Exhibit 10.20
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT
REQUEST, PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE
PLACE WITH THREE ASTERISKS [***].
MASTER CONTINUING
LETTER OF CREDIT REIMBURSEMENT AND SECURITY AGREEMENT
November 24, 2009
The undersigned applicants (collectively, the “Applicants” and each,
individually, an “Applicant”) may from time to time request The Bank of
Tokyo-Mitsubishi UFJ, Ltd. (hereinafter referred to, together with its
successors and/or assigns, as the “Bank”), with offices at 1251 Avenue of the
Americas, New York, NY 10020-1104, to issue one or more irrevocable standby
letters of credit (each, as the context requires or applies, and together with
all amendments, renewals and extensions thereof, a “Letter of Credit”, and
collectively, the “Letter of Credit” or “Letters of Credit”).
In order to induce the Bank to issue the Letters of Credit, and in consideration
thereof, each of the Applicants hereby agrees with the Bank as follows:
1. Application. From time to time from the date of this agreement until one
(1) year from the date hereof (the “Maturity Date”), each Applicant may request
Letters of Credit subject to the terms hereof. Each request for any Letter of
Credit shall be on the Bank’s form of application therefor as from time to time
in use (each, an “Application”), must have an expiration date no later than one
(1) year from its date of issuance (subject, however, to any evergreen clause),
and the total aggregate amount of Letters of Credit which the Applicants may
request and the Bank may issue hereunder in the aggregate shall not exceed
$25,000,000. Neither this Master Continuing Letter of Credit Reimbursement
Agreement (as amended or otherwise modified from time to time, this “Agreement”)
nor any Application obligates the Bank to issue, or consider any request to
issue, any proposed Letter of Credit for which an Application has been made
until the Applicant has complied with any and all requirements relating to
conditions precedent, collateral security, guaranty or credit support
established for that Letter of Credit.
2. Reimbursement. The Applicants agree jointly and severally to reimburse the
Bank, with or without demand, for any and all payments the Bank makes under or
otherwise with respect to any Letter of Credit. If any Letter of Credit provides
for sight payment, the due date for reimbursement is no later than the date the
Bank pays. If any Letter of Credit calls for acceptance of a time draft, the due
date for reimbursement is no later than the day preceding the date on which
payment of such draft is due.
3. Indemnity. Each Applicant hereby indemnifies the Bank against all costs,
expenses, claims and liabilities (and related costs, including reasonable
attorney’s fees, expert witness fees, court costs, and other formal or informal
dispute resolution costs and expenses) that the Bank may pay or incur arising
out of, or in connection with, this Agreement, any Application, any draft or any
Letter of Credit, whether payments are made as the result of informal
settlement, nonjudicial dispute resolution process, or litigation, except to the
extent incurred as the result of the Bank’s gross negligence or willful
misconduct as determined in a final non-appealable judgment issued by a court of
competent jurisdiction. This indemnity includes, without limitation, instances
in which (a) a beneficiary seeks to enforce any Letter of Credit or any advice
thereof, sues for wrongful dishonor, seeks a judicial determination, or brings
any other action or proceeding relating thereto; (b) an advising bank,
confirming bank, negotiating bank, or other intermediary seeks to be reimbursed,
indemnified, or compensated; (c) the Bank delivers, with or without endorsement,
any instrument, security, or document, as contemplated by this Agreement; (d)
the Bank gives its guaranty, endorsement, or other undertaking to induce
delivery, pursuant to Section 7(h) hereof; (e) a third party seeks to enforce
the rights of the

 

 

