EXHIBIT 10.11
THIRD AMENDMENT TO CREDIT AGREEMENT AND CONSENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT AND CONSENT (this "Amendment")
made and entered into effective as of March 31, 1997 (the "Effective Date"), by
and among COVENANT TRANSPORT, INC., a Tennessee corporation ("CTI"), COVENANT
LEASING, INC., a Nevada corporation ("Leasing"; CTI and Leasing are sometimes
referred to herein individually as a "Borrower" and collectively as the
"Borrowers"), ABN AMRO BANK N.V., acting through its Atlanta Agency, THE FIRST
NATIONAL BANK OF CHICAGO (as assignee of NBD Bank), NATIONSBANK, N.A. (SOUTH)
(formerly known as NationsBank of Georgia, N.A.) and FIRST AMERICAN NATIONAL
BANK (collectively, the "Banks"), and ABN AMRO BANK N.V., acting through its
Atlanta Agency, as Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, CTI, the Agent and the Banks entered into a certain Credit Agree-
ment, dated as of January 17, 1995, as amended by that certain First Amendment
to Credit Agreement and Waiver, dated as of October 15, 1995, among CTI, the
Agent and the Banks, and as further amended by that certain Second Amendment to
Credit Agreement and Waiver, dated as of April 12, 1996, among CTI, the Agent
and the Banks (the "Credit Agreement"; capitalized terms used herein and not
otherwise defined herein shall have the meanings given such terms in the Credit
Agreement, as amended by this Amendment), whereby the Banks agreed to make
certain loans and grant other financial accommodations to or for the benefit of
the CTI, subject to the terms, covenants and conditions contained in the Credit
Agreement; and
WHEREAS, CTI and Leasing have requested that the Agent and the Banks amend
the Credit Agreement to add Leasing as an additional "Borrower" under the Credit
Agreement, to increase the Revolving Credit Commitments of the Banks to
$85,000,000, to consent to certain transactions to be entered into by certain
stockholders of the Parent and waive any defaults under the Credit Agreement
arising as a result thereof, to consent to the formation of certain new
Subsidiaries of the Parent and waive any defaults under the Credit Agreement
arising as a result thereof, and to modify certain other terms of the Credit
Agreement as set forth in this Amendment, and the Agent and the Banks are
willing to agree to such consents, waivers and modifications subject to the
terms and conditions of this Amendment.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Addition of Leasing as an additional Borrower under the Credit
Agreement. Subject to the terms and conditions of this Amendment, the parties
agree that, as of the date hereof, Leasing shall become a party to the Credit
Agreement and shall have the rights and obligations of a "Borrower" thereunder
(including without limitation the obligation for payment and performance of the
Obligations).
2. Amendments to Section 1.1.
(a) Subject to the terms and conditions of this Amendment, Section
1.1(a)(i) of the Credit Agreement is hereby amended (i) deleting the reference
to the amount of "$55,000,000" contained in the ninth line thereof and
substituting in lieu thereof the amount of "$70,000,000", and (ii) by deleting
the reference to the amount of "$70,000,000" contained in the last line thereof
and substituting in lieu thereof the amount of "$85,000,000".
(b) Subject to the terms and conditions of this Amendment, Section
1.1 of the Credit Agreement is further amended by incorporating into such
Section, immediately following subsection (d) thereof, the following new
subsection (e):
(e) Commitment Increases. (i) In the event that the Borrower
wishes to increase the aggregate Commitments at any time prior to
the Revolving Credit Commitment Termination Date, and provided that
no Default or Event of Default has occurred and is then continuing,
it shall notify the Agent in writing of the amount (the "Offered
Increase Amount") of such proposed increase (such notice, a
"Commitment Increase Notice"). The Borrower may, at its election,
(x) offer one or more of the Banks the opportunity to participate in
all or a portion of the Offered Increase Amount pursuant to
subsection (iii) below and/or (y) with the consent of the Agent in
the event the existing Banks choose not to participate in all of the
Offered Increase Amount (which consent shall not be unreasonably
withheld), offer one or more additional banks, financial
institutions or other entities the opportunity to participate in the
Offered Increase Amount pursuant to paragraph (ii) below, to the
extent of such Offered Increase Amount not participated in by the
existing Banks. Each Commitment Increase Notice shall specify which
Banks and/or banks, financial institutions or other entities the
Borrower desires to participate in such commitment increase. The
Borrower or, if requested by the Borrower, the Agent will notify
such Banks and/or banks, financial institutions or other entities of
such offer.
(ii) Any additional bank, financial institution or other
entity which the Borrower selects with the consent of the Agent in
accordance with subsection (i) above to offer participation in the
increased Commitments, and which elects to become a party to this
Agreement and obtain a Revolving Credit Commitment and Term Loan
Commitment in an amount so offered and accepted by it pursuant to
subsection (i) above, shall execute a New Bank Supplement with the
Borrower and the Agent, substantially in the form of Exhibit E,
whereupon such bank, financial institution or other entity (herein
called a "New Bank") shall become
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a "Bank" for all purposes and to the same extent as if originally a
party hereto and shall be bound by and entitled to the benefits of
this Agreement with respect to the full amount of its Commitments,
provided that the Commitments of any such new Lender shall be in an
amount not less than $5,000,000.
