<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
Commission File No. 000-24615
LANDAIR CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1743549
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
430 AIRPORT ROAD
GREENEVILLE, TENNESSEE 37745
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 636-7000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
The number of shares outstanding of the registrant's common stock, $.01 par
value, as of March 31, 1999 was 6,295,932.
<PAGE> 2
TABLE OF CONTENTS
LANDAIR CORPORATION
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Income -
Three months ended March 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements -
March 31, 1999 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
ITEM 3. Quantitative and Qualitative Disclosure of Market Risk 14
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 15
ITEM 2. Changes in Securities and Use of Proceeds 15
ITEM 3. Defaults Upon Senior Securities 15
ITEM 4. Submission of Matters to a Vote of Security Holders 15
ITEM 5. Other Information 15
ITEM 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
EXHIBIT INDEX 17
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Landair Corporation
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-----------------------------------
(Unaudited) (Note 1)
(In thousands, except share data)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12 $ 1,783
Accounts receivable, less allowance of $364 in 1999 and $370 in 1998 15,516 15,805
Other current assets 7,067 7,112
-------------------------
Total current assets 22,595 24,700
Property and equipment 116,244 98,636
Less accumulated depreciation and amortization 32,778 31,242
-------------------------
83,466 67,394
Other assets 4,050 335
-------------------------
Total assets $110,111 $92,429
=========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,113 $ 3,338
Accrued expenses 8,906 9,056
Current portion of long-term debt 7,964 3,009
-------------------------
Total current liabilities 20,983 15,403
Long-term debt, less current portion 29,576 18,058
Deferred income taxes 13,867 13,715
Shareholders' equity:
Preferred stock -- --
Common stock, $.01 par value:
Authorized shares - 45,000,000
Issued and outstanding shares - 6,295,932 in 1999 and 6,293,441
in 1998 63 63
Additional paid-in capital 44,202 44,191
Retained earnings 1,420 999
-------------------------
Total shareholders' equity 45,685 45,253
-------------------------
Total liabilities and shareholders' equity $110,111 $92,429
=========================
</TABLE>
See notes to condensed consolidated financial statements.
3
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Landair Corporation
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
---------------------------------
March 31, 1999 March 31, 1998
---------------------------------
(In thousands, except per share data)
<S> <C> <C>
Operating revenue
Forward Air, Inc. $ 709 $ 1,318
Other 31,221 24,005
---------------------------
31,930 25,323
Operating expenses:
Salaries, wages and employee benefits 11,301 8,433
Purchased transportation 8,017 6,155
Fuel and fuel taxes 3,560 2,937
Depreciation and amortization 3,200 2,252
Insurance and claims 1,381 1,227
Operating leases 382 239
Other operating expenses 2,965 2,502
---------------------------
30,806 23,745
---------------------------
Income from operations 1,124 1,578
Other income (expense):
Interest expense (497) (467)
Other, net 51 6
---------------------------
(446) (461)
Income before income taxes 678 1,117
Income taxes 257 441
---------------------------
Net income $ 421 $ 676
===========================
Income per share (pro forma in 1998):
Basic $ .07 $ .11
===========================
Diluted $ .07 $ .11
===========================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
Landair Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
--------------------------------
March 31, 1999 March 31, 1998
--------------------------------
(In thousands)
<S> <C> <C>
Cash provided by operations $ 4,359 $ 5,279
Investing activities:
Proceeds from disposal of property and equipment 1,552 521
Purchases of property and equipment (11,249) (6,256)
Acquisition of assets of Laker Express, Inc. (12,894) --
Other 377 (21)
---------------------------
(22,214) (5,756)
Financing activities:
Proceeds from long-term debt 23,406 3,824
Payments of long-term debt (7,333) (2,714)
Payments of capital lease obligations -- (331)
Exercise of stock options 11 --
---------------------------
16,084 779
Increase (decrease) in cash and cash equivalents $ (1,771) $ 302
===========================
Non-cash transaction -
Issuance of note payable to Laker Express, Inc.
for asset acquisition $ 400,000 $ --
===========================
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
Landair Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 1999
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements for the three-month
period ended March 31, 1999 include the accounts of Landair Corporation and its
subsidiaries. The unaudited condensed consolidated financial statements for the
three-month period ended March 31, 1998 include the accounts comprising the
truckload operations of Forward Air Corporation (formerly known as Landair
Services, Inc.) ("Forward Air"), and are based on historical amounts included in
the consolidated financial statements of Forward Air. On July 9, 1998, the Board
of Directors of Forward Air authorized the separation of Forward Air into two
publicly-held corporations, one owning and operating the deferred air freight
operations and the other owning and operating the truckload operations (the
"Spin-off").
The Spin-off was effected on September 23, 1998 through the distribution to
shareholders of Forward Air of all the outstanding stock of a new truckload
holding company, Landair Corporation. Pursuant to the Spin-off, the common stock
of Landair Corporation was distributed on a pro rata basis of one share of
Landair Corporation common stock for every one share of Forward Air common stock
held. Effective with the Spin-off, Landair Corporation is the legal entity that
owns and operates the truckload operations through its operating subsidiaries,
and Forward Air is the legal entity that continues to own and operate the
deferred air freight operations through its operating subsidiaries.
As used in the accompanying condensed consolidated financial statements, the
term "Company" refers to Landair Corporation and its subsidiaries for the
three-month period ended March 31, 1999 and to the truckload operations of
Forward Air for the three-month period ended March 31, 1998.
These historical financial statements include the results of operations directly
related to the truckload operations of Forward Air for the period presented
prior to the Spin-off. Significant changes could have occurred in the funding
and operations of the Company had it been operated as an independent stand-alone
entity during that period, which could have had a significant impact on its
results of operations. As a result, the financial information included in these
financial statements for the three-month period ended March 31, 1998 is not
necessarily indicative of the results of operations of the Company which might
have occurred had it been an independent stand-alone entity.
The Company is an irregular route, high-service truckload carrier that
transports a wide range of commodities in both intrastate and interstate
commerce. The Company provides dry van
6
<PAGE> 7
Landair Corporation
Notes to Condensed Consolidated Financial Statements (continued)
common carrier and dedicated contract carriage for shippers of a variety of
products in the medium- and short-haul markets.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 1999
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Landair Corporation
annual report on Form 10-K for the year ended December 31, 1998.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date, but does not include all of the financial
information and footnotes required by generally accepted accounting principles
for complete financial statements.
2. PURCHASE OF ASSETS OF LAKER EXPRESS, INC.
On January 7, 1999, the Company acquired certain operating assets of Laker
Express, Inc. ("Laker"), a truckload dry van carrier based in Indianapolis,
Indiana which operated predominantly in the Midwest in the short- to medium-haul
markets. The purchase price for Laker consisted of approximately $12.9 million
in cash and the issuance of a note payable of $400,000. The source of funds for
the cash consideration paid to Laker was from borrowings under the Company's
credit facilities. The pro forma unaudited results of operations for the three
months ended March 31, 1999 and 1998, assuming the purchase of Laker as of the
beginning of the periods presented, are as follows:
<TABLE>
<CAPTION>
Three months ended
------------------------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Operating revenue $31,930 $29,489
Net income 421 692
Income per share:
Basic .07 .11
Diluted .07 .11
</TABLE>
The pro forma results of operations do not purport to represent what the
Company's results of operations would have been had the transaction, in fact,
occurred at the beginning of the periods presented or to project the Company's
results of operations in any future period.
The acquisition was accounted for as a purchase. Identified intangible assets
acquired totaled approximately $1.5 million and are being amortized on a
straight-line basis over a life of five
7
<PAGE> 8
Landair Corporation
Notes to Condensed Consolidated Financial Statements (continued)
years. Goodwill totaled approximately $2.6 million and is being amortized on a
straight-line basis over a life of 20 years. Accumulated amortization of the
identified intangible assets and goodwill totaled $73,000 at March 31, 1999. The
results of operations for the acquired business were included in the condensed
consolidated statement of income from the acquisition date forward.
3. LONG-TERM DEBT
In January 1999, the Company obtained a new equipment financing facility,
providing borrowing capacity of up to $15 million. A portion of the availability
under this new line was immediately used to fund the acquisition of Laker
Express, Inc. The facility bears interest at LIBOR plus 0.75% to 1.5%, expires
in December 2000, and is secured by certain revenue equipment. Among other
restrictions, the terms of the line of credit require maintenance of certain
levels of net worth and other financial ratios.
4. SHAREHOLDERS' EQUITY
In February 1999, the Board of Directors authorized the repurchase of up to
500,000 shares of the Company's common stock in open market purchases. The
amount and timing of any repurchases are to be at such prices as management of
the Company from time to time approves. As of March 31, 1999, the Company had
repurchased no shares.
5. COMPREHENSIVE INCOME
The Company had no items of other comprehensive income in 1999 or 1998 and,
accordingly, comprehensive income is equivalent to net income.
8
<PAGE> 9
Landair Corporation
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
6. INCOME PER SHARE
The following table sets forth the computation of basic and diluted income per
share. Income per share for 1998 is presented on a pro forma basis to reflect
the 6,293,542 share issuance of common stock as a result of the Spin-off of
Landair Corporation (see Note 1) as if the Spin-off had occurred on January 1,
1998:
<TABLE>
<CAPTION>
Three months ended
------------------------------------
March 31, 1999 March 31, 1998
(Pro forma)
------------------------------------
(in thousands, except per share data)
<S> <C> <C>
Numerator:
Numerator for basic and diluted earnings per share -
net income $ 421 $ 676
Denominator:
Denominator for basic earnings per share - weighted-
average shares 6,294 6,294
Effect of dilutive stock options 122 --
------------------------
Denominator for diluted earnings per share - adjusted
weighted-average shares 6,416 6,294
========================
Basic earnings per share $ .07 $ .11
========================
Diluted earnings per share $ .07 $ .11
========================
Securities that could potentially dilute basic income per share in the
future that were not included in the computation of diluted
income per share because to do so would have been antidilutive
for the periods presented 91 --
========================
</TABLE>
7. INCOME TAXES
For the three months ended March 31, 1999 and 1998, the effective income tax
rate varied from the statutory federal income tax rate of 34% primarily as a
result of the effect of state income taxes, net of the federal benefit, and
permanent differences.
