Transaction Documents to which it is a
party when duly executed and delivered by Borrower or Master Servicer (as
applicable) and the other parties thereto will be, the legal, valid and binding
obligation of Borrower or Master Servicer (as applicable) enforceable in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and by general principles of equity.
Section 8.5 Government Approvals.
No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body required for the due
execution, delivery or performance by Borrower or Master Servicer of any
Transaction Document to which it is a party remains unobtained or unfiled.
Section 8.6 Solvency.
Borrower is Solvent.
Section 8.7 Margin Regulations.
Neither Borrower or Master Servicer is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds of any Loans, directly or indirectly, will be used for a purpose that
violates, or would be inconsistent with, Regulations T, U and X promulgated by
the Federal Reserve Board from time to time.
31
Section 8.8 Quality of Title.
The Collateral, including, without limitation, the Receivables, in
which a security interest is to be granted to Administrator (for the benefit of
the Secured Parties) pursuant to this Agreement shall be owned by Borrower free
and clear of any Adverse Claim. Borrower has a first priority perfected
ownership interest in the Receivables. This Agreement creates a valid first
priority security interest in favor of Administrator (for the benefit of the
Secured Parties) in the Collateral, including without limitation the
Receivables, which security interest has been perfected (free and clear of any
Adverse Claim) as security for the Obligations. No effective financing statement
or other instrument similar in effect covering any of the Collateral or any
interest therein is on file in any recording office except for financing
statements that may be filed (a) in favor of Administrator (for the benefit of
the Secured Parties) in accordance with this Agreement, (b) in favor of Borrower
in accordance with the Receivables Purchase Agreement, or (c) UCC-3 termination
statements necessary to release all Liens and Adverse Claims of any Person in
the Collateral granted by Borrower or any Originator.
Section 8.9 Offices.
The principal place of business and chief executive office of Borrower
and Master Servicer is located at the address referred to on Schedule VI to this
Agreement(or at such other locations, notified to Administrator in jurisdictions
where all action required thereby has been taken and completed).
Section 8.10 Compliance with Applicable Laws; Licenses, etc.
(a) Each of Borrower and Master Servicer is in compliance with the
requirements of all applicable laws, rules, regulations, and orders of all
governmental authorities, a breach of any of which, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect.
(b) Neither Borrower nor Master Servicer has failed to obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its properties or to the conduct of its business, which
violation or failure to obtain has had, or would be reasonably likely to have, a
Material Adverse Effect.
Section 8.11 No Proceedings.
Except as described in Schedule IV,
(a) there is no order, judgment, decree, injunction, stipulation or
consent order of or with any court or other government authority to which
Borrower or Master Servicer is subject, and there is no action, suit,
arbitration, regulatory proceeding or investigation pending, or, to the
knowledge of Borrower or Master Servicer, threatened, before or by any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality, against Borrower or Master Servicer that, individually or in
the aggregate, has had, or is reasonably likely to have a Material Adverse
Effect; and
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(b) there is no action, suit, proceeding, arbitration, regulatory or
governmental investigation, pending or, to the knowledge of Borrower or Master
Servicer, threatened, before or by any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement, Lender Note or any other Transaction Document,
(ii) seeking to prevent the issuance of Lender Note or the consummation of any
of the other transactions contemplated by this Agreement or any other
Transaction Document or (iii) seeking to adversely affect the federal income tax
attributes of Borrower.
Section 8.12 Investment Company Act, Etc.
Neither Borrower nor Master Servicer is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company", of a "holding company", or an "affiliate"
of a "holding company", or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 8.13 Eligible Receivables.
Each Receivable included in the Borrowing Base as an Eligible
Receivable on the date of any Borrowing Base Certificate, Monthly Report or any
Loan shall be an Eligible Receivable on such date.
Section 8.14 Accuracy of Information.
All information heretofore furnished by, or on behalf of, Borrower or
Master Servicer to Administrator or Lender 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).
Section 8.15 No Material Adverse Change.
Since September 30, 2000, there has been no material adverse change in
the collectibility of the Receivables or Master Servicer's or Borrower's (a)
financial condition, business or operations or (b) ability to perform its
obligations under any Transaction Document.
Section 8.16 Trade Names and Subsidiaries.
Borrower has not used any other names, trade names or assumed names for
the six year period preceding the date of this Agreement. Borrower has no
Subsidiaries and does not own or hold, directly or indirectly, any equity
interest in any Person.
Section 8.17 Accounts.
Set forth in Schedule I hereto is a complete and accurate description,
as of the Closing Date, of the Collection Account and the LockBoxes maintained
by any Originator, Borrower or Master Servicer for the purpose of receiving
Collections with respect to Receivables. The Collection Account has been validly
and effectively assigned to Administrator pursuant to this Agreement and the
Collection Account Agreements. The Collection Account Agreements
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continue to be the legal, valid and binding obligations of the parties thereto,
enforceable against such parties in accordance with their respective terms, and
Borrower and Master Servicer acknowledge that all cash and other proceeds of the
Receivables will be deposited in the Collection Account in accordance with this
Agreement and are subject to the terms and conditions of this Agreement. None of
the Originators, Master Servicer or Borrower has granted any interest in the
Collection Account or any LockBox to any Person other than Administrator, and
Administrator has exclusive control of the Collection Account and the LockBox.
Section 8.18 Sales by Originators.
Each sale of Receivables by any Originator to Borrower shall have been
effected under, and in accordance with the terms of, the Receivables Purchase
Agreement, including the payment by Borrower to such Originator of an amount
equal to the purchase price therefor as described in the Receivables Purchase
Agreement, and each such sale shall have been made for "reasonably equivalent
value" (as such term is used under Section 548 of the Bankruptcy Code) and not
for or on account of "antecedent debt" (as such term is used under Section 547
of the Bankruptcy Code) owed by Borrower to such Originator.
ARTICLE IX
COVENANTS OF BORROWER AND MASTER SERVICER
Section 9.1 Affirmative Covenants.
From the date hereof until the first day, following the Commitment
Termination Date, on which all Obligations shall have been finally and fully
paid and performed, Borrower hereby covenants and agrees with Lender and
Administrator that as to itself, and Master Servicer hereby covenants and agrees
with Lender and Administrator as to itself, that it will:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders of all governmental authorities
(including those which relate to the Receivables).
(b) Preservation of Corporate Existence. Preserve and maintain its
existence rights, franchises and privileges in the jurisdiction of its
incorporation or organization, and qualify and remain qualified in good standing
as a foreign entity in the jurisdiction where its principal place of business
and its chief executive office are located and in each other jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualifications would have a Material Adverse Effect.
(c) Performance and Compliance with Receivables. Timely and fully
perform and comply with all provisions, covenants and other promises required to
be observed by it under the Receivables and all other agreements related to such
Receivables.
(d) Collection Policy. Comply in all material respects with the
Collection Policy applicable to the Receivables.
(e) Reporting Requirements. Furnish to Administrator and Lender:
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(i) Financial Statements.
(A) as soon as available, and in any event within 95
days after the end of each Fiscal Year of Borrower, a copy of
the annual report for such Fiscal Year of Borrower including a
copy of the balance sheet of Borrower, in each case, as at the
end of such Fiscal Year, together with the related statements
of earnings and cash flows for such Fiscal Year, certified by
the chief executive officer, chief financial officer or
controller of Borrower (which certification shall state that
such balance sheet and statements fairly present the financial
condition and results of operations for such Fiscal Year in
accordance with GAAP), together with a certificate of such
officer stating that such officer has obtained no knowledge
that a Significant Event or Unmatured Significant Event has
occurred and is continuing, or if, in the opinion of such
officer, such a Significant Event or Unmatured Significant
Event has occurred and is continuing, a statement as to the
nature thereof;
(B) 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 of funds of Covenant Nevada, along with
consolidating statements, 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 Administrator by
PricewaterhouseCoopers LLP or other nationally recognized
independent public accountants acceptable to 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
Significant Event or Unmatured Significant Event has occurred
and is continuing, or if, in the opinion of such accounting
firm, such a Significant Event or Unmatured Significant Event
has occurred and is continuing, a statement as to the nature
thereof; and
(C) as soon as available and in any event within 50
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 executive or
financial 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 officer or controller to the
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effect that no Significant Event or Unmatured Significant
Event has occurred and is continuing.
(ii) Monthly Reports. On or before the 20th day of each
calendar month (each, a "Reporting Date"), Master Servicer shall
prepare and deliver to Administrator and Lender a report, substantially
in the form of Exhibit C or in such other form acceptable to
Administrator (a "Monthly Report"), as of the immediately preceding
Month End Date signed by an authorized officer of Master Servicer.
(iii) Significant Events. As soon as possible but in any event
within three days after any officer of Borrower or Master Servicer
becomes aware of the occurrence of a Significant Event or an Unmatured
Significant Event, or a Purchase Termination Event or Incipient
Purchase Termination Event under (and as defined in) the Receivables
Purchase Agreement, an officer's certificate of Borrower or Master
Servicer, as the case may be, setting forth details of such event and
the action that Master Servicer, Borrower or Originators, as the case
may be, proposes to take with respect thereto.
(iv) Servicing Certificate. Master Servicer shall deliver, or
cause to be delivered, to Administrator, on or before the date that is
95 days after the end of each Fiscal Year, an officer's certificate
signed by the president, chief executive officer or any vice president
of Master Servicer, dated as of the last day of the preceding Fiscal
Year, stating that (A) a review of the activities of Master Servicer
during the preceding Fiscal Year 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, Master Servicer
has fulfilled its obligations under the 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.
(v) Collateral Review. As soon as possible, and in any event
within 60 days after the Closing Date, and after each semi-annual
period thereafter, a report of the independent certified public
accountants of Covenant Nevada (each such report, a "Collateral
Review") which satisfies the requirements set forth on Schedule V.
(vi) Collection Policy. On or before April 15 of each year, a
summary of any changes to the Collection Policy made during the
previous year.
(vii) [Reserved].
(viii) Other. Promptly, from time to time, such other
information, documents, records or reports respecting the Collateral,
the Receivables or the condition or operations, financial or otherwise,
of Borrower, any Originator or Master Servicer as Administrator may
from time to time reasonably request in order to protect the interests
of Administrator or Lender under or as contemplated by this Agreement
or the other Transaction Documents.
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(f) Use of Proceeds. Borrower shall use the proceeds of the Loans made
hereunder solely in connection with the acquisition or funding of Receivables or
the repayment of amounts owned under the Originator Note in connection
therewith.