(iii) Any Bank which accepts an offer to it by the
Borrower to increase its Commitments pursuant to subsection (i)
above shall, in each case, execute a Commitment Increase Supplement
with the Borrower and the Agent, substantially in the form of
Exhibit F, whereupon such Bank shall be bound by and entitled to the
benefits of this Agreement with respect to the full amount of its
Commitments as so increased.
(iv) If any bank, financial institution or other entity
becomes a New Bank pursuant to subsection (ii) above or any Bank's
Commitments are increased pursuant to subsection (iii) above, addi-
tional Revolving Loans made on or after the effectiveness thereof
(the "Re-Allocation Date") shall be made pro rata based on the
Proportionate Shares in effect on and after such Re-Allocation Date
(except to the extent that any such pro rata Borrowings would result
in any Bank making an aggregate principal amount of Revolving Loans
in excess of its Revolving Credit Commitment, in which case such
excess amount will be allocated to, and made by, such New Banks and/
or Banks with such increased Commitments to the extent of, and pro
rata based on, their respective Commitments otherwise available for
Revolving Loans), and continuations of Eurodollar Loans outstanding
on such Re-Allocation Date shall be effected by repayment of such
Eurodollar Loans on the last day of the Interest Period applicable
thereto and the making of new Eurodollar Loans pro rata based on
such new Proportionate Shares. In the event that on any such
Re-Allocation Date there is an unpaid principal amount of Base Rate
Loans or Alternate Base Rate Loans, the Borrower shall make
prepayments thereof and Borrowings of Base Rate Loans or Alternate
Base Rate Loans so that, after giving effect thereto, the Base Rate
Loans or Alternate Base Rate Loans outstanding are held pro rata
based on such new Proportionate Shares. In the event that on any
such Re-Allocation Date there is an unpaid principal amount of
Eurodollar Loans, such Eurodollar Loans shall remain outstanding
with the respective holders thereof until the expiration of their
respective Interest Periods (unless the Borrower elects to prepay
any thereof in accordance with the applicable provisions of this
Agreement), and interest on and repayments of such Eurodollar Loans
will be paid thereon to the respective Banks holding such Eurodollar
Loans pro rata based on the respective principal amounts thereof
outstanding.
(v) Notwithstanding anything to the contrary in this
Section 1.1(e), (x) in no event shall any transaction effected
pursuant to this Section 1.1(e) cause the aggregate Commitments to
exceed $100,000,000 and (y) no Bank shall have any obligation to
increase its Commitment unless it agrees to do so in its sole
discretion.
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3. Amendment to Section 4.7. Subject to the terms and conditions of
this Amendment, Section 4.7 of the Credit Agreement is hereby amended by
deleting such Section in its entirety and substituting in lieu thereof the
following:
Section 4.7. Title to Properties. Each of the Parent and the
Borrower has title to its respective properties reflected on the
financial statements delivered from time to time under Section
6.1(a) and (b), subject to no Liens or adverse claims except as
disclosed thereon and except for Permitted Liens.
4. Amendment to Section 5.21. Subject to the terms and conditions of
this Amendment, Section 5.21 of the Credit Agreement is hereby amended by (i)
deleting from the first sentence of such Section the following: "a first lien on
and security interest in all Accounts (including intercompany accounts), bank
accounts and Revenue Equipment owned by the Parent, the Borrower and any other
Subsidiary . . .", and (ii) substituting in lieu thereof the following: "a first
lien on and security interest in all Accounts (including intercompany accounts),
equipment leases, trademarks, trade names and other intellectual property,
Revenue Equipment and any general intangibles relating to any of the foregoing,
owned by the Parent, the Borrower or any other Subsidiary . . .".
5. Amendments to Section 10.1. Subject to the terms and conditions of
this Amendment, Section 10.1 of the Credit Agreement is hereby amended as
follows:
(a) by modifying the definitions of the terms "Account",
"Borrower", "Eligible Account", "Guarantor Pledge Agreement", "Guaranty
Agreement", "Loan Documents", "Revenue Equipment", "Revolving Credit
Commitment", "Revolving Credit Commitment Termination Date", "Security
Agreement", "Security Documents", and "Term Loan Commitment" to read,
respectively, as follows:
"Account" means any right of the Borrower or any other
Subsidiary to payment for goods sold or leased, or for services
rendered, by the Borrower or such other Subsidiary that is not
evidenced by an instrument or chattel paper.
"Borrower" means Covenant Transport, Inc., a Tennessee
corporation, and Covenant Leasing, Inc., a Nevada corporation,
or either of them individually, as the context may require.
"Eligible Account" means, at the time of any determination
thereof, any Account of CTI as to which each of the following
requirements has been fulfilled to the satisfaction of the
Agent:
(i) CTI owns such Account free and clear of all
liens other than a Lien in favor of the Agent granted
pursuant to any Loan Document, and, if
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after the Security Date, such Account is subject to a
lien in favor of the Agent that constitutes a first
perfected security interest in such Account;
provided, however, that no Account as to which any
United States federal or state governmental agency or
instrumentality is the Collateral Debtor may be an
Eligible Account after the Security Date, except to
the extent that CTI has complied with the Assignment
of Claims Act of 1940, as amended (31 U.S.C. ss.
