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EXHIBIT 10.2
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 13th day of January, 1999, by
and among FORWARD AIR CORPORATION, a Tennessee corporation, FAF, INC., a
Tennessee corporation, and FORWARD AIR, INC., a Tennessee corporation
(hereinafter referred to collectively as the "Borrower"), and SUNTRUST BANK,
NASHVILLE, N.A., a national banking association (hereinafter referred to as the
"Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested and Lender has agreed to make available
to Borrower a line of credit in the principal amount of up to Ten Million
Dollars ($10,000,000.00).
NOW, THEREFORE, for and in consideration of the foregoing premises, and
for such other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Lender and Borrower hereby agree as follows:
ARTICLE I
AMOUNT AND TERMS OF THE LOAN
Section 1.1. Loan. Subject to the terms and conditions and relying on
the representations and warranties contained herein, Lender has agreed to make
available to Borrower a line of credit in the principal amount of up to Ten
Million Dollars ($10,000,000.00) (the "Loan") until December 31, 2000. Such
maturity shall be automatically extended for consecutive one year periods unless
Lender delivers written notice to Borrower at least thirty (30) days prior to
the scheduled maturity. Each advance under the Loan (an "Advance") shall reduce
the amount available thereunder by the amount of such Advance and each repayment
of principal under the Notes (as defined below) shall increase the amount
available to Borrower under the Loan. Each Advance under the Loan shall be
evidenced by a separate promissory note dated the date of such Advance and
otherwise in the form attached hereto as Exhibit A (each a "Note," collectively
the "Notes").
FAF, Inc., as maker, has previously executed in favor of Lender, a
revolving line of credit promissory note dated August 11, 1998 (the "Prior FAF,
Inc. Note") in the original principal amount of $8,022,000 which is the
outstanding principal balance as of the date hereof. Borrower and Lender
acknowledge and agree that the outstanding principal balance of the Prior FAF,
Inc. Note shall be deemed an Advance under this Agreement and concurrently
herewith Borrower shall execute a restated Note (in the form of Exhibit A) equal
to the principal amount outstanding under the Prior FAF, Inc. Note. As of the
date hereof and of such Note,
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the Prior FAF, Inc. Note shall be terminated except for payment to Lender of all
accrued and unpaid interest thereunder. The principal balance of the Prior FAF
Note shall be amortized and payable as set forth in Section 1.5 and shall be
governed by the terms and provisions of this Agreement and such Note.
Section 1.2. Notice and Manner of Borrowing. For each request for an
Advance under the Loan, Borrower shall provide to Lender a request for Advance
executed by an authorized officer of Borrower, in such form as approved by
Lender, and in substance satisfactory to Lender, together with an invoice and a
description for the Trailers and/or Tractors (as such terms are defined below)
to be purchased with the Advance. Subject to the fulfillment of each of the
conditions set forth in this Agreement, Lender will make each requested Advance
under the Loan available to Borrower, in immediately available funds no later
than 2:00 p.m., local time of the Lender, on the date of the requested Advance.
Section 1.3. Each Borrowings, Request a Certification. Each request for
an Advance under the Loan shall constitute a certification by Borrower that, on
the date of the respective Advance and after giving effect thereto: (i) no Event
of Default has occurred and is continuing on the date of such request and (ii)
each of the representations and the warranties made by the Borrower herein is
true and correct on such date with the same force and effect as if made on and
as of such date.
Section 1.4. Interest. The Borrower shall pay interest on the
outstanding principal amount of the Loan at the "Applicable Rate," which shall
be the LIBOR Rate plus the Applicable Margin. The LIBOR Rate shall mean the
London Interbank Offering Rate for ninety (90) day periods as quoted on the
Telerate System on the Rate Reset Date (as defined and described in this
Section) or if such date is not a business day, the business day next preceding
the Rate Reset Date. Interest shall be computed based upon a 360-day year.
The Applicable Rate shall be determined in accordance with the
following pricing matrix.
Ratio of Adjusted Funded Applicable
Debt to EBITDAR Margin
--------------- ------
> 2.0 1.50%
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> 1.5 and < 2.0 1.25%
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> 1.0 and < 1.5 1.00%
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< 1.0 0.75%
Initially and until April 1, 1999 the Applicable Rate shall be the
LIBOR Rate in effect as of the date of the execution of this Agreement (and
adjusted on the first business day of each calendar quarter thereafter) plus one
and one quarter of one percent (1.25%) per annum. Thereafter the Ratio of
Adjusted Funded Debt to
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EBITDAR shall be measured at the end of each calendar quarter commencing
December 31, 1998, and the effective date of any change to the Applicable Margin
shall be the first business day of the next calendar quarter (the "Rate Reset
Date"). For example, if the above-referenced ratio is measured on December 31st,
the Rate Reset Date for the change in interest rate under this Section shall be
April 1st of the next year.