(g) Separate Legal Entity. Borrower hereby acknowledges that Lender and
Administrator are entering into the transactions contemplated by this Agreement
and the other Transaction Documents in reliance upon Borrower's identity as a
legal entity separate from any other Person. Therefore, from and after the date
hereof, Borrower shall take all reasonable steps to continue Borrower's identity
as a separate legal entity and to make it apparent to third Persons that
Borrower is an entity with assets and liabilities distinct from those of any
other Person, and is not a division of any other Person. Without limiting the
generality of the foregoing and in addition to and consistent with the covenant
set forth in Section 9.1(b), Borrower shall take such actions as shall be
required in order that:
(i) Borrower will be a special purpose corporation whose
primary activities are restricted in its certificate of incorporation
to owning financial assets and financing the acquisition thereof and
conducting such other activities as it deems necessary or appropriate
to carry out its primary activities;
(ii) Not less than one member of Borrower's Board of Directors
(the "Independent Director") shall be an individual who is not, and
during the past five (5) years has not been, a director, officer,
employee or 5% beneficial owner of the outstanding common stock of any
Person or entity beneficially owning any outstanding shares of common
stock of Covenant Nevada or any Affiliate thereof; provided, however,
that an individual shall not be deemed to be ineligible to be an
Independent Director solely because such individual serves or has
served in the capacity of an "independent director" or similar capacity
for special purpose entities formed by Covenant Nevada or any of its
Affiliates. The certificate of incorporation of Borrower shall provide
that (A) the Board of Directors shall not approve, or take any other
action to cause the filing of, a voluntary bankruptcy petition with
respect to Borrower unless the Independent Director shall approve the
taking of such action in writing prior to the taking of such action,
and (B) such provision cannot be amended without the prior written
consent of the Independent Director;
(iii) Any employee, consultant or agent of Borrower will be
compensated from funds of Borrower, as appropriate, for services
provided to Borrower;
(iv) Borrower will allocate and charge fairly and reasonably
overhead expenses shared with any other Person. To the extent, if any,
that Borrower and any other Person share items of expenses such as
legal, auditing and other professional services, such expenses will be
allocated to the extent practical on the basis of actual use or the
value of services rendered, and otherwise on a basis reasonably related
to the actual use or the value of services rendered;
(v) Borrower's operating expenses will not be paid by any
other Person except as permitted under the terms of this Agreement or
otherwise consented to by Administrator and Lender;
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(vi) Borrower's books and records will be maintained
separately from those of any other Person;
(vii) All audited financial statements of any Person that are
consolidated to include Borrower will contain detailed notes clearly
stating that (A) all of Borrower's assets are owned by Borrower, and
(B) Borrower is a separate corporate entity;
(viii) Borrower's assets will be maintained in a manner that
facilitates their identification and segregation from those of any
other Person;
(ix) Borrower will strictly observe corporate formalities in
its dealings with all other Persons, and funds or other assets of
Borrower will not be commingled with those of any other Person;
(x) Borrower shall not, directly or indirectly, be named or
enter into an agreement to be named, as a direct or contingent
beneficiary or loss payee, under any insurance policy with respect to
any amounts payable due to occurrences or events related to any other
Person; and
(xi) Any Person that renders or otherwise furnishes services
to Borrower will be compensated thereby at market rates for such
services it renders or otherwise furnishes thereto. Borrower will not
hold itself out to be responsible for the debts of any other Person or
the decisions or actions respecting the daily business and affairs of
any other Person.
(h) Adverse Claims on Receivables. Defend each Receivable against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to Administrator and the Secured Parties.
(i) Further Assurances. At their expense, perform all acts and execute
all documents reasonably requested by Administrator at any time to evidence,
perfect, maintain and enforce the title or the security interest of
Administrator in the Receivables and the priority thereof. Borrower will, at the
reasonable request of Administrator, execute and deliver financing statements
relating to or covering the Collateral and, where permitted by law, Borrower
shall authorize Administrator to file one or more financing statements signed
only by Administrator. Borrower and Master Servicer 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 to Borrower and that the Collateral has been pledged to Administrator
for the benefit of the Secured Parties.
(j) Servicing. Master Servicer shall use all reasonable measures to
prevent or minimize any loss being realized on a Receivable and shall take all
reasonable steps to recover the full amount of such loss. Master Servicer shall
follow such practices and procedures for servicing the Receivables as would be
customary and usual for a prudent servicer under similar circumstances,
including using reasonable efforts to realize upon any recourse to the Obligors.
(k) Inspection. Master Servicer and Borrower shall permit Lender,
Administrator or their duly authorized representatives, attorneys or auditors to
inspect the Receivables, the
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Receivable Files, Documents and the related accounts, records and computer
systems, software and programs used or maintained by Borrower or Master Servicer
at such times as Lender or Administrator may reasonably request; provided, that
all inspections occurring after a Significant Event has occurred shall be at the
expense of Borrower. Upon instructions from Lender or Administrator, Borrower or
Master Servicer shall release any Document to Lender or Administrator, as the
case may be.
(l) Cooperation. Borrower and Master Servicer shall provide such
cooperation, information and assistance, and prepare and supply Administrator
with such data regarding the performance by the Obligors of their obligations
under the Receivables and the performance by Borrower and Master Servicer of
their respective obligations under the Transaction Documents, as may be
reasonably requested by Administrator from time to time.
(m) Facility. Master Servicer shall maintain its facility from which it
services the Receivables in its present condition, ordinary wear and tear
excepted, or such other facility of similar quality, security and safety as
Master Servicer may select from time to time. Master Servicer shall make all
property tax payments, lease payments and all other payments with respect to
such facility. Master Servicer shall (i) ensure that Administrator shall have
complete and unrestricted access, at Master Servicer's expense, to such facility
and all computers and other systems relating to the servicing of the Receivables
and all persons employed at such facility, (ii) use its best efforts to retain
the employees based at such facility to provide assistance to Administrator and
(iii) continue to store on a daily basis all back-up files relating to the
Receivables and the servicing of the Receivables at the facilities of Covenant
Tennessee, Southern Refrigerated, or such other storage facility of similar
quality, security and safety as Master Servicer may select from time to time, in
the case of each of clauses (i), (ii) and (iii) until the receipt of all
Collections in respect of all Receivables or all Receivables have been written
off in accordance with the Collection Policy.
(n) Accounts. Borrower shall not maintain any bank accounts other than
the Collection Account described on Schedule I. Except as set forth in the last
sentence of Section 11.2(c)(ii) Borrower shall not make, nor will it permit any
Originator or Master Servicer to make, any change in its instructions to
Obligors regarding payments to be made to a LockBox. Neither Borrower nor Master
Servicer shall, nor will it permit any Originator to, add any Collection Account
Bank or Collection Account, to those listed on Schedule I unless Administrator
shall have consented thereto and received a copy of any new duly executed
Collection Account Agreement. Neither Borrower nor Master Servicer shall, nor
will it permit any Originator to, terminate any Collection Account Bank or close
any Collection Account unless Administrator shall have received at least thirty
(30) days prior notice of such termination.
Section 9.2 Negative Covenants of Borrower and Master Servicer.
From the date hereof until the first day, following the Commitment
Termination Date, on which all Obligations shall have been finally and fully
paid and performed, each of Borrower and Master Servicer hereby covenants and
agrees.
(a) Sales, Liens, Etc. Except pursuant to, or as contemplated by, the
Transaction Documents, Borrower shall not sell, assign (by operation of law or
otherwise) or otherwise
39
dispose of, or create or suffer to exist voluntarily or, for a period in excess
of 5 days, involuntarily any Adverse Claims upon or with respect to any of its
assets, including, without limitation, the Collateral, any interest therein or
any right to receive any amount from or in respect thereof.
(b) Mergers, Acquisitions, Sales, Subsidiaries, Etc.
(i) Certain Restrictions on Borrower. Borrower shall not:
(A) be a party to any merger or consolidation, or
directly or indirectly purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of,
or any partnership or joint venture interest in, any other
Person, except for Permitted Investments, or sell, transfer,
assign, convey or lease any of its property and assets (or any
interest therein) other than pursuant to, or as contemplated
by, this Agreement or the other Transaction Documents;
(B) make, incur or suffer to exist an investment in,
equity contribution to, loan or advance to, or payment
obligation in respect of the deferred purchase price of
property from, any other Person, except for Permitted
Investments or pursuant to the Transaction Documents;
(C) create any direct or indirect Subsidiary or
otherwise acquire direct or indirect ownership of any equity
interests in any other Person other than pursuant to the
Transaction Documents; or
(D) enter into any transaction with any Affiliate
except for the transactions contemplated by the Transaction
Documents and other transactions upon fair and reasonable
terms materially no less favorable to Borrower than would be
obtained in a comparable arm's length transaction with a
Person not an Affiliate.
(c) Change in Business Policy: Change in Collection Policy. Borrower
shall not make any change in the character of its business. Neither Borrower nor
Master Servicer shall make any change in the Collection Policy that could
adversely affect the collectibility of any Receivable.
(d) Other Debt. Borrower shall not incur any Debt to any Person other
than pursuant to this Agreement, the Receivables Purchase Agreement or otherwise
in connection with a transaction involving Lender, Bank, any Credit Bank, any
Liquidity Bank or any other Persons providing liquidity or credit support to
Lender.
(e) Certificate of Incorporation and By-Laws. Borrower shall not amend
its certificate of incorporation or by-laws.
(f) Chief Executive Office. The principal place of business and chief
executive office of each of Borrower and Master Servicer is located at the
address referred to on Schedule VI to this Agreement. Originals or duplicates of
documents and records evidencing all Receivables are kept at, and only at, said
offices, and neither Borrower nor Master Servicer shall
40
move its chief executive office or permit the documents and records evidencing
the Receivables to be moved unless (i) Borrower or Master Servicer, as the case
may be, shall have given to Administrator prior written notice thereof, clearly
describing the new location, and (ii) Borrower shall have taken such action,
satisfactory to Administrator, to maintain the title or ownership of Borrower
and any security interest of Administrator in the Collateral at all times fully
perfected and in full force and effect. Master Servicer shall not, in any event,
move the location where it conducts the servicing and collection of the
Receivables from the address referred to on Schedule VI to this Agreement,
without the prior written consent of Administrator, which consent shall not be
unreasonably withheld.
(g) Financing Statements. Borrower shall not execute any effective
financing statement (or similar statement or instrument of registration under
the laws of any jurisdiction) or statements relating to any Receivables other
than the financing statements described in Section 7.1(e).
(h) Business Restrictions. Borrower shall not (i) engage in any
business or transactions, or be a party to any documents, agreements or
instruments, other than the Transaction Documents or those incidental to the
purposes thereof, or (ii) make any expenditure for any assets (other than
Receivables) if such expenditure, when added to other such expenditures made
during the same calendar year would, in the aggregate, exceed $10,500; provided,
however, that the foregoing will not restrict Borrower's ability to pay
servicing compensation as provided herein and, so long as no Significant Event
or Unmatured Significant Event shall have occurred and be continuing, and that
Borrower's tangible net worth, after giving effect thereto, shall not be less
than $2,000,000, Borrower's ability to pay amounts due on the Originator Note or
other payments or distributions legally made to Borrower's equity owners.
ARTICLE X
SIGNIFICANT EVENTS AND THEIR EFFECT
Section 10.1 Events of Default.
Each of the following shall constitute an Event of Default (an "Event
of Default") under this Agreement:
(a) Non-Payment of Loans, Etc. Borrower shall fail to make any payment
when due of any principal of or interest on any Loan, or payment of any other
amount payable by Borrower hereunder, including, without limitation, interest on
any Loan or any Fees, or shall fail to make any deposit required to be made
hereunder when due and such failure shall continue for three Business Days.
(b) Non-Compliance with Other Provisions. Borrower shall fail to
perform or observe any other term, covenant or agreement contained in this
Agreement or any other Transaction Document on its part to be performed or
observed and any such failure shall remain unremedied for thirty days after the
earlier to occur of (i) Borrower having knowledge thereof and (ii) Borrower
having received written notice thereof from Lender or Administrator.
41
(c) Breach of Representations and Warranties. Any representation or
warranty of Borrower made or deemed to have been made hereunder or in any other
Transaction Document or any other writing or certificate furnished by or on
behalf of Borrower to Administrator or Lender for purposes of or in connection
with this Agreement or any other Transaction Document shall prove to have been
false or incorrect in any material respect when made or deemed to have been
made, and shall continue to be false or incorrect for a period of 30 days after
the earlier to occur of (i) Borrower having obtained knowledge thereof and (ii)
Borrower having received written notice thereof from Lender or Administrator.