3727; 41 U.S.C. ss. 15), by delivering to the Agent a
notice of assignment under such Act in favor of the
Collateral Agent, for the benefit of the Banks, the
Letter of Credit Banks and the Agent, and in
compliance with applicable provisions of 31 C.F.R.
ss. 7-103.8 and 41 C.F.R. ss. 1-30.7, or with similar
state law;
(ii) Such Account is a legal, valid, binding and
enforceable obligation of the Collateral Debtor;
(iii) Such Account is not subject to any
dispute, setoff, counterclaim or other claim or
defense on the part of the Collateral Debtor or any
other Person denying liability under such Account;
(iv) CTI has the full and unqualified right to
assign and xxxxx x Xxxx in such Account to the
Collateral Agent as security for the Obligations;
(v) Such Account is evidenced by an invoice
rendered to the Collateral Debtor and is not
evidenced by any instrument or chattel paper (as the
terms "instrument" and "chattel paper" are defined in
Section 9-105 of the UCC);
(vi) Such Account arose from the sale of goods
or services on an absolute basis (and not on a con-
signment, approval or sale-and-return basis) by CTI
in the ordinary course of CTI's business, and such
services have been performed or such goods have been
shipped and delivered to, and accepted by, the
Collateral Debtor for such Account;
(vii) With respect to such Account, the
Collateral Debtor thereof is not (A) an Affiliate of
the Parent or any Subsidiary, or (B) the subject of
any reorganization, bankruptcy, receivership,
custodianship, insolvency, dissolution, winding up,
liquidation or similar proceeding;
(viii) Such Account is not outstanding (A) more
than 90 days past the original billing date (which
date shall not be later than the date upon which the
services giving rise to such Account are completed or
the shipment date of the goods giving rise to such
Account), or (B) more than 60 days past the due date
thereof;
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(ix) Such Account is not an Account owing by a
Collateral Debtor having, at the time of any
determination of Eligible Accounts, in excess of 25%
of the aggregate outstanding amount of all of such
Collateral Debtor's Accounts more than 90 days past
the original invoice date with respect thereto or
more than 60 days past the due date thereof;
(x) With respect to the Collateral Debtor under
such Account, CTI is not indebted to such Collateral
Debtor, unless CTI and such Collateral Debtor have
entered into an agreement whereby the Collateral
Debtor is prohibited from exercising any right of
setoff with respect to the Accounts of CTI;
(xi) Such Account has arisen from the sale of
goods or services in the United States to a
Collateral Debtor located in the United States or is
100% secured by a letter of credit issued or
confirmed by a domestic bank or a domestic agency of
a foreign bank, acceptable to the Agent and the
Required Banks;
(xii) Such Account is denominated and payable
only in Dollars;
(xiii) Such Account does not arise out of a
contract or order which fails in any material respect
to comply with the requirements of applicable law;
(xiv) Such Account is not an Account with
respect to which the Collateral Debtor is located in
a state that requires CTI, as a precondition to
commencing or maintaining an action in the courts of
that state, either to (A) receive a certificate of
authority to do business and be in good standing in
such state, or (B) file a notice of business
activities report or similar report with such state's
taxing authority, unless (x) CTI has taken one of the
actions described in clauses (A) or (B), (y) the
failure to take one of the actions described in
either clause (A) or (B) may be cured retroactively
CTI at its election, or (z) CTI has proven, to
Agent's satisfaction, that it is exempt from any such
requirements under any such state's laws;
(xv) Such Account is not an Account (A) with
respect to which any representation or warranty
contained in this Agreement or any other Loan
Document is untrue or (B) which violates any of the
covenants of the Borrower or CTI contained in this
Agreement or any other Loan Document;
(xvi) Such Account is not an Account which, when
added to a particular Collateral Debtor's other
indebtedness to CTI, exceeds a credit limit
determined by Agent in its sole discretion for that
Collateral Debtor
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(except that Accounts excluded from Eligible Accounts
solely by reason of this clause shall be Eligible
Accounts to the extent of such credit limit); and
(xvii) Such Account is not an Account with
respect to which the prospect of payment or
performance by the Collateral Debtor is or will be
impaired, as determined by the Agent is its sole
discretion.
"Guarantor Pledge Agreement" means the Pledge and Security
Agreement between the Parent and the Collateral Agent, dated as
of October 15, 1995, and any other pledge agreement executed by
the Parent or a Subsidiary in favor of the Collateral Agent as
security for the Obligations.
"Guaranty Agreement" means the Guaranty Agreement
delivered by the Parent in favor of the Banks, the Letter of
Credit Banks and the Agent, dated January 17, 1995, and any
other guaranty agreement executed by a Subsidiary in favor of
the Banks, the Letter of Credit Banks and the Agent, guarantee-
ing payment of the Obligations.
