Exhibit 10.1
PARTICIPATION AGREEMENT
Dated as of December 22, 1995
Entered Into By and Among
CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE
as Lessee,
ABN AMRO BANK N.V.,
not individually, except as expressly
set forth herein, but as Agent
and
The Lessors Listed on
Schedule I Hereto
TABLE OF CONTENTS
Page
ARTICLE I Definitions 1
ARTICLE II Purchase and Lease of Vehicles 1
Section 2.1 Fundings; Payment of Purchase Price 1
Section 2.2 Application of Funds; Sale and Lease of Vehicles 3
Section 2.3 Time and Place of Delivery Dates 4
Section 2.4 Postponement of Delivery Date 4
Section 2.5 Commitment Fee 4
ARTICLE III Conditions to Delivery Date Closings 5
Section 3.1 Delivery Date Notice; Invoices 5
Section 3.2 Appraisal 5
Section 3.3 Participation Agreement 6
Section 3.4 Lease 6
Section 3.5 Lease Supplements 6
Section 3.6 Financial Reports 7
Section 3.7 Financing Statements 7
Section 3.8 Certificates of Title 7
Section 3.9 Transaction Costs; Fees 7
Section 3.10 Opinions of Counsel 8
Section 3.11 Corporate Status and Proceedings 8
Section 3.12 Consents and Approvals 8
Section 3.13 Payment of Impositions 8
Section 3.14 Search Reports 9
Section 3.15 [Intentionally Omitted] 9
Section 3.16 Insurance 9
Section 3.17 Proceedings Satisfactory, Etc. 9
Section 3.18 Absence of Material Adverse Effect 9
Section 3.19 Representations and Warranties True; Absence of
Defaults 9
ARTICLE IV General Provisions 9
Section 4.1 Nature of Transaction 9
Section 4.2 [Intentionally Omitted] 10
Section 4.3 Replacements 10
ARTICLE V Representations and Warranties 10
Section 5.1 Representations and Warranties of Lessee 10
Section 5.2 Representations and Warranties of Lessors 16
Section 5.3 Representations and Warranties of Agent 16
ARTICLE VI Covenants 18
Section 6.1 Covenants of Lessee 18
Section 6.2 [Intentionally Omitted] 24
Section 6.3 Covenants of Agent and Lessors 24
ARTICLE VII General Indemnities 25
Section 7.1 Indemnity 25
Section 7.2 Excessive Use Indemnity 26
Section 7.3 Increased Capital Costs 26
Section 7.4 LIBO Rate Unlawful 27
Section 7.5 Funding Losses 27
Section 7.6 Actions of Affected Lessors 28
ARTICLE VIII General Tax Indemnity 28
Section 8.1 General Tax Indemnity 28
Section 8.2 Contest 29
Section 8.3 Gross Up 30
Section 8.4 Tax Returns 31
Section 8.5 Withholding Tax Exemption 32
ARTICLE IX Agent 33
Section 9.1 Appointment of Agent; Powers and Authorization
to Take Certain Actions 33
Section 9.2 Reliance 34
Section 9.3 Action Upon Instructions Generally 34
Section 9.4 Indemnification 35
Section 9.5 Independent Credit Investigation 36
Section 9.6 Refusal to Act 36
Section 9.7 Resignation or Removal of Agent; Appointment of
Successor 37
Section 9.8 Separate Agent 37
Section 9.9 Termination of Agency 38
Section 9.10 Compensation of Agency 38
Section 9.11 Limitations 38
ARTICLE X Amendments to Operative Agreements 39
Section 10.1 Amendments to Operative Agreements With
Consent of Lessors 39
Section 10.2 Amendments to Operative Agreements
Affecting Agent 40
ARTICLE XI Miscellaneous 40
Section 11.1 Survival of Covenants 40
Section 11.2 APPLICABLE LAW 40
Section 11.3 Distribution and Application of Rents and Other
Payments 40
Section 11.4 Notices 41
Section 11.5 Transaction Costs; Other Expenses 42
Section 11.6 Counterparts 42
Section 11.7 Severability 43
Section 11.8 Successors and Assigns; Transfers 43
SECTION 11.9 JURY TRIAL 45
Section 11.10 Captions; Table of Contents 45
Section 11.11 FINAL AGREEMENT 45
Section 11.12 No Third-Party Beneficiaries 45
Section 11.13 Further Assurances 45
Section 11.14 Reproduction of Documents 46
Section 11.15 Consideration for Consents to Waivers and
Amendments 46
Section 11.16 Submission to Jurisdiction 46
LIST OF SCHEDULES AND EXHIBITS
Schedule I - Commitments of Lessors; Payment Instructions
Schedule II - Description of Vehicles
Schedule X - Definitions
Exhibit A - Form of Lease
Schedule I - Description of Vehicles
Exhibit A - Form of Lease Supplement
Exhibit B - Form of Delivery Date Notice
Schedule I - Vehicle List and Purchase Price
Exhibit C - Form of Lessee's Opinion of Counsel
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Investor's Letter
Exhibit F - Form of Assumption Agreement
Exhibit G - Form of Schedule I to Lease Agreement
Exhibit H - Form of Schedule II to Lease Agreement
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of December 22, 1995
(this "Participation Agreement"), is entered into among
CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, a Delaware
corporation, as Lessee ("Lessee"), ABN AMRO BANK N.V., a bank
organized under the laws of the Netherlands, not in its
individual capacity, except as otherwise expressly provided
herein, but solely as Agent for the Lessors (the "Agent"), and
the several Lessors listed on Schedule 1 hereto (together with
their respective permitted successors, assigns and transferees,
each a "Lessor" and collectively the "Lessors").
WHEREAS, on each Delivery Date, Lessee will transfer to
Agent, for the benefit of Lessors, and Agent, on behalf of
Lessors, will purchase and receive from Lessee, an interest in
certain of the Vehicles described on Schedule II hereto; and
WHEREAS, upon the transfer of the Vehicles on each Delivery
Date, Agent, on behalf of Lessors, will lease such Vehicles to
Lessee and Lessee will lease such Vehicles from Agent, for the
benefit of Lessors, pursuant to the terms of the Lease substan
tially in the form of Exhibit A hereto and one or more Lease
Supplements, each substantially in the form of Exhibit A to the
Lease;
NOW, THEREFORE, in consideration of the mutual terms and
conditions herein contained, the parties hereto agree as
follows:
ARTICLE I
Definitions
Capitalized terms used but not defined herein (including
those used in the foregoing recitals) shall have the meanings
specified in Schedule X hereto unless the context otherwise
requires, which Schedule X shall for all purposes constitute a
part of this Participation Agreement.
ARTICLE II
Purchase and Lease of Vehicles
Section II.1 Fundings; Payment of Purchase Price.
(a) Subject to the terms and conditions hereinafter set
forth, and in reliance on the representations and warranties
contained herein or made pursuant hereto, upon receipt of each
Delivery Date Notice, each Lessor shall transfer to Agent on the
specified Delivery Date an amount equal to the product of the
aggregate Purchase Price of the Vehicles specified in such
Delivery Date Notice, multiplied by such Lessor's Commitment
Percentage (each such transfer being referred to herein as a
"Funding"). In no event shall any Lessor be required to provide
funds under this Participation Agreement in an aggregate amount
exceeding such Lessor's Commitment.
(b) Remittances pursuant to this Section 2.1 shall be made
in immediately available federal funds by wire transfer to the
account of Agent set forth below (or as otherwise specified by
Agent to each Lessor from time to time not less than three
Business Days prior to the date of the requested Funding) and
must be received by Agent by 2:00 p.m., New York time on the
applicable Delivery Date:
(c) If the Agent determines that any Lessor (a "Defaulting
Lessor") will not make available the amount (the "Defaulted
Amount") which would constitute its Commitment Percentage of the
total Purchase Price of the Vehicles specified in a Delivery
Date Notice, Agent shall promptly notify each other Lessor
(each, a "Non-Defaulting Lessor") and specify the additional
amounts required to be funded by each Non-Defaulting Lessor.
Each Non-Defaulting Lessor, as soon as practical after receipt
of notice but not before the Delivery Date, shall transfer to
the Agent, in immediately available funds, its pro rata share of
the Defaulted Amount, determined in the same proportion that
such Non-Defaulting Lessor's Commitment bears to the aggregate
Commitments of all Non-Defaulting Lessors; provided that such
amount, together with all amounts previously funded by each
Non-Defaulting Lessor, shall not exceed the Non-Defaulting
Lessor's Commitment. If the Defaulted Amount cannot be fully
funded by the Non-Defaulting Lessors, Agent shall so notify the
Non-Defaulting Lessors and give to all Non-Defaulting Lessors
the opportunity to increase their respective Commitments by
notice in writing to the Agent; provided that should the aggre
gate proposed increased Commitments by one or more Non-Default
ing Lessors exceed the Defaulted Amount, Agent shall increase
the Commitments of the participating Non-Defaulting Lessors on a
pro-rata basis in accordance with the respective amounts by
which such Non-Defaulting Lessors have offered to participate,
it being understood that in no event shall the aggregate amount
funded by any Lessor exceed the amount of such Lessor's Commit
ment, after giving effect to any increase in such Commitment
pursuant to this sentence.
In the event of any funding of all or a portion of the
Defaulted Amount by the Non-Defaulting Lessors, the following
rules shall apply notwithstanding any other provision in any
Operative Agreement:
(i) The Commitment of the Defaulting Lessor
shall be decreased in an amount equal to the total
aggregate increase in the Commitments of the
Non-Defaulting Lessors pursuant to this Section
2.1(c);
(ii) A Defaulting Lessor shall be obligated to
fund any deliveries occurring after its default based
upon its revised Commitment Percentage;
(iii) A Defaulting Lessor shall not have the
right to fund its Defaulted Amount without the written
consent of the Agent and Lessee and then only to the
extent such Defaulted Amount has not been funded by
the Non-Defaulting Lessors;
(iv) If and to the extent that the Defaulted
Amount is not funded by the Non-Defaulting Lessors,
Agent may delete Vehicles from the Delivery Date
Notice so that the total Purchase Price of the
Vehicles specified in the Delivery Date Notice equals
the aggregate revised Fundings for the Delivery Date;
and
(v) The Defaulting Lessor shall not be responsi
ble for any consequential damages suffered by Lessee
or any of Lessee's Affiliates as a result of its
failure to so fund.
Section II.2 Application of Funds; Sale and Lease of
Vehicles. On each Delivery Date, upon (a) receipt by Agent of
all amounts to be paid by the Lessors pursuant to Section 2.1,
and (b) satisfaction or waiver of each of the conditions set
forth in Article III, (i) Agent shall purchase, for the benefit
of the Lessors, an interest in the Vehicles to be acquired on
such Delivery Date, as specified in the relevant Delivery Date
Notice delivered pursuant to Section 3.1, (ii) in consideration
therefor, Agent, on behalf of the Lessors, shall pay, from the
funds made available by the Lessors pursuant to Section 2.1, an
amount equal to the aggregate Purchase Price of the interest in
the Vehicles being so sold and purchased in immediately availa
ble federal funds remitted by wire transfer to the account
specified by Lessee in the relevant Delivery Date Notice, and
(iii) Agent, on behalf of the Lessors, shall lease to Lessee the
Vehicles so purchased by Agent and Lessee shall accept delivery
of and lease from Agent such Vehicles pursuant to the Lease.
Each Lessor shall hold an undivided interest in the Vehicles
equal to such Lessor's Investment Percentage.
Section II.3 Time and Place of Delivery Dates. Each
Delivery Date Closing shall take place on the Delivery Date set
forth in the relevant Delivery Date Notice, commencing at
10:00 a.m. San Francisco time, at Pillsbury Madison & Sutro LLP,
subject to the following:
(i) no more than one Funding and one Delivery
Date may occur;
(ii) each Delivery Date shall occur on a
Business Day on or after the date hereof and not later
than December 29, 1995, it being understood that there
may be a Funding without a Delivery Date Closing if
Lessee has postponed the Delivery Date pursuant to
Section 2.4, so long as such Delivery Date occurs not
later than December 29, 1995; and
(iii) in no event shall the aggregate amount
advanced by the Lessors exceed the Total Commitment.
Section II.4 Postponement of Delivery Date. In the event
that the Lessors shall make the Funding requested pursuant to
any Delivery Date Notice and the relevant Delivery Date Closing
shall not have occurred on the date specified in such Delivery
Date Notice, Lessee shall pay to Agent, for the benefit of
Lessors, interest on the amount funded by each Lessor at the
Assumed Interest Rate, less any interest earned by investing
such funded amounts, which interest shall be for the ratable
benefit of the Lessors; provided that this provision shall not
be construed to require Agent to invest such funds in interest-
bearing accounts. Such interest shall be due and payable by
Lessee upon the occurrence of such Delivery Date and such
payment shall be an additional condition precedent to such
Delivery Date Closing; provided, however, that no additional
Delivery Date Notice shall be required to be given if a Delivery
Date Closing is postponed and thereafter consummated; and
provided, further, that if such Delivery Date Closing shall not
have occurred by the first to occur of (a) the fifth (5th)
Business Day following the Funding in respect thereof and
(b) December 29, 1995; then all such interest shall be due and
payable on such date, and Agent shall refund to each Lessor all
amounts funded by such Lessor, plus any other amounts due under
Section 7.5.
Section II.5 Commitment Fee. On the Lease Commencement
Date, in the event that the outstanding Lease Balance is less
than 95% of the Total Commitment (after giving effect to any
Delivery Date Closing that may have occurred on such date),
Lessee shall pay to Agent, for the benefit of the Lessors, a
commitment fee (the "Commitment Fee") equal to the amount
accrued on the unfunded portion of the Total Commitment from the
Initial Delivery Date through the Lease Commencement Date at the
rate of .20% per annum; provided, however, if the Initial
Delivery Date and the Lease Commencement Date occur on the same
date, no Commitment Fee shall be payable by Lessee.
ARTICLE III
Conditions to Delivery Date Closings
The obligation of each Lessor and Agent to perform its obli
gations on any Delivery Date, and of each Lessor to make its
Funding, shall be subject to the fulfillment to the satisfaction
of (including, with respect to writings, such writings being in
form and substance reasonably satisfactory to the addressee or
beneficiary thereof), or the waiver in writing by, each Lessor
and Agent of the conditions precedent set forth in this Article
III on or prior to such Delivery Date (except that the
obligation of any party hereto shall not be subject to the
performance or compliance of such party or of any of such
party's Affiliates).
Section III.1 Delivery Date Notice; Invoices. Lessee
shall have delivered to Agent and each Lessor, not later than
1:00 p.m. San Francisco time not earlier than the tenth (10th)
and not later than the first (1st) Business Day prior to the
proposed Delivery Date, an irrevocable notice (a "Delivery Date
Notice") substantially in the form of Exhibit B, specifying (i)
the proposed Delivery Date, (ii) a description (including model,
make, serial number and registration) of each Vehicle to be
purchased on such Delivery Date and a representation and
warranty that as of the date Lessee takes possession of each
such Vehicle and at all times thereafter, such Vehicle will
either be (a) used in interstate commerce, titled in a State
with respect to which Agent and Lessors have received an opinion
in the form of Exhibit C-1 and registered in a State which is a
party to the International Registration Plan or (b) used in
intrastate commerce, registered in the State in which it is so
used and titled in a State with respect to which Agent and
Lessors have received an opinion in the form of Exhibit C-1,
(iii) the respective Purchase Prices of such Vehicles, and
(iv) wire transfer instructions for the disbursement of funds.
Concurrently with each Delivery Date Notice, Lessee shall
deliver to Agent true and correct copies of the manufacturer's
or dealer's invoice for each Vehicle to be delivered on such
Delivery Date, which invoices shall set forth the Invoice Cost
of each such Vehicle.
Section III.2 Appraisal. At least one (1) Business Day
prior to the Initial Delivery Date, Agent and each Lessor shall
have received an Appraisal to their reasonable satisfaction
opining:
(a) that the Appraised Value of the Vehicles is reasonably
expected to be as follows:
Date Value
Sum of Fair Market Value
Vehicles on the Initial Delivery Date $64,725,527.48
End of Base Period $47,896,890.34
End of First Renewal Term $39,482,571.76
End of Second Renewal Term $31,068,253.19
End of Third Renewal Term $22,653,934.62
(b) that the remaining economic useful life of each
Vehicle is not less than eight (8) years;
(c) that the values set forth in clause (a) above assume
an increase for inflation of 2% per annum, and that such infla
tion assumption is reasonable.
Section III.3 Participation Agreement. On or prior to the
Initial Delivery Date, each of the Participants shall have
received a fully executed counterpart of this Participation
Agreement.
Section III.4 Lease. On or prior to the Initial Delivery
Date, each Participant shall have received a fully executed
counterpart of the Lease.
Section III.5 Lease Supplements. On each Delivery Date,
Lessee by accepting Vehicles for lease on such Delivery Date
shall execute and deliver to Agent and each Lessor one or more
Lease Supplements in form and substance reasonably satisfactory
to Lessors and substantially in the form of Exhibit A to the
Lease (each a "Lease Supplement"); provided, however, only Agent
shall receive the Lease Supplement marked "Counterpart No. 1 -
Agent's Original Copy". Each Lease Supplement to be executed
and delivered by Lessee on each Delivery Date shall set forth:
(a) in Schedule I thereto, a description of and the
Purchase Price for the Vehicles; and
(b) in Schedule II thereto, (i) the Interim Rent (if any),
(ii) a schedule of the installments of Fixed Rent, the Payment
Dates therefor payable during the Base Period and during each
Renewal Term, the Supplement Balance of such Lease Supplement as
of the Delivery Date therefor and as of each Payment Date in the
Base Term and each Renewal Term, assuming in each case that all
installments of Fixed Rent due and payable thereunder to and
including such Payment Date have been paid, (iii) the Lease
Supplement Termination Percentages, (iv) the Lease Supplement
Lessee Risk Percentages and (v) the Lease Supplement Lessor Risk
Percentages.
An amortization schedule, providing for equal quarterly install
ments of Fixed Rent and Variable Rent over the full five years
of the Lease Term (that is, the Base Term and the three Renewal
Terms), will be prepared for each Lease Supplement using the
Interest Rate as determined on the date of the Delivery Date
Notice, such that at the end of the Lease Term the Supplement
Balance of such Lease Supplement shall be equal to the Appraised
Value at such date of the Vehicles subject to such Lease
Supplement. The installments of Fixed Rent so determined shall
be set forth in Schedule II to such Lease Supplement and shall
be payable by Lessee on the dates and in the amounts set forth
in said Schedule II. The installment of Variable Rent shall
vary over the Lease Term, based upon changes in the applicable
Interest Rate. Schedules I and II to each Lease Supplement
shall be prepared by Agent, and the items set forth by Agent in
such Schedules shall be conclusive and binding upon Lessee for
all purposes hereunder. To assist the Agent in preparing
Schedules I and II to each Lease Supplement, attached hereto as
Exhibits G and H are hypothetical Schedules I and II which have
been prepared using certain assumed information.
Section III.6 Financial Reports. At least three (3)
Business Days prior to the Initial Delivery Date, Lessee shall
have delivered to Agent and Lessors copies of its most recent
financial statements prepared in accordance with GAAP, applied
on a consistent basis throughout the periods covered thereby and
on a basis consistent with prior periods.
Section III.7 Financing Statements. On or prior to each
Delivery Date, Agent shall have received from Lessee duly
executed UCC financing statements identifying Lessee as debtor
and Agent as secured party for the benefit of the Lessors, and
describing the Lease as a secured transaction, and such financ
ing statements shall have been filed in (a) the jurisdiction in
which Lessee has its principal office and (b) each jurisdiction
in which any Vehicle being delivered on such Delivery Date is to
be titled.
Section III.8 Certificates of Title. On or prior to each
Delivery Date, Agent and each Lessor shall have received a duly
executed Officer's Certificate from Lessee, certifying that
(a) Lessee has submitted to each applicable motor vehicle
Authority the Certificate of Title or Certificate of Origin for
each Vehicle to be delivered on such Delivery Date, together
with (i) applications duly completed by Lessee requesting that
such Authority record the interests of Agent, on behalf of the
Lessors, as lienholder on each such Certificate of Title and
(ii) payment of all applicable fees and charges and (b) as so
submitted, such Certificates of Title do not evidence title, or
any interest in or Lien against title, in any such Vehicle in
any Person other than the Lessee and the Agent.
Section III.9 Transaction Costs; Fees. On or prior to
each Delivery Date, Lessee shall have paid to Agent, for the
benefit of Agent and the Lessors, any Transaction Costs invoiced
and not previously paid. Such payment shall be made by wire
transfer of immediately available funds to the account specified
for Agent at Schedule I.
Section III.10 Opinions of Counsel. On or prior to the
Initial Delivery Date, each Lessor and Agent shall have received
the opinions of (a) Xxxxxxxx & Xxxxxxxx, as counsel to Lessee
substantially to the effect of the matters set forth in
Exhibit C-1, and (b) general counsel to Consolidated
Freightways, Inc., the parent corporation of Lessee,
substantially to the effect of the matters set forth in Exhibit
C-2. By their execution hereof, Lessee expressly instructs
Xxxxxxxx & Xxxxxxxx and such general counsel to execute and
deliver such opinions to Agent and the Lessors. To the extent
that any Vehicle to be delivered on any Delivery Date is titled
in a jurisdiction with respect to which Agent and the Lessors
have not previously received a satisfactory opinion or
memorandum of counsel establishing to their satisfaction that
title to such Vehicle may be held in the name of the Lessee
thereof, with the interest of Agent, as lienholder on behalf of
the Lessors, noted on the Certificate of Title (and that the
Lien of Agent is thereby perfected), then Lessee shall cause
such an opinion or memorandum satisfactory to the Lessors to be
delivered to Agent and each Lessor on or prior to such Delivery
Date.
Section III.11 Corporate Status and Proceedings. On or
prior to the Initial Delivery Date, Agent shall have received:
(a) certificates of existence and good standing with
respect to Lessee from the Secretary of State of the State of
its incorporation, dated no earlier than the 15th day prior to
the Initial Delivery Date; and
(b) with respect to Lessee, an Officer's Certificate
substantially in the form of Exhibit D, dated the Initial
Delivery Date, with respect to such Person's governing docu
ments, resolutions and incumbent officers, representations and
warranties and absence of defaults.
Section III.12 Consents and Approvals. On or prior to the
Initial Delivery Date, all necessary consents, approvals and
authorizations of, and declarations, registrations and filings
with, Authorities and nongovernmental Persons required to consum
mate the transactions contemplated by this Agreement and the
other Operative Agreements shall have been obtained or made by
Lessee and shall be in full force and effect.
Section III.13 Payment of Impositions. All Impositions
other than Charges payable on or prior to each Delivery Date in
connection with the execution, delivery, recording or filing of
any of the Operative Agreements, in connection with the filing
of any of the financing statements, any applications regarding
certificates of title and any other documents, in connection
with the consummation of any other transactions contemplated
hereby or by any of the other Operative Agreements, shall have
been paid in full by Lessee.
Section III.14 Search Reports. Prior to each Delivery
Date, Agent shall have received reports acceptable to Agent and
counsel to the Lessors as to Lessee by the office of the
Secretaries of State and the appropriate county filing or
recording offices (if applicable) of each jurisdiction
contemplated by Section 3.7, each dated as close to the relevant
Delivery Date as practicable, in respect of a search of the
applicable UCC files and any indices of Liens maintained by such
offices (including, if applicable, indices of judgment, revenue
and tax liens).
Section III.15 [Intentionally Omitted].
Section III.16 Insurance. On or prior to the Initial
Delivery Date, Agent shall have received (and each Lessor shall
have received a copy of) a current certificate to the effect
that insurance complying with Section 7.1 of the Lease is in
full force and effect, and there shall be no past due premiums
in respect of any such insurance.
Section III.17 Proceedings Satisfactory, Etc. All proceed
ings taken in connection with such Delivery Date and all docu
ments relating thereto shall be reasonably satisfactory to each
Participant and its counsel, and each Participant and its coun
sel shall have received copies of such documents as such Partici
pant or its counsel may reasonably request in connection
therewith, all in form and substance reasonably satisfactory to
such Participant and its counsel.
Section III.18 Absence of Material Adverse Effect. Except
as disclosed in writing to Agent, since September 30, 1995, no
Material Adverse Effect shall have occurred and be continuing.
Section III.19 Representations and Warranties True;
Absence of Defaults. Each of the representations and warranties
made by or on behalf of Lessee under the Operative Agreements
shall be true on and as of each Delivery Date, and no Incipient
Default or Event of Default shall have occurred and be
continuing on and as of each Delivery Date.
ARTICLE IV
General Provisions
Section IV.1 Nature of Transaction. It is the intent of
the Participants that: (a) the transaction contemplated hereby
constitutes an operating lease from Agent and Lessors to Lessee
for purposes of each Lessee's financial reporting, (b) the trans
action contemplated hereby preserves ownership in the Vehicles
to Lessee for purposes of Federal and state income tax,
bankruptcy and UCC purposes, (c) the Lease grants a security
interest in the Vehicles and the other Collateral to Agent for
the benefit of Agent and the Lessors, and (d) the obligations of
Lessee to pay Fixed Rent and Variable Rent shall be treated as
payments of principal and interest, respectively. Nevertheless,
Lessee acknowledges and agrees that Agent has not made any
representations or warranties concerning the tax, accounting or
legal characteristics of the Operative Agreements and that
Lessee has obtained and relied upon such tax, accounting and
legal advice concerning the Operative Agreements as it deems
appropriate. Except as specifically provided for herein or in
the Lease, Agent, for the benefit of the Lessors, shall retain
an interest in the Vehicles, free and clear of all Liens other
than Permitted Liens, as security for the obligations of Lessee
under the Operative Agreements. Lessee shall not have any
right, title or interest in the Vehicles except as expressly set
forth in this Agreement or in the Lease. Without limiting the
foregoing, Lessee shall be permitted to be named as the record
owner of each Vehicle leased by such Lessee on the Certificate
of Title and the registration issued for such Vehicle by each
applicable Authority so long as Agent is listed on the same
Certificate of Title as having a security interest in the
Vehicle or Lessee has taken such other steps as may be necessary
to perfect Agent's security interest, on behalf of the Lessors,
in such Vehicle. Other than Agent, who will hold a security
interest on behalf of the Lessors, and the Lessors, no Person
shall be named on the Certificate of Title of any Vehicle as
having a security interest in such Vehicle.
Section IV.2 [Intentionally Omitted].
Section IV.3 Replacements. Lessors hereby agree that they
shall instruct Agent to release a Part or Vehicle from the Lease
and evidence such release by the execution and delivery of a
termination statement release, a release of Lien from the
applicable Certificate of Title and such other documents as may
be required to release the replaced Part or Vehicle from the
Lease and which are in form and substance satisfactory to the
Required Lessors subject to the satisfaction of the conditions
set forth in the Lease with respect to the release of such Part
or Vehicle.
ARTICLE V
Representations and Warranties
Section V.1 Representations and Warranties of Lessee. As
of each Delivery Date, Lessee makes the representations and
warranties set forth in this Section 5.1 to Agent and each
Lessor:
(a) Title. Lessee has record title to each of the
Vehicles listed opposite such Lessee's name on Schedule I to the
applicable Delivery Date Notice or has beneficial title to such
Vehicle with record title being subject only to the issuance in
the ordinary course of the original Certificate of Title, for
which an application has already been submitted to the appropri
ate titling Authority, and each of the Vehicles and all of the
other Collateral is free from all Liens except for Permitted
Liens.
(b) Perfection of Security Interests. No filing, recorda
tion or registration is necessary or advisable in order to
perfect the security interest of Agent, for the benefit of the
Lessors, in the Vehicles and other Collateral referred to in the
foregoing subsection (a) other than (i) the filing or recording
of financing statements under Article 9 of the applicable UCC in
the jurisdictions contemplated by Section 3.7, and the recorda
tion on the Certificate of Title for each Vehicle with the
applicable Authority of the security interest of Agent on behalf
of the Lessors or (ii) in the case of any Sublease, the delivery
to Agent of the chattel paper original of such Sublease, and
upon the actions described in the foregoing clauses (i) and (ii)
the security interests in the Vehicles and the other Collateral
are enforceable, properly perfected, first-priority Liens,
subject only to Permitted Liens; provided, however, that such
actions may not be effective to perfect such security interest
in certain Intellectual Property Collateral that can only be
perfected by filing with the United States Patent and Trademark
Office and certain items described in clause (e) of the defini
tion of "Collateral" to the extent such items are stored in (but
not made a part of) a Vehicle and located from time to time in
jurisdictions where no such filing has been made or to the
extent that any such item consists of a type of collateral in
which a security interest cannot be perfected by taking such
actions.
(c) Appraisal Data. The information provided by Lessee to
the Appraiser and forming the basis for the conclusions set
forth in the Appraisal, taken as a whole, was true and correct
in all material respects and did not omit any information neces
sary to make the information provided not materially misleading
as of the time provided.
(d) Corporate Existence. Lessee is a corporation duly
incorporated validly existing and in good standing under the
laws of the State of Delaware, and Lessee is duly qualified or
licensed and in good standing as a foreign corporation
authorized to do business in each state where, because of the
nature of its activities or properties, such qualification or
licensing is required, except for such jurisdictions where the
failure to be so qualified or licensed would not have a Material
Adverse Effect.
(e) Corporate Authority. Lessee has all requisite
corporate power and authority to execute, deliver, and perform
its respective obligations under each Operative Agreement to
which it is a party.
(f) Authorization; Non-Contravention. The execution and
delivery by Lessee of the Operative Agreements to which it is a
party, and the performance by Lessee of its obligations under
such Operative Agreements, have been duly authorized by all
necessary corporate action (including any necessary stockholder
action) on its part, and do not and will not: (i) violate any
provision of any law, rule or regulation presently in effect
having applicability to Lessee or of any order, writ, judgment,
decree, determination or award presently in effect having appli
cability to Lessee, which violation or violations would have,
individually or in the aggregate, a Material Adverse Effect;
(ii) violate any provision of the charter or bylaws of Lessee;
(iii) result in a breach of or constitute a default under any
indenture, loan or credit agreement, or any other agreement or
instrument to which Lessee is a party or by which Lessee or its
properties may be bound or affected, which breaches or default
would have, individually or in the aggregate, a Material Adverse
Effect; or (iv) result in, or require, the creation or imposi
tion of any Lien of any nature upon or with respect to any of
the properties now owned or hereafter acquired by Lessee (other
than the security interest contemplated by the Lease); and
Lessee is not in default under or in violation of its charter or
by-laws.
(g) Binding Effect. Each of the Operative Agreements to
which Lessee is a party constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee, in accordance
with its terms, except as enforcement may be limited by bank
ruptcy, insolvency, arrangement, reorganization, moratorium or
other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
(h) Absence of Litigation, etc. There is no litigation
(including, without limitation, derivative actions), arbitration
or governmental proceedings pending or, to the knowledge of
Lessee, threatened against Lessee in which there is a reasonable
possibility of an adverse decision which, if adversely deter
mined, would have a Material Adverse Effect.
(i) Consents, etc. No authorization, consent, approval,
license or formal exemption from, nor any filing, declaration or
registration with, any Authority, including, without limitation,
the Securities and Exchange Commission, or with any securities
exchange, is or will be required in connection with the execu
tion and delivery by Lessee of the Operative Agreements to which
it is a party, the performance by Lessee of its obligations
under such Operative Agreements or the ownership, operation and
maintenance of the Vehicles as contemplated by the Operative
Agreements, except as described in Section 5.1(b).
(j) Location of Offices. The principal place of business
and chief executive office (as such term is used in Article 9 of
the UCC) of Lessee is located at 0000 Xxxx Xxxx Xxxx, Xxxxx 000,
Xxxxx Xxxx, Xxxxxxxxxx 00000.
(k) ERISA. Relying upon the accuracy of the representa
tions in Section 5.2(a) hereof, the execution and delivery of
the Operative Agreements by Lessee will not involve any prohi
bited transaction within the meaning of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended.
(l) Taxes. Lessee has filed or caused to be filed all
United States Federal and all other material tax returns that
are required to be filed by Lessee, and has paid or caused to be
paid all taxes shown to be due and payable on such returns or on
any assessment received by Lessee to the extent that such taxes
have become due and payable except to the extent that taxes due,
but unpaid, are being contested in good faith by Lessee by
appropriate action or proceeding and, to the extent (if any)
that such taxes are not due and payable, has established or
caused to be established reserves that are adequate for the
payment thereof in accordance with GAAP.
(m) Compliance with Laws. The Vehicles, the properties
from which they are operated and serviced and the current opera
tion thereof and thereon do not violate any laws, rules, regula
tions, or orders of any Authorities that are applicable thereto,
including, without limitation, any thereof relating to matters
of occupational safety and health or Environmental Laws, or
motor vehicles or the titling or registration thereof, except
for such violations as would not have, individually or in the
aggregate, a Material Adverse Effect.
(n) Disclosure. Taken as a whole, neither this Participa
tion Agreement, nor any offering materials, nor the other Opera
tive Agreements to which Lessee is or will be a party nor the
other documents and certificates furnished pursuant to this
Participation Agreement to Agent, or the Lessors, in connection
with the transactions contemplated by this Participation Agree
ment, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the state
ments contained herein and therein, in the light of the circum
stances under which they were made, not misleading as of the
time furnished.
(o) Impositions. No sales, use, excise, transfer or other
tax, fee or imposition shall result from the titling, regis
tration or delivery of a Vehicle on or before any Delivery Date,
except such taxes, fees or impositions that have been paid in
full on or prior to the applicable Delivery Date, except with
respect to sales and use taxes owing in connection with a trans
fer which shall be paid monthly or quarterly as due and payable.
(p) Certain Vehicle Matters.
(i) Each Vehicle accepted by the Lessors on a
Delivery Date which is to be used in interstate
commerce will be properly registered pursuant to the
International Registration Plan as in effect in the
state in which such Vehicle is titled on such Delivery
Date.
(ii) Each Vehicle has a gross weight rating of
more than 16,000 pounds, and none of the Vehicles has
been specially constructed, rebuilt, reconstituted or
assembled.
(iii) Lessee is not in the business of selling
vehicles and the Vehicles do not constitute "inven
tory" under any applicable UCC.
(iv) Each Vehicle is manufactured within the
United States of America.