8. CONTINGENCIES
The Company is, from time to time, a party to litigation arising in the normal
course of its business, most of which involve claims for personal injury and
property damage incurred in connection with the transportation of freight.
Management believes none of these actions, individually or in the aggregate,
will have a material adverse effect on the financial condition or results of
operations of the Company.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of expense items to
operating revenue for the periods indicated.
<TABLE>
<CAPTION>
Three months ended
--------------------------------
March 31, 1999 March 31, 1998
--------------------------------
<S> <C> <C>
Operating revenue:
Forward Air, Inc. 2.2% 5.2%
Other 97.8 94.8
------------------------
100.0 100.0
Operating expenses:
Salaries, wages and employee
benefits 35.4 33.3
Purchased transportation 25.1 24.3
Fuel and fuel taxes 11.2 11.6
Depreciation and amortization 10.0 8.9
Insurance and claims 4.3 4.9
Operating leases 1.2 0.9
Other operating expenses 9.3 9.9
------------------------
96.5 93.8
Income from operations 3.5 6.2
Other income (expense):
Interest expense (1.6) (1.8)
Other, net 0.2 0.0
------------------------
(1.4) (1.8)
------------------------
Income before income taxes 2.1 4.4
Income taxes 0.8 1.7
------------------------
Net income 1.3% 2.7%
========================
</TABLE>
Results of Operations
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Operating revenue increased by $6.6 million, or 26.1%, to $31.9 million in the
first quarter of 1999 from $25.3 million in 1998. During the first quarters of
1999 and 1998, the average tractors in service, including owner-operators, were
1,087 and 780, respectively.
The operating ratio (operating expenses as a percentage of operating revenue)
was 96.5% for the first quarter of 1999 compared to 93.8% for 1998. The increase
in the operating ratio in 1999 was due primarily to a higher operating cost
structure resulting from a decrease in equipment utilization between periods.
10
<PAGE> 11
Salaries, wages and employee benefits were 35.4% of operating revenue in the
first quarter of 1999 compared to 33.3% in 1998. The increase in salaries, wages
and employee benefits as a percentage of operating revenue in the first quarter
of 1999 compared to the first quarter of 1998 was due primarily to a decrease in
the equipment utilization between periods. During the first quarter of 1999,
average Company-operated tractors in service were 779 compared to 556 in 1998.
Purchased transportation was 25.1% of operating revenue in the first quarter of
1999 compared to 24.3% in 1998. The increase in purchased transportation as a
percentage of operating revenue in the first quarter of 1999 was primarily
attributable to a decrease in equipment utilization between periods. During the
first quarters of 1999 and 1998, approximately 308 and 224, respectively, of the
Company's average tractors in service were contracted through owner-operators.
Fuel and fuel taxes were 11.2% of operating revenue in the first quarter of 1999
compared to 11.6% in 1998. The decrease in fuel and fuel taxes as a percentage
of operating revenue during the first quarter of 1999 resulted primarily from a
6.7% decrease in the average fuel price per gallon between periods.
Depreciation and amortization expense as a percentage of operating revenue was
10.0% in the first quarter of 1999 compared to 8.9% in 1998. The increase in
depreciation and amortization as a percentage of operating revenue is
attributable to a decrease in equipment utilization.
Insurance and claims were 4.3% of operating revenue in the first quarter of 1999
compared to 4.9% in 1998. The improvement in insurance and claims expense is due
primarily to a decrease in the frequency and severity of accidents and lower
premium costs during the first quarter of 1999 compared with 1998.
Operating leases were 1.2% of operating revenue in the first quarter of 1999
compared to 0.9% in 1998. The increase in operating leases as a percentage of
operating revenue during 1999 is attributed to an increase in rent for trailers
between periods.
Other operating expenses, a large component of which relates to equipment
maintenance, were 9.3% of operating revenue in the first quarter of 1999
compared to 9.9% in 1998. Gains on the sale of revenue equipment (which were
netted against other operating expenses) were $259,000 or 0.8% of operating
revenue during the first three months of 1999 compared to $32,000 or 0.1% of
operating revenue during the same period of 1998.
Interest expense was $497,000 or 1.6% of operating revenue in the first quarter
of 1999 compared to $467,000 or 1.8% in 1998.
The combined federal and state effective tax rate for the first quarter of 1999
was 37.9% compared to 39.5% for 1998.
11
<PAGE> 12
As a result of the foregoing factors, net income decreased by $255,000, or
37.7%, to $421,000 for the first quarter of 1999 from $676,000 in 1998.
Liquidity and Sources of Capital
The continued growth of the Company, and the nature of its operations, have
required significant investment in new equipment. The Company has historically
financed revenue equipment purchases with cash flows from operations, and
through borrowing under credit agreements with financial institutions. Working
capital needs have generally been met with cash flows from operations and
borrowings under credit agreements. Net cash provided by operating activities of
the Company was $4.4 million for the first three months of 1999 compared with
$5.3 million in the same period of 1998.
Net cash used in investing activities was approximately $22.2 million in the
first three months of 1999 compared with $5.8 million in the same period of
1998. Investing activities consisted primarily of the acquisition of additional
revenue equipment and enhanced management information systems during the first
three months of 1999 and 1998 and the acquisition of assets from Laker Express,
Inc. and the purchase of a terminal facility in 1999.
Net cash provided by financing activities was $16.1 million in the first three
months of 1999 compared with $800,000 in the same period of 1998. These
financing activities for the first three months of 1999 and 1998 included the
continued financing of revenue equipment coupled with repayment of long-term
debt and capital leases. In addition, the first three months of 1999 included
the financing related to the acquisition of assets from Laker Express, Inc.
The Company's credit facilities include a working capital line of credit and two
equipment financing facilities. Subject to maintenance of financial covenants
and ratios, these credit facilities permit the Company to borrow up to $15.0
million under the working capital line of credit and $25.0 million under the
equipment financing facilities. Interest rates for advances under the facilities
vary based on covenants related to total indebtedness, cash flows, results of
operations and other ratios. The facilities bear interest at LIBOR plus 0.75% to
1.6%, expire in September and December 2000, and are secured by accounts
receivable and certain revenue equipment. Availability under the line of credit
is reduced by the amount of outstanding letters of credit. Among other
restrictions, the terms of the line of credit require maintenance of certain
levels of net worth and other financial ratios. As of March 31, 1999, the
Company had $2.7 million of borrowings and $6.7 million of letters of credit
outstanding under the working capital line of credit facility and $19.2 million
of borrowings outstanding under the equipment financing facilities.
Management believes available borrowing under existing lines of credit, future
borrowings under installment notes for revenue equipment, and cash generated by
operations will be sufficient to fund the Company's cash needs and anticipated
capital expenditures through at least the next 12 months.
12
<PAGE> 13
Impact of Year 2000
We depend upon a significant number of computer software programs and operating
systems to conduct our business. Some of our older software programs are not
year 2000 compliant. We are in the process of replacing most of our key
financial and operating systems as a part of the normal upgrading of our
systems. In addition to our replacement program, we intend to modify some of our
software and hardware so that our computer systems will function properly in and
after the year 2000. We expect to complete this process by June 30, 1999.
We are in the process of obtaining year 2000 compliance letters and reports from
our significant suppliers and customers. We presently do not anticipate any
major interruption in our business as a result of year 2000 issues. Therefore,
we do not expect that year 2000 issues will have a material adverse effect on
our business or operations or that we will incur any material expense associated
with year 2000 compliance. We have not established a contingency plan to address
potential year 2000 noncompliance in our systems or in those of our major
suppliers or customers. We are currently considering whether we need a
contingency plan. Because of our dependence on systems outside our control and
because third parties with whom we have relationships may not have adequately
addressed year 2000 issues, we could face unexpected problems associated with
year 2000 issues. These problems could affect our operations, business or
financial condition.
Forward-Looking Statements
The Company, or its executive officers and directors on behalf of the Company,
may from time to time make written or oral "forward-looking statements." Written
forward-looking statements may appear in documents filed with the Securities and
Exchange Commission, in press releases and in reports to shareholders. Oral
forward-looking statements may be made by the Company's executive officers and
directors on behalf of the Company to the press, potential investors, securities
analysts and others. The Private Securities Litigation Reform Act of 1995
contains a safe harbor for forward-looking statements. The Company relies on
this safe harbor in making such disclosures. In connection with this safe harbor
provision, the Company is hereby identifying important factors that could cause
actual results to differ materially from those contained in any forward-looking
statement made by or on behalf of the Company. Without limitation, factors that
might cause such a difference include economic factors such as recessions,
inflation, higher interest rates, downturns in customer business cycles,
competition, surplus inventories, loss of a major customer, fuel price
increases, the Company's lack of prior operating history as an independent
entity, the ability of the Company's information systems to handle increased
volume of freight, and the availability and compensation of qualified drivers
and independent owner-operators. The Company disclaims any intent or obligation
to update these forward-looking statements.