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Applicant, any beneficiary, any negotiating bank or other intermediary,
transferee, assignee of proceeds, or holder of a document, or to question,
delay, or prevent the honor of any Letter of Credit; (f) a government (or other
de facto or de jure political body) or government agency seeks to regulate,
investigate, delay, or prevent honor of any Letter of Credit; (g) the Bank
undertakes the preparation, negotiation, amendment, or “workout”/restructuring
of this Agreement or any Letter of Credit; (h) the Bank seeks to determine,
protect, or enforce the Bank’s rights and remedies under any Letter of Credit,
this Agreement, or any security agreement, guaranty, credit support, or other
undertaking entered into in connection with this Agreement or any Letter of
Credit; (i) the Bank seeks to respond to any notice of alleged fraud, forgery,
or illegality in any presentation, including active defense by the Bank in any
action in which an Applicant may seek an injunction against presentation, honor,
or payment of any Letter of Credit or draft; or (j) the Bank may be obligated by
court order to pay legal fees or court costs paid or incurred by an Applicant,
any beneficiary, or any other party in any dispute involving any Application,
any Letter of Credit, any draft or this Agreement. All amounts indemnified
hereunder shall be payable on demand.
4. Fees and Costs; Interest. The Applicants agree to pay the Bank, on demand or
as either provided herein or as mutually agreed in writing between the Bank and
the Applicants: (a) issuance or other processing or administration, maintenance,
acceptance, transfer, drawing, amendment, and recognition of assignment of
proceeds fees and any other commissions in the amount shown on any Application,
if any, or as in effect at the Bank from time to time, or as separately agreed
between the Bank and the Applicant in writing, it being understood that the bank
will not charge Applicant any upfront, issuance or facing fees and that the fee
for any amendment shall not be in excess of $150; (b) a letter of credit fee, as
charged by the Bank, which, as of the date hereof shall be [***] basis points
per annum, which shall accrue and be due and payable in arrears on the last day
of each fiscal quarter of the Applicants; (c) S.W.I.F.T. charges and other
issuance costs; (d) fees paid by the Bank to advising, confirming, and
negotiating banks; (e) actual costs incurred in determining the authenticity of
any purported assignment of proceeds or the identity and capacity of any
purported successor of any beneficiary; (f) increased costs or reduction in
yield if, after the date hereof, any change in any law, rule, or regulation,
treaty, or interpretation thereof (whether or not having the force of law)
regarding reserves, special deposits, insurance assessments, fees, capital
adequacy, or similar requirements shall have the effect of increasing the Bank’s
costs or reducing its yield hereunder, such amounts to be payable on the basis
of the Bank’s calculations of these amounts made in good faith, absent manifest
error; (g) interest on all unpaid amounts due with respect to this Agreement,
any Application, any draft or any Letter of Credit at a daily fluctuating rate
per annum equal to the sum of [***]% plus [***], and (h) any and all other costs
and expenses (including, without limitation, reasonable attorney’s fees,
disbursements and court costs) incurred by the Bank in connection with any
Letter of Credit and any and all payments or disbursements thereunder.
5. Payments.
(a) The Applicants’ obligations hereunder shall be absolute, unconditional and
irrevocable, and shall be paid and otherwise observed under all circumstances,
including, without limitation, the following: (a) any lack of validity or
enforceability of any Letter of Credit or any agreement referenced herein or any
amendment hereto or thereto, or any waiver hereof or thereof or consent to
departure herefrom or therefrom; (b) any claim, set-off, defense, or other
rights which an Applicant may have at any time against any beneficiary or any
other person or entity in connection with the Letters of Credit, any agreement
referred to therein, or any unrelated transaction; (c) any draft or document
presented to the Bank under any Letter of Credit or any statement contained
therein (as the case may be) proves to be forged, fraudulent, unauthorized,
invalid, insufficient, untrue, or inaccurate in any respect whatsoever no
readily apparent on its face, or does not strictly comply with the terms of any
Letter of Credit.
(b) Payments to the Bank shall be made in U. S. Dollars (unless expressly
otherwise agreed or ordered by a court of competent jurisdiction) without
deduction, counterclaim or set-off in immediately available funds before 2:00
p.m. on the due date at the Bank’s New York office set forth on page 1 of this
Agreement, ABA #[***], Account No. [***], Account Name: [***] or any other
designated account or location specified by the Bank. If the due date is not a
“Banking Day” (defined as a day, other than a Saturday, Sunday, or other day on
which banks are required or permitted to be closed in the City of New York),
payment shall be made on the next Banking Day, subject to accrual of interest
and fees for the period of such extension. All payments of fees (including any
letter of credit fee) and interest hereunder shall be made on the basis of a
360 day year for the actual number of days elapsed, from and including the day
the payment obligation arises to but excluding the date of payment (provided
payment is made on such date in accordance with this Section 5(b)).

 

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(c) If, pursuant to agreement or order of a court of competent jurisdiction, a
payment is made by an Applicant in a currency other than U.S. Dollars, it shall
be computed at the Bank’s spot selling rate for cable transfers (or, at the
Bank’s option, the rate of exchange then current in New York City) to the place
of payment in the currency in which such draft is drawn.
(d) To effect payment, the Bank may, and is hereby authorized, with or without
notice, to debit any account that the Applicants may have at the Bank.
(e) If any payment made by the Applicants to the Bank shall be rescinded or
recovered, or if the Bank for any reason is compelled to surrender, or
voluntarily surrenders such payment to any person or entity (i) because such
payment is or may be avoided, invalidated, declared fraudulent, declared void or
voidable as a preference, fraudulent conveyance, impermissible setoff or
diversion of trust funds, or (ii) for any other reason, including a judgment,
decree, or order of any court or administrative body, or settlement or
compromise of the same, then the obligation intended to be satisfied shall be
reinstated as though no payment had been made.
(f) Each payment by the Applicants under this Agreement shall be made without
withholding for or on account of any present or future taxes, excluding, in the
case of the Bank, taxes imposed upon its income, and taxes imposed upon it by
the jurisdiction (or any political subdivision thereof) in which the Bank is
organized (all such nonexcluded taxes to be known as “Taxes”), provided,
however, that if such Taxes are required by law to be withheld from any such
payment, the Applicant shall make such withholding for the account of the Bank,
make timely payment thereof to the appropriate governmental authority, and shall
pay to the Bank such additional amounts as are necessary (including deductions
applicable with respect to the additional amounts payable under this Subsection
(f)) to enable the Bank to receive an amount equal to the amount the Bank would
have received had no such deduction been made. All such Taxes shall be paid by
the Applicants prior to the date on which penalties attach or interest accrues
thereon, provided, however, that if any such penalties or interest become due,
the Applicant shall make prompt payment thereof to the applicable governmental
authority. The Applicants will indemnify the Bank for the full amount of any
Taxes (including Taxes on amounts payable under this Subsection (f)) paid by the
Bank and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally asserted. All amounts indemnified hereunder shall be payable on demand.
6. Division of Responsibilities; External Events. The Bank, its correspondents
and any other banks involved shall have no liability for, and the Bank’s rights
and remedies against the Applicants shall not be impaired by: (a) honor of any
presentation that substantially complies with any Letter of Credit, even if that
Letter of Credit requires strict compliance by the beneficiary with respect
thereto, or in accordance with the Applicants’ waiver of discrepancies and
authorization to pay; (b) electronic presentation, if authorized by any Letter
of Credit; (c) the existence, nature, amount, condition, or delivery of any
property purported to be represented by any document or any variance from any
description contained therein; (d) the use which may be made of any Letter of
Credit or for any actions or omissions of the users of any Letter of Credit; (e)
the existence or non-existence of a default under any instrument secured or
supported by any Letter of Credit or any other event which gives rise to a right
to call upon any Letter of Credit; (f) the nature, form, sufficiency, accuracy,
validity, genuineness, legal effect, or collectability of any instrument,
document, or policy of insurance, or any endorsement thereon (even if such
instrument, document, policy of insurance or endorsement should in fact prove to
be in any or all respects invalid, fraudulent or forged), or the relationship of
any issuer thereof to the property; (g) the solvency or responsibility of any
party issuing any document; (h) any irregularity in connection with shipment,
including any default, oversight or fraud by the shipper and/or others in
connection with the property, documents, or shipment, partial or incomplete
shipment or non-shipment or transmittal thereof, or delay in arrival, failure to
arrive, or failure to give notice of shipment or arrival thereof; (i) honor of a
certificate or documents signed or presented by or on behalf of, or requesting
payment to a person or entity that is the purported successor to any
beneficiary, or payment of proceeds to a purported assignee of proceeds;
(j) failure of any advising bank accurately to advise the terms of any Letter of
Credit; (k) failure of any draft or document to bear reference or adequate
reference to any Letter of Credit, failure of any document to accompany any
draft or to contain instructions to notify the Applicants, failure of any person
to note the amount of any draft on the reverse of any Letter of Credit, or to
surrender or take up any Letter of Credit, or to send or forward documents
separately from drafts, each of which provisions, if contained in any Letter of
Credit, may be waived by the Bank; (l) honor of a presentation on the basis of a
forged certificate, document or signature, or a certificate presented or other
presentation made in bad faith or as the result of illegal conduct by any
beneficiary or a third person or entity; (m) errors, omissions, interruptions or
delays in transmission or delivery of any messages by mail, cable, telegraph,
wireless or otherwise, (n) honor of a presentation up to the amount outstanding
on any Letter of Credit, even though the draft claims an amount in excess
thereof; (o) honor of any Letter of Credit beyond the time period prescribed by
the law or rules to which it is subject;