Section 1.5. Payment of Principal and Interest. For Advances used to
acquire new equipment, Borrower shall repay each Note in equal monthly payments
of principal based on a five year amortization plus all accrued and unpaid
interest thereunder. The outstanding and unpaid principal amount and all accrued
and unpaid interest under each Note shall be paid in full on the date which is
five (5) years from the date of such Note. For Advances used to acquire used
equipment, Borrower and Lender shall mutually agree upon the amortization of the
applicable Note. In the event the Collateral is sold, the proceeds of such sale
shall be applied to repayment of the applicable Note in inverse order of
maturity.
Section 1.6. Use of Proceeds. The proceeds of the Loan (except for
proceeds of the Loan to refinance the Prior FAF, Inc. Note) hereunder shall be
used by Borrower periodically to purchase trailers (the "Trailers"), tractors
(the "Tractors") for its business use, as well as other equipment mutually
agreed upon by Borrower and Lender.
ARTICLE II
SECURITY INTEREST
Section 2.1. Grant of Security Interest. As security for the payment of
all indebtedness, liabilities and obligations of Borrower to Lender, now
existing or hereafter incurred, matured or unmatured, direct or contingent,
including all modifications, extensions, renewals or changes in form thereof,
whether evidenced by, arising under, relating to or in connection with the Loan,
the Notes, any liability of the Borrower to the Lender (or its affiliates) under
any swap agreements or similar arrangements or otherwise (hereinafter sometimes
collectively referred to as the "Indebtedness"), Borrower hereby assigns to
Lender and grants to Lender a security interest in the following:
(a) Equipment. All of Borrower's right, title, and interest in
and to the Tractors and Trailers being acquired (or refinanced) by Borrower with
the proceeds of the Loan, which are more particularly described on Exhibit B
which is attached hereto and incorporated herein by this reference. Borrower
shall provide descriptions of the remaining Tractors and Trailers at the time of
Borrower's request for an Advance under the Loan or as soon thereafter as
available, and Exhibit B shall be updated accordingly.
(b) Proceeds. All proceeds and products of any of the
foregoing, including, without limitation, all accounts receivable, accounts,
contract rights, instruments, documents, chattel paper, and/or general
intangibles arising out of
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or in connection with any of the foregoing, all rights of the Borrower in and to
all collateral security securing or otherwise relating to any obligations of
third parties to the Borrower in connection with any of the foregoing, cash
proceeds, non-cash proceeds, and insurance proceeds payable by reason of loss or
damage to any of the foregoing, whether now existing or hereafter arising.
All of which is sometimes hereinafter collectively referred to as the
"Collateral."
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. Affirmative Representations, Warranties and Covenants.
Borrower represents, warrants and covenants that:
(a) Status. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee and is
authorized to transact in Tennessee, and in all other locations where the
failure to qualify would have a material adverse effect, all business that it
now transacts therein;
(b) Location. Borrower's principal place of business is located
at the address appearing after its signature hereto. Borrower will notify Lender
at least thirty (30) days in advance of any change in the location of its
principal place of business and chief executive office, or the establishment of
any new principal place of business or chief executive office;
(c) Entity. Borrower will not change its name nor do business
under any name or trade name other than its current name without giving Lender
at least thirty (30) days prior written notice of such change;
(d) Subsidiaries. FAF, Inc. and Forward Air, Inc. are
wholly-owned subsidiaries of Forward Air Corporation. The entities described in
Exhibit C hereto, constitute all directly or indirectly owned subsidiaries of
Forward Air Corporation. Any "Significant Subsidiaries" shall enter into a
guaranty, in form and substance mutually agreeable to Borrower and Lender,
pursuant to which such Significant Subsidiary shall guarantee the Loan and the
Notes. A subsidiary of Borrower shall constitute a "Significant Subsidiary" when
such subsidiary accounts for ten percent (10%) or more of the Borrower's
consolidated EBITDA (earnings before interest, taxes, depreciation and
amortization).
(e) Power and Authorization. Borrower has the corporate power
and authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged in. All corporate action necessary to permit
Borrower to execute, deliver and perform this Agreement, and all documents
executed in connection herewith, has been duly and effectively taken. Such
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execution, delivery and performance does not require the consent of any other
person or entity;
(f) Conflicting Transactions. The execution, delivery and
performance of this Agreement, the Notes, and all documents executed in
connection herewith or therewith by Borrower will not violate the provisions of
Borrowers' charter or by-laws; or constitute a default under or conflict with
any indenture, mortgage, deed of trust, lease, agreement, contract, document, or
other instrument to which Borrower is a party; or contravene any law, ordinance,
rule, regulation, judgment, order, injunction, writ, or decree of any government
or political subdivision or agency thereof, or any court or similar entity
established by any of them, to which Borrower or its property is subject; or
result in, or require, the creation or imposition of any lien upon or with
respect to any property now owned or hereafter acquired by Borrower;
(g) Binding Obligations. This Agreement, the Notes, and any and
all other documents executed in connection herewith or therewith, are the legal,
valid, and binding obligations of the Borrower, enforceable against the Borrower
in accordance with their respective terms;
(h) Ownership. Borrower is or will become the owner of the
Collateral free from any adverse lien, security interest, or encumbrance.