13
<PAGE> 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
At the March 31, 1999 borrowing levels, a hypothetical 10% adverse change in
interest rates on the Company's variable rate long-term debt would reduce
pre-tax income for the three-month period ended March 31, 1999 by approximately
$45,000. Actual changes in rates may differ from the hypothetical assumptions
used in computing this exposure.
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is, from time to time, a party to litigation arising in the normal
course of its business, most of which involve claims for personal injury and
property damage incurred in connection with the transportation of freight.
Management believes that none of these actions, individually or in the
aggregate, will have a material adverse effect on the financial condition or
results of operations of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
(a) Exhibits - The response to this portion of Item 6 is submitted as a
separate section of this report.
(b) Reports on Form 8-K - The Company filed a report on Form 8-K during the
three months ended March 31, 1999. The Form 8-K was filed on January 22,
1999 and reported the completion on January 7, 1999 of an asset purchase
transaction in which a wholly-owned subsidiary of the Company, Landair
Transport, Inc., acquired certain assets of Laker Express, Inc. See Note
2 to the Condensed Consolidated Financial Statements.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Landair Corporation
Date: May 14, 1999 By: /s/ Edward W. Cook
-------------------------------
Edward W. Cook
Chief Financial Officer
and Senior Vice President
16
<PAGE> 17
EXHIBIT INDEX
Exhibit No.
-----------
10.1 Amended and Restated Stock Option and
Incentive Plan
10.2 Amended and Restated Non-Employee Director
Stock Option Plan
10.3 Third Amendment to Term Loan and Security
Agreement, dated as of January 5, 1999, between
SunTrust Bank, Nashville, N.A. and the Registrant
10.4 Loan and Security Agreement ($15.0 Million Line of
Credit), dated as of January 5, 1999, among
SunTrust Bank, Nashville, N.A. and the Registrant
and Landair Transport, Inc. Certain exhibits to
this document are omitted from this filing but the
Company will furnish supplemental copies of the
omitted materials to the Securities and Exchange
Commission upon request.)
10.5 $3.0 Million Note Secured by Real Estate, dated
March 25, 1999, to First Tennessee Bank National
Association
10.6 Guaranty Agreement, dated as of March 25, 1999, by
the Registrant to First Tennessee Bank National
Association
27.1 Financial Date Schedule - Period Ended
March 31, 1999 (Electronic Filing Only)
17
<PAGE> 1
EXHIBIT 10.1
LANDAIR CORPORATION
-----------------------------------------------------------------
AMENDED AND RESTATED
STOCK OPTION AND INCENTIVE PLAN
-----------------------------------------------------------------
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of the Landair Corporation Stock Option and Incentive Plan
(the "Plan") is to enable Landair Corporation (the "Company") to attract, retain
and reward key employees of, and any consultant or other person providing key
services to, the Company and its Subsidiaries, and strengthen the mutuality of
interests between such persons and the Company's shareholders by offering such
persons performance-based stock incentives and/or other equity interests or
equity-based incentives in the Company.
It is further intended that options granted by the Compensation or
other Committee (the "Committee") of the Board of Directors of the Company (the
"Board") pursuant to Section 8 of the Plan shall constitute "incentive stock
options" ("Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended and any successor thereto (the
"Code"), and options granted by the Committee pursuant to Section 7 of the Plan
shall constitute "nonqualified stock options" ("Nonqualified Stock Options").
The Committee may also grant stock appreciation rights ("Stock Appreciation
Rights" or "SARs") pursuant to Section 9 of the Plan and shares of restricted
stock ("Restricted Stock") pursuant to Section 10 of the Plan.
The provisions of the Plan are intended to satisfy the requirements of
Section 16(b) of the Securities Exchange Act of 1934, and shall be interpreted
in a manner consistent with the requirements thereof, as now or hereafter
construed, interpreted, and applied by regulations, rulings, and cases. The Plan
is also designated so that awards granted hereunder intended to comply with the
requirements for "performance-based" compensation under Section 162(m) of the
Code may comply with such requirements. The creation and implementation of the
Plan shall not diminish or prejudice other compensation plans or programs
approved from time to time by the Board.
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Cause" means a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, or a participant's gross
negligence, willful misconduct or dishonesty, any of which is directly or
materially harmful to the business or reputation of the Company or any
Subsidiary, as determined by the Committee in its sole discretion.
<PAGE> 2
(b) "Common Stock" shall mean shares of Common Stock, par value $.01
per share, of the Company.
(c) "Disability" shall mean a disability as determined under procedures
established by the Committee for purposes of this Plan.
(d) "Fair Market Value" per share of Common Stock as of a particular
date shall mean (i) the closing sales price per share of Common Stock on the
national securities exchange on which the Common Stock is principally traded,
for the last preceding date on which there was a sale of such Common Stock on
such exchange, or (ii) if the shares of Common Stock are then traded in an
over-the-counter market, the average of the closing bid and asked prices for the
shares of Common Stock in such over-the-counter market for the last preceding
date on which there was a sale of such Common Stock in such market, or (iii) if
the shares of Common Stock are not then listed on a national securities exchange
or traded in an over-the-counter market, such value as the Committee, in its
sole discretion, shall determine. Notwithstanding any provision of the Plan to
the contrary, no determination made with respect to the Fair Market Value of a
share of Common Stock subject to Incentive Stock Option shall be inconsistent
with Section 422 of the Code or regulation thereunder.
(e) "Immediate Family" shall mean any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.
(f) "Option" or "Options" shall mean a grant to a Grantee of an option
or options to purchase shares of Common Stock. Options granted by the Committee
pursuant to the Plan shall constitute either Incentive Stock Options or
Nonqualified Stock Options.
(g) "Parent" shall mean any company (other than the Company) in an
unbroken chain of companies ending with the Company if, at the time of granting
an Option, each of the companies other than the Company owns stock or equity
interests (including partnership interests) possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock or equity
interests in one of the other companies in such chain.
(h) "Performance Goals" means performance goals based on one or more of
the following criteria: (i) pre-tax income or after-tax income; (ii) operating
cash flow; (iii) operating profit; (iv) return on equity, assets, capital, or
investment; (v) earnings or book value per share; (vi) sales or revenues; (vii)
operating expenses; (viii) Common Stock price appreciation; and (ix)
implementation or completion of critical projects or processes. Where
applicable, the Performance Goals may be expressed in terms of attaining a
specified level of the particular criteria or the attainment of a percentage
increase or decrease in the particular criteria, and may be applied to one or
more of the Company or any Subsidiary, or a division or strategic business unit
of the Company, or may be applied to the performance of the Company relative to
a market index, a group of other companies,
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or a combination thereof, all as determined by the Committee. The Performance
Goals may include a threshold level of performance below which no payment will
be made (or no vesting will occur), levels of performance at which specified
payments will be made (or specified vesting will occur), and a maximum level of
performance above which no additional payment will be made (or at which full
vesting will occur). Each of the foregoing Performance Goals shall be
determined, to the extent applicable, in accordance with generally accepted
accounting principles and shall be subject to certification by the Committee;
provided, that the Committee shall have the authority to make equitable
adjustments to the Performance Goals in recognition of unusual or non-recurring
events affecting the Company or any Subsidiary or the financial statements of
the Company or any Subsidiary, in response to changes in applicable laws or
regulations, or to account for items of gain, loss, or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of business or related to a change in accounting
principles.
(i) "Subsidiary" shall mean any company (other than the Company) in an
unbroken chain of companies beginning with the Company if, at the time of
granting an Option, each of the companies other than the last company in the
unbroken chain owns stock or equity interests (including partnership interests)
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock or equity interests in one of the other companies in such
chain.
(j) "Ten Percent Stockholder" shall mean a Grantee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary.
(k) "Retirement" means retirement by an employee from active employment
with the Company or any Subsidiary (i) on or after attaining age 65, or (ii)
with the express consent, for the purposes of this Plan, of the Committee or
such officer of the Company as the Committee may designate from time to time at
or before the time of such retirement, from active employment with the Company
or any Subsidiary after age 55.
3. ADMINISTRATION.
The Plan shall be administered by the Committee, which will be
comprised solely of "Non-Employee Directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
by the Board if for any reason the Committee is not so comprised, in which case
all references herein to the Committee shall refer to the Board.
The Committee shall have the authority in its discretion, subject to
and not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically granted
to it under the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options, SARs, and
Restricted Stock; to determine which Options shall constitute Incentive Stock
Options and which
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Options shall constitute Nonqualified Stock Options and whether such Options
will be accompanied by Stock Appreciation Rights; to determine the purchase
price of the shares of Common Stock covered by each Option (the "Option Price")
and SARs and the kind of consideration payable (if any) with respect to awards;
to determine the period during which Options may be exercised and during which
Restricted Stock shall be subject to restrictions, and whether in whole or in
installments; to determine the persons to whom, and the time or times at which
awards shall be granted (such persons are referred to herein as "Grantees"); to
determine the number of shares to be covered by each award; to determine the
terms, conditions, and restrictions of any Performance Goals and the number of
Options, SARs, or shares of Restricted Stock subject thereto; to interpret the
Plan; to prescribe, amend, and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the agreements (which need not be
identical) entered into in connection with awards granted under the Plan (the
"Agreements"); to cancel or suspend awards, as necessary; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may delegate to one or more of its members or to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. All decisions, determinations,
and interpretations of the Committee shall be final and binding on all persons,
including the Company and Grantees of any awards under this Plan.
The Board shall fill all vacancies, however caused, in the Committee.