 

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(p) reimbursement of a bank claiming the status of negotiating bank that has not
given value or that has misrepresented the basis on which it claims
reimbursement; (q) reimbursement of a bank making advances to any beneficiary
before receiving documents (“clean” or “red clause” advances) (r) dishonor of
any presentation that does not strictly comply; (s) retention of proceeds based
on a blocking regulation, or assertion of the rights of a purported governmental
entity or a third party to the proceeds; or (t) consequences arising from Act of
God, weather condition, riot, civil commotion, insurrection, war, political
disturbance, strike, lockout, computer hardware or software failure or error in
or inaccessibility of data, interruption in electric or telephone service, or
other causes beyond its control, delay or loss in transit of any letter or
document, or loss, delay, or error in the transmission of any electronic
message, irrespective of the cause of such event. Neither the Bank nor any of
its Affiliates (defined as a person or entity controlling, controlled by or
under common control) shall be responsible for any act, error, neglect or
default, omissions, insolvency or failure in the business of any of the Bank’s
correspondents to pay or honor drafts drawn under any Letter of Credit because
of any applicable law, decree or edict, legal or illegal, of any governmental
agency now or hereafter enforced or for any matter beyond the control of the
Bank and its Affiliates; and the Applicant hereby indemnifies and holds the Bank
harmless from any claim, loss, liability or expense arising by reason thereof.
The Bank is expressly authorized to rely upon and take, and shall have no
liability for relying upon and taking, any action required or permitted under
(i) any interbank payment system or clearing house rules, (ii) the International
Standby Practices published by the Institute of International Banking Law and
Practice, Inc., (iii) the UCP 600 (as defined below), (iv) the standard practice
of banks that regularly issue letters of credit, or (v) opinions, memoranda, or
advice received from counsel or other professional advisors.
7. Bank Discretion in Certain Cases. Unless otherwise agreed in writing, the
Bank: (a) may issue or send any Letter of Credit by an appropriate S.W.I.F.T.
message type and bind the Applicants directly and as indemnitor to the rules
applicable to S.W.I.F.T messages; (b) may select any branch or Affiliate of the
Bank or any other bank to act as an advising, confirming, and/or negotiating
bank under the law and practice of the place where it is located; (c) may
assume, unless honor of a presentation is enjoined by a court of competent
jurisdiction, that such presentation or other demand or request is
nonfraudulent, and disregard any notice to the contrary; (d) need not ascertain
the authenticity or authority of any purported beneficiary signature, even if it
has previously requested a signature guaranty or if in other transactions such
beneficiary is a customer or its signature or the authority of any signatory is
otherwise known or should be known to the Bank; (e) may, but need not, notify
the Applicants of the Bank’s receipt of a request for an amendment or assignment
of proceeds, receipt of a presentation, detection of a discrepancy, notification
of actions taken to cure, dishonor, or other action, inaction, or communication
with or with respect to any beneficiary (other than the Bank’s decision to honor
the presentation); (f) need not consent to any proposed amendment of any Letter
of Credit; (g) may assert or waive application of the UCP 600; (h) if any
property receivable under any Letter of Credit arrives before the Bank receives
the relevant presentation under any Letter of Credit, may, in its sole
discretion, issue for the Applicants’ account a separate guaranty, indemnity, or
other undertaking to the carrier to induce delivery of the property, and shall
by such action preclude the Applicant from raising any defense or claim with
respect to the Bank’s subsequent honor of the related documents; and (i) may
take such time as may be permitted under the UCP 600 to examine any
presentation. The Bank’s action or inaction in one or more instances shall not
waive its right, without notice to the Applicants, to use its discretion
differently in other instances.
8. Applicants’ Responsibility for Letter of Credit Text. Notwithstanding
suggestions or recommendations made by Bank personnel, the Applicants are solely
responsible for the content of each Letter of Credit, and assume all risks that:
(a) reference to nondocumentary requirements will be ignored when presentment is
made, or may cause any Letter of Credit to be interpreted by a court as a
guarantee; (b) ambiguous or inconsistent requirements may be interpreted in a
manner not intended by the Applicants; (c) permitted payment at a foreign
location may invoke the application of laws or rules of practice unfamiliar to
the Applicants; (d) any Letter of Credit is not consistent with or does not
satisfy the underlying obligation or any other aspect of the transaction between
the Applicants and any beneficiary; and (e) any other risks that may be imposed
on the Applicants under the rules and laws to which any Letter of Credit is
subject.