(d) Bankruptcy. An Event of Bankruptcy shall have occurred and remained
continuing with respect to Borrower.
(e) Tax Liens. The IRS shall file notice of a lien pursuant to Section
6323 of the Code with regard to any of the assets of Borrower, and such lien
shall not have been released within 5 Business Days.
Section 10.2 Amortization Events.
Each of the following shall constitute an Amortization Event (an
"Amortization Event") under this Agreement:
(a) Servicer Event of Default. A Servicer Event of Default shall have
occurred and remained continuing.
(b) Borrowing Base Deficit. A Borrowing Base Deficit shall exist and
such condition shall continue unremedied for three Business Days.
(c) Default Ratio. The Default Ratio shall be equal to or exceed 1.5%
on a rolling three month average basis.
(d) Delinquency Ratio. The Delinquency Ratio shall be equal to or
exceed 1.5% on a rolling three month average basis.
(e) Dilution Ratio. The Dilution Ratio shall be equal to or exceed 1.0%
on a rolling three month average basis.
(f) Accounts Receivable Turnover Ratio. The Accounts Receivable
Turnover Ratio is less than 6.75 for any Due Period.
(g) Event of Default. An Event of Default shall have occurred and
remained continuing;
(h) Validity of Transaction Documents. (i) Any Transaction Document, or
any lien or security interest granted thereunder, shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of Borrower, Master
Servicer or any Originator party to such Transaction Document, (ii) Borrower,
any Originator or Master Servicer shall, directly or indirectly, contest in any
manner such effectiveness, validity, binding nature or enforceability or (iii)
any security interest
42
securing any Obligation shall, in whole or in part, cease to be a perfected
first priority security interest.
Section 10.3 Effect of Significant Event.
(a) Optional Termination. Upon the occurrence of a Significant Event
(other than an Event of Default described in Section 10.1(d)), Administrator
may, and at the request of Lender shall, by notice to Borrower (a copy of which
shall be promptly forwarded by Administrator to each Rating Agency), declare all
or any portion of the outstanding principal amount of the Loans and other
Obligations to be due and payable and/or Lender's Commitment (if not theretofore
terminated) to be terminated by declaring the Commitment Termination Date to
have occurred, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, Lender's Commitment shall terminate.
(b) Automatic Termination. Upon the occurrence of an Event of Default
described in Section 10.1(d)), the Commitment Termination Date shall be deemed
to have occurred automatically, and all outstanding Loans and all other
Obligations shall become immediately and automatically due and payable, all
without presentment, demand, protest, or notice of any kind.
(c) Notice to Rating Agencies. Administrator shall notify each Rating
Agency of the occurrence of any continuing Significant Event, promptly following
its actual knowledge thereof.
ARTICLE XI
THE MASTER SERVICER
Section 11.1 Covenant Nevada as Initial Master Servicer.
The servicing, administering and collection of the Receivables shall be
conducted by the Person designated from time to time as Master Servicer
hereunder. Until such time as Administrator shall notify Covenant Nevada in
writing pursuant to Section 11.6 hereof of the revocation of such power and
authority, Borrower, Lender and Administrator hereby appoint Covenant Nevada,
and Covenant Nevada hereby agrees to act, as Master Servicer hereunder. Each of
the Originators named in the Receivables Purchase Agreement, agrees to act as
subservicer for the purpose of performing certain duties and obligations with
respect to all Receivables purchased by Borrower from such Originator pursuant
to the terms of the Receivables Purchase Agreement. In so acting as subservicer,
each Originator shall comply with, and agrees to be bound by, all of the terms
and provisions of this Agreement applicable to such Originator in the
performance of its duties as subservicer; provided, however, that each
Originator (i) shall cease to act as subservicer upon the termination of the
Master Servicer pursuant to Section 11.6, (ii) shall not be entitled to receive
any Servicing Fee provided for herein, and (iii) shall not be bound by, or be
deemed to have made, any of the representations, warranties or covenants in
Article VIII except as expressly provided in the Receivables Purchase Agreement.
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Section 11.2 Certain Duties of Master Servicer.
(a) Authorization to Act as Borrower's Agent. Borrower hereby appoints
Master Servicer as its agent for the following purposes: (i) selecting the
amount of each requested Loan and executing Borrowing Requests on behalf of
Borrower, (ii) making transfers among, deposits to and withdrawals from all
deposit accounts of Borrower for the purposes described in the Transaction
Documents, (iii) arranging payment by Borrower of all Fees, expenses, other
Obligations and other amounts payable under the Transaction Documents, (iv)
causing the repayment and prepayment of the Loans as required or permitted
pursuant to Section 4.1 and (v) executing and preparing the Monthly Reports;
provided, however, that Master Servicer shall act in such capacity only as an
agent of Borrower and shall incur thereby no additional obligations with respect
to any Loan. Borrower irrevocably agrees that (A) it shall be bound by all
proper actions taken by Master Servicer pursuant to the preceding sentence, and
(B) Lender, Administrator and the banks holding all deposit accounts of Borrower
are entitled to accept submissions, determinations, selections, specifications,
transfers, deposits and withdrawal requests, and payments from Master Servicer
on behalf of Borrower.
(b) Covenant Nevada to Act as Master Servicer. (i) Master Servicer
shall service and administer the Receivables on behalf of Borrower and
Administrator (for the benefit of the Secured Parties) and shall have full power
and authority, acting alone and/or through subservicers as provided in Section
11.2(b)(iii), to do any and all things which it may deem reasonably necessary or
desirable in connection with such servicing and administration and which are
consistent with this Agreement. Consistent with the terms of this Agreement,
Master Servicer may waive, modify or vary any term of any Receivable or consent
to the postponement of strict compliance with any such term or in any manner,
grant indulgence to any Obligor if, in Master Servicer's reasonable
determination, such waiver, modification, postponement or indulgence is not
materially adverse to the interests of Borrower or Administrator (for the
benefit of the Secured Parties); provided, however, that Master Servicer may not
permit any modification with respect to any Receivable that would reduce the
Unpaid Balance (except for actual payments thereof), or extend the due date
thereof, except that Master Servicer may take such actions with respect to
Defaulted Receivables if such actions will, in Master Servicer's reasonable
business judgment, maximize the Collections thereof. Without limiting the
generality of the foregoing, Master Servicer in its own name or in the name of
Borrower is hereby authorized and empowered by Borrower when Master Servicer
believes it appropriate in its best judgment to execute and deliver, on behalf
of Borrower, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments, with
respect to the Receivables.
(ii) Master Servicer shall service and administer the
Receivables by employing such procedures (including collection
procedures) and degree of care, in each case consistent with applicable
law, with the Collection Policy and with prudent industry standards, as
are customarily employed by Master Servicer in servicing and
administering receivables owned or serviced by Master Servicer
comparable to the Receivables. Master Servicer shall not take any
action to impair Administrator's (for the benefit of the Secured
Parties) security interest in any Receivable, except to the extent
allowed pursuant to this Agreement or required by law.
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(iii) Master Servicer may perform any of its duties pursuant
to this Agreement, including those delegated to it pursuant to this
Agreement, through subservicers appointed by Master Servicer, provided
that such subservicing arrangements may be terminated, at
Administrator's discretion, upon the replacement of Covenant Nevada as
Master Servicer. Such subservicers may include Affiliates of Master
Servicer. Notwithstanding any such delegation of a duty, Master
Servicer shall remain obligated and liable for the performance of such
duty as if Master Servicer were performing such duty.
(iv) Master Servicer may take such actions as are necessary to
discharge its duties as Master Servicer in accordance with this
Agreement, including the power to execute and deliver on behalf of
Borrower such instruments and documents as may be customary, necessary
or desirable in connection with the performance of Master Servicer's
duties under this Agreement (including consents, waivers and discharges
relating to the Receivables).
(v) Master Servicer shall keep separate records covering the
transactions contemplated by this Agreement, including the identity and
collection status of each Receivable purchased by Borrower from any
Originator and the Originator Payables.
(c) Collections. (i) On or prior to the Closing Date, Borrower and
Master Servicer shall have established and shall maintain thereafter the
following system of collecting and processing Collections of Receivables. The
Obligors of Covenant Tennessee shall be instructed to make payments of
Receivables by wire transfer to the Primary Collection Account or by check
mailed to a post office box listed on Schedule I (each a "LockBox" and
collectively, the "LockBoxes")(such payments, upon receipt in a LockBox being
referred to herein as "Mail Payments").
(ii) On or prior to the Closing Date, Administrator shall have
received a consent to assignment of the assignment of each LockBox to
Administrator. Master Servicer's right of access thereto shall be
revocable at the option of Administrator upon the occurrence of
Unmatured Significant Event or Significant Event. In addition, after
the occurrence of any Unmatured Significant Event or any Significant
Event, Master Servicer agrees that it shall, upon the written request
of Administrator, notify all Obligors under Receivables to make payment
thereof to (A) one or more bank accounts and/or post-office boxes
designated by Administrator and specified in such notice or (B) any
successor Master Servicer appointed hereunder.
(iii) Master Servicer shall remove all Mail Payments, or cause
all Mail Payments to be removed, from each LockBox by the close of
business on each Business Day and deposited into the Primary Collection
Account. Master Servicer shall cause all payments received directly by
Master Servicer or otherwise to be deposited in a Collection Account
within three (3) Business Days after receipt thereof. Master Servicer
shall process all such Mail Payments, and all wire transfers, ACH
payments and other payments on the date received by recording the
amount of the payment received from the Obligor and the applicable
account or invoice number.
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(iv) All Collections received by an Originator or Master
Servicer in respect of Receivables will, pending remittance to the
Collection Account as provided herein, be held by such Originator or
Master Servicer in trust for the exclusive benefit of Administrator,
and shall not be commingled with any other funds or property of such
Originator or Master Servicer.
(v) Borrower and Master Servicer hereby irrevocably waive any
right to set off against, or otherwise deduct from, any Collections.
(vi) In performing its duties and obligations hereunder,
Master Servicer (A) shall not impair the rights of Borrower or
Administrator in any Receivable, (B) shall not amend the terms of any
Receivable other than in accordance with the Collection Policy and this
Agreement, and (C) shall be entitled to commence or settle any legal
action to enforce collection of any Receivable. In the event that
Master Servicer shall breach any of its covenants set forth in clause
(A), (B) or (C) of this Section 11.2(c)(vi), Master Servicer shall pay
the Unpaid Balance of each Receivable affected thereby on the
Distribution Date following the Due Period in which such event occurs.
For the purposes of Section 11.7 hereof, Master Servicer shall not be
deemed to have breached its obligations under this Section 11.2(c)(vi)
unless it shall fail to make such payment with respect to any
Receivable affected by Master Servicer's noncompliance with clause (A),
(B) or (C) of this Section 11.2(c)(vi).
(vii) All payments or other amounts collected or received by
Master Servicer in respect of a Receivable shall be applied to the
Unpaid Balance of such Receivable.
(d) Collection Account. (i) On any Business Day, Borrower may withdraw,
or permit Master Servicer to withdraw, for any purpose or use permitted hereby,
including, without limitation, paying the purchase price of Receivables acquired
by Borrower under the Receivables Purchase Agreement, funds that are on deposit
in the Collection Account, provided that (A) no Significant Event or Unmatured
Significant Event has occurred and is continuing and (B) the Commitment
Termination Date has not occurred. On the first Business Day of each week, the
Master Servicer shall deliver a certificate to Administrator, which certificate
shall be substantially in the form of Exhibit H hereto and which shall certify
to the Administrator that (x) the requirements set forth in clauses (A) and (B)
of the immediately proceeding sentence were satisfied with respect to each
withdrawal made from the Collection Account on any day during the immediately
preceding week and (y) after giving effect to all withdrawals made during the
immediately preceding week, no Borrowing Base Deficit exists or has occurred
and, as of the last day of the previous week, there were funds in the Collection
Account at least equal to the interest on the Loans and the Fees accrued through
such date.