The Board may from time to time appoint additional members to the Committee, and
may at any time remove one or more Committee members and substitute others. One
member of the Committee shall be selected by the Board as chairman. The
Committee shall hold its meetings at such times and places as it shall deem
advisable. All determinations of the Committee shall be made by a majority of
its members either present in person or participating by conference telephone at
a meeting or by written consent. The Committee may appoint a secretary and make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings.
No members of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any award
granted hereunder. To the fullest extent permitted by law, the Company shall
indemnify each person made or threatened to be made a party to any civil or
criminal action or proceeding by reason of the fact that such person, or his or
her testator or intestate, is or was a member of the Committee.
4. ELIGIBILITY.
Officers and other key employees of the Company or any Subsidiary, and
any consultant or other person providing key services to the Company or any
Subsidiary shall be eligible to receive awards hereunder (excluding members of
the Committee and any person who serves only as a
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director). In determining the persons to whom awards shall be granted and the
number of shares to be covered by each award, the Committee, in its sole
discretion, shall take into account the contribution by the eligible
participants to the management, growth, and profitability of the business of the
Company and such other factors as the Committee shall deem relevant.
5. STOCK.
The maximum number of shares of Common Stock reserved for the grant of
awards under the Plan shall be 1,000,000 (including shares of Common Stock
reserved for the grant of awards issued in connection with the Distribution
Agreement dated as of September 18, 1998, by and between the Company and Forward
Air Corporation, a Tennessee corporation (the "Distribution Agreement")) subject
to adjustment as provided in Section 11 hereof. Such shares may, in whole or in
part, be authorized but unissued shares or shares that shall have been or may be
reacquired by the Company. No Grantees shall be eligible to receive awards
relative to shares of Common Stock which exceed 100,000 shares in any fiscal
year.
If any outstanding award under the Plan should, for any reason, expire
or be canceled, forfeited, or terminated, without having been exercised in full,
the shares of Common Stock allocable to the unexercised, canceled, forfeited, or
terminated portion of such award shall (unless the Plan shall have been
terminated) become available for subsequent grants of awards under the Plan.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted pursuant to the Plan shall be evidenced by a
written agreement between the Company and the Grantee (the "Option Agreement"),
in such form as the Committee shall from time to time approve, which Option
Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) Type of Option. Each Option Agreement shall specifically state that
the Option constitutes an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options may be granted only to individuals who are employees of
the Company or any Subsidiary.
(c) Option Price. Each Option Agreement shall state the Option Price,
which, in the case of an Incentive Stock Option, shall not be less than one
hundred percent (100%) of the Fair Market Value of the shares of Common Stock
covered by the Option on the date of grant. The Option Price shall be subject to
adjustment as provided in Section 11 hereof. Unless otherwise stated in the
resolution, the date on which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such Option is granted.
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(d) Medium and Time of Payment. The Option Price shall be paid in full,
at the time of exercise, as the Option Agreement may provide, in cash or in
shares of Common Stock having a Fair Market Value equal to such Option Price, or
in a combination of cash and Common Stock, or in such other manner as the
Committee shall determine.
(e) Term and Exercisability of Options. Each Option shall be
exercisable at such times and under such conditions as the Committee, in its
discretion, shall determine; provided, however, that in the case of an Incentive
Stock Option, such exercise period shall not exceed ten (10) years from the date
of grant of such Option. The exercise period shall be subject to earlier
termination as provided in Section 6(f) hereof. An Option may be exercised, as
to any or all full shares of Common Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or its
designated agent.
(f) Termination of Employment
(i) Generally. Except as otherwise provided herein, an Option
may not be exercised unless the Grantee is then in the service or employ of the
Company or a Parent or Subsidiary (or a company or a parent or subsidiary
company of such company issuing or assuming the Option in a transaction to which
Section 424(a) of the Code applies), and unless the Grantee has remained
continuously so employed since the date of grant of the Option. Unless otherwise
determined by the Committee at or after the date of grant, in the event that the
employment of a Grantee terminates (other than by reason of death, Disability,
Retirement, or for Cause) all Options that are exercisable at the time of such
termination may be exercised for a period of 90 days from the date of such
termination or until the expiration of the stated term of the Option, whichever
period is shorter. For purposes of interpreting this Section 6(f) only, the
service of a director as a non-employee member of the Board shall be deemed to
be employment by the Company.
(ii) Death or Disability. If a Grantee dies while employed by
the Company or a Parent or Subsidiary (or within the period of extended
exercisability otherwise provided herein), or if the Grantee's employment
terminates by reason of Disability, all Options theretofore granted to such
Grantee will become fully vested and exercisable (notwithstanding any terms of
the Options providing for delayed exercisability) and may be exercised by the
Grantee, by the legal representative of the Grantee's estate, or by the legatee
under the Grantee's will at any time until the expiration of the stated term of
the Option. If an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Option will thereafter be treated as a Non-Qualified Stock Option. In the event
that an Option granted hereunder is exercised by the legal representative of a
deceased or disabled Grantee, written notice of such exercise must be
accompanied by a certified copy of letters testamentary or equivalent proof of
the right of such legal representative or legatee to exercise such Option.
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(iii) Retirement. If a Grantee's employment terminates by reason of
Retirement, any Option held by the Grantee may thereafter be exercised, to the
extent it was exercisable at the time of such Retirement or on such accelerated
basis as the Committee may determine at or after the date of grant (but before
the date of such Retirement), at any time until the expiration of the stated
term of the Option. If an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, such Option will thereafter be treated as a Non-Qualified Stock Option.
(iv) Cause. If a Grantee's employment terminates for Cause, the
Option, to the extent not theretofore exercised, shall terminate on the date of
termination of employment.
(v) Committee Discretion. Notwithstanding the provisions of
subsections (i) through (iv) above, the Committee may, in its sole discretion,
at or after the date of grant (but before the date of termination), establish
different terms and conditions pertaining to the effect on any Option of
termination of a Grantee's employment, to the extent permitted by applicable
federal and state law.
(g) Buyout Provisions. The Committee may at any time offer to buy out
for a payment in cash, Common Stock, or Restricted Stock an option previously
granted, based on such terms and conditions as the Committee shall establish and
communicate to the Grantee at the time that such offer is made.
(h) Other Provisions. The Option Agreements evidencing Options under
the Plan shall contain such other terms and conditions, not inconsistent with
the Plan, as the Committee may determine.
7. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 6 hereof.
8. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 8 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
6 hereof.
(a) Value of Shares. The aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of equity
securities of the Company with respect to which Incentive Stock Options granted
under this Plan and all other option plans of any Parent or Subsidiary become
exercisable for the first time by each Grantee during any calendar year shall
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not exceed $100,000. To the extent such $100,000 limit has been exceeded with
respect to any Options first becoming exercisable, including acceleration upon a
Change in Control, and notwithstanding any statement in the Option Agreement
that it constitutes an Incentive Stock Option, the portion of such Option(s)
that exceeds such $100,000 limit shall be treated as a Nonqualified Stock
Option.
(b) Ten Percent Stockholder. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the Option Price shall not be less
than one hundred ten percent (110%) of the Fair Market Value of the shares of
Common Stock on the date of grant of such Incentive Stock Option, and (ii) the
exercise period shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
9. STOCK APPRECIATION RIGHTS.
The Committee is authorized to grant SARs to Grantees on the following
terms and conditions:
(a) In General. Unless the Committee determines otherwise, an SAR (i)
granted in tandem with a Nonqualified Stock Option may be granted at the time of
grant of the related Nonqualified Stock Option or at any time thereafter, and
(ii) granted in tandem with an Incentive Stock Option may only be granted at the
time of grant of the related Incentive Stock Option. An SAR granted in tandem
with an Option shall be exercisable only to the extent the underlying Option is
exercisable and shall terminate when the underlying Option terminates.
(b) SARs. An SAR shall confer on the Grantee a right to receive an
amount with respect to each share subject thereto, upon exercise thereof, equal
to the excess of (i) the Fair Market Value of one share of Common Stock on the
date of exercise over (ii) the grant price of the SAR (which in the case of an
SAR granted in tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other SAR shall be such price as
the Committee may determine).
(c) Performance Goals. The Committee may condition the exercise of any
SAR upon the attainment of specified Performance Goals, in its sole discretion.
10. RESTRICTED STOCK.
The Committee may award shares of Restricted Stock to any eligible
person so determined by the Committee. Each award of Restricted Stock under the
Plan shall be evidenced by an instrument, in such form as the Committee shall
from time to time approve (the "Restricted Stock Agreement"), and shall comply
with the following terms and conditions (and with such other terms and
conditions not inconsistent with the terms of this Plan as the Committee, in its
discretion, shall
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establish including, without limitation, the requirement that a Grantee provide
consideration for Restricted Stock upon the lapse of restrictions):
(a) The Committee shall determine the number of shares of Common Stock
to be issued to the Grantee pursuant to the award.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution, for such period as the Committee shall determine from
the date on which the award is granted (the "Restricted Period"). The Committee
may impose such other restrictions and conditions on the shares as it deems
appropriate including the satisfaction of Performance Goals. Certificates for
shares of stock issued pursuant to Restricted Stock awards shall bear an
appropriate legend referring to such restrictions, and any attempt to dispose of
any such shares of stock in contravention of such restrictions shall be null and
void and without effect. During the Restricted Period, such certificates shall
be held in escrow by an escrow agent appointed by the Committee. In determining
the Restricted Period of an award, the Committee may provide that the foregoing
restrictions lapse at such times, under such circumstances, and in such
installments, as the Committee may determine.