"Loan Documents" means this Agreement, the Notes, the
Security Documents, the Reimbursement Agreements, the Guaranty
Agreements, each Schedule to this Agreement and each document,
instrument, certificate, and opinion executed and delivered in
connection with any of the foregoing.
"Revenue Equipment" means all tractors, trailers and
other similar equipment used in the operation of CTI's truck-
ing business.
"Revolving Credit Commitment" means the commitment of each
Bank to make Revolving Loans pursuant to Section 1.1(a)(i) in
the amount set forth opposite such Bank's name on the
signature pages of the Third Amendment, as such amount may be
increased from time to time pursuant to Section 1.1(e) or
reduced from time to time pursuant to Section 1.7 or 7.2.
Revolving Credit Commitments means the sum of the Revolving
Credit Commitments of all the Banks.
"Revolving Credit Commitment Termination Date" means the
earlier of (i) the date upon which Revolving Credit Commitments
reduce to zero pursuant to Section 1.7 or Section 7.2, and (ii)
April 30, 1999, or such later date as shall be designated by
the Banks pursuant to Section 1.1(d).
"Security Agreement" means the Security Agreement between
CTI and the Collateral Agent, dated as of October 15, 1995, and
any other security agreement executed by a Subsidiary in favor
of the Collateral Agent as security for the Obligations.
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"Security Documents" shall mean, collectively, each
Security Agreement, each Pledge Agreement, each Blocked Account
Agreement, and each other mortgage, deed of trust, security
agreement, pledge agreement, or other security or collateral
document securing the Obligations.
"Term Loan Commitment" means, for any Bank, its Propor-
tionate Share of the lesser of $85,000,000 (as such amount may
be increased pursuant to Section 1.1(e)) and the aggregate
amount of Revolving Loans outstanding on the Term Loan
Conversion Date, as such amount may be reduced from time to
time pursuant to Section 1.7 or Section 7.2.
(b) by adding thereto the following new definitions:
"CTI" means Covenant Transport, Inc., a Tennessee corpor-
ation which is a Wholly-Owned Subsidiary of the Parent.
"Third Amendment" means the Third Amendment to Credit
Agreement, dated as of March 31, 1997, among the Borrower, the
Agent and the Banks.
6. Amendments to Article XI. (a) Subject to the terms and conditions
of this Amendment, Section 11.1(b) of the Credit Agreement is hereby amended to
provide that notices to the Borrower shall be addressed as follows:
Covenant Transport, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
Treasurer and Chief Financial Officer
(b) Subject to the terms and conditions of this Amendment,
Section 11.1(c) of the Credit Agreement is hereby amended by
inserting at the end thereof the following:
"Delivery of notice to either Borrower shall be deemed
notice to both Borrowers."
(c) Subject to the terms and conditions of this Amendment,
Article XI of the Credit Agreement is hereby amended by inserting at
the end thereof the following new Sections 11.16, 11.17 and 11.18:
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Section 11.16.Joint and Several Liability; Additional Waivers.
(a) This Agreement and the other Loan Documents shall
in all respects be the absolute, unconditional, joint, several
and irrevocable agreement of each Borrower to pay and perform
the Obligations and each Borrower jointly and severally agrees
that the Obligations will be paid and performed strictly in
accordance with the terms of the Loan Documents under which
they arise, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agent, the Banks or the Letter of
Credit Banks with respect thereto. The liability of each
Borrower under this Agreement and the other Loan Documents
shall remain in full force and effect without regard to, and
shall not (except to the extent of any waivers or amendments
to this Agreement or the other Loan Documents made in
accordance with Section 11.5 hereof) be released, suspended,
discharged, terminated, modified or otherwise affected by any
circumstance or occurrence whatsoever, including without
limitation any of the following (whether or not any Borrower
consents thereto or has notice thereof): (i) any change in or
waiver of the time, place or manner of payment, or any other
term, of any of the Obligations or Loan Documents, any waiver
of or any renewal, extension, increase, amendment or
modification of or addition, consent or supplement to or
deletion from, or any other action or inaction under or in
respect of, any of the Obligations or Loan Documents or any
other document, instrument or agreement referred to therein or
any assignment or transfer of any of the Obligations or Loan
Documents; (ii) any lack of validity, legality or
enforceability of any of the Obligations or Loan Documents or
any other document, instrument, or agreement referred to
therein or of any assignment or transfer of any of the fore-
going; (iii) any furnishing to the Agent, the Collateral
Agent, the Banks or the Letter of Credit Banks of any
collateral for any of the Obligations or any sale, exchange,
release or surrender of, or realization on, any collateral for
any of the Obligations; (iv) any settlement, release or
compromise of any of the Obligations or Loan Documents, any
collateral therefor, or any liability of any other party
(including without limitation any other Borrower or any
guarantor) with respect to any of the Obligations or Loan
Documents, or any subordination of payment of any of the
Obligations to the payment of any other indebtedness,
liability or obligation of any Borrower; (v) any bankruptcy,
insolvency, reorganization, composition, adjustment, merger,
consolidation, dissolution, liquidation or other like
proceeding or occurrence relating to any Borrower or any
other change in the ownership, composition or nature of any
Borrower; (vi) any non-perfection, subordination, release,
avoidability or voidability of any security interest, security
title, pledge, collateral assignment or other lien of the
Agent, the Collateral Agent, any Bank or any Letter of Credit
Bank on any collateral for any of the Obligations or this
Agreement or any other Loan Document; (vii) any application of
sums paid by any Borrower or any other person with respect to
any of the Obligations, except to the extent actually applied
against the Obligations, regardless of what other
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liabilities of such Borrower remain unpaid; (viii) the failure
of the Agent, the Collateral Agent, any Bank or any Letter of
Credit Bank to assert any claim or demand or to enforce any
right or remedy against any Borrower or any other person
(including any Borrower or any guarantor of any of the
Obligations) under the provisions of any of the Loan Documents
or otherwise, or any failure of the Agent, the Collateral
Agent, any Bank or any Letter of Credit Bank to exercise any
right or remedy against any Borrower or any guarantor of or
any collateral for any of the Obligations; (ix) any other act
or failure to act by the Agent, the Collateral Agent, any Bank
or any Letter of Credit Bank which may adversely affect any
Borrower; or (x) any other circumstance which might otherwise
constitute a defense against, or a legal or equitable
discharge of, any Borrower's liability under this Agreement or
any other Loan Document.