 

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9. Duty of Examination and Prompt Response. The Applicants agree (a) to promptly
examine (i) the copy of each Letter of Credit (and any amendment thereto) sent
to each Applicant by the Bank and (ii) all documents delivered to the Applicants
from time to time (the Bank being under no obligation to send or deliver the
same) and (b) to promptly notify the Bank in writing within a reasonable time
(but in no event later than five Banking Days after receipt of such Letter of
Credit, or amendment, or documents, as applicable) of any claim of nonconformity
of such Letter of Credit (or amendment) or documents, as applicable,
noncompliance with instructions, or other irregularities. Each Applicant is
conclusively deemed to have waived any such claim against the Bank, its
correspondents and any other banks involved unless such notice is given as
aforesaid. Any waiver of noncompliance of the documents with any Letter of
Credit which is authorized by the Applicants shall apply not only to the
specific documents in question but, at the Bank’s discretion, to any subsequent
documents of the same nature or containing the same discrepancy. If partial
shipments are permitted, the Bank is authorized, without notice to the
Applicants, to honor such drafts notwithstanding any apparent disproportion
between the quantity shipped and the amount of the draft.
10. Conditions to Effectiveness. Without limiting or otherwise impairing the
discretionary nature of this Agreement and the Bank’s decision whether or not to
issue the Letter of Credit, this Agreement shall become effective upon
satisfaction of the following conditions precedent:
(a) The Bank shall have received duly executed originals of this Agreement.
(b) The Bank shall have received copies, certified by the Secretary or Assistant
Secretary of each Applicant (as defined below) of such party’s certificate of
incorporation, bylaws and resolutions or actions of such party’s Board of
Directors and any other body, if necessary, authorizing the execution of this
Agreement, each Application and each Letter of Credit to which such Applicant is
party.
(c) The Bank shall have received an incumbency certificate, executed by the
Secretary or Assistant Secretary of each Applicant, which shall identify by name
and title and bear the signatures of all authorized officers of such party
authorized to sign this Agreement, each Application and each Letter of Credit to
which such Applicant is party, upon which certificates the Bank shall be
entitled to rely.
(d) Arkansas Best Corporation (“ABC”) shall execute and deliver to the Bank an
Account Control Agreement among ABC, the Bank and Union Bank, N.A., dated as of
even date herewith (the “Account Control Agreement”), granting to the Bank a
first priority lien and security interest in certain “Collateral” (as defined in
the Account Control Agreement), which Collateral shall be in an amount of not
less than $the amount of letters of credit outstanding. The Collateral under the
Account Control Agreement shall be held by the Bank as support for the
Applicants’ obligations under this Agreement, and shall be in form and substance
satisfactory to the Bank. Notwithstanding anything to the contrary herein
contained, the parties agree that ABC shall be entitled to withdraw from the
account any funds in excess of the amount of the letters of credit outstanding
from time to time.
11. Representations and Warranties. Each Applicant represents and warrants to
the Bank (which representations and warranties shall survive the issuance of
each Letter of Credit) as follows:
(a) The Applicant is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization. The Applicant has all requisite authority to execute and deliver
this Agreement and to perform the obligations herein.
(b) The execution, delivery and performance by the Applicant of this Agreement
have been duly authorized by proper proceedings and this Agreement constitutes
the valid and binding obligation of the Applicant; and neither the execution and
delivery by the Applicant of this Agreement, the consummation of the
transactions herein contemplated nor compliance with the provisions will
contravene the Applicant’s organizational or charter documents, result in a
breach of or constitute a default under any material agreement, indenture,
instrument or undertaking by which the Applicant is or may be bound, or violate
any law, rule, regulation, order, or governmental consent requirement,
including, without limitation, any that regulate exports, imports, or the
shipping of goods, the transfer of technology, infringement, foreign assets,
foreign exchange, foreign nation sanctions, money laundering laws, investments,
margin stock, investment companies, securities offerings, infringement, and
boycotts.
(c) No authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by the Applicant of this Agreement or the
completion of any Application.
(d) The Agreement is a legal, valid and binding agreement of the Applicant,
enforceable against it in accordance with its terms.
(e) There is no pending or threatened action against the Applicant before any
court, governmental agency, or arbitrator that may materially and adversely
affect the financial condition or operations of the Applicant.