(c) Subject to such exceptions as may be determined by the Committee,
if the Grantee's continuous employment with the Company or any Parent or
Subsidiary shall terminate for any reason prior to the expiration of the
Restricted Period of an award, any shares remaining subject to restrictions
(after taking into account the provisions of Subsection (f) of this Section 10)
shall thereupon be forfeited by the Grantee and transferred to, and reacquired
by, the Company or a Parent or Subsidiary at no cost to the Company or such
Parent or Subsidiary.
(d) During the Restricted Period the Grantee shall possess all
incidents of ownership of such shares, subject to Subsection (b) of this Section
10, including the right to receive cash dividends with respect to such shares
and to vote such shares; provided, that shares of Common Stock distributed in
connection with a stock split or stock dividend shall be subject to restriction
and a risk of forfeiture to the same extent as the Restricted Stock with respect
to which such shares are distributed.
(e) Upon the occurrence of any of the events described in Section
11(c), all restrictions then outstanding with respect to shares of Restricted
Stock awarded hereunder shall automatically expire and be of no further force or
effect.
(f) The Committee shall have the authority (and the Restricted Stock
Agreement may so provide) to cancel all or any portion of any outstanding
restrictions prior to the expiration of the Restricted Period with respect to
any or all of the shares of Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
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(g) If and when the Restricted Period expires without a prior
forfeiture of the Restricted Stock subject to such Restricted Period,
certificates for an appropriate number of unrestricted shares shall be delivered
to the Grantee promptly.
11. EFFECT OF CERTAIN CHANGES.
(a) If there is any change in the shares of Common Stock through the
declaration of extraordinary cash dividends, stock dividends, recapitalization,
stock splits, or combinations or exchanges of such shares, or other similar
transactions, the number of shares of Common Stock available for awards (both
the maximum number of shares issuable under the Plan as a whole and the maximum
number of shares issuable on a per-employee basis, each as set forth in Section
5 hereof), the number of such shares covered by outstanding awards, the
Performance Goals, and the price per share of Options or SARs shall be
proportionately adjusted by the Committee to reflect such change in the issued
shares of Common Stock; provided, that any fractional shares resulting from such
adjustment shall be eliminated; and provided, further, that, with respect to
Incentive Stock Options, such adjustment shall be made in accordance with
Section 424(h) of the Code.
(b) In the event of the dissolution or liquidation of the Company; in
the event of any corporate separation or division, including but not limited to,
split-up, split-off or spin-off; or in the event of other similar transactions,
the Committee may, in its sole discretion, provide that either:
(i) the Grantee of any award hereunder shall have the right to
exercise an Option (at its then Option Price) and receive such property, cash,
securities, or any combination thereof upon such exercise as would have been
received with respect to the number of shares of Common Stock for which such
Option might have been exercised immediately prior to such dissolution,
liquidation, or corporate separation or division; or
(ii) each Option shall terminate as of a date to be fixed by the
Committee and that not less than thirty (30) days' written notice of the date so
fixed shall be given to each Grantee, who shall have the right, during the
period of thirty (30) days preceding such termination, to exercise all or part
of such Option.
In the event of a proposed sale of all or substantially all of the
assets of the Company or the merger of the Company with or into another
corporation, any award then outstanding shall be assumed or an equivalent award
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless such successor corporation does not agree to
assume the award or to substitute an equivalent award, in which case the
Committee shall, in lieu of such assumption or substitution, provide for the
realization of such outstanding awards in the manner set forth in Section
11(b)(i) or 11(b)(ii) above.
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(c) If, while any awards remain outstanding under the Plan, any of the
following events shall occur (which events shall constitute a "Change in
Control" of the Company):
(i) the "beneficial ownership," as defined in Rule 13d-3 under the
Exchange Act, of securities representing more than a majority of the combined
voting power of the Company are acquired by any "person" as defined in Sections
13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B) any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company, (C) Scott M. Niswonger or any member of his Immediate Family, or (D)
any corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock of the
Company); or
(ii) the shareholders of the Company approve a definitive agreement
to merge or consolidate the Company with or into another company (other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) a majority of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation), or to sell or otherwise dispose of all or
substantially all of its assets, or adopt a plan of liquidation; or
(iii) during any period of two consecutive years, individuals who
at the beginning of such period were members of the Board cease for any reason
to constitute at least a majority thereof (unless the election, or the
nomination for election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period); then from and after the
date on which any such Change in Control shall have occurred (the "Acceleration
Date"), any Option, SAR, and share of Restricted Stock awarded pursuant to this
Plan shall be exercisable or otherwise nonforfeitable in full, as applicable,
whether or not otherwise exercisable or forfeitable.
Following the Acceleration Date, (i) the Committee shall, in the case
of a merger, consolidation, or sale or disposition of assets, promptly make an
appropriate adjustment to the number and class of shares of Common Stock
available for awards, and to the amount and kind of shares or other securities
or property receivable upon exercise or other realization of any outstanding
awards after the effective date of such transaction, and, if applicable, the
price thereof, and (ii) the Committee may in its discretion (unless proscribed
with respect to certain Grantees), permit the cancellation of outstanding
Options, SARs, and Restricted Stock in exchange for a cash payment in an amount
equal to the Spread. The term "Spread" as used herein shall mean an amount equal
to the product computed by multiplying (i) the excess of (A) the highest Fair
Market Value per share of Common Stock during the sixty-day period preceding the
Acceleration Date over (B) the Option Price per share of Common Stock at which
such Option, SAR, or Restricted Stock is exercisable, by (ii) the number of
shares of Common Stock with respect to which the Option, SAR, or Restricted
Stock is being exercised.
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Notwithstanding the foregoing, (i) with respect to any Incentive Stock
Option (or an SAR relating to an Incentive Stock Option), the Grantee may not
receive a cash payment in excess of the maximum amount that will enable such
option to continue to qualify as an Incentive Stock Option, and (ii) no Grantee
subject to the reporting requirements of Section 16(a) of the Exchange Act shall
be eligible to receive a cash payment in respect of any award held for less than
six months prior to exercise.
(d) In the event of a change in the Common Stock of the Company as
presently constituted that is limited to a change of all of its authorized
shares of Common Stock into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
(e) Except as herein before expressly provided in this Section 11, the
Grantee of an award hereunder shall have no rights by reason of any subdivision
or consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger, or consolidation
or spin-off of assets or stock of another company; and any issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock subject to
an award. The grant of an award pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to merge or
to consolidate or to dissolve, liquidate, or sell, or transfer all or part of
its business or assets or engage in any similar transactions.
12. SURRENDER AND EXCHANGES OF AWARDS.
The Committee may permit the voluntary surrender of all or a portion of
any Option granted under the Plan or any option granted under any other plan,
program, or arrangement of the Company or any Subsidiary ("Surrendered Option"),
to be conditioned upon the granting to the Grantee of a new Option for the same
number of shares of Common Stock as the Surrendered Option, or may require such
voluntary surrender as a condition precedent to a grant of a new Option to such
Grantee. Subject to the provisions of the Plan, such new Option (1) may be an
Incentive Stock Option or a Nonqualified Stock Option and (2) shall be
exercisable at the price, during such period, and on such other terms and
conditions as are specified by the Committee at the time the new Option is
granted. The Committee may also grant Restricted Stock in exchange for
Surrendered Options to any holder of such Surrendered Option.
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13. PERIOD DURING WHICH AWARDS MAY BE GRANTED.
Awards may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the effective date of the Plan, provided that
awards granted prior to such tenth anniversary date may be extended beyond such
date.
14. LIMITS ON TRANSFERABILITY OF AWARDS.
Awards of Incentive Stock Options (and any SAR related thereto) shall
not be transferable otherwise than by will or by the laws of descent and
distribution, and all Incentive Stock Options are exercisable during the
Grantee's lifetime only by the Grantee. Awards of Nonqualified Stock Options
(and any SAR related thereto) shall not be transferable, without the prior
written consent of the Committee, other than (i) by will or by the laws of
descent and distribution, (ii) by a Grantee to a member of his or her Immediate
Family, or (iii) to a trust for the benefit of the Grantee or a member of his or
her Immediate Family. Awards of Restricted Stock shall be transferable only to
the extent set forth in the Restricted Stock Agreement.
15. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of the date of the Distribution, subject
to the approval of the Plan by the holders of a majority of the shares of Common
Stock. Any grants made under the Plan prior to such approval shall be effective
when made (unless otherwise specified by the Committee at the time of grant),
but shall be conditioned on, and subject to, such approval of the Plan by such
shareholders.
16. AGREEMENT BY GRANTEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise of an
Option or SAR or other realization of an award, each Grantee shall agree that no
later than the date of exercise or other realization of an award granted
hereunder, the Grantee will pay to the Company or make arrangements satisfactory
to the Committee regarding payment of any federal, state, or local taxes of any
kind required by law to be withheld upon the exercise of an Option or other
realization of an award. Alternatively, the Committee may provide that a Grantee
may elect, to the extent permitted or required by law, to have the Company
deduct federal, state, and local taxes of any kind required by law to be
withheld upon the exercise of an Option or realization of any award from any
payment of any kind due to the Grantee. The Committee may, in its sole
discretion, permit withholding obligations to be satisfied in shares of Common
Stock subject to the award.
13
<PAGE> 14
17. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate,
modify, or amend the Plan without stockholder approval to the fullest extent
permitted by the Exchange Act and the rules and regulations thereunder;
provided, however, that no suspension, termination, modification, or amendment
of the Plan may adversely affect any award previously granted hereunder, unless
the written consent of the Grantee is obtained.