(b) Except for notices and demands expressly required
to be given to the Borrower under this Agreement or the other
Loan Documents, each Borrower hereby waives: (i) notice of
acceptance of this Agreement and the other Loan Documents by
the Agent, the Collateral Agent, the Banks and the Letter of
Credit Banks; (ii) notice of the creation, existence,
acquisition, extension, or renewal of any of the Obligations;
(iii) notice of the amount of the Obligations outstanding from
time to time, subject, however, to each Borrower's right to
make inquiry of the Agent at reasonable intervals to ascertain
the amount of Obligations then outstanding; (iv) notice of any
default or event of default under any of the Loan Documents
(other than any notice expressly required thereunder) or with
respect to any of the Obligations or notice of any other
adverse change in any Borrower's financial condition or means
or ability to pay any of the Obligations or perform its
obligations under any of the Loan Documents or notice of any
other fact which might increase any Borrower's risk hereunder;
(v) notice of presentment, demand, protest, and notice of
dishonor or nonpayment as to any instrument; (vi) notice of
any acceleration or other demand for payment of any of the
Obligations (except as otherwise expressly provided herein);
and (vii) all other notices and demands to which the Borrowers
might otherwise be entitled with respect to any of the
Obligations or the Loan Documents or with respect to the
Agent's, the Collateral Agent's, the Banks' and the Letter of
Credit Banks' enforcement of their rights and remedies
thereunder. Each Borrower further waives any right such
Borrower may have, by statute or otherwise, to require the
Agent, the Collateral Agent, the Banks or the Letter of Credit
Banks to seek recourse first against any other Borrower or any
other person, or to realize upon any collateral for any of the
Obligations, as a condition precedent to enforcing such
Borrower's joint and several liability and obligations under
this Agreement and the other Loan Documents, and each Borrower
further waives any defense arising by reason of any incapacity
or other disability of any other Borrower or by reason of any
other defense which any Borrower may have on any of the
Obligations or under any of the Loan Documents. Each Borrower
consents and agrees that, without notice to or consent by any
Borrower and without affecting or impairing the liability of
any
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Borrower under this Agreement and the other Loan Documents,
the Agent, the Collateral Agent, the Banks and the Letter of
Credit Banks may compromise or settle, extend the period of
duration or the time for the payment, discharge or
performance of any of the Obligations or Loan Documents, or
may refuse to enforce or may release all or any parties to
any or all of the Obligations (including without limitation
any other Borrower or any guarantor thereof) or any
collateral therefor, or may grant other indulgences to any
other Borrower or such other parties in respect thereof, or
may waive, amend or supplement in any manner the provisions
of any of the Loan Documents or any other document,
instrument or agreement relating to or securing any of the
Obligations, or may release, surrender, exchange, modify, or
compromise any and all collateral securing any of the
Obligations or in which the Agent, the Collateral Agent, any
Bank or any Letter of Credit Bank may at any time have a
lien, or may refuse to enforce its rights or may make any
compromise or settlement or agreement therefor, in respect of
any and all of such collateral, or with any party to any of
the Obligations or Loan Documents, or with any other person,
or may release or substitute any one or more of the other
endorsers or guarantors of the Obligations, or may exchange,
enforce, waive or release any collateral for any guaranty of
any of the Obligations. Each Borrower further consents and
agrees that the Agent, the Collateral Agent, the Banks and
the Letter of Credit Banks shall not be under any obligation
to marshal any assets in favor of any Borrower or against or
in payment of any of the Obligations.
(c) Each Borrower agrees that no payment, performance
or enforcement of such Borrower's liabilities and obligations
under this Agreement and the other Loan Documents shall cause
such Borrower by subrogation or otherwise , to acquire any
rights of the Agent, the Collateral Agent, any Bank or any
Letter of Credit Bank against any Borrower or any property of
any Borrower (or any interest in such rights) unless and until
the Agent, the Collateral Agent, the Banks and the Letter of
Credit Banks have received full and indefeasible payment of
all of the Obligations.