Borrower will defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein;
(i) Delivery of Title. Borrower shall cause certificates of title
for the Tractors and Trailers to be issued by the State of Tennessee with a
notation of Lender's lien on each certificate, and shall cause certificates of
title for the Tractors and Trailers being financed by an Advance to be delivered
to Lender within ninety (90) days from the date of such Advance;
(j) Financing Statements. No financing statement covering any
of the Collateral or the proceeds therefrom is currently on file in any public
office, which has not been released or terminated or which is not to be released
or terminated from the proceeds of the Loan. At Lender's request, Borrower will
join with Lender in executing one or more financing statements pursuant to the
Uniform Commercial Code, in form satisfactory to Lender, and will pay the cost
of filing or recording the same or this Agreement in all public offices wherever
filing or recording is deemed by Lender to be necessary or desirable. A copy of
this Agreement or copies of any financing statements executed in connection
herewith may be filed in lieu of originals in any public office;
(k) Liens. Borrower will keep the Collateral free from any
adverse lien, security interest, or encumbrance;
(l) Condition of Collateral. Borrower will keep the Collateral
in good order and repair and will not waste or destroy the Collateral;
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(m) Inspection. Lender may examine and inspect the Collateral at
any time, wherever located;
(n) Insurance and Damage. Borrower will maintain insurance
satisfactory to Lender in form, amount and substance, issued by insurers
satisfactory to Lender, insuring the Collateral against loss from fire, theft,
and such other risks determined by Lender, with deductibles acceptable to
Lender. Borrower has provided Lender with a schedule of insurance coverages
dated November 17, 1998 which Lender acknowledges is acceptable. Liability
insurance coverage shall be provided up to $2,000,000 together with excess
coverage. Cargo shall be insured for the actual value thereof up to $2,000,000.
Borrower's current deductible of $250,000 is acceptable to Lender. Lender shall
be designated as loss payee under the terms of the policies evidencing such
insurance. In the event Collateral is damaged or destroyed, Borrower shall have
the option to repair the Collateral, replace the Collateral (which shall have
substantially the same value) or prepay the applicable Note with an amount equal
to the pro rata portion of the unamortized principal with respect to such
damaged or destroyed Collateral. At Lender's request, Borrower will execute a
specific assignment to Lender, in form satisfactory to Lender, of all of
Borrower's rights under any insurance policy covering any of the Collateral.
Borrower shall furnish to Lender such evidence of insurance as Lender may
require;
(o) Records. Borrower will at all times keep accurate and
complete records of its operations and the Collateral. Lender, or any of its
agents, shall have the right to call at Borrower's place or places of business,
at intervals determined by Lender, and without hindrance or delay, to inspect,
audit, check, and make extracts from the books, records, journals, orders,
receipts, correspondence, and other data relating to the Collateral or
Borrower's operations. Lender shall have the right to discuss such matters with
Borrower's officers and accountants at all times. Borrower shall promptly
furnish to Lender such information and reports regarding the Collateral and
Borrower's financial status as Lender shall from time to time request;
(p) Event of Default. In the event of the occurrence of an Event
of Default (as hereinafter defined), Borrower shall immediately notify Lender,
setting forth the nature of the Event of Default and the action Borrower
proposes to take to cure the default;
(q) Liabilities and Litigation. There is no material outstanding
or unpaid judgment against Borrower. There is no material legal, judicial,
regulatory or arbitration action, suit, proceeding or investigation pending, or
to Borrower's knowledge, threatened, or for which a basis exists, against or
affecting Borrower, except proceedings that are fully covered by insurance,
subject to deductibles, or that, if adversely determined, would not impair the
ability of Borrower to perform all of its obligations hereunder, under the
Notes, or under any document executed in connection herewith or therewith, and
would not have a material adverse effect upon the business or financial
condition of Borrower;
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(r) Compliance. Borrower is not in violation of, or in default
under, and will comply with, all laws, ordinances, rules, regulations,
judgments, orders, injunctions, writs and decrees of any government or political
subdivision or agency thereof, or any court or similar entity established by any
of them, that are applicable to Borrower's operations or the Collateral, and
will pay promptly all taxes and assessments upon the Collateral or for its use
or operation, upon this Agreement or any other document executed in connection
herewith, or upon the Indebtedness, and all claims for labor or supplies, rents,
and other obligations that, if unpaid, might become a lien against Borrower's
property. In the event any such liability or obligation is contested by Borrower
in good faith, Borrower shall set up reserves in amounts satisfactory to Lender
to meet such obligation;
(s) ERISA. Borrower is in compliance in all material aspects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and no default has occurred with respect to any plan