 

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(f) No documents, financial statements, reports, notices, schedules,
certificates, statements, or other writings or information furnished to the Bank
by the Applicant in connection with this Agreement or any Application are
materially false or misleading.
(g) There are no Events of Default (as defined in Section 15 hereof) or any
event that would constitute an Event of Default with the passage of time, the
giving of notice, or both (a “Default”).
(h) The person (or persons) identified in this Agreement as the Applicant(s)
warrants that it is (or they are) the only real party (or parties) in interest
with respect to any Letter of Credit issued hereunder.
12. Certain Agreements. So long as this Agreement is in effect and the
Applicants’ obligations hereunder have not been repaid in full, each Applicant
agrees that:
(a) Each Application shall constitute a reaffirmation, as of the date of such
Application, of the representations and warranties made herein.
(b) There will not be, on the date that any Letter of Credit is issued, nor will
issuance of any Letter of Credit create, any Event of Default or Default. The
Applicant will deliver a certificate to that effect from time to time if
requested by the Bank. The Applicant shall promptly give notice in writing to
the Bank of the occurrence of any Event of Default or Default.
(c) ABC will furnish to the Bank (i) as soon as available, and in any event
within 120 days after the end of each fiscal year of ABC, a copy of the annual
report for such year of the ABC and its subsidiaries, containing financial
statements for such year certified in a manner acceptable to the Bank; (ii) such
other information respecting the condition or operation, financial or otherwise,
of ABC or its subsidiaries as the Bank may from time to time request; and
(iii) such other documents, including but not limited to by-laws, resolutions,
certificates of incumbency, and the like, that the Bank may from time to time
request.
(d) The Applicant will (i) comply with all laws, regulations, orders, or
governmental requirements, including, without limitation, any that regulate
exports, imports, or the shipping of goods, the transfer of technology,
infringement, foreign assets, foreign exchange, foreign nation sanctions, money
laundering laws, investments, margin stock, investment companies, securities
offerings, infringement, and boycotts; and (ii) furnish the Bank with such
documentation and certificates evidencing compliance with governmental
requirements as the Bank may request.
13. Security Interest.
(a) To secure the payment and performance of the Applicants’ obligations
hereunder, whether present or future, absolute or contingent, due or to become
due, matured or unmatured, each Applicant hereby grants to the Bank a first
priority lien and security interest in (i) certain “Collateral” as defined in
and set forth in the Account Control Agreement; (ii) deposits, cash balances,
credit balances, other funds of or owed to the Applicant and all claims against
the Bank or any Affiliate; (iv) additional property in which an Applicant grants
a security interest to the Bank or any Affiliate to secure such obligations; and
(v) all substitutions therefor and cash and noncash proceeds of the foregoing.
This grant is in addition to any other grant of a security interest or mortgage
now or hereafter made by the Applicants to the Bank or any Affiliate, and to the
Bank’s right to a set off or banker’s lien, whether arising by contract or
established by law. All property described in this Section 12(a) shall be known
as “Collateral.”
(b) Any delivery of Collateral to the Applicants shall be without waiver of the
Bank’s rights therein, and any rights of the Bank provided in the Bank’s
standard form of receipt therefor are in addition to and not in substitution of
the rights provided herein. The Bank disclaims all engagements, representations,
and warranties upon such delivery, including those implied in law, whether or
not it has endorsed an instrument, security, or document.

 

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(c) The Applicants agree that upon and during the continuance of any Event of
Default, as defined in Section 15 below, or the initiation of any action for
injunction, wrongful honor, wrongful dishonor, or the judicial or nonjudicial
determination of the rights and remedies of a party to or affected by any Letter
of Credit, or any other event that threatens, as determined by the Bank, to
extend or increase the Bank’s contingent liability beyond the amount or time
specified in any Letter of Credit, the Applicants will deliver to the Bank
additional Collateral to the Bank’s satisfaction, which Collateral shall be held
subject to this Agreement for as long as any obligations of the Applicant remain
outstanding as security for the repayment of such obligations.
14. Further Assurances; Appointment of Bank as Attorney-in-Fact. Each Applicant
agrees to do such other acts, execute and deliver such other agreements,
instruments, statements, and documents, and take such steps as may be
appropriate or as the Bank may request in order to establish, perfect, maintain,
and realize upon the security interest granted herein, to satisfy any obligation
of the Applicants hereunder or as the Bank may otherwise reasonably request,
and, following the unreimbursed honor of any Letter of Credit, to recover as an
assignee or subrogee of the rights and remedies of the Applicants against any
beneficiary and of any beneficiary against the Applicants in each Letter of
Credit and the related underlying obligation. Without limiting the generality of
the foregoing, the Applicant agrees, when requested by the Bank, at Applicants’
expense: (a) to procure and deliver lien search reports; (b) to prepare and/or
file financing statements; (c) to transfer or register any of the Collateral
into the name of the Bank, or any Affiliate or nominee thereof; (d) to assign or
mark insurance policies and documents to reflect the Bank’s interest; (e) to
send priority notices to secured parties of record; (f) to execute the Bank’s
standard form of receipt in effect from time to time for documents delivered to
the Applicants; and (g) to procure any necessary government consents and
licenses. The Bank, acting through its officers, employees, consultants,
representatives and authorized agents, is hereby irrevocably appointed as the
attorney-in-fact of the Applicants, to take all actions contemplated by this
Agreement, at the Applicants’ expense, which are not taken by the Applicants
after timely notice given by the Bank.
15. Events of Default. Each of the following (each herein called an “Event of
Default”) shall entitle the Bank to exercise the remedies specified in this
Agreement:
(a) any Applicant fails to pay when due any amount required by this Agreement;
(b) breach of any representation, or warranty, or failure to perform or observe
any agreement herein;
(c) repudiation or invalidity of this Agreement or any term or provision hereof;
or repudiation or invalidity of, or an event of default under, or breach by any
obligor under, any separate security agreement, guaranty, letter of credit,
comfort letter, or other agreement, instrument, or undertaking relating to this
Agreement, including, but not limited to, the Account Control Agreement;
(d) an event of default or the demand for payment under any other undertaking of
an Applicant or any Affiliate thereof to the Bank or any Affiliate thereof
(whether as primary or secondary obligor), including, but not limited to, an
event of default under that certain $325,000,000 Second Amended and Restated
Credit Agreement dated May 4, 2007;
(e) an event of default or demand for payment under any undertaking of an
Applicant or any Affiliate thereof to any other person (whether as primary or
secondary obligor) which causes or permits any acceleration of such Applicant’s
or any Affiliate’s obligations thereunder;
(f) an Applicant or any Affiliate thereof admits in writing its inability to pay
its debts as they become due, or makes a general assignment for the benefit of
creditors, or an Applicant or any Affiliate is dissolved, liquidated or wound up
or ceases its corporate existence, or any proceeding is instituted by or against
it seeking to adjudicate it bankrupt or insolvent under any bankruptcy,
reorganization, arrangement of debt, insolvency, receivership, dissolution law
or statute, or the Bank shall deem itself insecure;
(g) any judgment, writ, warrant of attachment, or similar process in excess of
$10,000,000 is levied against an Applicant and is not released, vacated, stayed,
fully bonded, or paid within 30 days of its issue or levy;
(h) the occurrence of any of the above events with respect to any person or
entity which has guaranteed or provided any other credit support for any
obligation of the Applicants to the Bank under this Agreement or otherwise; or
(i) Applicants’ failure at any time to keep with the Bank Collateral subject to
the Account Control Agreement equal to he amount of the outstanding Letters of
Credit.

 

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16. Remedies. Upon the occurrence of an Event of Default:
(a) The Bank may (i) declare all of the Applicants’ outstanding obligations to
the Bank hereunder (including those which are contingent and unmatured),
immediately due and payable, without notice, demand, or opportunity to cure; or
(ii) require the Applicants to deposit with the Bank in immediately available
funds in a cash collateral account maintained with the Bank or its affiliates
the amount of all of the Letters of Credit outstanding and such other
obligations, which shall be held by the Bank as collateral security for the
reimbursement obligations of the Applicants hereunder, provided that, (xi) if
the Event of Default arises under Section 15(d) or (e) and the applicable
agreement provides for a notice or cure period, the Bank will observe these
requirements unless the Bank reasonably determines that observance of these
requirements will impair, reduce, or prejudice its rights; (y) in the event of a
breach of Section 15(b) hereof the Bank in its discretion may (but need not)
give notice, as provided in Section 18 hereof, and give the Applicants twenty
Banking Days to effect a cure; and (z) if the Event of Default arises under
Section 15(f) or 15(h) hereof, all of the Applicants’ outstanding obligations to
the Bank hereunder (including those which are contingent and unmatured) shall
become immediately due and payable, without notice, demand, or opportunity to
cure.
(b) The Bank may pursue any remedy available at law or equity to secure,
collect, enforce or secure the obligations of the Applicants hereunder, or
against any person or entity primarily or secondarily liable hereunder, or under
any separate security agreement, guaranty, letter of credit, comfort letter, or
other agreement, instrument or undertaking supporting this Agreement, and may
pursue its remedies separately, successively, or concurrently.
(c) To the extent permitted by law, after honor of the presentation the Bank
shall be subrogated to the rights of (i) each beneficiary to the same extent as
if the Bank were a secondary obligor of the underlying obligation owed to such
beneficiary and (ii) the Applicants to the same extent as if the Bank were the
secondary obligor of the underlying obligation owed to the Applicants, provided,
however, that for purposes of this Section 16(c) only, the Bank shall be deemed
to have honored a presentation once it has either paid or accepted a draft.
(d) If any Collateral consists of accounts, Applicants shall, at the Bank’s
request, notify the account debtors and any guarantors that payments are to be
made directly to the Bank. Should the Applicants fail to do so, the Bank shall
have the right, as attorney-in-fact of the Applicant, to make such notification.
From and after such notification, Applicants (i) shall hold all amounts
recovered from an account debtor or other obligor in trust for the Bank, and
shall promptly remit the same; and (ii) shall not settle, compromise, or adjust
any disputed amount, or allow any credit, rebate, or discount, without the
Bank’s prior written approval.
(e) To the extent that Collateral is not in the possession of the Bank, the
Applicants shall assemble the same and make it available to the Bank at a
reasonably convenient time and place designated by the Bank, and unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Bank will give the Applicants
notice of the time and place of any public sale or of the time after which a
private sale or other disposition is to be made by sending notice, as provided
in Section 18 herein, at least five days prior to the date of the sale or
disposition, which notice the Applicants agree is reasonable.
(f) The Bank may but shall have no obligation to take any action to complete the
manufacture of any inventory, to place Collateral in a condition for sale, to
register unregistered securities, to retain any investment property, real
property, or other Collateral in the expectation that a better price may be
secured at a later date, or to preserve any rights in the Collateral against
prior parties.
(g) After such sale, after deducting all costs and expenses of every kind for
care, safekeeping, preparation for sale, advertisement, sale, or delivery, the
Bank may apply any proceeds to the payment or reduction of the obligations due
hereunder or under any other obligation of the Applicants or their Affiliates to
the Bank and its Affiliates, whether or not then due, in any order of priority
it may elect.
(h) Upon the occurrence and during the continuance of any Event of Default, the
Bank is hereby authorized to set-off and apply any and all deposits of any kind
at any time held, and other indebtedness at any time owing by the Bank, to or
for the credit or the account of the Applicant against any and all obligations
of the Applicants, irrespective of whether any demand is made. The Applicants
will continue to be liable for any deficiency. For purposes of this
Section 16(h), “Bank” shall include the Bank and its Affiliates. The Bank agrees
promptly to notify the Applicants after any such set-off and application,
provided that the failure to give notice shall not affect the validity of such
set-off and application. The Bank’s rights under this Section 15(h) are in
addition to other rights and remedies which the Bank may have, including,
without limitation, other rights of set-off.