(d) Each reference to "the Borrower" in this
Agreement shall be deemed to be a reference to either Borrower
or, collectively, both Borrowers, as appropriate.
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Section 11.17. Maximum Liability; Contribution Rights.
(a) It is the intention of the Borrowers and of the
Banks, the Letter of Credit Banks and the Agent that each
Borrower's obligations hereunder shall be in, but not in
excess of, the maximum amount permitted by applicable federal
bankruptcy, state insolvency, fraudulent conveyance or
transfer or similar laws ("Applicable Bankruptcy Law"). To
that end, but only to the extent such obligations would
otherwise be subject to avoidance under Applicable Bankruptcy
Law if any Borrower is not deemed to have received valuable
consideration, fair value or reasonably equivalent value for
its obligations hereunder, such Borrower's respective
obligations hereunder shall be reduced to that amount which,
after giving effect thereto, would not render such Borrower
insolvent, or leave such Borrower with unreasonably small
capital to conduct its business, or cause such Borrower to
have incurred debts (or intended to have incurred debts)
beyond its ability to pay such debts as they mature, at the
time such obligations are deemed to have been incurred under
Applicable Bankruptcy Law. As used herein, the terms
"insolvent" and "unreasonably small capital" shall likewise be
determined in accordance with Applicable Bankruptcy Law. This
Section is intended solely to preserve the rights of the
Banks, the Letter of Credit Banks and the Agent hereunder to
the maximum extent permitted by Applicable Bankruptcy Law, and
none of the Borrowers nor any other Persons shall have any
right or claim under this Section that would not otherwise be
available under Applicable Bankruptcy Law.
(b) If and to the extent that any Borrower shall,
under this Agreement or any other Loan Document make a payment
(a "Borrower Payment") of all or any portion of the Obligations
then such Borrower shall be entitled to contribution and
indemnification from each of the other Borrowers (collectively
the "Contributing Borrowers") in an amount, for each such
Contributing Borrower, equal to a fraction of such Borrower
Payment, the numerator of which fraction is such Contributing
Borrower's Allocable Amount of such Borrower Payment and the
denominator of which is the sum of all of the Allocable Amounts
of such Borrower Payment of all of the Contributing Borrowers.
As of any date of determination thereof and with respect to any
Borrower Payment, the "Allocable Amount" of each Contributing
Borrower shall be equal to the maximum amount of liability
which could be asserted against such Contributing Borrower
under this Agreement or any other Loan Document with respect to
such Borrower Payment without (i) rendering such Contributing
Borrower insolvent, (ii) leaving such Contributing Borrower
with unreasonably small capital to conduct its business, or
(iii) causing such Contributing Borrower to have incurred debts
beyond its ability to pay such debts as they mature. As used
in this Section 11.17, the terms "insolvent" and "unreasonably
small capital" shall be determined in accordance with Applic-
able Bankruptcy Laws. This Section 11.17 is intended only to
define the relative rights and obligations of the Borrowers
with respect to
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any and all Borrower Payments, and nothing set forth in this
Section 11.17 is intended to or shall otherwise modify, affect
or impair the obligations of the Borrowers, jointly and
severally, to pay any or all of the Obligations as and when the
same shall become due and payable in accordance with the terms
of this Agreement and the other Loan Documents. Each of the
Borrowers hereby acknowledges that the rights of contribution
and indemnification hereunder shall constitute assets in favor
of each Borrower to which such contribution and indemnification
is owing hereunder. The agreements contained in this Section
11.17 shall continue in full force and effect and may not be
terminated or otherwise revoked by any Borrower until all of
the Obligations have been indefeasibly paid in full and this
Agreement and the other Loan Documents shall been terminated in
accordance with the terms thereof.
Section 11.18. Subordination. Until all of the Commitments
and Letters of Credit have been terminated and all Loans,
Reimbursement Obligations and other Obligations have been paid
in full, all present and future indebtedness and obligations of
any Borrower to any other Borrower are hereby subordinated in
right of payment to the Obligations, provided, however, that
any such Borrower may receive payments of any such indebtedness
so long as no Default shall have occurred and be continuing
hereunder. All monies received from any Borrower or for its
account by any other Borrower with respect to such indebtedness
or obligations after the occurrence and during the continuance
of a Default hereunder shall be received in trust for the
Banks, the Letter of Credit Banks and the Agent, and promptly
upon receipt be paid over to the Agent upon its request until
the Obligations are fully paid, satisfied and performed, all
without prejudice to and without in any way affecting the
obligations of any Borrower hereunder.
7. Replacement of Exhibits A-1 through A-6. Subject to the terms and
conditions of this Amendment, Exhibits X-0, X-0, X-0, X-0, A-5 and A-6 of the
Credit Agreement are hereby replaced with the Exhibits X-0, X-0, X-0, X-0, A-5
and A-6 attached hereto.
8. Addition of Exhibits E and F. Subject to the terms and conditions
of this Amendment, Exhibits E and F attached hereto are added to and
incorporated into the Credit Agreement.