(ii) Prior to 3:00 p.m., New York time, on the Business Day
preceding each Distribution Date (a "Deposit Date"), the Master
Servicer shall deposit or cause to be deposited in the Primary
Collection Account, to the extent not already on deposit therein, an
amount equal to, without duplication, the lesser of (1) (I) the
aggregate amount of all Collections received during the immediately
preceding Due Period, plus (II) the aggregate amounts due from Master
Servicer on such Distribution Date pursuant to Section 11.2(c)(vi)
hereof, plus (III) the aggregate amount of Originator Payables paid on
46
such Distribution Date and (2) the amounts due on such Distribution
Date pursuant to clauses first through sixth of Section 4.2(b), and the
remainder of the Collections from such Due Period shall be applied
pursuant to the Receivables Purchase Agreement, provided that if a
Significant Event or Unmatured Significant Event shall exist on such
Distribution Date or the Commitment Termination Date has occurred, then
the Master Servicer shall deposit all of the amounts described in this
Section 11.2(d)(ii) in the Primary Collection Account on such Deposit
Date.
(iii) Master Servicer shall distribute the amounts on deposit
in the Primary Collection Account in accordance with Section 4.2
hereof.
(iv) Funds deposited in the Collection Account may be invested
by Master Servicer in Permitted Investments that mature not later than
the Business Day next preceding the Distribution Date. All income, gain
or losses realized from any such investment shall be credited or
debited (as applicable) to the balance of the Collection Account.
Master Servicer shall have no obligation to reimburse the Collection
Account for any losses realized by reason of such investments.
(v) On any day on which a Borrowing Base Deficit shall exist,
the Master Servicer shall cause an amount of Collections equal to such
Borrowing Base Deficit to be set aside and retained in the Primary
Collection Account for application in accordance with this subsection
(d). Such funds shall be held in the Primary Collection Account until
the earlier of (i) any prepayment made pursuant to the provisions of
Section 4.1(d) and (ii) any payment made pursuant to the provisions of
Section 4.2(a) or 4.2(b), as the case may be.
Section 11.3 Servicing Compensation.
Master Servicer, as compensation for its activities hereunder, shall be
entitled to receive the Servicing Fee, which shall be payable by Borrower on
each Distribution Date from funds on deposit in the Primary Collection Account
in accordance with Section 4.2. Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including payment of the fees and expenses of any subservicer) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
Section 11.4 Agreement Not to Resign.
Covenant Nevada acknowledges that Lender and Administrator have relied
on Covenant Nevada's agreement to act as Master Servicer hereunder in their
respective decisions to execute and deliver the respective Transaction Documents
to which they are parties. In recognition of the foregoing, Covenant Nevada
agrees not to resign as Master Servicer voluntarily, except as required by law
(as evidenced by the delivery of an outside opinion of counsel to Administrator,
in form and substance satisfactory to Administrator), without the prior written
consent of Administrator.
Section 11.5 Designation of Master Servicer.
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Borrower agrees not to designate any Person other than Covenant Nevada
as Master Servicer without the prior written consent of Administrator.
Section 11.6 Termination.
The authorization of Master Servicer to act on behalf of Borrower under
this Agreement and the other Transaction Documents shall terminate at the sole
discretion of Administrator upon the replacement of Master Servicer by a
successor Master Servicer selected by Administrator.
Section 11.7 Master Servicer Events of Default.
Each of the following shall constitute a Servicer Event of Default (a
"Servicer Event of Default") under this Agreement:
(a) failure by the Master Servicer to make any payments required to be
made by it hereunder on the day on which such payment is required to be made and
such failure continues for three Business Days;
(b) failure on the part of the Master Servicer to observe or perform in
any respect any other covenants or agreements of the Master Servicer contained
herein which continues unremedied for a period of 30 days after the earlier of
(i) Master Servicer's knowledge thereof and (ii) receipt by Master Servicer of
written notice thereof from Lender or Administrator;
(c) the delegation by the Master Servicer of its duties hereunder;
(d) any representation, warranty or certification made by the Master
Servicer herein proves to have been incorrect when made;
(e) so long as Covenant Nevada shall be the Master Servicer the
Consolidated Tangible Net Worth of Covenant Nevada shall be less than or equal
to $80,000,000;
(f) an Event of Bankruptcy shall have occurred with respect to the
Master Servicer or any Originator;
(g) a final judgment or judgments for the payment of money in excess of
$10,000 in the aggregate shall have been rendered against Borrower or $5,000,000
in the aggregate shall have been rendered against Covenant Nevada and the same
shall have remained unsatisfied and in effect, without stay of execution, for a
period of 30 consecutive days after the period for appellate review shall have
elapsed; or
(h) Covenant Nevada shall fail to pay any Debt in excess of $5,000,000
when due, or a default shall have occurred and be continuing with respect to any
such Debt which default results in, or would permit, the acceleration of such
Debt.
At any time during the continuance of any Servicer Event of Default,
Administrator may, in its sole discretion, notify Master Servicer in writing of
the revocation of its appointment as Master Servicer hereunder. Upon revocation
of Master Servicer's appointment hereunder, Administrator shall appoint a
successor Master Servicer.
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Master Servicer agrees that upon receipt of written notification from
Administrator of the revocation of Master Servicer's appointment as Master
Servicer hereunder, Master Servicer shall upon the written request of
Administrator (which request may be contained in the notification of revocation)
(i) notify all Obligors under the Receivables to make payment thereof to a bank
account(s) or post office box designated by Administrator and specified in such
notice, and (ii) pay to Administrator (or its designee) immediately all
Collections then held or thereafter received by Master Servicer or any
Originator of Receivables, together with all other payment obligations of the
Master Servicer hereunder owing to Lender or Administrator.
Master Servicer shall, at its sole cost and expense, cooperate with and
assist the successor Master Servicer (including, without limitation, providing
access to, and transferring, all Receivable Files and all records (including
data-processing records) relating thereto (which shall be held in trust for the
benefit of the parties hereto in accordance with their respective interests))
and allowing the successor Master Servicer to use all licenses, hardware or
software necessary or desirable to collect the Receivables). Covenant Nevada
irrevocably agrees to act (if requested to do so) as the data-processing agent
for the successor Master Servicer (in substantially the same manner as Covenant
Nevada conducted such data-processing functions while it acted as Master
Servicer).
ARTICLE XII
ADMINISTRATOR
Section 12.1 Authorization and Action.
Lender hereby appoints SunTrust Equitable Securities Corporation as its
Administrator for purposes of the Transaction Documents and authorizes SunTrust
Equitable Securities Corporation in such capacity to take such action on its
behalf under each Transaction Document and to exercise such powers hereunder and
thereunder as are delegated to SunTrust Equitable Securities Corporation, as
Administrator, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto.
Section 12.2 Administrator and Affiliates.
Bank and any of its Affiliates may generally engage in any kind of
business with Borrower, Bank, Master Servicer, any Obligor, any of their
respective Affiliates and any Person who may do business with or own securities
of Borrower, Bank, Master Servicer, any Obligor or any of their respective
Affiliates, all as if SunTrust Equitable Securities Corporation were not
Administrator and without any duty to account therefor to Lender.
ARTICLE XIII
ASSIGNMENTS
Section 13.1 Restrictions on Assignments.
Neither Borrower nor Master Servicer may delegate any of its duties, or
assign its rights, hereunder or any interest herein without the prior written
consent of Administrator and Lender.
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Lender may not assign its rights hereunder, any Loan or Lender Note (or any
portion thereof) to any Person without the prior written consent of Borrower;
provided, however, that:
(a) Lender may assign, or grant a security interest in, all or any
portion of the Loans and Lender Note to Credit Bank, any Liquidity Bank (or any
successor of any thereof by merger, consolidation or otherwise), any Affiliate
of Credit Bank or any Liquidity Bank in connection with a draw under the
Liquidity Agreement or a Credit Advance (which may then assign all or any
portion thereof so assigned or any interest therein to such party or parties as
it may choose); and
(b) Lender may assign any Loan to any other Person proposed by Lender
and consented to by Borrower (such consent not to be unreasonably withheld).
Administrator shall promptly provide notice of any such assignment to each
Rating Agency.
Within five Business Days after notice to Borrower of any proposed
assignment by Lender for which Borrower's consent is required, Borrower agrees
to advise Administrator of its consent or non-consent thereto. If Borrower does
not consent to such assignment Lender may immediately assign the Loan (or
portion thereof) that was subject to such proposal to Bank, any Liquidity Bank
or any Affiliate of Bank or any Liquidity Bank. Subject to Section 13.2, all of
the aforementioned assignments shall be upon such terms and conditions as Lender
and the assignee may mutually agree.
Section 13.2 Documentation.
Lender shall deliver to each assignee an assignment, in such form as
Lender and the related assignee may agree, duly executed by Lender, assigning
any such Loan to the assignee, and Lender shall promptly execute and deliver all
further instruments and documents, and take all further action, that the
assignee may reasonably request, in order to perfect, protect or more fully
evidence the assignee's right, title and interest in and to such Loan, and to
enable the assignee to exercise or enforce any rights hereunder or under Lender
Note evidencing such Loan.
Section 13.3 Rights of Assignee.
Upon the foreclosure of any assignment of any Loans made for security
purposes, or upon any other assignment of any Loan from Lender pursuant to this
Article XIII, the respective assignee receiving such assignment shall have all
of the rights of Lender hereunder to the extent of such assignment with respect
to such Loans and all references to Lender in Section 6.1 shall be deemed to
apply to such assignee to the extent of such assignment.
Section 13.4 Notice of Assignment.
Lender shall provide notice to Borrower of any assignment hereunder by
Lender to any assignee. Lender authorizes Administrator to, and Administrator
agrees that it shall, endorse Lender Note to reflect any assignments made
pursuant to this Article XIII or otherwise.
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ARTICLE XIV
INDEMNIFICATION
Section 14.1 General Indemnity of Borrower.
Without limiting any other rights which any such Person may have
hereunder or under applicable law, Borrower hereby agrees to indemnify
Administrator, Lender, Master Servicer, each Liquidity Bank, each Credit Bank,
Bank, each of Bank's Affiliates and each of their respective successors,
transferees, participants and assigns and all officers, directors, shareholders,
controlling persons, employees and agents of any of the foregoing (each of the
foregoing Persons being individually called an "Indemnified Party"), forthwith
on demand, on an after-tax basis, from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
called "Indemnified Amounts") awarded against or incurred by any of them arising
out of or relating to any Transaction Document or the transactions contemplated
thereby, any commingling of funds (whether or not permitted hereunder), or the
use of proceeds therefrom by Borrower, including (without limitation) in respect
of the funding of any Loan or in respect of any Receivable; excluding, however,
(a) Indemnified Amounts to the extent determined by a court of competent
jurisdiction to have resulted from gross negligence or willful misconduct on the
part of such Indemnified Party and (b) any tax upon or measured by net income
(except those described in Section 6.1(a)) on any Indemnified Party.
Section 14.2 Indemnity of Master Servicer.
