LEASE GUARANTY
EXHIBIT
10.20
In
consideration of and as an inducement for the granting, execution and delivery
of the Lease Agreement, dated as of April 3, 2006 (hereinafter, as amended
from
time to time, called “Lease”),
a
copy of which is attached hereto as Exhibit
A,
by CT
Chattanooga TN, LLC, a Delaware limited liability company, the Landlord therein
named (hereinafter called “Landlord”),
to
Covenant Transport, Inc., a Tennessee corporation, the Tenant therein named
(hereinafter called “Tenant”),
and
in further consideration of the sum of One Dollar ($1.00) and other good and
valuable consideration paid by Landlord to the undersigned COVENANT TRANSPORT,
INC., a Nevada corporation (hereinafter called “Lease
Guarantor”),
Lease
Guarantor, intending to be legally bound, hereby guarantees to Landlord, its
successors and assigns, the full and prompt payment when due of all Basic Rent
and Additional Rent and any and all other sums and charges payable by Tenant
under the Lease, and the full, faithful and prompt performance and observance
of
all the covenants, terms, conditions, and agreements therein provided to be
performed and observed by Tenant (collectively, the “Obligations”);
and
Lease Guarantor does hereby become surety to Landlord, its successors and
assigns for and with respect to all of the Obligations. Lease Guarantor is
the
direct or indirect owner of all outstanding partnership interests, membership
interests or shares, as applicable, of Tenant and Lease Guarantor acknowledges
that it will derive substantial benefits from the Lease. Capitalized terms
used
in this Guaranty and not otherwise defined herein shall have the meanings
assigned thereto in the Lease.
Lease
Guarantor hereby covenants and agrees to and with Landlord, its successors
and
assigns, that if default shall at any time be made by Tenant, its successors
and
assigns, in the payment of any such rent or other sums or charges payable by
Tenant under the Lease or in the performance of any of the covenants, terms,
conditions or agreements contained in the Lease, Lease Guarantor will forthwith
pay such rent or other sums or charges to Landlord, its successors or assigns
(as applicable), and any arrears thereof, and will forthwith faithfully perform
and fulfill all of such covenants, terms, conditions and agreements, and will
forthwith pay to Landlord, it successors or assigns (as applicable), all damages
and all costs and expenses that may arise in consequence of any default by
Tenant under the Lease (including, without limitation, all reasonable attorneys’
fees incurred by Landlord or caused by any such default and/or by the
enforcement of this Guaranty). In addition, Lease Guarantor hereby covenants
and
agrees to and with each Indemnitee that if default shall at any time be made
by
Tenant, its successors and assigns in the payment of any indemnity payable
by
Tenant under the Lease, Lease Guarantor will forthwith pay such indemnity to
such Indemnitee, and Lease Guarantor hereby agrees that each Indemnitee shall
be
a third party beneficiary hereunder and may directly enforce its rights under
this sentence against Lease Guarantor.
This
Guaranty is an absolute and unconditional guaranty of payment (and not merely
of
collection) and of performance and is a surety agreement. Lease Guarantor’s
liability hereunder is direct and may be enforced without Landlord being
required to resort to any other right, remedy or security and this Guaranty
shall be enforceable against Lease Guarantor, its successors and assigns,
without the necessity for any suit or proceedings on Landlord’s part of any kind
or nature whatsoever against Tenant and without the necessity of any notice
of
non-payment, non-performance or non-observance or of any notice of acceptance
of
this Guaranty or of Landlord’s intention to act in reliance hereon or of any
other notice or demand to which Lease Guarantor might otherwise be entitled,
all
of which Lease Guarantor hereby expressly waives; and Lease Guarantor hereby
expressly agrees that the validity of this Guaranty and the obligations of
Lease
Guarantor hereunder shall in nowise be terminated, affected or impaired by
reason of the assertion or the failure to assert by Landlord against Tenant
of
any of the rights or remedies reserved to Landlord pursuant to the provisions
of
the Lease.
This
Guaranty shall be a continuing guaranty, and (whether or not Lease Guarantor
shall have notice or knowledge of any of the following) the liability and
obligation of Lease Guarantor hereunder shall be absolute and unconditional
and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way impaired by (a) any amendment or modification
of, or supplement to, or extension or renewal of, the Lease or any assignment
or
transfer thereof; (b) any exercise or non-exercise of any right, power, remedy
or privilege under or in respect of the Lease or this Guaranty or any waiver,
consent or approval by Landlord with respect to any of the covenants, terms,
conditions or agreements contained in the Lease or any indulgences, forbearances
or extensions of time for performance or observance allowed to Tenant from
time
to time and for any length of time; (c) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or similar
proceeding relating to Tenant, its successors and assigns or their properties
;
(d) any limitation on the liability or obligation of Tenant under the Lease
or
its estate in bankruptcy or of any remedy for the enforcement thereof, resulting
from the operation of any present or future provision of the federal or state
bankruptcy law or any other statute or from the decision of any court; (e)
any
sublease or transfer by Tenant or any assignment of its interest under the
Lease; or (f) any termination of the Lease prior to the expiration of its
Term.