18. RIGHTS AS A SHAREHOLDER.
Except as provided in Section 10(d) hereof, a Grantee or a transferee
of an award shall have no rights as a shareholder with respect to any shares
covered by the award until the date of the issuance of a stock certificate to
him or her for such shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities, or other property) or
distribution of other rights for which the record date is prior to the date such
stock certificate is issued, except as provided in Section 11 hereof.
19. NO RIGHTS TO EMPLOYMENT.
Nothing in the Plan or in any award granted or Agreement entered into
pursuant hereto shall confer upon any Grantee the right to continue in the
employ of the Company or any subsidiary or to be entitled to any remuneration or
benefits not set forth in the Plan or such Agreement or to interfere with or
limit in any way the right of the Company or any such subsidiary to terminate
such Grantee's employment. Awards granted under the Plan shall not be affected
by any change in duties or position of a Grantee as long as such Grantee
continues in the employ of the Company or any Subsidiary.
20. BENEFICIARY.
A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Grantee, the executor or administrator of the Grantee's estate
shall be deemed to be the Grantee's beneficiary.
21. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a Grantee by
the Company, nothing contained herein shall give any such Grantee any rights
that are greater than those of a general creditor of the Company. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock or payments in lieu of or with respect to awards hereunder; provided,
however, that, unless the
14
<PAGE> 15
Committee otherwise determines with the consent of the affected participant, the
existence of such trusts or other arrangements is consistent with the "unfunded"
status of the Plan.
22. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Tennessee.
15
<PAGE> 1
EXHIBIT 10.2
LANDAIR CORPORATION
- -------------------------------------------------------------------------------
AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
- -------------------------------------------------------------------------------
SECTION 1. Purpose.
The purposes of the Amended and Restated Non-Employee Director Stock
Option Plan (the "Plan") are to attract and retain well-qualified persons for
service as directors of Landair Corporation (the "Company"), to provide
directors with an opportunity to increase their ownership interest in the
Company, and thereby increase their personal interest in the Company's continued
success, through the grant of options (the "Options") to purchase shares of the
$.0l par value per share common stock of the Company (the "Common Stock").
SECTION 2. Administration.
Responsibility and authority to administer and interpret the provisions
of the Plan shall be conferred upon the Company's Compensation Committee (the
"Committee"). The Committee may employ attorneys, consultants, accountants or
other persons, and the Committee, the Company and its officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All usual and reasonable expenses of the Committee shall be paid by the
Company. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all recipients who
have received awards, the Company and other interested persons. Notwithstanding
the foregoing, the Committee shall have no discretion with respect to the
amount, price and timing of the awards. No member of the Committee shall be
personally liable for any action, determination or interpretation taken or made
in good faith with respect to the Plan or awards made hereunder, and all members
of the Committee shall be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
SECTION 3. Eligibility.
All directors of the Company who are neither full-time employees of the
Company nor officers of the Company shall be participants in the Plan.
SECTION 4. Options.
Each eligible participant serving as a director on the effective date
of the Plan shall automatically be granted, on such effective date, Options to
purchase fifteen thousand (15,000) shares of Common Stock. Each individual who
serves as a director of the Company and is an eligible participant shall
automatically be granted options to purchase seven thousand five hundred (7,500)
shares of Common Stock on the first business day after each Annual Meeting of
Shareholders of the Company occurring after the effective date of the Plan. Each
Option granted hereunder shall be evidenced by an Option Agreement acceptable to
the Company. The Options
<PAGE> 2
shall be registered pursuant to a Registration Statement on Form S-8 to be filed
in compliance with the Securities Act of 1933, as amended (the "Securities
Act").
SECTION 5. Terms and Conditions.
(a) Options to purchase up to one hundred thousand (100,000) shares of
Common Stock may be granted hereunder. In the event that any Option granted
hereunder expires unexercised or is canceled, surrendered, or terminated without
being exercised, in whole or in part, for any reason, then the number of shares
of Common Stock theretofore subject to such Option which expired or were
canceled, surrendered or terminated without being exercised shall be added to
the remaining number of shares of Common Stock for which Options may be granted
hereunder. The Committee shall appropriately adjust the number of shares for
which Options may be granted pursuant to the Plan in the event of
reorganization, recapitalization, stock split, reverse stock split, stock
dividend, exchange or combination of shares, merger, consolidation, rights
offering, or any change in capitalization of the Company.
(b) The Options shall be exercisable only by the participant during his
or her lifetime and may not be transferred other than by will or the laws of
descent and distribution.
(c) The exercise price per share for each Option granted under the Plan
shall be 100% of the Fair Market Value (as defined below) of a share of Common
Stock as of the date of grant. "Fair Market Value" as of a given date for
purposes of the Plan and any Option Agreement means (i) the closing sales price
per share of Common Stock on the national securities exchange on which the
Common Stock is principally traded, for the last preceding date on which there
was a sale of such Common Stock on such exchange, or (ii) if the shares of
Common Stock are then traded in an over-the-counter market, the average of the
closing bid and asked prices for the shares of Common Stock in such
over-the-counter market for the last preceding date on which there was a sale of
such Common Stock in such market, or (iii) if the shares of Common Stock are not
then listed on a national securities exchange or traded in an over-the-counter
market, such value as the Committee, in its sole discretion, shall determine.
(d) The initial Options to purchase fifteen thousand (15,000) shares of
Common Stock granted to directors on the effective date of the Plan shall become
exercisable in two (2) equal installments on the first and second anniversaries
of their respective dates of grant. Subsequent annual grants of Options shall
become exercisable in two (2) equal installments, the first installment becoming
exercisable twelve (12) months after the respective date of grant. The second
installment of each annual grant shall become exercisable twenty-four (24)
months after the respective date of grant. Once an Option has become
exercisable, it shall remain exercisable, to the extent not exercised, until its
expiration date.
(e) If a participant's service with the Company terminates due to the
participant's death or disability, all Options theretofore granted to the
participant will become fully vested and exercisable and may be exercised by the
participant, by the legal representative of the participant's
2
<PAGE> 3
estate, or by the legatee under the participant's will at any time until the
expiration of the Option (as set forth below). If a participant's service with
the Company terminates for any other reason, all Options granted to such
participant which are not then exercisable shall be canceled, and the remaining
Options shall continue to be exercisable for ninety (90) days thereafter
(subject to expiration as provided below).
(f) Payment of the exercise price shall be in cash, in shares of Common
Stock valued at their Fair Market Value on the date of exercise, or both, as
elected by the participant. Shares of Common Stock issued pursuant to the
exercise of an Option under the Plan shall be from authorized but unissued
shares. To the extent the shares purchased through the exercise of an Option
granted hereunder are not registered under the Securities Act, they may not be
sold, assigned, transferred or otherwise disposed of in the absence of an
effective registration statement covering the shares, or an available exemption
under the Securities Act.
(g) Notwithstanding any other provision herein to the contrary, all
Options granted hereunder shall expire on the tenth anniversary of their
respective date of grant.
SECTION 6. Change in Control.
If, while any awards remain outstanding under the Plan, any of the
following events shall occur (which events shall constitute a "Change in
Control" of the Company):
(a) the "beneficial ownership," as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of securities
representing more than a majority of the combined voting power of the Company
are acquired by any "person" as defined in Sections 13(d) and 14(d) of the
Exchange Act (other than (A) the Company, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, (C) Scott M.
Niswonger or any member of his Immediate Family (as defined below), or (D) any
corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company);
or
(b) the shareholders of the Company approve a definitive agreement
to merge or consolidate the Company with or into another company (other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) a majority of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation), or to sell or otherwise dispose of all or
substantially all of its assets, or adopt a plan of liquidation; or
(c) during any period of two consecutive years, individuals who at
the beginning of such period were members of the Board of Directors of the
Company (the "Board") cease for any reason to constitute at least a majority
thereof (unless the election, or the nomination for election by
3
<PAGE> 4
the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of such period);
then from and after the date on which any such Change in Control shall have
occurred (the "Acceleration Date"), any Option, SAR, and share of Restricted
Stock awarded pursuant to this Plan shall be exercisable or otherwise
nonforfeitable in full, as applicable, whether or not otherwise exercisable or
forfeitable.
Following the Acceleration Date, (i) the Committee shall, in the case
of a merger, consolidation, or sale or disposition of assets, promptly make an
appropriate adjustment to the number and class of shares of Common Stock
available for awards, and to the amount and kind of shares or other securities
or property receivable upon exercise or other realization of any outstanding
awards after the effective date of such transaction, and, if applicable, the
price thereof, and (ii) the Committee may in its discretion (unless proscribed
with respect to certain Grantees), permit the cancellation of outstanding
Options, SARs, and Restricted Stock in exchange for a cash payment in an amount
equal to the Spread. The term "Spread" as used herein shall mean an amount equal
to the product computed by multiplying (i) the excess of (A) the highest Fair
Market Value per share of Common Stock during the sixty-day period preceding the
Acceleration Date over (B) the Option Price per share of Common Stock at which
such Option, SAR, or Restricted Stock is exercisable, by (ii) the number of
shares of Common Stock with respect to which the Option, SAR, or Restricted
Stock is being exercised.
Notwithstanding the foregoing, no participant subject to the reporting
requirements of Section 16(a) of the Exchange Act shall be eligible to receive a
cash payment in respect of any award held for less than six months prior to
exercise.
For purposes of this Section 6, "Immediate Family" shall mean any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
sister-in-law, and shall include adoptive relationships.
SECTION 7. Amendment or Discontinuance.