Without limiting any other rights which any such Person may have
hereunder or under applicable law, Covenant Nevada as Master Servicer, hereby
agrees to indemnify each Indemnified Party forthwith on demand, on an after-tax
basis, from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising from, or related to, the negligence or willful
misconduct of Covenant Nevada, the inaccuracy of any representation or warranty
of Covenant Nevada, or the failure of Covenant Nevada to perform its obligations
under any Transaction Document; excluding, however, (a) Indemnified Amounts to
the extent determined by a court of competent jurisdiction to have resulted from
gross negligence or willful misconduct on the part of such Indemnified Party,
(b) Indemnified Amounts to the extent solely due to non-payment by any Obligor
of an amount due and payable with respect to a Receivable for credit reasons,
and (c) any tax upon or measured by net income on any Indemnified Party.
ARTICLE XV
MISCELLANEOUS
Section 15.1 No Waiver; Remedies.
No failure on the part of Lender, Administrator, any Indemnified Party
or any Affected Party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by any of them of any right, power or remedy hereunder preclude
any other or further exercise thereof, or the exercise of any other
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right, power or remedy. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law. Without limiting the foregoing, each
of Bank, each Credit Bank and each Liquidity Bank is hereby authorized by
Borrower at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Bank, such Credit Bank or such Liquidity Bank to or for the credit
or the account of Borrower, now or hereafter existing under this Agreement, to
Administrator, any Affected Party, any Indemnified Party, or Lender or their
respective successors and assigns.
Section 15.2 Amendments, Etc.
No amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement and any Schedules hereto, or Lender Note shall
in any event be effective unless the same shall be in writing and signed and
delivered by (a) Borrower, Master Servicer, Administrator and Lender (with
respect to an amendment), or (b) Administrator and Lender (with respect to a
waiver or consent by them) or Master Servicer or Borrower (with respect to a
waiver or consent by them), as the case may be, and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no material amendment of this
Agreement (other than an amendment to extend the Scheduled Commitment
Termination Date) shall be effective unless Lender (or Administrator on its
behalf) shall have received written confirmation by the Rating Agencies that
such amendment shall not cause the rating on the then outstanding Commercial
Paper Notes to be downgraded or withdrawn. Administrator shall provide each
Rating Agency with a copy of each amendment to or consent or waiver under this
Agreement promptly following the effective date thereof.
Section 15.3 Notices, Etc.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including facsimile
communication) and shall be personally delivered or sent by certified mail,
postage prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party set forth opposite its name on Schedule VI hereto
or at such other address or facsimile number as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall be effective, (a) if personally delivered, when received,
(b) if sent by certified mail, three Business Days after having been deposited
in the mail, postage prepaid, (c) if sent by overnight courier, one Business Day
after having been given to such courier, and (d) if transmitted by facsimile,
when sent, receipt confirmed by telephone or electronic means, except that
notices and communications pursuant to Section 2.2 shall not be effective until
received.
Section 15.4 Costs, Expenses and Taxes.
In addition to its obligations under Section 14.1, Borrower agrees to
pay on demand:
(a) all costs and expenses incurred by Administrator, Lender, each
Liquidity Bank, each Credit Bank and Master Servicer in connection with (i) the
preparation, execution, delivery, administration and enforcement of, or any
breach of, this Agreement, Lender Note, the other Transaction Documents, the
Liquidity Agreement and, to the extent directly related to this
52
Agreement, the Program Documents (including any amendments or modifications of
or supplements to the Program Documents directly related to this Agreement),
including, without limitation, the reasonable fees and expenses of counsel to
any of such Persons incurred in connection therewith, (ii) the perfection of
Administrator's security interest in the Collateral,(iii) the maintenance of the
Collection Account, (iv) the audit of the books, records and procedures of the
Originators, Master Servicer and Borrower by Administrator's auditors (which may
be employees of Administrator), and (v) Rating Agency fees related to the
transactions contemplated by this Agreement; and
(b) 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, Lender Note, the other Transaction Documents, or (to the extent
directly related to this Agreement) the Program Documents, and agrees to
indemnify each Indemnified Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
Section 15.5 Binding Effect; Survival.
This Agreement shall be binding upon and inure to the benefit of
Borrower, Bank, Covenant Nevada, Lender, Administrator, and their respective
successors and assigns, and the provisions of Article VI and Article XIV shall
inure to the benefit of the Affected Parties and the Indemnified Parties,
respectively, and their respective successors and assigns; provided, however,
nothing in the foregoing shall be deemed to authorize any assignment not
permitted by Article XIII. 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 effect until such time, after the Commitment
Termination Date, when all Obligations have been finally and fully paid and
performed. The rights and remedies with respect to any breach of any
representation and warranty made by Borrower or Master Servicer pursuant to
Article VIII and the indemnification and payment provisions of Article XIV and
Article VI, Sections 15.4, 15.11 and 15.12 shall be continuing and shall survive
any termination of this Agreement and any termination of Covenant Nevada's
rights to act as Master Servicer hereunder or under any other Transaction
Document.
Section 15.6 Captions and Cross References.
The various captions (including, without limitation, the table of
contents) in this Agreement are provided solely for convenience of reference and
shall not affect the meaning or interpretation of any provision of this
Agreement. Unless otherwise indicated, references in this Agreement to any
Section, Appendix, Schedule or Exhibit are to such Section of or Appendix,
Schedule or Exhibit to this Agreement, as the case may be, and references in any
Section, subsection, or clause to any subsection, clause or subclause are to
such subsection, clause or subclause of such Section, subsection or clause.
Section 15.7 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
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Section 15.8 Governing Law.
THIS AGREEMENT AND LENDER NOTE SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
Section 15.9 Counterparts.
This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original but all of which
shall constitute together 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 Agreement.
Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury.
(a) Borrower and Master Servicer 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. Borrower and
Master Servicer 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 15.10 shall affect the right of Administrator or Lender
to bring any action or proceeding against Borrower or Master Servicer 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 15.11 No Recourse Against Lender.
The obligations of Lender under this Agreement are solely the corporate
obligations of Lender. No recourse shall be had for any obligation, covenant or
agreement (including, without limitation, the payment of any amount owing in
respect to this Agreement or the payment of any fee hereunder or for any other
obligation or claim) arising out of or based upon this Agreement or any other
agreement, instrument or document entered into pursuant hereto or in connection
herewith against any stockholder, employee, officer, director, manager,
administrator, partner or incorporator of Lender, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise.
Section 15.12 No Proceedings.
Each of the parties hereto hereby agree that it will not institute
against Lender, or join any other Person in instituting against Lender, any
insolvency proceeding (namely, any proceeding of the type referred to in the
definition of Event of Bankruptcy) so long as any Commercial Paper Notes issued
by Lender shall be outstanding and there shall not have elapsed one year plus
one
54
day since the last day on which any such Commercial Paper Notes shall be
outstanding. The provisions of this Section 15.12 shall survive the termination
hereof.
Section 15.13 Confidentiality of Agreement.
Unless otherwise consented to by Administrator, each of Borrower and
Master Servicer hereby agrees that it will not disclose the contents of any
Transaction Document, or any other confidential or proprietary information
furnished by Administrator or Lender to any Person other than its Affiliates
(which Affiliates shall have executed an agreement satisfactory in form and in
substance to Administrator to be bound by this Section 15.13) auditors and
attorneys or as required by applicable law.
Section 15.14 Entire Agreement.
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS EXECUTED AND
DELIVERED HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND
THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
[signature pages begin on next page]
55
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CVTI RECEIVABLES CORP.,
as Borrower
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO
COVENANT TRANSPORT, INC.,
as Master Servicer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO
THREE PILLARS FUNDING CORPORATION,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SUNTRUST EQUITABLE SECURITIES
CORPORATION, as Administrator
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
EXHIBIT A
FORM OF BORROWING REQUEST
To: Three Pillars Funding Corporation ("Lender")
SunTrust Equitable Securities Corporation ("Administrator")
From: CVTI Receivables Corp. ("Borrower")
Re: Loan Agreement, dated as of December 12, 2000, between Borrower,
Covenant Transport, Inc., a Nevada corporation ("Covenant Nevada") as
initial master servicer, Lender and the Administrator as heretofore
amended, (the "Agreement")
A. (i) Pursuant to Section 2.2, the undersigned hereby
requests a Loan from Lender in an amount equal
to the following (at least $1,000,000 and in
integral multiples of $500,000 $____________
(ii) The date such Loan is requested is:
(iii) The total principal amount of Loans outstanding
under the Loan Agreement, including the amount
in (i) above, is equal to: $____________
(iv) The amount in (iii) above does not exceed the
Borrowing Base as of the date hereof or the
Facility Limit ($62,000,000)
B. (i) The Aggregate Unpaid
Balance as of the date hereof
is equal to: $____________
(ii) The aggregate Excess Concentration Amount as
of the date hereof is: $____________
(iii) (A) The Loss Reserve is: ____________%
(B) The Dilution Reserve is: ____________%
(C) The Yield Reserve is: ____________%
(D) The Servicer Reserve is: ____________%
(E) The sum of (A), plus (B), and (C),
plus (D) is: ____________%
(F) The Reserve Floor is: 12.1%
(G) The Advance Rate (100% minus the greater
of (E) and (F) is: ____________%
(iv) The Borrowing Base ([(i) minus (ii)] times (iii) (G))
as of the date hereof is equal to: $____________
C. As of the date hereof and the date of making of the Loans, (i) each of the
representations and warranties contained in Article VIII of the Agreement
shall be true and correct on and as of the date hereof and, the date of
such Loan, (ii) no Significant Event or Unmatured Significant Event has
occurred and is continuing or shall exist after giving effect to the Loans
requested hereby, (iii) no Servicer Event of Default has occurred and is
continuing and (iv) after giving effect to the Loan, the aggregate
principal balance of the outstanding Loans hereunder will not exceed the
Borrowing Base or the Facility Limit.
Capitalized terms used but not defined herein shall have the meanings
given to them in the Agreement.
The undersigned certifies to the accuracy of the foregoing.
CVTI RECEIVABLES CORP.
Date:________________ By:______________________________________
Name:_____________________________
Title:____________________________
COVENANT TRANSPORT, INC., a Nevada
corporation, as initial Master
Servicer
By:______________________________________
Name:_____________________________
Title:____________________________
EXHIBIT B
FORM OF LENDER NOTE
$62,000,000 December 12, 2000
FOR VALUE RECEIVED, CVTI RECEIVABLES CORP., a Nevada corporation (the
"Borrower"), promises to pay to THREE PILLARS FUNDING CORPORATION, as lender
(the "Lender") the principal sum of SIXTY-TWO MILLION DOLLARS ($62,000,000) or,
if less, the unpaid principal amount of the aggregate loans (each a "Loan") made
by the Lender to the Borrower pursuant to the Agreement (as defined below), as
set forth on the attached Schedule, as specified in Section 2.7 of the
Agreement, and to pay interest on the unpaid principal amount of each Loan on
each day that such unpaid principal amount is outstanding as provided in the
Agreement on each Distribution Date and each other dates specified in the
Agreement.
This Lender Note is issued pursuant to the Loan Agreement dated as of
December 12, 2000 (as amended, restated or otherwise modified from time to time,
the "Agreement") among the Borrower, Covenant Transport, Inc., a Nevada
corporation as master servicer, Three Pillars Funding Corporation, as lender and
SunTrust Equitable Securities Corporation, as administrator. Capitalized terms
used but not defined in this Lender Note are used with the meanings ascribed to
them in the Agreement.