(v) In connection with the submission of each
application to have the Lien of Agent, for the benefit
of the Lessors, listed on each Certificate of Title,
Lessee has submitted sufficient evidence of ownership
of the applicable Vehicle to the relevant motor
vehicle titling Authority.
(q) Registration of Vehicles Used in Intrastate or
Interstate Commerce. Each Vehicle accepted by the Lessors on a
Delivery Date will be, when Lessee takes possession thereof and
at all times thereafter, either (i) used in interstate commerce,
titled in a State with respect to which Agent has received an
opinion in the form of Exhibit C-1 and registered in a State
which is a party to the International Registration Plan or
(ii) used in intrastate commerce, registered in the State in
which it is so used and titled in a State with respect to which
Agent and Lessors have received an opinion in the form of
Exhibit C-1.
(r) Holding Company. Lessee is not subject to regulation
as a "holding company," an "affiliate" of a "holding company",
or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as
amended.
(s) Investment Company Act. Lessee is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(t) Intellectual Property. To Lessee's knowledge or as
represented in writing by a vendor of the Vehicles which writing
has been provided to Agent, there are no patents, patent rights,
trademarks, service marks, trade names, copyrights, licenses or
other intellectual property rights with respect to the Vehicles,
or proprietary, patented or patentable modifications or Parts
used in connection with the Vehicles, the unavailability of
which would have a material adverse effect on the current Fair
Market Value of the Vehicles.
(u) Subjection to Regulation. Neither Agent nor any
Lessor will, solely by reason of entering into the Operative
Agreements or the consummation and performance of the transac
tions contemplated thereby (other than upon the exercise of
remedies under the Lease) (i) be required to qualify to do
business in any jurisdiction, (ii) become subject to ongoing
regulation by any Authority as a company engaged in the business
of Lessee in any jurisdiction or (iii) to the best knowledge of
Lessee, become subject to any other ongoing regulation of its
operations by any Authority (other than any taxing Authority).
(v) Use of Proceeds. The use of the proceeds from the
transaction contemplated by the Operative Agreements will not
violate or result in any violation of Section 7 of the Securi
ties Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations G,
T, U and X of the Board of Governors of the Federal Reserve
System.
(w) Absence of Defaults. No Incipient Default or Event of
Default has occurred and is continuing, and since June 30, 1995
there has occurred no Material Adverse Effect.
(x) Absence of Casualty. No Casualty has occurred with
respect to the Vehicles being delivered on such Delivery Date.
(y) Insurance. All insurance coverages required by
Section 7.1 of the Lease are in full force and effect and there
are no past due premiums in respect of any such insurance.
(z) Financial Reports. The financial statements delivered
by Lessee to Agent pursuant to Section 0 will fairly present the
financial condition of Lessee and its consolidated Subsidiaries
at the dates thereof and the consolidated results of their
operations for the periods covered thereby.
(aa) Private Offering. Neither Lessee, nor anyone acting
on behalf of it, has taken or will take any action which will
subject the issue and sale of any interest being acquired by the
Lessors under the Operative Agreements to the requirements of
Section 5 of the Securities Act of 1933, as amended (the
"Securities Act"), and, assuming the truth and accuracy of the
representations set forth in Section 5.2(b), the issuance, sale
and delivery of such interests under the circumstances contem
plated by this Agreement do not require the registration of such
interests under the Securities Act or the qualification of any
of the Operative Agreements under the Trust Indenture Act of
1939, as amended.
(bb) Brokers, etc. Lessee has not engaged or authorized
any broker, finder, investment banker or other third party to
act on its behalf, directly or indirectly, as a broker, finder,
investment banker, agent or in any other like capacity in connec
tion with any of the Operative Agreements or the transactions
contemplated thereby. Lessee shall be responsible for, and
shall indemnify, defend and hold each Lessor harmless from and
against any and all claims, liabilities or demands by any Person
for broker's, finder's, investment banker's or agent's fees,
commissions or other entitlements with respect the Operative
Agreements and the transactions contemplated thereby (except to
the extent arising from a breach of Sections 5.2(c) or 5.3(f)).
Section V.2 Representations and Warranties of Lessors.
Each of Lessors hereby represents and warrants severally but not
jointly to the other Participants as set forth in this
Section 5.2.
(a) ERISA. Such Lessor is not and will not be funding any
of its Commitment or performing any of its obligations under the
Operative Agreements with the assets of an "employee benefit
plan" (as defined in Section 3(3) of ERISA) which is subject to
Title I of ERISA, or a "plan" (as defined in Section 4975(e)(1)
of the Code.
(b) Investment. The interest being acquired by such
Lessor under the Operative Agreements is being acquired for its
own account, without any view to the distribution thereof or any
interest therein, provided that such Lessor shall be entitled to
assign, transfer or convey its interest in accordance with
Section 11.8.
(c) Brokers, etc. Such Lessor has not engaged or
authorized any broker, finder, investment banker or other third
party to act on its behalf, directly or indirectly, as a broker,
finder, investment banker, agent or in any other like capacity
in connection with any of the Operative Agreements or the
transactions contemplated thereby.
Section V.3 Representations and Warranties of Agent. ABN
AMRO Bank N.V., in its individual capacity, hereby represents
and warrants to the other Participants as set forth in this
Section 5.2.
(a) Organization and Authority. Agent is a corporation
duly organized and validly existing in good standing under the
laws of the Netherlands and has the corporate power and
authority to enter into and perform its obligations under the
Operative Agreements.
(b) Authorization; Binding Effect. The Operative Agree
ments to which Agent is or will be a party have been or will be,
on the date required to be delivered hereby, duly authorized,
executed and delivered by Agent, and this Participation Agree
ment is, and such other Operative Agreements are, or, when so
executed and delivered by Agent will be, valid, legal and
binding agreements of Agent, enforceable against Agent in
accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity.
(c) Non-Contravention. Neither the execution and delivery
by Agent of the Operative Agreements to which it is or will be a
party, either in its individual capacity, as Agent, or both, nor
compliance with the terms and provisions thereof, conflicts
with, results in a breach of, constitutes a default under (with
or without the giving of notice or lapse of time or both), or
violates any of the terms, conditions or provisions of: (i) the
articles of incorporation or by-laws of Agent; (ii) any bond,
debenture, note, mortgage, indenture, agreement, lease or other
instrument to which Agent, either in its individual capacity, as
Agent or both, is now a party or by which it or its property,
either in its individual capacity, as Agent or both, is bound or
affected, where such conflict, breach, default or violation
would be reasonably likely to materially and adversely affect
the ability of Agent, either in its individual capacity, as
Agent or both, to perform its obligations under any Operative
Agreement to which it is or will be a party, either in its indi
vidual capacity, as Agent or both; or (iii) any of the terms,
conditions or provisions of any law, rule, regulation, order,
injunction or decree of any Authority applicable to it in its
individual capacity, as Agent or both, where such conflict,
breach, default or violation would be reasonably likely to
materially and adversely affect the ability of Agent, either in
its individual capacity, as Agent or both, to perform its obliga
tions under any Operative Agreement to which it is or will be a
party.
(d) Absence of Litigation, etc. There is no litigation
(including, without limitation, derivative actions), arbitration
or governmental proceedings pending or, to the best knowledge of
Agent, threatened against it which would be reasonably likely to
adversely affect Agent's ability to perform its obligations
under the Operative Agreements to which it is party.
(e) Consents, etc. No authorization, consent, approval,
license or formal exemption from, nor any filing, declaration or
registration with, any Authority, is or will be required in
connection with the execution and delivery by Agent of the
Operative Agreements to which it is party or the performance by
Agent of its obligations under such Operative Agreements.
(f) Brokers, etc. Agent has not engaged or authorized any
broker, finder, investment banker or other third party (other
than ABN AMRO North America, Inc.) to act on its behalf,
directly or indirectly, as a broker, finder, investment banker,
agent or in any other like capacity in connection with any of
the Operative Agreements or the transactions contemplated
thereby.
ARTICLE VI
Covenants
Section VI.1 Covenants of Lessee. Lessee, covenants and
agrees with the Lessors and Agent that during the Lease Term,
and, if Lessee has not purchased the Vehicles pursuant to the
Lease, for 90 days thereafter, Lessee shall comply with each of
the following provisions of this Section 6.1.
(a) Corporate Existence, etc. Subject to Section 6.1(c)
and any merger permitted thereby pursuant to which Lessee ceases
to exist (in which case this subsection (a) shall apply to the
surviving corporation of such merger), Lessee shall do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and powers and
franchises and its power and authority to perform its obliga
tions under the Operative Agreements, including, without limita
tion, any necessary qualification or licensing in any foreign
jurisdiction, except where the failure to be so qualified would
not have a Material Adverse Effect.
(b) Compliance With Laws. Lessee shall comply with all
applicable statutes, regulations, franchises, and orders of, and
all applicable restrictions imposed by, any Authority, in
respect of the conduct of its business and the ownership of its
properties (including, without limitation, applicable statutes,
rules, ordinances, regulations and orders relating to Environ
mental Laws), except for such instances of non-compliance which
would not have, individually or in the aggregate, a Material
Adverse Effect. Without limiting the foregoing, Lessee shall at
all times be responsible for, and shall comply with, all provi
sions of any Authority with respect to the titling and
registration of Vehicles.
(c) Mergers, Consolidations, Dispositions. Lessee shall
not consolidate with or merge into any other Person, or convey,
transfer or lease all or substantially all of its assets to any
other Person, unless:
(i) the Person resulting from such consolidation
or merger, or the Person which acquires all or substan
tially all of Lessee's assets (the "Surviving
Corporation"), is a corporation organized under the
laws of the United States of America or any State
thereof, and executes and delivers to Agent and each
Lessor an Assumption Agreement substantially in the
form of Exhibit G hereto (the "Assumption Agreement"),
pursuant to which the Surviving Corporation shall
succeed to and assume all of the obligations of Lessee
with which it is so merged or whose assets it so
acquires under the Operative Agreements and for all
purposes thereafter be deemed to be such Lessee
thereunder;
(ii) at the time of, and immediately after
giving effect to, such transaction, there shall exist
no Incipient Default, Event of Default or any
violation of any covenant or agreement under any of
the Operative Agreements;
(iii) promptly upon the consummation of such
transaction, such Surviving Corporation shall cause
the Certificate of Title for each Vehicle acquired by
it pursuant to such transaction to be reissued with
such Surviving Corporation listed as the holder of
title to each such Vehicle (unless it has provided to
Agent and each Lessor, prior to the consummation of
such transaction, an opinion of counsel acceptable to
Agent to the effect that such re-titling is not
required under applicable law), with the interests of
Agent and Lessors as lienholders duly noted thereon,
and such Surviving Person shall comply with the
provisions of Sections 6.1(f) and (g) in connection
therewith, for such purposes treating the date of
consummation of such transaction as a "Delivery Date";
and
(iv) promptly upon the consummation of such
transaction, each Lessor and Agent shall have received
an opinion of counsel to such Surviving Corporation
with respect to the validity of such transaction and
as to the enforceability of the Assumption Agreement
and the other Operative Agreements against such
Surviving Corporation.
(d) Liens. Lessee shall not incur or suffer to exist any
Lien on any of the Collateral other than Permitted Liens. With
out limiting the foregoing, Lessee shall not assign or pledge
any of its rights under any Sublease to any Person other than
Agent.
(e) Change of Name or Location. Lessee shall furnish to
Agent notice on or before the 30th day prior to any relocation
of its chief executive office or principal place of business, or
change of its name.
(f) Perfection and Maintenance of Security Interest.
(i) Lessee, at its expense, shall cause, as soon
as possible, but in any event no later than the 10th
day after any request, financing statements (and
continuation statements with respect thereto) and all
other documents necessary or reasonably requested by
Agent in connection with the establishment and perfec
tion of the interest of Agent in the Collateral, to be
recorded or filed at the locations contemplated by
Section 3.7, and in such manner, and, at its expense,
shall take, or shall cause to be taken, all such other
action as may be necessary or reasonably requested by
Agent or the Required Lessors in order to establish,
preserve, protect and perfect the rights, titles and
interests of Agent, on behalf of the Lessors, to the
Collateral.
(ii) All Certificates of Title relating to
Vehicles delivered on any Delivery Date shall indicate
the address of Agent set forth in Section 11.4 as the
address of the lienholder thereon, for the benefit of
the Lessors.
(iii) Lessee shall, no later than seventy-five
(75) days following each Delivery Date, have delivered
to Agent and each Lessor an Officer's Certificate
certifying that each such Certificate of Title is in
the possession of Lessee, shows Lessee as owner of
record, and names Agent, on behalf of the Lessors (and
Lessors to the extent permitted under applicable law
and procedure to be so named), on the face of such
Certificates of Title as having a perfected first
security interest in such Vehicles, and reflecting no
other Liens other than Permitted Liens. All Certifi
xxxxx of Title so held by Lessee shall be available
for inspection by Agent during normal business hours,
and Lessee shall deliver possession of such Certifi
xxxxx of Title to Agent immediately upon Agent's
request therefor.
(iv) Notwithstanding the foregoing, if naming
Agent (and, if permitted as aforesaid, Lessors) as a
secured party on such Certificate or Certificates of
Title as hereinabove contemplated is not adequate to
perfect the first priority security interest of Agent,
for the benefit of the Lessors, then Lessee shall,
upon receipt of Agent's request therefor, within the
applicable time period specified above, deliver to
Agent, in addition to the original Certificates of
Title, all such other documents or filings as xxxxxxx
xxx required by Agent or the Required Lessors to
ensure that Agent, on behalf of the Lessors, has a
perfected first priority security interest in such
Vehicles.
Without limiting the foregoing, in the event that any
application for registration of such Lien on the Certificate of
Title to any Vehicle shall be rejected by the applicable
Authority, Lessee shall make such corrections as may be
necessary in order that such registration shall be re-submitted
to the applicable Authority not more than fifteen (15) days
following the initial rejection thereof, and duly completed not
more than sixty (60) days following such re-submission. Follow
ing receipt by Lessee of any Certificate of Title as contem
plated by clause (iv) hereof, Lessee shall not, without the
prior written approval of Agent, change the State of title or
the Certificate of Title of any Vehicle, apply for an additional
Certificate of Title for any Vehicle, or otherwise modify such
Certificate of Title. Agent shall grant such written approval
upon Lessee's satisfaction of the provisions of this Section
6.1(f) with respect to the perfection of Agent's security
interest, on behalf of the Lessors, in such Vehicle (or any
Replacement Vehicle) and upon receipt by Agent and each Lessor
of an opinion of counsel substantially to the effect of the
matters set forth in Exhibit C-1 with respect to the jurisdic
tion in which such Vehicle is to be titled or registered (to the
extent that Agent and Lessors have not previously received such
an opinion of counsel with respect to such jurisdiction). The
security interest of Agent, on behalf of the Lessors, on any
Certificate of Title shall not be removed therefrom, nor shall
any other security interest be noted thereon, unless and until
such Vehicle is to be released from the Lien created by the
Lease in accordance with the applicable provisions of the
Operative Agreements. Lessee shall not, without the prior
written approval of Agent, register any Vehicle in any manner
that would render Section 5.1(q) untrue with respect to such
Vehicle as of any date of determination.
It is expressly understood that to the extent that any
Certificate of Title is in the possession of Lessee, such
possession shall be strictly for the benefit of Agent and solely
in accordance with the provisions of the Operative Agreements.
(g) Mandatory Purchase Following a Delivery Date. If
Lessee shall upon the expiration of the applicable time period
set forth in Section 6.1(f) fail to deliver the Officer's
Certificate described in Section 6.1(f)(iii) with respect to any
Vehicle evidencing no other Liens other than that of Agent, for
the benefit of the Lessors, then Lessee shall, on the Payment
Date immediately following the expiration of such time period,
purchase each of the Vehicles for which Lessee has failed to
satisfy any such requirement and pay to Agent, for the benefit
of the Lessors, on such Payment Date a portion of the Lease
Balance equal to the Casualty Amount for each such Vehicle.
Upon Lessors' receipt of the payments described in the preceding
sentence and all Rent then due and payable under the Lease and
each of the Lease Supplements, Agent shall transfer its interest
in such Vehicle or Vehicles to Lessee in accordance with the
last two sentences of Section 12.1 of the Lease.
Notwithstanding the foregoing, if the amount of the Lease
Balance repaid from the Initial Delivery Date to any date of
determination pursuant to this Section 6.1(g) and the last
sentence of Article X of the Lease exceeds $4,000,000 in the
aggregate, Lessee shall be required to repay the entire outstand
ing Lease Balance, together with the applicable Administrative
Charge and all accrued but unpaid Variable Rent to the date of
such repayment.
(h) Periodic Reporting. Lessee shall deliver to Agent:
(i) promptly following but in no event more than
60 days following the end of each fiscal quarter
Lessee's quarterly unaudited consolidated financial
statements and no more than 90 days following the end
of each fiscal year Lessee's annual audited xxxxxxx
dated financial statements; provided that if annual
audited consolidated financial statements are not
prepared by Lessee in the ordinary course of its
business, Lessee shall deliver unaudited annual
consolidated financial statements certified as to
accuracy and adherence to GAAP by the Chief Financial
Officer or Chief Accounting Officer of Lessee;
(ii) concurrently with each delivery pursuant to
the foregoing paragraph (i), but in any event not
later than the 60th day after the end of each fiscal
quarter in each fiscal year of Lessee, an Officer's
Certificate of Lessee stating that such officer has
reviewed the activities of Lessee during such period
and that, to the best of such officer's knowledge,
during such period Lessee has performed and fulfilled
each and every covenant, obligation and condition
contained in the Operative Agreements, no Incipient
Default, Event of Default exists under any of the
Operative Agreements, or if such condition shall
exist, specifying the nature and status thereof.
(i) Financial Tests. Lessee shall:
(i) maintain a minimum Consolidated Tangible Net
Worth equal to the greater of (a) one hundred seventy-
five million dollars ($175,000,000) or (b) sixty-five
percent (65%) of Consolidated Tangible Net Worth as of
December 31, 1995 plus fifty percent (50%) of
Consolidated Net Income from January 1, 1996, with no
reduction for losses, provided that if Lessee shall
cease to be at least fifty-one percent (51%) owned by
Consolidated Freightways, Inc. then the minimum
Consolidated Tangible Net Worth shall be reduced by
fifty percent (50%) of dividends to Consolidated
Freightways, Inc. after September 30, 1995, provided,
further, that under no circumstances shall such
minimum Consolidated Tangible Net worth fall below one
hundred fifty million dollars ($150,000,000), all of
which shall be tested at the end of each fiscal
quarter;
(ii) maintain a Consolidated Debt to
Consolidated Tangible Net Worth of not more than 2 to
1 at the end of each fiscal quarter; and
(iii) maintain a ratio of Consolidated EBITDAR
divided by Consolidated Interest Expense plus
Consolidated Rental Expense of at least (i) 1.25 to 1
at the end of each fiscal quarter up to and including
September 30, 1996 and (ii) 1.5 to 1 at the end of
each fiscal quarter thereafter on a four quarter
rolling average.
(j) Default and Acceleration of Material Debt. Lessee
agrees that if an Incipient Default or an Event of Default shall
occur, or if an event or condition shall occur that results in
the acceleration of the maturity of Debt of Lessee in amounts
exceeding twenty million dollars ($20,000,000), or in the event
that such acceleration should occur with respect to Debt of any
Affiliates of Lessee, Lessee shall promptly notify Agent thereof
and upon Agent's request, Lessee shall immediately deliver to
Agent, Certificates of Title for all of the Vehicles, duly
endorsed by Lessee in blank.
(k) Sale of Assets. Lessee will not sell, lease or other
wise transfer any of its assets to any other Person, except for
the sale, lease or other transfer of any asset of the Lessee
(i) in the ordinary course of business; (ii) for fair value,
provided the aggregate fair value of assets sold or otherwise
transferred does not exceed the fair value of assets acquired
during any fiscal year by $50,000,000; (iii) in accordance with
the provisions of Section 6.1(c); or (iv) assets transferred to
a wholly owned subsidiary of Consolidated Freightways, Inc. or
one of its subsidiaries, so long as (a) such transferred assets
are still available for use by Lessee in the conduct of its
business or (b) the fair value of the transferred assets does
not exceed $50,000,000 in the aggregate in any fiscal year, if
such assets are no longer available for use by Lessee in the
conduct of its business.
(l) ERISA Events. Promptly upon Lessee's becoming aware
of the occurrence of any matter or matters referred to in the
following clauses (i), (ii) and (iii) involving liability that
may reasonably be expected to exceed, individually or in the
aggregate, $20,000,000, Lessee shall notify Agent and each of
the Lessors in writing specifying the nature thereof, what
action Lessee is taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal
Revenue Service with respect thereto: (i) a "Reportable Event"
as such term is defined in Section 4043 of ERISA, (ii) an
"Accumulated Funding Deficiency" as such term is defined in
Section 302 of ERISA, or (iii) a "Prohibited Transaction", as
such term is defined in Section 4975 of the Code or described in
Section 406 of ERISA, in connection with any Pension Plan (or
any trust created thereunder).
(m) Notice of Defaults. Promptly upon, but in no event
later than five (5) days after Lessee shall have obtained Actual
Knowledge thereof, Lessee shall notify Agent and each Lessor in
writing of the existence of an Incipient Default, Event of
Default, or any other matter which has resulted in or could
reasonably be expected to have a Material Adverse Effect, which
notice shall describe the nature of such Incipient Default,
Event of Default or other matter and the action Lessee is taking
with respect thereto.
(n) Notice of Proceedings. Promptly upon Lessee's
becoming aware of (i) any proposed or pending investigation of
Lessee, or any of its Subsidiaries by any Authority, (ii) any
court or administrative proceeding involving any Person
described in the foregoing clause (i), or (iii) any notice,
claim or demand from any Authority which alleges that any such
Person is in violation of any law or has failed to comply with
any order issued pursuant to any Federal, state or local statute
regulating its operation and business, which in any such case
involves (A) one or more claims involving an aggregate amount of
$25,000,000 or more with respect to Lessee, or (B) individually
or in the aggregate, the reasonable expectation of a Material
Adverse Effect, Lessee shall notify Agent and each of the
Lessors specifying its nature and the action Lessee is taking
with respect thereto.
(o) Additional Information. Promptly upon receipt of a
written request from Agent or any Lessor, Lessee shall deliver
to such requesting party such other data and information as from
time to time may be reasonably requested.
(p) Reports to Lessors. Lessee shall, concurrently with
any notice, delivery or other communication required to be
delivered to Agent pursuant to any Operative Agreement, deliver
a copy of such notice, delivery or other communication to each
Lessor at such Lessor's current address.
Section VI.2 [Intentionally Omitted].
Section VI.3 Covenants of Agent and Lessors. Agent, in
its individual capacity, and each of the Lessors, covenants and
agrees with each of the other parties that: (a) it will not
directly or indirectly create, incur, assume or suffer to exist
any Lessor Liens arising by, through or under it on the
Collateral, other than Permitted Lessor Liens; (b) it will, at
its own cost and expense, promptly take such action in its
individual capacity as may be necessary to discharge fully such
Lessor Liens created by it on the Collateral, other than
Permitted Lessor Liens; (c) it will not, except in compliance
with the Operative Agreements, sell, transfer or otherwise
dispose of all or any part of the Vehicles or the other
Collateral; and (d) it will not claim any depreciation with
respect to the Vehicles during the term of the Lease.
ARTICLE VII
General Indemnities
Section VII.1 Indemnity. Whether or not the transactions
contemplated hereby are consummated, to the fullest extent
permitted by applicable law, Lessee waives and releases any
claims now or hereafter existing against Indemnitees on account
of, and shall indemnify, reimburse and hold the Indemnitees
harmless (subject to Section 8.3) from, any and all claims by
third parties (including, but not limited to, claims relating to
trademark or patent infringement and claims based upon negli
gence, strict liability in tort, violation of laws, including,
without limitation, Environmental Laws, statutes, rules, codes
or orders or claims arising out of any loss or damage to any
property or death or injury to any Person), any losses, damages
or obligations owing to third parties, any penalties, liabili
ties, demands, suits, judgments or causes of action, and all
legal proceedings (either administrative or judicial), in each
case whether or not the Indemnitee is a party thereto, and any
costs or expenses in connection therewith (including costs
incurred in connection with discovery) or in connection with the
enforcement of this indemnity (including reasonable attorneys'
fees and expenses, and fees and expenses of internal counsel,
incurred by the Indemnitees), including, in each case, matters
based on or arising from the negligence of Indemnitees (subject
to the proviso below), which may be imposed on, incurred by or
asserted against the Indemnitees by Persons other than Lessee
(except to the extent arising by or through a claim of a third
party) in any way relating to or arising in any manner out of:
(a) the registration, purchase, taking or foreclosure of a
security interest in, ownership, delivery, condition, lease,
sublease, assignment, storage, transportation, possession, use,
operation, return or other disposition of any of the Vehicles,
or any defect in any such Vehicle, arising from the material or
any article used therein or from the design, testing or use
thereof, or from any maintenance, service, repair, overhaul or
testing of any such Vehicle regardless of when such defect shall
be discovered, whether or not such Vehicle is in the possession
of Lessee and no matter where it is located; or
(b) this Participation Agreement, any other Operative
Agreement or any document or certificate delivered in connection
therewith, the enforcement hereof or thereof or the consummation
of the transactions contemplated hereby or thereby;
provided that Lessee shall not be obligated to indemnify an
Indemnitee for any such claim, loss, damage, liability, obliga
tion, penalty, demand or suit to the extent the same results
directly from
(c) the willful misconduct or gross negligence of such
Indemnitee;
(d) the incorrectness in any material respect of any repre
sentation or warranty made by such Indemnitee in the Operative
Agreements;
(e) the creation or existence of a Lessor Lien attributa
ble to such Indemnitee;
(f) a disposition by such Indemnitee of any Vehicle
following the purchase of such Vehicle by such Indemnitee from
Agent in a foreclosure sale or any use or operation of such
Vehicle following such disposition (other than use or operation
by Lessee or Sublessee or an Affiliate, agent or representative
of Lessee); or
(g) any Impositions described in Section 8.1 except any
amount necessary under this Section 7.1 to hold the Indemnitee
harmless (subject to Section 8.3) from all Impositions required
to be paid by such Indemnitee with respect to the receipt or
accrual of such indemnity under the laws of any Authority in the
United States;
provided, however, that nothing in the preceding proviso shall
be deemed to exclude or limit any claim that any Indemnitee may
have under any Operative Agreement or applicable laws from
Lessee for breach of its representations, warranties or
covenants.
Section VII.2 Excessive Use Indemnity. In the event that
at the end of the Lease Term: (a) Lessee elects the Sale
Option; and (b) after paying to Agent any amounts due under
Section 11.3 of the Lease, Agent does not have sufficient funds
to reduce the Lease Balance to zero, then Lessee shall promptly
pay over to Agent the shortfall unless Lessee delivers a report
from the Appraiser in form and substance satisfactory to the
Required Lessors which establishes that the decline in value in
each Vehicle which was sold pursuant to the Sale Option from
that amount anticipated for such date in the Appraiser's report
delivered with respect to such Vehicle on the applicable
Delivery Date was not due to extraordinary use, failure to
maintain or replace, failure to use, workmanship or method of
installation or removal or any other cause or condition within
the power of Lessee to control or effect (each an "Excessive
Use").
Section VII.3 Increased Capital Costs. If any change in,
or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any law or regulation, direc
tive, guideline, decision or request (whether or not having the
force of law) of any court, central bank regulator or other
Authority ("Change in Law") affects or would affect the amount
of capital required or expected to be maintained by any Lessor
directly or by its parent company (including, without limita
tion, any reserve requirements specified under regulations
issued from time to time by the Board of Governors of the
Federal Reserve System and then applicable to assets or liabili
ties consisting of and including "Eurocurrency Liabilities" as
defined in Regulation D of such Board of Governors) and such
Lessor determines (in its sole and absolute discretion) that the
rate of return on it or its parent's capital as a consequence of
the Funding made by such Lessor hereunder to pay its share of
the Purchase Price is reduced to a level below that which such
Lessor or its parent could have achieved but for the occurrence
of any such circumstances, then, in any such case, upon written
notification from time to time by Lessor to Lessee, Lessee
shall, within five (5) Business Days following receipt of the
statement referred to in the next sentence, pay directly to such
Lessor additional amounts sufficient to compensate Lessor or its
parent for such reduction in rate of return (subject to Section
8.3). A statement of a Lessor as to any such additional amount
or amounts (including calculations thereof in reasonable detail)
shall, in the absence of manifest error, be conclusive and
binding on Lessee. In determining such amount, each Lessor
shall use any method of averaging or attribution that it (in its
reasonable discretion) shall deem applicable. Notwithstanding
the foregoing, any demand by a Lessor pursuant to this
Section 7.3 shall be made in writing within 120 days after such
Lessor receives actual notice or obtains actual knowledge of the
matter giving rise to such demand. In the event such Lessor
fails to make such demand within such 120 day period, Lessee
shall have no obligation to pay any portion of the demanded
payment accruing prior to the 120th day preceding such demand.
Section VII.4 LIBO Rate Unlawful. If any Lessor shall
determine in good faith (which determination shall, upon notice
thereof to Lessee, be conclusive and binding on Lessee) that a
Change in Law makes it unlawful, or the central bank or other
Authority asserts that it is unlawful, for such Lessor to make,
continue or maintain any amount of such Lessor's Funding on a
LIBO Rate basis, the obligations of such Lessor to make,
continue or maintain any such Funding shall, upon such determina
tion, forthwith be suspended until such Lessor shall notify
Lessee that the circumstances causing such suspension no longer
exist, and all Variable Rent allocable to such Lessor, commenc
ing with the Rent Period in which such notice is given, shall
automatically be determined on a CD Rate basis beginning on the
next immediately succeeding Payment Date with respect thereto or
sooner, if required by such law or assertion.
Section VII.5 Funding Losses. Lessee agrees to reimburse
Lessor for any loss or expense incurred (including any loss or
expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lessor to make,
continue or maintain any portion of its Outstanding Investment
as a LIBO Rate financing) as a result of (i) the failure of the
transaction contemplated by Article l of the Lease to occur on
or before the Delivery Date specified in the Delivery Date
Notice or (ii) any payment of all or any portion of the Lease
Balance for any reason on a date other than a Payment Date.
Lessor shall promptly notify Lessee in writing of the amount of
any claim under this Section 7.5, the reason or reasons therefor
and the additional amount required fully to compensate such
Lessor for such loss or expense. Such written notice (which
shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on Lessee.
Section VII.6 Actions of Affected Lessors. Each Lessor
shall use reasonable efforts (including reasonable efforts to
change the booking office for this transaction) to avoid or
minimize any amounts which might otherwise be payable pursuant
to Section 7.3; provided, however, that such efforts shall not
be deemed by such Lessor, in its sole discretion, to be disadvan
tageous to it. In the event that such reasonable efforts are
insufficient to avoid or minimize such amounts that might be
payable pursuant to Section 7.3, then such Lessor (the "Affected
Lessor") shall use its reasonable efforts to transfer to any
other Lessor approved by Lessee (which itself is not then an
Affected Lessor) its rights and obligations hereunder; provided,
however, that such transfer shall not be deemed by such Affected
Lessor, in its sole discretion, to be disadvantageous to it
(other than the economic disadvantage of ceasing to be a
Lessor). In the event that the Affected Lessor is unable, or
otherwise is unwilling, so to transfer its rights and obliga
tions, Lessee may designate an alternate financial institution
to purchase the Affected Lessor's rights and obligations here
under, at the amount of such Lessor's Outstanding Investment
plus accrued Variable Rent, indemnities, and other amounts owing
to such Lessor and, subject to the provisions of Sections 7.5
and 11.8, the Affected Lessor shall transfer its rights and obli
gations to such alternate financial institution and such
alternate financial institution shall become a Lessor hereunder.
ARTICLE VIII
General Tax Indemnity
Section VIII.1 General Tax Indemnity. Lessee agrees to
pay or reimburse Indemnitees for, and to indemnify and hold
Indemnitees harmless from, all Impositions arising at, or
relating to, any time prior to or during the Base Period or
Renewal Terms, or upon any termination of the Lease or prior to,
or upon the return of, the Vehicles to Agent, and levied or
imposed upon Indemnitees directly or otherwise, by any Federal,
state or local government or taxing authority in the United
States or by any foreign country or foreign or international
taxing authority upon or with respect to: (a) the Vehicles or
any other Collateral; (b) the exportation, importation,
registration, purchase, ownership, delivery, condition, lease,
sublease, assignment, storage, transportation, possession, use,
operation, maintenance, repair, return, sale (including to Agent
or any Lessee pursuant to the Operative Agreements), transfer of
title or other disposition thereof; (c) the rentals, receipts,
or earnings arising from any of the Vehicles; or (d) the Lease
or any payment made thereunder; provided that this Section 8.1
shall not apply to: (i) Impositions which are based upon or
measured by the Indemnitee's net income, or which are expressly
in substitution for, or relieve Indemnitee from, any actual
Imposition based upon or measured by Indemnitee's net income;
(ii) Impositions characterized under local law as franchise, net
worth, or shareholder's capital (excluding, however, any value
added, license, property or similar Impositions); and
(iii) Impositions based upon the voluntary transfer, assignment
or disposition by Agent or any Lessor of any interest in any of
the Vehicles (other than a transfer pursuant to the exercise of
remedies under the Operative Agreements, transfers pursuant to
the exercise of the Lessee Purchase Option or Sale Option, a
transfer to Lessee or otherwise pursuant to the Lease).
Notwithstanding the foregoing provisions of this Section 8.1,
Lessee shall pay or reimburse, and indemnify and hold harmless,
any Lessor which is not incorporated under the laws of the
United States, or a state thereof, and which has complied with
Section 8.5, from any deduction or withholding of any United
States Federal income tax.