All
of
Landlord’s rights and remedies under the Lease and under this Guaranty are
intended to be distinct, separate and cumulative and no such right and remedy
therein or herein mentioned is intended to be in exclusion of or a waiver of
any
of the others. No termination of the Lease or taking or recovering of the
premises demised thereby shall deprive Landlord of any of its rights and
remedies against Lease Guarantor under this Guaranty. This Guaranty shall apply
to the Obligations pursuant to any extension, renewal, amendment, modification
and supplement of or to the Lease as well as to the Obligations thereunder
during the original Term thereof in accordance with the original provisions
thereof.
The
Lease
Guarantor hereby waives any requirement that the Landlord protect, secure,
perfect or insure any security interest or lien or any property subject thereto
or exhaust any right to take any action against any person or any collateral
(including any rights relating to marshaling of assets).
The
Obligations will be paid strictly in accordance with the terms of the Lease,
regardless of the value, genuineness, validity, regularity or enforceability
of
the Obligations, and of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Landlord
with respect thereto. The liability of the Lease Guarantor to the extent herein
set forth shall be absolute and unconditional, not subject to any reduction,
limitation, impairment, termination, defense, offset, counterclaim or recoupment
whatsoever (all of which are hereby expressly waived by the Lease Guarantor)
whether by reason of any claim of any character whatsoever, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise,
or by reason of any liability at any time to the Lease Guarantor or otherwise,
whether based upon any obligations or any other agreements or otherwise,
howsoever arising, whether out of action or inaction or otherwise and whether
resulting from default, willful misconduct, negligence or otherwise, and without
limiting the foregoing, irrespective of: (a) any lack of validity or
enforceability of the Lease or of any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term
in respect of, all or any of the Obligations, or any other amendment or waiver
of or consent to Obligations, or any other amendment or waiver of or consent
to
any departure from the Lease or any other agreement relating to any Obligations;
(c) any increase in, addition to, exchange or release of, or nonperfection
of
any lien on or security interest in, any collateral or any release or amendment
or waiver of or consent to any departure from or failure to enforce any other
guarantee, for all or any of the indebtedness; (d) any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the Tenant
in respect of the obligations of the Lease Guarantor in respect hereof; (e)
the
absence of any action on the part of the Landlord to obtain payment for the
Obligations from the Tenant; (f) any insolvency, bankruptcy, reorganization
or
dissolution, or any proceeding of the Tenant or the Lease Guarantor, including,
without limitation, rejection of the guaranteed Obligations in such bankruptcy;
or (g) the absence of notice or any delay in any action to enforce any
Obligations or to exercise any right or remedy against the Lease Guarantor
or
the Tenant, whether hereunder, under any Obligations or under any agreement
or
any indulgence, compromise or extension granted.
2
Lease
Guarantor further agrees that, to the extent that the Tenant or the Lease
Guarantor makes a payment or payments to the Landlord, which payment or payments
or any part thereof are subsequently invalidated, declared to be fraudulent
or
preferential, set aside and/or required to be repaid to the Tenant or the Lease
Guarantor or their respective estate, trustee, receiver or any other party
under
any bankruptcy law, state or federal law, common law or equitable cause, then
to
the extent of such payment or repayment, this Guaranty and the advances or
part
thereof which have been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date of such initial
payment, reduction or satisfaction occurred.
Lease
Guarantor shall have no rights (direct or indirect) of subrogation,
contribution, reimbursement, indemnification or other rights of payment or
recovery from any person or entity (including, without limitation, the Tenant)
for any payments made by the Lease Guarantor hereunder, and Lease Guarantor
hereby waives and releases absolutely and unconditionally, any such rights
of
subrogation, contribution, reimbursement, indemnification and other rights
or
recovery which it may now or hereafter acquire, in each case, until the Lease
has terminated and all Obligations have been fully and finally paid and
performed thereunder.