subject to Title IV of ERISA maintained by Borrower;
(t) Taxes, Government Charges. Borrower has filed all tax returns
and reports (federal, state, and local) required to be filed and has paid all
taxes, assessments, fees, and other governmental charges which are now due and
payable, including interest and penalties;
(u) Expenses. Borrower shall pay all costs incurred by Lender in
connection with the preparation, execution, recording, filing, administration,
modification, transfer and enforcement of all documents evidencing or incident
to this transaction, as well as in connection with Lender's protection of its
rights under this Agreement, including all legal fees. All such costs shall be
deemed part of the Indebtedness;
(v) Financial Statements and Reports. Borrower promptly will
furnish to Lender, as soon as available and in any event no later than ninety
(90) days after the close of Borrower's fiscal year, the complete audited
consolidated and consolidating financial reports of Borrower, including balance
sheet, income statement, sources and uses statement, reconciliation of net
worth, and pertinent footnotes, all in reasonable detail and accompanied by an
unqualified opinion thereon acceptable to Lender by the Borrower's independent
certified public accountants;
Borrower also will furnish promptly to Lender, within forty-five
(45) days of the end of each calendar quarter, consolidated and consolidating
balance sheets of Borrower as of the end of such period, and the consolidated
and consolidating statements of income of the Borrower for such period, all in
reasonable detail and certified as true and correct by the chief financial
officer of Borrower in his or her official capacity, together with calculations
evidencing compliance with each of the financial covenants set forth in Article
IV and the calculations of Adjusted Funded Debt and EBITDA under Section 1.4.
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In addition, Borrower will provide to Lender, promptly upon its
becoming available, such other information about the Borrower, financial or
otherwise, as the Lender may reasonably request from time to time.
All such financial reports and statements referred to herein
shall conform to generally accepted accounting principles consistently applied
("GAAP").
(w) Further Assurances. Borrower shall promptly cure any
defects in the creation, issuance, and delivery of the Notes and the execution
and delivery of this Agreement and any and all other documents executed in
connection herewith.
Section 3.2. Negative Covenants. So long as any Indebtedness is
outstanding, Borrower covenants that, without Lender's prior written consent, it
will not (and it will cause its subsidiaries so that they will not):
(a) Sale of Assets. Sell, offer to sell, lease, convey, or
otherwise transfer or dispose of any material portion of its property or assets,
or any interest therein, except in the ordinary course of business;
(b) Reorganization. Suffer, permit or participate in the
dissolution, liquidation, reorganization, consolidation, merger, or
recapitalization of any corporation, including Borrower, other than mergers or
consolidations where Borrower is the surviving entity;
(c) Loans. Make loans or advances to any person or entity outside
of Borrower's ordinary course of business, except for loans or advances to any
officer, director or employee of Borrower, or any subsidiary, which in the
aggregate for all such loans does not exceed Five Hundred Thousand Dollars
($500,000.00);
(d) Preservation of Entity. Fail to preserve its existence as an
entity, discontinue its usual business, or change its name.
(e) Acquisitions. Make any acquisition of another entity (either
stock or assets) (or a series of related acquisitions) with an aggregate
purchase price in excess of $15,000,000 without the prior written consent of
Lender. For any such acquisitions with a purchase price of less than
$15,000,000, Borrower will give prior written notice to Lender together with
certification that such acquisition will not cause an Event of Default
hereunder.
(f) Change in Control. Allow any person or entity that currently
does not have Operating Control of Borrower to acquire such Operating Control
without Lender's prior written consent. "Operating Control" means direct or
indirect control of, or the ability or right to control or vote (directly or
indirectly) a majority of the voting securities of Borrower.
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ARTICLE IV
FINANCIAL COVENANTS
Section 4.1. EBITR to IR Ratio. While any of the Indebtedness is
outstanding, Forward Air Corporation will maintain (on a consolidated basis) a
ratio of earnings (before interest, taxes, and rent expense ("EBITR")) to
interest and rent expense of no less than 2.25 to 1.0, calculated on an
annualized rolling four fiscal quarter basis and measured at the end of each
fiscal quarter commencing December 31, 1998. The "current portion of long term
debt" is the amount paid or scheduled to be paid for the applicable four fiscal
quarters with respect to "long term debt" which is indebtedness with an original
maturity of one year or longer.
Section 4.2. Adjusted Funded Debt to EBITDAR Ratio. While any of the
Indebtedness is outstanding, Forward Air Corporation will maintain (on a
consolidated basis) a ratio of Adjusted Funded Debt to earnings before interest,
taxes, depreciation, amortization and rent expense ("EBITDAR") of no greater
than 3.0 to 1.0, calculated on an annualized rolling four fiscal quarter basis
and measured at the end of each fiscal quarter commencing December 31, 1998.
Section 4.3. Tangible Net Worth. While any of the Indebtedness is
outstanding, Forward Air Corporation will maintain (on a consolidated basis) at
all times a Tangible Net Worth equal to $12,500,000 commencing September 30,
1998. Commencing December 31, 1998, Tangible Net Worth shall increase after each
fiscal quarter by: (i) at least 75% of net income, without any deduction for
losses; and (ii) 100% of the net proceeds of any equity offering.
Section 4.4. Definitions. As used in this Article IV, the following
terms shall have the definitions set forth below:
FUNDED DEBT shall mean, without respect to Forward Air
Corporation on a consolidated basis, (a) any obligation for borrowed
money; (b) any obligation evidenced by bonds, debentures, notes or
other similar instruments; (c) any obligation to pay the deferred
purchase price of property or for services (other than in the ordinary
course of business); (d) any capitalized lease obligation; (e) any
obligation or liability of others secured by a lien on property owned,
whether or not such obligation or liability is assumed; (f) any
liability of Borrower to Lender (or its affiliates) under any swap
agreements or similar arrangements; and (g) any letter of credit issued
for the account of Forward Air Corporation or its subsidiaries. The
calculation of Funded Debt shall include all Funded Debt of Forward Air
Corporation and its subsidiaries, plus all Funded Debt of other
entities or persons which has been guaranteed by Forward Air
Corporation or any subsidiary. Funded Debt shall also include the
redemption amount with respect to any redeemable preferred stock of
Forward Air Corporation or its subsidiaries required to be redeemed
within the next twelve months.
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ADJUSTED FUNDED DEBT shall mean, with respect to Forward Air
Corporation (all on a consolidated basis) the sum of (a) Funded Debt
plus (b) Rent Expense as calculated in accordance with Standard and
Poor Corporation's Methodology, as such method may change from time to
time.
TANGIBLE NET WORTH shall mean, as of the date of determination,
Forward Air Corporation's total consolidated net worth minus any
goodwill or other intangibles as determined in accordance with
generally accepted accounting principles.
All undefined terms set forth herein shall have the meanings ascribed
to them under GAAP.
ARTICLE V
DEFAULT
Section 5.1. Events of Default. The occurrence of any of the following
shall constitute an event of default under this Agreement (hereinafter referred
to as an "Event of Default"):
(a) Payment. Default in the punctual payment when due of any of
the Indebtedness; or,
(b) Breach of Covenant. Default in the performance of any of
the covenants, terms or provisions contained or referred to herein, or in the
Notes, or in any other document or instrument executed in connection herewith,
or evidencing any of the Indebtedness.
(c) Breach of Warranty or Representation. Any warranty,
representation or statement made or furnished to Lender by or on behalf of
Borrower herein, in connection with this Agreement, the Notes, or in connection
with any document or instrument executed in connection herewith or therewith,
proves to have been false in any material respect when made or furnished; or any
misstatement or omission of fact or failure to state facts necessary to make
such representations and warranties not misleading; or,
(d) Collateral. Loss, theft, substantial damage or destruction
to or of the Collateral, or the making of any levy, seizure, or attachment
thereof or thereon; or,
(e) Bankruptcy or Receivership. Dissolution, termination of
existence, insolvency, failure to pay debts as they mature, admission in writing
of an inability to pay debts generally as they become due, business failure,
appointment of a trustee or receiver for any part of the property, assignment
for the benefit of creditors, or commencement of any proceeding under any
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bankruptcy, insolvency, composition, reorganization, or liquidation law, of, by
or against Borrower; or,
(f) Liens. The filing or attachment of any tax lien with
respect to any of the Collateral, except for a tax lien that is being contested
in good faith and for which Borrower provides to Lender additional security or
establishes reserves satisfactory to Lender in all respects.
(g) Default on Other Debt or Security. Subject to any applicable
grace period, Borrower fails to make any payment due on any indebtedness or
security, or any event shall occur or any condition shall exist in respect of
any indebtedness or security of Borrower or under any agreement securing or
relating to such indebtedness or security, the effect of which is to cause or to
permit any holder of such indebtedness or other security or a trustee to cause
(whether or not such holder or trustee elects to cause) such indebtedness or
security, or a portion thereof, to become due prior to its stated maturity or
prior to its regularly scheduled date of payment; or
(h) Undischarged Judgments. The rendering by any court or other
governmental authority of a judgment for the payment of money (which is not
bonded or pending appeal) in excess of $100,000.00 against Borrower, and the
Borrower does not discharge the same or provide for its discharge in accordance
with its terms, or procure a stay of execution thereof within thirty (30) days
from the date of entry thereof.
ARTICLE VI
REMEDIES
Section 6.1. Remedies Upon Default. Upon the occurrence of an Event of
Default, and at any time thereafter, (i) Lender may at its option, for purposes
hereof, declare all Indebtedness secured hereby immediately due and payable,
without presentment, demand, protest, notice of protest, dishonor, or other
notice or demand of any kind, all of which Borrower hereby expressly waives,
(ii) all obligations, if any, of Lender hereunder shall immediately cease and
terminate unless and until Lender shall reinstate same in writing, and (iii)
Lender shall have all the rights and remedies available to it at law or in
equity, including all rights and remedies of a secured party under the Uniform
Commercial Code or other applicable law. Lender may require Borrower to assemble
the Collateral and make it available to Lender at a place or places, designated
by Lender, reasonably convenient to both parties. Unless the Collateral is
perishable, threatens to decline speedily in value, or is a type customarily
sold on a recognized market, Lender will give Borrower reasonable notice of the
time and place of any public sale thereof or of the time after which any private
sale or any other intended disposition thereof is to be made. The requirements
of reasonable notice shall be met if such notice is given in accordance with the
notice provisions of this Agreement, at least ten (10) days before the time of
the sale or disposition, Borrower agrees to pay all expenses of retaking,
holding, preparing for sale, and selling the Collateral, together with
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any court costs and Lender's attorneys' fees; all such expenses, costs, and fees
shall be deemed part of the Indebtedness.
Section 6.2. Setoff. Upon the occurrence of an Event of Default, and at
any time thereafter, Lender may, at any time and from time to time, without
notice to Borrower, which notice Borrower hereby expressly waives, setoff and
apply any and all deposits and other indebtedness at any time owing by Lender to
or for the credit or account of Borrower, against any and all of the
Indebtedness.
Section 6.3. Protective Action. At its option, Lender may discharge
taxes, liens, security interests, or other encumbrances at any time levied or
placed on the Collateral, may pay for insurance on the Collateral, and may pay
for the maintenance and preservation of the Collateral. Borrower agrees to
reimburse Lender on demand for any payment made, or any expense incurred, by
Lender pursuant to the foregoing authorization, together with interest thereon
from date of payment at the maximum lawful rate of interest permitted under
applicable law from time to time.
Section 6.4. Collateral Control. Lender shall have the right at any
time to obtain and use the services of a collateral control firm. Borrower shall
bear the expenses of such services.
Section 6.5. Cumulative Remedies. No right, power or remedy herein or
otherwise conferred upon or reserved to Lender, by contract, at law, in equity
or by statute, is intended to be exclusive of any other right, power or remedy,
and each and every such right, power and remedy shall be cumulative and shall be
in addition to every other right, power and remedy given hereunder or elsewhere,
or now or hereafter existing by contract, at law, in equity or by statute. All
such rights, powers and remedies may be exercised separately or concurrently,
and in such order and as often as Lender elects.
Section 6.6. Waiver. No delay or omission by Lender in exercising any
right, power or remedy hereunder or otherwise afforded by contract, at law, in
equity or by statute, shall constitute an acquiescence therein, impair any other
right, power or remedy hereunder, or otherwise afforded by contract, at law, in
equity or by statute, or operate as a waiver of such right, power or remedy. No
waiver by Lender of any default shall operate as a waiver of any other default
or of the same default on a future occasion.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Headings. The headings contained in this Agreement are
inserted for convenience of reference only, and shall not be construed as
defining, limiting, extending, or describing the scope of this Agreement, any
section hereof, or the intent of any provision hereof.
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Section 7.2. Notice. All notices given hereunder shall be given in
writing, signed by the party giving such notice, and shall either be personally
delivered, sent by registered or certified mail, return receipt requested, or
sent by a nationally recognized courier service, if to Lender, to SunTrust Bank,
Nashville, N.A., 201 Fourth Avenue North, Nashville, Tennessee 37219, Attention:
Allen Oakley, and if to Borrower, to the address following its signature hereto,
or, as to either party hereto, to such other address as may hereafter be
provided in accordance with the notice provisions hereof. Notice shall be deemed
given when so personally delivered, mailed, or delivered to such courier
service, as the case may be.
Section 7.3. Choice of Law. This Agreement and the documents executed
in connection herewith have been negotiated, made, executed and delivered in
Nashville, Tennessee. The validity and construction of this Agreement and the
documents executed in connection herewith shall be determined in all respects in
accordance with the laws of the State of Tennessee.
Section 7.4. Successors and Assigns. All of Lender's rights hereunder
shall inure to the benefit of its successors and assigns; all of Borrower's
obligations hereunder shall bind Borrower's successors and assigns. Borrower may
not assign its rights or delegate its duties hereunder, and any attempt at such
assignment shall be void. Lender reserves the right to assign its rights and
delegate its duties hereunder.
Section 7.5. Time. Time is of the essence with regard to each and every
provision of this Agreement.
Section 7.6. Release. Borrower hereby releases Lender and its officers,
employees, attorneys and agents from all claims for loss or damages caused by
any act or omission on the part of any of them except willful misconduct.
Section 7.7. No Waiver. Nothing in this Agreement shall be deemed a
waiver or prohibition of Lender's right of banker's lien or setoff.
Section 7.8. Entire Agreement; Amendment. This Agreement, and the
documents executed and delivered in connection herewith, constitute the entire
agreement between the parties hereto. Neither this Agreement nor any provision
hereof may be amended, waived, discharged or terminated orally, but only by a
writing signed by the party against whom enforcement of the amendment, waiver,
discharge or termination is sought.
Section 7.9. Severability. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall be held invalid or
unenforceable under any applicable law, such invalidity or unenforceability
shall not affect any other provision of this Agreement that can be given effect
without the invalid or unenforceable provision, or the application of such
provision to other persons or circumstances, and, to this end, the provisions
hereof are severable.
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Section 7.10. Enforceability. The invalidity or unenforceability of any
of the rights or remedies herein provided in any jurisdiction shall not in any
way affect the right to the enforcement of such rights or remedies in other
jurisdictions. If the fulfillment of any provision hereof shall involve
transcending the limit of validity prescribed by law, then ipso facto, the
provision to be fulfilled shall be reduced to the limit of such validity.
Section 7.10. Counterparts. This Agreement may be executed by the
signatures of each of the parties hereto, or to a counterpart of this Agreement,
and all such counterparts shall collectively constitute one Agreement.
Section 7.11. Borrower. Each and every reference to "Borrower" in this
Agreement shall be deemed to refer to and to include FAF, Inc., Forward Air,
Inc., and Forward Air Corporation, individually and collectively as the context
so dictates. Each and every agreement, obligation, representation, warranty, and
covenant herein of Borrower shall be the joint and several agreement,
obligation, representation, warranty and covenant of FAF, Inc., Forward Air,
Inc. and Forward Air Corporation.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first set forth above.
SUNTRUST BANK, NASHVILLE, N.A.
By: /s/ Allen K. Oakley
Title: Senior Vice President
FORWARD AIR CORPORATION
By: /s/ Bruce A. Campbell
Title: President
FAF, INC.
By: Bruce A. Campbell
Title: President
FORWARD AIR, INC.
By: Bruce A. Campbell
Title: President
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Principal Place(s) of Business, Chief
Executive Office and Address for Notices:
430 Airport Road
Greeneville, TN 37745
Mail:
P.O. Box 1058
Greeneville, TN 37744
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EXHIBIT A
[FORM OF]
PROMISSORY NOTE
$_______________ _________________ (Date)
FOR VALUE RECEIVED, the undersigned (the "Maker") jointly and severally
promises to pay to the order of SUNTRUST BANK, NASHVILLE, N.A., a national
banking association having offices in Nashville, Tennessee ("Lender"), its
successors and assigns, in lawful money of the United States of America, the
principal amount of ______________________________________________________
Dollars ($______________) or so much thereof as may be advanced, together with
all interest accrued thereon under the terms hereof.
Interest on the outstanding principal balance hereof shall accrue at a
rate of interest per annum equal to the Applicable Rate as defined and described
in the Loan Agreement (as defined below). Interest shall be computed on the
basis of a 360-day year.
Equal monthly payments of principal in the amount of $___________ plus
interest shall be due and payable on the tenth (10th) day of each month,
commencing on the tenth (10th) day of ________________, _____, and continuing on
the tenth (10th) day of each month thereafter. Notwithstanding the foregoing,
the entire outstanding principal balance plus all accrued and unpaid interest
hereon, and all unpaid costs and expenses of Lender hereunder, in the absence of
default by Maker, shall be due and payable by Maker to Lender on
_________________ (the "Maturity Date"), without grace.
Principal, interest and fees, if any, shall be payable at the main
office of the Lender.
If any payment hereunder becomes due and payable on a day other than a
business day, the maturity thereof shall be extended to the next succeeding
business day, and interest thereon shall be payable at the rate in effect during
such extension. As used herein, the term "business day" shall mean a day other
than a Saturday, Sunday, or day on which commercial banks are authorized to
close under the laws of the State of Tennessee.
Notwithstanding any provision to the contrary, it is the intent of the
Lender, the Maker, and all parties liable on this Note, that neither the Lender
nor any subsequent holder shall be entitled to receive, collect, reserve or
apply, as interest, any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as amended or enacted
from time to time. In the event this Note calls for an interest payment that
exceeds the maximum lawful rate of interest then applicable, such interest shall
not be received, collected, charged, or reserved until such time as that
interest, together
17
with all other interest then payable, falls within the then applicable maximum
lawful rate of interest, such amount which would be excessive interest shall be
deemed a partial prepayment of principal and treated hereunder as such, or, if
the principal indebtedness evidenced hereby is paid in full, any remaining
excess funds shall immediately be paid to the Maker. In determining whether or
not the interest paid or payable, under any specific contingency, exceeds the
maximum lawful rate of interest, the Maker and the Lender shall, to the maximum
extent permitted under applicable law, (a) exclude voluntary prepayments and the
effects thereof, and (b) amortize, prorate, allocate, and spread, in equal
parts, the total amount of interest throughout the entire term of the
indebtedness; provided that if the indebtedness is paid in full prior to the
Maturity Date, and if the interest received for the actual period of existence
hereof exceeds the maximum lawful rate of interest, the holder of the Note shall
refund to the Borrower the amount of such excess or credit the indebtedness as
of the date it was received, and, in such event, the Lender shall not be subject
to any penalties provided by any laws for contracting for, charging, reserving,
collecting or receiving interest in excess of the maximum lawful rate of
interest. The term "maximum lawful rate of interest" as used herein shall mean a
rate of interest equal to the higher or greater of the following: (a) the
"applicable formula rate" defined in Tennessee Code Annotated Section
47-14-102(2), or (b) such other rate of interest as may be charged under other
applicable laws or regulations.
Maker shall have the right, upon at least three business days prior
notice to Lender, to prepay in full or in part the principal amount outstanding
hereunder at any time without premium or penalty, provided, any such prepayment
shall not reduce or alter Borrower's obligation to continue making monthly
installment payments in accordance with the terms hereof, as and when required
hereunder.
All monies received pursuant hereto shall be applied first to the
accrued and unpaid interest, second to any late charges, with the balance, if
any, applied to the reduction of the principal amount outstanding unless
otherwise elected by Lender.
Maker shall pay to Lender a "late charge" of five percent (5%) of the
total amount of the payment required hereunder not received by the Lender within
five (5) days after such payment is due to defray the expense incurred by Lender
in handling and processing such delinquent payment and not as a penalty or
forfeiture; provided in no event shall said "late charge" result in the payment
of interest in excess of the maximum lawful rate of interest permitted by
applicable law.
This Note is made pursuant to the terms of that certain Loan and
Security Agreement dated __________, 19__, by and among Forward Air Corporation,
FAF, Inc. and Forward Air, Inc. as borrowers and Lender, as the same may
hereafter be amended or modified (the "Loan Agreement"), and reference is made
thereto for provisions regarding default, acceleration, and other terms
applicable hereto and for the definition of certain terms utilized herein.
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Lender shall have the optional right, without further notice and
notwithstanding the Maturity Date, to declare the amount of the total unpaid
balance hereof to be due and forthwith payable in advance of the Maturity Date,
upon the failure of Maker to make any payment (whether principal, principal and
interest or interest only) in full within five (5) days of when due in the
manner above specified, or upon the occurrence of any other event of default
under this Note, the Loan Agreement, or any other instrument or document
evidencing or securing repayment of the indebtedness evidenced hereby, subject
to any applicable grace periods set forth therein. Forbearance to exercise this
option with respect to any failure or breach of the Maker shall not constitute a
waiver of the right so long as such failure or breach shall continue, or
constitute a waiver of the right as to any subsequent failure or breach, such
right being a continuing one. After this Note matures, whether by demand,
acceleration or otherwise, the entire principal balance shall bear interest at
the maximum lawful rate of interest permitted by law on such date, or on the
date hereof, whichever is greater.
Each and every Maker, endorser, guarantor, surety, co-maker and all
parties to this Note and all who may become liable for same, jointly and
severally waive presentment for payment, protest, notice of protest, notice of
nonpayment of this Note, demand and all legal diligence in enforcing collection,
and hereby expressly agree that the lawful owner or holder of this Note may
alter its maturity, defer or postpone collection of the whole or any part
thereof, either principal and/or interest, or may extend or renew the whole or
any part thereof, either principal and/or interest, or may accept additional
collateral or security for the payment of interest, or may release the whole or
any part of any collateral security and/or liens given to secure the payment of
this Note, or may release from liability on account of this Note any one or more
of the Makers, endorsers, guarantors, sureties, co-makers, and/or other parties
thereto, all without notice to them or any of them; and such alteration,
deferment, postponement, renewal, extension, acceptance of additional collateral
or security and/or release shall not in any way affect or change the obligation
of any such Maker, endorser, guarantor or other party to this Note, or of any
other party who may become liable for the payment thereof.
This Note may not be amended, modified, or supplemented without the
prior written approval of Lender and Maker. No waiver of any term or provision
hereof shall be valid against Lender unless such waiver be in writing executed
by Lender.
Time is of the essence of this Note, and in the event this Note is
placed in the hands of one or more attorneys for collection or enforcement or
protection of Lender's rights, the undersigned agrees to pay all attorneys' fees
and all court and other costs incurred by the Lender, including the Lender's
costs, expenses and fees incurred by the Lender pursuant hereto.
This Note has been executed and delivered in and shall be construed and
enforced in accordance with the laws of the State of Tennessee.
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Executed this _____ day of _______________, _____.
FORWARD AIR CORPORATION
By:
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Title:
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FAF, INC.
By:
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Title:
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FORWARD AIR, INC.
By:
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Title:
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