Notwithstanding any other provisions contained in this Lender Note, if
at any time the rate of interest payable by the Borrower under this Lender Note,
when combined with any and all other charges provided for in this Lender Note,
in the Agreement or in any other document (to the extent such other charges
would constitute interest for the purpose of any applicable law limiting
interest that may be charged on this Lender Note), exceeds the highest rate of
interest permissible under applicable law (the "Maximum Lawful Rate"), then so
long as the Maximum Lawful Rate would be exceeded, the rate of interest under
this Lender Note shall be equal to the Maximum Lawful Rate. If at any time
thereafter the rate of interest payable under this Lender Note is less than the
Maximum Lawful Rate, the Borrower shall continue to pay interest under this
Lender Note at the Maximum Lawful Rate until such time as the total interest
paid by the Borrower is equal to the total interest that would have been paid
had applicable law not limited the interest rate payable under this Lender Note.
In no event shall the total interest received by the Lender under this Lender
Note exceed the amount which the Lender could lawfully have received had the
interest due under this Lender Note been calculated since the date of this
Lender Note at the Maximum Lawful Rate.
Payments of the principal of, and interest on, Loans represented by
this Lender Note shall be made by the Borrower to the holder hereof by wire
transfer of immediately available funds in the manner and at the address
specified for such purpose as provided in Section 4.5 of the Agreement, or in
such manner or at such other address as the holder of this Lender Note shall
have specified in writing to the Borrower for such purpose, without the
presentation or surrender of this Lender Note or the making of any notation on
this Lender Note.
If any payment under this Lender Note falls due on a day which is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day and interest shall be payable on any principal so extended at the
applicable interest rate.
If all or a portion of (i) the principal amount hereof or (ii) any
interest payable thereon or (iii) any other amounts payable hereunder shall not
be paid when due (whether at maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum that is equal to the Base
Rate plus 3.00%, in each case from the date of such non-payment to (but
excluding) the date such amount is paid in full.
Portions or all of the principal amount of the Lender Note shall become
due and payable at the time or times set forth in the Agreement. Any portion or
all of the principal amount of this Lender Note may be prepaid, together with
interest thereon (and as set forth in the Agreement, certain costs and expenses
of the Lender) at the time and in the manner set forth in, but subject to the
provisions of, the Agreement.
Except as provided in the Agreement, the Borrower expressly waives
presentment, demand, diligence, protest and all notices of any kind whatsoever
with respect to this Lender Note.
All amounts evidenced by this Lender Note and all payments and
prepayments of the principal hereof and the respective dates and maturity dates
thereof shall be endorsed by the Lender on the schedule attached hereto and made
a part hereof or on a continuation thereof which shall be attached hereto and
made a part hereof, or otherwise recorded by the Lender in its internal records;
provided, however, that the failure of the Lender to make such a notation shall
not in any way limit or otherwise affect the obligations of the Borrower under
this Lender Note as provided in the Agreement.
The holder hereof may sell, assign, transfer, negotiate, grant
participations in or otherwise dispose of all or any portion of any Loans made
by the Lender and represented by this Lender Note and the indebtedness evidenced
by this Lender Note.
This Lender Note is secured by the security interests granted pursuant
to Section 5.1 of the Agreement. The holder of this Lender Note and the Lender,
is entitled to the benefits of the Agreement and may enforce the agreements of
the Borrower contained in the Agreement and exercise the remedies provided for
by, or otherwise available in respect of,
the Agreement, all in accordance with, and subject to the restrictions contained
in, the terms of the Agreement. If a Significant Event shall occur and be
continuing, the unpaid balance of the principal of all Loans, together with
accrued interest thereon, shall be declared, and become due and payable in the
manner and with the effect provided in the Agreement.
This Lender Note is the Lender Note referred to in the Agreement.
THIS LENDER NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned has executed this Lender Note as on
the date first written above.
CVTI RECEIVABLES CORP.
By:______________________________________
Name:
Title:
Schedule to Lender Note
-------------- ------------ ------------ ------------- ------------- -----------
Date of Loan Principal Principal Outstanding Interest Interest
or Repayment Amount of Amount of Principal Rate Period
Loan Repayment Amount
-------------- ------------ ------------ ------------- ------------- -----------
-------------- ------------ ------------ ------------- ------------- -----------
-------------- ------------ ------------ ------------- ------------- -----------
-------------- ------------ ------------ ------------- ------------- -----------
-------------- ------------ ------------ ------------- ------------- -----------
-------------- ------------ ------------ ------------- ------------- -----------
-------------- ------------ ------------ ------------- ------------- -----------
Exhibit C
Form of Monthly Report
CVTI RECEIVABLES CORPORATION
MONTHLY REPORT
$62,000,000 SECURITIZATION FACILITY
Due Period: From:
---------------------
To:
---------------------
Number of days in the Due Period: ---------------------
Report Date: ---------------------
Facility Amount: ---------------------
Revolving Period or Amortization Period? ---------------------
Has a Significant Event Occurred? ---------------------
Total Number of Active Accounts: ---------------------
Pursuant to Section 9.1.e.ii of the Loan Agreement, dated as of December xx,
2000 as amended from time to time, (the "Loan Agreement"), among CVTI
Receivables Corporation, as Borrower, Covenant Nevada, as Master Servicer, Three
Pillars Funding Corporation, as Lender and SunTrust Equitable Securities
Corporation, as Administrator, the Master Servicer is required to prepare
certain information each Due Period regarding the Receivables described in the
Loan Agreement. The undersigned, a duly authorized representative of the Master
Servicer, does hereby certify:
I. Capitalized terms used in this Report have their respective meanings set
forth in the Loan Agreement. References herein to certain sections and
subsections are references to their respective sections and subsections of
the Loan Agreement.
II. This Report is being delivered pursuant to Section 9.1.e.ii of the Loan
Agreement.
III. Covenant Nevada, is the Master Servicer under the Loan Agreement. The
undersigned is an authorized officer of the Master Servicer.
IV. The date of this Report is on, or prior to, the twentieth day after the
Month End Date related to the Due Period specified above.
V. No Amortization Event or Event of Default has occurred under the Loan
Agreement.
VI. As of the date hereof, to the best knowledge of the undersigned, the Master
Servicer has performed in all material respects all of its obligations
under the Loan Agreement through the Month End Date related to the Due
Period specified above.
Accounts Receivable Information
1 Beginning Unpaid Balance of all Receivables: _____________________
2 Credit Sales for the current Due Period: _____________________
3 Collections received during the current Due
Period: _____________________
4 Receivables Charged-Off during the current Due
Period: _____________________
5 Dilutions for the current Due Period: _____________________
6 Net credits for the current Due Period: _____________________
7 Ending Unpaid Balance of all Receivables: _____________________
Aging Report (Unpaid Balances as of the Month End Date)
8 Current: _____________________
9 Receivables 31-60 days past invoice date
(1-30 DPD): _____________________
10 Receivables 61-90 days past invoice date
(31-60 DPD): _____________________
11 Receivables 91-120 days past invoice date
(61-90 DPD): _____________________
12 Receivables 121-150 days past invoice date
(91-120 DPD): _____________________
13 Receivables 151+ days past invoice date
(121+ DPD): _____________________
14 Total Receivables: _____________________
15 Delinquent Receivables: (Line 11) _____________________
16 Receivables from customers in bankruptcy
included in Lines 8, 9, and 10: _____________________
17 Receivables from customers in bankruptcy
included in Line 11: _____________________
18 Defaulted Receivables: (Line 4 + Line 12 +
Line 13 + Line 16 + Line 17) _____________________
Eligible Receivables Information
19 Unpaid Balance of all Receivables as of the
Month End Date: (Line 7) _____________________
20 Unpaid Balance of Receivables over 60 days
past due: (Line 11 + Line 12+ Line13) _____________________
21 Unpaid Balance of Receivables for non-Delinquent
customers in Bankruptcy: (Line 16) _____________________
22 Unpaid Balance of remaining Receivables with
Affiliated or Governmental Obligors: _____________________
23 Unpaid Balance of remaining non-U.S. Dollar
denominated Receivables: _____________________
24 Unpaid Balance of remaining Receivables with
non-U.S. domiciled Obligors: _____________________
25 Unpaid Balance of remaining Receivables with
terms > 30 days: _____________________
26 Unpaid Balance of remaining Receivables failing
to satisfy clauses (a), (b), (c), (e), (g),
(k), (l), (m), (n), (o), (q), and (r): _____________________
27 Aggregate Unpaid Balance: (Line 19 - Sum
(Lines 20 - 26)) _____________________
Concentration Limits (List all obligors in excess of 3% along with
their allowable %)
-------------------------------------------------------------------
Concentration
Credit Rating Limit
-------------------------------------------------------------------
A-1+/P-1 (AAA/Aaa) 6%
A-1/P-1 (AA-/Aa3 to AA+/Aa1) 6%
A-2/P-2 (A-/A3 to A+/A1) 6%
A-3/P-3 (BBB/Baa3 to BBB+/Baa1) 4%
NIG/NR 2%
EGL Eagle Global Logistics 6%
-------------------------------------------------------------------
Credit Concentration Eligible Rec
Obligor Name Rating Limit Balance Excess Amount
------------ ---------------------------------------------------------------
a.
---------------------------------------------------------------
b.
---------------------------------------------------------------
c.
---------------------------------------------------------------
d.
---------------------------------------------------------------
e.
---------------------------------------------------------------
f.
---------------------------------------------------------------
g.
---------------------------------------------------------------
h.
---------------------------------------------------------------
i.
---------------------------------------------------------------
j.