 

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17. Certain Limitations on Bank Liability. (a) The Bank shall not be liable to
the Applicants in contract, tort, or otherwise, for any special, indirect,
consequential, punitive, or exemplary damages, however arising, whether for
wrongful honor, wrongful dishonor, or any other action taken or omitted with
respect to any Letter of Credit or this Agreement. (b) The Applicants’ damages
are indirect to the extent that they arise from fraud or forgery on the part of
any beneficiary, successor, or transferee. (c) The Applicants must take all
reasonable and appropriate action to reduce the amount of damages to be claimed
against the Bank. (d) If the Bank honors a presentation or makes a payment for
which the Applicants claim they are not required to reimburse the Bank, the
Applicants shall nevertheless on demand reimburse the Bank for the amount the
Bank paid, without prejudice to the Applicants’ right to make claim against the
Bank for the amount of its payment and for any direct damages incurred that the
Applicants are unable to avoid or reduce. (e) The Applicants’ aggregate remedies
against the Bank for wrongfully honoring a presentation are limited to the
amount paid or required to be paid by the Applicants with respect to that
presentation, and the Applicants hereby agree that such amount will either be
reasonable in light of the harm anticipated in such event or, if it is not, that
the Applicants will not request the Bank to issue a Letter of Credit. (f) The
Applicants hereby waive the right to obtain an injunction against honor of any
Letter of Credit or any draft drawn thereunder (or any form of legal relief
whose purpose is to prevent payment to any beneficiary) once the Bank or any
bank has accepted or negotiated a draft drawn thereunder.
18. Notices.
(a) All notices shall be directed to the Bank at the address shown on the first
page of this Agreement, to the Applicant at the address shown on the last page
of this Agreement, and to both parties at the fax and S.W.I.F.T. numbers shown
on the last page of this Agreement, or at such addresses and numbers as each
party may from time to time provide to the other. Notices may not be given by
telephone conversations or by “e-mail”. All notices to the Bank are effective
when received.
(b) Until it receives a notice to the contrary, the Bank may treat each person
who signs this Agreement as entitled to act on behalf of the Applicants with
respect to any Letter of Credit issued under this Agreement.
(c) For purposes of notices required to be given under this Agreement, the Bank
may rely upon a writing apparently sent by the Applicants and a fax apparently
transmitted by the Applicants. For purposes of other communications, the Bank
may rely on a telephone communication apparently that of the Applicants. The
Bank is not obligated to recognize the authenticity of any request to issue,
amend, honor, or otherwise act on or with respect to any Letter of Credit unless
the Bank has received a writing signed by the Applicants or a fax authenticated
to the Bank’s satisfaction.
19. Change in Laws. If the Bank determines that any change in any law,
regulation, guideline or order or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration thereof
shall either (i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against letters of credit issued by the Bank or against
any other extension of credit, or other assets of, or any deposits or other
liabilities of the Bank or require the inclusion of any Letter of Credit in
calculations related to the Bank’s capitalization, or (ii) impose any other
condition regarding this Agreement or the Letters of Credit, including without
limitation, any requirement that the Bank pay assessments for deposit insurance
with respect to the Letters of Credit, and the result of any event referred to
in clause (i) or (ii) above shall be to increase the cost to the Bank of issuing
or maintaining the Letters of Credit or the reimbursement obligations of the
Applicants or to reduce the amounts receivable to the Bank, then upon demand by
the Bank, the Applicants shall immediately pay to the Bank from time to time, as
specified by the Bank (which shall be conclusive absent manifest error as to the
amount thereof), additional amounts which shall be sufficient to compensate the
Bank for such increased cost or reduce receivables from the date demanded until
payment in full. If payment is not made on the date demanded, interest will be
charged based on the calculation in Section 4(f) hereof.

 

