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EXHIBIT 10.5
LOAN AND SECURITY AGREEMENT
THIS 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
LANDAIR CORPORATION, a Tennessee corporation with principal offices in
Greeneville, Tennessee that was formerly known as Landair Services, Inc.
("Borrower").
RECITALS:
A. Borrower is a newly created corporation which will succeed to a
portion of the business of Forward Air Corporation (formerly known as Landair
Services, Inc.; herein "Forward Air") as a result of the distribution by Forward
Air of certain of its assets.
B. Borrower has requested that Lender make available to Borrower an
equipment loan facility in the original principal amount not exceeding
$10,000,000 (the "Equipment Loan") and make available to Borrowers 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")(the "Line of Credit"; the Term Loan and the Line of Credit are
sometimes hereinafter referred to as the "Loans") on the terms and conditions
hereinafter set forth, and for the purposes hereinafter set forth; and
C. In order to induce Lender to make the Loans to Borrower, Borrower
has made certain representations to Lender; and
D. Lender, in reliance upon the representations and inducements of
Borrower, has agreed to make the Loans 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:
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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 1.25:1.0 1.00% 1.10%
From 1.25 up to and including 1.6:1.0 1.25% 1.35%
From 1.6 up to and including 2.25:1.0 1.50% 1.60%
In the event the Cash Flow Coverage Ratio is greater than 2.25:1.0 all
Borrowings shall accrue interest at the Default Rate set forth in the applicable
Note. 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 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.
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"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)
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
effective 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
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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
a 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.
"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
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.
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"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.
"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.
ARTICLE II
THE EQUIPMENT LOAN
2.1. Evidence of Equipment Loan Indebtedness; Advances; Repayment.
(a) The Equipment Loan shall be evidenced by a Secured
Promissory Note (Equipment Loan) of even date herewith, in the original
principal amount of Ten Million and No/100 Dollars ($10,000,000), made
and executed by Borrower, payable to the order of Lender, in
substantially the form attached hereto as Exhibit A-1 (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 $10,000,000 provided,
however, that (i) no advance under the Equipment Loan after the date of
this Agreement shall be in an 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
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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.
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(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 (a) with respect
to equipment being acquired by Borrower or any Guarantor, 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) and (b) with respect to equipment already owned by Borrower
or any Guarantor as of the date of this Agreement and approved by
Lender, in level payments sufficient to amortize the principal amount
so drawn over a period approved by Lender 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 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
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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.
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
Master Secured Promissory Note (Line of Credit Loan) of even date
herewith, in the original principal amount not exceeding 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-2 (together with any extensions,
modifications, renewals and/or replacements thereof, herein referred to
as the "Line of Credit Note").
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(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) $15,000,000.
(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 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").
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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.
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 1.6:1.0 .100%
1.6:1.0 or greater .125%
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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 1.25:1.0 .25%
From 1.25 up to and including 1.6:1.0 .50%
1.6:1.0 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 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:
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(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):
(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
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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:
(1) Equipment. All equipment or other property of
Borrower purchased with the proceeds of the Equipment Note,
together with all parts, accessories and attachments and all
replacements thereof and additions thereto; and
(2) Accounts, Chattel Paper, Instruments and General
Intangibles. All of Borrower's present and future accounts,
accounts receivable, chattel paper,
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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 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.
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(b) Guaranty. The Guaranty Agreement of even date herewith,
executed by Landair Transport, Inc., Volunteer Adjustment, Inc. and
Landair 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 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,
(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
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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;
(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;
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(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. Forward Air Corporation shall have effected
a distribution of the common stock of Borrower as approved by the Board
of Directors of Forward Air Corporation on July 9, 1998 and shall have
completed the transfer of certain assets to Borrower as described in
that certain August, 1998 letter from the Internal Revenue Service to
Forward Air Corporation (the "Distribution").
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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 its obligations thereunder are within the
corporate powers of Borrower and such Guarantor, have
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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.
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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
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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 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
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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.
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
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intangible collateral security for the Obligations, without thirty (30) days'
prior written notice to Lender in each instance.
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
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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.
(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
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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.
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 2.25 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.
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 E 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 of 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 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
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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 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 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
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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.
8.30. Operations of Other Subsidiaries. Without the prior written
permission of Lender, Borrower shall not permit the Other Subsidiaries, if any,
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;
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(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 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
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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:
(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 first 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. 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.
10.3. 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.
10.4. 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
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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 F attached
hereto.
10.5. 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.
10.6. 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.
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.
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10.7. 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.
10.8. 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.
10.9. 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.
10.10. 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.
10.11. 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.
10.12. 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.
10.13. 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
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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:
Landair Corporation
000 Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopy Number: 000-000-0000
10.14. 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.
10.15. Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same
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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.
10.16. 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:
LANDAIR CORPORATION
By: /s/ X.X. Xxxxx
--------------------------------
Title: President
--------------------------------
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