The Board of Directors may, at any time amend, rescind or terminate the
Plan, as it shall deem advisable; provided, however, that (i) no change may be
made in any Option previously made under the Plan which would impair the
recipients' rights without their consent; (ii) no amendment to the Plan may be
made without approval of the Company's shareholders if the effect of the
amendment would be to: (a) materially increase the number of shares reserved
hereunder or benefits accruing to participants under the Plan, (b) materially
change the requirements for eligibility under Section 3 hereof, or (c)
materially modify the method for determining the number of options granted under
Section 4 hereof, except that any such increase or modification that results
from adjustments authorized by the first paragraph of Section 5 shall not
require such approval; and (iii) no amendment may be made to the Plan within six
(6) months of a prior amendment, except as required for
4
<PAGE> 5
compliance with the Internal Revenue Code of 1986, as amended from time to time,
or the rules thereunder.
SECTION 8. Effective Date and Term of Plan.
The Plan shall become effective as of October 5, 1998, subject to the
approval of a majority of the shareholders of the Company. Options granted prior
to termination of the Plan, shall, notwithstanding termination of the Plan,
continue to be effective and shall be governed by the Plan.
SECTION 9. Governing Law.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Tennessee pertaining to contracts
made and to be performed wholly within such jurisdiction.
5
<PAGE> 1
EXHIBIT 10.3
THIRD AMENDMENT TO
TERM LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT (the
"Amendment") is made and entered into as of the 5th day of January, 1999, by and
between LANDAIR CORPORATION, a Tennessee corporation and LANDAIR TRANSPORT,
INC., a Tennessee corporation (hereinafter referred to collectively as the
"Borrower") and SUNTRUST BANK, NASHVILLE, N.A., a national banking association
(the "Lender").
R E C I T A L S:
A. Borrower and Lender previously entered into that certain Term Loan
and Security Agreement dated July 13, 1994 (as amended from time to time, the
"Loan Agreement").
B. Borrower and Lender amended the Loan Agreement pursuant to a First
Amendment to Term Loan and Security Agreement dated June 16, 1995 and a Second
Amendment to Term Loan and Security Agreement dated October 15, 1997.
C. Pursuant to the terms of the Loan Agreement, Borrower has previously
executed in favor of Lender that certain Promissory Note which has a principal
amount outstanding as of the date hereof of $4,416,788 which is governed by the
Loan Agreement and is defined as the "Notes" in the Loan Agreement.
D. Landair Services, Inc. was previously a "Borrower" under the Loan
Agreement and the Notes and with the consent of Lender was released as an
obligor thereunder.
E. Landair Corporation executes this Amendment to evidence its
agreement to be added as a "Borrower," as such term is defined and described in
the Loan Agreement.
F. Terms not defined herein shall have the meanings ascribed to such
terms in the Loan Agreement.
G. Borrower and Lender have agreed to amend the Loan Agreement as set
forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Section 1.1 of the Loan Agreement is amended to acknowledge that
there will be no additional Advances under the Loan.
<PAGE> 2
2. Section 3.2 concerning "Negative Covenants" is amended by the
addition of the following as subsections (e) and (f) thereof:
(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 $25,000,000 without the prior
written consent of Lender. For any such acquisitions with a purchase
price of less than $25,000,000, 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.
3. Sections 4.1 and 4.2 of the Loan Agreement concerning
"Financial Covenants" are deleted and the following sections are substituted in
lieu thereof:
Section 4.1. EBITR Divided by IR Ratio. While any of the
Indebtedness is outstanding, Landair Corporation will maintain (on a
consolidated basis) a ratio of earnings (before interest and rent
expense and taxes) to interest and rent expense, of no less than 2.0 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 4.2. Adjusted Funded Debt to EBITDAR Ratio. While any
of the Indebtedness is outstanding, Landair Corporation will maintain
(on a consolidated basis) a ratio of Adjusted Funded Debt to earnings
before interest, taxes, depreciation, amortization and rents
("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. Capitalization Ratio. While any of the
Indebtedness is outstanding, Landair Corporation will maintain at all
times (on a consolidated basis) a ratio of Adjusted Funded Debt to
Adjusted Capitalization not to exceed 0.55 at any time.
Section 4.4. Tangible Net Worth. While any of the Indebtedness
is outstanding, Landair Corporation will maintain (on a consolidated
basis) at all times a Tangible Net Worth equal to $39,000,000
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 4.5. Definitions. As used in this Article IV, the
following terms shall have the definitions set forth below:
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<PAGE> 3
FUNDED DEBT shall mean, without respect to the Landair
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 the Borrower to the Lender (or its
affiliates) under any swap agreements or similar arrangements; and
(g) any letter of credit issued for the account of Landair
Corporation or its subsidiaries. The calculation of Funded Debt
shall include all Funded Debt of Landair Corporation and its
subsidiaries, plus all Funded Debt of other entities or persons
which has been guaranteed by Landair Corporation or any subsidiary.
Funded Debt shall also include the redemption amount with respect
to any redeemable preferred stock of Landair Corporation or its
subsidiaries required to be redeemed within the next twelve months.
ADJUSTED FUNDED DEBT shall mean, with respect to Landair
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.
ADJUSTED CAPITALIZATION shall mean, with respect to
Landair Corporation on a consolidated basis the sum of (a)
stockholder's equity plus (b) Adjusted Funded Debt.
TANGIBLE NET WORTH shall mean, as of the date of
determination, Landair Corporation's total consolidated net worth
minus any goodwill or other intangibles as determined in
accordance with generally accepted accounting principles.
4. The Loan Agreement is hereby, and shall henceforth be deemed to be,
amended, modified and supplemented in accordance with the provisions hereof,
effective as of the execution of this Amendment, and the respective rights,
duties and obligations of Borrower and Lender under the Loan Agreement shall
hereafter be determined, exercised and enforced thereunder subject in all
respects to such amendments, modifications and supplements, and all terms and
conditions of this Amendment shall be for any and all purposes, a part of the
terms and conditions of the Loan Agreement.
5. This Amendment shall be governed by and construed in accordance with
the laws of the State of Tennessee.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.
BORROWER:
LANDAIR CORPORATION
By: E.R. Brown
Title: President
LANDAIR TRANSPORT, INC.
By: E.R. Brown
Title: President
LENDER:
SUNTRUST BANK, NASHVILLE, N.A.
By: Allen K. Oakley
Title: Senior Vice President
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<PAGE> 1
EXHIBIT 10.4
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 5th day of January, 1999, by and
among LANDAIR CORPORATION, a Tennessee corporation, and LANDAIR TRANSPORT, 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 Fifteen Million
Dollars ($15,000,000.00).
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 Fifteen
Million Dollars ($15,000,000.00) (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").
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.
<PAGE> 2
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.
<TABLE>
<CAPTION>
Ratio of Adjusted Funded Applicable
Debt to EBITDAR Margin
--------------- ------
<S> <C>
> 2.0 1.50%
-
> 1.5 and < 2.0 1.25%
-
> 1.0 and < 1.5 1.00%
-
< 1.0 0.75%
</TABLE>
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 as of the first business day of each calendar quarter thereafter) plus
one percent (1%) per annum. Thereafter the Ratio of Adjusted Funded Debt to
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.
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<PAGE> 3
Section 1.6. Use of Proceeds. The proceeds of the Loan 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. Lender agrees that the acquisition of the
assets of Laker Express, Inc. is a permitted use of proceeds and that the
amortization applicable to the Note financing such assets shall be four years.
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 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 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:
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<PAGE> 4
(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. Landair Transport, Inc. and Volunteer
Adjustment, Inc. are wholly-owned subsidiaries of Landair Corporation. The
following entity constitutes the only subsidiary of Landair Transport, Inc.:
Landair Transportation Properties, Inc.; 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
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;
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<PAGE> 5
(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;
(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 September 23, 1998 which Lender acknowledges as 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
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prepay the applicable Note with 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;
(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,
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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 EBITDAR and Adjusted Funded Debt
under Section 1.4 hereof.
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):
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<PAGE> 8
(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 $25,000,000 without the prior written consent of
Lender. For any such acquisitions with a purchase price of less than
$25,000,000, 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.
ARTICLE IV
FINANCIAL COVENANTS
Section 4.1. EBITR Divided by IR Ratio. While any of the Indebtedness
is outstanding, Landair Corporation will maintain (on a consolidated basis) a
ratio of earnings (before interest and rent expense and taxes) to interest and
rent expense, of no less than 2.0 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 4.2. Adjusted Funded Debt to EBITDAR Ratio. While any of the
Indebtedness is outstanding, Landair Corporation will maintain (on a
consolidated basis) a ratio of Adjusted Funded Debt to earnings before interest,
taxes, depreciation, amortization and rents ("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.
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Section 4.3. Capitalization Ratio. While any of the Indebtedness is
outstanding, Landair Corporation will maintain at all times (on a consolidated
basis) a ratio of Adjusted Funded Debt to Adjusted Capitalization not to exceed
0.55.
Section 4.4. Tangible Net Worth. While any of the Indebtedness is
outstanding, Landair Corporation will maintain (on a consolidated basis) at all
times a Tangible Net Worth equal to $39,000,000 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 4.5. Definitions. As used in this Article IV, the following
terms shall have the definitions set forth below:
FUNDED DEBT shall mean, without respect to the Landair
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 Landair Corporation or its subsidiaries. The
calculation of Funded Debt shall include all Funded Debt of Landair
Corporation and its subsidiaries, plus all Funded Debt of other
entities or persons which has been guaranteed by Landair Corporation or
any subsidiary. Funded Debt shall also include the redemption amount
with respect to any redeemable preferred stock of Landair Corporation
or its subsidiaries required to be redeemed within the next twelve
months.
