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EXHIBIT 10.5
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement"),
dated as of September 10, 1998, is made and entered into on the terms and
conditions hereinafter set forth, by and between FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, a national banking association with offices in Greeneville,
Tennessee ("Lender"), and FORWARD AIR CORPORATION, a Tennessee corporation with
principal offices in Greeneville, Tennessee that was formerly known as Landair
Services, Inc. ("Borrower").
RECITALS:
A. Pursuant to that certain Loan Agreement (Equipment Loan)
between Lender, Borrower, Landair Transport, Inc., a Tennessee corporation
("LTI"), and Forward Air International Airlines, Inc., a Tennessee corporation
(formerly known as Landair International Airlines, Inc.) ("FAIA"), dated
October 17, 1994, as amended by a First Amendment to Loan and Security
Agreements dated October 20, 1994, a Second Amendment to Loan and Security
Agreements dated December 23, 1994, a Third Amendment to Loan and Security
Agreements dated May 24, 1995, a Fourth Amendment to Loan and Security
Agreements dated May 31, 1995, a Fifth Amendment to Loan and Security
Agreements dated December 22, 1995, a Sixth Amendment to Loan and Security
Agreements dated January 30, 1998, a Seventh Amendment to Loan and Security
Agreements dated January 30, 1998, a Eighth Amendment to Loan and Security
Agreements dated February 24, 1998, and a Ninth Amendment to Loan and Security
Agreements dated March 24, 1998 (collectively, the "Equipment Loan Agreement"),
Lender has made available to Borrower an equipment loan facility in the
original principal amount not exceeding $15,000,000 (the "Equipment Loan") on
the terms and conditions set forth in the Equipment Loan Agreement.
B. Pursuant to that certain Line of Credit Loan Agreement
between Lender, Borrower, LTI, FAIA, Forward Air, Inc., a Tennessee corporation
("FAI"), and Transportation Properties, Inc., a Tennessee corporation (formerly
known as Landair Properties, Inc.) ("TPI"), dated October 17, 1994, as amended
by a First Amendment to Line of Credit Loan Agreement and to Amended and
Restated Security Agreement dated May 31, 1995, a Second Amendment to Line of
Credit Loan Agreement and to Amended and Restated Security Agreement dated
January 28, 1997, and a Third Amendment to Line of Credit Loan Agreement and to
Amended and Restated Security Agreement dated January 30, 1998 (collectively,
the "Line of Credit Loan Agreement"), Lender has made available to Borrower a
line of credit in the original principal amount not exceeding $15,000,000 (the
"Line of Credit"; the Equipment Loan and the Line of Credit are sometimes
hereinafter referred to individually as a "Loan" and individually and
collectively as the "Loans") on the terms and conditions set forth in the Line
of Credit Loan Agreement.
C. The indebtedness of Debtor under the Equipment Loan is
evidenced by Debtor's Restated, Amended and Replacement Promissory Note
(Equipment Loan) in favor of Lender dated January 30, 1998 (the "Prior
Equipment Note") and the indebtedness of Debtor under the Line
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of Credit is evidenced by Debtor's Restated, Amended and Replacement Promissory
Note (Line of Credit) in favor of Lender dated January 30, 1998 (the "Prior
Line of Credit Note").
D. Borrower intends to effect a spin-off of LTI and certain of
its other subsidiaries and has requested Lender to amend and restate the
Equipment Loan Agreement and Line of Credit Loan Agreement to reflect such
reorganization, to extend the maturity of the Loans and to increase the Line of
Credit to $20,000,000.
E. Lender, in reliance upon the representations and inducements
of Borrower contained herein, has agreed to amend and restate the Equipment
Loan Agreement and Line of Credit Loan Agreement and amend the terms of the
Loans subject to and upon the terms and conditions hereinafter set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the agreement of Lender to make
the Loans and the mutual covenants and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Lender and Borrower hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. As used in this Agreement, in addition to
other terms defined herein, the following terms shall have the indicated
meanings:
"Account Debtor" shall mean any person which is now or
hereafter obligated or indebted to Borrower or any Guarantor on any Account
Receivable.
"Accounts Receivable", "Receivable" or "Account" shall mean
all amounts owed to Borrower on account of sales, leases or rentals of goods or
services rendered in the ordinary course of Borrower's or any Guarantor's trade
or business.
"Applicable Margin" shall mean, with respect to any
Borrowing, the percentage from Column A below, if the Cash Flow Coverage Ratio
is equal to or greater than 2.5:1.0, or from Column B below, if the Cash Flow
Coverage Ratio is less than 2.5:1.0, which corresponds to the Debt to Worth
Ratio of the Borrower and Guarantors set forth below:
Column A Column B
---------- ----------
Debt to Worth Applicable Applicable
Ratio Margin Margin
------------- ---------- ----------
Equal to or less than 1.5:1.0 1.00% 1.10%
From 1.5 up to and including 2.0:1.0 1.25% 1.35%
From 2.0 up to and including 2.5:1.0 1.50% 1.60%
Greater than 2.5:1.0 1.75% 1.85%
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For purposes of this definition, the Cash Flow Coverage Ratio and Debt to Worth
Ratio shall be determined by the quarterly financial statements delivered
pursuant to Section 8.4 hereof, which determination shall be effective as of
the date of the delivery of such financial statements with respect to all
Borrowings outstanding hereunder.
"Borrowing" shall mean an Equipment Borrowing or a Line of
Credit Borrowing.
"Borrowing Base" means (a) for the period from the date of
the Distribution, as defined in Section 6.1, until the earlier of (i) nine
months thereafter or (ii) the date the Borrower receives the proceeds of the
Public Offering, an aggregate amount equal to one hundred and ten percent
(110%) of Eligible Receivables and (b) thereafter an aggregate amount equal to
eighty percent (80%) of Eligible Receivables.
"Business Day" shall mean any day on which commercial banks
in Greeneville, Tennessee are neither authorized nor required by law or
executive order to close.
"Cash Flow" shall mean, in any fiscal period, the net income
of Borrower, Guarantors and Other Subsidiaries plus depreciation plus
amortization of intangible assets plus the interest portion of scheduled debt
service plus taxes plus payments made under operating leases less dividends
paid to shareholders, all on a consolidated basis and as determined in
accordance with generally accepted accounting principles.
"Cash Flow Coverage Ratio" shall mean the ratio of Cash Flow
to (a) current maturities of long-term indebtedness and interest payments
relating thereto (including payments made pursuant to capitalized leases) plus
(b) payments made under operating leases, all as determined with regard to
Borrower, Guarantors and Other Subsidiaries on a consolidated basis in
accordance with generally accepted accounting principles.
"Debt to Worth Ratio" shall mean the ratio of consolidated
total liabilities of Borrower, Guarantors and Other Subsidiaries to
consolidated Net Worth of Borrower, Guarantors and Other Subsidiaries, all as
determined on a consolidated basis and in accordance with generally accepted
accounting principles.
"Eligible Receivables" shall mean Accounts Receivable (a) in
which Lender holds a valid, perfected first security interest; (b) which arise
from goods theretofore sold and delivered or services theretofore rendered to
the Account Debtor; (c) with respect to which no setoffs, counterclaims or
defenses are claimed by the Account Debtor; (d) which constitute the binding
obligation of an Account Debtor which at the time a Line of Credit advance or
extension of credit is requested based upon such Account, and at all times
thereafter while a Line of Credit advance or extension of credit remains
outstanding, is solvent, is financially able to pay its debts and obligations
as they become due and is paying its debts and obligations as they become due;
(e)
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which do not remain unpaid more than ninety (90) days after the date of the
invoice relating to the Accounts Receivable; and (f) with respect to which the
Account Debtor is not a Related Person.
"Equipment Loan Borrowing" shall mean a borrowing against the
Equipment Loan by Borrower pursuant to Article 2 hereof.
"Interest Payment Date" shall mean the first Business Day of
each month and the maturity date of the Loan with respect to which such
Borrowing relates.
"Interest Period" shall mean a period of one month, provided
that
(1) the first Interest Period shall begin on
the date of this Agreement and shall end on the first Business Day of the
succeeding month;
(2) if any Interest Period would otherwise not
end on the first Business Day of a month, the Interest Period shall be
automatically shortened so that such Interest Period ends on the first Business
Day of the month next succeeding the month in which such Interest Period began;
(3) if any Interest Period otherwise would
expire on day that is not a Business Day, then such Interest Period shall be
extended to expire on the next succeeding Business Day;
(4) in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the day on
which the next preceding Interest Period expires; and
(5) no Interest Period for any Loan shall
extend beyond the maturity date of such Loan.
"Interest Rate Determination Date" shall mean each date for
calculating LIBOR for purposes of determining the interest rate in respect of
an Interest Period, which in each case shall be the second (2nd) Business Day
prior to the first (1st) day of such Interest Period.
"Interim Period" shall mean the period of time from the date
hereof until the earlier of (i) the date the Borrower receives the proceeds of
the Public Offering, or (ii) November 30, 2000.
"LIBOR" shall mean the London Interbank Offered Rate for U.S.
Dollar-denominated interbank obligations in the London, England, market. The
LIBOR applicable to a Borrowing for an Interest Period is the LIBOR for
obligations with term of one month selected as of 11:00 a.m. London time (a)
two (2) Business Days prior to the first day of the Interest Period, or (b) if
Lender elects, the first day of such Interest Period or the Business Day prior
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thereto, and rounded up to the nearest .01% per annum. Lender may determine
LIBOR from TELERATE or any other generally recognized financial reporting
service.
"Line of Credit Borrowing" shall mean a borrowing against the
Line of Credit by Borrower pursuant to Article 3 hereof.
"Net Worth" means the excess of the combined book value of
the assets of Borrower, Guarantors and Other Subsidiaries over their combined
liabilities, calculated in accordance with generally accepted accounting
principles; provided, however, that in performing such calculation there shall
be (a) excluded from the assets (i) any amounts owed to Borrower, any Guarantor
or any Other Subsidiary by a Related Person, and (ii) any amounts owed to
Borrower, any Guarantor or any Other Subsidiary by an employee of Borrower, of
a subsidiary or of any Related Person, and (b) included, as equity, any
indebtedness owed by Borrower, any Guarantor or any Other Subsidiary to any
person which indebtedness has, by formal binding agreement (in form and
substance satisfactory to Lender) been deferred and subordinated in priority of
payment to the indebtednesses and obligations of Borrower and the Guarantors to
Lender.
"Notes" shall mean the Equipment Loan Note and the Line of
Credit Note, individually and collectively, together with any and all
extensions, modifications, renewals and/or replacements thereof.
"Other Subsidiary" means any subsidiary of Borrower whose
stock is now or hereafter pledged to Lender in a manner satisfactory to Lender
(unless such pledge is waived in writing by Lender) and whose financial
statements are consolidated with Borrower's financial statements under
generally accepted accounting principles.
"Public Offering" means the public offering of equity
securities of Borrower that is contemplated by Borrower in an approximate
amount of $18,000,000.