9. Consent to Xxxxx Xxxxxx Transaction. Subject to the terms and
conditions of this Amendment, the Agent and the Banks hereby consent to the
consummation of the transaction described on Exhibit B attached hereto, and
hereby waive any Event of Default arising under Sections 5.6, 5.7, 5.10 or 5.18
of the Credit Agreement (other than an Event of Default caused by the failure of
the Parent or any new Subsidiary to deliver the additional Security Documents
required under Sections 5.18 and 5.21) solely by reason of the consummation of
the transaction described on Exhibit B. The foregoing consent and waiver shall
apply only to the matter stated and shall not constitute a waiver by the Agent
or the Banks of any other or future Default or Event of Default.
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10. Consent to Formation of New Subsidiaries. Subject to the terms and
conditions of this Amendment, the Agent and the Banks hereby consent to the
formation of the new Subsidiaries identified on Exhibit C attached hereto, and
hereby waive any Event of Default arising under Section 5.17 or 5.18 of the
Credit Agreement (other than an Event of Default caused by the failure of any
such new Subsidiary to deliver the additional Security Documents required under
Section 5.18 and 5.21) solely by reason of the formation of such new
Subsidiaries. The foregoing consent and waiver shall apply only to the matter
stated and shall not constitute a waiver by the Agent or the Banks of any other
or future Default or Event of Default. Schedule 4.1 of the Credit Agreement is
hereby amended by adding thereto the names of the new Subsidiaries identified on
Exhibit C hereto.
11. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to the Agent and the Banks that (a) this Amendment has
been duly authorized, executed and delivered by each of the Borrowers, (b) no
Default or Event of Default has occurred and is continuing as of this date, and
(c) all of the representations and warranties made by the "Borrower" in the
Credit Agreement are true and correct in all material respects on and as of the
date of this Amendment (except to the extent that any such representations or
warranties expressly referred to a specific prior date). Any breach by the
Borrowers of the representations and warranties contained in this Section 11
shall be an Event of Default for all purposes of the Credit Agreement.
12. Ratification. Each of the Borrowers hereby ratifies and reaffirms
each and every term, covenant and condition set forth in the Credit Agreement
and all other documents delivered by such Borrower in connection therewith
(including without limitation the other Loan Documents to which Borrower is a
party), effective as of the date hereof.
13. Estoppel. To induce the Agent and the Banks to enter into this
Amendment, each of the Borrowers hereby acknowledges and agrees that, as of the
date hereof, there exists no right of offset, defense or counterclaim in favor
of such Borrowers as against the Agent, any Bank or any Letter of Credit Bank
with respect to the obligations of the Borrowers to any of such parties under
the Credit Agreement or the other Loan Documents, either with or without giving
effect to this Amendment.
14. Conditions to Effectiveness. This Amendment shall become effective,
upon the Effective Date, subject to the satisfaction of the following conditions
on or prior to such date:
(a) the receipt by the Agent of this Amendment, duly executed,
completed and delivered by the Agent, the Banks and the Borrowers, and
consented to by the Parent;
(b) the receipt by the Agent and the Banks of replacement Revolving
Notes evidencing Base Rate Loans, Alternate Base Rate Loans and Eurodollar
Loans, duly executed by the Borrowers and payable to the order of each
Bank;
(c) the receipt by the Agent of such additional Security Documents
or modifications of the existing Security Documents as may be requested by
the Agent,
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duly executed by the Parent and/or each Borrower which is a party thereto,
and the Collateral Agent, in each case in form and substance satisfactory
to the Agent;
(d) the receipt by the Agent of such modifications of the Inter-
creditor Agreement as may be requested by the Agent, duly executed by the
Collateral Agent and the Senior Noteholders, and acknowledged by the
Borrowers, the Parent and each other new Subsidiary, in form and substance
satisfactory to the Agent;
(e) the receipt by the Agent of a Guaranty Agreement and such
Security Documents as may be requested by the Agent, duly executed by each
new Subsidiary (other than Leasing) and in form and substance satisfactory
to the Agent;
(f) the receipt by the Agent of a certificate of the Secretary or
an Assistant Secretary of the Parent, each Borrower and each other new
Subsidiary, in form and substance satisfactory to the Agent, with respect
to the officers of the Parent, the Borrowers and the other new Subsidiaries
authorized to deliver this Amendment, the replacement Revolving Notes and
the other supplemental Loan Documents contemplated hereby, to which shall
be attached copies of the resolutions and bylaws referred to in such
certificate;
(g) the receipt by the Agent of a certificate of incorporation of
each new Subsidiary, certified by the Secretary of State of its
jurisdiction of incorporation;
(h) the receipt by the Agent of a certificate of good standing with
respect to the Parent, each Borrower and each other new Subsidiary, issued
as of a recent date by the Secretary of State of its jurisdiction of
incorporation;
(i) the receipt by the Agent of a certificate as to the solvency of
the Parent and its Subsidiaries, duly executed by the chief financial
officer of the Parent and in form and substance satisfactory to the Agent;
(j) the receipt by the Agent of an opinion of counsel to the
Parent, the Borrowers and the other new Subsidiaries as to such matters as
may be requested by the Agent or the Required Banks, in form and substance
satisfactory to the Agent and the Required Banks;
(k) the receipt by the Agent of such other documents, certificates,
instruments and opinions as the Agent may reasonably request; and
(l) the receipt by the Agent of all fees and expenses payable to
the Agent and the Banks in connection with the Credit Agreement and this
Amendment including without limitation, the reasonable legal fees and other
reasonable out of pocket expenses of the Agent and each Bank incurred in
connection with this Amendment.