---------------------------------------------------------------
28 Total Excess Concentration Amount: ---------------------
Days Sales Outstanding Ratio (b) Ending Rec
---------------------------- (a) Credit Sales Balance
29 Figures for the current Due Period: _____________________ _____________________
30 Figures for the previous Due Period: _____________________ _____________________
31 Figures for the Due Period 2 periods ago: _____________________ _____________________
32 Figures for the Due Period 3 periods ago: _____________________ _____________________
33 Figures for the Due Period 4 periods ago: _____________________ _____________________
34 Figures for the Due Period 5 periods ago: _____________________ _____________________
35 Figures for the Due Period 6 periods ago: _____________________ _____________________
36 Figures for the Due Period 7 periods ago: _____________________ _____________________
37 Figures for the Due Period 8 periods ago: _____________________ _____________________
38 Figures for the Due Period 9 periods ago: _____________________ _____________________
39 Figures for the Due Period 10 periods ago: _____________________ _____________________
40 Figures for the Due Period 11 periods ago: _____________________ _____________________
41 Aggregate Credit Sales during the last 12 Due Periods: _____________________
42 Current 12-month average aggregate Upaid Balance of all Receivables: _____________________
43 Accounts Receivable Turnover Ratio: (Line 41 / Line 42) _____________________
44 Current Days Sales Outstanding Ratio: (360 / Line 43) _____________________
45 DSO Ratio for the previous Due Period: _____________________
46 DSO Ratio for the Due Period 2 periods ago: _____________________
47 DSO Ratio for the Due Period 3 periods ago: _____________________
48 DSO Ratio for the Due Period 4 periods ago: _____________________
49 DSO Ratio for the Due Period 5 periods ago: _____________________
50 DSO Ratio for the Due Period 6 periods ago: _____________________
51 DSO Ratio for the Due Period 7 periods ago: _____________________
52 DSO Ratio for the Due Period 8 periods ago: _____________________
53 DSO Ratio for the Due Period 9 periods ago: _____________________
54 DSO Ratio for the Due Period 10 periods ago: _____________________
55 DSO Ratio for the Due Period 11 periods ago: _____________________
Loss Reserve
56 Receivables 91 - 120 DPD during the current Due Period: (Line 12) _____________________
57 Charge-Offs for the current Due Period: (Line 4) _____________________
58 Receivables whose obligors entered bankruptcy during the current Due
Period, to the extent not included in Line 56 or Line 57: _____________________
59 Credit Sales for the Due Period 4 periods ago: (Line 33a) _____________________
60 Default Ratio for the current Due Period: ((Line 56 + Line 57 +
Line 58) / Line 59) _____________________
(b) 3-Month Average
(a) Default Ratio Default Ratio
61 Ratios for the current Due Period: _____________________ _____________________
62 Ratios for the previous Due Period: _____________________ _____________________
63 Ratios for the Due Period 2 Periods ago: _____________________ _____________________
64 Ratios for the Due Period 3 Periods ago: _____________________ _____________________
65 Ratios for the Due Period 4 Periods ago: _____________________ _____________________
66 Ratios for the Due Period 5 Periods ago: _____________________ _____________________
67 Ratios for the Due Period 6 Periods ago: _____________________ _____________________
68 Ratios for the Due Period 7 Periods ago: _____________________ _____________________
69 Ratios for the Due Period 8 Periods ago: _____________________ _____________________
70 Ratios for the Due Period 9 Periods ago: _____________________ _____________________
71 Ratios for the Due Period 10 Periods ago: _____________________ _____________________
72 Ratios for the Due Period 11 Periods ago: _____________________ _____________________
73 Ratios for the Due Period 12 Periods ago: _____________________
74 Ratios for the Due Period 13 Periods ago: _____________________
75 Highest 3-month average Default Ratio over the
last 12 months: (Max (Lines 61b - 72b)) _____________________
76 Stress Factor: _____________________
77 Credit Sales for the last 4 Due Periods:
(Line 29a + Line 30a + Line 31a + Line 32a) _____________________
78 Aggregate Unpaid Balance less Excess
Concentrations: (Line 27 - Line 28) _____________________
79 Loss Horizon Ratio: (Line 77 / Line 78)
80 Loss Reserve: (Line 75 * Line 76 * Line 79) _____________________
Dilution Reserve
81 Dilutions for the current Due Period:
(Line 5) _____________________
82 Credit Sales for the previous Due Period:
(Line 30a) _____________________
83 Dilution Ratio for the current Due Period:
(Line 81 / Line 82) _____________________
84 Dilution Ratio for the previous Due Period: _____________________
85 Dilution Ratio for the Due Period 2 Periods
ago: _____________________
86 Dilution Ratio for the Due Period 3 Periods
ago: _____________________
87 Dilution Ratio for the Due Period 4 Periods
ago: _____________________
88 Dilution Ratio for the Due Period 5 Periods
ago: _____________________
89 Dilution Ratio for the Due Period 6 Periods
ago: _____________________
90 Dilution Ratio for the Due Period 7 Periods
ago: _____________________
91 Dilution Ratio for the Due Period 8 Periods
ago: _____________________
92 Dilution Ratio for the Due Period 9 Periods
ago: _____________________
93 Dilution Ratio for the Due Period 10 Periods
ago: _____________________
94 Dilution Ratio for the Due Period 11 Periods
ago: _____________________
95 Current 12-month average Dilution Ratio:
(Average Lines 83 - 94) _____________________
96 Stress Factor: _____________________
97 Dilution Spike Rate: (Max Lines 83 - 94 _____________________
98 Credit Sales for the current Due Period:
(Line 29a) _____________________
99 Aggregate Unpaid Balance less Excess
Concentrations: (Line 27 - Line 28) _____________________
100 Dilution Horizon Ratio: (Line 98 / Line 99)
101 Dilution Reserve: _____________________
((Line 95 * Line 96) + ((Line 97 - Line 95)
* (Line 97 / Line 95))) * Line 100) _____________________
Yield Reserve
102 Suntrust Prime Rate: _____________________
103 Highest DSO Ratio during the last 12 Due
Periods: (Max Lines 44 - 55) _____________________
104 Stress Factor: _____________________
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇: (Line 102 * Line 103 * Line 104
* 1/360) _____________________
Servicing Reserve
106 Highest DSO Ratio during the last 12 Due
Periods: (Max Lines 44 - 55) _____________________
107 Stress Factor: _____________________
108 Backup Servicer Fee: _____________________
109 Servicing Reserve: (Line 106 * Line 107 *
Line 108 * 1/360 ) _____________________
Advance Rate
110 Reserve Floor:
111 Calculated Reserve: (Line 80 + Line 101 + Line 105 + Line 109)
112 Reserve Percentage: (Max Lines 110 - 111)
113 Advance Rate: (100% - Line 112)
AMORTIZATION EVENTS
-------------------
Borrowing Base Deficit Test
114 Aggregate Unpaid Balance: (Line 27) _____________________
115 Excess Concentration Amount: (Line 28) _____________________
116 Advance Rate: (Line 113) _____________________
117 Borrowing Base: ((Line 114 - Line 115) *
Line 116) _____________________
118 Collections currently on deposit in the
Collection Account: _____________________
119 Maximum Borrowing Amount: (Line 117 + Line 118) _____________________
120 Commercial Paper Outstanding: _____________________
121 Difference: _____________________
122 Compliance: (Yes if zero or positive) _____________________
Default Ratio Test
123 Current 3-month average Default Ratio: (Line 61b) _____________________
124 Three-month average Default Ratio Trigger: _____________________
125 Compliance: (Yes if Line 123 < Line 124) _____________________
Delinquency Ratio Test
126 Delinquent Receivables for the current Due
Period: (Line 15) _____________________
127 Aggregate Unpaid Balance less Excess
Concentrations: (Line 27 - Line 28) _____________________
128 Delinquency Ratio for the current Due Period:
(Line 126 / Line 127) _____________________
129 Delinquency Ratio for the previous Due Period: _____________________
130 Delinquency Ratio for the Due Period 2 periods
ago: _____________________
131 Current 3-month average Delinquency Ratio:
(Average(Lines 128 - 130)) _____________________
132 Three-month average Delinquency Ratio Trigger: _____________________
133 Compliance: (Yes if Line 131 < Line 132) _____________________
Dilution Ratio Test
134 Dilution Ratio for the current Due Period:
(Line 83) _____________________
135 Dilution Ratio for the previous Due Period:
(Line 84) _____________________
136 Dilution Ratio for the Due Period 2 periods ago:
(Line 85) _____________________
137 Current 3-month average Dilution Ratio:
(Average(Lines 134 - 136)) _____________________
138 Three-month average Dilution Ratio Trigger: _____________________
139 Compliance: (Yes if Line 137 < 138) _____________________
Accounts Receivable Turnover Ratio Test
140 Accounts Receivable Turnover Ratio for the
current Due Period: (Line 43) _____________________
141 Accounts Receivable Turnover Ratio Trigger: _____________________
142 Compliance: (Yes if Line 140 >= Line 141) _____________________
IN WITNESS WHEREOF, the undersigned has duly executed this Report on
xxx xx, 200x.
Covenant Nevada
By: ___________________________
▇▇▇▇ ▇▇▇▇▇
CFO
Exhibit D
Form of Borrowing Base Certificate
BORROWING BASE CERTIFICATE
To: SunTrust Equitable Securities
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: CVTI Receivables Corp.
We refer to the Loan Agreement, dated as of December __, 2000 as amended from
time to time, (the "Loan Agreement"), among CVTI Receivables Corp., as Borrower,
SunTrust Bank, as Servicer, Three Pillars Funding Corporation, as Lender and
SunTrust Equitable Securities Corporation, as Administrator. This certificate is
delivered to you pursuant to the terms of the Loan Agreement. Capitalized terms
used but not otherwise defined herein shall have the same meanings herein as in
the Loan Agreement.
We hereby certify and warrant to the Administrator and the Lender that at the
close of business on ______ ____, _______ (the "Borrowing Base Calculation
Date"), the Borrowing Base and the Maximum Borrowing Amount were as follows:
1. Aggregate Unpaid Balance detailed in the most recent
Monthly Servicer Report: $ -
2. Excess Concentration Amount detailed in the most recent
Monthly Servicer Report: $ -
3. Receivables Purchased since the most recent Monthly Servicer
Report: $ -
4. Collections since the most recent Monthly Servicer Report: $ -
5. Advance Rate detailed in the most recent Monthly Servicer
Report: 0.00%
6. Borrowing Base: ((Line 1 - Line 2 + Line 3 - Line 4) * Line 5) $ -
7. Cash currently on deposit in the Collection Account: $ -
8. Maximum Borrowing Amount: (Line 5 + Line 6) $ -
9. Current amount of Commercial Paper outstanding: $ -
10. Difference: (Line 7 - Line 8) $ -
11. Compliance?: (Yes if Line 8 is zero or positive) YES
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the Servicer has caused the Certificate to be executed
and delivered by a Responsible Officer the ___th day of ____, ________.
COVENANT TRANSPORT, INC.,
as Master Servicer
By:___________________________________
Officer
Exhibit E
Form of Collection Account Agreement
COLLECTION ACCOUNT AGREEMENT
[Letterhead of Originator]
December 12, 2000
[Name of Collection Bank]
[Address]
Attention: ___________________________
Re: Covenant Transport, Inc.
Southern Refrigerated Transport, Inc.
Ladies and Gentlemen:
Reference is made to our the account numbers [_________________________]
maintained with you (the "Account") pursuant to a collection account agreement
between the undersigned and you, the terms and conditions of which are
incorporated herein by reference (the "Collection Account Agreement"). Pursuant
to a Receivables Purchase Agreement, dated as of December 12, 2000 as amended,
supplemented or otherwise modified from time to time, among Covenant Transport,
Inc., a Tennessee corporation ("Covenant Tennessee" or an "Originator"),
Southern Refrigerated Transport, Inc. ("Southern Refrigerated" or an
"Originator," together with Covenant Tennessee, the "Originators"), and CVTI
Receivable Corp. ("CVTI"), as purchaser, we have sold and/or may hereafter sell
to CVTI certain of the accounts, chattel paper, instruments or general
intangibles (collectively, "Receivables") with respect to which payments are or
may hereafter be made to the Account. Pursuant to a Loan Agreement, dated as of
December 12, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Loan Agreement"), among CVTI, as borrower, Covenant Transport, Inc.,
a Nevada corporation as initial master servicer ("Covenant Nevada" or " Master
Servicer") (the Originators and the Master Servicer being referred to
hereinafter collectively as the "Seller Parties"), Three Pillars Funding
Corporation as lender ("TPFC" or the "Lender") and SunTrust Equitable Securities
Corporation, as administrator (the "Administrator"), Lender has agreed to extend
financing to CVTI on the terms and subject to the conditions set forth therein.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Loan Agreement.
For purposes of this letter agreement, SunTrust Equitable Securities Corporation
is acting as Administrator for TPFC. We hereby transfer exclusive ownership and
control of the
Account to the Administrator, for the benefit of TPFC, subject only to the
condition subsequent that the Administrator shall have given you notice of its
election to assume such ownership and control, which notice shall be
substantially in the form attached hereto as Annex A.
We hereby irrevocably instruct you, at all times from and after the date of your
receipt of notice from the Administrator of its assumption of control of the
Account as described above, (i) to make all payments to be made by you out of or
in connection with the Account directly to the Administrator in accordance with
the instructions of the Administrator, (ii) to hold all moneys and instruments
delivered to the Account administered by you for the order of the Administrator
(for the benefit of the TPFC), (iii) to refrain from initiating any transfer
from the Account to any Seller Party and (iv) to change the name of the Account
to "SunTrust Equitable Securities Corporation., as Administrator for Three
Pillars Funding Corporation." The Administrator agrees to execute your standard
wire transfer documentation in effect from time to time, or other customary
documentation related to wire transfers, prior to the initiation of any wire
transfers.
We also hereby notify you that, at all times from and after the date of your
receipt of notice from the Administrator as described above, the Administrator
shall be irrevocably entitled to exercise in our place and stead any and all
rights in respect of or in connection with the Account, including, without
limitation, (a) the right to specify when payments are to be made out of or in
connection with the Account and (b) the right to require preparation of
duplicate monthly bank statements on the Account for the Administrator's audit
purposes and mailing of such statements directly to the Administrator at an
address specified by the Administrator.
Notices from the Administrator and other notices or communications under this
letter agreement may be personally served or sent by facsimile or by certified
mail, return receipt requested, or by express mail or courier, to the address or
facsimile number set forth under the signature of the relevant party to this
letter agreement (or to such other address or facsimile number as the relevant
party shall have designated by written notice to the party giving the aforesaid
notice or other communication). Notwithstanding the foregoing, any notice
delivered by you may be delivered by regular mail. If notice is given by
facsimile, it will be deemed to have been received when the notice is sent and
receipt is confirmed by telephone or other electronic means. All other notices
will be deemed to have been received when actually received or, in the case of
personal delivery, delivered.
By executing this letter agreement, you acknowledge the existence of the
Administrator's right to ownership and control of the Account and its ownership
(on behalf of TPFC and CVTI as the parties having interests in such amounts) of
the amounts from time to time on deposit therein, and agree that from the date
hereof the Account shall be maintained by you for the benefit of, and amounts
from time to time therein held by you for, the Administrator (on behalf of TPFC
and CVTI) on the terms provided herein. Except as otherwise provided in this
letter agreement, payments to the Account are to be processed in accordance with
the
standard procedures currently in effect. All service charges and fees with
respect to the Account shall continue to be payable by us as under the
arrangements currently in effect.
By executing this letter agreement, you irrevocably waive and agree not to
assert, claim or endeavor to exercise, irrevocably bar and estop yourself from
asserting, claiming or exercising, and acknowledge that you have not heretofore
received a notice, writ, order or any form of legal process from any other party
asserting, claiming or exercising, any right of set-off, banker's lien or other
purported form of claim with respect to the Account or any funds from time to
time therein. Except for your right to payment of your service charges and fees
and your right to make deductions for returned items, you shall have no rights
in the Account or funds therein. To the extent you may ever have such rights,
you hereby expressly subordinate all such rights to all rights of the
Administrator.
Notwithstanding any other provision of this letter agreement, it is agreed by
the parties hereto that you shall not be liable to TPFC or the Administrator for
any action taken by you or any of your directors, officers, agents or employees
in accordance with this letter agreement at the request of the Administrator,
except for your or such person's own gross negligence or willful misconduct.
This letter agreement may be executed by the signatories hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall together constitute but one and the same letter agreement. Delivery of an
executed counterpart of a signature page to this letter agreement by facsimile
shall be effective as delivery of a manually executed counterpart to this letter
agreement. This letter agreement shall be governed by and interpreted under the
laws of the State of _______.
You may terminate this letter agreement by canceling the Account maintained with
you, which cancellation and termination shall become effective only upon 30
days' prior written notice thereof from you to the Administrator. Incoming mail
addressed to the Account received after such cancellation shall be forwarded in
accordance with the Administrator's instructions. This letter agreement may also
be terminated upon written notice to you by the Administrator stating that the
Loan Agreement is no longer in effect. Except as otherwise provided in this
paragraph, this letter agreement may not be altered, modified, terminated or
amended in any respect, nor may any right, power or privilege of any party
hereunder be waived or released or discharged, except upon execution by all
parties hereto of a written instrument so providing. In the event that any
provision in this letter agreement is in conflict with, or inconsistent with,
any provision of the Collection Account Agreement, this letter will exclusively
govern and control. Each party agrees to take all actions reasonably requested
by any other party to carry out the purposes of this letter agreement or to
preserve and protect the rights of each party hereunder.
Please acknowledge your agreement to the terms set forth in this letter
agreement by signing the six copies of this letter agreement enclosed herewith
in the space provided below and returning each of such signed copies to the
Administrator.
Very truly yours,
COVENANT TRANSPORT, INC.,
a Tennessee corporation
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address for notice:
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SOUTHERN REFRIGERATED TRANSPORT, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address for notice:
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Accepted and confirmed as of
the date first written above:
THREE PILLARS FUNDING CORPORATION,
as Lender
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for notice:
c/o Amacar Group, L.L.C.
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
SUNTRUST EQUITABLE SECURITIES CORPORATION
as Administrator
By:
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Name:
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Title:
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Address for notice:
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CVTI RECEIVABLES CORP.,
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for notice:
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
[Name of Collection Bank]
as Collection Bank
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for notice:
Attention:
Facsimile No:
ANNEX A to
Collection Account Agreement
[FORM OF NOTICE OF ASSUMPTION OF CONTROL OF ACCOUNT]
[Letterhead of Collection Bank]
__________________, 200_
[Name of Collection Bank]
[Address of Collection Bank]
------------------------------
------------------------------
Re: Covenant Transport, Inc.
Collection Account No.___________
Ladies and Gentlemen:
Reference is made to the letter agreement dated December 12, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Letter Agreement")
among Covenant Transport, Inc., Southern Refrigerated Transport, Inc., CVTI
Receivables Corp., Three Pillars Funding Corporation (the "Lender"), SunTrust
Equitable Securities Corporation, as Administrator for the Lender, and you,
concerning the above-described Collection Account (the "Account").
We hereby give you notice of our assumption of ownership and control of the
Account as provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of or in
connection with the Account [directly to the undersigned, at [our address set
forth above], for the account of [Three Pillars Funding Corporation] (account
no. ___________)].
[Other instructions]
Very truly yours,
SUNTRUST EQUITABLE SECURITIES
CORPORATION,
as Administrator
By:______________________________________
Name:____________________________________
Title:___________________________________
EXHIBIT F
[RESERVED]
EXHIBIT G
FORM OF ORIGINATOR NOTE
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__, 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.
"Senior Indebtedness" means all (a) obligations of CVTI under the Loan
Agreement dated as of December___, 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;
(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).
(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.
(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:______________________________
EXHIBIT H
FORM OF WITHDRAWAL CERTIFICATE
OF
COVENANT TRANSPORT, INC (NEVADA)
This Certificate is made pursuant to the provisions of the Loan
Agreement, dated as of December___, 2000, (the "Agreement") by and among CVTI
RECEIVABLES CORP., a Nevada corporation, as borrower, COVENANT TRANSPORT, INC.,
a Nevada holding corporation ("Company"), as initial master servicer, THREE
PILLARS FUNDING CORPORATION, a Delaware corporation, ("Lender") and SUNTRUST
EQUITABLE SECURITIES CORPORATION, a Tennessee corporation, as agent and
administrator for Lender. Capitalized terms used herein and not otherwise
defined shall have the meaning set forth in the Agreement.
The undersigned, as ______________________ of the Company, DOES HEREBY
CERTIFY that:
1. This certificate relates to the week ended on [month] __, 200_.
2. On the following dates, the Company, as Master Servicer, withdrew funds
from the Collection Account in accordance with the provisions of Section
11(c)(vii) of the Agreement (each, a "Withdrawal Date"): [list dates].
3. On each Withdrawal Date, no Significant Event or Unmatured Significant
Event was in existence.
4. On each Withdrawal Date, the Commitment Termination Date had not occurred.
5. On [insert date that is last Withdrawal Date for week covered by this
certificate] no Borrowing Base Deficit existed after giving effect to the
withdrawal of funds from the Primary Collection Account on such day and, after
giving effect to such withdrawal, there were funds in the Primary Collection
Account at least equal to the interest on the Loans and the Fees accrued through
such date.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, I have signed this certificate as of this _____ day
of _______, 200_.
CONVENANT TRANSPORT, INC.,
a Nevada corporation
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Schedule I
Description of Collection Account
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Name and Address of Bank LockBox Number and Account Number
Address (if applicable)
------------------------------ ------------------------------- -----------------
------------------------------ ------------------------------- -----------------
Bank of America P.O. Box 841944 003782911511
Nashville, TN Dallas, TX
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Diamond State Bank N/A 0520764
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Schedule II
Reserved
Schedule III
Form of Contract
[Delivered Under Separate Cover]
Schedule IV
Description Of Proceedings
None.
Schedule V
Collateral Review Requirements
I. Initial Report of Independent Accountants
(a) the report shall be titled the "Initial Report of Independent
Accountants on Agreed Upon Procedures";
(b) the report shall be addressed to Covenant Transport, Inc., as
Master Servicer and to SunTrust Equitable Securities Corporation
as Administrator:
▇▇▇ ▇▇▇▇▇▇▇
SunTrust Equitable Securities Corp.
Mail Code 3950
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(c) the agreed upon procedures shall be performed by
PricewaterhouseCoopers LLP as engaged by the Master Servicer;
(d) the report shall be delivered on April 15, 2001; and
(e) the agreed upon procedures shall entail the selection of a
non-systematic sample of 100 invoices from the receivable
schedule delivered by Borrower pursuant to the initial funding
performance of the following:
(i) agree invoice information including: customer name
and receivables balance to information on the report
generated by the receivable servicing system;
(ii) determine that credit terms are indicated on the
invoice and do not exceed 30 days; and
(iii) determine that the Originators' computer records have
been marked or stamped indicating that the Receivable
has been sold to CVTI Receivables Corp.
II. Reports of Independent Accountants
(a) the report shall be titled "Report of Independent Accountants on
Agreed Upon Procedures";
(b) the report shall be addressed as detailed in item I above;
(c) the agreed upon procedures shall be performed by
PricewaterhouseCoopers LLP;
(d) the reports shall be delivered within 60 days after each
semi-annual period following this transaction's Closing Date;
and
(e) the agreed upon procedures shall consist of the following:
(i) agree the data on lines 1 through 6 and 8 through 13
from three (3) non-sytematically selected Monthly
Reports as shown in Exhibit C for the most recent
semi-annual period to the information contained in
system reports and accounting records used in the
compilation of those Monthly Reports;
(ii) request personnel responsible for the credit and/or
finance function at Covenant Transport, Inc. to (a)
identify whether or not any customers with balances
included as Receivables are in bankruptcy; and (b)
provide a list of the names of such customers. For
any such identified customers, compare the balance of
such Receivables contained in the system reports used
in the compilation of those Monthly Reports with
amounts contained in lines 16 and 17 of the Monthly
Reports in item (i) above and report any differences;
(iii) verify the mathematical accuracy of the Accounts
Receivable information and Aging Report in the
Monthly Reports in item (i) above;
(iv) non-systematically select a sample of 100 invoices
from the receivable schedule delivered by Borrower
pursuant to the subsequent fundings during the most
recent semi-annual period and perform the following:
(a) agree invoice information including:
customer name and receivables balance to
information on a report generated by the
receivables servicing system;
(b) determine that credit terms are on the
invoice and do not exceed 30 days;
(c) determine that the Originators' computer
records have been marked or stamped to indicate
that the Receivable has been sold to CVTI
Receivables Corp.;
(d) for invoices for which payments have been
received verify that the Collection was sent by
wire transfer to a Collection Account or by check
to a Lock-Box and deposited into a Collection
Account.
Schedule VI
Notice Addresses
Borrower: CVTI Receivables Corp.
Address for notice
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Master Servicer: Covenant Transport, Inc.
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Lender: Three Pillars Funding Corporation
c/o Amacar Group, L.L.C.
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Administrator: SunTrust Equitable Securities Corporation
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