"Related Person" shall mean any person (a) which now or
hereafter directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, Borrower or any
Guarantor, or (b) which now or hereafter beneficially owns or holds five
percent (5%) or more of the capital stock of Borrower or any Guarantor (or such
greater percentage as may be approved in advance, in writing by Lender, such
approval not to be unreasonably withheld or delayed), or (c) five percent (5%)
or more of the capital stock of which is beneficially owned or held by Borrower
or any Guarantor (or such greater percentage as may be approved in advance, in
writing by Lender, such approval not to be unreasonably withheld or delayed).
For the purposes hereof, "control" shall mean possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting stock, by
contract or otherwise.
"Uniform Commercial Code" means the Uniform Commercial Code
as in effect in the State of Tennessee from time to time.
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ARTICLE II
THE EQUIPMENT LOAN
2.1. Evidence of Equipment Loan Indebtedness; Advances; Repayment.
(a) The Equipment Loan shall be evidenced by an Amended and
Restated Secured Promissory Note (Equipment Loan) of even date herewith, in the
original principal amount of Fifteen Million and No/100 Dollars ($15,000,000),
made and executed by Borrower, payable to the order of Lender, in substantially
the form attached hereto as Exhibit A-1, which amends and restates the Prior
Equipment Note in its entirety (together with any extensions, modifications,
renewals and/or replacements thereof, herein referred to as the "Equipment Loan
Note").
(b) Subject to and upon compliance with all applicable terms and
conditions of this Agreement, and so long as no Event of Default (or event that
with the giving of notice or the passage of time or both would constitute an
Event of Default) has occurred and is continuing hereunder, Lender shall
advance the proceeds of the Equipment Loan to or as directed by Borrower in one
or more advance upon not less than two (2) Business Day's notice from Borrower
to Lender in an aggregate amount outstanding not to exceed at any time
$15,000,000 provided, however, that (i) no advance under the Equipment Loan
after the date of this Agreement shall be in amount in excess of the cost of
the equipment being purchased with the proceeds of such advance, (ii) in no
event shall the aggregate amount of all advances under the Equipment Loan to
purchase equipment subsequent to the date of this Agreement exceed 100% of the
book value of such purchased equipment and (iii) Lender shall not be required
to make any advances under the Equipment Loan on or after the date that is two
years from the date hereof unless Lender and Borrower mutually agree to extend
such date on terms mutually satisfactory to both parties.
(c) The indebtedness of Borrower to Lender in connection with the
Equipment Loan shall be payable in accordance with the terms of the Equipment
Loan Note and as provided in this subsection. The principal outstanding on the
Equipment Loan Note as of the date hereof, together with interest thereon,
shall be payable as provided in the Equipment Loan Note. Any principal amount
drawn on the Equipment Loan Note after the date hereof, together with interest
thereon, shall be payable by Borrower making monthly payments as of the first
day of each month, beginning the first day of the first month after such
drawing, or such other day of the month as the parties may agree upon, in an
amount sufficient to amortize the principal amount so drawn in level payments
over a period of seven years (five years in the case of draws to purchase
equipment other than transportation trailers) at an assumed interest rate equal
to LIBOR (as of such draw) plus the Applicable Margin plus two percent (2.0%)
(with any assumed interest in excess of the interest being actually accrued
being applied to amortize principal). In the event that LIBOR plus the
Applicable Margin exceeds at any time such assumed rate of interest, the
monthly payments with respect to any such draws or with respect to the amount
outstanding under the Equipment Loan Note as of the date hereof may be
recalculated by
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Lender, from time to time, utilizing the most recent actual interest
rate on the Equipment Loan Note. Upon any such recalculation, Lender
shall give Borrower notice of the adjusted payments to be made by
Borrower hereunder.
2.2. Notice of Equipment Loan Borrowing.
(1) Delivery of Notice. Whenever Borrower desires to
make a Equipment Loan Borrowing, it shall deliver to Lender written notice (a
"Notice of Equipment Loan Borrowing") no later than 12:00 noon (Eastern time)
at least two (2) Business Days in advance of the date on which the funding of
the Equipment Loan Borrowing is to occur (an "Equipment Loan Funding Date"),
which notice shall be accompanied by a Certificate of Draw Against Equipment
Loan in the form contained in Exhibit A-1 attached hereto. The Notice of
Equipment Loan Borrowing shall specify (i) the proposed Equipment Loan Funding
Date (which shall be a Business Day), and (ii) the amount of the proposed
Equipment Loan Borrowing. The execution and delivery of each Notice of
Equipment Loan Borrowing shall be deemed a representation and warranty by
Borrower that the requested Equipment Loan Borrowing may be made in accordance
with, and will not violate the requirements of, this Agreement.
(2) Notice Irrevocable. A Notice of Equipment Loan
Borrowing for a Line of Credit Borrowing shall be irrevocable on and after the
related Interest Rate Determination Date, and Borrower shall be bound to make a
Equipment Loan Borrowing in accordance therewith.
2.3. Disbursement of Funds. Promptly after receipt of a Notice of
Equipment Loan Borrowing and provided all conditions to such Borrowing
contained herein have been met, Lender shall make the amount of the Equipment
Loan Borrowing available to Borrower on the Equipment Loan Funding Date by
causing an amount of immediately available (same day) funds equal to the amount
of such Borrowing to be credited to or for the benefit of the account of
Borrower at the office of the Lender.
2.4. Interest; Interest Payments.
(a) The unpaid principal balance of the Equipment Loan,
or any portion thereof, shall bear interest at a rate equal to LIBOR plus the
Applicable Margin, as LIBOR and the Applicable Margin change from time to time.
(b) The interest accrued on each Equipment Loan
Borrowing shall be payable on each Interest Payment Date applicable to such
Borrowing, upon any prepayment of any Borrowing (to the extent accrued on the
amount being prepaid) and at maturity.
2.5. Purpose of Equipment Loan and Use of Proceeds. The purpose of
the Equipment Loan shall be to finance the acquisition of transport equipment
and other equipment and property for use by Borrower in the conduct of its
business. The proceeds of the Equipment Loan shall not be used for any other
purposes.
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ARTICLE III
THE LINE OF CREDIT
AND LETTERS OF CREDIT
3.1. Evidence of Line of Credit Indebtedness; Advances; Repayment.
(a) The Line of Credit shall be evidenced by that certain Amended
and Restated Master Secured Promissory Note (Line of Credit Loan) of even date
herewith, in the original principal amount not exceeding Twenty Million and
No/100 Dollars ($20,000,000), made and executed by Borrower, payable to the
order of Lender, in substantially the form attached hereto as Exhibit A-2,
which amends and restates the Prior Line of Credit Note in its entirety
(together with any extensions, modifications, renewals and/or replacements
thereof, herein referred to as the "Line of Credit Note").
(b) Subject to and upon compliance with all applicable terms and
conditions of this Agreement, and so long as no Event of Default (or event that
with the giving of notice or the passage of time or both would constitute an
Event of Default) has occurred and is continuing hereunder, Lender shall
advance proceeds of the Line of Credit to Borrower upon Borrower's request in
an aggregate amount outstanding at any one time not to exceed the lesser of (1)
the Borrowing Base in effect from time to time, or (2) $20,000,000.
(c) The indebtedness of Borrower to Lender in connection with the
Line of Credit shall be evidenced by, and payable in accordance with the terms
of, the Line of Credit Note. In addition, Borrower covenants and agrees to
maintain its Eligible Receivables in an aggregate amount sufficient to keep the
aggregate outstanding principal balance of the advances made in respect of the
Line of Credit within the limits herein specified. If at any time the limits
herein specified are exceeded, Borrower shall immediately pay to Lender an
amount sufficient to reduce the aggregate outstanding principal balance of the
Line of Credit to an amount that is within the limits herein specified.
(d) The Lender has issued, as listed on Exhibit B, and shall from
time to time hereafter issue, letters of credit for the account of Borrower
pursuant to applications submitted to Lender by Borrower. It is understood and
agreed that:
(1) the credit availability under the Line of Credit
shall be reduced by the aggregate undrawn amount from time to time
available under outstanding letters of credit, and
(2) any amounts paid by Lender under any such letters of
credit shall be deemed to be advances against the Line of Credit Note,
and the indebtedness of Borrower to Lender in connection therewith
shall constitute a part of the Obligations (as hereinafter defined)
and shall be secured as hereinafter set forth in
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the same manner as all other advances made by Lender against the Line
of Credit Note.
Borrower acknowledges and agrees that Lender's issuance of additional letters
of credit is subject to additional conditions and restrictions which Lender may
impose in its sole discretion from time to time, including the execution by
Borrower of a letter of credit application and reimbursement agreement with
respect to the letter of credit.
3.2. Notice of Line of Credit Borrowing.
(1) Delivery of Notice. Whenever Borrower desires to
make a Line of Credit Borrowing, it shall deliver to Lender written notice (a
"Notice of Line of Credit Borrowing") no later than 12:00 noon (Eastern time)
of the day on which the funding of the Line of Credit Borrowing is to occur,
which date must be a Business Day (a "Line of Credit Funding Date"). The Notice
of Line of Credit Borrowing shall specify (i) the proposed Line of Credit
Funding Date (which shall be a Business Day), and (ii) the amount of the
proposed Line of Credit Borrowing. The execution and delivery of each Line of
Credit Notice of Borrowing shall be deemed a representation and warranty by
Borrower that the requested Line of Credit Borrowing may be made in accordance
with, and will not violate the requirements of, this Agreement.
(2) Notice Irrevocable. A Notice of Line of Credit
Borrowing for a Line of Credit Borrowing shall be irrevocable on and after the
related Interest Rate Determination Date, and Borrower shall be bound to make a
Line of Credit Borrowing in accordance therewith.
3.3. Disbursement of Funds. Promptly after receipt of a Notice of
Line of Credit Borrowing, and provided all conditions to such Borrowing
contained herein have been met, Lender shall make the amount of the Borrowing
available to Borrower on the Line of Credit Funding Date by causing an amount
of immediately available (same day) funds equal to the amount of such Borrowing
to be credited to the account of Borrower at the office of the Lender.
3.4. Interest; Interest Payments.
(a) The unpaid principal balance of the Line of Credit
Loan, or any portion thereof, shall bear interest at a rate equal to LIBOR plus
the Applicable Margin, as LIBOR and the Applicable Margin change from time to
time.
(b) The interest accrued on each Borrowing shall be
payable on each Interest Payment Date applicable to such Borrowing, upon any
prepayment of any Borrowing (to the extent accrued on the amount being prepaid)
and at maturity.
3.5. Purposes of Loan and Use of Proceeds. The purpose of the Line
of Credit shall be to provide working capital to Borrower and Guarantors on a
revolving basis. The proceeds of the Line of Credit shall not be used for any
other purposes.
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3.6. Unused Commitment Fee. In addition to the fee payable under
Section 10.1 herein, a fee equal to the percentage per annum, as determined in
accordance with the chart set forth below and calculated on the basis of a year
of 360 days and payable for the actual number of days elapsed on the average
daily balance, of the unused portion of the Line of Credit shall be payable by
Borrower quarterly in arrears, commencing on December 31, 1998 (for the period
from the date hereof through such date) and continuing thereafter on the last
day of each succeeding calender quarter and on the maturity date of the Line of
Credit:
Debt to Worth Unused Commitment
Ratio Fee Percentage
------------- -----------------
Less than 2.0:1.0 .100%
2.0:1.0 or greater .125%
For purposes of the above chart, the Debt to Worth Ratio shall be determined by
reference to the most recent financial statements delivered pursuant to Section
8.4 hereof.
3.7. Letter of Credit Fees. Borrower agrees to pay to Lender a
letter of credit fee on the date of issuance of each letter of credit issued by
Lender equal to the stated amount of such letter of credit multiplied by the
percentage determined in accordance with the chart set forth below and the
fraction of a year such letter of credit is to be outstanding based upon a
360-day year and the actual number of days to elapse:
Debt to Worth Letter of Credit
Ratio Fee Percentage
------------- ----------------
Less than or equal to 1.5:1.0 .25%
From 1.5 up to and including 2.5:1.0 .50%
2.5:1.0 or greater .75%
For purposes of the above chart, the Debt to Worth Ratio shall be determined by
reference to the most recent financial statements delivered pursuant to Section
8.4 hereof.
ARTICLE IV
PAYMENTS AND COMPUTATIONS
4.1. Prepayments. Borrower may prepay a Borrowing only upon the
delivery to Lender of written notice or telephonic notice confirmed in writing
not less than two (2) Business Days' prior to the date of prepayment provided
that, in connection with any prepayment of a Borrowing, Borrower shall pay to
the Lender the accrued interest on such Borrowing.
4.2. Computations. To the extent permitted by applicable law, all
computations of fees and interest under this Agreement payable in respect of
any period shall be made by the Lender on the basis of a 360-day year, in each
case for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest is payable. In
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computing interest on any advance, the date of the making of such advance or
the first day of an Interest Period, as the case may be, shall be included and
the date of payment or the expiration date of an Interest Period, as the case
may be, shall be excluded; provided, however, that if an advance is repaid on
the same day on which it is made, one day's interest shall be paid on that
advance.
4.3. Special Provisions Governing Borrowings. Notwithstanding
other provisions of this Agreement, the following provisions shall govern with
respect to Borrowings as to the matters covered:
(a) Determination of Interest Rate. As soon as is
practicable after 11:00 a.m. (Eastern time) on the Interest Rate Determination
Date, the Lender shall determine the interest rate that shall apply to the
Borrowings for which an interest rate is then being determined for the
applicable Interest Period and shall give notice thereof to Borrower.
(b) Inability to Determine Rate. In the event the Lender
shall have determined (which determination shall be conclusive and binding
absent manifest error) that by reason of circumstances affecting the London
interbank Eurodollar market, adequate and reasonable means do not exist for
ascertaining LIBOR, the Lender forthwith shall give telephonic notice of such
determination and of the comparable source by which the rate of interest for
Borrowings shall be determined, which notice shall be confirmed in writing to
Borrower.
(c) Illegality; Termination of Commitment to Make
Borrowings. Notwithstanding any other provisions of this Agreement, if any law,
treaty, rule or regulation or determination of a court or other governmental
authority, or any change therein or in the interpretation or application
thereof, shall make it unlawful for Lender to make or maintain Borrowings, as
contemplated by this Agreement, then, and in any such event, Lender shall
promptly give notice to Borrower of such determination, and the obligation of
the Lender to make Borrowings shall be terminated and any Borrowings of the
Lender then outstanding shall thereafter bear interest at Lender's Base Rate,
as announced from time to time, minus one percent (1%).
(d) Borrowing During Interest Period. If Borrower makes
a drawing under the Equipment Loan or the Line of Credit while an amount is
already outstanding under the Equipment Loan or the Line of Credit, such
drawing shall bear interest at the same rate as the other amounts outstanding
under the Equipment Loan or the Line of Credit until the end of the then
current Interest Period, and thereafter such drawing shall have the same
Interest Period as the other amounts that are outstanding under the Equipment
Loan or the Line of Credit.
4.4. Increased Costs, Reserve Requirements and Taxes.
(a) Increased Costs. Except to the extent reimbursed
pursuant to other provisions of this Section 4.4, in the event that either (i)
the introduction of, or any change in, or in the interpretation of, any law or
regulation or (ii) compliance with any guideline or request from any central
bank or other governmental authority (regardless of whether having the force of
law):
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(1) does or shall subject Lender to any
additional income, preference, minimum or excise tax or to any additional tax
of any kind whatsoever with respect to Borrowings or change the basis of
taxation of payments to such Lender of principal, commitment fees, interest or
any other amount payable in regard to Borrowings (except for changes in the
rate of tax on the overall gross or net income of that Lender or its foreign
branch, agency or subsidiary); or
(2) does or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or other liabilities in
or for the account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of such Lender; or
(3) does or shall impose on that Lender any
other condition with respect to Borrowings;
and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining the Borrowing or to reduce any amount
receivable hereunder; then, in any such case, Borrower shall promptly pay to
Lender, within thirty (30) days of written demand therefor which notice shall
describe reasonable detail the amount, nature and manner of calculating the
increased cost, such additional amounts as are sufficient to compensate Lender
for any such additional cost or reduced amount received.
(b) Capital Requirements - General. If either (i) the
introduction of, or any change in, or in the interpretation by any governmental
agency or court of applicable jurisdiction of, any law or regulation or (ii)
compliance with any guideline, demand or order from any central bank or other
governmental authority (regardless of whether having the force of law), affects
or would affect in any way the amount of capital required or expected to be
maintained with respect to Borrowings by Lender or any corporation controlling
such Lender with the effect of reducing the rate of return on such capital to a
level below the rate that Lender or such other corporation could have achieved
but for such introduction, change or compliance, and Lender reasonably
determines that such reduction is based on the existence of Lender's
commitments as to Borrowings hereunder and other commitments of this type, then
upon written demand by Lender, Borrower shall further pay to Lender from time
to time as specified by Lender such additional amounts as are sufficient to
reasonably compensate Lender or other corporation for such reduction.
ARTICLE V
SECURITY
5.1. Security. The Obligations (as hereinafter defined) shall be
secured by the following:
(a) Personal Property. Borrower hereby grants to Lender
a security interest in the following described property and interests
in property, together with all proceeds and products thereof and all
accessions thereto, as applicable:
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(1) Equipment. All equipment of Borrower
(including, but not limited to, the equipment listed on
Exhibit E attached hereto) other than equipment in which a
security interest has been previously granted to other
lenders as of the date hereof, together with all parts,
accessories and attachments and all replacements thereof and
additions thereto and all additional equipment or other
property purchased with the proceeds of the Equipment Note;
and
(2) Accounts, Chattel Paper, Instruments and
General Intangibles. All of Borrower's present and future
accounts, accounts receivable, chattel paper, instruments,
and other obligations of every kind, whether now or hereafter
existing, arising out of or in connection with the sale or
lease of goods or the rendering of services or otherwise,
claims for a tax refund, contract rights, general
intangibles, customer lists, original books and records,
ledgers and account cards, computer tapes, disks and
printouts, and other similar collateral whether now existing
or hereafter created, acquired, or arising, and the proceeds
thereof, including, but not limited, to:
(A) All of the Borrower's accounts,
accounts receivable, chattel paper, instruments and
other obligations of any kind, whether or not
evidenced by an instrument or chattel paper, and
whether or not earned by performance, whether now or
hereafter existing, arising out of or in connection
with the sale or lease of goods or the rendering of
services or otherwise relating to any such Accounts
Receivable; and
(B) All claims for tax refunds,
whether now existing or hereafter arising, of
Borrower against any city, county, state or federal
government or any agency or authority or other
subdivision thereof, and the proceeds thereof; and
(C) All of Borrower's contract rights
and general intangibles ("General Intangibles") of
every kind, character and description, both now
owned and hereafter acquired, including, without
limitation, goodwill, trademarks, trade styles,
trade names, patents, patent applications, and
deposit accounts; and
(D) All of Borrower's customer lists,
original books and records, ledger and account
cards, computer tapes, discs and printouts, whether
now in existence or hereafter created; and
(E) All proceeds ("Proceeds") of any
and all of the foregoing collateral and, to the
extent not otherwise included, all payments under
insurance (whether or not the Lender is the loss
payee thereunder), any indemnity, warranty, or
guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing
collateral, and including, without limitation, all
monies due or to become due in connection with any
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of the collateral, guaranties and security for the
payment of such monies, the right of stoppage in
transit, and all returned or repossessed goods
arising from the sale or lease thereof;
in each case, whether now owned or hereafter acquired by the Borrower
and howsoever its interest therein may arise or appear whether by
ownership, lease, security interest, claim or otherwise.
(b) Guaranty. The Guaranty Agreement of even date
herewith, executed by FAI, FAF Inc. and Transportation Properties,
Inc., jointly and severally (each individually a "Guarantor" and
collectively the "Guarantors"), guaranteeing to Lender, among other
things, the payment of the indebtednesses evidenced by the Notes and
the performance of the obligations of Borrower to Lender in connection
therewith (the "Guaranty").
(c) Security Agreement. The Security Agreement of even
date herewith, executed by the Guarantors, granting Lender a security
interest in the assets described therein to secure, among other
things, the payment of the indebtednesses evidenced by the Notes and
the performance of the obligations of Borrower to Lender in connection
therewith (the "Guarantor Security Agreement").
(d) Pledge and Security Agreement. The Pledge and
Security Agreement of even date herewith, executed by Borrower,
pledging to Lender all of the stock of Forward Air Royalty Company,
Forward Air International Airlines, Inc., Transportation Properties
(Texas), Inc., and Forward Air Licensing Company, wholly-owned
subsidiaries of Borrower, and pledging all promissory notes from any
of the Guarantors to Borrower, to secure, among other things, the
payment of the indebtednesses evidenced by the Notes and the
performance of the obligations of Borrower to Lender in connection
therewith (the "Pledge Agreement").
This Agreement, the Guaranty, the Guarantor Security Agreement, and
the Pledge Agreement and any other instruments, documents or agreements now or
hereafter securing the Obligations are herein referred to individually as a
"Security Instrument" and individually and collectively as the "Security
Instruments". The Security Instruments, together with the Notes and any other
instruments and documents now or hereafter evidencing, securing or in any way
related to the indebtednesses evidenced by the Notes are herein referred to
individually as a "Loan Document" and individually and collectively as the
"Loan Documents".
5.2. Obligations. Without limiting any of the provisions thereof,
the Security Instruments shall secure:
(a) The full and timely payment of the indebtednesses
evidenced by the Notes, together with interest thereon, and any
extensions, modifications and/or renewals thereof and any notes given
in payment thereof,
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(b) The full and prompt performance of all of the
obligations of Borrower to Lender under the Loan Documents to which
Borrower is a party,
(c) The full and prompt payment of all court costs,
expenses and costs of whatever kind incident to the collection of the
indebtednesses evidenced by the Notes, the enforcement or protection
of the security interests of the Security Instruments and/or the
exercise by Lender of any rights or remedies of Lender with respect to
the indebtednesses evidenced by the Notes, including but not limited
to attorney's fees and expenses incurred by Lender, all of which
Borrower agrees to pay to Lender upon demand, and
(d) The full and prompt payment and performance of any
and all other indebtednesses and other obligations of Borrower to
Lender, direct or contingent (including but not limited to obligations
incurred as indorser, guarantor or surety or the obligation to
reimburse Lender with respect to any draws on letters of credit issued
by the Lender on Borrower's behalf), however evidenced or denominated,
and however and whenever incurred, including but not limited to
indebtednesses incurred pursuant to any present or future commitment
of Lender to Borrower.
All of the foregoing indebtedness and other obligations are herein collectively
referred to as the "Obligations".
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Condition Precedent to Loans. The obligation of Lender to
advance the proceeds of either Loan to or for the account of Borrower is
subject to the condition precedent that Lender shall have received each of the
following, in form and substance satisfactory to the Lender and its counsel:
(a) Notes. The Notes, duly executed by Borrower, which
Notes shall be deemed delivered as of the date all of the other
conditions precedent set forth in this Section 6.1 have been met;
(b) Security Instruments. The Security Instruments, duly
executed by the parties thereto, together with: (1) acknowledgment
copies of the Financing Statements (UCC-1) duly filed under the
Uniform Commercial Code of all jurisdictions necessary or, in the
opinion of Lender, desirable to perfect the security interests created
by this Agreement and the other Security Instruments or such other
documents, such as certificates of title with Lender's lien noted
thereon, that are necessary to perfect Lender's security interest; and
(2) evidence of the public recording or filing of such of the Security
Instruments as Lender deems it necessary or desirable to record or
file publicly, in such offices as Lender shall require, together with
evidence satisfactory to Lender of the priority of the liens, security
titles and/or security interests of such Security Instruments;
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(c) Title to Assets. Evidence satisfactory to Lender
demonstrating that Borrower or a Guarantor is the owner of the
collateral security described in the Security Instruments, free and
clear of defects therein or claims thereto by persons other than
Borrower, Guarantor and Lender;
(d) Guaranty. The Guaranty, duly executed by the
Guarantors;
(e) Insurance. Evidence satisfactory to Lender of the
existence of the policies of insurance required by the provisions of
Article V of this Agreement;
(f) Evidence of Corporate Action by Borrower and
Guarantors. Certified (as of the date of this Agreement) copies of all
corporate action taken by Borrower and the Guarantors, including
resolutions of their board of directors, authorizing the execution,
delivery and performance of the Loan Documents to which each is a
party and each other document to be delivered by Borrower or any
Guarantor pursuant to this Agreement;
(g) Incumbency and Signature Certificates. A certificate
(dated as of the date of this Agreement) of the Secretary or an
Assistant Secretary of Borrower and each Guarantor certifying the
names and true signatures of the officers of Borrower and each
Guarantor authorized to sign the Loan Documents to which it is a party
and the other documents to be delivered by Borrower or any Guarantor
under this Agreement;
(h) Organizational Documents. Copies of the corporate
charter and other publicly filed organizational documents of Borrower
and each Guarantor, certified by the Secretary of State or other
appropriate public official in the jurisdiction in which Borrower or
any Guarantor is incorporated;
(i) Evidence of Legal Existence/Good Standing. A
certificate as to the legal existence and good standing of Borrower
and each Guarantor, issued by the Secretary of State or other
appropriate public official in the jurisdiction in which Borrower or
such Guarantor is incorporated;
(j) Evidence of Foreign Qualifications. Certificates of
the Secretaries of State or other appropriate public officials as to
Borrower's and each Guarantor's qualification to do business and good
standing in each jurisdiction in which a failure to be so qualified
would have a material adverse effect on Borrower's financial position
or its ability to conduct its business in the manner now conducted and
as hereafter intended to be conducted;
(k) Commitment Fee. Borrower shall have paid to Lender a
commitment fee in the amount of $10,000.
(l) Distribution. Borrower shall have effected a
distribution of the common stock of Landair Corporation as approved by
its Board of Directors on July 9, 1998 and
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shall have completed the transfer of certain assets of Borrower as
described in that certain August, 1998 letter from the Internal
Revenue Service to Borrower (the "Distribution").
6.2. Additional Condition(s) Precedent to Loans. The obligation of
Lender to make each advance of Loan proceeds to or for the account of Borrower
(including the initial advance or advances) is subject to the further
condition(s) precedent that on and as of the date of such advance:
(a) Representations and Warranties True; Absence of
Default. The following statements shall be true, and Borrower's
request for such advance shall constitute an affirmation by Borrower
that:
(1) The representations and warranties
contained in Article VII of this Agreement are correct on and
as of the date of such advance as though made on and as of
such date; and
(2) Neither an Event of Default (as hereinafter
defined), nor any event that with the giving of notice or the
passage of time or both would constitute an Event of Default,
has occurred and is continuing, or would result from such
advance; and
(b) Additional Documentation. Lender shall have received
such other approvals, opinions and documents as Lender reasonably may
request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
7.1. Corporate Status. Borrower and each Guarantor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee; and each has the corporate power to own and
operate its properties, to carry on its business as now conducted and to enter
into and to perform its obligations under this Agreement and the other Loan
Documents to which it is a party. Borrower and each Guarantor is duly qualified
to do business and in good standing in the State of Tennessee and in each state
in which a failure to be so qualified would have a material adverse effect on
Borrower's or such Guarantor's financial position or its ability to conduct its
business in the manner now conducted.
7.2. Authorization. Borrower and each Guarantor has full legal
right, power and authority to conduct its business and affairs in the manner
contemplated by the Loan Documents, and to enter into and perform its
obligations thereunder, without the consent or approval of any other person,
firm, governmental agency or other legal entity. The execution and delivery of
this Agreement, the borrowing hereunder, the execution and delivery of each
Loan Document to which Borrower or any Guarantor is a party and the performance
by Borrower and each Guarantor of
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its obligations thereunder are within the corporate powers of Borrower and such
Guarantor, have been duly authorized by all necessary corporate action properly
taken, have received all necessary governmental approvals, if any were
required, and do not and will not contravene or conflict with any provision of
law, any applicable judgment, ordinance, regulation or order of any court or
governmental agency, the charter or by-laws of Borrower or any agreement
binding upon Borrower or its properties. The officer(s) executing this
Agreement, the Notes and all of the other Loan Documents to which Borrower or
any Guarantor is a party are duly authorized to act on behalf of Borrower or
such Guarantor.
7.3. Validity and Binding Effect. This Agreement and the other
Loan Documents are the legal, valid and binding obligations of the parties
thereto, enforceable in accordance with their respective terms subject to
applicable bankruptcy and other creditor rights laws and subject to principles
of equity.
7.4. Other Transactions. There are no prior loans, liens, security
interests, agreements or other financings upon which Borrower or any Guarantor
is obligated or by which Borrower or any Guarantor is bound that will in any
way permit any third person to have or obtain priority over Lender as to any of
the collateral security granted to Lender pursuant to this Agreement and the
other Security Instruments. Consummation of the transactions hereby
contemplated and the performance of the obligations of Borrower and the
Guarantors under and by virtue of the Loan Documents to which Borrower or any
Guarantor is a party will not result in any breach of, or constitute a default
under, any loan or credit agreement, indenture, mortgage, deed of trust,
security deed or agreement, lease, corporate charter or by-laws, agreement or
certificate of limited partnership, partnership agreement, license, franchise
or other instrument or agreement to which Borrower or any Guarantor is a party
or by which Borrower or any Guarantor or any of their properties may be bound
or affected.
7.5. Places of Business. The records with respect to all
intangible personal property constituting a part of the collateral security for
the Obligations are maintained at Borrower's chief place of business and chief
executive office, which has the address of 000 Xxxxxxx Xxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000. All tangible personal property constituting a part of the
collateral security for the Obligations, except for transportation equipment
subject to a certificate of title, is or will be located at Borrower's chief
place of business and chief executive office and/or at any specific locations
set forth on attached Exhibit C.
7.6. Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of Borrower, threatened, against or affecting
Borrower or any Guarantor or involving the validity or enforceability of any of
the Loan Documents or the priority of the liens thereof, at law or in equity,
or before any governmental or administrative agency, except actions, suits and
proceedings that are covered by insurance or for which the Company has created
reserves which in the opinion of the Borrower's management are reasonably
calculated to cover claimed exposures, or which, if adversely determined, would
not materially impair the ability of Borrower or any Guarantor to perform each
and every one of its obligations under and by virtue of the Loan Documents; and
to Borrower's knowledge, neither Borrower nor any Guarantor is in default with
respect to any
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order, writ, injunction, decree or demand of any court or any governmental
authority that would materially affect Borrower's or any Guarantor's business.
7.7. Financial Statements. The financial statement(s) of Borrower
and the Guarantors heretofore delivered to Lender are true and correct in all
respects, have been prepared in accordance with generally accepted accounting
principles consistently applied, and fairly present the financial conditions of
the subjects thereof as of the date(s) thereof. Except for the transactions
contemplated as a part of the Distribution, no material adverse change has
occurred in the financial condition of Borrower or any Guarantor since the
date(s) thereof, and no additional borrowings have been made or liabilities
incurred by Borrower or any Guarantor since the date(s) thereof.
7.8. No Defaults. With the exception of defaults or Events of
Default which would not have a material adverse effect on the properties,
business, results of operations, management or financial or other condition of
Borrower or a Guarantor or on the ability of Borrower to perform its
obligations under the Loan Documents to which it is a party, no default or
event of default by Borrower or any Guarantor exists under any of the Loan
Documents to which it is a party, or under any other instrument or agreement to
which Borrower or any Guarantor is a party or by which Borrower, any Guarantor
or any of their properties may be bound or affected, and no event has occurred
and is continuing that with notice or the passage of time or both would
constitute a default or event of default under any Loan Document to which it is
a party.
7.9. Compliance With Law. Borrower and each Guarantor have
obtained all material licenses, permits and governmental approvals and
authorizations necessary or proper in order to conduct their businesses and
affairs as heretofore conducted and as hereafter intended to be conducted,
including, but not limited to, any licenses, permits and governmental approvals
and authorizations relating to the generation, recycling, use, reuse, sale,
storage, handling, transport, treatment or disposal of hazardous materials.
Borrower and each Guarantor is in compliance with all laws, regulations,
decrees and orders applicable to it (including but not limited to laws,
regulations, decrees and orders relating to environmental, occupational and
health standards and controls, antitrust, monopoly, restraint of trade or
unfair competition), except to the extent that noncompliance, in the aggregate,
cannot reasonably be expected to have a material adverse effect on its
business, operations, property or financial condition and will not materially
adversely affect its ability to perform its obligations under the Loan
Documents to which it is a party. Neither Borrower nor any Guarantor has
received, and does not expect to receive, any order or notice of any violation
or claim of violation of any law, regulation, decree, rule, judgment or order
of any governmental authority or agency relating to the ownership and/or
operation of its properties, as to which the cost of compliance is or might be
material and the consequences of noncompliance would or might be materially
adverse to its business, operations, property or financial condition, or which
would or might materially impair its ability to perform its obligations under
the Loan Documents to which it is a party.
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7.10. No Burdensome Restrictions. No instrument, document or
agreement to which Borrower or any Guarantor is a party or by which it or its
properties may be bound or affected materially adversely affects, or may
reasonably be expected so to affect, the business, operations, property or
financial condition thereof.
7.11. Taxes. Borrower and each Guarantor has filed or caused to be
filed all tax returns that to Borrower's knowledge are required to be filed
(except for returns that have been appropriately extended), and each has paid
all taxes shown to be due and payable on said returns and all other taxes,
impositions, assessments, fees or other charges imposed on it by any
governmental authority, agency or instrumentality, prior to any delinquency
with respect thereto (other than taxes, impositions, assessments, fees and
charges currently being contested in good faith by appropriate proceedings, for
which appropriate amounts have been reserved) except to the extent that the
failure to file such returns or pay such amounts would not have a material
adverse effect on such Borrower or Guarantor. No tax liens have been filed
against Borrower, any Guarantor or any of the property thereof.
7.12. Equipment. The equipment constituting a part of the
collateral for the Obligations is owned solely by Borrower or a Guarantor, and
Borrower and each Guarantor has full right, power and authority to grant to
Lender a valid and enforceable security interest therein. Lender's security
interest in such equipment constitutes a first and prior lien upon and security
interest in such equipment, and no other person or entity has any right, title,
interest, security interest, claim or lien with respect thereto.
7.13. Receivables, Etc. With respect to Receivables resulting from
the rendition of services to Borrower's or any Guarantor's customers, (a) each
such Receivable is a valid and bona fide existing obligation created by or
arising out of the rendition of services to Borrower's or a Guarantor's
customers in the ordinary course of business, (b) such Receivables are owned
solely by Borrower or a Guarantor and Borrower or such Guarantor has all
necessary right, power and authority to grant to Lender a valid and enforceable
security interest therein, (c) Lender's security interest in such Receivables
constitutes a first and prior lien upon and security interest in such
Receivables, and no other person or entity has any right, title, interest,
security interest, claim or lien with respect thereto, (d) each such Receivable
will at all times be unconditionally owed to Borrower or a Guarantor and
enforceable against the obligor(s) with respect thereto without dispute of any
kind, and (e) each such Receivable constituting an Eligible Receivable is an
"account", "contract right" or "chattel paper" within the meaning of the
Tennessee Uniform Commercial Code and is not evidenced by any other instrument
or document (except as specifically disclosed to Lender and accepted by Lender
as an Eligible Receivable) that would in any way change or alter its character
as an account, contract right or chattel paper.
7.14. Other Subsidiaries. The net income from the Other
Subsidiaries is less than five percent (5%) of the combined net income of the
Borrower, Guarantors and Other Subsidiaries and the assets of the Other
Subsidiaries is less than five percent (5%) of the combined assets of the
Borrower, Guarantors and Other Subsidiaries.
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ARTICLE VIII
COVENANTS AND AGREEMENTS
Borrower covenants and agrees that during the term of this Agreement:
8.1. Payment of Obligations. Borrower will pay the indebtednesses
evidenced by the Notes according to the tenor thereof, and will timely pay or
perform, as the case may be, all of the other Obligations.
8.2. Sales of Assets. Neither Borrower nor any Guarantor will
sell, exchange, lease, transfer or dispose (other than in the normal course of
business) of all or substantially all of its assets.
8.3. Further Assurances. Borrower and each Guarantor will take all
reasonable actions requested by Lender to create and maintain in Lender's favor
valid liens upon, security titles to and/or perfected security interests in the
collateral security described in the Security Instruments and all other
security for the Obligations now or hereafter held by or for Lender. Without
limiting the foregoing, Borrower and each Guarantor shall execute such further
instruments (including financing statements and continuation statements) as may
be required or permitted by any law relating to notices of, or affidavits in
connection with, the perfection of Lender's security interests, and to
cooperate with Lender in the filing or recording and renewal thereof.
8.4. Financial Statements. Borrower will furnish to Lender:
(a) As soon as practicable and in any event within one
hundred and twenty (120) days after the end of each fiscal year of
Borrower, a consolidated balance sheet of Borrower and the Guarantors
as of the close of such fiscal year, the related statements of income,
cash flow and shareholders' equity for such fiscal year and all notes
to such financial statements, in such form as is required of publicly
traded companies by the United States Securities Exchange Commission
("SEC"), audited by independent certified public accountants
satisfactory to Lender, and accompanied by the opinion of such
accountants.
(b) As soon as practicable and in any event within
forty-five (45) days after the end of each quarter-annual period of
Borrower's fiscal year, a consolidated balance sheet of Borrower and
the Guarantors as of the close of such quarterly period, and the
related statements of income, cash flow and shareholders' equity for
such quarterly period, in such form as is required of publicly traded
companies by the SEC.
(c) Upon each drawing by Borrower under the Line of
Credit and at such other times as Lender may reasonably request, a
Borrowing Base Certificate in the form attached hereto as Exhibit D or
such other form as is reasonably requested by Lender.
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(d) With reasonable promptness, such other financial
data as Lender reasonably may request and all filings made by the
Borrower with the SEC.
Notwithstanding the foregoing, until four complete fiscal quarters
have occurred after the Distribution, Borrower shall also provide to Lender on
the same date the financial statements described in (b) above are delivered,
financial statements of the Borrower, Guarantors and Other Subsidiaries for the
prior fiscal quarters that reflect, in the best judgment of Borrower and in a
manner reasonably acceptable to Lender, the assets, liabilities, income and
losses which such entities would otherwise have had if the Distribution had
taken place prior to the beginning of the periods covered by such financial
statements. Such financial statements shall be used to determine compliance
with the covenants in Section 8.17 hereof and for purposes of determining the
Applicable Margin
8.5. Maintenance of Books and Records; Inspection. Borrower and
each Guarantor will maintain its books, accounts and records in accordance with
generally accepted accounting principles consistently applied, and permit any
person designated by Lender in writing to visit and inspect any of its
properties (including but not limited to the collateral security described in
the Security Instruments), corporate books and financial records, and to
discuss its accounts, affairs and finances with Borrower, Guarantor or the
principal officers of Borrower or any Guarantor during reasonable business
hours, all at such times as Lender reasonably may request.
8.6. Insurance. Without limiting any of the requirements of any of
the other Loan Documents, Borrower will maintain or cause to be maintained for
Guarantors, in amounts satisfactory to Lender:
(a) comprehensive public liability insurance;
(b) worker's compensation insurance (or maintain a
legally sufficient amount of self insurance against worker's
compensation liabilities, with adequate reserves, under a plan
approved by Lender); and
(c) "all-risk" property/casualty insurance on its
properties (including but not limited to the collateral security now
or hereafter securing payment and performance of the Obligations),
against such hazards and in at least such amounts as is customary in
Borrower's business and with such deductible and/or self-insurance
provisions as are acceptable to Lender.
Lender agrees that the insurance coverages and self-insurance
retention that Borrower presently maintains are acceptable to Lender, and
Borrower agrees to obtain Lender's consent to any material changes in such
insurance coverages and/or self-insurance retention..
At the request of Lender from time to time, Borrower will deliver to
Lender certificates issued by the insurer(s), specifying the details of such
insurance in effect. To the extent that proceeds are payable under Borrower's
or any Guarantor's policies of property/casualty insurance with respect to any
damage or loss of equipment that is collateral for the Loans, such policies
shall
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provide that such proceeds shall be payable to Borrower or the appropriate
Guarantor and Lender as their respective interests may appear, and that at
least thirty (30) days' prior written notice of cancellation or modification of
the policy shall be given to Lender by the insurer. Borrower agrees that there
shall be no recourse against Lender for the payment of premiums, commissions,
assessments or advances in respect of any such policy, and at Lender's request
will provide Lender with the agreement of the insurer(s) to this effect. Lender
may, at its option upon an Event of Default, act as attorney for Borrower or
any Guarantor in obtaining, adjusting, settling and canceling any such
insurance that relates to the collateral that secures the Loans and endorsing
any drafts with respect thereto, and this power, being coupled with an
interest, shall be irrevocable prior to payment in full of the Loans and
performance of all of the obligations of Borrower to Lender in connection
therewith.
8.7. Taxes and Assessments; Tax Indemnity. Borrower and each
Guarantor will (a) file all tax returns and appropriate schedules thereto that
are required to be filed under applicable law, prior to the date of
delinquency, (b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon Borrower or any Guarantor, upon their income and
profits or upon any properties belonging to any of them, prior to the date on
which penalties attach thereto, and (c) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of any of their properties; provided, however, that Borrower or any
Guarantor in good faith may contest any such tax, assessment, governmental
charge or levy so long as appropriate reserves are maintained with respect
thereto. If any tax is or may be imposed by any governmental entity in respect
of any transaction of Borrower or any Guarantor, which tax Lender is or may be
required to withhold or pay, Borrower agrees to indemnify Lender and hold
Lender harmless in connection with such taxes, and Borrower will immediately
reimburse Lender for any such taxes paid by Lender and added to the Obligations
pursuant to the terms hereof.
8.8. Corporate Existence. Borrower and each Guarantor will maintain
its corporate existence and good standing in the state of its incorporation,
and its qualification and good standing as a foreign corporation in each
jurisdiction in which such qualification is necessary pursuant to applicable
law. Borrower and each Guarantor may from time to time change its name provided
that Borrower or such Guarantor has given Lender advance notice of such change
and has taken such actions as Lender deems necessary to insure that such change
of name does not impair Lender's security interest in the Collateral or its
perfection therein.
8.9. Compliance with Law and Other Agreements. Borrower and each
Guarantor will maintain its business operations and property owned or used in
connection therewith in material compliance with (a) all applicable federal,
state and local laws, regulations and ordinances governing such business
operations and the use and ownership of such property, including, but not
limited to, any laws, regulations or ordinances relating to the generation,
recycling, use, reuse, sale, storage, handling, transport, treatment or
disposal of hazardous materials and (b) all agreements, licenses, franchises,
indentures and mortgages to which Borrower or any Guarantor is a party or by
which Borrower, any Guarantor or any of their properties is bound. Without
limiting the foregoing, Borrower and each Guarantor will pay all of its
indebtedness promptly in accordance with the terms thereof.
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8.10. Notice of Default. Borrower will give written notice to
Lender of the occurrence of any default, event of default or Event of Default
under this Agreement or any other Loan Document promptly upon the occurrence
thereof.
8.11. Notice of Litigation. Upon request, Borrower shall give
Lender a list of all pending actions, suits, proceedings and disputes
instituted by any persons whomsoever against Borrower or any Guarantor, or
affecting any of Borrower's or any Guarantor's assets in connection with any
applicable federal, state or local laws or regulations, or any dispute between
Borrower or any Guarantor on the one hand and any governmental regulatory body
on the other hand.
8.12. ERISA Plan. If Borrower or any Guarantor has in effect, or
hereafter institutes (with Lender's consent, as hereinafter provided), a
pension plan that is subject to the requirements of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2, 1974,
00 Xxxx. 000, 00 X.X.X.X. ss. 1001 et seq. (1975), as amended from time to time
("ERISA"), then the following warranty and covenants shall be applicable during
such period as any such plan (the "Plan") shall be in effect: (a) Borrower
hereby warrants that no fact that might constitute grounds for the involuntary
termination of the Plan, or for the appointment by the appropriate United
States District Court of a trustee to administer the Plan, exists at the time
of execution of this Agreement, (b) Borrower hereby covenants that throughout
the existence of the Plan, Borrower's contributions under the Plan will meet
the minimum funding standards required by ERISA and Borrower will not institute
a distress termination of the Plan, (c) Borrower hereby covenants that the
Plan's annual financial and actuarial statements and the Plan's annual Form
5500 information return will be timely filed with the Internal Revenue Service
and a copy delivered to Lender within thirty (30) days of the preparation
thereof, and (d) Borrower covenants that it will send to Lender a copy of any
notice of a reportable event (as defined in ERISA) required by ERISA to be
filed with the Labor Department or the Pension Benefit Guaranty Corporation, at
the time that such notice is so filed. Notwithstanding anything herein to the
contrary, Borrower shall not be deemed to be in breach of this Agreement with
regard to any breach of a warranty or covenant contained in this Section 8.12
which would not have a material adverse effect on the business operations or
financial condition of such Borrower or Guarantor.
No new Plan shall be instituted by Borrower or any Guarantor unless
Lender shall have given its written consent thereto.
8.13. Places of Business; Mobile Goods. The location of the chief
place of business, chief executive office and all other places of business of
Borrower and each Guarantor are set forth on Exhibit C. Upon Lender's request,
Borrower shall update Exhibit C from time to time. Borrower agrees not to
change the location of its places of business in Greeneville, Tennessee,
Atlanta, Georgia or Columbus, Ohio or the location at which it maintains its
records concerning the intangible collateral security for the Obligations,
without thirty (30) days' prior written notice to Lender in each instance.
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8.14. Maintenance of Collateral. Borrower will maintain all
tangible personal property constituting any part of the collateral security
described in the Security Instruments in good condition and repair, will pay
all costs and expenses incurred in the maintenance of same, and will not permit
any act or occurrence that may impair the value thereof. Prior to the
occurrence of an Event of Default (as hereinafter defined), Borrower or the
applicable Guarantor will be entitled to possession of such tangible collateral
and to use same in any lawful manner permitted hereunder, provided that such
use does not cause excessive wear and tear to such collateral, nor cause it to
decline in value at an excessive rate, nor violate the terms of any policy of
insurance, if any, thereon.
8.15. Special Agreements With Respect to Receivables.
(a) By the execution of this Agreement, Lender shall not
be obligated to do or perform any of the acts or things provided in
any contracts covered hereby to be done or performed by Borrower or
any Guarantor, but upon the occurrence of an Event of Default, Lender
may, at its election, perform some or all of the obligations provided
in said contracts to be performed by Borrower or any Guarantor, and if
Lender incurs any liability or expenses by reason thereof, same shall
be payable by Borrower upon demand and same shall also be secured by
this Agreement and the other Loan Documents. Upon an Event of Default,
Borrower will, on request from Lender, submit to Lender duplicate
copies of all invoices on outstanding Receivables subject to Lender's
security interest.
(b) Upon an Event of Default, if requested by Lender, (i)
Borrower and each Guarantor will forthwith on receipt of all checks,
drafts, cash and other remittances in payment of inventory sold, or in
payment on account of Borrower's or any Guarantor's Receivables,
deposit the same in a special bank account maintained with Lender over
which Lender alone has power of withdrawal, and/or (ii) Borrower will
immediately notify all account debtors to direct payments to a lockbox
in accordance with a Lockbox Service Agreement entered into or to be
entered into between Borrower and Lender. Said proceeds shall be
deposited in precisely the form received, except for the indorsement
of Borrower or the Guarantor where necessary to permit collection of
items, which indorsement Borrower agrees to make or obtain, and which
Lender is also hereby authorized to make on Borrower's or the
Guarantor's behalf. Pending such deposit, Borrower agrees that it will
not commingle any such checks, drafts, cash or other remittances with
any of Borrower's other funds or property, but will hold them separate
and apart therefrom and in trust for Lender until deposit thereof is
made in the special account. The funds in said account and any funds
collected by Lender under a Lockbox Service Agreement shall be held by
Lender as additional security for the Obligations. Lender will,
usually on a daily basis but in any event at least once a week, apply
the whole or any part of the collected funds on deposit in the special
account and from the lockbox against the Obligations; the amount,
order and method of such application to be in the discretion of
Lender. Any portion of said funds on deposit in the special account
and from the lockbox that Lender elects not to so apply may be paid
over by Lender to Borrower.
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(c) Without limiting the provisions of subsection
8.15(b), Borrower acknowledges and agrees that upon the occurrence of
an Event of Default (or an event that with the giving of notice or the
passage of time or both would constitute an Event of Default), Lender
will have the right to notify the account debtors obligated on any or
all of Borrower's or any Guarantor's Receivables to make payment
thereof direct to Lender, and to take control of all proceeds of any
such Receivables. Until such time as Lender elects to exercise such
right, Borrower and each Guarantor is authorized, as agent of Lender,
to collect and enforce said Receivables.
(d) Lender shall be privileged to enjoy all the rights
and remedies of Borrower and each Guarantor as to the Receivables and
shall be and become subrogated to all guaranties and securities
possessed by Borrower or any Guarantor or due to come into Borrower's
or any Guarantor's hands, but Lender shall not be liable in any manner
for exercising or refusing to exercise any rights thereby bestowed.
(e) Upon an Event of Default, Borrower will notify
Lender promptly of all returns and recoveries of merchandise and of
all disputes and claims, and Borrower will settle or adjust disputes
and claims directly with customers for amounts and upon terms it
considers advisable and dispose of merchandise returns as it sees fit,
unless Lender directs Borrower to make such settlements, adjustments
and disposals subject to Lender's approval. In all cases Lender will
credit Borrower's loan account with only the net amounts received by
Borrower in payment of Receivables.
(f) Borrower hereby appoints the officers of Lender
and/or any other person whom Lender may designate as Borrower's
attorney(s)-in-fact with full power to endorse Borrower's name on any
checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come in Lender's possession; to sign
Borrower's name on any invoice or xxxx of lading relating to any
Receivable, on drafts against customers, on schedules of assignments
of Receivables, on notices of assignment, on financing statements,
applications for noting of liens on certificates of title and other
public records or documents of any kind as necessary or desirable to
insure perfection or enforceability of Lender's security interests in
or liens on property of Borrower granted hereunder or otherwise, on
verification of accounts and on notices to customers; to notify the
post office authorities to change the address for delivery of
Borrower's mail to an address designated by Lender; to receive, open
and dispose of all mail addressed to Borrower; to send requests for
verifications of accounts to customers; and to do all other things
Lender deems necessary to carry out this Agreement. Borrower hereby
ratifies and approves all acts of the attorney(s) and neither Lender
nor the attorney(s) for Lender will be liable for any acts of
commission or omission, nor for any error of judgment or mistake of
fact or law. This power, being coupled with an interest, is
irrevocable so long as any money remains owing to Lender from
Borrower; provided, however, that Lender shall not exercise such power
unless an Event of Default has occurred and is continuing hereunder.
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8.16. Debt to Worth Ratio. Borrower shall maintain as of the end of
each fiscal quarter a Debt to Worth Ratio of not more than (i) 3.75 to 1.00 for
the period from September 10, 1998 until December 31, 1998, (ii) 3.50 to 1.00
for the period from January 1, 1999 until Xxxxx 00, 0000, (xxx) 3.25 for the
period from April 1, 1999 until June 30, 1999, and (iv) 3.00 to 1.00
thereafter.
8.17. Cash Flow Coverage. Borrower shall maintain as of the end of
each fiscal quarter for the four prior fiscal quarters a Cash Flow Coverage
Ratio of not less than 1.25 to 1.00.
8.18. Relationship with Lender. Borrower shall maintain their
material operating accounts and investment accounts with Lender and utilize
Lender as their "primary depository" until the Loans have been paid in full.
8.19. Net Worth. Borrower, Guarantors and the Other Subsidiaries
shall maintain on a consolidated basis as of the end of each fiscal quarter a
Net Worth of not less than an amount equal to ninety percent (90%) of their
consolidated Net Worth as of the date hereof plus fifty percent (50%) of
cumulative net income (provided that any net loss arising from any fiscal
quarter or other accounting period shall be counted as zero in calculating
cumulative net income) from the date hereof through such fiscal quarter end
plus one hundred percent (100%) of the aggregate proceeds from the issuance of
stock, warrants or other equity interests in Borrower or any Guarantor
occurring from the date hereof through the date of such fiscal quarter end.
8.20. Capital Expenditures and Acquisitions. Without the prior
written consent of Lender, Borrower, Guarantors and the Other Subsidiaries
shall not individually or collectively make aggregate capital expenditures in
any fiscal year in excess of $25,000,000 or make acquisitions of stock or
assets in any fiscal year where the aggregate purchase price for such stock or
assets is in excess of $20,000,000.
8.21. Indebtedness. Neither Borrower nor any Guarantor shall incur,
create, assume or permit to exist any indebtedness or liability for borrowed
money, or on account of deposit, advance or progress payments under contracts,
or any other indebtedness or liability, including, but not limited to,
indebtedness evidenced by notes, bonds, debentures or similar obligations,
except:
(a) Indebtedness(es) to Lender evidenced by the Notes;
(b) Indebtedness for borrowed money under notes and lease
obligations secured by newly acquired equipment;
(c) Trade accounts payable, taxes payable, deferred sales,
accrued employees' bonuses and withheld amounts, accrued liabilities with
respect to contributions to pension plans and other similar short-term
obligations incurred by Borrower or a Guarantor in the normal course of
operating its business, provided that (i) the amount of such obligations shall
not be unduly large, in the reasonable judgment of Lender, considering the size
and nature of Borrower's and
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Guarantors' businesses, and (ii) the Borrower and Guarantors shall not be in
default with respect to any of such obligations.
(d) Other indebtedness incurred for any purpose which is not
secured, in whole or in part, by any lien or security interest upon the
collateral for the Loans (unless such indebtedness is secured by a purchase
money security interest in equipment acquired after the date hereof), provided
that the incurring of any such indebtedness does not create or result in a
violation of any other provision hereof.
8.22. Mortgages, Liens, Etc. Neither Borrower nor any Guarantor
shall create, assume or suffer to exist any mortgage, pledge, lien, charge or
other encumbrance of any nature whatsoever on any of its assets, now or
hereafter owned, except for:
(a) Liens securing payment of the Loans;
(b) Existing liens securing indebtednesses permitted under
Section 8.20(b) above; and
(c) Permitted Encumbrances described on Exhibit F hereto.
8.23. Guaranties. Neither Borrower nor any Guarantor shall
guarantee or otherwise in any way become or be responsible for the indebtedness
or obligations of any other person, by any means whatsoever, whether by
agreement to purchase the indebtedness of any other person or agreement for the
furnishing of funds to any other person through the purchase of goods, supplies
or services, or by way of stock purchase, or discharging the indebtedness of
any other person, or otherwise, except for (i) guaranties in favor of Lender,
(ii) the endorsement of negotiable instruments by Borrower or any Guarantor in
the ordinary course of business for collection, and (iii) guaranties of
indebtedness which are not in the aggregate in excess of twenty-five percent
(25%) of the consolidated Net Worth of Borrower and Guarantors.
8.24. Consolidation or Merger. Without the prior written consent of
Lender, neither Borrower nor any Guarantor shall enter into any transaction,
acquisition, merger or consolidation which would result in an acquisition by
Borrower or any Guarantor of the assets or stock or other equity interests of
another entity or a merger or consolidation of Borrower or any Guarantor with
an entity unless (i) the merging or acquired entity is in the same line of
business of Borrower or such Guarantor, (ii) the acquired assets, or the assets
possessed by the merging or acquired entity, do not have a fair market value
that is more than forty-nine percent (49%) of the fair market value of Borrower
or such Guarantor, and (iii) the surviving entity of such merger or
consolidation, if any, is the Borrower or such Guarantor. In addition to the
foregoing limitations, Borrower shall not acquire, without the prior written
consent of Lender, the assets or stock or other equity interests of any entity
if the portion of the acquisition price that is attributable to intangible
assets exceeds 20% of the consideration paid or assumed by Borrower in
connection with such acquisition.
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8.25. Loans and Investments. Neither Borrower nor any Guarantor
shall make any loans to or investments in, or, purchase any stock, other
securities or evidence of indebtedness of any person, except as follows: (i)
direct obligations of the United States of America or obligations for which the
full faith and credit of the United States is pledged to provide for the
payment of principal and interest, (ii) marketable securities issued by an
agency of the United States government, (iii) commercial paper rated A-1 by
Standard and Poors Corporation, or P-1 by Xxxxx'x Investors Services, Inc.,
(iv) certificates of deposit of or bankers' acceptances accepted by domestic
commercial banks in the United States of America having a combined capital and
surplus of at least Ninety Million Dollars ($90,000,000.00), (v) repurchase
agreements with respect to any of the foregoing, (vi) loans permitted by the
provisions of Section 8.26 hereof or (vii) loans by Borrower to any Guarantor
of the proceeds of the Loans for the purposes permitted hereunder pursuant to
promissory notes properly pledged to Lender. This negative covenant shall be
inapplicable to loans other than to Guarantors except where the transaction
which is prohibited would either create or result in a violation of Section
8.16, Section 8.17, or Section 8.19 hereof, or impair, directly or indirectly,
the value of the collateral for the Loans.
8.26. Dividends, Redemptions and Other Payments. Neither Borrower
nor any Guarantor shall (a) declare or pay, or set aside any sum for the
payment of, any dividends or make any other distribution upon any shares of its
capital stock of any class, or (b) purchase, redeem or otherwise acquire for
value any shares of its capital stock of any class, or commit to do any of
same, or set aside any sum therefor, or permit any subsidiary to purchase or
acquire for value any shares of its capital stock of any class, or commit do to
any of the same, or set aside any sum therefor, or (c) make any payment to a
profit sharing plan or to any other retirement or pension plan to or for the
benefit of management shareholders which exceeds (based on a percentage of
compensation) similar payments made for the benefit of all employees of
Borrower or the Guarantors, in such a manner which violates applicable law
and/or any filings of Borrower with applicable securities agencies and stock
exchanges and related restrictions and regulations. This negative covenant
shall be inapplicable except where the transaction which is prohibited would
either create or result in a violation of Section 8.16, Section 8.17 or Section
8.19 hereof.
8.27. Loans to Officers and Employees. Without the prior written
consent of Lender, neither Borrower nor any Guarantor shall permit or allow
loans to officers and employees of Borrower or any Guarantor, in the aggregate,
to exceed at any one time outstanding the sum of One Hundred Fifty Thousand
Dollars ($150,000.00).
8.28. Creation of Subsidiaries. Borrower may create additional
subsidiaries, without the prior written consent of Lender, only if the
following conditions are met:
(a) each such subsidiary is engaged in a business
directly related to the Borrower's business, and
(b) (i) each such subsidiary guaranties the obligations
of Lender hereunder and under the Notes by the execution of a Guaranty
Agreement in the same form as executed by Guarantors, joins with the
other Guarantors in the Security Agreement, and delivers to Borrower a
promissory note in the form of the promissory notes delivered by the
other
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Guarantors and pledged to the Lender under the Pledge Agreement, and
Borrower enters into an amendment to the Pledge Agreement whereby it
pledges such promissory note to the Lender; or (ii) Borrower enters
into an amendment of the Pledge Agreement whereby it pledges to the
Lender all of the stock of such subsidiary and such subsidiary becomes
an Other Subsidiary under this Agreement; and
(c) each such subsidiary delivers to the Lender:
(i) a copy of its charter or certificate of
incorporation, certified by the appropriate official in its
jurisdiction of organization, in form and substance
satisfactory to the Lender, and a copy of its bylaws, and all
amendments thereto, together with a certificate of its
Secretary stating that such copy is complete and correct;
(ii) a certificate of the appropriate
governmental officials stating that such subsidiary exists,
is in good standing with respect to the payment of franchise
and similar taxes and is duly qualified to transact business
in the state;
(iii) a certificate of the secretary of the
subsidiary as to the incumbency and signature of all officers
of such subsidiary authorized to execute or attest to the
Loan Documents to which such subsidiary is a party, together
with evidence of the incumbency of each such secretary or
other officer;
(iv) with respect to such subsidiary (A) copies
of the resolution authorizing, approving and ratifying the
Loan Documents to which such subsidiary is a party, duly
adopted by the board of directors of such subsidiary,
together with (B) a certificate of the secretary or other
appropriate officer of such subsidiary stating that each such
copy is a true and correct copy of resolutions duly adopted
at a meeting, or by action taken on written consent, of the
board of directors of such subsidiary and that such
resolutions have not been modified, amended, rescinded or
revoked in any respect and are in full force and effect as of
the date hereof; and
(v) all other documents, instruments,
agreements, opinions, certificates, insurance policies,
consents and evidences of other legal matters, in form and
substance satisfactory to the Lender and its counsel, as the
Lender reasonably may request.
8.29. Amount of Equipment Loan. In the event that the total
outstanding indebtedness under the Equipment Loan is at any time in excess of
ninety percent (90%) of the book value of the Borrower's equipment in which the
Lender has a perfected security interest hereunder (the "Equipment
Collateral"), then Borrower shall not pay any dividends or prepay any loans
from other creditors until the outstanding amount of the Equipment Loan is
reduced to an amount which is not in excess of ninety percent (90%) of the book
value of the Equipment Collateral.
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8.30. Operations of Other Subsidiaries. Without the prior written
permission of Lender, Borrower shall not permit the Other Subsidiaries to
conduct such business which would cause the net income of the Other
Subsidiaries would exceed five percent (5%) of the combined net income of the
Borrower, Guarantors and Other Subsidiaries or cause the assets of the Other
Subsidiaries to exceed five percent (5%) of the combined assets of the
Borrower, Guarantors and Other Subsidiaries.
ARTICLE IX
DEFAULT AND REMEDIES
9.1. Events of Default. The occurrence of any of the following
shall constitute an Event of Default hereunder:
(a) Borrower shall fail to pay the principal of, or
interest on, the indebtedness evidenced by any of the Notes, or any
other fee or charge payable by Borrower hereunder, as and within ten
(10) days of when due and payable (provided that Borrower shall only
be entitled to such ten-day grace period twice within any twelve-month
period);
(b) Any representation or warranty made or deemed made
by Borrower or any Guarantor in this Agreement or any of the other
Loan Documents, or that is contained in any certificate, document,
opinion or financial or other statement furnished at any time under or
in connection with any Loan Document, shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made, and, to the extent any such misrepresentation or breach of
warranty is capable of being cured, the same continues thirty (30)
days after notice from the Lender; provided, however, that if such
misrepresentation or breach of warranty (which is capable of being
cured) cannot be reasonably be cured within such thirty (30) day
period, but can reasonably be cured within a sixty (60) day period,
the Borrower shall have an additional period of time not to exceed
sixty (60) days after the original notice of default, provided that
the Borrower proceeds promptly, diligently and in good faith to cure
such misrepresentation or breach;
(c) Borrower or any Guarantor shall fail to perform or
observe any term, covenant or agreement on its part to be performed or
observed under this Agreement or any other Loan Document to which it
is a party, and such default continues thirty (30) days after notice
from the Lender; provided, however, that if such default cannot
reasonably be cured within such thirty (30) day period, but can
reasonably be cured in a sixty (60) day period, Borrower shall have an
additional period of time not to exceed sixty (60) days after the
original notice of default, provided that the Borrower proceeds
promptly, diligently and in good faith to cure such default;
(d) Borrower or any Guarantor (1) shall generally not
pay or shall be unable to pay its debts as such debts become due; or
(2) shall make an assignment for the benefit of creditors or petition
or apply to any tribunal for the appointment of a custodian, receiver
or trustee for it or a substantial part of its assets; or (3) shall
commence any proceeding
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under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; or (4) shall have had any such
petition or application filed or any such proceeding commenced against
it in which an order for relief is entered or an adjudication or
appointment is made; or (5) shall indicate, by any act or omission,
its consent to, approval of or acquiescence in any such petition,
application, proceeding or order for relief or the appointment of a
custodian, receiver or trustee for it or a substantial part of its
assets; or (6) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of thirty (30) days
or more;
(e) Borrower or any Guarantor shall be liquidated,
dissolved, partitioned or terminated, or the charter or certificate of
authority thereof shall expire or be revoked;
(f) A default or event of default shall occur under any
of the other Loan Documents, subject to applicable cure periods; or
(g) Borrower or any Guarantor shall (1) fail to pay any
indebtedness for borrowed money in the amount of $50,000 or greater
(other than the indebtednesses evidenced by the Notes), or any
interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), subject to
applicable cure periods, including but not limited to any such
indebtedness or obligation now or hereafter owed to Lender, or (2)
fail to perform or observe any term, covenant or condition on its part
to be performed or observed under any agreement or instrument relating
to any such indebtedness, when required to be performed or observed,
if the effect of such failure to perform or observe is to accelerate,
or to permit the acceleration after the giving of notice or the
passage of time or both, of the maturity of such indebtedness,
regardless of whether such failure to perform or observe shall be
waived by the holder of such indebtedness; or any such indebtedness
shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof.
9.2. Acceleration of Maturity; Remedies. Upon the occurrence of
any Event of Default described in subsection 6.1(d) as it relates to Borrower,
the indebtednesses evidenced by the Notes as well as any and all other
indebtedness and obligations of Borrower to Lender shall be immediately due and
payable in full; and upon the occurrence of any other Event of Default
described above (including but not limited to subsection 6.1(d) as it relates
to any Guarantor), Lender at any time thereafter may at its option accelerate
the maturity of the indebtednesses evidenced by the Notes as well as any and
all other indebtedness and obligations of Borrower to Lender; all without
notice of any kind. Upon the occurrence of any such Event of Default and the
acceleration of the maturity of the indebtednesses evidenced by the Notes:
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(a) any obligation of Lender to advance any theretofore
undisbursed proceeds of the Loans shall immediately cease and be of no
further force nor effect, and Lender shall be immediately entitled to
exercise any and all rights, powers, privileges, options and remedies
possessed by Lender pursuant to the terms of the Security Instruments
and all of the other Loan Documents;
(b) Lender shall have and may exercise all of the rights
and remedies of a secured party under the Uniform Commercial Code as
adopted in the State of Tennessee; and
(c) Lender shall have and may exercise any and all other
rights, powers, privileges, options and remedies that Lender may now
or hereafter possess at law, in equity or by statute.
9.3. Right of Setoff. Without limitation of the foregoing, upon
the occurrence and during the continuance of any Event of Default, Lender is
hereby authorized at any time and from time to time, without notice to Borrower
(any such notice being expressly waived by Borrower), to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by Lender or any of its affiliates, and any other indebtedness at
any time owing by Lender or its affiliates to or for the credit or the account
of Borrower or any Guarantor, against any and all of the Obligations,
irrespective of whether Lender shall have made any demand under this Agreement
or the Notes or any other Loan Document and although such obligations may be
unmatured. Lender agrees to notify Borrower within a reasonable time after any
such setoff and application; provided that the failure to give such notice
shall not affect the validity of such setoff and application. The rights of
Lender under this Section 9.3 are in addition to any other rights and remedies
(including, without limitation, other rights of setoff) that Lender may have.
9.4. Remedies Cumulative; No Waiver. No right, power or remedy
conferred upon or reserved to Lender by this Agreement or any of the other Loan
Documents is intended to be exclusive of any other right, power or remedy, but
each and every such right, power and remedy shall be cumulative and concurrent
and shall be in addition to any other right, power and remedy given hereunder,
under any of the other Loan Documents or now or hereafter existing at law, in
equity or by statute. No delay or omission by Lender to exercise any right,
power or remedy accruing upon the occurrence of any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein, and every
right, power and remedy given by this Agreement and the other Loan Documents to
Lender may be exercised from time to time and as often as may be deemed
expedient by Lender.
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9.5. Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including reasonable
attorney's fees, incurred by Lender in connection with the exercise of
its remedies;
Second, to the expenses of curing the default that has
occurred, in the event that Lender elects, in its sole discretion, to
cure the default that has occurred;
Third, to the payment of the Obligations, including but not
limited to the payment of the principal of and interest on the
indebtednesses evidenced by the Notes, in such order of priority as
Lender shall determine in its sole discretion; and
Fourth, the remainder, if any, to Borrower or to any other
person lawfully thereunto entitled.
ARTICLE X
MISCELLANEOUS
10.1. Commitment Fee. In consideration of Lender's agreement to
make the Loan, Borrower shall pay to the Lender a non-refundable per annum
commitment fee in the amount of $10,000. This fee shall be payable on the date
hereof for the period ending on the anniversary date hereof, and the same
amount shall thereafter be due and payable on each anniversary hereof for the
succeeding twelve month period.
10.2. Release of LTI. LTI is hereby released of any liability with
regard to the Loans, this Agreement, the Notes or any other document relating
this Loans.
10.3. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise would be within the limitations of, another covenant
shall not avoid the occurrence of an Event of Default if such action is taken
or condition exists.
10.4. Integration. This Agreement and the Loan Documents contain
the entire agreement among the parties relating to the subject matter hereof
and supersede all oral statements and prior writings with respect thereto. The
execution and delivery of this Agreement and the other Loan Documents by
Borrower were not based upon any facts or materials provided by Lender, nor was
Borrower induced or influenced to execute and deliver this Agreement or any
other Loan Document by any representation, statement, analysis or promise made
by Lender. This Agreement amends and restates in their entirety the Equipment
Loan Agreement and the Line of Credit Loan Agreement.
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10.5. Amendments, Etc. No amendment, modification, termination or
waiver of any provision of any Loan Document to which Borrower is a party, nor
consent to any departure by Borrower from compliance with the terms of any Loan
Document to which it is a party, shall be effective unless the same shall be in
writing and signed on behalf of Lender by a duly authorized officer of Lender,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. Upon their mutual
agreement, Lender, Borrower and the Guarantors may amend this Agreement to
extend the maturity date of either of the Loans by executing the Modification
Agreement in the form of Exhibit G attached hereto.
10.6. Performance By Lender.
(a) Lender may file one or more financing statements
disclosing Lender's security interests under this Agreement and the
other Loan Documents without the signature of Borrower appearing
thereon if permitted by law, and Borrower shall pay the costs of, or
incidental to, any recording or filing of any financing statements
concerning the collateral security described in the Security
Instruments. Borrower agrees that a carbon, photographic, photostatic
or other reproduction of this Agreement or any other Security
Instrument or of a financing statement is sufficient as a financing
statement.
(b) If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this
Agreement, Lender may, at its option, pay, perform or observe the
same, and all payments made or costs or expenses incurred by Lender in
connection therewith (including but not limited to reasonable
attorney's fees), with interest thereon at the greatest default rate
provided in the Notes (if none, then at the maximum rate from time to
time allowed by applicable law), shall be immediately repaid to Lender
by Borrower and shall constitute a part of the Obligations and be
secured hereby until fully repaid. Lender shall be the sole judge of
the necessity for any such actions and of the amounts to be paid.
10.7. Costs and Expenses. Lender shall not bear any cost or expense
whatsoever in connection with the making, administration, servicing or
collection of the Loans. Borrower agrees to pay on demand all costs and
expenses in connection with the preparation, execution, delivery, filing,
recording and/or administration of any of the Loan Documents, including but not
limited to the fees and expenses of counsel for Lender, and local counsel who
may be retained by Lender or said counsel, with respect thereto and with
respect to advising Lender as to its rights and responsibilities under any of
the Loan Documents, and all costs and expenses, if any, in connection with the
enforcement of any of the Loan Documents. In addition, Borrower shall pay any
and all recording, indebtedness, stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of any of the Loan Documents and any other documents to be delivered
under any such Loan Documents, and agrees to indemnify Lender and hold Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
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The provisions of this Section shall be effective regardless of
whether Borrower shall be entitled to any advances hereunder and shall survive
any termination of this Agreement.
10.8. Assignment. The Notes, this Agreement and the other Loan
Documents may be endorsed, assigned and/or transferred in whole or in part by
Lender, and any such holder and/or assignee of the same shall succeed to and be
possessed of the rights and powers of Lender under all of the same to the
extent transferred and assigned. Lender may grant participations in all or any
portion of its interest in the indebtednesses evidenced by the Notes. Borrower
shall not assign any of its rights nor delegate any of its duties hereunder or
under any of the other Loan Documents without the prior express written consent
of Lender.
10.9. Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure
to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
10.10. Third Party Beneficiaries. This Agreement and the other Loan
Documents are intended for the sole and exclusive benefit of the parties hereto
and their respective successors and permitted assigns, and shall not serve to
confer any rights or benefits in favor of any person not a party hereto. No
other person shall have any right to rely on this Agreement or the other Loan
Documents, or to derive any benefit herefrom.
10.11. Time of the Essence. Time is of the essence with respect to
each and every covenant, agreement and obligation of Borrower hereunder and
under all of the other Loan Documents.
10.12. Severability. Any provision of this Agreement that is
prohibited or unenforceable with respect to any person or circumstance or in
any jurisdiction shall, as to such person, circumstance or jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision with respect to other persons or
circumstances or in any other jurisdiction.
10.13. Article and Section Headings; Terminology. Article and
section headings used herein are included for convenience of reference only and
shall not constitute a part hereof for any other purpose. References herein to
"Articles" and "Sections" shall be deemed to be references to Articles and
Sections, respectively, of this Agreement unless the context otherwise
requires. When used herein, the singular shall include the plural, and vice
versa, and the use of the masculine, feminine or neuter gender shall include
all other genders, as appropriate. Any reference herein to a person shall
include natural persons, corporations, partnerships, limited liability
companies, associations and other entities.
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10.14. Notices. Any and all notices, elections or demands permitted
or required to be made under this Agreement shall be in writing and shall be
delivered personally, telecopied or sent by certified mail or nationally
recognized courier service (such as Federal Express) to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery or telecopy, or the date of mailing or delivery to such courier
service, as the case may be, shall be the date of such notice, election or
demand, and rejection, refusal to accept or inability to deliver because of a
changed address of which no notice was sent shall not affect the validity of
any notice, election or demand given in accordance with the provisions of this
Agreement. For the purposes of this Agreement:
The address of Lender is:
First Tennessee Bank National Association
0000 X. Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy Number: 000-000-0000
The address of Borrower is:
Forward Air Corporation
000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopy Number: 000-000-0000
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10.15. Interest and Loan Charges Not to Exceed Maximum Amounts
Allowed by Law. Anything in this Agreement, the Notes, the Security Instruments
or any of the other Loan Documents to the contrary notwithstanding, in no event
whatsoever, whether by reason of advancement of proceeds of the Loans,
acceleration of the maturity of the unpaid balance of the Loans or otherwise,
shall the interest and loan charges agreed to be paid to Lender for the use of
the money advanced or to be advanced hereunder exceed the maximum amounts
collectible under applicable laws in effect from time to time. It is understood
and agreed by the parties that, if for any reason whatsoever the interest or
loan charges paid or contracted to be paid by Borrower in respect of the Loans
shall exceed the maximum amounts collectible under applicable laws in effect
from time to time, then ipso facto, the obligation to pay such interest and/or
loan charges shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by
Lender that exceed such maximum amounts shall be applied to the reduction of
the principal balance of the Loans and/or refunded to Borrower so that at no
time shall the interest or loan charges paid or payable in respect of the Loans
exceed the maximum amounts permitted from time to time by applicable law.
10.16. Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that
the terms hereof shall be more strictly construed against one party by reason
of the rule of construction that a document is to be more strictly construed
against the party that itself or through its agent prepared the same, it being
agreed that Borrower, Lender and their respective agents have participated in
the preparation hereof.
10.17. Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of State of Tennessee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
or have caused this Agreement to be executed by their duly authorized officers,
as of the day and year first above written.
LENDER:
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxx
Title: Regional President
BORROWER:
FORWARD AIR CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
Title: President
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