Lease
Guarantor represents and warrants to Landlord that (a) Lease Guarantor is duly
organized, validly existing and in good standing under the laws of the state
of
Nevada; (b) the execution and delivery of this Guaranty has been duly authorized
by all necessary corporate action on the part of Lease Guarantor, and this
Guaranty has been duly executed and delivered by Lease Guarantor, (c) the making
of this Guaranty does not (i) require any vote or consent of shareholders of
Lease Guarantor, or the filing or registration with, consent or approval of,
or
notice to, with or by any governmental authority or any other person, (ii)
result in or cause a default under or violation of, or create a lien pursuant
to, the Lease Guarantor’s organizational documents, or any agreement, indenture,
contract, order, decree or judgment to which the Lease Guarantor is a party
or
by which the Lease Guarantor’s is bound; or (iii) violate any law, rule or
regulation to which the Lease Guarantor is subject; (d) Tenant is a wholly
owned
direct or indirect subsidiary of Lease Guarantor; (e) this Guaranty constitutes
the legal, valid and binding obligation of Lease Guarantor, enforceable against
Lease Guarantor in accordance with its terms, except as enforceability may
be
limited by bankruptcy, insolvency or similar laws affecting the enforcement
of
creditors’ rights generally; (f) neither the Lease Guarantor nor any Subsidiary
of the Lease Guarantor is an “investment company” or a company “controlled” by
an “investment company”, within the meaning of the Investment Company Act of
1940, as amended; and (g) the information, financial statements and reports
furnished in writing by the Lease Guarantor or the Tenant in connection with
the
Lease and the Purchase and Sale Agreement, dated as of March 17, 2006, between
Tenant and Landlord and the transactions contemplated thereby are true and
correct in every material respect as of the date as of which such information,
financial statement or report is stated or certified, and does not contain
an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements herein or therein contained, in the light
of
the circumstances under which they were made, not misleading.
3
Lease
Guarantor hereby agrees to deliver to the Landlord and the Lender (if any)
the
financial statements described in Paragraph 29 of the Lease on the dates, and
otherwise in accordance with the provisions, set forth in such Paragraph 29
of
the Lease.
This
Guaranty shall be legally binding upon Lease Guarantor and its successors and
permitted assigns and shall inure to the benefit of Landlord and its successors
and assigns. Lease Guarantor shall not assign its rights and obligations under
this Guaranty to any Person without the Landlord’s and the Lender’s (if any)
prior written consent.
Lease
Guarantor will not enter into any amendment to this Guaranty, and no such
amendment will be effective in any event, without the prior written consent
thereto by the Landlord and the Lender, if any. Lease Guarantor will from time
to time during the Term, promptly following request of Landlord or Lender,
confirm in writing to Landlord and to Lender that this Guaranty remains in
full
force and effect in accordance with its terms.
All
notices sent pursuant to this Guaranty shall be in writing and shall be deemed
to have been given for all purposes (i) three (3) days after having been sent
by
United States mail, by registered or certified mail, return receipt requested,
postage prepaid, addressed to the other party at its address as stated below,
or
(ii) one (1) business day after having been sent for overnight delivery by
Federal Express, United Parcel Service or other nationally recognized air
courier service.
To
the
addresses stated below:
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If
to Landlord:
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c/o
SunTrust Equity Funding, LLC
|
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000
Xxxxxxxxx Xxxxxx, 24th
Floor
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MC
3951
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Xxxxxxx,
Xxxxxxx 00000
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Attention:
Xxxxxxx
XxXxxx
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Facsimile:
(000) 000-0000
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4
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With
a copy to:
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Xxxxxxxxx
Traurig, LLP
|
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00
Xxxx Xxxxxx Xxxxx, Xxxxx 0000
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Xxxxxxx,
Xxxxxxxx 00000
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Attention:
Xxxxx X. Xxxxxx
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Facsimile:
(000) 000-0000
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If
to Lease Guarantor:
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Covenant
Transport, Inc.
|
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000
Xxxxxxxxxx Xxxxxxx, Inc.
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Xxxxxxxxxxx,
Xxxxxxxxx 00000
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Attention:
Xxxx X. Xxxxx
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Facsimile:
(000) 000-0000
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With
a copy to:
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Xxxxxxx
Law Firm, P.C., L.L.O.
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000
X. 00xx
Xxxxxx
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Xxxxxxx,
Xxxxxxxx 00000
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Attention:
Xxxx Xxxxxxx
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Facsimile:
(000) 000-0000
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Each
of
Landlord and Lease Guarantor may substitute its address by giving fifteen (15)
days’ notice to the other party in the manner provided above. Any notice may be
given on behalf of any party by its counsel.
LEASE
GUARANTOR AND LANDLORD (BY ITS ACCEPTANCE OF THIS GUARANTY) HEREBY MUTUALLY
WAIVE TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE ARISING HEREUNDER. THE TERMS
AND PROVISIONS OF THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TENNESSEE.
[signature
page to follow]
5
IN
WITNESS WHEREOF, Lease Guarantor, intending to be legally bound hereby, has
caused this Guaranty to be executed by its duly authorized officers as of
this 3rd day of April, 2006.
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COVENANT
TRANSPORT, INC., a Nevada corporation
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By:
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/s/ Xxxx X. Xxxxx | |
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Name:
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Xxxx X. Xxxxx | |
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Title:
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EVP/CFO |
X-0