Section VIII.2 Contest. Lessee shall pay on or before the
time or times prescribed by law any Impositions (except any
Impositions excluded by Section 8.1); provided, however, that
Lessee shall be under no obligation to pay any such Imposition
so long as the payment of such Imposition is not delinquent or
is being contested by a Permitted Contest. If any claim or
claims is or are made against any Indemnitee solely for any
Imposition which is subject to indemnification as provided in
Section 8.1, Indemnitee shall as soon as practicable, but in no
event more than 20 days after receipt of formal written notice
of the Imposition or proposed Imposition, notify Lessee and if,
in the reasonable opinion of Lessee and (in the case of any
Imposition which may reasonably be expected to exceed $100,000
in the aggregate) tax counsel acceptable to the Indemnitee,
there exists a reasonable basis to contest such Imposition (and
if the provisos of the definition of "Permitted Contest"
continues to be satisfied and so long as no Event of Default
exists), Lessee at its expense may, to the extent permitted by
applicable law, contest such imposition, and subsequently may
appeal any adverse determination, in the appropriate administra
tive and legal forums; provided that in all other circumstances,
upon notice from Lessee to such Indemnitee that there exists a
reasonable basis to contest any such Imposition (as supported by
an opinion of tax counsel to Lessee reasonably acceptable to the
Indemnitee), the Indemnitee, at Lessee's expense, shall contest
any such Imposition. Lessee shall pay all expenses incurred by
the Indemnitee in contesting any such Imposition (including,
without limitation, all reasonable attorneys' and accountants'
fees, including the allocated costs of internal counsel), upon
demand by the Indemnitee. Lessee shall have the right to
participate in the conduct of any proceedings controlled by the
Indemnitee to the extent that such participation does not
interfere with the Indemnitee's control of such contest and
Lessee shall in all events be kept informed, to the extent
practicable, of material developments relative to such proceed
ings. The Indemnitee shall have the right to participate in the
conduct of any proceedings controlled by Lessee and the Indemni
tee shall in all events be kept informed, to the extent practica
ble, of material developments relative to such proceedings. The
Indemnitees agree that a contested claim for which Lessee would
be required to make a reimbursement payment hereunder will not
be settled or compromised without Lessee's prior written consent
(which consent shall neither be unreasonably delayed nor
withheld other than in good faith), unless the provisos of the
definition of "Permitted Contest" would not continue to be
satisfied. Indemnitee shall endeavor to settle or compromise
any such contested claim in accordance with written instructions
received from Lessee provided that: (x) Lessee on or before the
date the Indemnitee executes a settlement or compromise pays the
contested Imposition to the extent agreed upon or makes an
indemnification payment to the Indemnitee in an amount accepta
ble to the Indemnitee; and (y) the settlement or compromise does
not, in the reasonable opinion of the Indemnitee materially
adversely affect the right of such Lessor to receive Rent or the
Lease Balance or any other payment pursuant to the Operative
Agreements, or involve a material risk of sale, forfeiture or
loss of any of the Vehicles or any interest therein or any
matter described in the provisos to the definition of "Permitted
Contest". The failure of an Indemnitee to timely contest a
claim against it for any Imposition which is subject to indemni
fication under Section 8.1 and for which it has an obligation to
Lessee to contest under this Section 8.2 in the manner required
by applicable law or regulations where Lessee has timely
requested that such Indemnitee contest such claim shall relieve
Lessee of their obligations to such Indemnitee under Section 8.1
with respect to such claim to the extent such failure results in
the loss of an effective contest. If applicable law requires
the payment of a contested Imposition as a condition to, or
regardless of, its being contested, and Lessee chooses to
contest such Imposition or to direct the Indemnitee to contest
such Imposition in accordance with this Section, then Lessee
shall provide the Indemnitee with the funds to pay such Imposi
tion, such provision of funds to be deemed a non-interest
bearing loan by Lessee to the Indemnitee to be repaid by any
recovery of such Imposition from such contest and any remaining
unpaid amount not recovered to offset Lessee's obligation to
indemnify the Indemnitee for such Imposition. In the event that
the Indemnitee receives a refund (or like adjustment) in respect
of any Imposition for which the Indemnitee has been reimbursed
by Lessee, the Indemnitee shall immediately remit the amount of
such refund (or like adjustment) to Lessee, net of all costs and
expenses incurred by such Indemnitee.
Section VIII.3 Gross Up. If an Indemnitee shall not be
entitled to a corresponding and equal deduction with respect to
any payment or Imposition which Lessee is required to pay or
reimburse under Article VII, Section 8.1 or Section 8.2 (each
such payment or reimbursement under Article VII, Section 8.1 or
Section 8.2, an "original payment") and which original payment
constitutes income to such Indemnitee, then Lessee shall pay to
such Indemnitee on demand the amount of such original payment on
a gross-up basis such that, after subtracting all Impositions
imposed on such Indemnitee with respect to such original payment
by Lessee (including any Impositions otherwise excluded by
Section 8.1 and assuming for this purpose that such Indemnitee
was subject to taxation at the applicable Federal, state or
local marginal rates used to compute such Indemnitee's tax
return for the year in which such income is taxable), such
payments shall be equal to the original payment to be received
(net of any credits, deductions or other tax benefits then
actually recognized that arise from the payment by such Indemni
tee of any amount, including taxes, for which the payment to be
received is made).
Section VIII.4 Tax Returns. Except as otherwise provided
in the third sentence below, Lessee shall prepare and file
(whether or not it is a legal obligation of an Indemnitee) all
tax returns or reports that may be required with respect to any
Impositions assessed, charged or imposed on the Vehicles or the
Lease, including, but not limited to sales and use taxes, prop
erty taxes (ad valorem and real property) and any other tax or
charge based upon the ownership, leasing, subleasing, rental,
sale, purchase, possession, use, operation, delivery, return or
other disposition of any of the Vehicles or upon the rentals or
the receipts therefrom (excluding, however, any tax based upon
the net income of an Indemnitee or any tax which is in substi
tution for or relief of a tax imposed upon or measured by the
net income of an Indemnitee). Lessee may notify in writing all
applicable Authorities having jurisdiction with respect to
personal property taxes that Lessee is the appropriate party for
receiving notices of (or copies of, if such Authority is
required by law to notify Agent) assessment, appeal and payment
with respect to the Vehicles. If an Indemnitee is obligated by
law to file any such reports or returns, then Lessee shall at
least 10 days before the same are due, prepare the same and
forward them to the Indemnitee, as appropriate, with detailed
instructions as to how to comply with all applicable filing
requirements, together with funds in the amount of any payment
required pursuant thereto. Indemnitee shall forward to Lessee
at its address listed in Section 11.4 copies of all assessment
and valuation notices it receives within 10 days of receipt;
provided that Indemnitee's failure to deliver such notices on a
timely basis shall not relieve Lessee of any obligations
hereunder. The Participants agree that neither they nor any
corporation controlled by them, or under common control with
them, directly or indirectly will at any time take any action or
fail to take any action with respect to the filing of any income
tax return, including an amended income tax return, inconsistent
with the intention of the parties expressed in Section 4.1.
Section VIII.5 Withholding Tax Exemption.
(a) At least five (5) Business Days prior to the first
date on which any Rent is payable hereunder or under any other
Operative Agreement for the account of any Lessor not incorpo
rated under the laws of the United States or a state thereof,
such Lessor agrees that it will have delivered to Lessee and
Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case
that such Lessor is entitled to receive payments under this
Agreement and the other Operative Agreements without deduction
or withholding of any United States Federal income taxes. Each
Lessor which so delivers a Form 1001 or 4224 further undertakes
to deliver to Lessee and Agent two additional copies of such
form (or a successor form) on or before the date that such form
expires (currently, three successive calendar years for Form
1001 and one calendar year for Form 4224) or becomes obsolete or
after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by
Lessee or Agent, in each case certifying that such Lessor is
entitled to receive payments under this Agreement and the other
Operative Agreements without deduction or withholding of any
United States Federal income taxes, unless prior to the date on
which any such delivery would otherwise be required any change
in treaty, law or regulation or in the interpretation thereof by
the applicable taxing Authority occurring after such Lessor
became a Lessor hereunder has rendered all such forms inapplica
ble or has prevented such Lessor from duly completing and
delivering any such form with respect to it and such Lessor
advises Lessee and Agent that, as a result of such change in
treaty, law, regulation or interpretation, it is not capable of
receiving payments without any withholding of United States
Federal income tax.
(b) At least five (5) Business Days prior to the first
date on which any Rent is payable hereunder or under any other
Operative Agreement for the account of any Lessor who does not
have a street address in the State of California, such Lessor
agrees that it will have delivered to Lessee and Agent two duly
completed copies of California Form 587 or 590, certifying in
either case that such Lessor is entitled to receive payments
under this Agreement and the other Operative Agreements without
deduction or withholding of any California income taxes. Each
Lessor which so delivers a Form 587 or 590 further undertakes to
deliver to Lessee and Agent two additional copies of such form
(or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent forms so delivered by it
(including, without limitation, any change in residency or
address), and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by Lessee or Agent, in
each case certifying that such Lessor is entitled to receive
payments under this Agreement and the other Operative Agreements
without deduction or withholding of any California income taxes,
unless prior to the date on which any such delivery would other
wise be required any change in treaty, law or regulation or in
the interpretation thereof by the applicable taxing Authority
occurring after such Lessor became a Lessor hereunder has
rendered all such forms inapplicable or has prevented such
Lessor from duly completing and delivering any such form with
respect to it and such Lessor advises Lessee and Agent that, as
a result of such change in treaty, law, regulation or interpreta
tion, it is not capable of receiving payments without any
withholding of California income tax.
ARTICLE IX
Agent
Section IX.1 Appointment of Agent; Powers and
Authorization to Take Certain Actions.
(a) Each Lessor irrevocably appoints and authorizes ABN
AMRO Bank N.V. to act as its agent hereunder, with such powers
as are specifically delegated to Agent by the terms hereof,
together with such other powers as are reasonably incidental
thereto. Each Lessor authorizes and directs Agent to, and Agent
agrees for the benefit of the Lessors, that, on the Initial
Delivery Date it will accept the documents described in Article
III of this Participation Agreement. Agent accepts the agency
hereby created applicable to it and agrees to receive all
payments and proceeds pursuant to the Operative Agreements and
disburse such payments or proceeds in accordance with the
Operative Agreements. Agent shall have no duties or responsi
bilities except those expressly set forth in the Lease and this
Participation Agreement. Agent shall not be responsible to any
Lessor (or to any other Person) (i) for any recitals, state
ments, representations or warranties of any party contained in
the Lease, this Participation Agreement, or in any certificate
or other document referred to or provided for in, or received by
any of them under, the Operative Agreements, other than the
representations and warranties made by Agent in Section 5.3, or
(ii) for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Collateral or the title
thereto (subject to Agent's obligations under Section 6.3) or of
the Lease or any other document referred to or provided for
therein or (iii) for any failure by Lessee, any Lessor or any
other third party (other than Agent) to perform any of its
obligations under any Operative Agreement. Agent may employ
agents, trustees or attorneys-in-fact, may vest any of them with
any property, title, right or power deemed necessary for the
purposes of such appointment and shall not be responsible for
the negligence or misconduct of any of them selected by it with
reasonable care. Neither Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for
any action taken or omitted to be taken by it or them hereunder,
or in connection herewith, except for its or their own gross
negligence or willful misconduct.
(b) Agent shall not have any duty or obligation to manage,
control, use, operate, store, lease, sell, dispose of or other
wise deal with any Vehicle, any other Collateral or the Lease,
or to otherwise take or refrain from taking any action under, or
in connection with, this Agreement, the Lease or any related
document to which Agent is a party, except as expressly provided
by the terms hereof, and no implied duties of any kind shall be
read into any Operative Agreement against Agent. The permissive
right of Agent to take actions enumerated in this Agreement and
the Lease shall never be construed as a duty, unless Agent is
instructed or directed to exercise, perform or enforce one or
more rights by the Required Lessors (provided that Agent has
received indemnification reasonably satisfactory to it).
Subject to Section 9.1(c) below, no provision of the Operative
Agreements shall require Agent to expend or risk its own funds
or otherwise incur any financial liability in the performance of
any of its obligations under the Operative Agreements, or in the
exercise of any of its rights or powers thereunder. It is
understood and agreed that the duties of Agent are ministerial
in nature.
(c) Except as specifically provided herein, Agent is
acting hereunder solely as agent and, except as specifically
provided herein, is not responsible to any party hereto in its
individual capacity, except with respect to any claim arising
from Agent's gross negligence or willful misconduct or any
breach of a representation or covenant made in its individual
capacity.
(d) Agent may accept deposits from, lend money to and
otherwise deal with Lessee or any of its Affiliates with the
same rights as it would have if it were not the named Agent
hereunder.
Section IX.2 Reliance. Agent may rely upon, and shall not
be bound or obligated to make any investigation into the facts
or matters stated in, any certificate, notice or other communica
tion (including any communication by telephone, telecopy, telex,
telegram or cable) reasonably believed by it to be genuine and
correct and to have been made, signed or sent by or on behalf of
the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts
selected by Agent with due care (including any expert selected
by Agent to aid Agent in any calculations required in connection
with its duties under the Operative Agreements).
Section IX.3 Action Upon Instructions Generally. Subject
to Sections 9.4 and 9.6, upon written instructions of the
Required Lessors, Agent shall, on behalf of the Lessors, give
such notice or direction, exercise such right, remedy or power
hereunder or in respect of any Vehicle, and give such consent or
enter into such amendment to any document to which it is a party
as Agent as may be specified in such instructions. Agent shall
deliver to each Lessor a copy of each notice, report and certifi
cate received by Agent pursuant to the Operative Agreements.
Agent shall have no obligation to investigate or determine
whether there has been an Event of Default or an Incipient
Default. Agent shall not be deemed to have notice or knowledge
of an Event of Default or Incipient Default unless a Responsible
Officer of Agent is notified in writing of such Event of Default
or Incipient Default, provided that Agent shall be deemed to
have been notified in writing of any failure of Lessee to pay
Rent in the amounts and at the times set forth in Article III of
the Lease. If Agent receives notice of an Event of Default,
Agent shall give prompt notice thereof, at Lessee' expense, to
each Lessor. Subject to Sections 9.4 and 9.6 and Article X,
Agent shall take action or refrain from taking action with
respect to such Event of Default as directed by the Required
Lessors or, in the case of a Payment Default, as directed by any
Lessor; provided that, unless and until Agent receives such
directions, Agent may refrain from taking any action, or may act
in its discretion, with respect to such Event of Default or
Payment Default. Prior to the date the Lease Balance shall have
become due and payable by acceleration pursuant to Section 8.2
of the Lease, Required Lessors may deliver written instructions
to Agent to waive, and Agent shall waive pursuant thereto, any
Event of Default and its consequences; provided that in the
absence of written instructions from all Lessors, Agent shall
not waive any (i) Payment Default or (ii) covenant or provision
which, under Section 10.1, cannot be modified or amended without
the consent of all Lessors. As to any matters not expressly
provided for by this Agreement, Agent shall in all cases be
fully protected in acting, or in refraining from acting, here
under in accordance with instructions signed by the Required
Lessors and such instructions of the Required Lessors and any
action taken or failure to act pursuant thereto shall be binding
on each Lessor.
Section IX.4 Indemnification. Each Lessor shall reimburse
and hold Agent harmless, ratably in accordance with its Outstand
ing Investment at the time the indemnification is required to be
given, (but only to the extent that any such indemnified amounts
have not in fact been paid to Agent by, or on behalf of, Lessee
in accordance with Section 7.1) from any and all claims, losses,
damages, obligations, penalties, liabilities, demands, suits,
judgments, or causes of action, and all legal proceedings, and
any reasonable costs or expenses in connection therewith,
including allocated charges, costs and expenses of internal
counsel of Agent and all other reasonable attorneys' fees and
expenses incurred by Agent, in any way relating to or arising in
any manner out of (i) any Operative Agreement, the enforcement
hereof or thereof or the consummation of the transactions
contemplated thereby, or (ii) instructions from the Required
Lessors (including, without limitation, the costs and expenses
that Lessee is obligated to and does not pay hereunder, but
excluding normal administrative costs and expenses incident to
the performance by Agent of its agency duties hereunder other
than materially increased administrative costs and expenses
incurred as a result of an Event of Default), provided that no
Lessor shall be liable for any of the foregoing to the extent
they arise from (a) the gross negligence or willful misconduct
of Agent, (b) the inaccuracy of any representation or warranty
or breach of any covenant given by Agent in Section 5.3 or
Section 6.3 hereof or in the Lease, (c) in the case of Agent's
handling of funds, the failure to act with the same care as
Agent uses in handling its own funds or (d) any taxes, fees or
other charges payable by Agent based on or measured by any fees,
commissions or compensation received by it for acting as Agent
in connection with the transactions contemplated by the
Operative Agreements.
Section IX.5 Independent Credit Investigation. Each
Lessor by entering into this Agreement agrees that it has, inde
pendently and without reliance on Agent or any other Lessor and
based on such documents and information as it has deemed appro
priate, made its own credit analysis of Lessee and its own
decision to enter into this Agreement and each of the other
Operative Agreements to which it is a party and that it will,
independently and without reliance upon Agent or any other
Lessor, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis
and decisions in taking action under this Agreement and any
related documents to which it is a party. Agent shall not be
required to keep itself informed as to the performance or
observance by Lessee of any other document referred to (directly
or indirectly) or provided for herein or to inspect the proper
ties or books of Lessee. Except for notices or statements which
Agent is expressly required to give under this Agreement and for
notices, reports and other documents and information expressly
required to be furnished to Agent alone (and not also to each
Lessor, it being understood that Agent shall forward copies of
same to each Lessor) hereunder or under any other Operative
Agreement, Agent shall not have any duty or responsibility to
provide any Lessor with copies of notices or with any credit or
other information concerning the affairs, financial condition or
business of Lessee (or any of its affiliates) that may come into
the possession of Agent or any of its Affiliates.
Section IX.6 Refusal to Act. Except for notices and
actions expressly required of Agent hereunder and except for the
performance of its covenants in Section 6.3, Agent shall in all
cases be fully justified in failing or refusing to act unless
(a) it is indemnified to its reasonable satisfaction by the
Lessors against any and all liability and reasonable expense
which may be incurred by it by reason of taking or continuing to
take any such action (provided that such indemnity shall not be
required to extend to liability or expense arising from any
matter described in clauses (a) through (d) of Section 9.4, it
being understood that no action taken by Agent in accordance
with the instructions of the Required Lessors shall be deemed to
constitute any such matter) and (b) it is reasonably satisfied
that such action is not contrary to any Operative Agreement or
to any applicable law.
Section IX.7 Resignation or Removal of Agent; Appointment
of Successor. Subject to the appointment and acceptance of a
successor Agent as provided below, Agent may resign at any time
by giving notice thereof to each Lessor and Lessee or may be
removed at any time by written notice from the Required Lessors.
Upon any such resignation or removal, the Required Lessors at
the time of the resignation or removal shall have the right
(with the reasonable, prompt approval of Lessee unless an Event
of Default shall be continuing) to appoint a successor Agent
which shall be a financial institution having a combined capital
and surplus of not less than $100,000,000. If, within 30 calen
dar days after the retiring Agent's giving of notice of resigna
tion or receipt of a written notice of removal, a successor
Agent is not so appointed and does not accept such appointment,
then the retiring or removed Agent may appoint a successor Agent
and transfer to such successor Agent all rights and obligations
of the retiring Agent. Such successor Agent shall be a xxxxx
cial institution having combined capital and surplus of not less
than $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring or removed Agent
and the retiring or removed Agent shall be discharged from
duties and obligations as Agent thereafter arising hereunder and
under any related document. If the retiring Agent does not
appoint a successor, any Lessor shall be entitled to apply to a
court of competent jurisdiction for such appointment, and such
court may thereupon appoint a successor to act until such time,
if any, as a successor shall have been appointed as above
provided.
Section IX.8 Separate Agent. The Required Lessors may,
and if they fail to do so at any time when they are so required,
Agent may, for the purpose of meeting any legal requirements of
any jurisdiction in which any Vehicle or Collateral may be
located, appoint one or more individuals or corporations either
to act as co-agent jointly with Agent or to act as separate
agent of all or any part of the Vehicles or Collateral or the
Lease, and vest in such individuals or corporations, in such
capacity, such title to the Vehicles or Collateral or the Lease
or any part thereof, and such rights or duties as Agent may
consider necessary or desirable. Agent shall not be required to
qualify to do business in any jurisdiction where it is not now
so qualified. Agent shall execute, acknowledge and deliver all
such instruments as may be required by any such co-agent or
separate agent more fully confirming such title, rights or
duties to such co-agent or separate agent. Upon the acceptance
in writing of such appointment by any such co-agent or separate
agent, it, she or he shall be vested with such interest in the
Vehicles or Collateral and the Lease or any part thereof, and
with such rights and duties, not inconsistent with the provi
sions of the Operative Agreements, as shall be specified in the
instrument of appointment, jointly with Agent (except insofar as
local law makes it necessary for any such co-agent or separate
agent to act alone), subject to all terms of the Operative Agree
ments. Any co-agent or separate agent, to the fullest extent
permitted by legal requirements of the relevant jurisdiction, at
any time, by an instrument in writing, shall constitute Agent
its attorney-in-fact and agent, with full power and authority to
do all acts and things and to exercise all discretion on its
behalf and in its name. If any co-agent or separate agent shall
die, become incapable of acting, resign or be removed, the
interest in the Vehicles or Collateral and the Lease and all
rights and duties of such co-agent or separate agent shall, so
far as permitted by law, vest in and be exercised by Agent,
without the appointment of a successor to such co-agent or
separate agent.
Section IX.9 Termination of Agency. The agency created
hereby shall terminate upon the final disposition by Agent of
all Collateral at any time subject hereto and the final distribu
tion by Agent of all moneys or other property or proceeds
received pursuant to the Lease in accordance with its terms,
provided that at such time Lessee shall have complied fully with
all the terms hereof.
Section IX.10 Compensation of Agency. As compensation for
the performance of Agent's obligations hereunder, Lessee shall
pay to Agent, on the Initial Delivery Date and on each anniver
sary of the Initial Delivery Date occurring during the Lease
Term, a fee (the "Agency Fee") in the amount of $15,000.
Section IX.11 Limitations. It is expressly understood and
agreed by and among the parties hereto that, except as otherwise
provided herein or in the other Operative Agreements: (a) this
Participation Agreement and the other Operative Agreements to
which Agent is a party are executed by Agent, not in its indivi
dual capacity (except with respect to the representations and
covenants of Agent in Sections 5.3 and 6.3o), but solely as
Agent under the Operative Agreements in the exercise of the
power and authority conferred and vested in it as such Agent;
(b) each and all of the undertakings and agreements herein made
on the part of Agent are each and every one of them made and
intended not as personal undertakings and agreements by Agent,
or for the purpose or with the intention of binding Agent
personally, but are made and intended for the purpose of binding
only the Collateral unless expressly provided otherwise;
(c) actions to be taken by Agent pursuant to its obligations
under the Operative Agreements may, in certain circumstances, be
taken by Agent only upon specific authority of the Lessors;
(d) nothing contained in the Operative Agreements shall be
construed as creating any liability on Agent, individually or
personally, or any incorporator or any past, present or future
subscriber to the capital stock of, or stockholder, officer or
director, employee or agent of, Agent to perform any covenants
either express or implied contained herein, all such liability,
if any, being expressly waived by the other parties hereto and
by any Person claiming by, through or under them; and (e) so far
as Agent, individually or personally, is concerned, the other
parties hereto and any Person claiming by, through or under them
shall look solely to the Collateral and Lessee for the perfor
xxxxx of any obligation under any of the instruments referred to
herein; provided, however, that nothing in this Section 9.11
shall be construed to limit in scope or substance the general
corporate liability of Agent in respect of its gross negligence
or willful misconduct or those representations, warranties and
covenants of Agent in its individual capacity set forth herein
or in any of the other agreements contemplated hereby.
ARTICLE X
Amendments to Operative Agreements
Section X.1 Amendments to Operative Agreements With
Consent of Lessors. This Participation Agreement and each of
the other Operative Agreements shall be changed, waived,
discharged or terminated with respect to Lessee and each Lessor
upon the ratification in writing of such change, waiver,
discharge or termination by Lessee and the Required Lessors, in
which case such change, waiver, discharge or termination shall
be effective as to each Lessor and Lessee; provided no such
change, waiver, discharge or termination shall, without the
written ratification of each Lessor:
(i) modify any of the provisions of this Section
10.1 or Article III, change the definitions of "Commit
ment", "Commitment Percentage", "Total Commitment" or
"Required Lessors" or modify or waive any provision of
an Operative Agreement requiring action by the
foregoing, or release any Collateral (except as
otherwise specifically provided in any Operative
Agreement);
(ii) modify, amend, waive or supplement any of
the provisions of Articles III, VII, VIII (except as
otherwise expressly provided in Section 9.3 hereof), X
or XI, Sections 13.9 or 13.10 of the Lease or Section
11.3 hereof, provided that the Required Lessors may
waive an Event of Default other than a Payment
Default;
(iii) reduce, modify, amend or waive any indemni
ties in favor of any Participant, whether pursuant to
Articles VII or VIII or otherwise (except that any
Person may consent to any reduction, modification,
amendment or waiver of any indemnity payable to it);
(iv) modify, postpone, reduce or forgive, in
whole or in part, any Rent payment (other than
pursuant to the terms of any Operative Agreement),
Lease Balance, Termination Value, Lessor Risk Amount,
Lessee Risk Amount, interest or, subject to clause
(iii) above, any other amount payable under the Lease
or Participation Agreement, or modify the definition
or method of calculation of any Rent payment (other
than pursuant to the terms of any Operative
Agreement), Lease Balance, Termination Value, Lessor
Risk Amount, Lessee Risk Amount or other amount
payable hereunder;
(v) consent to any assignment of the Lease
releasing any Lessee from its obligations in respect
of the payments due pursuant to the Operative Agree
ments or changing the absolute and unconditional
character of such obligations; or
(vi) permit the creation of any Lien on the
Collateral or any part thereof except as contemplated
in the Operative Agreements, or deprive any Lessor of
the benefit of the security interest in the Collateral
granted by Lessee.
Section X.2 Amendments to Operative Agreements Affecting
Agent. Without the prior written consent of Agent, no amendment
of, supplement to, or waiver or modification of, any Operative
Agreement shall adversely affect Agent's rights or immunities or
modify or increase the duties or obligations of Agent with
respect to any Operative Agreement.
ARTICLE XI
Miscellaneous
Section XI.1 Survival of Covenants. All claims pertaining
to the representations, warranties, covenants or indemnities of
the Participants shall survive the termination of the Lease to
the extent such claims arose out of events occurring or condi
tions existing prior to any such termination. Without limiting
the foregoing, the provisions of Article VII and Article VIII
hereof shall survive the termination of the Lease.
Section XI.2 APPLICABLE LAW. THIS PARTICIPATION AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF CALIFORNIA
WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF.
Section XI.3 Distribution and Application of Rents and
Other Payments. Except as otherwise specifically provided for
in the Lease or in Articles VII and VIII hereof, all amounts of
money received or realized by Agent pursuant to the Lease which
are to be distributed to the Lessors (after payment of accrued
but unpaid fees and expenses and indemnification payments
payable to Agent in its capacity as Agent that remain unpaid for
30 days or more) shall be distributed to each Lessor pro rata,
in accordance with each Lessor's Outstanding Investment and
without preference or priority of any Lessor over another;
provided, however, that in the case such moneys are insufficient
to pay in full the whole amount due, owing and unpaid, then
application shall be made in the manner set forth in Section 8.4
of the Lease. All payments to the Lessors shall be made in
accordance with Section 3.2 of the Lease.
Section XI.4 Notices. All notices, demands, declarations,
consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof
shall be in writing and shall be deemed to have been duly given
when delivered personally, by facsimile (and confirmed, which
confirmation may be mechanical), nationally recognized overnight
courier or otherwise actually received or 5 Business Days after
being deposited in the United States mail certified, postage
prepaid, addressed as follows:
If to Lessee:
Consolidated Freightways Corporation
of Delaware
000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Treasurer
Fax: 000-000-0000
With a copy to:
c/o Consolidated Freightways, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Treasurer
Fax: 000-000-0000
If to Agent:
ABN AMRO Bank N.V.
Syndications
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Fax: 000-000-0000
With a copy to:
ABN AMRO Bank N.V.
c/o ABN AMRO North America, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Fax: 000-000-0000
and
ABN AMRO North America, Inc.
Surface Transportation Group
000 Xx. Xx Xxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax: 000-000-0000
If to the Lessors, to their respective addresses set forth
on Schedule I hereto or at such other place as any such party
may designate by notice given in accordance with this Section
11.4.
Section XI.5 Transaction Costs; Other Expenses. Lessee
shall pay all Transaction Costs whether or not the transactions
contemplated hereby close. In addition, Lessee shall pay or
reimburse Agent and the Lessors for all other out-of-pocket
costs and expenses (including allocated fees of internal coun
sel) reasonably incurred in connection with: (a) entering into,
or the giving or (in the case of any amendments, supplements,
waivers or consents proposed by Lessee) withholding of, any
future amendments, supplements, waivers or consents with respect
to the Operative Agreements (including without limitation any
legal services rendered in connection with or arising under
Section 6.1 hereof), it being understood that Lessee shall only
be required to pay for one firm of legal counsel to Agent and
Lessors in respect of any transaction under this clause (a); (b)
any Casualty or termination of the Lease or any other Operative
Agreement; (c) the negotiation and documentation of any restruc
turing or "workout," whether or not consummated, of any Opera
tive Agreement; (d) the enforcement of the rights or remedies
under the Operative Agreements; (e) further assurances requested
pursuant to Section 11.13 hereof or any similar provision in
other Operative Agreements; (f) any and all out-of-pocket
expenses of Agent in connection with the Sale Option described
in Section 11.3 of the Lease; (g) any transfer by Agent or a
Lessor of any interest in the Operative Agreements during the
continuance of an Event of Default; and (h) the Agency Fee.
Section XI.6 Counterparts. This Participation Agreement
may be executed in any number of counterparts and by different
parties hereto on separate counterparts, each executed
counterpart constituting an original but all together one
agreement.
Section XI.7 Severability. Whenever possible, each
provision of this Participation Agreement shall be interpreted
in such manner as to be effective and valid under applicable
law; but if any provision of this Participation Agreement shall
be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Participation Agreement.
Section XI.8 Successors and Assigns; Transfers. This
Participation Agreement shall be binding upon the parties hereto
and their respective successors and assigns, and shall inure to
the benefit of the parties hereto and their respective succes
sors and permitted assigns. Lessee may not assign any of its
rights and obligations under any Operative Agreement except as
expressly provided in the Operative Agreements.
No Lessor shall assign, convey or otherwise transfer
(including pursuant to a participation) all or any portion of
its right, title or interest in, to or under any of the Opera
tive Agreements, any Collateral and its interest in the
Vehicles, except that without the prior written consent of Agent
or Lessee (x) any bank or similar financial or commercial
lending institution may pledge its interest in the ordinary
course of its business without the consent of Lessee or Agent,
provided, that no transfer upon a foreclosure pursuant to such a
pledge may occur unless the other provisions of this Section are
complied with, (y) any Lessor may transfer all or any portion of
its interest to any other existing Lessor and (z) any Lessor may
transfer any or all of such right, title and interest upon the
satisfaction of each of the following conditions:
(a) Required Notice and Effective Date. Any Lessor
desiring to effect a transfer of its interest hereunder shall
give written notice of each such proposed transfer to Lessee and
Agent at least ten (10) days prior to such proposed transfer,
setting forth the name of such proposed transferee, the
percentage or interest to be retained by such Lessor, if any,
and the date on which such transfer is proposed to become
effective. All reasonable out-of-pocket costs incurred by Agent
in connection with any such disposition by a Lessor under this
Section 11.8 shall be borne by such Lessor, unless such transfer
is being made pursuant to Section 7.6, in which case such costs
shall be borne by Lessee. In the event of a transfer under this
Section 11.8, any expenses incurred by the transferee in
connection with its review of the Operative Agreements and its
investigation of the transactions contemplated thereby shall be
borne by such transferee or the relevant Lessor, as they may
determine, but shall not be considered costs and expenses which
Lessee are obligated to pay or reimburse under Section 11.5,
unless such transfer is being made pursuant to Section 7.6.
(b) Assumption of Obligations. Any transferee pursuant to
this Section 11.8 shall have executed and delivered to Agent a
letter substantially in the form of the Investor's Letter
attached hereto as Exhibit F, and thereupon the obligations of
the transferring Lessor under the Operative Agreements shall be
proportionately released and reduced to the extent of such
transfer. Upon any such transfer as above provided, the trans
feree shall be deemed to be bound by all obligations (whether or
not yet accrued) under, and to have become a party to, all
Operative Agreements to which its transferor was a party, shall
be deemed the pertinent "Lessor" for all purposes of the Opera
tive Agreements and shall be deemed to have made that portion of
the payments pursuant to the Participation Agreement previously
made or deemed to have been made by the transferor represented
by the interest being conveyed; and each reference herein and in
the other Operative Agreements to the pertinent "Lessor" shall
thereafter be deemed a reference to the transferee, to the
extent of such transfer, for all purposes. Upon any such trans
fer, Agent shall deliver to each Lessor and Lessee a new
Schedule I to this Participation Agreement, revised to reflect
the relevant information for such new Lessor and the Commitment
of such new Lessor (and the revised Commitment of the transferor
Lessor if it shall not have transferred its entire interest).
(c) Employee Benefit Plans. No Lessor may make any such
assignment, conveyance or transfer to or in connection with any
arrangement or understanding in any way involving any employee
benefit plan (or its related trust), as defined in Section 3(3)
of ERISA, or with the assets of any such plan (or its related
trust), as defined in Section 4975(e)(1) of the Code (other than
a governmental plan, as defined in Section 3(32) of ERISA), with
respect to which Lessee or such Lessor or any of their Affili
ates is a party in interest within the meaning of ERISA or a
"disqualified person" within the meaning of the Code.
(d) Amount of Commitment. Unless Lessee shall consent to
otherwise, no Lessor may make any such assignment, conveyance or
transfer if, as a consequence thereof, the transferor (if such
Lessor retains any part of its Commitment) or transferee Lessor
would have an Outstanding Investment of less than $5,000,000.
(e) Representations and Warranties. Notwithstanding
anything to the contrary set forth above, no Lessor may assign,
convey or transfer its interest to any Person, unless such
Person shall have delivered to Agent and Lessee a certificate
confirming the accuracy of the representations and warranties
set forth in Section 5.2 with respect to such Person (other than
as such representation or warranty relates to the execution and
delivery of Operative Agreements).
(f) Financial Condition. Any transferee pursuant to this
Section 11.8 shall be a financial institution having combined
capital and surplus of at least $100,000,000.
Each transferee of a Lessor pursuant to this Section 11.8
shall be entitled to the benefits of Sections 7.3, 7.4 and 7.5;
provided that no such transferee shall be entitled to receive
any greater amount pursuant to such Sections than the transferor
Lessor would have been entitled to receive in respect of the
amount of the Commitment transferred by such transferor Lessor
to such transferee if such transfer had not occurred.
SECTION XI.9 JURY TRIAL. LESSEE WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS PARTICIPATION AGREEMENT OR ANY OTHER
OPERATIVE AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED
IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELA
TIONSHIP EXISTING IN CONNECTION WITH THIS PARTICIPATION AGREE
MENT OR ANY OPERATIVE AGREEMENT AND AGREE THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
Section XI.10 Captions; Table of Contents. Section
captions and the table of contents used in this Participation
Agreement (including the exhibits and schedules) are for
convenience of reference only and shall not affect the
construction of this Participation Agreement.
Section XI.11 FINAL AGREEMENT. THIS PARTICIPATION AGREE
MENT, TOGETHER WITH THE OTHER OPERATIVE AGREEMENTS, REPRESENT
THE ENTIRE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED HEREBY AND IN THE OTHER OPERATIVE
AGREEMENTS. THIS PARTICIPATION AGREEMENT CANNOT BE MODIFIED,
SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES, EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
Section XI.12 No Third-Party Beneficiaries. Nothing in
this Participation Agreement or the other Operative Agreements
shall be deemed to create any right in any Person not a party
hereto or thereto (other than the permitted successors and
assigns of Lessors, Agent and Lessee), and such agreements shall
not be construed in any respect to be a contract in whole or in
part for the benefit of any third party except as aforesaid.
Section XI.13 Further Assurances. Lessee, at its expense,
will promptly and duly execute and deliver all such documents
and take such further action as may be necessary or appropriate
in order to effect the intent or purpose of this Participation
Agreement and the other Operative Agreements and to establish
and protect the rights and remedies created or intended to be
created in favor of the Lessors and Agent for the benefit of the
Lessors, including, without limitation, if requested by Required
Lessors at the expense of Lessee, the recording or filing of any
Operative Agreement or any other document in accordance with the
laws of the appropriate jurisdictions.
Section XI.14 Reproduction of Documents. This Participa
tion Agreement, all documents constituting Schedules or Exhibits
hereto, and all documents relating hereto received by a party
hereto, including, without limitation: (a) consents, waivers
and modifications that may hereafter be executed; (b) the
Certificates of Title and all other documents received by the
Lessors or Agent in connection with the receipt and/or acquisi
tion of the Vehicles; and (c) financial statements, certifi
xxxxx, and other information previously or hereafter furnished
to Agent or any Lessor may be reproduced by the party receiving
the same by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process.
Each of the Participants agrees and stipulates that, to the
extent permitted by law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such
party in the regular course of business) and that, to the extent
permitted by law, any enlargement, facsimile, or further
reproduction of such reproduction shall likewise be admissible
in evidence.
Section XI.15 Consideration for Consents to Waivers and
Amendments. Lessee hereby agrees that it will not, and that it
will not permit any of its Affiliates to, offer or give any
consideration or benefit of any kind whatsoever to any Lessor in
connection with, in exchange for, or as an inducement to, such
Lessor's consent to any waiver in respect of, any modification
or amendment of, any supplement to, or any other consent or
approval under, any Operative Agreement unless such considera
tion or benefit is offered ratably to all Lessors.
Section XI.16 Submission to Jurisdiction. Any suit by
Agent or any Lessor to enforce any claim arising out of the
Operative Agreements may be brought in any state or Federal
court located in San Francisco, California having subject matter
jurisdiction, and with respect to any such claim, each Partici
pant hereby irrevocably: (a) submits to the jurisdiction of
such courts; and (b) consents to the service of process out of
said courts by mailing a copy thereof, by registered mail,
postage prepaid, to such Participant at its address specified in
this Participation Agreement, and agrees that such service, to
the fullest extent permitted by law: (i) shall be deemed in
every respect effective service of process upon it in any such
suit, action or proceeding; and (ii) shall be taken and held to
be valid personal service upon and personal delivery to it.
Lessee irrevocably waives, to the fullest extent permitted by
law: (A) any claim, or any objection, that it now or hereafter
may have, that venue is not proper with respect to any such
suit, action or proceeding brought in such a court located in
San Francisco, California including, without limitation, any
claim that any such suit, action or proceeding brought in such
court has been brought in an inconvenient forum; and (B) any
claim that Lessee is not subject to personal jurisdiction or
service of process in such forum. Lessee agrees that any suit
to enforce any claim arising out of the Operative Agreements or
any course of conduct or dealing of Agent or any Lessor shall be
brought and maintained exclusively in any state or Federal court
located in San Francisco, California. Nothing in this Section
11.16 shall affect the right of Agent or any Lessor to bring any
action or proceeding against Lessee or any Vehicle or other
Collateral in the courts of any other jurisdiction. Lessee
agrees that a final judgment in any action or proceeding in a
state or Federal court within the United States may be enforced
in any other jurisdiction by suit on the judgment or in any
other manner provided by law.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed and delivered as of the
date first above written.
CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE, as Lessee
By /s/X.X. Xxxxxxxx
Name Printed: X.X. Xxxxxxxx
Title: Vice President and
Treasurer
ABN AMRO
BANK N.V., not individually, but
solely as Agent for the Lessors
By /s/Xxxxxxx X. French
Name Printed: Xxxxxxx X. French
Title: Vice President
By /s/X.X. Xxxxxxx
Name Printed: X.X. Xxxxxxx
Title: Group Vice President
LESSORS:
ABN AMRO BANK N.V.
By /s/Xxxxxxx X. French
/s/Xxxxxxx X. French
Name Printed: Xxxxxxx X. French
Title: Vice President
By /s/X.X. Xxxxxxx
Name Printed: X.X. Xxxxxxx
Title: Group Vice President
SCHEDULE I
TO
PARTICIPATION AGREEMENT
AGENT AND LESSOR ADDRESSES; LESSOR COMMITMENTS
AGENT: ABN AMRO BANK N.V. (address set forth in Section 11.4)
LESSORS:
1. ABN AMRO BANK N.V.
SCHEDULE X
TO
PARTICIPATION AGREEMENT
DEFINITIONS
The following terms (or other terms used or defined in any
Operative Agreement which have meanings substantially similar or
equivalent to the meanings assigned to such terms) shall have
the following meanings for all purposes, and such meanings shall
be equally applicable both to the singular and plural forms of
the terms defined. Any agreement, document or instrument
defined or referred to in this Schedule X shall include each
amendment, modification or supplement thereto including each
waiver and consent that may (pursuant to the Operative
Agreements) be effective from time to time, except as otherwise
expressly indicated. The definition of any person herein shall
include its successors and permitted assigns. Reference to
schedules and exhibits in this Schedule X shall mean Schedules
and Exhibits attached to the Participation Agreement, except as
otherwise indicated. All references to "the Vehicles" or "all
of the Vehicles" or words of similar import shall be deemed to
refer to all Vehicles covered by all Lease Supplements then in
effect.
"Actual Knowledge" shall mean, as to any matter with
respect to any Person, the actual knowledge of such matter by a
Responsible Officer of such Person and shall include, without
limitation, receipt of a notice of such matter by any such
Responsible Officer.
"Affected Lessor" shall have the meaning provided in
Section 7.6 of the Participation Agreement.
"Affiliate(s)" of any Person shall mean any other Person
that directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with,
such Person. No Person shall be considered an Affiliate of
Agent unless such Person directly or indirectly through one or
more intermediaries controls, is controlled by, or is under
common control with, Agent solely in its capacity as agent under
the Lease.
"Agent" shall have the meaning provided in the preamble of
the Lease.
"Agent's Corporate Office" shall mean the principal
corporate office of Agent, which office is, on the date the
Participation Agreement is executed by all parties thereto,
located at the address for Agent set forth in Section 11.4 of
the Participation Agreement.
"Agency Fee" shall have the meaning specified in
Section 9.10 of the Participation Agreement.
"Allocation Fraction" of any Vehicle shall mean, (a) with
respect to any Lease Supplement, a fraction, the numerator of
which is the Purchase Price of such Vehicle and the denominator
of which is the aggregate Purchase Price of all of the Vehicles
then subject to such Lease Supplement, including such Vehicle,
and (b) with respect to the Lease, a fraction, the numerator of
which is the Purchase Price of such Vehicle and the denominator
of which is the aggregate Purchase Price of all of the Vehicles
then subject to the Lease, including such Vehicle.
"alter" shall have the meaning provided in Section 5.5(a)
of the Lease.
"Appraisal" shall mean the appraisal of the Vehicles from
an Appraiser received pursuant to the terms of the Lease.
"Appraised Value" shall mean, with respect to any Vehicle
as of any date of determination, the fair market value of such
Vehicle as set forth on the Appraisal therefor.
"Appraiser" shall mean Valuation Research Corporation or
such other Person as is selected by the Lessee and Agent.
"Assumed Interest Rate" shall mean, as of the date of any
Funding, the Interest Rate that would have been applicable for
purposes of calculating Variable Rent under the Lease in the
event that the Delivery Date to which such Funding relates had
occurred on such date.
"Assumption Agreement" shall have the meaning provided in
Section 6.1(c) of the Participation Agreement.
"Authority" shall mean any: (a) Federal, state, local or
(if any Vehicle or any component thereof has been moved outside
of the United States) foreign, tribunal, legislative body,
governmental subdivision, administrative agency or other
governmental authority; or (b) arbitrator or panel of
arbitrators, in the case of each of clause (a) and (b) having or
exercising jurisdiction over Lessee, Agent, or any Vehicle (or
any component thereof).
"Base Period" shall have the meaning provided in
Section 2.1 of the Lease.
"Basic Rent" shall mean, with respect to the Lease or any
Lease Supplement (as the context may require) all installments
of Fixed Rent and Variable Rent due and payable by Lessee on
each Payment Date during the Base Period.
"Business Day" shall mean any day on which
(a) Federal and state chartered banks in San
Francisco, California are open for commercial banking
business; and
(b) solely with respect to determinations of
Variable Rent and Rent Periods, dealings in Dollars are
carried on in the London Interbank market.
"Casualty" shall mean any of the following events in
respect of any Vehicle: (a) the loss of such Vehicle or the use
thereof due to theft, disappearance, destruction, damage beyond
repair or rendition of such Vehicle permanently unfit for normal
use for any reason whatsoever; (b) any damage to such Vehicle
which results in an insurance settlement with respect to such
Vehicle on the basis of a total loss; (c) the permanent
condemnation, confiscation or seizure of, or requisition of
title to or use of, such Vehicle; (d) as a result of any rule,
regulation, order or other action by any Authority, the use of
such Vehicle in the normal course of business shall have been
prohibited, directly or indirectly, for a period of six
consecutive months, unless Lessee, prior to the expiration of
such six-month period, shall have undertaken and shall be
diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such Vehicle by the Lessee
thereof or, in any event, if use of such Vehicle shall have been
prohibited, directly or indirectly, for a period of twelve
consecutive months; or (e) the operation or location of such
Vehicle, while under requisition for use by any Authority, in
any area excluded from coverage by any insurance policy then in
effect with respect to such Vehicle required by the terms of
Section 7.1 of the Lease, if Lessee shall be unable to obtain
indemnity in lieu thereof from such Authority; provided that for
the purpose of the foregoing clause (e), if such Vehicle shall
be returned to Lessee prior to the Casualty Settlement Date in
such condition that a Casualty would not otherwise be deemed to
exist with respect thereto, then such event shall, at the option
of Lessee, not constitute a Casualty.
"Casualty Amount" of any Vehicle shall mean, with respect
to any Casualty (and for purposes of Section 6.1(g) of the
Participation Agreement), an amount equal to the product of
(a) the Lease Balance on the date of such Casualty (or the date
of determination for purposes of Section 6.1(a) of the
Participation Agreement) and (b) the Allocation Fraction of such
Vehicle.
"Casualty Notice" shall have the meaning provided in
Section 6.1 of the Lease.
"Casualty Proceeds" shall have the meaning provided in
Section 6.2 of the Lease.
"Casualty Settlement Date" shall have the meaning provided
in Section 6.1(a) of the Lease.
"CD Rate" means, relative to any Rent Period with respect
to the Lease Balance and each Supplement Balance, the rate of
interest determined by the Agent to be the arithmetic average
(rounded upwards, if necessary, to the nearest 1/16 of 1%) of
the prevailing rates per annum bid at 10:00 a.m., San Francisco
time (or as soon thereafter as practicable), on the first day of
such Rent Period by two or more certificate of deposit dealers
of recognized standing located in San Francisco, California for
the purchase at face value from ABN AMRO Bank N.V. of its
certificates of deposit in an amount approximately equal to the
Lease Balance at the beginning of such Rent Period and having a
maturity approximately equal to such Rent Period plus 115 basis
points.
"Certificate of Title" shall mean a certificate of title,
certificate of ownership, manufacturer's certificate of origin
or any similar equivalent instrument issued by any applicable
Authority evidencing title, or an interest in title, to a
Vehicle.
"CFI Revolving Credit Agreement" shall mean that certain
Amended and Restated Credit Agreement dated as of January 10,
1995 among Consolidated Freightways, Inc., the Banks listed
therein, the LC Issuing Banks listed therein, the Co-Agents
listed therein and Xxxxxx Guaranty Trust Company of New York as
Agent, as amended, restated, replaced, refinanced, supplemented
or otherwise in effect from time to time, including any
successor agreement or agreements or arrangement or arrangements
providing for revolving or working capital indebtedness, whether
or not secured.
"Charges" shall mean (a) freight, installation and other
similar costs with respect to any Vehicle and (b) applicable
sales, use or similar taxes imposed upon any Vehicle.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean all of Lessee's right, title and
interest in and to each of the following, whether now existing
or hereafter arising or acquired, and wherever located:
(a) the Vehicles and the Intellectual
Property Collateral;
(b) the Subleases;
(c) all contracts necessary to purchase, operate
and maintain the Vehicles, including all warranties;
(d) any rebate, offset or other similar rights
under a purchase order, invoice or purchase agreement
with any manufacturer of any Vehicle;
(e) all books, manuals, logs, records, writings,
data bases, information and other property relating to,
used or useful in connection with, evidencing, embodying
or incorporating any of the foregoing; and
(f) all products, accessions and proceeds of and
from any and all of the foregoing Collateral (including
proceeds which constitute property of the types
described in subsections (a), (b), (c), (d) and (e)
above and, to the extent not otherwise included, all
payments under insurance (whether or not Lessor is the
loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing
Collateral.
"Commitment(s)" for each Lessor shall mean the amount set
forth in Schedule I to the Participation Agreement across from
the name of such Lessor.
"Commitment Fee" shall have the meaning specified in
Section 2.5 of the Participation Agreement.
"Commitment Percentage" shall mean, with respect to each
Lessor, the quotient (expressed as a percentage) of such
Lessor's Commitment divided by the Total Commitment.
"Consolidated Debt" shall mean, at any date, the Debt of
Lessee and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated EBITDAR" shall mean, in respect of any
period, Consolidated Net Income, increased by extraordinary
losses, decreased by extraordinary gains, and increased by
interest (including the portion of payments under any Operative
Agreements that may be characterized for GAAP purposes as
interest), federal and state income taxes, depreciation,
amortization and Consolidated Rental Expense, all for such
period.
"Consolidated Interest Expense" shall mean, for any period,
the interest expense of Lessee and its Consolidated
Subsidiaries, determined on a consolidated basis for such
period.
"Consolidated Net Income" means, for any period, the net
income of Lessee and its Consolidated Subsidiaries for such
period determined in accordance with GAAP provided, however,
that in determining Consolidated Net Income, there shall not be
included the following: if the Lessee shall have acquired the
assets and business of any Person or any substantial part of the
assets and business of any Person, any revenues and expenses
properly attributable to such assets and business or part
thereof prior to the date of such acquisition.
"Consolidated Rental Expense" shall mean, for any period,
the rental expense for operating leases of Lessee and its
Consolidated Subsidiaries, determined on a consolidated basis
for such period.
"Consolidated Subsidiary" shall mean, at any date, any
subsidiary or other entity the accounts of which would be
consolidated with those of Lessee in its consolidated financial
statements if such statements were prepared as of such date.
"Consolidated Tangible Net Worth" shall have the same
meaning as "CFI investment and advances" as such term is used in
the Consolidated Freightways Corporation of Delaware and
Subsidiaries Consolidated Balance Sheets. until such time as
Lessee shall cease to be a subsidiary of Consolidated
Freightways, Inc., at which point "Consolidated Tangible Net
Worth" shall mean at any date the Shareholders' Equity of Lessee
and its Consolidated Subsidiaries, determined on a consolidated
basis, less Intangible Assets, all determined as of such date.
For purposes of this definition, "Intangible Assets" means the
amount (to the extent reflected in determining such
Shareholders' Equity) of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of
assets of a going concern business made within twelve months
after the acquisition of such business) subsequent to
September 30, 1995 in the book value of any asset owned by
Lessee, (ii) all equity investments in Persons (except invest
ments in publicly traded marketable equity securities) and
(iii) all unamortized debt discount and expense, goodwill,
patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible
assets (it being understood that unamortized deferred charges
and deferred income tax assets are not deemed to be intangible
assets for purposes hereof).
"Debt" of any Person shall mean at any date, without dupli
cation, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, deben
tures, notes or other similar instruments, (iii) all obligations
of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as
lessee which are capitalized in accordance with GAAP, (v) non-
real estate minimum operating lease commitments (present valued
at ten percent (10%)); (vi) all obligations of such Person to
reimburse banks for drawings under letters of credit or payments
with respect to bankers' acceptances, which obligations remain
unpaid for more than three Business Days after they become due,
or, if later, after such Person is notified of the due date
thereof, (vii) all obligations of the types referred to in
clauses (i) to (v), inclusive, of this definition which are
secured by a Lien on any asset of such Person, whether or not
such obligations are otherwise obligations of such Person, and
(viii) all obligations of others of the types referred to in
clauses (i) to (v), inclusive, of this definition which are
guaranteed by such Person; provided, however, if any of the
obligations described in clause (viii) above are also guaranteed
by Person(s) other than such Person (the "Additional
Guarantors"), the amount of such obligations which shall be
included as Debt of such Person shall be equal to the product of
(i) the amount of such obligations times (ii) such Person's
Percentage Shareholders' Equity. As used herein, the term
"Percentage Shareholders' Equity" shall be a fraction, the
numerator of which is the Shareholders' Equity of such Person
and the denominator of which is the sum of the Shareholders'
Equity of such Person and of all Additional Guarantors; provided
however that this clause (viii) shall not apply to guarantee
obligations of Lessee that in the aggregate are less than five
million dollars ($5,000,000) or relate to guarantee obligations
in respect of the CFI Revolving Credit Agreement.
"Defaulted Amount" shall have the meaning provided in
Section 2.1(c) of the Participation Agreement.
"Defaulting Lessor" shall have the meaning provided in
Section 2.1(c) of the Participation Agreement.
"Default Rate" shall mean, at any time, the rate per annum
which is two percent (2%) higher than the Interest Rate then in
effect.
"Delivery Date(s)" shall mean each of the actual dates on
or prior to December 29,> 1995 on which the transactions
contemplated in Article II of the Participation Agreement are
completed.
"Delivery Date Closing" shall mean, with respect to a
Delivery Date, the completion of those transactions described in
Article II of the Participation Agreement.
"Delivery Date Notice" shall have the meaning provided in
Section 3.1 of the Participation Agreement.
"Deposit Account" shall have the meaning provided in
Section 6.2 of the Lease.
"Dollar" and the sign "$" mean lawful money of the United
States.
"Environmental Laws" shall mean all applicable Federal,
state, local or foreign statutes, laws, ordinances, codes,
rules, regulations and orders (including consent decrees)
relating to public health and safety and protection of the
environment.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Event of Default" shall have the meaning provided in
Section 8.1 of the Lease.
"Fixed Rent" shall mean, for each Payment Date during the
Base Period and each Renewal Term, that portion of the
installment of Rent payable on such Payment Date set forth under
the heading "Fixed Rent Payment" on Schedule II to each Lease
Supplement.
"Funding" shall have the meaning assigned to that term in
Section 2.1 of the Participation Agreement.
"GAAP" shall mean generally accepted accounting principles
in the United States of America in effect from time to time,
applied on a consistent basis both as to classification of items
and amounts.
"Impositions" shall mean all fees (including, but not
limited to, license, documentation, recording or registration
fees) and taxes (including but not limited to all income, sales,
use, lease, sublease, gross receipts, personal property,
occupational, value added or other taxes, levies, imposts,
duties, assessments, charges or withholdings of any nature
whatsoever), together with any penalties, fines or additions to
tax or interest thereon.
"Incipient Default" shall mean an event or condition which,
with the giving of notice or the passage of time or both, would
constitute an Event of Default.
"Indemnitee(s)" shall mean Agent in both its individual and
agent capacity, the Lessors, any Affiliate of any of them and
any assignee, officer, director, employee, attorney or agent of
any of them.
"Initial Delivery Date" shall mean the first Delivery Date
completed pursuant to Article II of the Participation Agreement.
"Intellectual Property Collateral" shall mean:
(a) all software programs (including
both source code, object code and all related applications and
data files), whether now owned, licensed or leased or hereafter
acquired by Lessee, designed for use on any computers and
electronic data processing hardware constituting part of and not
readily removable from the Vehicles and necessary for the
operation and maintenance of the Vehicles; provided that with
respect to any licensed or leased software program the foregoing
shall be included in "Intellectual Property Collateral" only to
the extent that a grant of a security interest is not prohibited
by the terms of the license or lease;
(b) all firmware associated therewith;
(c) all documentation (including flow charts,
logic diagrams, manuals, guides and specifications) with
respect to such hardware, software and firmware
described in the preceding clauses (a) and (b); and
(d) all rights with respect to all of the
foregoing, including, without limitation, any and all
copyrights, licenses, options, warranties, service
contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal
rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of
the foregoing.
"Interest Rate" means, with respect to any Rent Period or
any Interim Period under any Lease Supplement, the rate per
annum equal to the sum of the LIBO Rate for such Rent Period or
Interim Period plus 115 basis points, unless and to the extent
that the CD Rate shall apply as a result of the application of
provisions of Section 7.4 of the Participation Agreement.
"Interim Period" shall mean, as to each Lease Supplement,
the period, if any, commencing on the Delivery Date of such
Lease Supplement and continuing to and ending (but not
including) the Lease Commencement Date.
"Interim Rent" shall mean all payments, if any, due and
payable by Lessee under each Lease Supplement on the last day of
the applicable Interim Period. The Interim Rent payable under
each Lease Supplement, if any, is set forth under the heading
"Interim Rent" on Schedule II to such Lease Supplement.
"International Registration Plan" shall mean the
reciprocity agreement among various states, including Oregon and
Illinois, and Canadian provinces, pursuant to which fleets of
motor vehicles used in interstate commerce are registered and
licensed for operation within and among the signatory states and
provinces.
"interstate" or "intrastate" shall refer to interstate or
intrastate activity within the United States.
"Investment Percentage" shall mean, with respect to each
Lessor as of any date of determination, the quotient (expressed
as a percentage) of such Lessor's Outstanding Investment divided
by the Lease Balance.
"Invoice Cost" with respect to any Vehicle shall mean the
aggregate cost of such Vehicle (exclusive of Charges) reflected
on the invoice therefor delivered to Agent pursuant to Section
3.1 of the Participation Agreement.
"IRS" shall mean the Internal Revenue Service.
"Lease" shall mean that certain Master Lease Intended as
Security, dated as of December 22, 1995, by and between Agent
and Lessee, substantially in the form of Exhibit A to the
Participation Agreement, as amended, modified or supplemented
from time to time in accordance with the Participation
Agreement.
"Lease Balance" shall mean, as of any determination date,
the aggregate Purchase Price of all of the Vehicles, minus all
amounts of Fixed Rent actually paid to the date of determination
and all Reduction Amounts actually paid to the date of
determination.
"Lease Commencement Date" shall have the meaning provided
in Section 2.2 of the Lease.
"Lease Supplement" shall have the meaning provided in
Section 3.5 of the Participation Agreement.
"Lease Supplement Lessee Risk Amount" shall mean, for any
Lease Supplement on any date, an amount equal to the product of
(i) the percentage (expressed as a decimal) set forth opposite
such date under the heading "Lease Supplement Lessee Risk
Percentage" on Schedule II to such Lease Supplement times
(ii) the aggregate Purchase Price of all Vehicles subject to
such Lease Supplement.
"Lease Supplement Lessor Risk Amount" shall mean, for any
Lease Supplement on any date, an amount equal to the product of
(i) the percentage (expressed as a decimal) set forth opposite
such date under the heading "Lease Supplement Lessor Risk
Percentage" on Schedule II to such Lease Supplement times
(ii) the aggregate Purchase Price of all Vehicles subject to
such Lease Supplement.
"Lease Supplement Termination Value" shall mean, for any
Lease Supplement on any date, an amount equal to the product of
(i) the percentage (expressed as a decimal) set forth opposite
such date under the heading "Lease Supplement Termination
Percentage" on Schedule II to such Lease Supplement times
(ii) the aggregate Purchase Price of all Vehicles subject to
such Lease Supplement.
"Lease Term" shall mean the Interim Period, if any, the
Base Period and all exercised Renewal Terms.
"Lessee" shall mean Consolidated Freightways Corporation of
Delaware, a Delaware corporation.
"Lessee Purchase Option" shall have the meaning provided in
Section 11.1(b) of the Lease.
"Lessee Risk Amount" shall mean, on any date, the sum of
the Lease Supplement Lessee Risk Amounts for all Lease
Supplements then in effect.
"Lessors" shall mean each of the Persons identified as a
Lessor in Schedule I to the Participation Agreement and those
Persons to whom the interests in the Lease and the Collateral
shall have been transferred or assigned from time to time in
accordance with the provisions of the Lease and the
Participation Agreement.
"Lessor Commitment" shall mean, with respect to each
Lessor, the amount set forth opposite such Lessor's name on
Schedule I to the Participation Agreement.
"Lessor Liens" shall mean Liens or other conveyances result
ing from any act of or claim against Agent in its individual
capacity (or any Person claiming by, through or under Agent in
its individual capacity) or any Lessor, in each case arising out
of any event or condition not related to the exercise of such
Person's rights or the performance of its duties expressly
provided under any Operative Agreement.
"Lessor Risk Amount" shall mean, on any date, the sum of
the Lease Supplement Lessor Risk Amounts for all Lease
Supplements then in effect.
"LIBO Rate" means, relative to any Rent Period with respect
to the Lease Balance and each Supplement Balance, the rate per
annum determined by Agent to be:
(a) the offered rate per annum at
which deposits in United States Dollars appear on the Telerate
Page 3750 (or any successor page), or
(b) if such offered rate is not available, then
the rate per annum at which deposits in United States
Dollars appear on the Reuters Screen LIBO Page (or any
successor page), or
(c) if neither of the foregoing offered rates is
available, the average (rounded upwards, if necessary,
to the nearest 1/16 of 1%) of the rates per annum at
which Dollar deposits in immediately available funds are
offered to The Industrial Bank of Japan, Limited's LIBOR
Office in the London interbank market,
determined in any case as of 11:00 a.m. (London time) two
Business Days prior to the beginning of such Rent Period for
delivery on the first day of such Rent Period, and in an amount
approximately equal to the amount of the Lease Balance or the
applicable Supplement Balance and for a period approximately
equal to such Rent Period.
"LIBOR Office" shall mean ABN AMRO Bank N.V., London,
England branch, or such other office of ABN AMRO Bank N.V. as
designated from time to time by notice from Agent to Lessee,
whether or not outside the United States, which shall be used
for purposes of establishing LIBO Rates hereunder.
"Lien" shall mean: (a) any interest in property securing
an obligation owed to, or claimed by, a Person other than the
owner of the property, whether such interest is based on the
common law, statute or contract, and including, without
limitation, any judgment lien, security interest, mortgage,
encumbrance, pledge, conditional sale, right of distraint or
trust receipt or a lease, consignment or bailment for security
purposes; or (b) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease
or other title exception or defect, cloud on title or
encumbrance affecting property.
"Material Adverse Effect" shall mean any change or changes,
effect or effects or condition or conditions that individually
or in the aggregate are or are reasonably likely to be
materially adverse to (i) the business, consolidated financial
position or consolidated results of operations of Lessee and its
Consolidated Subsidiaries taken as a whole, (ii) the
transactions contemplated by the Operative Agreements, (iii) the
ability of Lessee to perform its respective obligations under
the Operative Agreements or (iv) the validity or enforceability
of any of the Operative Agreements or any rights or remedies
under any thereof.
"Multiemployer Plan" shall have the meaning assigned to the
term "multiemployer plan" in Section 3(37) of ERISA.
"Non-Defaulting Lessor" shall have the meaning provided in
Section 2.1(c) of the Participation Agreement.
"Officer's Certificate" shall mean a certificate executed
on behalf of any entity by its President, one of its Vice
Presidents, its Chief Financial Officer, its Treasurer, its
Assistant Treasurer or its Controller.
"Operative Agreement(s)" shall mean the Participation
Agreement, the Lease, the Lease Supplements, the Delivery Date
Notices, the Subleases, any Assumption Agreement, each
Certificate of Title and each UCC financing statement filed or
to be filed from time to time with respect to the security
interests created pursuant to the Lease.
"Outstanding Investment" of any Lessor as of any date of
determination shall mean the aggregate amount funded by such
Lessor pursuant to Section 2.1 of the Participation Agreement
(but excluding amounts returned to such Lessor pursuant to
Section 2.4 of the Participation Agreement), reduced by all
Fixed Rent paid to Agent for the account of such Lessor and all
Reduction Amounts paid to Agent for the account of such Lessor.
"Part(s)" shall mean all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature that may from time to time be incorporated or
installed in or attached to any Vehicle.
"Partial Casualty" shall mean any loss, damage,
destruction, taking by eminent domain, loss of use or theft of
any portion of a Vehicle which does not constitute a Casualty.
"Participant(s)" shall mean any or all of the parties to
the Participation Agreement.
"Participation Agreement" shall mean the Participation
Agreement, dated as of December 22, 1995, entered into between
Lessee, Agent and Lessors, as amended, modified or supplemented
from time to time in accordance with its terms.
"Payment Date" shall mean the last day of each Rent Period.
"Payment Default" shall mean an Event of Default described
in Section 8.1(a) of the Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean, with respect to any Person, a
"pension plan" as such term is defined in section 3(2) of ERISA
which is subject to Title IV of ERISA and to which such Person
may have any liability or contingent liability, including, but
not limited to, liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason or being deemed to
be a contributing sponsor under section 4069 of ERISA.
"Permitted Contest" shall mean actions taken by a Person to
contest in good faith, by appropriate proceedings initiated
timely and diligently prosecuted, the legality, validity or
applicability to the Vehicles or any interest therein of any
Person of: (a) any law, regulation, rule, judgment, order, or
other legal provision or judicial or administrative require
ments; (b) any term or condition of, or any revocation or
amendment of, or other proceeding relating to, any authorization
or other consent, approval or other action by any Authority; or
(c) any Lien or Imposition; provided that the initiation and
prosecution of such contest would not: (i) result in, or
materially increase the risk of, the imposition of any criminal
liability on any Indemnitee; (ii) materially and adversely
affect the security interests created by the Lease or the right,
title or interest of Agent or any Lessor in or to any of the
Vehicles or the right of Agent to receive payment of Rent or the
Lease Balance or any interest therein; or (iii) materially and
adversely affect the fair market value, utility or remaining
useful life of the Vehicles or any interest therein or the
continued economic operation thereof; and provided further that
in any event adequate reserves in accordance with GAAP are
maintained against any adverse determination of such contest.
"Permitted Lessor Liens" shall mean Lessor Liens: (a) for
Taxes of Agent or a Lessor either not yet due or being chal
lenged by a Permitted Contest; (b) arising out of judgments or
awards against Agent or a Lessor with respect to which at the
time an appeal or proceeding for review is being prosecuted by a
Permitted Contest; and (c) arising out of Liens arising volun
tarily in the ordinary course of business of Agent or a Lessor
for amounts the payment of which is either not delinquent or is
being contested by a Permitted Contest.
"Permitted Liens" shall mean: (i) any rights in favor of
Lessors under the Operative Agreements and any rights of any
Persons entitled to use of the Collateral in accordance with
Section 5.2 of the Lease; (ii) any Lien, (including, without
limitation, Liens of landlords, carriers, warehousemen,
mechanics or materialmen) in favor of any Person securing
payment of the price of goods or services provided in the
ordinary course of business for amounts the payment of which is
not overdue or is being contested in good faith by appropriate
proceedings promptly initiated and diligently prosecuted, so
long as such proceedings do not involve any reasonable danger of
sale, forfeiture or loss of all or any material part of the
Collateral and do not materially adversely affect any Lien
created in favor of Lessor under the Lease; (iii) any Lessor
Lien or any Lien arising out of any breach by any Lessor of its
obligations under the Operative Agreements; (iv) any Lien for
current taxes, assessments or other governmental charges which
are not delinquent or the validity of which is being contested
by a Permitted Contest; (v) attachments, judgments and other
similar Liens arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured hereby are being
contested in good faith and by appropriate proceedings;
(vi) reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases,
zoning and land use restrictions and other similar title
exceptions or encumbrances affecting real property that were not
incurred in connection with the incurrence of indebtedness, so
long as such Liens do not involve a reasonable danger of sale,
forfeiture or loss of all or any material portion of the
Collateral and do not materially adversely affect any Lien
created in favor of Lessor under the Lease; and (vii) any Lien
incurred in the ordinary course of business to secure
performance of statutory obligations.
"Person" shall mean any individual, partnership, corpora
tion, trust, unincorporated association or joint venture, a
government or any department or agency thereof or any other
legal entity.
"Plan" shall mean an "employee benefit plan" as defined in
section 3(3) of ERISA.
"Proceeds" shall have the meaning provided in Section
11.1(c) of the Lease.
"Purchase Price" shall mean, for any Vehicle, the sum of
the Invoice Cost of such Vehicle plus Charges; provided that the
items described in clause (a) of the definition of "Charges"
shall not exceed 3% of the Purchase Price of such Vehicle and
the items described in clause (b) of the definition of "Charges"
shall not exceed 12% of the Purchase Price of such Vehicle, and
provided, further, that the Purchase Price shall in no event
exceed the sum of the Appraised Value of such Vehicle as of its
Delivery Date plus Charges (subject to the preceding proviso).
"Reduction Amount" shall mean amounts paid by Lessee to
Agent, for the benefit of the Lessors, for the purchase of any
Vehicle pursuant to Section 6.1 or 6.2 of the Lease or
Section 6.1(g) of the Participation Agreement, provided that
"Reduction Amounts" shall not include any Rent, Administrative
Charges or any costs, expenses or taxes to be paid by Lessee in
connection with any such purchase, sale or transfer.
"Related Person" shall mean, with respect to any Person,
any trade or business (whether or not incorporated) which,
together with such Person, is under common control as described
in section 414 of the Code.
"Renewal Option" shall mean the meaning provided in Section
11.1(a) of the Lease.
"Renewal Rent" shall mean, with respect to the Lease or any
Lease Supplement (as the context may require), all payments of
Fixed Rent and Variable Rent due and payable by Lessee on each
Payment Date during the applicable Renewal Term.
"Renewal Term" shall have the meaning provided in
Section 2.3 of the Lease.
"Rent" shall mean, with respect to the Lease or any Lease
Supplement, Interim Rent, if any, Basic Rent, and/or Renewal
Rent, as the context may require.
"Rent Period" shall mean, for the Base Period or any
Renewal Term the period beginning on the first day of the Base
Period and ending on (but excluding) the date which numerically
corresponds to such date three months thereafter and each
consecutive three-month period thereafter, with each such period
ending on the date which numerically corresponds to the date on
which such period commenced; provided, however, that (a) if such
Rent Period would otherwise end on a day which is not a Business
Day, then such Rent Period would otherwise end on a day which is
not a Business Day, then such Rent Period shall end on the next
following Business Day, unless (solely for purposes of
determining Rent Periods in connection with calculating Variable
Rent on a LIBO Rate basis) such next following Business Day is
the first Business Day of a calendar month, in which case such
Rent Period shall end on the Business Day immediately preceding
such numerically corresponding day, and (b) no Rent Period may
end later than the last day of the Lease Term.
"Replaced Part" shall have the meaning provided in
Section 5.4(a) of the Lease.
"Replacement Part" shall have the meaning provided in
Section 5.4(a) of the Lease.
"Replacement Vehicle" shall mean any Vehicle duly
substituted for another Vehicle in accordance with the
provisions of the Operative Agreements, as contemplated by
Sections 6.1 and 6.2 of the Lease and Section 6.1(g) of the
Participation Agreement.
"Reportable Event" shall mean a "reportable event"
described in Section 4043(b) of ERISA and the regulations
thereunder.
"Required Lessors" shall mean, at a particular time, the
holders of at least 60% of the Outstanding Investment.
"Responsible Officer" of the Person shall mean: (i) in the
case of any business corporation, the chairman of the board of
directors of such corporation if such chairman is an officer of
such corporation, the president, any vice president or any
assistant vice president of such corporation, the secretary or
any assistant secretary of such corporation or the treasurer or
any assistant treasurer of such corporation; (ii) in the case of
any partnership, a general partner (if such general partner is
an individual), or a Responsible Officer of a corporate general
partner, of such partnership or the general manager of such
partnership or any assistant general manager of such
partnership; and (iii) in the case of any commercial bank or
trust company, the chairman or vice chairman of the board of
directors or trustees of such bank or trust company, the
chairman or vice chairman of the executive committee of the
board of directors or trustees of such bank or trust company,
the president, any vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or any assistant trust
officer of such bank or trust company, the controller or any
assistant controller of such bank or trust company, any
executive or senior assistant or second vice president of such
bank or trust company or any other individual who is employed by
such bank or trust company and customarily performs functions
similar to those performed by any of the other officers of such
bank or trust company referred to herein.
"Sale Option" shall have the meaning provided in Section
11.1(c) of the Lease.
"Schedule X" shall mean this Schedule to the Participation
Agreement.
"Securities Act" shall have the meaning provided in
Section 5.1(aa) of the Participation Agreement.
"Shareholder's Equity" shall mean the total shareholder's
equity of Lessee and its Consolidated Subsidiaries, determined
in accordance with GAAP.
"Sublease" shall mean a sublease of Vehicles entered into
in accordance with Section 5.2 of the Lease.
"Sublessee" shall mean the lessees or sublessee under any
Sublease.
"Subsequent Delivery Date" shall mean each of the dates
scheduled for a Delivery Date Closing pursuant to a Delivery
Date Notice occurring following the Initial Delivery Date.
"Subsequent Delivery Date Closing" shall mean the Delivery
Date Closing relating to a Subsequent Delivery Date.
"Subsequent Delivery Date Notice" shall mean a Delivery
Date Notice relating to a Subsequent Delivery Date.
"Subsidiary" shall mean, with respect to any Person, any
corporation, association, partnership, joint venture or other
business entity more than 50% (by number of votes) of the stock
of any class or classes (or equivalent interests) of which is at
the time owned by such Person or by one or more Subsidiaries of
such Person; if the holders of the stock of such class or
classes (or equivalent interests) (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a
majority of the directors (or Persons performing similar
functions) of such business entity, even though the right so to
vote has been suspended by the happening of such a contingency,
or (b) at the time entitled, as such holders, to vote for the
election of a majority of the directors (or Persons performing
similar functions) of such business entity, whether or not the
right so to vote exists by reason of a happening of a
contingency.
"Supplement Balance" shall mean, as of any determination
date, the aggregate Purchase Price of all of the Vehicles
subject to such Lease Supplement, minus all amounts of Fixed
Rent actually paid to the date of determination pursuant to such
Lease Supplement and all Reduction Amounts with respect to such
Lease Supplement actually paid with respect to such Vehicles to
the date of determination.
"Termination Date" shall mean the date the Lease Term
including any Renewal Term, ends pursuant to (a) Article VIII of
the Lease relating to termination as a result of an Event of
Default, (b) Article X of the Lease relating to early
termination, or (c) Section 11.1 of the Lease relating to the
exercise of Lessee Purchase Option or Sale Option.
"Termination Value" shall mean, on any date, the sum of the
Lease Supplement Termination Values for such date for all Lease
Supplements then in effect.
"Total Commitment" shall mean $65,000,000.
"Transaction Costs" shall mean, without duplication,
(i) the Commitment Fee;
(ii) a fee in respect of legal fees of Pillsbury
Madison & Sutro reasonably incurred on behalf of Agent
through the Initial Delivery Date in connection with the
negotiation, execution and delivery of the Operative
Agreements, and the transactions contemplated thereby,
and the reasonable out-of-pocket expenses of Pillsbury
Madison & Sutro in connection with the foregoing;
(iii) the fees and expenses of the Appraiser;
(iv) the Upfront Fee; and
(v) all costs of lien searches and perfection of a
first priority security interest in the Vehicles.
"UCC" shall mean the Uniform Commercial Code, as in effect
from time to time in any applicable jurisdiction.
"Upfront Fee" shall mean that amount referred to in a
letter agreement dated December 19, 1995 from ABN AMRO North
America, Inc. to Lessee.
"Variable Rent" shall mean, with respect to each Rent
Period, an amount equal to interest accrued on the Lease Balance
(or, with respect to a Lease Supplement, on the Supplement
Balance) outstanding during such period at the Interest Rate
and, for purposes of the Interim Period, shall mean the Interim
Rent.
"Vehicle" shall mean each tractor listed on Schedule I to
each Lease Supplement, and any substitutions therefor, replace
ments thereof and additions thereto from time to time pursuant
to the Operative Agreements.
"Welfare Plan" shall mean, with respect to any Person, a
"welfare plan" as such term is defined in section 3(1) of ERISA
to which such Person or any Related Person to such Person may
have any liability or contingent liability
MASTER LEASE INTENDED AS SECURITY
Dated as of December 22, 1995
between
CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE
as Lessee
and
ABN AMRO BANK N.V.
not individually, but solely
as Agent for the Lessors from
time to time under the
Participation Agreement
TABLE OF CONTENTS
Page
ARTICLE I Delivery and Acceptance 1
Section 1.1 Transfer 1
Section 1.2 Acceptance Procedure 2
ARTICLE II Lease Term 2
Section 2.1 Interim and Base Periods 2
Section 2.2 Lease Commencement Date 2
Section 2.3 Lease Renewal 2
ARTICLE III Rent; Other Economic Provisions 3
Section 3.1 Rent Payments 3
Section 3.2 Place and Manner of Payment 3
Section 3.3 Net Lease 4
ARTICLE IV Warranties 5
Section 4.1 Warranty Disclaimer 5
Section 4.2 Quiet Enjoyment 5
ARTICLE V Possession, Assignment, Use and Maintenance of Vehicles 5
Section 5.1 Restriction on Lessee's Possession and Use 5
Section 5.2 Subleases 6
Section 5.3 Maintenance 7
Section 5.4 Repair, Replacement and Substitution 8
Section 5.5 Alterations, Modifications and Additions;
Removable Parts 9
Section 5.6 Inspection of Collateral 10
ARTICLE VI Risk of Loss; Replacement; Waiver and Indemnity 10
Section 6.1 Casualty 10
Section 6.2 Casualty Proceeds 11
ARTICLE VII Insurance 11
Section 7.1 Required Coverages 11
Section 7.2 Delivery of Insurance Certificates 13
ARTICLE VIII Default 13
Section 8.1 Events of Default 13
Section 8.2 Remedies 15
Section 8.3 Additional Remedies 17
Section 8.4 Proceeds of Sale; Deficiency 17
Section 8.5 Right to Perform Lessee's Agreements 18
ARTICLE IX Return of Vehicles 19
ARTICLE X Early Termination 19
Section 10.1 Early Termination as to all Vehicles 19
Section 10.2 Early Termination as to a Vehicle 20
ARTICLE XI Lease Termination 20
Section 11.1 Options 20
Section 11.2 Lessee Purchase Option 21
Section 11.3 Sale Option 21
ARTICLE XII Ownership, Grant of Security Interest to
Lessor and Further Assurances 22
Section 12.1 Grant of Security Interest 22
Section 12.2 Retention of Proceeds in the Case of Default 23
Section 12.3 Attorney-in-Fact 24
Section 12.4 Release of Liens 24
ARTICLE XIII Miscellaneous 24
Section 13.1 No Waiver 24
Section 13.2 Survival of Covenants 25
Section 13.3 APPLICABLE LAW 25
Section 13.4 Effect and Modification of Lease 25
Section 13.5 Notices 25
Section 13.6 Counterparts 25
Section 13.7 Severability 25
Section 13.8 Successors and Assigns:
Benefit of Agreement 26
Section 13.9 Assignment by Agent 26
Section 13.10 Assignment by Lessee 26
Section 13.11 Jury Trial 26
Section 13.12 Section Headings: Table of Contents 26
Section 13.13 Final Agreement 26
Section 13.14 Timeliness of Performance 26
MASTER LEASE INTENDED AS SECURITY
THIS MASTER LEASE INTENDED AS SECURITY (as amended, modi
fied, restated or supplemented from time to time, this "Lease")
dated as of December 22, 1995 is between CONSOLIDATED
FREIGHTWAYS CORPORATION OF DELAWARE, a Delaware corporation, as
Lessee ("Lessee"), with its principal office at Menlo Park,
California, and ABN AMRO BANK N.V., a bank organized under the
laws of the Netherlands, not in its individual capacity, but
solely in its capacity as agent ("Agent") for the benefit of the
Lessors.
WHEREAS, pursuant to the terms and conditions set forth
herein and in that certain Participation Agreement, dated as of
December 22, 1995 (the "Participation Agreement"), by and among
Lessee, Agent and the Lessors named therein, the Participants
have agreed that Agent, on behalf of the Lessors, will lease to
Lessee and Lessee will lease from Agent, on behalf of the
Lessors, certain personal property described in Schedule I
hereto and replacements thereto;
WHEREAS, capitalized terms used but not otherwise defined
herein (including those used in the foregoing recitals) shall
have the meanings specified in Schedule X to the Participation
Agreement, unless the context otherwise requires;
WHEREAS, Lessee may from time to time enter into a Lease
Supplement with Agent, on behalf of the Lessors, covering
certain of the Vehicles identified on Schedule I hereto;
WHEREAS, each Lease Supplement executed from time to time
by Agent, on behalf of the Lessors, and Lessee shall be
incorporated herein by reference;
WHEREAS, to secure Lessee's obligations under this Lease
and the other Operative Agreements, Lessee will grant to Agent,
on behalf of the Lessors, a security interest in the Collateral.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
Paragraph Definition here. ARTICLE I
Delivery and Acceptance
Section I.1 Transfer, Acceptance and Lease of Vehicles.
On each Delivery Date, subject to the satisfaction or waiver of
the conditions set forth in Article III of the Participation
Agreement, (a) Lessee hereby grants, assigns, transfers and sets
over unto Agent, on behalf of the Lessors, an interest in the
Vehicles to be delivered on such Delivery Date and covered by
each Lease Supplement, (b) Agent hereby agrees to accept
delivery on such Delivery Date of the interest in the Vehicles
to be so delivered pursuant to the terms of the Participation
Agreement and simultaneously to lease such Vehicles to Lessee
under this Lease and the applicable Lease Supplement, and
(c) Lessee hereby agrees, expressly for the direct benefit of
Agent and the Lessors, to lease from Agent hereunder, for the
Lease Term, such Vehicles to be delivered on such Delivery Date.
Section I.2 Acceptance Procedure. Agent hereby authorizes
one or more employees of Lessee, as the authorized representa
tive or representatives of Agent to accept delivery of the
Vehicles identified on Schedule I to each Lease Supplement
executed by Lessee on each Delivery Date. Lessee hereby agrees
that such acceptance of delivery by such authorized representa
tive or representatives and the execution and delivery by Lessee
on each Delivery Date of a Lease Supplement shall, without
further act, constitute the irrevocable acceptance by Lessee of
the Vehicles which are the subject thereof for all purposes of
this Lease and the other Operative Agreements on the terms set
forth therein and herein.
ARTICLE II
Lease Term
Section II.1 Interim and Base Periods. Unless earlier
terminated, the term of this Lease shall consist of (a) an
interim period commencing, with respect to each Lease Supple
ment, on and including the applicable Delivery Date of such
Lease Supplement, and ending on but not including the Lease
Commencement Date (the "Interim Period"), (b) a base period,
commencing on and including the Lease Commencement Date and
ending on but not including the second anniversary thereof (the
"Base Period") and (c) any Renewal Terms (collectively, the
"Lease Term").
Section II.2 Lease Commencement Date. The lease commence
ment date shall be December 28, 1995 (the "Lease Commencement
Date").
Section II.3 Lease Renewal. Lessee may elect to renew
this Lease for up to three successive one-year renewal terms
with respect to all, but not less than all, of the Vehicles
subject to all then-existing Lease Supplements (each, a "Renewal
Term") as provided in Article XI.
ARTICLE III
Rent; Other Economic Provisions
Section III.1 Rent Payments. Lessee shall pay to Agent,
for the benefit of the Lessors, the amounts of Interim Rent,
Basic Rent or Renewal Rent, as applicable, determined in
accordance with this Section 3.1 and each Lease Supplement.
Scheduled installments of Basic Rent and Renewal Rent may be
adjusted pursuant to Section 6.1. All computations of interest
pursuant to the Operative Agreements shall be made on the basis
of actual number of days elapsed in a 360-day year.
(a) Interim Rent. With respect to the Interim Period (if
any) for the Lease, Lessee shall pay to Agent, for the benefit
of the Lessors, the amount of Interim Rent set forth on Schedule
II to each Lease Supplement to which Lessee is a party. Interim
Rent under each Lease Supplement shall consist of interest
accrued on the Supplement Balance of such Lease Supplement at
the Interest Rate for the Interim Period of such Lease
Supplement and shall be payable on the Lease Commencement Date.
(b) Basic Rent. On each Payment Date during the Base
Period, Lessee shall pay to Agent, for the benefit of the
Lessors, Basic Rent under each Lease Supplement to which Lessee
is a party, consisting of the amount of Fixed Rent set forth
opposite the applicable Payment Date on Schedule II to each such
Lease Supplement and Variable Rent accrued on the Supplement
Balance of each such Lease Supplement during the Rent Period
ended on such Payment Date.
(c) Renewal Rent. On each Payment Date during any Renewal
Term in effect, Lessee shall pay to Agent, for the benefit of
the Lessors, Renewal Rent under each Lease Supplement to which
Lessee is a party, consisting of the amount of Fixed Rent set
forth opposite the applicable Payment Date on Schedule II to
each such Lease Supplement and Variable Rent accrued on the
Supplement Balance of each such Lease Supplement during the Rent
Period ended on such Payment Date.
Section III.2 Place and Manner of Payment. Rent and all
other sums due to Agent or any Lessor hereunder shall be paid in
immediately available funds and if payable to Agent, at the
Agent's Corporate Office, and if payable to a Lessor at the
office of Lessor as it may from time to time specify to Lessee
in a notice pursuant to this Lease. All such payments shall be
received by Agent or Lessor, as applicable, not later than
11:00 a.m., San Francisco time, on the date due; funds received
after such time shall for all purposes under the Operative
Agreements be deemed to have been received by Lessor on the next
succeeding Business Day. Any payments received by Agent not
later than 11:00 a.m. San Francisco time, shall be paid by Agent
to the Lessors in immediately available funds no later than
1:00 p.m. San Francisco time on the same day and any payments
received by Agent from or on behalf of Lessee after 11:00 a.m.
San Francisco time, shall be paid to Lessors as soon after
receipt as practicable, but not later than 1:00 p.m. San
Francisco time on the next succeeding Business Day. Lessee
shall pay to Agent, for the benefit of the Lessors, or to a
Lessor in the case of payments to a Lessor, on demand, interest
at the rate per annum which is 2% above the Interest Rate in
effect from time to time on any overdue amount of Rent, or any
other payment due under this Lease and (to the extent permitted
by applicable law) interest from the date due (not taking into
account any grace period) until payment is made.
Section III.3 Net Lease. This Lease is a net lease and
Lessee's obligation to pay all Rent, indemnities and other
amounts payable hereunder shall be absolute and unconditional
under any and all circumstances and, without limiting the
generality of the foregoing, Lessee shall not be entitled to any
abatement or reduction of Rent or any setoff against Rent,
indemnity or other amount, whether arising by reason of any
past, present or future claims of any nature by Lessee against
Agent or any Lessor, or otherwise. Except as otherwise
expressly provided herein, this Lease shall not terminate, nor
shall the obligations of Lessee be otherwise affected: (a) by
reason of any defect in, damage to, or loss of possession or
use, obsolescence or destruction, of any or all of the Vehicles,
however caused; or (b) by the taking or requisitioning of any or
all of the Vehicles by condemnation or otherwise; or (c) by the
invalidity or unenforceability or lack of due authorization by
Lessor or Lessee or other infirmity of this Lease; or (d) by
lack of power or authority of Agent to enter into this Lease or
any other Operative Agreement; or (e) by the attachment of any
Lien of any third party to any Vehicle; or (f) by any
prohibition or restriction of or interference with Lessee's use
of any or all of the Vehicles by any Person; or (g) by the
insolvency of or the commencement by or against Lessor of any
bankruptcy, reorganization or similar proceeding; or (h) by any
other cause, whether similar or dissimilar to the foregoing, any
present or future law to the contrary notwithstanding. It is
the intention of the parties that all Rent, indemnities and
other amounts payable by Lessee hereunder shall be payable in
all events in the manner and at the times herein provided unless
Lessee's obligations in respect thereof have been terminated or
modified pursuant to the express provisions of this Lease. To
the extent permitted by applicable law, Lessee hereby waives any
and all rights which it may now have or which may at any time be
conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Lease, in whole or in part,
except strictly in accordance with the express terms hereof.
Each rental, indemnity or other payment made by Lessee hereunder
shall be final, and Lessee shall not seek to recover (except as
expressly provided in this Lease) all or any part of such
payment from Lessor for any reason whatsoever. Without
affecting Lessee's obligation to pay Rent, or other amounts
payable hereunder, Lessee may seek damages for a breach by Agent
or any Lessor of its obligations under this Lease or the
Participation Agreement.
ARTICLE IV
Warranties
Section IV.1 Warranty Disclaimer. LESSEE ACKNOWLEDGES AND
AGREES THAT: (a) EACH OF THE VEHICLES IS LEASED AS-IS AND
WHERE-IS; (b) EACH OF THE VEHICLES LEASED BY IT IS OF A SIZE,
DESIGN, CAPACITY AND MANUFACTURE SELECTED BY LESSEE; (c) LESSEE
IS SATISFIED THAT THE SAME IS SUITABLE FOR ITS PURPOSES;
(d) LESSOR IS NOT A MANUFACTURER THEREOF OR A DEALER IN PROPERTY
OF SUCH KIND; AND (e) LESSOR HAS NOT MADE NOR SHALL IT BE DEEMED
TO HAVE MADE: (i) ANY REPRESENTATION OR WARRANTY OR COVENANT
WITH RESPECT TO THE TITLE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, CONDITION, QUALITY, DESCRIPTION, DURABILITY
OR SUITABILITY OF ANY VEHICLE IN ANY RESPECT OR IN CONNECTION
WITH OR FOR THE PURPOSES AND USES OF LESSEE; OR (ii) ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY VEHICLE.
Section IV.2 Quiet Enjoyment. In the absence of an Event
of Default, neither any Lessor nor the Agent nor any Person
acting by, through or under any of such Persons, shall take any
actions to interfere with Lessee's quiet enjoyment of the
Vehicles during the Lease Term.
ARTICLE V
Possession, Assignment, Use and
Maintenance of Vehicles
Section V.1 Restriction on Lessee's Possession and Use.
Lessee shall not nor shall Lessee permit any Sublessee to:
(a) use, operate, maintain or store any Vehicle or any portion
thereof: (i) except in accordance with Section 5.3; or (ii) in
violation of any applicable insurance policy or law or regula
tion of any Authority; (b) except as permitted by Section 6.1,
abandon any Vehicle; (c) except as permitted by Section 5.2,
sublease or assign, without the prior written consent of Agent,
any Vehicle or permit the operation thereof by anyone other than
Lessee; (d) except as set forth in Section 5.2, sell, assign or
transfer any of its rights hereunder or in any Vehicle, or
directly or indirectly create, incur or suffer to exist any
Lien, on any of its rights hereunder or in any Vehicle, except
for Permitted Liens; (e) permit any Vehicle to be titled in any
jurisdiction other than the jurisdiction in which it was titled
on its the Delivery Date, except as permitted under Section
6.1(f) of the Participation Agreement; and (f) use, operate,
maintain or store any Vehicle or any portion thereof outside of
the United States except that Lessee may (and may permit any
Sublessee to) use, maintain and operate any Vehicle outside of
the United States on trips to and from a point of embarkation
located within the United States. Lessee will defend the
transfer of the Vehicles by Lessee to Agent, for the benefit of
the Lessors or Agent against the claims or demands of all
Persons (other than Lessor Liens).
Section V.2 Subleases. So long as no Event of Default
shall have occurred and be continuing, Lessee may sublease one
or more Vehicles (i) to a wholly-owned Subsidiary of Lessee
without the prior written consent of Lessors and (ii) to any
other corporation organized under the laws of the United States
or any State thereof with the prior written consent of each of
the Lessors, which consent shall not be unreasonably withheld;
provided, that any Sublease entered into pursuant to this
Section 5.2 shall satisfy each of the following conditions:
(a) such Sublease shall automatically expire upon the
termination of the Lease Supplement governing the Vehicle
subleased under such Sublease and shall be expressly subordinate
and subject to this Lease and the Liens created hereunder, and
to the applicable Lease Supplement;
(b) such Sublease shall be in writing and shall expressly
prohibit any further assignment, sublease or transfer;
(c) such Sublease shall not contain a purchase option in
favor of the Sublessee or any other provision pursuant to which
the Sublessee may obtain record or beneficial title to the
Vehicle leased thereunder from Lessee of such Vehicle;
(d) such Sublease shall prohibit the Sublessee from making
any alterations or modifications to the Vehicle that would
violate this Lease;
(e) such Sublease shall require the Sublessee to maintain
the Vehicle in accordance with Section 5.3;
(f) on or before execution and delivery of such Sublease,
Lessee shall execute and deliver to Agent a security agreement,
in a form approved by Agent, whereby Lessee grants to Agent, for
the benefit of the Lessors, a security interest in all of
Lessee's rights, title and interest in, to and under such
Sublease, as Collateral for Lessee's obligations under the
Operative Agreements. Such Sublease shall provide that such
sublessee shall make all payments under such Sublease directly
to Agent, at an account specified by Agent, upon the occurrence
of any of the events specified in Section 6.1(j) of the
Participation Agreement. In connection therewith, Lessee shall
deliver to Agent an executed original counterpart of such
Sublease upon the execution and delivery thereof, marked as the
sole original execution counterpart for Uniform Commercial Code
purposes, and Lessee shall, at its own cost and expense, do any
further act and execute, acknowledge, deliver, file, register
and record any further documents which Agent may reasonably
request in order to create, perfect, preserve and protect
Agent's and Lessor's security interest in such Sublease. Any
payments received by Agent from Sublessee pursuant to this
Section shall be credited to those amounts owing by Lessee under
the Lease;
(g) Lessee shall not, without Agent's prior written
consent, permit or consent to any renewal or extension of a
Sublease at any time when an Event of Default has occurred and
is continuing;
(h) Lessee shall notify Agent and each Lessor in writing
not less than 30 days prior to entering into any Sublease, which
notice shall include (i) a description of the Vehicle or
Vehicles to be leased thereunder, and (ii) the street address,
city, county and State where such Vehicle or Vehicles will be
located during the term of such Sublease, and Lessee shall
provide copies of each Sublease to Agent upon request, provided
that if such Sublease will require that the Vehicle be titled or
registered in a different jurisdiction, then Lessee must comply
with Section 6.1(f) of the Participation Agreement in connection
with such titling and registration.
The liability of Lessee with respect to this Lease, the Lease
Supplements and each of the other Operative Agreements shall not
be altered or affected in any way by the existence of any
Sublease.
Section V.3 Maintenance. At all times during the term of
this Lease, Lessee shall at its expense or shall cause each
Sublessee to: (a) maintain, manage and monitor the Vehicles in
compliance in all material respects with all applicable require
ments of law, Authority and/or insurance policies; (b) maintain
the Vehicles (or cause the Vehicles to be maintained) in as good
operating order, repair and condition as it was on the date such
Vehicles became subject to this Lease (assuming that, as of such
date, each such Vehicle was in good operating order, repair and
condition), ordinary wear and tear excepted; (c) maintain,
manage and monitor the Vehicles in accordance with the terms of
all applicable contracts (including, without limitation, service
contracts and insurance contracts) in a manner consistent with
Lessee's customary practices; and (d) conduct all scheduled
maintenance of the Vehicles in conformity with Lessee's mainte
xxxxx procedures then in effect for similar equipment owned or
leased by Lessee, and applicable warranty guidelines. Lessee
shall in any event maintain the Vehicles (or cause the Vehicles
to be maintained) in at least as good a condition as comparable
equipment owned or leased by Lessee or any of its Subsidiaries.
Lessee will maintain or cause to be maintained, and shall permit
Agent and Lessors to inspect, any records, logs and other
materials required by any Authority having jurisdiction to be
maintained or filed in respect of any Vehicle.
Section V.4 Repair, Replacement and Substitution.
(a) As soon as practicable after a Partial Casualty to a
Vehicle, Lessee shall repair and rebuild the affected portions
of such Vehicle (or cause such affected portions to be repaired
and rebuilt) to the condition required to be maintained by
Section 5.3. In the event that any Part which may from time to
time be incorporated or installed in or attached to any Vehicle
becomes at any time worn out, damaged or permanently rendered
unfit for use for any reason whatsoever (unless such event
constitutes a Casualty, in which event the provisions of
Section 6.1 hereof shall apply), Lessee, at its own cost and
expense, will promptly replace, or cause to be replaced, such
Part with a replacement Part (a "Replacement Part") in
accordance with Lessee's customary practices, but in any event
subject to Section 5.3. In addition, Lessee may, at its own
cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Part, whether or not
worn out, destroyed, seized, confiscated, damaged beyond repair
or permanently rendered unfit for use; provided, that Lessee
will, at its own cost and expense, replace such Part with a
Replacement Part as promptly as is commercially reasonable. All
Replacement Parts shall be free and clear of all Liens (other
than Permitted Liens) and shall be in as good operating
condition as, and shall have a value and utility at least equal
to, the Parts replaced, assuming such replaced Parts and the
Vehicles were in the condition and repair required to be
maintained by the terms of Section 5.3. Any Part at any time
removed from any Vehicle shall remain the property of Agent, for
the benefit of the Lessors (subject to this Lease), no matter
where located, until such time as such Part shall be replaced by
a Part which has been incorporated or installed in or attached
to such Vehicle and which meets the requirements for a
Replacement Part specified above. Immediately upon any
Replacement Part becoming incorporated or installed in or
attached to any such Vehicle as above provided, without further
act: (i) title to the replaced Part (the "Replaced Part") shall
thereupon vest in Lessee of such Vehicle, free and clear of all
rights of Agent, for the benefit of the Lessors, and shall no
longer be deemed a Part hereunder; (ii) such Replacement Part
shall thereupon vest in Lessor, as provided in Section 12.1 (in
the same manner as the underlying Vehicle); and (iii) such
Replacement Part shall become subject to this Lease, the
security interest created hereunder, and the applicable Lease
Supplement, and shall be deemed part of such Vehicle for all
purposes hereof to the same extent as the Parts incorporated or
installed in or attached to such Vehicle on the date such
Vehicle became subject to this Lease.
(b) Upon the satisfaction of the conditions specified in
Section 5.4(a), and the Replacement Part becoming subject to
this Lease and the security interest created hereunder, Agent,
on behalf of the Lessors, shall execute and deliver to Lessee
such documents as may be reasonably necessary to release the
Replaced Part from the terms and scope of this Lease (but
without representations or warranties, except that the Replaced
Part is free and clear of all Lessor Liens), in such form as may
be reasonably requested by Lessee and are in form and substance
satisfactory to the Required Lessors, all at the expense of
Lessee.
Section V.5 Alterations, Modifications and Additions;
Removable Parts.
(a) Except as provided in Sections 5.3 and 5.4, Lessee
shall not remove, replace or alter any Vehicle or affix or place
any accessory, equipment or device on any Vehicle (such actions
shall be hereafter referred to collectively as "alter") if such
removal, replacement, alteration or addition would materially
impair the originally intended function or use or materially
reduce the value or useful life of such Vehicle; provided, that
Lessee, at its own expense, will make, or cause to be made, any
alteration, improvement, modification or addition to or in
respect of any Vehicle that may be necessary, from time to time,
to comply in all material respects with any applicable law,
governmental rule or regulation or any provision of any
insurance policy required to be maintained under Section 7.1
(any Parts being used to comply with this provision shall be
hereafter referred to as "Mandatory Parts"). All Parts affixed
to or installed as a part of any Vehicle, excluding temporary
replacements, shall thereupon become subject to the security
interest under this Lease. If no Event of Default shall exist,
Lessee may remove, at its expense, any Part at any time during
the term of this Lease (such Part, a "Removable Part"):
(i) which is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed
in or attached to a Vehicle on the date such item became subject
to this Lease or any Part in replacement of or substitution for
any such Part originally incorporated or installed or attached
to such Vehicle; (ii) which is not a Mandatory Part; and
(iii) which can be removed from any Vehicle without causing
damage to such Vehicle or diminishing or impairing the value,
utility or condition which such Vehicle would have had at such
time had such addition not occurred; provided, that: (x) such
removal will not materially impair the value, use or useful life
which the Vehicle would have had at such time had such Part not
been affixed or placed to or on such Vehicle; and (y) such Part
is not necessary for the continued normal use of such Vehicle.
Lessee shall repair all damage to any Vehicle resulting from any
alteration so as to restore such Vehicle to the condition in
which it existed prior to such alteration (ordinary wear and
tear excepted). Neither Agent nor any Lessor shall have any
obligation to pay for or to reimburse Lessee for any alteration
required or permitted by this Section 5.5.
(b) As provided in Section 4.1 of the Participation
Agreement and Section 12.1 of this Lease, all Parts incorporated
or installed in or attached or added to any Vehicle as the
result of alterations, modifications or additions under this
Section 5.5, except Removable Parts, shall, without further act,
vest in Agent, for the benefit of the Lessors, to secure
Lessee's performance of its obligations under the Operative
Agreements, in the manner provided in clause (ii) of
Section 5.4(a) and the other applicable provisions of
Section 5.4 shall apply with respect to such Parts. Upon the
removal by Lessee of any Removable Part as provided herein, such
Removable Part shall no longer be deemed part of the Vehicle
from which it was removed. Any Removable Part not removed by
Lessee as provided herein prior to the end of the Lease Term
shall become the property of Lessor at such time.
Section V.6 Inspection of Collateral. Agent, the Lessors
and each of their agents and representatives shall have the
right at all reasonable times, upon reasonable notice, to
inspect any Collateral, including without limitation any
Certificate of Title or documentation related to the Collateral.
Lessee shall maintain: any Certificate of Title, microfiche
containing Vehicle registration documents and executed blank
powers of attorney enabling the Agent to reregister the
Vehicles, each of them to be maintained in Lessee's records in a
separate file entitled "ABN AMRO Documentation."
ARTICLE VI
Risk of Loss; Replacement; Waiver and Indemnity
Section VI.1 Casualty. Upon a Casualty, Lessee shall give
prompt written notice thereof (a "Casualty Notice") to Agent,
which notice shall specify whether Lessee will:
(a) repay a portion of the Lease Balance equal to the
Casualty Amount together with all Variable Rent accrued on such
portion of the Lease Balance to the date of payment, which
repayment shall be made no later than the next scheduled Payment
Date occurring after such Casualty or, if such Casualty occurs
during the last 5 Business Days of a Rent Period, then no later
than the second Payment Date occurring after such Casualty,
provided that in any event such repayment shall be made no later
than the last day of the Lease Term (the "Casualty Settlement
Date"); or
(b) replace the Vehicle with respect to which the Casualty
has occurred pursuant to the provisions of Section 5.4 (treating
such Vehicle, for these purposes, in the same manner as a Part),
provided that upon the occurrence and during the continuance of
an Event of Default or an Incipient Default, Lessee shall be
obligated, at the option of the Required Lessors, to make the
payments referred to in clause (a) above and shall not be
entitled to exercise any right or election of replacement as set
forth in this clause (b).