15. Reimbursement of Expenses. Each of the Borrowers hereby jointly and
severally agrees that it shall reimburse the Agent on demand for all costs and
expenses (including
-15-
without limitation attorney's fees) incurred by such parties in connection with
the negotiation, documentation and consummation of this Amendment and the other
documents executed in connection herewith and therewith and the transactions
contemplated hereby and thereby.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA FOR CONTRACTS TO BE
PERFORMED ENTIRELY WITHIN SAID STATE.
17. Severability of Provisions. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. To the extent permitted by Applicable Law, each of the Borrowers
hereby waives any provision of law that renders any provision hereof prohibited
or unenforceable in any respect.
18. Counterparts. This Amendment may be executed in any number of
counterparts, all of which shall be deemed to constitute but one original and
shall be binding upon all parties, their successors and permitted assigns.
19. Entire Agreement. The Credit Agreement as amended by this Agreement
embodies the entire agreement between the parties hereto relating to the subject
matter hereof and supersedes all prior agreements, representations and
understandings, if any, relating to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed by their respective officers thereunto duly authorized, as of the date
first above written.
COVENANT TRANSPORT, INC., a Tennessee
corporation, as a Borrower
By:
Name:
Title:
COVENANT LEASING, INC., a Nevada
corporation, as a Borrower
By:
Name:
Title:
ABN AMRO BANK N.V., acting through
its Atlanta Agency, as Agent
By:
Name:
Title:
By:
Name:
Title:
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ABN AMRO BANK N.V., acting through
its Atlanta Agency, as a Bank
By:
Name:
Title:
By:
Name:
Title:
Commitments: Amount: Percentage:
Revolving $26,000,000 .30588235
Term $26,000,000 .30588235
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376858.3
THE FIRST NATIONAL BANK
OF CHICAGO
By:
Name:
Title:
Commitments: Amount: Percentage:
Revolving $22,000,000 .25882353
Term $22,000,000 .25882353
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NATIONSBANK, N.A. (SOUTH)
By:
Name:
Title:
Commitments: Amount: Percentage:
Revolving $22,000,000 .25882353
Term $22,000,000 .25882353
-20-
FIRST AMERICAN NATIONAL BANK
By:
Name:
Title:
Commitments: Amount: Percentage:
Revolving $15,000,000 .17647059
Term $15,000,000 .17647059
-21-
CONSENT OF GUARANTOR
The undersigned COVENANT TRANSPORT, INC., a Nevada corporation, as
guarantor (the "Guarantor") under that certain Guaranty Agreement (hereinafter
called the "Guaranty"), dated as of January 17, 1995, executed by the Guarantor
pursuant to the Credit Agreement (the "Credit Agreement"), dated as of January
17, 1995, among Covenant Transport, Inc., a Tennessee corporation (the
"Borrower"), the Banks signatories thereto (the "Banks"), the Banks serving as
Letter of Credit Banks thereunder, and ABN AMRO Bank N.V., acting through its
Atlanta Agency, as Agent (all of the foregoing parties being herein referred to
collectively as the "Guaranteed Parties"), with respect to the indebtedness and
obligations of the Borrower arising under the Credit Agreement, hereby consents
to and approves of the execution and delivery by the Borrower of that certain
Third Amendment to Credit Agreement (the "Amendment"), dated as of the date
hereof, executed by and among the Borrower, Covenant Leasing, Inc., a Nevada
corporation ("Leasing"), and the Guaranteed Parties, and the transactions
contemplated thereby (including without limitation the addition of Leasing as a
Borrower thereunder), and further consents to and approves of the execution and
delivery by the Borrower and Leasing of all other documents and instruments
executed or to be executed by the Borrower or Leasing in connection therewith,
including, without limitation, the replacement Notes.
The Guarantor acknowledges and agrees that the execution and delivery
of the Amendment and the replacement Notes shall not diminish, impair, alter,
discharge or otherwise affect in any manner whatsoever the duties, obligations
and liabilities of the Guarantor under the Guaranty including, without
limitation, the obligation of the Guarantor for the payment of the "Obligations"
(as that term is defined in the Guaranty and the Credit Agreement).
The Guarantor hereby ratifies, confirms and approves the Guaranty and
all of the terms and provisions thereof, and agrees that the Guaranty
constitutes the valid and binding obligation of the Guarantor, enforceable by
the Guaranteed Parties in accordance with its terms.
IN WITNESS WHEREOF, the Guarantor has executed this consent, as of the
31st day of March, 1997.
GUARANTOR:
COVENANT TRANSPORT, INC., a Nevada
corporation
By:
Name:
Title:
