EXHIBIT 10.H
LOAN AGREEMENT
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
Kenan Transport Company
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx Xxxxxxxx 00000-0000
(Hereinafter referred to as the "Borrower")
This Loan Agreement ("Agreement") is entered into February 13, 1998, by
and between Bank and Borrower, a Corporation (For profit) organized under
the laws of North Carolina.
Borrower has applied to Bank for a loan or loans (individually and
collectively, the "Loan") evidenced by one or more promissory notes
(whether one or more, the "Note") as follows:
Line of Credit - in the principal amount of $20,000,000.00 which is
evidenced by the Promissory Note executed of even date herewith ("Line
of Credit Note"), under which Borrower may borrow, repay, and reborrow,
from time to time, so long as the total indebtedness outstanding at any
one time does not exceed the principal amount as reduced on a quarterly
basis according to the availability reduction schedule specified in the
Note. The Loan proceeds are to be used by Borrower for refinancing
outstanding obligations, if any, pursuant to Borrower's existing
$7,000,000.00 line of credit with Bank, financing acquisitions and
related capital expenses, working capital and general corporate purposes.
Bank's obligation to advance or readvance under the Line of Credit Note
shall terminate if Borrower is in Default under the Line of Credit Note.
This Agreement applies to the Loan and all Loan Documents. The terms
"Loan Documents" and "Obligations," as used in this Agreement, are
defined in the Note. The term "Borrower" shall include its Subsidiaries.
As used in this Agreement as to Borrower, "Subsidiary" shall mean any
corporation of which more than 80% of the issued and outstanding voting
stock is owned directly or indirectly by Borrower. Each Subsidiary of
the Bank, now existing or hereafter acquired, will execute an
unconditional guaranty of the Note identical in form to that attached
hereto as Exhibit A.
Relying upon the covenants, agreements, representations and warranties
contained in this Agreement, Bank is willing to extend credit to Borrower
upon the terms and subject to the conditions set forth herein, and Bank
and Borrower agree as follows:
REPRESENTATIONS. Borrower represents that from the date of this
Agreement and until final payment in full of the Obligations:
Accurate Information. All information now and hereafter furnished to
Bank is and will be as of the date of any future advance true, correct
and complete provided however that any projections on Borrower's future
performance provided to Bank by Borrower while made in good faith, were
intended to be predictions and are not warranted as to ultimate accuracy.
Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s)
thereof, (including guarantys and contingent liabilities of a type
required by generally accepted accounting principles to be reflected
therein), and Borrower further represents that its financial condition
has not changed materially or adversely since the date(s) of such
documents.
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Authorization; Non-Contravention. The execution, delivery and
performance by Borrower and any guarantor, as applicable, of this
Agreement and other Loan Documents to which it is a party are within its
power, have been duly authorized by all necessary action taken by the
duly authorized officers of Borrower and any guarantors and, if
necessary, by making appropriate filings with any governmental agency or
unit and are the legal, binding, valid and enforceable obligations of
Borrower and any guarantors (subject to bankruptcy and other equitable
principles); and do not (i) contravene, or constitute (with or without
the giving of notice or lapse of time or both) a violation of any
provision of applicable law, a violation of the organizational documents
of Borrower or any guarantor, or a default under any agreement, judgment,
injunction, order, decree or other instrument binding upon or affecting
Borrower or any guarantor, (ii) result in the creation or imposition of
any lien (other than the lien(s) created by the Loan Documents) on any of
Borrower's or guarantor's assets, or (iii) give cause for the
acceleration of any obligations of Borrower or any guarantor to any other
creditor.
Asset Ownership. Borrower has good and marketable title to all of the
properties and assets reflected on the balance sheets and financial
statements supplied Bank by Borrower, and all such properties and assets
are free and clear of mortgages, security deeds, pledges, liens, charges,
and all other encumbrances, except as otherwise disclosed to Bank by
Borrower in writing ("Permitted Liens") and listed on the Schedule of
Permitted Liens attached hereto as Exhibit B. To Borrower's knowledge, no
default has occurred under any Permitted Liens and no claims or interests
adverse to Borrower's present rights in its properties and assets have
arisen.
Discharge of Liens and Taxes. Borrower has duly filed, paid and/or
discharged all taxes or other claims which may become a lien on any of
its property or assets, except to the extent that such items are being
appropriately contested in good faith and an adequate reserve for the
payment thereof is being maintained.
Sufficiency of Capital. Borrower is not, and after consummation of this
Agreement and after giving effect to all indebtedness incurred and liens
created by Borrower in connection with the Loan, will not be, insolvent
within the meaning of 11 U.S.C. Section 101(32).
Compliance with Laws. Borrower is in compliance in all material respects
with all federal, state and local laws, rules and regulations applicable
to its properties, operations, business, and finances, including, without
limitation, any federal or state laws relating to liquor (including 18
U.S.C. Section 3617, et seq.) or narcotics (including 21 U.S.C. Section
801, et seq.) and/or any commercial crimes; all applicable federal, state
and local laws and regulations intended to protect the environment; and
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), if applicable.
Organization and Authority. Each corporate or limited liability company
Borrower and any guarantor, as applicable, is duly created, validly
existing and in good standing under the laws of the state of its
organization, and has all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted.
Each corporate or limited liability company Borrower and any guarantor,
if any, is duly qualified, licensed and in good standing in each
jurisdiction where qualification or licensing is required by the nature
of its business or the character and location of its property, business
or customers, and in which the failure to so qualify or be licensed, as
the case may be, in the aggregate, could have a material adverse effect
on the business, financial position, results of operations, properties or
prospects of Borrower or any such guarantor.
No Litigation. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor the potential aggregate
liability to Borrower for which in the reasonable estimation of Borrower,
exceeds $2,000,000.00.
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Regulation U. None of the proceeds of the Loan made pursuant to this
Agreement shall be used directly or indirectly for the purpose of
purchasing or carrying any margin stock in violation of any of the
provisions of Regulation U of the Board of Governors of the Federal
Reserve System ("Regulation U"), or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or
carry margin stock or for any other purchase which might render the Loan
a "Purpose Credit" within the meaning of Regulation U.
ERISA. Each employee pension benefit plan, as defined in ERISA,
maintained by Borrower meets, as of the date hereof, the minimum funding
standards of ERISA and all applicable regulations thereto and
requirements thereof, and of the Internal Revenue Code of 1954, as
amended. No "Prohibited Transaction" or "Reportable Event" (as both
terms are defined by ERISA) has occurred with respect to any such plan.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this
Agreement and until final payment in full of the Obligations, unless Bank
shall otherwise consent in writing, Borrower will:
Business Continuity. Conduct its business in substantially the same
manner as such business is now and has previously been conducted.
Maintain Properties. Maintain, preserve and keep its property in good
repair, working order and condition, making all needed replacements,
additions and improvements thereto, to the extent allowed by this
Agreement.
Access to Books & Records. Allow Bank, or its agents, during normal
business hours, access to the books, records and such other documents of
Borrower as Bank shall reasonably require, and allow Bank to make copies
thereof at Bank's expense.
Insurance. Maintain adequate insurance coverage with respect to its
properties and business against loss or damage of the kinds and in the
amounts customarily insured against by companies of established
reputation engaged in the same or similar businesses including, without
limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; and provide such proof
of insurance coverage as the Bank may from time to time reasonably
request.
Notice of Default and Other Notices. (a) Notice of Default. Furnish to
Bank immediately upon becoming aware of the existence of any condition or
event which constitutes a Default (as defined in the Loan Documents) or
any event which, upon the giving of notice or lapse of time or both, may
become a Default, written notice specifying the nature and period of
existence thereof and the action which Borrower is taking or proposes to
take with respect thereto. (b) Other Notices. Promptly notify Bank in
writing of (i) any material adverse change in its financial condition or
its business; (ii) any default under any material agreement, contract or
other instrument to which it is a party or by which any of its properties
are bound, or any acceleration of the maturity of any indebtedness owing
by Borrower; (iii) any material adverse claim against or affecting
Borrower or any part of its properties; (iv) the commencement of, and any
material determination in, any litigation with any third party or any
proceeding before any governmental agency or unit affecting Borrower; and
(v) at least 30 days prior thereto, any change in Borrower's name or
address as shown above, and/or any change in Borrower's corporate
structure.
Compliance with Other Agreements. Comply with all terms and conditions
contained in this Agreement and any other Loan Documents as defined in
the Note, including but not limited to the ISDA Master Swap Agreement
between Borrower and Bank effective December 10, 1997.
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Payment of Debts. Pay and discharge when due or reasonably promptly
thereafter, and before subject to penalty or further charge, and
otherwise satisfy before maturity or delinquency, all obligations, debts,
taxes, and liabilities of whatever nature or amount, except those which
Borrower in good faith disputes.
Reports and Proxies. Deliver to Bank, promptly, a copy of all financial
statements, reports, notices, and proxy statements, sent by Borrower to
stockholders all 10-K's and 10-Q's, and such reports required to be filed
by Borrower with any governmental agencies or authorities as the Bank may
from time to time reasonably request.
Other Financial Information. Deliver promptly such other information
regarding the operation, business affairs, and financial condition of
Borrower which Bank may reasonably request.
Non-Default Certificate From Borrower. Deliver to Bank, with the
Financial Statements required herein, a certificate signed by Borrower,
if Borrower is an individual, or by a principal financial officer of
Borrower warranting that no "Default" as specified in the Loan Documents
nor any event which, upon the giving of notice or lapse of time or both,
would constitute such a Default, has occurred.
Estoppel Certificate. Furnish, within 15 days after request by Bank, a
written statement duly acknowledged of the amount due under the Loan and
whether offsets or defenses exist against the Obligations.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement
and until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, Borrower and Subsidiaries will not:
Default on Other Contracts or Obligations. Default (and failure to cure
within any applicable cure period) on any material contract with or
obligation when due to a third party or default in the performance of any
obligation to a third party incurred for money borrowed in an amount in
excess of $2,000,000.00, in each case, the effect of which default is to
permit acceleration or termination of a contract, the acceleration or
termination of which would be materially adverse to Borrower.
Material Capital Structure or Business Alteration. (i) suffer a
material alteration in the kind or type of Borrower's business or that of
Borrower's Subsidiaries, if any; (ii) sell all or substantially all of
the business or assets of Borrower, or any of Borrower's Subsidiaries,
or; (iii) sell a material portion (25% or more in aggregate) of such
business or assets if such a sale is outside the ordinary course of
business of Borrower, or any of Borrower's Subsidiaries.
Judgment Entered. Permit the entry of any monetary judgment or the
assessment against, the filing of any tax lien against, or the issuance
of any writ of garnishment or attachment against any property of or debts
due Borrower in an amount in excess of $2,000,000.00 and that is not
discharged or execution is not stayed within Thirty (30) days of entry.
Government Intervention. Permit the assertion or making of any seizure,
vesting or intervention by or under authority of any government by which
the management of Borrower or any guarantor is displaced of its authority
in the conduct of its respective business or such business is curtailed
or materially impaired.
Prepayment of Other Debt. Retire any long-term debt entered into prior
to the date of this Agreement at a date in advance of its legal
obligation to do so.
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Change in Fiscal Year. Borrower or guarantor shall not change its fiscal
year without the consent of Bank.
Guarantees. Guarantee or otherwise become responsible for obligations of
any unaffiliated person or entity in an aggregate amount in excess of
$2,000,000.00 per fiscal year, other than the endorsement of checks and
drafts for collection in the ordinary course of business.
Encumbrances. Create, assume, or permit to exist any mortgage, security
deed, deed of trust, pledge, lien, charge or other encumbrance on any of
its assets, whether now owned or hereafter acquired, other than: (i)
security interests required by the Loan Documents; (ii) liens for taxes
contested in good faith; (iii) liens accruing by law for employee
benefits; (iv) ordinary course liens such as carriers', warehousemen,
mechanics' and lessors liens, not to exceed $2,000,000.00 in aggregate at
any time; (v) capital leases not exceeding $7,000,000.00 in the aggregate
at any time, or (vi) Permitted Liens.
Mergers. Enter into any merger or consolidation unless Borrower is the
surviving entity in such merger or consolidation.
FINANCIAL COVENANTS. Borrower agrees to the following provisions from
the date hereof until final payment in full of the Obligations, unless
Bank shall otherwise consent in writing, and all financial covenants
shall be calculated quarterly on a consolidated trailing twelve month
basis, using the consolidated financial information for Borrower, its
Subsidiaries, and its holding or parent company, as applicable:
FUNDS FROM OPERATIONS TO FUNDED DEBT RATIO. Borrower shall at all
times maintain a ratio of Funds from Operations to Funded Debt as
determined in accordance with generally accepted accounting
principles in effect on the date hereof of not less than 40%.
"Funds from Operations" is defined as net after tax income of
Borrower and its Subsidiaries before extraordinary non-recurring
gains or losses plus depreciation and amortization minus dividends
for the four fiscal quarters of Borrower most recently ended for
which financial statements are due to be provided to Bank pursuant
hereto. "Funded Debt" is defined as all indebtedness of Borrower
and its Subsidiaries for borrowed money, including, but not limited
to, obligations evidenced by notes, debentures, bonds, capital
leases, and other similar instruments and shall be determined
according to same financial statements used to determine funds from
operations.
FUNDED DEBT TO CAPITALIZATION. Borrower shall at all times
maintain a Funded Debt to Capitalization Ratio as determined in
accordance with generally accepted accounting principles in effect
on the date hereof, of not more than 45%. "Capitalization" is
defined as the sum of Funded Debt plus Consolidated Stockholder's
Equity, determined by reference to the balance sheet from the
period most recently ended for which financial statements are due
to be provided to Bank pursuant hereto.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank,
within 90 days after the close of each fiscal year, audited
financial statements reflecting its operations during such fiscal
year, including, without limitation, a balance sheet, profit and
loss statement and statement of cash flows, all on a consolidated
basis and in reasonable detail, prepared in conformity with
generally accepted accounting principles, as from time to time in
effect. Supporting schedules to such statements will be supplied
upon reasonable request of Bank. All such statements shall be
examined by an independent certified public accountant acceptable
to Bank. The opinion of such independent certified public
accountant shall not be acceptable to Bank if qualified due to any
limitations in scope imposed by Borrower or its
Page 5
Subsidiaries, if any. Any other material qualification of the
opinion by the accountant shall render the acceptability of the
financial statements subject to Bank's approval.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank
quarterly financial statements, including, without limitation, a
balance sheet, quarterly compliance certificate in form attached
hereto as Exhibit C, profit and loss statement and statement of
cash flows, as soon as available and in any event within 30 days
after the close of each such period; all in reasonable detail and
prepared in conformity with generally accepted accounting
principles, as from time to time in effect. Supporting schedules
to such statements will be supplied upon reasonable request of
Bank. Such statements shall be certified as to their correctness
by a principal financial officer of Borrower and in each case, if
audited statements are required, subject to audit and year-end
adjustments.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank
such information as Bank may reasonably request from time to time,
including without limitation, financial statements and information
pertaining to Borrower's or any subsidiary's financial condition.
Such information shall be true, complete, and accurate.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any
advances pursuant to this Agreement are subject to the following
conditions precedent:
Additional Documents. Receipt by Bank of such additional supporting
documents as Bank or its counsel may reasonably request.
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first
written above, have caused this Agreement to be executed under seal.
Kenan Transport Company
Taxpayer Identification Number: 00-0000000
CORPORATE By: /s/ Xxx X. Xxxxxxx
-----------------------------------
SEAL President & Chief Executive Officer
Attest:
/s/ Xxxxxxx X. Xxxxx
---------------------
Secretary
First Union National Bank
CORPORATE By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
SEAL President
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EXHIBIT A
UNCONDITIONAL GUARANTY
Kenan Transport Company
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx Xxxxxxxx 00000-0000
(Individually and collectively "Borrower")
________________________
________________________
______________, North Carolina _________
(Individually and collectively "Guarantor")
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(Hereinafter referred to as "Bank")
To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, and in
consideration of loans, advances, credit, or other financial
accommodations made, extended or renewed to or for the benefit of
Borrower, Guarantor hereby absolutely, irrevocably and unconditionally
guarantees to Bank and its successors, and assigns the timely payment and
performance of all liabilities and obligations of Borrower to Bank under
that certain Promissory Note dated February 13, 1998 and the Loan
Documents as defined therein, and all extensions, modifications and
renewals thereof, including without limitation all principal, interest,
charges, and costs and expenses incurred thereunder (including attorneys'
fees and other costs of collection incurred, regardless of whether suit
is commenced) (collectively, the "Guaranteed Obligations").
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional
guaranty of payment and performance and not of collection. The parties
to this Guaranty are jointly and severally obligated hereunder. This
Guaranty does not impose any obligation on Bank to extend or continue to
extend credit or otherwise deal with Borrower at any subsequent time.
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of the Guaranteed Obligations is
rescinded, avoided or for any other reason must be returned by Bank, and
the returned payment shall remain payable as part of the Guaranteed
Obligations, all as though such payment had not been made. Except to the
extent the provisions of this Guaranty give the Bank additional rights,
this Guaranty shall not be deemed to supersede or replace any other
guaranties given to Bank by Guarantor; and the obligations guaranteed
hereby shall be in addition to any other obligations guaranteed by
Guarantor pursuant to any other agreement of guaranty given to Bank and
other guaranties of the Guaranteed Obligations.
TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty by
written notice, delivered personally to or received by certified or
registered United States Mail or by overnight courier by an authorized
officer of the Bank at the address for notices provided herein. Such
termination shall be effective with respect to Guaranteed Obligations
arising more than 15 days after the date such written notice is received
by said Bank officer. Guarantor may not terminate this Guaranty as to
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Guaranteed Obligations (including any subsequent extensions,
modifications or compromises of the Guaranteed Obligations) then
existing, or to Guaranteed Obligations arising subsequent to receipt by
Bank of said notice if such Guaranteed Obligations are a result of Bank's
obligation to make advances pursuant to a commitment entered into prior
to expiration of the 15 day notice period, or are a result of advances
which are necessary for Bank to protect its collateral or otherwise
preserve its interests. Termination of this Guaranty by any single
Guarantor will not affect the existing and continuing obligations of any
other guarantor hereunder.
APPLICATION OF PAYMENTS, BANK LIEN AND SET-OFF. Monies received from any
source by Bank for application toward payment of the Guaranteed
Obligations may be applied to such Guaranteed Obligations in any manner
or order deemed appropriate by Bank. Except as prohibited by law,
Guarantor grants Bank a security interest in all of Guarantor's accounts
maintained with Bank and any of its affiliates (collectively, the
"Accounts"). If a Default occurs, Bank is authorized to exercise its
right of set-off or to foreclose its lien against any obligation of Bank
to Guarantor including, without limitation, all Accounts or any other
debt of any maturity, without notice.
CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Bank may
from time to time, in its sole discretion, without affecting, impairing,
lessening or releasing the obligations of the Guarantor hereunder: (a)
extend or modify the time, manner, place or terms of payment or
performance and/or otherwise change or modify the credit terms of the
Guaranteed Obligations; (b) increase, renew, or enter into a novation of
the Guaranteed Obligations; (c) waive or consent to the departure from
terms of the Guaranteed Obligations; (d) permit any change in the
business or other dealings and relations of Borrower or any other
guarantor with Bank; (e) proceed against, exchange, release, realize
upon, or otherwise deal with in any manner any collateral that is or may
be held by Bank in connection with the Guaranteed Obligations or any
liabilities or obligations of Guarantor; and (f) proceed against, settle,
release, or compromise with Borrower, any insurance carrier, or any other
person or entity liable as to any part of the Guaranteed Obligations,
and/or subordinate the payment of any part of the Guaranteed Obligations
to the payment of any other obligations, which may at any time be due or
owing to Bank; all in such manner and upon such terms as Bank may deem
appropriate, and without notice to or further consent from Guarantor. No
invalidity, irregularity, discharge or unenforceability of, or action or
omission by Bank relating to any part of, the Guaranteed Obligations or
any security therefor shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following
rights, demands, and defenses Guarantor may have with respect to Bank and
collection of the Guaranteed Obligations: (a) promptness and diligence in
collection of any of the Guaranteed Obligations from Borrower or any
other person liable thereon, and in foreclosure of any security interest
and sale of any property serving as collateral for the Guaranteed
Obligations; (b) any law or statute that requires that Bank make demand
upon, assert claims against, or collect from Borrower or other persons or
entities, foreclose any security interest, sell collateral, exhaust any
remedies, or take any other action against Borrower or other persons or
entities prior to making demand upon, collecting from or taking action
against Guarantor with respect to the Guaranteed Obligations, including
any such rights Guarantor might otherwise have had under Va. Code
Subsection 49-25 and 49-26, et seq., N.C.G.S. Subsection 26-7, et seq.,
Tenn. Code Xxx. Section 00-00-000, O.C.G.A. Section 10-7-24 (and any
successor statute) and any other applicable law; (c) any law or statute
that requires that Borrower or any other person be joined in, notified of
or made part of any action against Guarantor; (d) that Bank preserve,
insure or perfect any security interest in collateral or sell or dispose
of collateral in a particular manner or at a particular time; (e) notice
of extensions, modifications, renewals, or novations of the Guaranteed
Obligations, of any new transactions or other relationships between Bank,
Borrower and/or any guarantor, and of changes in the financial condition
of, ownership of, or business structure of Borrower or any other
guarantor; (f) presentment, protest, notice of dishonor, notice of
default, demand for payment, notice of intention to accelerate maturity,
notice of acceleration of maturity, notice of sale, and all other notices
of any kind whatsoever; (g) the right to assert against Bank any defense
(legal or equitable), set-off, counterclaim,
Page 2
or claim that Guarantor may have at any time against Borrower or any other
party liable to Bank; (h) all defenses relating to invalidity,
insufficiency, unenforceability, enforcement, release or impairment of
Bank's lien on any collateral, of the Loan Documents, or of any other
guaranties held by Bank; (i) any claim or defense that acceleration of
maturity of the Guaranteed Obligations is stayed against Guarantor because
of the stay of assertion or of acceleration of claims against any other
person or entity for any reason including the bankruptcy or insolvency of
that person or entity; and (j) the benefit of any exemption claimed by
Guarantor. Guarantor acknowledges and represents that it has relied upon
its own due diligence in making its own independent appraisal of Borrower,
Borrower's business affairs and financial condition, and any collateral;
Guarantor will continue to be responsible for making its own independent
appraisal of such matters; and Guarantor has not relied upon and will not
hereafter rely upon Bank for information regarding Borrower or any
collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to
Bank that on and after the date hereof: (a) the fair saleable value of
Guarantor's assets exceeds its liabilities, Guarantor is meeting its
current liabilities as they mature, and Guarantor is and shall remain
solvent; (b) all financial statements of Guarantor furnished to Bank are
correct and accurately reflect the financial condition of Guarantor as of
the respective dates thereof; (c) since the date of such financial
statements, there has not occurred a material adverse change in the
financial condition of Guarantor; (d) there are not now pending any court
or administrative proceedings or undischarged judgments against
Guarantor, no federal or state tax liens have been filed or threatened
against Guarantor, and Guarantor is not in default or claimed default
under any agreement; and (e) at such reasonable times as Bank requests,
Guarantor will furnish Bank with such other financial information as Bank
may reasonably request; provided however that if Guarantor is a wholly-
owned subsidiary of Borrower the submission of consolidated financial
statements by Borrower as required by the Loan Agreement shall be
adequate financial information.
INTEREST. Regardless of any other provision of this Guaranty or other
Loan Documents, if for any reason the effective interest on any of the
Guaranteed Obligations should exceed the maximum lawful interest, the
effective interest shall be deemed reduced to and shall be such maximum
lawful interest, and any sums of interest which have been collected in
excess of such maximum lawful interest shall be applied as a credit
against the unpaid principal balance of the Guaranteed Obligations.
DEFAULT. If any of the following events occur, a default ("Default")
under this Guaranty shall exist: (a) Failure of timely payment or
performance of the Guaranteed Obligations or a default under any Loan
Document; (b) A breach of any agreement or representation contained or
referred to in the Guaranty, or any of the Loan Documents, or contained
in any other contract or agreement of Guarantor with Bank or its
affiliates, whether now existing or hereafter arising; (c) The death of,
appointment of a guardian for, dissolution of, termination of existence
of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against, Guarantor or any
general partner of or the holder(s) of the majority ownership interests
of Guarantor; and/or (d) The entry of any monetary judgment or the
assessment against, the filing of any tax lien against, or the issuance
of any writ of garnishment or attachment against any property of or debts
due Guarantor in an amount which may have a materially adverse impact on
the financial condition of Guarantor.
If a Default occurs, the Guaranteed Obligations shall be due immediately
and payable without notice. Guarantor shall pay interest on the
Guaranteed Obligations from such Default at the highest rate of interest
charged on any of the Guaranteed Obligations.
ATTORNEY'S FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all
of Bank's reasonable expenses incurred to enforce or collect any of the
Guaranteed Obligations, including, without limitation, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses,
Page 3
whether incurred without the commencement of a suit, in any suit,
arbitration, or administrative proceeding, or in any appellate or
bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated
Debt") to any and all obligations of Borrower to Bank now or hereafter
existing while this Guaranty is in effect, provided however that
Guarantor may receive regularly scheduled principal and interest payments
on the Subordinated Debt so long as (i) all sums due and payable by
Borrower to Bank have been paid in full on or prior to such date, and
(ii) no event or condition which constitutes or which with notice or the
lapse or time would constitute an event of default with respect to the
Guaranteed Obligations, shall be continuing on or as of the payment date;
(b) Guarantor will place a legend indicating such subordination on every
note, ledger page or other document evidencing any part of the
Subordinated Debt; and (c) except as permitted by this paragraph,
Guarantor will not request or accept payment of or any security for any
part of the Subordinated Debt, and any proceeds of the Subordinated Debt
paid to Guarantor, through error or otherwise, shall immediately be
forwarded to Bank by Guarantor, properly endorsed to the order of Bank,
to apply to the Guaranteed Obligations.
MISCELLANEOUS. (a) Assignment. This Guaranty and other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Guaranty and other Loan Documents are
freely assignable, in whole or in part, by Bank. Any assignment shall
not release Guarantor from the Guaranteed Obligations. (b) Applicable
Law; Conflict Between Documents. This Guaranty and other Loan Documents
shall be governed by and construed under the laws of the state named in
Bank's address shown above without regard to that state's conflict of
laws principles. If the terms of this Guaranty should conflict with the
terms of any commitment letter that survives closing, the terms of this
Guaranty shall control. (c) Jurisdiction. Guarantor irrevocably agrees to
non-exclusive personal jurisdiction in the state named in Bank's address
shown above. (d) Severability. If any provision of this Guaranty or of
the other Loan Documents shall be prohibited or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty or other document.
(e) Notices. Any notices to Guarantor shall be sufficiently given, if in
writing and mailed or delivered to the Guarantor's address shown above or
such other address as provided hereunder, and to Bank, if in writing and
mailed or delivered to Bank's office address shown above or such other
address as Bank may specify in writing from time to time. In the event
that Guarantor changes Guarantor's address at any time prior to the date
the Guaranteed Obligations are paid in full, Guarantor agrees to promptly
give written notice of said change of address by registered or certified
mail, return receipt requested, all charges prepaid. (f) Plural;
Captions. All references in the Loan Documents to borrower, guarantor,
person, document or other nouns of reference mean both the singular and
plural form, as the case may be, and the term "person" shall mean any
individual, person or entity. The captions contained in the Loan
Documents are inserted for convenience only and shall not affect the
meaning or interpretation of the Loan Documents. (g) Binding Contract.
Guarantor by execution of and Bank by acceptance of this Guaranty agree
that each party is bound to all terms and provisions of this Guaranty
and, in the case of amendments or modifications, by Guarantor. (h)
Amendments, Waivers and Remedies. No waivers, amendments or
modifications of this Guaranty and other Loan Documents shall be valid
unless in writing and signed by an officer of Bank. No waiver by Bank of
any Default shall operate as a waiver of any other Default or the same
Default on a future occasion. Neither the failure nor any delay on the
part of Bank in exercising any right, power, or privilege granted
pursuant to this Guaranty and other Loan Documents shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude
any other or further exercise or the exercise of any other right, power
or privilege. All remedies available to Bank with respect to this
Guaranty and other Loan Documents and remedies available at law or in
equity shall be cumulative and may be pursued concurrently or
successively. (i) Partnerships. If Guarantor is a partnership, the
obligations, liabilities and agreements on the part of Guarantor shall
remain in full force and
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effect and fully applicable notwithstanding any changes in the individuals
comprising the partnership. The term "Guarantor" includes any altered or
successive partnerships, and predecessor partnership(s) and the partners
shall not be released from any obligations or liabilities hereunder. (j)
Loan Documents. The term "Loan Documents" refers to all documents
executed in connection with the Guaranteed Obligations and may include,
without limitation, commitment letters that survive closing, loan
agreements, other guaranty agreements, security agreements, instruments,
financing statements, mortgages, deeds of trust, deeds to secure debt,
letters of credit and any amendments or supplements (excluding swap
agreements as defined in 11 U.S. Code Section 101).
FINANCIAL AND OTHER INFORMATION. Annual Financial Statements. Guarantor
shall deliver to Bank, within 90 days after the close of each fiscal
year, financial statements reflecting its operations during such fiscal
year, including, without limitation, a balance sheet, profit and loss
statement and statement of cash flows, all on a consolidated basis and in
reasonable detail, prepared in conformity with generally accepted
accounting principles, as from time to time in effect. Supporting
schedules to such statements will be supplied upon reasonable request of
Bank. Such statements shall be certified as to their correctness by a
principal financial officer of Guarantor. Additional Information.
Guarantor shall deliver to Bank such information as Bank may reasonably
request from time to time, including without limitation, financial
statements and information pertaining to Guarantor's financial condition.
Such information shall be true, complete, and accurate.
Arbitration. Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Guaranty
and other Loan Documents ("Disputes") between or among parties to this
Guaranty shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right
of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, disputes as to whether a
matter is subject to arbitration, claims brought as class actions, claims
arising from Loan Documents executed in the future, or claims arising out
of or connected with the transaction reflected by this Guaranty.
Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and Title 9 of the U.S.
Code. All arbitration hearings shall be conducted in the city in which
the office of Bank first stated above is located. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. All applicable statutes
of limitation shall apply to any Dispute. A judgment upon the award may
be entered in any court having jurisdiction. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired
judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted or if such person is not
available to serve, the single arbitrator may be a licensed attorney.
Notwithstanding the foregoing, this arbitration provision does not apply
to disputes under or related to swap agreements.
Preservation and Limitation of Remedies. Notwithstanding the preceding
binding arbitration provisions, Bank and Guarantor agree to preserve,
without diminution, certain remedies that any party hereto may employ or
exercise freely, independently or in connection with an arbitration
proceeding or after an arbitration action is brought. Bank and Guarantor
shall have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable:
(i) all rights to foreclose against any real or personal property or other
security by exercising a power of sale granted under Loan Documents or
under applicable law or by judicial foreclosure and sale, including a
proceeding to confirm the sale; (ii) all rights of self-help including
peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional
or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment
by
Page 5
confession of judgment. Preservation of these remedies does not limit
the power of an arbitrator to grant similar remedies that may be
requested by a party in a Dispute.
Guarantor and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which
may arise in the future in connection with any Dispute whether the
Dispute is resolved by arbitration or judicially.
IN WITNESS WHEREOF, Guarantor, on the day and year first written above,
has caused this Unconditional Guaranty to be executed under seal.
00-0000000
------------------------------
Taxpayer Identification Number
CORPORATE By: /s/ Xxx X. Xxxxxxx
-----------------------------------
SEAL President & Chief Executive Officer
ATTEST:
/s/ Xxxxxxx X. Xxxxx
---------------------------
Secretary
Page 6
EXHIBIT B
KENAN TRANSPORT COMPANY
SCHEDULE OF PERMITTED LIENS
As a result of asset purchase of Transport South, Inc. on December 1,
1997, the December 31, 1997 financial statements to be submitted to First
Union National Bank will include $3,070,260 in capital lease obligations.
EXHIBIT C
BORROWERS' COMPLIANCE CERTIFICATE
The undersigned officer of Kenan Transport Co. ("KTC") hereby
certifies, pursuant to Section 5.01(d) of the Loan Agreement (the "Loan
Agreement") dated as of February 13, 1998, among KTC and First Union
National Bank (the "Bank"), that:
1. I have reviewed the terms of the Loan Agreement and have made,
or caused to be made under my supervision, a review of the activities and
condition of KTC and its Subsidiaries during the accounting period set
forth below and that as of the date of this Certificate to the best of the
undersigned's knowledge after diligent inquiry the undersigned (on behalf
of the Borrowers and not in his individual capacity) certifies: (a) the
representations and warranties contained in the Loan Agreement and as set
forth in the other Loan Documents are in all material respects true and
correct (except (i) such representations and warranties which relate
specifically to an earlier date or which refer to financial statements
that are not the most recent financial statements of KTC and its
Subsidiaries furnished to the Bank pursuant to the Loan Agreement, and
(ii) those representations which are no longer true due to an action or
event specifically permitted by the provisions of the Loan Documents); (b)
no Default or Event of Default has occurred and is continuing that has not
been waived by the Bank in writing (or if a Default or Event of Default
has occurred, attached is a description in reasonable detail as to the
proposed action to be taken by the Borrowers with respect thereto); and
(c) no change has occurred in the operations or condition, financial or
otherwise, of the Borrowers since the Closing Date which could have a
Material Adverse Effect.
2. (a) Quarterly Statements. The accompanying financial
statements of KTC and its Subsidiaries as of December 31, 1997
for the quarterly accounting period ending December 31, 1997
present fairly, in accordance with GAAP, the financial
position of KTC and its Subsidiaries as of the end of such
period, and the results of operations for such period then
ended, and for the elapsed portion of the fiscal year ended
with the last day of such period, in each case prepared in
accordance with GAAP (except for the absence of footnotes and
normal year-end adjustments under GAAP).
(b) Annual Statements. The accompanying audited financial
statements of KTC and its Subsidiaries as of December 31, 1997
for the annual accounting period ending December 31, 1997
present fairly, in accordance with GAAP, the financial
position of KTC and its Subsidiaries as of the end of such
period, and the results of operations for such period then
ended, on the basis presented.
3. To the best of the undersigned's knowledge after diligent
inquiry, the undersigned (on behalf of the Borrowers and not in his
individual capacity) certifies that the Borrowers have observed, performed
and fulfilled in all material respects each and every obligation and
covenant contained in the Loan Agreement. Attached hereto as Schedule I
are calculations performed by me or under my
Page 1
supervision demonstrating for the accounting period set forth above the
Borrowers' compliance with each of the following Sections of the Loan
Agreement:
(a) Financial Covenants - Funds from Operations to Funded
Debt Ratio
(b) Financial Covenants - Funded Debt to Capitalization
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate as of February
13, 1998.
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx
------------------------
Title: Vice President - Finance
------------------------
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