If Lessee has elected, or is required, to pay the Casualty
Amount pursuant to clause (a) above, Lessee shall continue to
make all payments of Rent due under the applicable Lease
Supplement until and including the Casualty Settlement Date.
Upon payment of the Casualty Amount in respect of any Vehicle
suffering a Casualty on such Casualty Settlement Date, the
remaining scheduled payments of Fixed Rent, if any, shall each
be reduced by an amount equal to the product of the scheduled
amount of such Fixed Rent prior to the receipt of such payment
by Agent multiplied by the Allocation Fraction under such Lease
Supplement of the Vehicle suffering such Casualty.
Section VI.2 Casualty Proceeds. All proceeds of any
casualty insurance or condemnation proceeds ("Casualty
Proceeds") paid or payable to Lessee or any Affiliate of Lessee
by reason of a Casualty or Partial Casualty to a Vehicle shall
be deposited into a deposit account established by Agent, for
the benefit of the Lessors, (the "Deposit Account"), unless
Lessee shall have already complied with the applicable
provisions of Section 5.4 or 6.1 with respect to such Casualty
or Partial Casualty. Any Casualty Proceeds paid to Agent with
respect to a Vehicle suffering a Casualty or a Partial Casualty
shall also be deposited in the Deposit Account. Any moneys in
the Deposit Account attributable to a Casualty or Partial
Casualty shall be remitted promptly to Lessee after Lessee's
full compliance with Section 6.1 or Section 5.4, as applicable.
Notwithstanding the foregoing provisions of this Section 6.2,
and provided that no Incipient Default consisting of an event
described in Section 8.1 (a) or (g) or an Event of Default shall
exist, if the aggregate amount of Casualty Proceeds at any one
time outstanding is $250,000 or less, then Lessee may receive
such Casualty Proceeds directly, without delivery to Agent;
provided, that such Casualty Proceeds are applied in accordance
with the requirements of Section 6.1 or Section 5.4, as
applicable. Notwithstanding any Casualty, all of Lessee's
obligations under this Lease and each Lease Supplement
(including its obligation to make all payments of Rent as they
become due) shall continue unabated and in full force and effect
as provided in this Lease. Without limiting the foregoing,
Lessee's obligations under Section 5.4 shall not be affected by
the amount of any Casualty Proceeds received by Lessee.
ARTICLE VII
Insurance
Section VII.1 Required Coverages. At its own expense,
Lessee will maintain the following insurance coverages:
(a) primary automobile and general liability insurance of
not less than $3,000,000 per occurrence, with excess coverages
of not less than $5,000,000 per occurrence and $95,000,000 in
the aggregate, in each case naming Agent and Lessors as
additional insureds; and
(b) insurance against all risks of loss or physical damage
to the Vehicles in a primary amount of not less than $250,000
per occurrence and excess "all risk" coverage on the Vehicles in
a blanket amount of not less than $100,000,000, which insurance
shall name Agent and Lessors as the sole loss payees.
So long as CF Financial Services Corporation or an insurer which
is an Affiliate of Lessee (the "Insurer") shall (i) maintain its
good standing as an insurer, (ii) be financially sound in the
reasonable judgment of the Required Lessors and (iii) be in
compliance with all applicable regulatory requirements, Lessee
may obtain primary insurance coverage from the Insurer, with
retained liability for physical damage to the Vehicles and for
liability coverage required under clause (a) above, which
retained liability amounts, in both such cases, shall be in
amounts not greater than amounts customary for similarly
situated companies operating comparable equipment in the same
industry as Lessee. Lessee shall obtain its excess insurance
and, if Insurer does not meet the criteria set forth in the
preceding sentence or is no longer providing Lessee's insurance,
its primary insurance, from financially responsible companies
selected by Lessee and having an A.M. Best rating of "A" or
better or otherwise acceptable to the Required Lessors.
Such insurance shall (i) name Agent and Lessors as
additional insured parties thereunder as specified above
(without any representation or warranty by, or obligation upon,
Agent or any Lessor) as their respective interests may appear,
(ii) contain the agreement by the Insurer that any loss
thereunder shall be payable to Agent and Lessors notwithstanding
any action, inaction or breach of representation or warranty by
Lessee or any other Person having an interest in any Vehicle
(including, without limitation, Agent or any Lessor), (iii) pro
vide that there shall be no recourse against Agent or any Lessor
for payment of premiums or other amounts with respect thereto,
(iv) provide that Insurer shall give Agent and each Lessor at
least 30 days' prior written notice of cancellation, lapse or
reduction of limits, (v) be primary with respect to any other
insurance carried by or available to Agent and the Lessors,
(vi) provide that the insurer shall waive any right of
subrogation, setoff, counterclaim, or other deduction, whether
by attachment or otherwise, against Agent or any Lessor, and
(vii) contain a cross-liability clause providing for coverage of
Agent and each Lessor as if separate policies had been issued to
each of them, provided, however, that such provision shall not
increase the total limits of liability over those specified
herein. Lessee will notify Agent and Lessors promptly of any
policy cancellation, reduction in policy limits, modification or
amendment.
Section VII.2 Delivery of Insurance Certificates. On or
before the Initial Delivery Date and thereafter on each
Subsequent Delivery Date, Lessee shall deliver to Agent
certificates of insurance satisfactory to Agent and Lessors
evidencing the existence of all insurance required to be
maintained hereunder and setting forth the respective coverages,
limits of liability, carrier, policy number and period of
coverage. Thereafter, throughout the Lease Term, at the time
each of Lessee's insurance policies is renewed (but in no event
less frequently than once each year), Lessee shall deliver to
Agent and each Lessor certificates of insurance evidencing that
all insurance required by Section 7.1 to be maintained by Lessee
with respect to the Vehicles is in effect.
ARTICLE VIII
Default
Section VIII.1 Events of Default. The following shall
constitute events of default (each an "Event of Default")
hereunder and under each Lease Supplement then in effect
(whether any such event shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any Authority):
(a) any payment of Rent, or any other payment payable by
Lessee hereunder or by Lessee under any other Operative
Agreement (including without limitation, any amount payable
pursuant to Article VII or VIII of the Participation Agreement)
shall not be paid when due, and such payment shall be overdue
for a period of three Business Days;
(b) any representation or warranty made by or on behalf of
Lessee contained in any Operative Agreement or in any certifi
cate, letter or other writing or instrument furnished or
delivered to Agent or Lessors, pursuant thereto shall at any
time prove to have been incorrect in any material respect when
made, deemed made or reaffirmed, as the case may be;
(c) Lessee shall default in the performance or observance
of any term, covenant, condition or agreement on its part to be
performed or observed under Article XI or Section 13.10 of this
Lease or under Section 6.1(c), (f), (g) of the Participation
Agreement (except to the extent that Section 13.10 incorporates
Section 5.2, in which case clause (e) of this Section 8.1 shall
apply);
(d) Lessee shall default in any material respect in the
performance or observance of any term, covenant, condition or
agreement on its part to be performed or observed under
Section 7.1;
(e) Lessee shall default in any material respect in the
performance or observance of any other term, covenant, condition
or agreement on its part to be performed or observed hereunder
or under any other Operative Agreement (and not constituting an
Event of Default under any other clause of this Section 8.1),
and such default shall continue unremedied for a period of 30
days after the earlier to occur of (i) written notice thereof by
Agent or any Lessor to Lessee or (ii) Lessee has Actual
Knowledge thereof;
(f)(i) Lessee shall generally fail to pay, or admit in
writing its inability to pay, its debts as they become due, or
shall voluntarily commence any case or proceeding or file any
petition under any bankruptcy, insolvency or similar law or
seeking dissolution, liquidation or reorganization or the
appointment of a receiver, agent, custodian or liquidator for
itself or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its
creditors, or shall file any answer admitting the jurisdiction
of the court and the material allegations of any involuntary
petition filed against it in any bankruptcy, insolvency or
similar case or proceeding, or shall be adjudicated bankrupt, or
shall make a general assignment for the benefit of creditors, or
shall consent to, or acquiesce in the appointment of, a
receiver, agent, custodian or liquidator for itself or a
substantial portion of its property, assets or business; or
(ii) corporate action shall be taken by Lessee for the purpose
of effectuating any of the foregoing;
(g) involuntary proceedings or an involuntary petition
shall be commenced or filed against Lessee under any bankruptcy,
insolvency or similar law or seeking the dissolution, liquida
tion or reorganization of Lessee or the appointment of a
receiver, agent, custodian or liquidator for Lessee or of a
substantial part of the property, assets or business of Lessee,
or any writ, judgment, warrant of attachment, execution or
similar process shall be issued or levied against a substantial
part of the property, assets or business of Lessee, and such
proceedings or petition shall not be dismissed or stayed, or
such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded, within
60 days after commencement, filing or levy, as the case may be;
(h) any one or more of the following shall occur and the
liability of Lessee and its Subsidiaries on a consolidated basis
shall exceed, individually or in the aggregate, $20,000,000:
(i) a contribution failure occurs with respect to any Pension
Plan (other than a Multi-employer Plan) sufficient to give rise
to a lien under Section 302(f) of ERISA or Section 412(n) of the
Code with respect to any Pension Plan (other than a Multi-
employer Plan) as to which Lessee or any Related Person to
Lessee may have any liability, (ii) there shall exist an
unfunded current liability (as defined in 302(d)(8) of ERISA)
with respect to any Pension Plan, (iii) steps are undertaken to
terminate any Pension Plan, (iv) any Reportable Event occurs
with respect to a Pension Plan for which notice to the PBGC has
not been waived, (v) any action is taken with respect to a
Pension Plan which could result in the requirement that Lessee
or any Related Person to Lessee furnish a bond or other security
to the PBGC or such Pension Plan, (vi) the occurrence of any
event which could cause Lessee or any Related Person to Lessee
to incur any liability, fine or penalty with respect to any
Pension Plan or any increase in liability with respect to any
Pension Plan, or (vii) the occurrence of any event that could
result in any increase in the liability (or contingent
liability) of Lessee or any Related Person to Lessee with
respect to post-retirement benefits under any Welfare Plan;
(i) any Operative Agreement or the security interest
granted under this Lease 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 Lessee or any Affiliate, directly or indirectly,
contest in any manner in any court the effectiveness, validity,
binding nature or enforceability thereof; or the security
interest securing Lessee's obligations under the Operative
Agreements shall, in whole or in part, cease to be a perfected
first priority security interest;
(j) there shall have occurred any event of default (after
giving effect to any applicable grace or cure period) in the
performance or observance of any obligation or condition with
respect to any Debt owing by or guaranteed by Lessee having an
aggregate principal amount in excess of $20,000,000; provided
that should such event of default be subsequently cured or
waived, it shall no longer constitute an Event of Default
hereunder; or
(k) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against Lessee, and such judgment or judgments remain
undischarged or unstayed for a period (during which execution
shall not be effectively stayed) of 30 days; provided, that the
aggregate of all such judgments exceeds $20,000,000.
Section VIII.2 Remedies. If any Event of Default has
occurred and is continuing, Agent may exercise in any order one
or more or all of the remedies set forth in this Section 8.2 (it
being understood that no remedy herein conferred is intended to
be exclusive of any other remedy or remedies, but each and every
remedy shall be cumulative and shall be in addition to every
other remedy given herein or now or hereafter existing at law or
in equity or by statute):
(a) Agent may proceed by appropriate court action or
actions, either at law or in equity, to enforce performance by
Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof;
(b) Agent may by notice in writing to Lessee terminate
this Lease, but Lessee shall remain liable as hereinafter
provided; and Agent may, at its option, do any one or more of
the following: (i) declare the Lease Balance, all accrued
Variable Rent, all other amounts then payable by Lessee under
this Lease and the other Operative Agreements to be immediately
due and payable, and recover any other damages and expenses
(including the costs and expenses described in Article VII and
Section 11.5 of the Participation Agreement) in addition thereto
which Agent or any Lessor shall have sustained by reason of such
Event of Default; (ii) enforce the security interest given
hereunder pursuant to the Uniform Commercial Code or any other
law; (iii) enter upon the premises where any Vehicle may be and
either remove such Vehicle, with any damage to the improvements
on such premises to be borne by Lessee (except to the extent
such damage is due to the willful misconduct or gross negligence
of Agent or its representatives), or take possession of such
Vehicle; and (iv) require Lessee to return the Vehicles as
provided in Article IX; or
(c) Agent may require Lessee immediately to purchase the
Vehicles for an aggregate purchase price equal to the applicable
Termination Value as of the most recent Payment Date. Lessee
shall also pay to Agent (i) all accrued unpaid Rent payable on
or prior to such Payment Date; (ii) the pro rata Variable Rent
from the most recent Payment Date to the date of such purchase;
and (iii) all other fees and expenses and other amounts then due
and payable pursuant to this Lease and the other Operative
Agreements.
Notwithstanding the foregoing, and provided that no event
of default has occurred and is continuing under any documents
evidencing obligations for borrowed money in excess of twenty
million dollars ($20,000,000) to which Consolidated Freightways,
Inc. is a party, upon the occurrence of any Event of Default
resulting from a default in the performance or observance of any
term, covenant, condition or agreement on Lessee's part to be
performed or observed under 6.1(i) of the Participation
Agreement, and upon notice by the Agent to Lessee that the Agent
seeks to pursue any of the remedies described in Section 8.2,
Lessee may, within one (1) Business Day from receipt of such
notice, cause Consolidated Freightways, Inc. to enter into a
Guarantee, the form of which is attached hereto as Exhibit B,
the effect of which shall cure such Event of Default and such
Guarantee shall remain in effect until such time as Lessee is in
compliance with all financial covenants referred to in Section
6.1(i) of the Participation Agreement.
Notwithstanding the foregoing, upon the occurrence of any
Event of Default described in subsections (a) through (e) and
(h) through (k) of Section 8.1, and upon notice by the Agent to
Lessee that the Agent seeks to pursue any of the remedies
described in Section 8.2, Lessee may, within one (1) Business
Day from the receipt of such notice, elect to purchase all of
the Vehicles for an amount equal to the applicable Termination
Value as of the most recent Payment Date. Lessee shall also pay
to Agent (i) all accrued unpaid Rent payable on or prior to such
Payment Date; (ii) the pro rata Variable Rent from the most
recent Payment Date to the date of such purchase; and (iii) all
other fees and expenses and other amounts then due and payable
pursuant to this Lease and the other Operative Agreements. The
purchase of all Vehicles by Lessee pursuant to the preceding two
sentences shall be in immediately available funds within three
(3) Business Days from the date of Lessee's election to purchase
the Vehicles.
Notwithstanding the foregoing, upon the occurrence of any
Event of Default described in subsection (f) or (g) of
Section 8.1, Lessee shall automatically and immediately be
required to purchase all of the Vehicles for an amount equal to
the applicable Termination Value as of the most recent Payment
Date. Lessee shall also pay to Agent (i) all accrued unpaid
Rent payable on or prior to such Payment Date; (ii) the pro rata
Variable Rent from the most recent Payment Date to the date of
such purchase; and (iii) all other fees and expenses and other
amounts then due and payable pursuant to this Lease and the
other Operative Agreements.
Except for notices expressly otherwise provided for in the
Operative Agreements, Lessee hereby waives presentment, demand,
protest and notice of any kind including, without limitation,
notices of default, notice of acceleration and notice of intent
to accelerate.
Section VIII.3 Additional Remedies. In addition to the
remedies set forth in Section 8.2, if any Event of Default shall
occur, the Agent (at the direction of the Required Lessors) may,
but is not required to, sell the Collateral in one or more
sales. Lessor may purchase all or any part of the Collateral at
such sale. Lessee acknowledges that sales for cash or on credit
to a wholesaler, retailer or user of such Collateral, at a
public or private auction, are all commercially reasonable. Any
notice required by law of intended disposition by the Agent
shall be deemed reasonable and properly given if given at least
10 days before such disposition.
Section VIII.4 Proceeds of Sale; Deficiency. All payments
received and amounts held or realized by the Agent at any time
when an Event of Default shall have occurred and be continuing
and after, pursuant to Section 8.2, the Lease Balance shall have
been accelerated or Lessee is required to purchase the Vehicles,
as well as all payments or amounts then held or thereafter
received by the Agent shall be distributed forthwith upon
receipt by the Agent in the following order of priority:
first: (i) so much of such payments or amounts
as shall be required to reimburse first the Agent and
then any Lessor for any tax (other than any income tax
payable on interest and on fees and other compensation
of the Agent), expense or other amount owed to the
Agent or any Lessor in connection with the collection
or distribution of such payments or amounts to the
extent not previously reimbursed by Lessee (including,
without limitation, the expenses of any sale, taking
or other proceeding, expenses in connection with
realizing on any of the Collateral, reasonable
attorneys' fees and expenses (including the allocated
costs of internal counsel), court costs and any other
reasonable expenditures incurred or reasonable
expenditures or advances made by the Agent or any
Lessor in the protection, exercise or enforcement of
any right, power or remedy upon such Event of Default
whether pursuant to Section 8.2 or otherwise) shall be
so applied by the Agent first to itself and then to
such Lessors; and (ii) so much of such payments or
amounts as shall be required to pay the reasonable
fees and compensation of the Agent in connection with
acting as Agent not previously paid by Lessee, shall
be distributed to the Agent;
second: so much of such payments or amounts
except those specified in clause third below, which
under the terms of this Lease and the other Operative
Agreements have accrued, including, without limita
tion, such amounts as shall be required to reimburse
the then existing or prior Lessors for payments made
by them to Agent pursuant to Section 9.4 of the
Participation Agreement (to the extent not previously
reimbursed);
third: so much of such payments or amounts
remaining as shall be required to pay in full, in the
following order of application, (a) all accrued unpaid
Variable Rent (including, to the extent permitted by
applicable law, interest on interest) and (b) the
aggregate unpaid Lease Balance, and in case the
aggregate amount so to be distributed shall be
insufficient to pay any of the foregoing in full all
as aforesaid then, ratably to the Lessors in
accordance with their respective Commitment
Percentages; and
fourth: so much of such payments or amounts as
shall remain shall be distributed to Lessee.
Section VIII.5 Right to Perform Lessee's Agreements. If
Lessee fails to perform any of its agreements contained herein
or in any other Operative Agreement within the time period
specified therefor, whether or not an Event of Default has
occurred and is continuing, Agent, upon written instructions
from Required Lessors and receipt by Agent of indemnification
satisfactory to it, and, upon 3 Business Days' prior notice to
Lessee, may perform such agreement and the fees and expenses
incurred by Agent (or one or more Lessors) in connection with
such performance together with interest thereon shall be payable
by Lessee upon demand. Interest on fees and expenses so
incurred by Agent (or one or more Lessors) shall accrue at the
rate provided in Section 3.2 for overdue payments.
ARTICLE IX
Return of Vehicles
If Agent has terminated this Lease pursuant to Section 8.2,
and Lessee has not elected to purchase the Vehicles pursuant to
Articles X or XI, Lessee shall (a) maintain (or cause to be main
tained) the Vehicles in the condition required by Section 5.3,
store the Vehicles without cost to Agent or any Lessor and keep
all of the Vehicles insured in accordance with Article VII, and
(b) upon such termination forthwith package and deliver
exclusive possession of such Vehicles to Agent, for the benefit
of the Lessors, at a location designated by Agent, together with
a copy of an inventory list of the Vehicles then subject to the
Lease, all then current plans, specifications and operating,
maintenance and repair manuals relating to the Vehicles that
have been received or prepared by Lessee, appropriately
protected and in the condition required by Section 5.3 (and in
any event in condition to be placed in immediate service), to
Agent. This Article IX shall survive termination of this Lease.
ARTICLE X
Early Termination
Section X.1 Early Termination as to all Vehicles. On any
scheduled Payment Date Lessee may, at its option, upon at least
30 days' advance written notice from Lessee to Agent and the
Lessors, purchase all, but not less than all, of the Vehicles
subject to all Lease Supplements then in effect in immediately
available funds in an amount equal to the applicable Termination
Value as of such Payment Date. Lessee shall also pay to Agent
(i) all accrued unpaid Rent payable on or prior to such Payment
Date and (ii) all other fees and expenses and other amounts then
due and payable pursuant to this Lease and the other Operative
Agreements. Upon the indefeasible payment of such sums by
Lessee in accordance with the provisions of the preceding
sentence, the obligation of Lessee to pay Rent hereunder shall
cease, the term of this Lease shall end on the date of such
payment and Agent, on behalf of Lessors, shall execute and
deliver to Lessee such documents as may be reasonably required
to release the Vehicles from the terms and scope of this Lease
(without representations or warranties, except that the Vehicles
are free and clear of Lessor Liens), in such form as may be
reasonably requested by Lessee, all at Lessee's sole cost and
expense.
Section X.2 Early Termination as to a Vehicle. Lessee
may, at its option, at any time and from time to time, purchase
any Vehicle for an amount equal to the Casualty Amount of such
Vehicle, together with all accrued but unpaid Variable Rent on
the portion of the Lease Balance represented by such Casualty
Amount, whereupon Agent shall transfer its interest in such
Vehicle to Lessee in accordance with the last two sentences of
Section 12.1; provided, however, that Lessee shall not have such
option to purchase a Vehicle pursuant to this Section 10.2, if
as a result of such purchase, all Vehicles theretofore purchased
under this Section 10.2 together with the Vehicle to be
purchased would have an aggregate Purchase Price in excess of
$4,000,000.
ARTICLE XI
Lease Termination
Section XI.1 Options. Not later than 90 days prior to the
last day of the Base Period or any Renewal Term then in effect,
Lessee shall, by delivery of written notice to Agent (except in
the case of clause (a)), exercise one of the following options:
(a) unless Lessee delivers written notice to the contrary,
except in the case of the last Renewal Term, renew this Lease
with respect to all, but not less than all, of the Vehicles then
subject hereto for an additional one year Renewal Term (the
"Renewal Option") on the terms and conditions set forth herein
and the other Operative Agreements; or
(b) purchase in immediately available funds in an amount
equal to the applicable Termination Value all, but not less than
all, of the Vehicles then subject to this Lease on the last day
of the Base Term or Renewal Term with respect to which such
option is exercised, on the terms and conditions set forth in
Section 11.2. (the "Lessee Purchase Option"); or
(c) sell on behalf of the Lessors to a purchaser or
purchasers not in any way affiliated with Lessee all, but not
less than all, of the Vehicles then subject to this Lease on the
last day of the Base Period or of any Renewal Term then in
effect with respect to which such option is exercised, on the
terms and conditions set forth in Section 11.3 (the "Sale
Option").
Paragraph set at margin without indent per X. Xxxx'x
instruction.Lessee's election of the Lessee Purchase Option will
be irrevocable at the time made, but if Lessee fails to make a
timely election, Lessee will be deemed, in the case of the Lease
Term and each Renewal Term then in effect (other than the last
Renewal Term) to have irrevocably elected the Renewal Option
and, in the case of the last Renewal Term, Lessee will be deemed
to have irrevocably elected the Lessee Purchase Option. In
addition, the Sale Option shall automatically be revoked if
there exists an Incipient Default or Event of Default at anytime
after the Sale Option is properly elected and Agent shall be
entitled to exercise all rights and remedies provided in
Article VIII. Lessee may not elect the Sale Option if there
exists on the date the election is made an Event of Default or
an Incipient Default.
Section XI.2 Lessee Purchase Option. If Lessee elects the
Lessee Purchase Option, then on the Termination Date, Lessee
shall purchase all (but not less than all) of the Vehicles for
an amount equal to the applicable Termination Value. Lessee
shall also pay to Agent all accrued unpaid Rent and all other
amounts, if any then due and owing hereunder. Upon the
indefeasible payment of such sums by Lessee in accordance with
the provisions of the preceding sentence, the obligation of
Lessee to pay Rent hereunder shall cease, the term of this Lease
shall end on the date of such payment and Agent, on behalf of
Lessors, shall execute and deliver to Lessee such documents as
may be reasonably required to release the Vehicles from the
terms and scope of this Lease (without representations or
warranties, except that the Vehicles are free and clear of
Lessor Liens), in such form as may be reasonably requested by
Lessee, all at Lessee's sole cost and expense.
Section XI.3 Sale Option. If Lessee elects the Sale
Option, then during the period prior to the Termination Date,
Lessee, as agent for Agent and Lessors and at no expense to
Agent and Lessors, shall use its commercial best efforts to
obtain bids for the purchase in immediately available funds on
the Termination Date of the Vehicles from prospective purchasers
which are unaffiliated with Lessee and are financially capable
of purchasing the Vehicles ("Qualified Purchasers"). The Agent
may also, if it so desires, seek to obtain such bids. All bids
received by Lessee or Agent, within five Business Days after
receipt thereof, shall be certified to the other in writing
setting forth the name and address of the party submitting each
such bid and the amount and terms thereof.
If any bid is received from a Qualified Purchaser for an
amount in excess of the Lessor Risk Amount, or if Agent agrees
in its sole and absolute discretion to accept a bid for less
than the Lessor Risk Amount, then on the Termination Date
(i) the Vehicles shall be sold on an "as-is," "where-is" basis
(without recourse to or warranty from Agent and Lessors, except
that the Vehicles are free of Lessor Liens), to the bidder,
which is a Qualified Purchaser, selected by Lessee after
consultation with Agent (the "Purchaser"), provided, however,
that Lessee may not reject the highest bidder if the next
highest bid is not at least equal to the Lessor Risk Amount;
(ii) Lessee shall make the Vehicles available to the Purchaser
in the same manner and in the same condition and otherwise in
accordance with this Lease as if delivery were made to Agent
pursuant to Article IX, (iii) such Purchaser shall pay the sale
proceeds in immediately available funds to Agent for the benefit
of Lessors, (iv) Lessee shall pay to Agent, for the benefit of
the Lessor, in immediately available funds (x) all accrued
unpaid Rent and all other amounts, if any then due and owing
under this Lease, and (y) an amount equal to the excess, if any,
of (A) the Termination Value as of the Termination Date over
(B) the sale proceeds (but in no event shall such amount payable
by Lessee under this clause (y) exceed the applicable Lessee
Risk Amount), (v) title to the Vehicles shall be transferred to
such Purchaser free, and clear of Lessor Liens, and (vi) Agent,
on behalf of Lessors, shall execute and deliver to Purchaser
such documents as may be reasonably required to release the
Vehicles from the terms and scope of this Lease (without
representations or warranties, except that the Vehicles are free
and clear of Lessor Liens), in such form as may be reasonably
requested by Purchaser.
If (x) Agent does not receive any bid in excess of the
applicable Lessor Risk Amount from a Qualified Purchaser or
Agent does not accept any bids received for less than the Lessor
Risk Amount prior to the Termination Date or (y) the proposed
sale to the Purchaser is not consummated prior to the
Termination Date, Lessee shall have the option to purchase the
Vehicles by paying to Agent within ten (10) Business Days of the
Termination Date, in immediately available funds an amount equal
to the applicable Termination Value as of the Termination Date.
Lessee shall also pay to Agent (i) all accrued unpaid Rent
payable on the Termination Date; (ii) the pro rata Variable Rent
from the Termination Date to the date of such purchase; and
(iii) all other fees and expenses and other amounts then due and
payable pursuant to this Lease and the other Operative
Agreements. If Lessee does not so elect to purchase the
Vehicles pursuant to the immediately preceding sentence, Lessee
shall pay to Agent an amount equal to the Lessee Risk Amount,
Agent shall retain title to the Vehicles (or, if at such time
Lessee holds title to the Vehicles, Lessee shall transfer title
to Vehicles to Agent, without recourse, representations or
warranties, except that the Vehicles are free and clear of
Lessor Liens) and Lessee shall return the Vehicles to Agent in
accordance with Article IX.
ARTICLE XII
Ownership, Grant of Security
Interest to Lessor and Further Assurances
Section XII.1 Grant of Security Interest. Lessee hereby
assigns, grants and pledges to Agent, for the benefit of the
Lessors, a security interest in all of Lessee's right, title and
interest, whether now or hereafter existing or acquired, in the
Collateral, to secure the payment and performance of all
obligations of Lessee now or hereafter existing under this Lease
or any other Operative Agreement. Lessee shall, at its expense,
do any further act and execute, acknowledge, deliver, file,
register and record any further documents which Agent or any
Lessor may reasonably request in order to protect its title to
and perfected security interest in the Collateral, subject to no
Liens other than Permitted Liens, and Agent's rights and
benefits under this Lease. Lessee shall promptly and duly
execute and deliver to Agent such documents and assurances and
take such further action as Agent or any Lessor may from time to
time reasonably request in order to carry out more effectively
the intent and purpose of this Lease and the other Operative
Agreements, to establish and protect the rights and remedies
created or intended to be created in favor of Agent hereunder
and thereunder, and to establish, perfect and maintain the
right, title and interest of Agent, for the benefit of the
Lessors, in and to the Vehicles, subject to no Lien other than
Permitted Liens, or of such financing statements or fixture
filings or other documents with respect hereto as Agent or any
Lessor may from time to time reasonably request, and Lessee
agrees to execute and deliver promptly such of the foregoing
financing statements and fixture filings or other documents as
may require execution by Lessee. Without limiting the
foregoing, on and after the date Lessee elects or is deemed to
have elected the Lessee Purchase Option or the Sale Option,
Agent shall have the unconditional right to demand the execution
and delivery by Lessee of bills of sale with respect to the
Vehicles leased by Lessee or such documentation as may be
necessary to cause title to the Vehicles to be recorded in the
name of Agent, for the benefit of the Lessors. To the extent
permitted by applicable laws, Lessee hereby authorizes any such
financing statements and other documents to be filed without the
necessity of the signature of Lessee, if Lessee has failed to
sign any such instrument within 10 days after request therefor
by Agent or any Lessor. Upon Lessee's request, Agent shall at
such time as all of the obligations of Lessee under this Lease
or any other Operative Agreements have been indefeasibly paid or
performed in full (other than Lessee's contingent obligations,
if any, under Articles VII and VIII of the Participation
Agreement), execute and deliver termination statements and other
appropriate documentation reasonably requested by Lessee, all at
Lessee's expense, to evidence Agent's release of its security
interest in the Collateral. At such time, Agent shall execute
and deliver to Lessee such documents as may be reasonably
necessary (without representations or warranties, except that
the Vehicles are free and clear of Lessor Liens) to release
Agent's security interest in the Vehicles. Any such sale of the
Vehicles to either Lessee or a third party shall be on an AS-IS,
WHERE-IS basis (without representations or warranties, except
that the Vehicles are free and clear of Lessor Liens).
Section XII.2 Retention of Proceeds in the Case of
Default. If Lessee would be entitled to any amount (including
any Casualty Proceeds or Partial Casualty Proceeds) but for the
existence of any Event of Default or Incipient Default, Agent
shall hold such amount as part of the Collateral and shall be
entitled to apply such amounts against any amounts due
hereunder; provided, that Agent shall distribute such amount or
transfer such Vehicle in accordance with the other terms of this
Lease if and when no Event of Default or Incipient Default
exists.
Section XII.3 Attorney-in-Fact. Lessee hereby irrevocably
appoints Agent as Lessee's attorney-in-fact, with full authority
in the place and stead of Lessee and in the name of Lessee or
otherwise, from time to time in Agent's discretion, upon the
occurrence and during the continuance of an Event of Default, to
take any action (including any action that Lessee is entitled to
take) and to execute any instrument which Agent or the Required
Lessors may deem necessary or advisable to accomplish the
purposes of this Lease (subject to any limitations set forth in
the Operative Agreements), including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for money due and to
become due under or in connection with the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with the
foregoing clause (a);
(c) to file any claim or take any action or institute any
proceedings which Agent may deem to be necessary or advisable
for the collection thereof or to enforce compliance with the
terms and conditions of any Collateral; and
(d) to perform any affirmative obligations of Lessee
hereunder.
Lessee hereby acknowledges, consents and agrees that the power
of attorney granted pursuant to this Section 12.3 is irrevocable
and coupled with an interest.
Section XII.4 Release of Liens. Upon the replacement or
substitution of any Vehicle or Part or Sublease, or the payment
of all amounts required pursuant to Section 6.1 in connection
with a Casualty, in each case in compliance with the applicable
provisions of the Lease, such Vehicle or Part or Sublease shall
be released from the security interest created hereunder as
provided in Section 5.4(b).
ARTICLE XIII
Miscellaneous
Section XIII.1 No Waiver. No delay or omission in the
exercise of any right, power or remedy accruing to Agent and/or
the Lessors upon any breach or default of Lessee hereunder shall
impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence therein or of or in any similar breach or default
thereafter occurring, nor shall any single or partial exercise
of any right, power or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy,
nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind
or character on the part of Agent or the Lessors of any breach
or default under this Lease must be specifically set forth in
writing and must satisfy the requirements set forth in Article X
of the Participation Agreement with respect to approval by Agent
or the Lessors.
Section XIII.2 Survival of Covenants. All claims
pertaining to the representations, warranties and covenants of
Lessee under Articles II, III, IV, V, VI, VII, X, XI and XIII
shall survive the termination of this Lease to the extent such
claims arose out of events occurring or conditions existing
prior to any such termination.
Section XIII.3 APPLICABLE LAW. THIS LEASE SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE LAWS OF CALIFORNIA, WITHOUT
REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF.
Section XIII.4 Effect and Modification of Lease. No
variation, modification, amendment or waiver of this Lease,
including any schedules or exhibits hereto, or any other
Operative Agreement to which Agent or any Lessor is a party
shall be valid unless the same shall have been entered into in
accordance with Article X of the Participation Agreement.
Section XIII.5 Notices. All notices, demands, requests,
consents, approvals and other instruments hereunder shall be in
writing and shall be deemed to have been properly given if given
as provided for in Section 11.4 of the Participation Agreement.
Section XIII.6 Counterparts. This Lease has been executed
in several counterparts. One counterpart has been prominently
marked "Agent's Copy." Only the counterpart marked "Agent's
Copy" shall evidence a monetary obligation of or shall be deemed
to be an original or to be chattel paper for purposes of the
Uniform Commercial Code, and such copy shall be held by Agent.