9

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20. Successors and Assigns; No Third Party Benefit; Counterparts. This Agreement
shall be binding upon each Applicant, its successors and assigns, and shall
inure to the benefit of, the Bank and its successors and assigns. The Applicants
may not assign their rights or obligations hereunder except with the Bank’s
prior written authorization. This Agreement confers no right or benefit upon any
person or entity other than parties to this Agreement and their respective
permitted successors and assigns. This Agreement may be executed in any number
of counterparts, all of which, when taken together, shall be deemed to
constitute one and the same instrument.
21. Amendment; Course of Dealing; Waiver. No amendment of any provision of this
Agreement, no course of dealing or waiver of any right or remedy of the Bank
arising under this Agreement, and no inconsistent course of dealing or
performance between the Bank and the Applicants shall be enforceable against the
Bank unless the Bank expressly agrees in a signed writing, and then only in the
specific instance and for the specific purpose for which given. No failure of
the Bank’s part to exercise, and no delay on the Bank’s part in exercising, any
rights, power or remedies hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such rights, powers or remedies by the
Bank preclude any other or further exercising thereof or the exercise of any
other right, power or remedy. The remedies provided herein are cumulative and
not exclusive of any remedies provided at law or in equity.
22. Complete Agreement; Severability; Survival. This Agreement is the full and
complete expression of the parties’ agreement as to the subject matter hereof.
If any provision or clause hereof shall be held to be invalid, illegal, or
unenforceable in any respect, this Agreement shall be construed as if such
provision or clause did not exist. This Agreement shall survive the Applicant’s
repayment and performance of all of its obligations hereunder, the termination
or expiration of all Letters of Credit issued hereunder, and the expiration of
any statute of limitations applicable to any Letter of Credit. In the event of
any extension of the maturity or time for presentation of drafts, or documents,
any increase in the amount of any Letter of Credit or any other modification of
the terms of any Letter of Credit, this Agreement shall continue to be binding
upon the Applicant with regard to each Letter of Credit so extended, increased
or otherwise modified, to drafts, and to any action or inaction taken by the
Bank or any of the Bank’s correspondents in accordance with such extension,
increase or other modification.
23. Currency Conversion. In the event that payment under any Letter of Credit is
drawn or purported to be drawn in a currency other than United States Dollars,
the amount of reimbursement to the Bank therefore shall be calculated on the
basis of the Bank’s selling rate of exchange in effect (for the date on which
the Bank pays such draft or reimburses any of its correspondents which paid such
draft) for cable transfers to the place where and in the currency in which such
draft is payable. The Applicants shall comply with any and all governmental
exchange regulations now or hereafter applicable to any foreign exchange
provided the Bank pursuant to this Section, and shall indemnify and hold the
Bank harmless from any failure to so comply. If for any cause whatsoever, there
exists at the time in question no rate of exchange generally current at the Bank
for effective cable transfer of the sort above provided for, the Applicants
agree to pay the Bank on demand an amount in United States dollars equivalent to
the actual cost of settlement of the Bank’s obligations to the payor of the
draft or acceptance or any holder thereof, as the case may be, and however and
whenever such settlement may be made by the Bank, including interest of the
amount of dollars payable by the Applicant from the date of payment of such
draft or acceptance to the date of the Applicant’s payment to the Bank at the
rate customarily charged to the Bank in like circumstances.
24. Patriot Act. The Bank hereby notifies the Applicant that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Applicant, which information includes the name
and address of the Applicant and other information that will allow the Bank to
identify the Applicant in accordance with the Act.
25. Governing Law. This Agreement, each Application and each Letter of Credit
and any course of conduct, statements, or actions of either party relating
thereto shall be subject to one of the following (as may be stated on the face
of the Letter of Credit): (i) the International Standby Practices 1998,
International Chamber of Commerce Publication No. 590 (as amended, the “ISP”),
(ii) the Uniform Customs and Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (as from time to time
amended, modified or replaced, the “UCP 500”), or (iii) the Uniform Customs and
Practices for Documentary Credits (2007 Revision), International Chamber of
Commerce Publication No. 600 (as from time to time amended, modified or
replaced, the “UCP 600”), except that the term “document” shall not include a
draft or a certificate or policy of insurance, and to the extent not
inconsistent with the ISP, UCP 500 or UCP 600, as applicable, governed by the
laws of the State of New York without reference to conflicts of laws principles.

 

10

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26. Jurisdiction. Any action or proceeding against an Applicant relating in any
way to this Agreement or any Letter of Credit may be brought and enforced in the
courts of the State of New York located in New York County or of the United
States for the Southern District of New York, and each Applicant irrevocably
consents to the jurisdiction of each such court. Each Applicant further
irrevocably consents to the service of process in any such action or proceeding
within or outside such court’s territorial jurisdiction by registered or
certified mail to such Applicant at its address as shown on the last page of
this Agreement. The foregoing shall not limit the Bank’s right to serve process
in any other manner permitted by law or to bring an action in any other
jurisdiction. Each Applicant hereby further waives any objection to the venue
and convenience of the forum with respect to any action which is brought before
a court sitting in New York.
27. WAIVER OF JURY TRIAL. EACH APPLICANT AND THE BANK HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LITIGATION OR OTHER PROCEEDING
BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY APPLICATION, OR ANY LETTER OF
CREDIT.
28. MULTIPLE APPLICANTS. If two or more parties sign this Agreement as
Applicants (i) it shall be the joint and several agreement of all such signers
and binding upon their respective successors and assigns; and (ii) the term
“Applicant” shall mean all of such signers or any one or more of them, whether
or not all or any of them are referred to in any Letter of Credit.
IN WITNESS WHEREOF, the Bank and the Applicants, acting through their duly
authorized representatives, have caused this Agreement to be duly executed and
signed in their respective names the day and year first above written.
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.

         
By
  /s/ D. Barnell
 
Name: D. Barnell    
 
  Title: Authorized Signatory    

Fax number: 201-521-2337
S.W.I.F.T. number: BOTK US 33
ARKANSAS BEST CORPORATION

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        

 

11

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ABF FREIGHT SYSTEM, INC.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
ABF CARTAGE, INC.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
FLEETNET AMERICA, INC.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
DATA-TRONICS CORP.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        

 

12

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ABF FARMS, INC.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
TRANSPORT REALTY, INC.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
TREAD-ARK CORPORATION

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
ABF AVIATION LLC

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        

 

13

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GLOBAL SUPPLY CHAIN SERVICES, INC.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
FREIGHTVALUE, INC.

         
By
  /s/ Judy R. McReynolds
 
Name:   Judy R. McReynolds    
 
  Title:    SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        
MOVING SOLUTIONS, INC.

         
By
  /s/ Judy R. McReynolds
 
Name: Judy R. McReynolds    
 
  Title:   SVP, CFO and Treasurer    

Address of Applicant:
Attn: Cash Management Dept.
3801 Old Greenwood Road
Fort Smith, AR 72903
Fax number: (479) 785-8650
S.W.I.F.T. number:                                        

 

14