Section XIII.7 Severability. Whenever possible, each
provision of this Lease shall be interpreted in such manner as
to be effective and valid under applicable law; but if any
provision of this Lease shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Lease.
Section XIII.8 Successors and Assigns: Benefit of
Agreement. This Lease shall be binding upon each of the parties
hereto and, subject to Sections 13.9 and 13.10 hereof, its
respective successors and assigns, and shall inure to the
benefit of each of the parties hereto and its respective
successors and permitted assigns.
It is expressly understood and agreed that Agent is
entering into this Lease for the benefit of the Lessors, who are
third party beneficiaries of this Lease and each Lease
Supplement.
Section XIII.9 Assignment by Agent. Agent shall not sell,
assign, transfer or otherwise dispose of its rights or delegate
its obligations under this Lease to any other Person except as
permitted or required by the Participation Agreement.
Section XIII.10 Assignment by Lessee. Lessee shall not
sell, assign, transfer or otherwise dispose of its rights or
delegate its obligations under this Lease to any other Person,
except as permitted or required by Section 5.2 hereof or the
Participation Agreement.
Section XIII.11 Jury Trial. LESSEE WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS LEASE OR ANY RELATED DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THERE
WITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION
WITH THIS LEASE OR ANY RELATED DOCUMENT AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
Section XIII.12 Section Headings: Table of Contents.
Section headings and the table of contents used in this Lease
(including the schedule) are for convenience of reference only
and shall not affect the construction of this Lease.
Section XIII.13 Final Agreement. THIS LEASE, TOGETHER
WITH THE OTHER OPERATIVE AGREEMENTS, REPRESENTS THE ENTIRE FINAL
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED BY THE LEASE AND THE OTHER OPERATIVE AGREEMENTS.
THIS LEASE CANNOT BE MODIFIED, SUPPLEMENTED, AMENDED, RESCINDED
OR CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSE
QUENT ORAL AGREEMENTS OF THE PARTIES, EXCEPT BY AN INSTRUMENT IN
WRITING SIGNED BY THE PARTIES HERETO IN ACCORDANCE WITH THE
TERMS OF THE PARTICIPATION AGREEMENT. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
Section XIII.14 Timeliness of Performance. The provisions
of Articles VIII and XI pertaining to the delivery of notice and
[Remainder of page intentionally left blank.]
the performance of certain events on dates required by Articles
VIII and XI are to be strictly adhered to by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Lease to be executed and delivered as of the date first above
written.
CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE, as
Lessee
By /s/X. X. Xxxxxxxx
Name Printed: X.X. Xxxxxxxx
Title: Assistant Treasurer
ABN AMRO BANK N.V., not individually
but solely as Agent for the
Lessors
By /s/Xxxxxxx X. French
Name Printed: Xxxxxxx X. French
Title: Vice President
By /s/X.X. Xxxxxxx
Name Printed: X.X. Xxxxxxx
Title: Group Vice President
FIRST AMENDMENT TO PARTICIPATION AGREEMENT
AND MASTER LEASE INTENDED AS SECURITY
THIS FIRST AMENDMENT TO PARTICIPATION AGREEMENT AND MASTER
LEASE INTENDED AS SECURITY (this "First Amendment") dated as of
this 25th day of March, 1996, by and among CONSOLIDATED
FREIGHTWAYS CORPORATION OF DELAWARE, a Delaware corporation, as
Lessee ("Lessee"), ABN AMRO BANK N.V., a bank organized under the
laws of the Netherlands, not in its individual capacity, but
solely as Agent for the Lessors (the "Agent"), and the several
Lessors signatory hereto (together with their respective
permitted successors, assigns and transferees, each a "Lessor"
and collectively the "Lessors"),
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to that certain
Participation Agreement, dated as of December 22, 1995 (the
"Participation Agreement"); and
WHEREAS, pursuant to the Participation Agreement, the Agent
and the Lessee entered into that certain Master Lease Intended as
Security, dated as of December 22, 1995 (the "Lease"); and
WHEREAS, the parties hereto desire to amend the
Participation Agreement and the Lease to, among other things,
permit the Lessee to enter into certain secured interest rate
hedging transactions;
NOW THEREFORE, in consideration of the premises set forth
above and other good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined herein shall have the meanings given to such
terms in the Participation Agreement.
2. Amendments to Participation Agreement.
(a) The following new definition is hereby added to
Schedule X to the Participation Agreement:
"Permitted Interest Rate Hedging Liens" shall mean
Liens incurred to secure the obligations of the Lessee
under interest rate swap agreements entered into by
Lessee with respect to the Variable Rent.
(b) The definition of "Permitted Liens" contained in
Schedule X to the Participation Agreement is hereby deleted in
its entirety and replaced with the following new definition:
"Permitted Liens" shall mean: (i) any rights in
favor of Lessors under the Operative Agreements and any
rights of any Persons entitled to use of the Collateral
in accordance with Section 5.2 of the Lease; (ii) any
Lien, (including, without limitation, Liens of landlords,
carriers, warehousemen, mechanics or materialmen) in
favor of any Person securing payment of the price of
goods or services provided in the ordinary course of
business for amounts the payment of which is not overdue
or is being contested in good faith by appropriate
proceedings promptly initiated and diligently prosecuted,
so long as such proceedings do not involve any reasonable
danger of sale, forfeiture or loss of all or any material
part of the Collateral and do not materially adversely
affect any Lien created in favor of Lessor under the
Lease; (iii) any Lessor Lien or any Lien arising out of
any breach by any Lessor of its obligations under the
Operative Agreements; (iv) any Lien for current taxes,
assessments or other governmental charges which are not
delinquent or the validity of which is being contested by
a Permitted Contest; (v) attachments, judgments and other
similar Liens arising in connection with court
proceedings, provided the execution or other enforcement
of such Liens is effectively stayed and the claims
secured hereby are being contested in good faith and by
appropriate proceedings; (vi) reservations, exceptions,
encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, zoning and land use
restrictions and other similar title exceptions or
encumbrances affecting real property that were not
incurred in connection with the incurrence of
indebtedness, so long as such Liens do not involve a
reasonable danger of sale, forfeiture or loss of all or
any material portion of the Collateral and do not
materially adversely affect any Lien created in favor of
Lessor under the Lease; (vii) any Lien incurred in the
ordinary course of business to secure performance of
statutory obligations; and (viii) Permitted Interest Rate
Hedging Liens.
3. Amendments to Lease.
(a) The following new Section 12.5 is hereby added to the
Lease:
Section 12.5 Permitted Interest Rate Hedging Liens.
Notwithstanding anything contained herein to the
contrary, in no event shall any Permitted Interest Rate
Hedging Lien on the Collateral be prior to the security
interest of the Agent in the Collateral granted pursuant
to Section 12.1 above; provided, however, that Permitted
Interest Rate Hedging Liens may be pari passu ratably
with such security interest, subject to documentation of
such pari passu status in form and substance acceptable
to Agent in its sole discretion.
(b) The first paragraph immediately following paragraph (c)
of Section 8.2 of the Lease is hereby deleted in its entirety and
replaced with the following new paragraph:
Notwithstanding the foregoing, and provided that no
event of default has occurred and is continuing under any
documents evidencing obligations for borrowed money in
excess of twenty million dollars ($20,000,000) to which
Consolidated Freightways, Inc. is a party, (i) upon the
occurrence of any Event of Default resulting from a
default in the performance or observance of any term,
covenant, condition or agreement on Lessee's part to be
performed or observed under Section 6.1(i) of the
Participation Agreement, or (ii) in the event that Lessee
anticipates that such a default or Event of Default is
likely to occur, Consolidated Freightways, Inc. may elect
to enter into a Guarantee, the form of which is attached
hereto as Exhibit B, the effect of which shall be to
prevent the occurrence of any such anticipated default or
Event of Default, or to cure any such actual Event of
Default; provided, however, the Agent and the Lessors
shall have no obligation to accept the Guarantee as a
cure for any actual Event of Default if the Agent gives
notice to Lessee that the Agent seeks to pursue any of
the remedies described in Section 8.2 and Consolidated
Freightways, Inc. does not deliver the Guarantee within
one (1) Business Day after Lessee's receipt of such
notice; and provided, further, that no Guarantee shall be
effective for purposes of this provision unless
Consolidated Freightways, Inc. shall have delivered to
the Agent certified resolutions of its Board of Directors
authorizing such Guarantee, an incumbency certificate and
a legal opinion opining as to such matters related to
such Guarantee as the Agent shall reasonably request, in
form and substance satisfactory to Agent in its
reasonable discretion, and such other evidence of the
authority of Consolidated Freightways, Inc. to enter into
such Guarantee as Agent shall reasonably request. Any
such Guarantee shall remain in effect until receipt of
notice by the Agent from Consolidated Freightways, Inc.
of termination of the Guarantee; provided, however, that
no such notice will be effective unless (i) Lessee is in
compliance with all financial covenants referred to in
Section 6.1(i) of the Participation Agreement as of the
end of the fiscal quarter immediately preceding Agent's
receipt of the notice, and (ii) with respect to any
Guarantee given in anticipation of a default or Event of
Default, the Guarantee has been in effect through the end
of at least one fiscal quarter for which Lessee was in
compliance with all such financial covenants.
(c) Exhibit B to the Lease is hereby deleted in its
entirely and replaced with the new Exhibit B attached hereto as
Exhibit A.
4. Ratification of Agreements. Except as amended hereby,
all the provisions set forth in the Participation Agreement and
the Lease remain in full force and effect. From and after the
date hereof, (i) any reference in the Participation Agreement to
"this Participation Agreement" shall mean the Participation
Agreement as amended by this First Amendment, and (ii) any
reference in the Lease to "this Lease" shall mean the Lease as
amended by this First Amendment.
5. Severability. If any provision of this First Amendment
shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
6. Governing Law. This First Amendment shall be governed
by and construed in accordance with the internal laws of the
State of California.
7. Counterparts. This First Amendment may be executed in
any number of counterparts, all of which together shall consti
tute a single instrument, and it shall not be necessary that any
counterpart be signed by all the parties hereto.
8. Headings. The headings hereof are for convenience only
and are not intended to affect the meaning or interpretation of
this First Amendment.
9. Benefit of Agreement. This First Amendment shall inure
to the benefit of, and be enforceable by Lessee, Agent, Lessors,
and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this First
Amendment to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE
By /s/ Xxxxxx X. Xxxxx
Name Printed: Xxxxxx X.
Xxxxx
Title: Assistant Treasurer
ABN AMRO BANK N.V., not
individually but solely as
Agent for the Lessors
By /s/Xxxxx Xxxxxxxx
Name Printed: Xxxxx
Xxxxxxxx
Title: Vice President and
Director
By /s/Prorile Anand
Name Printed: Prorile
Anand
Title: Vice President and
Director
LESSORS:
ABN AMRO BANK N.V.
By /s/Xxxxx Xxxxxxxx
Name Printed: Xxxxx
Xxxxxxxx
Title: Vice President and
Director
By /s/Prorile Anand
Name Printed: Prorile
Anand
Title: Vice President and
Director
SECOND AMENDMENT TO PARTICIPATION AGREEMENT
AND MASTER LEASE INTENDED AS SECURITY
THIS SECOND AMENDMENT TO PARTICIPATION AGREEMENT AND
MASTER LEASE INTENDED AS SECURITY, dated as of January 23, 1997
(this "Amendment"), by and among CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE, a Delaware corporation, as lessee
("Lessee"), and ABN AMRO BANK N.V., a bank organized under the
laws of the Netherlands, not in its individual capacity, but
solely in its capacity as agent ("Agent"), and the several
Lessors signatory hereto (together with their respective
permitted successors, assigns, and transferees, each a "Lessor"
and collectively the "Lessors").
WHEREAS, the parties hereto are parties to that
certain Participation Agreement dated as of December 22, 1995,
as amended by an amendment thereto dated as of March 25, 1996
(said Participation Agreement as so amended being, the
"Participation Agreement");
WHEREAS, pursuant to the Participation Agreement, the
Agent and the Lessee entered into that certain Master Lease
Intended as Security, dated as of December 22, 1995, as amended
by an amendment thereto dated as of March 25, 1996 (said Master
Lease Intended as Security as so amended being the "Lease"); and
WHEREAS, the parties hereto desire to amend the
Participation Agreement and the Lease to, among other things,
reflect the spin-off of the Lessee from Consolidated Freightways
Inc. (the "Parent"), to release the Parent from its guarantee of
the obligations of the Lessee under the Participation Agreement,
the Lease and other Operative Agreements and to provide for the
granting of additional security by the Lessee to the Agent and
the Lessors to further secure such obligations;
NOW THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions. All capitalized terms used
herein and not otherwise defined herein shall have the meanings
given to such terms in the Participation Agreement.
SECTION 2. Amendments to Participation Agreement.
The Participation Agreement is, effective as of the date hereof
or on such later date on which all of the conditions precedent
set forth in Section 4 hereof have been satisfied, hereby
amended as follows:
(a) Section 5.1(j) is deleted in full and replaced
with the following:
"(j) Location of Offices. The principal place of
business and chief executive office (as such term is used in
Article 9 of the UCC) of Lessee is located at 000 Xxxxxxxx
Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000."
(b) Section 6.1(i) is deleted in full and replaced
with the following:
"(i) Financial Tests. Lessee shall:
(i) not permit Adjusted Net Earnings for
the fiscal periods specified below, determined as of
the last day of each fiscal quarter set forth below on
a year-to-date basis for each fiscal quarter in 1997
and thereafter for the twelve-month period ending the
last day of the respective fiscal quarter, to be less
than the amount set forth below listed opposite such
fiscal quarter:
Fiscal Quarter Ending:
March 1997 $ 5,000,000
June 1997 $15,000,000
September 1997 $27,000,000
December 1997 $40,000,000
March 1998 $43,000,000
June 1998 $45,000,000
September 1998 $48,000,000
December 1998 $52,000,000
March 1999 $54,000,000
June 1999 $56,000,000
September 1999 $58,000,000
December 1999 and each
fiscal quarter thereafter $60,000,000
(ii) not permit Adjusted Tangible Net Worth,
calculated without regard to the increase, not in
excess of $10,000,000 (after giving effect to income
taxes), in the worker's compensation accrual reserve
over and above the level of such reserve reflected in
the management projections dated as of September 9,
1996 heretofore delivered to Agent, determined as of
the last day of each fiscal quarter set forth below,
to be less than the amount set forth below listed
opposite such fiscal quarter:
Fiscal Quarter Ending: Adjusted Tangible
Net Worth:
December 1996 $210,000,000
March 1997 through December 1997 $195,000,000
March 1998 through September 1988 $190,000,000
December 1998 $195,000,000
March 1999 through September 1999 $190,000,000
December 1999 and each fiscal
quarter thereafter $200,000,000
(iii) not permit the Fixed Charge
Coverage Ratio, determined as of the last day of each
fiscal quarter set forth below, on a year-to-date
basis for each fiscal quarter in 1997 and thereafter
for the twelve-month period ending on the last day of
the respective fiscal quarter, to be less than the
ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending: Fixed Charge
Coverage Ratio
March 1997 .5 to 1
June 1997 .8 to 1
September 1997 1.0 to 1
December 1997 to June 1999 1.1 to 1
September 1999 1.15 to 1
December 1999 and each fiscal
quarter thereafter 1.2 to 1
(iv) not make or incur, or permit any of its
Subsidiaries to make or incur, any Capital Expenditure
if, after giving effect thereto, the aggregate amount
of all such Capital Expenditures, net of proceeds from
sales of fixed assets, would exceed $30,000,000 for
Fiscal Year 1997, $35,000,000 for Fiscal Year 1998 and
$60,000,000 for Fiscal Year 1999, provided however,
that up to $15,000,000 of permitted Capital
Expenditures unused in one year may be carried over to
the following year."
(c) Subsection 6.1(k) is amended by adding "or" before
"(iii)" in the seventh line thereof, adding a period at the end
of such clause (iii) and deleting the portion of such subsection
beginning with "; or (iv)" in the eighth line thereof through
the remainder of such subsection.
(d) Section 6.1 is amended by adding at the end thereof
new subsections to read as follows:
"(q) Acquisitions. Lessee shall not acquire
any Person or assets or merge or consolidate with any
Person, or permit any of its Subsidiaries to do any of
the foregoing, if for any such transaction the
aggregate of (i) the sum of (A) cash paid by the
Lessee or such Subsidiary in connection with such
transaction plus (B) the amount of obligations issued
or assumed by the Lessee or such Subsidiary in
connection with such transaction which are payable
within twelve months of the date of issuance or
assumption, as the case may be, and (ii) the sum of
(C) the aggregate amount of cash paid by the Lessee
and all of its Subsidiaries in connection with all
other acquisitions, mergers and consolidations
theretofore consummated during the term of this
Agreement plus (D) the aggregate amount of obligations
issued or assumed by the Lessee and its Subsidiaries
in connection with all such other acquisitions,
mergers and consolidations which are payable within
twelve months of the respective date of issuance or
assumption, as the case may be, is greater than
$50,000,000.
(r) Other Covenants. Lessee will not enter
into any other Synthetic Lease which contains more
burdensome financial covenants than are contained in
Subsection 6.1(i).
(s) Letter of Credit. Lessee shall
(i) maintain in effect at all times a letter of
credit, in form and substance satisfactory to the
Lessors, issued by NationsBank of Texas, N.A., or
such other financial institution satisfactory to the
Lessors, for the benefit of the Agent and in a face
amount not less than the maximum Rent payable under
the Lease in any quarter and (ii) shall cause such
letter of credit to be delivered to the Agent. The
proceeds of any drawing under any such letter of
credit shall be deposited in the Deposit Account (as
defined in Section 5(f)(i) of the Security Agreement),
and held (together with all earnings therein) as
security for the obligations of the Lessee under the
Lease and for the benefit of the Agent and the ratable
benefit of the Lessors, and all funds in the Deposit
Account shall be applied to Rent payments when due in
the order of maturity, provided that during the
continuance of an Event of Default, all such funds,
including any earnings thereon, shall be applied to
any amounts owing under the Lease, with the allocation
thereof to be made as the Agent determines in its sole
discretion. All such funds, and earnings thereon,
shall remain in the Deposit Account until all
obligations (other than Surviving Indemnities) under
the Lease are paid in full. Notwithstanding the
provisions of any such letter of credit, in lieu of
any automatic renewal of such letter of credit, Lessee
may cause the letter of credit to be renewed (i) in a
decreased face amount so long as the face amount is
not less than the maximum Rent payable under the Lease
in any future quarter, and/or (ii) with a renewal
period in excess of six months (or, if shorter, for a
period extending 30 days beyond the maximum Lease Term
as then permitted under the terms of the Lease). Upon
termination of the Lease and the payment in full of
all obligations (other than Surviving Indemnities)
under the Lease, the Agent shall return any such
letter of credit, to the extent undrawn, to the issuer
thereof for cancellation. Any such letter of credit
shall not be drawn solely because of nonrenewal if the
Lease is due to terminate at least 30 days prior to
the expiration date of the letter of credit."
(e) Section 9.10 is amended to read in its entirety
as follows: "As compensation for the performance of Agent's
obligations hereunder, Lessee shall pay to Agent (a) for the
first year of the Lease Term, on the Initial Delivery Date, a
fee in the amount of $15,000 and (b) for each year thereafter
during the Lease Term, on each anniversary of the Initial
Delivery Date an annual fee in the amount of $20,000 (such fee
as payable from time to time being the 'Agency Fee')."
(f) Section 11.4 is amended by deleting the reference
therein to "Consolidated Freightways, Inc., 0000 Xxxxxxxx
Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attn: Treasurer Fax:
415/000-0000."
(g) The definition of "Interest Rate" in Schedule X
is amended by deleting the phrase "115 basis points" therein and
substituting for such phrase the phrase "175 basis points."
(h) Schedule X is amended by adding the following
definitions:
"'Adjusted Net Earnings' means, with respect to any
fiscal period of the Lessee, the Adjusted Net Earnings from
Operations for such fiscal period plus the sum of the
following to the extent deducted in computing Adjusted Net
Earnings from Operations; (a) interest expense, (b) accrued
income taxes, (c) depreciation and amortization expenses,
and (d) miscellaneous expenses (including Letter of Credit
Fees) less miscellaneous income for such period.
'Adjusted Net Earnings from Operations' shall mean,
with respect to any fiscal period of the Lessee, the
Parent's, the Lessee's and their Subsidiaries' consolidated
net income after provision for income taxes for such fiscal
period, as determined in accordance with GAAP and reported
to the Agent hereunder for such period, excluding any and
all of the following included in such net income: (i) gain
or loss arising from the sale of any capital assets
(excluding Revenue Equipment), (ii) gain arising from any
write-up in the book value of any asset, (iii) earnings of
any corporation, substantially all the assets of which have
been acquired by the Parent or the Lessee or any of their
Subsidiaries in any manner, to the extent realized by such
other corporation prior to the date of acquisition, (iv)
earnings of any business entity in which the Parent or the
Lessee or any of their Subsidiaries has an ownership
interest (other than such Subsidiaries) unless (and only to
the extent) such earnings shall actually have been received
by the Parent or the Lessee or any of their Subsidiaries in
the form of cash distributions, (v) earnings of any Person
into which the Parent or the Lessee or any of their
Subsidiaries shall have been merged, or which has been a
party with the Parent or the Lessee or any of their
Subsidiaries to any consolidation or other form of
reorganization, prior to the date of such transaction, (vi)
gain arising from the acquisition of debt or equity
securities of the Parent or the Lessee or their
Subsidiaries or from cancellation or forgiveness of Debt,
and (vii) gain arising from extraordinary items, as
determined in accordance with GAAP, or gain from any other
non-recurring transaction.
'Adjusted Tangible Assets' shall mean all of the
Parent's, the Lessee's and their Subsidiaries' assets
except: (i) deferred assets, other than deferred tax
assets, prepaid insurance, and prepaid taxes, (ii) patents,
copyrights, trademarks, trade names, franchises, goodwill
and other similar intangibles, (iii) unamortized debt
discount and expense, and (iv) fixed assets to the extent
of any write-up in the book value thereof resulting from a
revaluation effective after November 27, 1996.
'Adjusted Tangible Net Worth' shall mean, at any date:
(a) the book value (after deducting related depreciation,
obsolescence, amortization, valuation, and other proper
reserves as determined in accordance with GAAP) at which
the Adjusted Tangible Assets would be shown on a
consolidated balance sheet of the Parent, the Lessee and
their Subsidiaries at such date prepared in accordance with
GAAP, less (b) the amount at which the Parent's, the
Lessee's and their Subsidiaries' liabilities would be shown
on such balance sheet, including as liabilities all
reserves for contingencies and other potential liabilities
which would be required to be shown on such balance sheet.
'BABC Agreement' means the Loan and Security Agreement
dated as of November 27, 1996 among BankAmerica Business
Credit, Inc., as agent, NationsBank of Texas, N.A., as
letter of credit issuer, the lenders party thereto,
Consolidated Freightways Corporation, Xxxxxx Xxxxx Xxxxxxx
Corporation and the Lessee, as in effect on January 23,
1997.
'Capital Expenditure' means all payments due (whether
or not paid) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition
thereto, which has a useful life of more than one year,
including, without limitation, those costs arising in
connection with the direct or indirect acquisition of such
asset by way of increased product or service charges or
offset items or in connection with a Capital Lease on a
Synthetic Lease.
'Capital Lease' means any lease of Property of the
Lessee which, in accordance with GAAP, is or should be
capitalized on the Lessee's balance sheet or for which the
amount of the asset and liability thereunder, as if so
capitalized, should be disclosed in a footnote to such
balance sheet.
'Debt for Borrowed Money' means Debt for borrowed
money or as evidenced by notes, bonds, debentures or
similar evidences of any such Debt of such Person, the
deferred and unpaid purchase price of any Property or
business (other than trade accounts payable incurred in the
ordinary course of business and constituting current
liabilities) and all obligations under Capital Leases or
Synthetic Leases.
'Fixed Charge Coverage Ratio' means, for any period,
the ratio of (a) Adjusted Net Earnings for such period, to
(b) the sum of the following: (i) total principal and
interest payments made or required to be made (without
duplication) during such period by the Parent, the Lessee
and their Subsidiaries on Debt for Borrowed Money plus any
Letter of Credit Fees during such period, (ii) Capital
Expenditures net of asset sales and (iii) accrued income
taxes during such period.
'Letter of Credit Fees' means the letter of credit
fees paid pursuant to the BABC Agreement.
'Moody's' means Xxxxx'x Investor Service, Inc. and its
successors.
'Parent' means Consolidated Freightways Corporation, a
Delaware corporation.
'Property' means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
'Revenue Equipment' has the meaning provided therefor
in the BABC Agreement.
'State' means the District of Columbia or any State of
the United States of America.
'Surviving Indemnities' means any obligation in
the nature of an indemnity or hold harmless by the
Lessee in favor of the Agent and/or any Lessor,
arising under or pursuant to the Lease, the
Participation Agreement or any of the other Operative
Agreements, which by its terms survives the latest of
(the 'Cut-off Date'):
(i) the termination of the Lease, and
(ii) the payment of all rent, fees and
all other obligations of Lessee (not in the
nature of an indemnity or hold harmless) due to
the Agent or any Lessor at the time of such
payment under the Lease and the Operative
Agreements;
provided, that there shall be excluded from such
indemnity or hold harmless obligations all amounts that
are due and payable thereunder upon the Cut-off Date.
'S&P' means Standard & Poor's Rating Group, a division
of XxXxxx-Xxxx Corporation, and its successors.
'Synthetic Leases' means a lease (and related
documents) entered into in connection with the financing of
equipment which qualifies as an operating lease for
accounting purposes but which permits the lessee to be
treated as the owner of equipment for tax purposes,
including without limitation the Lease and the lease
entered into on or about September 30, 1994 by the Lessee
(and certain other Persons) with BankAmerica Leasing &
Capital Corp., as agent.
SECTION 3. Amendments to Lease. The Lease is,
effective as of the date hereof or on such later date on which
all of the conditions precedent set forth in Section 4 hereof
have been satisfied, hereby amended as follows:
(a) Section 8.1(k) is amended by deleting the figure
"$20,000,000" therein and substituting for such figure the
figure "$10,000,000" and deleting the period at the end
thereof and substituting therefor a semicolon followed by
the word "or";
(b) Section 8.1 is amended by adding the following
subsection (l) following subsection 8.1(k) thereof:
"(l) Lessee shall default in any material respect
in the performance or observance of any other term,
covenant, condition or agreement on its part to be
performed or observed under the Security Agreement
dated as of January 23, 1997 from the Lessee to the
Agent, and such default shall continue unremedied for
a period of 30 days after the earliest to occur of (i)
written notice thereof by the Agent or any Lessor to
the Lessee or (ii) the Lessee has Actual Knowledge
thereof."
(c) The first paragraph immediately following
paragraph (c) of Section 8.2 is deleted in full.
(d) Exhibit B to the Lease, "Form of Guarantee," is
hereby deleted in its entirety.
SECTION 4. Conditions of Effectiveness. This Amendment
shall become effective when, and only when, on or before January
30, 1997 the Agent shall have received:
(a) Counterparts of this Amendment executed by the
Lessee and the Required Lessors, or advice satisfactory to
the Agent that such Lessors have executed this Amendment;
(b) (i) A Security Agreement (the "Security
Agreement") in substantially the form of Exhibit A duly
executed by the Lessee, together with a duly executed
Officer's Certificate from the Lessee, certifying that the
Lessee has submitted to the Illinois Motor Vehicle
Authority with respect to each Vehicle subject to the
Security Agreement which is titled in Illinois, such
certificates, documents and fees as may be required by such
Authority to perfect the security interest of the Agent, on
behalf of the Lessors, in such Vehicles, together with, for
each such Vehicle, copies of each application for vehicle
title and certificate of title of a vehicle reflecting the
recorded security interest of the Agent, and (ii) evidence
of the completion of all other recordings and filings,
including without limitation the filing of appropriately
completed UCC financing statements for all Vehicles and the
other Collateral subject to the Security Agreement with
evidence of filing in the jurisdiction in which the Lessee
has its principal office and in each other jurisdiction in
which any such vehicle is to be titled, with respect to the
Security Agreement that the Agent may deem necessary or
desirable in order to perfect and protect the liens created
thereby;
(c) A letter of credit, in form and substance
satisfactory to the Agent and issued by NationsBank of
Texas, N.A., for the account of the Lessee and for the
benefit of the Agent, on behalf of the Lessors, in a face
amount not less than the maximum Rent payable under the
Lease in any quarter;
(d) Certified resolutions of the Board of Directors
of the Lessee approving this Amendment, the Security
Agreement and the transactions contemplated hereby and
thereby together with an incumbency certificate with
respect to the officers of the Lessee executing this
Amendment and the Security Agreement;
(e) Opinions of counsel to the Lessee in
substantially the forms of Exhibits X-0, X-0 and B-3;
(f) An amendment fee as provided in a letter
agreement dated as of January 23, 1997 between the Agent
and Consolidated Freightways, Inc.; and
(g) Such other approvals, opinions or documents as
any Lessor through the Agent may reasonably request.
The Agent shall notify the Lessee and the Lessors after the
conditions set forth above have been satisfied or waived and the
date this Amendment is effective.
SECTION 5. Maintenance of Certificates of Title.
The Agent and the Lessors agree that, until notice from the
Agent, the Lessee shall hold and maintain the originals of all
certificates of title for the Vehicles subject to the Security
Agreement and shall only be required to deliver copies thereof
to the Agent. Upon notice from the Agent, the Lessee shall
promptly deliver all such originals to the Agent.
SECTION 6. Representations and Warranties of the
Lessee. The Lessee represents and warrants as follows:
(a) The Lessee is a corporation duly incorporated,
validly existing and in good standing under the laws of
Delaware.
(b) The Lessee has all requisite corporate power and
authority to execute, deliver and perform its obligations
under this Amendment, the Security Agreement and each
Operative Agreement, as amended hereby.
(c) The execution, delivery and performance by the
Lessee of this Amendment, the Security Agreement and the
Operative Agreements, as amended hereby, and the
performance by the Lessee of its respective obligations
hereunder and thereunder, have been duly authorized by all
necessary corporate action and do not and will not:
(i) violate any provision of the Lessee's certificate of
incorporation or by-laws; (ii) violate any provision of any
law, rule or regulation presently in effect applicable to
the Lessee, which violation or violations would have
individually or in the aggregate, a Material Adverse
Effect; (iii) result in a breach of, or constitute a
default under, any indenture, loan or credit agreement, or
any other agreement or instrument to which the Lessee is a
party or by which Lessee or its properties may be bound or
affected, which breaches or defaults would have,
individually or in the aggregate, a Material Adverse
Effect; or (iv) result in, or require the creation of
imposition of, any Lien of any nature upon or with respect
to any of the properties now owned or hereafter acquired by
Lessee (other than the security interest contemplated by
the Lease and by the Security Agreement).
(d) No authorization, consent, license, approval or
other action by or formal exemption from, and no notice to
or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and
performance by the Lessee of this Amendment, the Security
Agreement or any of the Operative Agreements, as amended
hereby, except as referred to in Section 4(b).
(e) This Amendment, the Security Agreement and each
of the other Operative Agreements, as amended hereby,
constitute legal, valid and binding obligations of the
Lessee enforceable against the Lessee in accordance with
their respective terms, except as enforcement may be
limited by bankruptcy, insolvency, arrangement,
reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by
general principles of equity.
(f) There is no pending or, to the knowledge of
Lessee, threatened action or proceeding affecting the
Lessee or any of its Subsidiaries before any court,
governmental agency or arbitrator, in which there is a
reasonable probability of an adverse decision which, if
adversely determined, would have a Material Adverse Effect
or which purports to affect the legality, validity or
enforceability of this Amendment, the Security Agreement or
any of the Operative Agreements, as amended hereby.
SECTION 7. Reference to and Effect on the Operative
Agreements. (a) Upon the effectiveness of this Amendment, on
and after the date hereof each reference in the Participation
Agreement to "this Agreement," "hereunder," "hereof" or words of
like import referring to the Participation Agreement, and each
reference in the other Operative Agreements to "the
Participation Agreement," "thereunder," "thereof" or words of
like import referring to the Participation Agreement, shall mean
and be a reference to the Participation Agreement as amended
hereby and each reference in the Lease to "this Lease,"
"hereunder," "hereof" or words of like import referring to the
Lease, and each reference in the other Operative Agreements to
"the Lease," "thereunder," "thereof" or words of like import
referring to the Lease, shall mean and be a reference to the
Lease as amended hereby.
(b) Except as specifically amended above, the
Participation Agreement and the Lease, and all other Operative
Agreements, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lessor
or the Agent under any of the Operative Agreements, nor
constitute a waiver of any provision of any of the Operative
Agreements.
SECTION 8. Consent to Security Interest. The Agent
and the Lessors hereby consent to the grant of a security
interest by the Lessee to BankAmerica Business Credit, Inc.
("BABC") as agent under the Loan and Security Agreement dated as
of November 27, 1996 among BABC, as agent, NationsBank of Texas,
N.A., as letter of credit issuer, the lenders party thereto,
Consolidated Freightways Corporation, Xxxxxx Xxxxx Xxxxxxx
Corporation and the Lessee, for the ratable benefit of BABC, as
agent, the Letter of Credit Issuer thereunder and such lenders,
in Lessee's rights as "Lessee" under the Operative Documents.
SECTION 9. Termination of the Guarantee. The Agent
and the Lessors hereby agree that upon the effectiveness of this
Amendment, the obligations and liabilities of the Parent under
that certain Guarantee, dated as of March 25, 1996 (the
"Guarantee"), by the Parent in favor of the Agent, on behalf of
the Lessors, shall be fully and finally discharged and the
Guarantee shall thereby terminate without any further action.
SECTION 10. Costs, Expenses and Taxes. The Lessee
agrees to pay on demand all costs and expenses of the Agent in
connection with the preparation, execution, delivery,
administration, modification, amendment and enforcement of this
Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities hereunder and
thereunder. In addition, the Lessee shall pay any and all stamp
and other taxes payable or determined to be payable in
connection with the execution and delivery of this Amendment and
the other instruments and documents to be delivered hereunder.
SECTION 11. Execution in Counterparts. This
Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the
same agreement.
SECTION 12. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the
State of California.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE, as Lessee
By: /s/Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President
and Controller
ABN AMRO BANK NORTH AMERICA, INC.,
as agent for
ABN AMRO BANK N.V., not individually,
but solely as Agent for the Lessors.
By: /s/R. Xxxx Xxxxxxx
Name: R. Xxxx Xxxxxxx
Title: Senior Vice President
By: /s/X.X. Xxxxxxx
Name: X.X. Xxxxxxx
Title: Group Vice President
LESSORS:
ABN AMRO NORTH AMERICA, INC.,
as agent for
ABN AMRO BANK N.V.
By: /s/R. Xxxx Xxxxxxx
Name: R. Xxxx Xxxxxxx
Title: Senior Vice President
By: /s/X.X. Xxxxxxx
Name: X.X. Xxxxxxx
Title: Group Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Xxx X. Xxxxx
Name: Xxx X. Xxxxx
Title: Vice President
EXHIBIT A
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of January 23, 1997 (this
"Security Agreement") made by CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE, a Delaware corporation ("Grantor"), in
favor of ABN AMRO BANK N.V., a bank organized under the laws of
the Netherlands, not in its individual capacity, but solely in
its capacity as agent ("Agent") for its benefit and the ratable
benefit of the lessors (the "Lessors") parties to the Lease (as
hereinafter defined);
WHEREAS, the Grantor and the Agent have entered into a
Master Lease Intended as Security dated as of December 22, 1995,
and amendments thereto dated as of March 25, 1996 and as of the
date hereof (said Master Lease Intended as Security, as so
amended, being the "Lease"); and
WHEREAS, the terms defined in Schedule X to the
Participation Agreement referred to in the Lease being used
herein as so defined unless otherwise provided herein; and
WHEREAS, the Grantor has requested that the Agent
agree to certain amendments to the Lease and the related
Participation Agreement and in connection therewith has agreed
to grant the Agent additional collateral as provided herein to
secure the Grantor's obligations under the Lease;
NOW, THEREFORE, in consideration of the premises and
in order to induce the Agent to enter in such amendments, the
Grantor hereby agrees with the Agent for its benefit and the
ratable benefit of the Lessors as follows:
SECTION 1. Grant of Security. The Grantor hereby
assigns, grants and pledges to the Agent for its benefit and the
ratable benefit of the Lessors a security interest in all of the
Grantor's right, title and interest in and to the following,
whether now owned or hereafter acquired (the "Collateral"):
(a) all of the Grantor's right, title and interest in
all vehicles listed on Schedule I hereto and any
substitutions therefor, replacements thereof and additions
thereto, in each case from time to time pursuant to the
provisions of this Agreement (collectively, the
"Vehicles");
(b) all contracts necessary to purchase, operate and
maintain the Vehicles, including all warranties;
(c) any rebate, offset or similar rights under a
purchase order, invoice or purchase agreement with any
manufacturer of any Vehicle;
(d) all books, manuals, logs, records, writing, data
bases, information and other property relating to, used or
useful in connection with, evidencing, embodying or
incorporating any of the foregoing; and
(e) all proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds that
constitute property of the types described in any of the
foregoing clauses of this Section 1) and, to the extent not
otherwise included, all payments under insurance (whether
or not the Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss
or damage to or otherwise with respect to any of the
foregoing Collateral.
SECTION 2. Security for Obligations. This Agreement
secures the payment of all obligations of the Grantor now or
hereafter existing under the Lease, whether for rent, fees,
expenses or otherwise, and all obligations of the Grantor now or
hereafter existing under this Agreement (all such obligations
being the "Obligations"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Obligations and would be owed by
the Grantor to the Agent or the Lessors under the Lease but for
the fact that they are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding
involving the Grantor.
SECTION 3. Representations and Warranties. The
Grantor represents and warrants as follows:
(a) The chief place of business and chief executive
office of the Grantor is 000 Xxxxxxxx Xxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000.
(b) The Grantor has record title to each of the
Vehicles, and each of the Vehicles and all of the other
Collateral is free and clear of any Lien except for the
security interest created by this Agreement and (i) any
Lien (including, without limitation, Liens of landlords,
carriers, warehousemen, mechanics or materialmen) in favor
of any Person securing payment of the price of goods or
services provided in the ordinary course of business for
amounts the payment of which is not overdue or is being
contested in good faith by appropriate proceedings promptly
initiated and diligently prosecuted, so long as such
proceedings do not involve any reasonable danger of sale,
forfeiture or loss of all or any material part of the
Collateral and do not materially adversely affect any Lien
created in favor of the Agent hereunder; (ii) any Lien for
current taxes, assessments or other governmental charges
which are not delinquent or the validity of which is being
contested by a Permitted Contest (as hereinafter defined);
(iii) attachments, judgments and other similar Liens
arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively
stayed and the claims secured thereby are being contested
in good faith and by appropriate proceedings; (iv)
reservations, exceptions, encroachments, easements, rights-
of-way, covenants, conditions, restrictions, leases, zoning
and land use restrictions and other similar title
exceptions or encumbrances affecting real property that
were not incurred in connection with the incurrence of
indebtedness, so long as such Liens do not involve a
reasonable danger of sale, forfeiture or loss of all or any
material portion of the Collateral and do not materially
adversely affect any Lien created in favor of Agent or
Lessor hereunder; (v) any Lien incurred in the ordinary
course of business to secure performance of statutory
obligations and (vi) any Lien in favor of BankAmerica
Business Credit, Inc., as Agent, under the BABC Agreement
in the Collateral described in Section 1(d) hereof to the
extent that such Collateral applies both to Vehicles and to
vehicles in which BankAmerica Business Credit, Inc., as
Agent, has a security interest in connection with the BABC
Agreement (all such Liens set forth in clauses (i) through
(vi) hereinafter referred to as "Permitted Liens").
"Permitted Contest" shall mean actions taken by a Person to
contest in good faith, by appropriate proceedings initiated
timely and diligently prosecuted, the legality, validity or
applicability to the Vehicles or any interest therein of
any Person of: (a) any law, regulation, rule, judgment,
order, or other legal provision or judicial or
administrative requirements; (b) any term or condition of,
or any revocations or amendments of, or other proceeding
relating to, any authorization or other consent, approval
or other action by any Authority; or (c) any Lien or
Imposition; provided that the initiation and prosecution of
such contest would not: (i) result in, or materially
increase the risk of, the imposition of any criminal
liability on any Indemnitee; (ii) materially and adversely
affect the security interests created hereunder or the
right, title or interest of Agent or any Lessor in or to
any of the Vehicles; or (iii) materially and adversely
affect the fair market value, utility or remaining useful
life of the Vehicles or any interest therein or the
continued economic operation thereof; and provided further
that in any event adequate reserves in accordance with GAAP
are maintained against any adverse determination of such
contest.
(c) No filing, recordation or registration is
necessary or advisable in order to perfect the security
interest of the Agent, for its benefit and the ratable
benefit of the Lessors, in the Vehicles and other
Collateral other than the filing or recording of financing
statements under Article 9 of the applicable UCC in
Illinois, Ohio, Pennsylvania, Washington, New Jersey,
Georgia, Michigan, Minnesota, North Carolina and Wisconsin
(the "Original States") and in California, and the
recordation on the Certificate of Title for each Vehicle
with the applicable governmental authority of the security
interest of the Agent for its benefit and the ratable
benefit of the Lessors in the respective Original State,
and upon the actions described in the foregoing clause the
security interests in the Vehicles and the other Collateral
are enforceable, properly perfected, first-priority Liens,
subject only to Permitted Liens; provided, however, that
such actions may not be effective to perfect such security
interest in certain items described in clause (d) of the
definition of "Collateral" to the extent such items are
stored in (but not made a part of) a Vehicle and located
from time to time in jurisdictions where no such filing has
been made or to the extent that any such item consists of a
type of collateral in which a security interest cannot be
perfected by taking such actions.
(d) Certain Vehicle Matters.
(i) Each Vehicle is properly registered
pursuant to the International Registration Plan as in
effect in the State in which such Vehicle is titled.
(ii) Except as set forth on Schedule I
hereto, each Vehicle has a gross weight rating of more
than 16,000 pounds, and none of the Vehicles has been
specifically constructed, built, reconstituted or
assembled.
(iii) The Grantor is not in the business
of selling Vehicles and the Vehicles do not constitute
"inventory" under any applicable UCC.
(e) Registration of Vehicles. Each Vehicle is either
(i) used in interstate commerce, titled in one of the
Original States and registered in a State which is a party
to the International Registration Plan or (ii) used in
intrastate commerce, registered in the State in which it is
so used and titled in one of the Original States.
(f) Intellectual Property. To the Grantor's
knowledge or as represented in writing by a vendor of the
Vehicles which writing has been provided to the Agent,
there are no patents, patent rights, trademarks, service
marks, trade names, copyrights, licenses or other
intellectual property rights with respect to the Vehicles,
or proprietary, patented or patentable modifications or
Parts (as hereinafter defined) used in connection with the
Vehicles, the unavailability of which would have a material
adverse effect on the current fair market value of the
Vehicles. "Parts" means all appliances, parts,
instruments, appurtenances, accessories, furnishings and
other equipment of whatever nature that may from time to
time be incorporated in or installed in or attached to any
Vehicle.
(g) Insurance. All insurance coverage required by
Section 6 hereof are in full force and effect and there are
no past due premiums in respect of any such insurance.
SECTION 4. Further Assurances. (a) The Grantor
agrees that from time to time, at the expense of the Grantor,
the Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may
be necessary or desirable, or that the Agent or any Lessor may
reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable
the Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Grantor will execute and file
such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may reasonably request,
in order to perfect and preserve the security interest granted
or purported to be granted hereby, including with respect to any
replaced Vehicle or any Replaced Part (as hereinafter defined).
In addition, the Grantor shall record or file, or cause to be
recorded or filed, and pay all applicable filing or recording
fees within fifteen days after the date of delivery of this
Agreement to the Agent in respect of each Vehicle subject to
this Agreement on such date (except all such Vehicles titled in
the State of Illinois), and within fifteen days after any other
Vehicle becomes subject to this Agreement, an appropriate
Certificate of Title in the appropriate jurisdiction in order to
perfect the security interest therein created hereby, and in
each case deliver to the Agent copies of all such Certificates
with the security interest of the Agent reflected thereon.
(b) The Grantor hereby authorizes the Agent to file
one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral without
the signature of the Grantor where permitted by law, if Grantor
has failed to sign any such instrument within 10 days after
request therefor by the Agent or any Lessor. A photocopy or
other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient
as a financing statement where permitted by law.
(c) The Grantor will furnish to the Agent from time
to time statements and schedules further identifying and
describing the Collateral and such other reports in connection
with the Collateral as the Agent may reasonably request, all in
reasonable detail.
(d) If Grantor would be entitled to any amount
(including any Casualty Proceeds (as hereinafter defined)) but
for the existence of any Event of Default or Incipient Default,
Agent shall hold such amount as part of the Collateral and shall
be entitled to apply such amounts against any amounts due
hereunder; provided that Agent shall distribute such amount in
accordance with the other terms hereof if and when no Event of
Default or Incipient Default exists.
SECTION 5. Possession, Assignment, Use and
Maintenance of Vehicles.
(a) Restriction on Possession and Use. Grantor shall
not (a) use, operate, maintain or store any Vehicle or any
portion thereof: (i) except in accordance with Section 5(b)
hereof; or (ii) in violation of any applicable insurance policy
or law or regulation of any Authority; (b) except as permitted
by Section 5(f)(i) hereof, abandon any Vehicle; (c) except for
the temporary loan of Vehicles to other carriers pursuant to
interchange agreements in the ordinary course of business, lease
or assign any Vehicle or permit the operation thereof by anyone
other than Grantor; (d) sell, assign or transfer any of its
rights in any Vehicle, or directly or indirectly create, incur
or suffer to exist any Lien, on any of its rights in any
Vehicle, except for Permitted Liens; (e) unless the security
interest of the Agent is noted in the certificate of title in
the new jurisdiction and Grantor notifies Agent within three
business days of any retitling in any jurisdiction other than
any of the Original States, permit any Vehicle to be titled in
any jurisdiction other than the jurisdiction in which it is
titled on the date hereof; or (f) use, operate, maintain or
store any Vehicle or any portion thereof outside of the United
States except that Grantor may use, maintain and operate any
Vehicle outside of the United States on trips to and from a
point of embarkation located within the United States.
(b) Maintenance. Until the payment in full of
the Obligations, Grantor shall at its expense: (a) maintain,
manage and monitor the Vehicles in compliance in all
material respects with all applicable requirements of law,
Authority and/or insurance policies; (b) maintain each
Vehicle (or cause each Vehicle to be maintained) in as good
operating order, repair and condition as it was on the date
such Vehicle became subject to this Security Agreement (to
the extent that, as of such date, each such Vehicle was in
good operating order, repair and condition), ordinary wear
and tear excepted; (c) maintain, manage and monitor the
Vehicles in accordance with the terms of all applicable
contracts (including, without limitation, service contracts
and insurance contracts) in a manner consistent with
Grantor's customary practices; and (d) conduct all scheduled
maintenance of the Vehicles in conformity with Grantor's
maintenance procedures then in effect for similar equipment
owned or leased by Grantor, and applicable warranty
guidelines. Grantor shall in any event maintain the
Vehicles (or cause the Vehicles to be maintained) in at
least as good a condition as comparable equipment owned or
leased by Grantor or any of its Subsidiaries. Grantor will
maintain or cause to be maintained, and shall permit Agent
and Lessors to inspect, any records, logs and other
materials required by Authority having jurisdiction to be
maintained or filed in respect of any Vehicle.
(c) Repair, Replacement and Substitution.
(i) As soon as practicable after a Partial
Casualty (as hereinafter defined) to a Vehicle, Grantor
shall repair and rebuild the affected portions of such
Vehicle (or cause such affected portions to be repaired and
rebuilt) to the condition required to be maintained by
Section 5(b) hereof. In the event that any Part which may
from time to time be incorporated or installed in or
attached to any Vehicle becomes at any time worn out,
damaged or permanently rendered unfit for use for any reason
whatsoever (unless such event constitutes a Casualty (as
hereinafter defined), in which event the provisions of
Section 5(f) hereof shall apply instead of this
Section 5(c)), Grantor, at its own cost and expense, will
promptly replace, or cause to be replaced, such Part with a
replacement Part (a "Replacement Part") in accordance with
Grantor's customary practices, but in any event subject to
Section 5(b) hereof. In addition, Grantor may, at its own
cost and expense, remove in the ordinary course of
maintenance, service, repair, overhaul or testing, any Part,
whether or not worn out, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use;
provided, that Grantor will, at its own cost and expense,
replace such Part with a Replacement Part as promptly as is
commercially reasonable. All Replacement Parts shall be
free and clear of all Liens (other than Permitted Liens) and
shall be in as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced,
assuming such replaced Parts and the Vehicles were in the
condition and repair required to be maintained by the terms
of Section 5(b) hereof. Any Part at any time removed from
any Vehicle shall remain subject to this Security
Agreement, no matter where located, until such time as such
Part shall be replaced by a Part which has been incorporated
or installed in or attached to such Vehicle and which meets
the requirements for a Replacement Part specified above.
Immediately upon any Replacement Part becoming incorporated
or installed in or attached to any such Vehicle as above
provided, without further act: (i) the replaced part (the
"Replaced Part") shall be released from the security
interest covered hereby and shall no longer be a part of the
Collateral; and (ii) such Replacement Part shall become
subject to this Security Agreement, and the security
interest created hereunder, and shall be deemed part of such
Vehicle for all purposes hereof to the same extent as the
Parts incorporated or installed in or attached to such
Vehicle on the date such Vehicle became subject to this
Security Agreement. "Partial Casualty" means any loss,
damage, destruction, taking by eminent domain, loss of use
or theft of any portion of a Vehicle which does not
constitute a Casualty. "Casualty" means any of the
following events in respect of any Vehicle: (a) the loss of
such Vehicle or the use thereof due to theft, disappearance,
destruction, damage beyond repair or rendition of such
Vehicle permanently unfit for normal use for any reason
whatsoever; (b) any damage to such Vehicle which results in
any insurance settlement with respect to such Vehicle on the
basis of a total loss; (c) the permanent condemnation,
confiscation or seizure of, or requisition of title to or
use of, such Vehicle; (d) as a result of any rule,
regulation, order or other action by any Authority, the use
of such Vehicle in the normal course of business shall have
been prohibited, directly or indirectly, for a period of six
consecutive months, unless Grantor, prior to the expiration
of such six-month period, shall have undertaken and shall be
diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such Vehicle by
Grantor thereof or, in any event, if use of such Vehicle
shall have been prohibited, directly or indirectly, for a
period of twelve consecutive months; or (e) the operation or
location of such Vehicle, while under requisition for use by
any Authority, in any area excluded from coverage by any
insurance policy then in effect with respect to such Vehicle
required by the terms of Section 6 hereof, if Grantor shall
be unable to obtain indemnity in lieu thereof from such
Authority.
(ii) Upon the satisfaction of the conditions
specified in Section 5(c)(i) hereof, and the Replacement
Part becoming subject to this Security Agreement and the
security interest created hereunder, Agent, on behalf of the
Lessors, shall execute and deliver to Grantor such documents
as may be reasonably necessary to release the Replaced Part
from the terms and scope of this Security Agreement, in such
form as may be reasonably requested by Grantor, and are in
form and substance satisfactory to the Required Lessors, all
at the expense of Grantor.
(d) Alterations, Modifications and Additions;
Removable Parts. Except as provided in Sections 5(b) and
5(c) hereof, Grantor shall not remove, replace or alter any
Vehicle or affix or place any accessory, equipment or device
on any Vehicle (such actions shall be hereafter referred to
collectively as "alteration") if such alteration would
materially impair the originally intended function or use or
materially reduce the value or useful life of such Vehicle;
provided, that Grantor, at its own expense, will make, or
cause to be made, any alteration to or in respect of any
Vehicle that may be necessary, from time to time, to comply
in all material respects with any applicable law,
governmental rule or regulation or any provision of any
insurance policy required to be maintained under Section 6
hereof (any Parts being used to comply with this provision
shall be hereafter referred to as "Mandatory Parts"). All
Parts affixed to or installed as a part of any Vehicle,
excluding temporary replacements, shall thereupon become
subject to the security interest under this Security
Agreement. If no Event of Default shall exist, Grantor may
remove, at its expense, any Part at any time during the term
of this Security Agreement (such Part, a "Removable Part")
(i) which is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or
installed in or attached to a Vehicle on the date such
Vehicle became subject to this Security Agreement or any
Part in replacement of or substitution for any such Part
originally incorporated or installed or attached to such
Vehicle; (ii) which is not a Mandatory Part; and (iii) which
can be removed from any Vehicle without causing damage to
such Vehicle or diminishing or impairing the value, utility
or condition which such Vehicle would have had at such time
had such addition not occurred; provided, that: (x) such
removal will not materially impair the value, use or useful
life which the Vehicle would have had at such time had such
Part not been affixed or placed to or on such Vehicle; and
(y) such Part is not necessary for the continued normal use
of such Vehicle. Grantor shall repair all damage to any
Vehicle resulting from any alteration so as to restore such
Vehicle to the condition in which it existed prior to such
alteration (ordinary wear and tear excepted). Neither Agent
nor any Lessor shall have any obligation to pay for or to
reimburse Grantor for any alteration required or permitted
by this Section 5(d) hereof.
(e) Inspection of Collateral. Agent, the Lessors
and each of their agents and representatives shall have the
right at all reasonable times, upon reasonable notice, to
inspect any Collateral, including without limitation any
certificate of title, certificate of ownership,
manufacturer's certificate of origin or any similar
equivalent instrument issued by any applicable Authority
evidencing title, or an interest in title, to a Vehicle
("Certificate of Title") or documentation related to the
Collateral. Grantor shall maintain: any Certificate of
Title, microfiche containing Vehicle registration documents
and executed blank powers of attorney enabling the Agent to
reregister the Vehicles, each of them to be maintained in
Grantor's records in a separate file entitled "ABN AMRO
Documentation."
(f) Risk of Loss; Replacement; Waiver and
Indemnity.
(i) Casualty. Grantor shall have no obligation
to replace any Vehicle or repay any portion of the Lease
Balance in respect of any Casualty so long as the number of
Vehicles which would be considered a Casualty do not exceed
in any year five percent of the number of Vehicles subject
to this Security Agreement on the date hereof (the "Initial
Vehicle Number") or exceed on a cumulative basis from the
date hereof to the date of determination ten percent of the
Initial Vehicle Number. Upon the happening of any Casualty
not included within the limits set forth in the preceding
sentence, Grantor either shall replace the Vehicle with
respect to which the Casualty has occurred pursuant to the
provisions of Section 5(c) hereof (treating such Vehicle,
for these purposes, in the same manner as a Part), or
deposit within 10 days of such Casualty into a deposit
account established by the Agent for its benefit and the
ratable benefit of the Lessors, as security for the Lessee's
obligations under the Lease (the "Deposit Account") an
amount equal to the Casualty Proceeds, provided, that upon
the occurrence and during the continuance of an Event of
Default or an Incipient Default, Grantor shall be obligated,
at the option of the Required Lessors, to make the deposit
as provided herein and shall not be entitled to exercise any
right of replacement as set forth in this subclause (i).
All funds in the Deposit Account, including any earnings
thereon, shall be applied to Rent payments when due in the
order of maturity, provided that during the continuance of
an Event of Default, all such funds, including any earnings
thereon, shall be applied to any amounts owing under the
Lease, with the allocation thereof to be made as the Agent
determines in its sole discretion. All such funds, and
earnings thereon, shall remain in the Deposit Account until
all Obligations (other than Surviving Indemnities) are paid
in full. All funds in the Deposit Account shall be
invested, as the Agent determines in its sole discretion in
one or more of the following:
(a) securities issued or fully guaranteed or
insured by the United States Government or any agency
thereof and backed by the full faith and credit of the
United States maturing not more than one year from the
date of acquisition;
(b) certificates of deposit, time deposits,
Eurodollar time deposits, bankers' acceptances or
deposit accounts having in each case a remaining term
to maturity of not more than one year, which are either
(i) fully insured by the Federal Deposit Insurance
Corporation or (ii) issued by any commercial bank under
the laws of any State or any national banking
association that has combined capital and surplus of
not less than $800,000,000 and whose short-term
securities are rated at least A-1 by S&P or P-1 by
Moody's;
(c) commercial paper that is rated at least A-1
by S&P or P-1 by Moody's, issued by a company that is
incorporated under the laws of the United States or of
any State and directly issues its own commercial paper,
and has a remaining term to maturity of not more than
one year; and
(d) any money market or other investment fund the
investments of which are limited to investments
described in clauses (a), (b) and (c) above and which
is managed by (i) a commercial bank that is organized
under the laws of any State or any national banking
association and that has total assets of at least
$1,000,000,000, or (ii) an investment bank that is
organized under the laws of any State and that has
total assets of at least $1,000,000,000.
(ii) Casualty Proceeds. Subject to Section
5(f)(i) hereof, all proceeds of any casualty insurance or
condemnation proceeds ("Casualty Proceeds") paid or payable
to Grantor or any Affiliate of Grantor by reason of a
Casualty or Partial Casualty to a Vehicle shall be deposited
into the Deposit Account, unless Grantor shall have already
complied with the applicable provisions of Section 5(c) or
5(f)(i) hereof with respect to such Casualty or Partial
Casualty. Any Casualty Proceeds paid to Agent with respect
to a Vehicle suffering a Casualty or a Partial Casualty
shall also be deposited in the Deposit Account. Any moneys
in the Deposit Account attributable to a Casualty or Partial
Casualty shall be remitted promptly to Grantor after
Grantor's full compliance with Section 5(f)(i) or 5(c)
hereof, as applicable. Notwithstanding the foregoing
provisions of this Section 5(f)(ii) hereof, and provided
that no Incipient Default consisting of an event described
in Section 8.1 (a) or (g) of the Lease or an Event of
Default shall exist, if the aggregate amount of Casualty
Proceeds at any one time outstanding is $250,000 or less,
then Grantor may receive such Casualty Proceeds directly,
without delivery to Agent; provided, that such Casualty
Proceeds are applied in accordance with the requirements of
Section 5(f)(i) or Section 5(c) hereof, as applicable.
Notwithstanding any Casualty, all of Grantor's obligations
under the Lease shall continue unabated and in full force
and effect as provided in the Lease. Without limiting the
foregoing, Grantor's obligations under Section 5(c) hereof
shall not be affected by the amount of any Casualty Proceeds
received by Grantor.
SECTION 6. Insurance.
(a) Required Coverage. At its own expense,
Grantor will maintain the.following insurance coverage with
respect to the Vehicles:
1. primary automobile and general
liability insurance of not less than $3,000,000
per occurrence, with excess coverage of not less
than $5,000,000 per occurrence and $95,000,000 in
the aggregate, in each case naming Agent and
Lessors as additional insured; and
2. insurance against all risks of loss
or physical damage to the Vehicles in a primary
amount of not less than $250,000 per occurrence
and excess "all risk" coverage on the Vehicles in
a blanket amount of not less than $100,000,000,
which insurance shall name Agent and Lessors as
the sole loss payees.
So long as an insurer which is an Affiliate of Grantor (the
"Insurer") shall (i) maintain its good standing as an
insurer, (ii) be financially sound in the reasonable
judgment of the Agent and (iii) be in compliance with all
applicable regulatory requirements, Grantor may obtain
primary insurance coverage from the Insurer, with retained
liability for physical damage to the Vehicles and for
liability coverage required under clause (a) above, which
retained liability amounts, in both such cases, shall be in
amounts not greater than amounts customary for similarly
situated companies operating comparable equipment in the
same industry as Grantor. Grantor shall obtain its excess
insurance and, if Insurer does not meet the criteria set
forth in the preceding sentence or is no longer providing
Grantor's insurance, its primary insurance, from financially
responsible companies selected by Grantor and having an A.M.
Best rating of "A" or better or otherwise acceptable to the
Agent.
Such insurance shall (i) name Agent and Lessors as
additional insured parties thereunder and loss payees as
specified above (without any representation or warranty by,
or obligation upon, Agent or any Lessor) as their respective
interests may appear, (ii) contain the agreement by the
Insurer that any loss thereunder shall be payable to Agent
and Lessors notwithstanding any action, inaction or breach
of representation or warranty by Grantor or any other entity
having an interest in any Vehicle (including, without
limitation, Agent or any Lessor), (iii) provide that there
shall be no recourse against Agent or any Lessor for payment
of premiums or other amounts with respect thereto,
(iv) provide that Insurer shall give Agent and each Lessor
at least 30 days' prior written notice of cancellation,
lapse or reduction of limits, (v) be primary with respect to
any other insurance carried by or available to Agent and the
Lessors, (vi) provide that the Insurer shall waive any right
of subrogation, setoff, counterclaim, or other deduction,
whether by attachment or otherwise, against Agent or any
Lessor, and (vii) contain a cross-liability clause providing
for coverage of Agent and each Lessor as if separate
policies had been issued to each of them, provided, however,
that such provision shall not increase the total limits of
liability over those specified herein. Grantor will notify
Agent and Lessors promptly of any policy cancellation,
reduction in policy limits, modification or amendment.
(b) Delivery of Insurance Certificates. Lessee
has heretofore delivered to Agent certificates of insurance
satisfactory to Agent and Lessors evidencing the existence
of all insurance required to be maintained hereunder and
setting forth the respective coverage, limits of liability,
carrier, policy number and period of coverage. Thereafter,
at the time each of Lessee's insurance policies is renewed
(but in no event less frequently than once each year),
Lessee shall deliver to Agent and each Lessor certificates
of insurance evidencing that all insurance required by this
Section to be maintained by Lessee with respect to the
Vehicles is in effect.
SECTION 7. Place of Perfection The Grantor shall
keep its chief place of business and chief executive office
at the location therefor specified in Section 3(a) hereof
and shall keep the office where it maintains its records
concerning the collateral at 0000 X.X. 00xx Xxxxxx,
Xxxxxxxx, Xxxxxx 00000 or, in either case, upon 30 days'
prior written notice to the Agent, at such other locations
in a jurisdiction where all actions required by Section 4
herein shall have been taken with respect to the Collateral.
SECTION 8. Release of Liens. Upon the
replacement or substitution of any Vehicle or Part, or the
payment of all amounts required pursuant to Section 5(f)(i)
in connection with a Casualty, in each case in compliance
with the applicable provisions hereof, such Vehicle or Part
shall be released from the security interest created
hereunder.
SECTION 9. Attorney-in-Fact. Grantor hereby
irrevocably appoints Agent as Grantor's attorney-in-fact,
with full authority in the place and stead of Grantor and in
the name of Grantor or otherwise, from time to time in
Agent's discretion, upon the occurrence and during the
continuance of an Event of Default, to take any action
(including any action that Grantor is entitled to take) and
to execute any instrument which Agent or the Required
Lessors may deem necessary or advisable to accomplish the
purposes of this Security Agreement (subject to any
limitations set forth in the Operative Agreements),
including, without limitation:
(a) to ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for
money due and to become due under or in connection with the
Collateral;
(b) to receive, endorse and collect any drafts or
other instruments, documents and chattel paper in connection
with the foregoing clause (a);
(c) to file any claim or take any action or
institute any proceedings which Agent may deem to be
necessary or advisable for the collection thereof or to
enforce compliance with the terms and conditions of any
Collateral; and
(d) to perform any affirmative obligations of
Grantor hereunder.
Grantor hereby acknowledges, consents and agrees that the
power of attorney granted pursuant to this Section 9 is
irrevocable and coupled with an interest.
SECTION 10. Agent May Perform. If the Grantor
fails to perform any agreement contained herein, the Agent
may itself perform, or cause performance of, such agreement,
and the expenses of the Agent incurred in connection
therewith shall be payable by the Grantor under Section 13.
SECTION 11. The Agent's Duties. The powers
conferred on the Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the
Agent shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Agent
accords its own property.
SECTION 12. Remedies. If any Event of Default
shall have occurred and be continuing:
(a) The Agent may exercise in respect of the
Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default
under the Uniform Commercial Code in effect in the
State of California at that time (the "Code") (whether
or not the Code applies to the affected Collateral),
and also may (i) require the Grantor to, and the
Grantor hereby agrees that it will at its expense and
upon request of the Agent forthwith, assemble all or
part of the Collateral as directed by the Agent and
make it available to the Agent at a place to be
designated by the Agent which is reasonably convenient
to both parties, (ii) without notice except as
specified below, sell the Collateral or any part
thereof in one or more parcels at public or private
sale, at any of the Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such
other terms as the Agent may deem commercially
reasonable, including public sales to the Agent or the
Lessors or one or more of their designees, and (iii)
enter upon the premises where any Vehicle may be and
either remove such Vehicle, with any damage to the
improvements on such premises to be borne by Grantor
(except to the extent such damage is due to the willful
misconduct or gross negligence of Agent or its
representatives), or take possession of such Vehicle.
The Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to
the Grantor of the time and place of any public sale or
the time after which any private sale is to be made
shall constitute reasonable notification. The Agent
shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be
made at the time and place to which it was so
adjourned. Grantor acknowledges that sales for cash or
on credit to a wholesaler, retailer or user of
Collateral, at a public or private sale, are in each
case commercially reasonable.
(b) Any cash held by the Agent as Collateral and
all cash proceeds received by the Agent in respect of
any sale of, collection from, or other realization upon
all or any part of the Collateral may, in the
discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter
be applied (after payment of any amounts payable to the
Agent pursuant to Section 13) in whole or in part by
the Agent for the ratable benefit of the Lessors
against, all or any part of the Obligations in such
order as the Agent shall elect. Any surplus of such
cash or cash proceeds held by the Agent and remaining
after payment in full of all the Obligations shall be
paid over to the Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
SECTION 13. Indemnity and Expenses. (a) The
Grantor agrees to indemnify the Agent from and against any
and all claims, losses and liabilities (including reasonable
attorneys' fees) growing out of or resulting from this
Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or willful
misconduct.
(b) The Grantor will upon demand pay to the Agent
the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any
experts and agents, which the Agent may incur in connection
with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the
rights of the Agent or the Lessors hereunder or (iv) the
failure by the Grantor to perform or observe any of the
provisions hereof.
SECTION 14. Amendments; Etc. No amendment or
waiver of any provision of this Agreement, and no consent to
any departure by the Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by
the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
SECTION 15. Addresses for Notices. All notices
and other communications provided for hereunder shall be in
writing (including telecopier communication) and mailed,
telecopied or delivered to it, if to the Grantor or to the
Agent, at its address specified in the Lease, or, as to
either party, at such other address as shall be designated
by such party in a written notice to the other party. All
such notices and other communications shall, when mailed or
telecopied be effective when deposited in the mails or
telecopied, respectively.
SECTION 16. Continuing Security Interest;
Assignments under Lease. This Agreement shall create a
continuing security interest in the Collateral and shall (i)
remain in full force and effect until the payment in full of
the Obligations (other than Surviving Indemnities) and all
other amounts payable under this Agreement, (ii) be binding
upon the Grantor, its successors and assigns, and (iii)
inure to the benefit of, and be enforceable by, the Agent,
the Lessors and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing
clause (iii), any Lessor may assign or otherwise transfer
all or any portion of its rights and obligations under the
Lease to any other person or entity, and such other person
or entity shall thereupon become vested with all the
benefits in respect thereof granted to such Lessor herein or
otherwise, subject, however, to the provisions of Section
11.8 of the Participation Agreement. Upon the payment in
full of the Obligations (other than Surviving Indemnities)
and all other amounts payable under this Agreement, the
security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the Grantor. Upon
any such termination, the Agent will, at the Grantor's
expense, execute and deliver to the Grantor such documents
as the Grantor shall reasonably request to evidence such
termination.
SECTION 17. Governing Law; Terms. This Agreement
shall be governed by and construed in accordance with the
laws of the State of California, except to the extent that
the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any
particular Collateral are governed by the laws of a
jurisdiction other than the State of California. Unless
otherwise defined herein, terms used in Division 9 of the
Code are used herein as therein defined.
SECTION 18. JURY TRIAL. THE GRANTOR AND THE
AGENT AND THE LESSORS (BY THEIR ACCEPTANCE OF THIS AGREEMENT
AND THE BENEFITS HEREUNDER) WAIVE ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
IN WITNESS WHEREOF, the Grantor has caused this
Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above
written.
CONSOLIDATED FREIGHTWAYS
CORPORATION OF DELAWARE
By/s/Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President and
Controller