ADJUSTED FUNDED DEBT shall mean, with respect to Landair
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.
ADJUSTED CAPITALIZATION shall mean, with respect to Landair
Corporation on a consolidated basis the sum of (a) stockholder's equity
plus (b) Adjusted Funded Debt.
TANGIBLE NET WORTH shall mean, as of the date of determination,
Landair Corporation's total consolidated net worth minus any goodwill
or other intangibles as determined in accordance with generally
accepted accounting principles.
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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
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
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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 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
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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.
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.
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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.
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.
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<PAGE> 14
Section 7.11. Borrower. Each and every reference to "Borrower" in this
Agreement shall be deemed to refer to and to include Landair Transport, Inc. and
Landair 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 Landair Transport, Inc. and Landair
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: Allen K. Oakley
Title: Senior Vice President
LANDAIR CORPORATION
By: E.R. Brown
Title: President
LANDAIR TRANSPORT, INC.
By: E.R. Brown
Title: President
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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<PAGE> 15
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
<PAGE> 16
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 January 5, 1999, by and among Landair Corporation and
Landair Transport, 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.
<PAGE> 17
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.
<PAGE> 18
This Note has been executed and delivered in and shall be construed and
enforced in accordance with the laws of the State of Tennessee.
Executed this _____ day of _______________, _____.
LANDAIR CORPORATION LANDAIR TRANSPORT, INC.
By: By:
----------------------------- ------------------------------
Title: Title:
-------------------------- ---------------------------
<PAGE> 1
EXHIBIT 10.5
NOTE SECURED BY REAL ESTATE
$3,000,000 Greeneville, Tennessee March 25, 1999
FOR VALUE RECEIVED, the undersigned, LANDAIR TRANSPORTATION PROPERTIES,
INC., a Tennessee corporation ("Maker"), promises to pay to the order of FIRST
TENNESSEE BANK NATIONAL ASSOCIATION, a national banking association with offices
in Greeneville, Tennessee ("Payee"; Payee and any subsequent holder[s] hereof
are hereinafter referred to collectively as "Holder"), without grace, at the
office of Payee at 2841 East Andrew Johnson Highway, Greeneville, Tennessee
37745, or at such other place as Holder may designate to Maker in writing from
time to time, the principal sum of THREE MILLION AND NO/100 DOLLARS
($3,000,000.00), together with interest on the outstanding principal balance
hereof from date at an annual rate of seven and five one-hundredths percent
(7.05%) per annum; provided that in no event shall the rate of interest payable
in respect of the indebtedness evidenced hereby exceed the maximum rate of
interest from time to time allowed to be charged by applicable law (the "Maximum
Rate"). Interest shall be calculated on the basis of a 360-day year to the
extent permitted by applicable law.
The principal amount owed hereunder, together with accrued interest
thereon, shall be due and payable in equal monthly payments of $27,048.78 each
on the 25th day of each successive month commencing on April 25, 1999 through
and including March 25, 2004, at which time the entire outstanding principal
balance, together with all accrued and unpaid interest, shall be immediately due
and payable in full. The said monthly payment is calculated based on an assumed
amortization period of fifteen (15) years at the interest rate specified above.
The undersigned recognizes and acknowledges that a principal balance shall
therefore be due on said maturity date.
All payments in respect of the indebtedness evidenced hereby shall be
made in collected funds, and shall be applied to principal, accrued interest and
charges and expenses owing under or in connection with this Note in such order
as Holder elects, except that payments shall be applied to accrued interest
before principal.
The indebtedness evidenced hereby may be prepaid in whole or in part,
at any time and from time to time, without penalty or premium except that, (i) a
penalty of two percent (2%) of any portion of the principal amount hereof which
is prepaid within the first twelve month period following the date hereof shall
be due and payable to Holder upon such prepayment, and (ii) a penalty of one
percent (1%) of any portion of the principal amount hereof which is prepaid
within the second twelve month period following the date hereof shall be due and
payable to Holder upon the date of such prepayment. Partial prepayments shall be
applied to installments hereunder in such order as the Holder hereof shall
determine in its sole discretion.
<PAGE> 2
Time is of the essence of this Note. It is hereby expressly agreed that
in the event any default shall occur:
(i) in the payment of principal or interest as stipulated above and
such default continues for more than ten (10) days after written notice to Maker
(provided that Maker shall only be entitled to such ten-day grace period twice
within any twelve-month period); or
(ii) under that certain Mortgage Deed executed by Borrower for the
benefit of Payee dated as of the date hereof (the "Mortgage"); or
(iii) under that certain Guaranty Agreement executed by Landair
Corporation (the "Guarantor") and the Payee dated as of the date hereof (the
"Guaranty Agreement"); or
(iv) under that certain Loan and Security Agreement between Guarantor
and the Payee dated as of September 10, 1998 or any other document relating to
the indebtedness of Guarantor described in, or evidenced by, such Loan and
Security Agreement; or
(v) under any other instrument or document now or hereafter further
evidencing, securing or otherwise relating to the indebtedness evidenced hereby,
and such default is not cured within any applicable grace or cure period with
respect thereto; then, and in such event, the entire outstanding principal
balance of the indebtedness evidenced hereby, together with any other sums
advanced hereunder, under the Mortgage and/or under any other instrument or
document now or hereafter evidencing, securing or in any way relating to the
indebtedness evidenced hereby, together with all unpaid interest accrued
thereon, shall, at the option of Holder and without notice to Maker, at once
become due and payable and may be collected forthwith, regardless of the
stipulated date of maturity. Upon the occurrence of any default as set forth
herein, at the option of Holder and without notice to Maker except as expressly
set forth herein, all accrued and unpaid interest, if any, shall be added to the
outstanding principal balance hereof, and the entire outstanding principal
balance, as so adjusted, shall bear interest thereafter until paid at an annual
rate (the "Default Rate") equal to the lesser of (i) the rate that is four
percentage points (4.0%) in excess of the above-specified interest rate, as it
varies from time to time, or (ii) the Maximum Rate, regardless of whether there
has been an acceleration of the payment of principal as set forth herein. All
such interest shall be paid at the time of and as a condition precedent to the
curing of any such default.
To the extent permitted by applicable law, Maker shall pay to Holder a
late charge equal to five percent (5%) of any payment hereunder that is not
received by Holder within five (5) days of the date on which it is due, in order
to cover the additional expenses incident to the handling and processing of
delinquent payments; provided, however, that no late charge will be imposed on
any payment made on time and in full solely by reason of any previously accrued
and unpaid late charge; and provided further that nothing in this paragraph
shall be deemed to waive any other right or remedy of Holder by reason of
Maker's failure to make payments when due hereunder.
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In the event this Note is placed in the hands of an attorney for
collection or for enforcement or protection of the security, or if Holder incurs
any costs incident to the collection of the indebtedness evidenced hereby or the
enforcement or protection of the security, Maker and any indorsers hereof agree
to pay a reasonable attorney's fee, all court and other costs, and the
reasonable costs of any other collection efforts.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto. No
failure to accelerate the indebtedness evidenced hereby by reason of default
hereunder, acceptance of a past-due installment or other indulgences granted
from time to time, shall be construed as a novation of this Note or as a waiver
of such right of acceleration or of the right of Holder thereafter to insist
upon strict compliance with the terms of this Note or to prevent the exercise of
such right of acceleration or any other right granted hereunder or by applicable
laws. Unless otherwise specifically agreed by Holder in writing, the liability
of Maker and all other persons now or hereafter liable for payment of the
indebtedness evidenced hereby, or any portion thereof, shall not be affected by
(1) any renewal hereof or other extension of the time for payment of the
indebtedness evidenced hereby or any amount due in respect thereof, (2) the
release of all or any part of any collateral now or hereafter securing the
payment of the indebtedness evidenced hereby or any portion thereof, or (3) the
release of or resort to any person now or hereafter liable for payment of the
indebtedness evidenced hereby or any portion thereof. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.
To the extent permitted by applicable law, Maker hereby waives and
renounces for itself, its heirs, successors and assigns, all rights to the
benefits of any appraisement, exception and homestead now provided, or that may
hereafter be provided by the Constitution and laws of the United States of
America and of any state thereof in and to all of its property, real and
personal, against the enforcement and collection of the obligations evidenced by
this Note.
The indebtedness and other obligations evidenced by this Note are
further evidenced and/or secured by (1) the Mortgage, (2) the Guaranty
Agreement, and (3) certain other instruments and documents as may be executed
from time to time by Maker.
All agreements herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise, shall the interest and loan
charges agreed to be paid to Holder 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. If for any reason whatsoever the interest or loan
charges paid or contracted to be paid in respect of the indebtedness evidenced
hereby 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 Holder
that exceed such maximum amounts shall be applied to the reduction of the
principal
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<PAGE> 4
balance remaining unpaid hereunder and/or refunded to Maker so that at no time
shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced hereby exceed the maximum amounts permitted from time to
time by applicable law. This provision shall control every other provision in
any and all other agreements and instruments now existing or hereafter arising
between Maker and Holder with respect to the indebtedness evidenced hereby.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, except to the extent that
Federal law may be applicable to the determination of the Maximum Rate.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective successors, legal representatives and assigns, whether
by voluntary action of the parties or by operation of law. In the event that
more than one person, firm or entity is a maker hereunder, then all references
to "Maker" shall be deemed to refer equally to each of said persons, firms
and/or entities, all of whom shall be jointly and severally liable for all of
the obligations of Maker hereunder.
IN WITNESS WHEREOF, the undersigned Maker has caused this Note to be
executed by its duly authorized manager as of the date first above written.
MAKER:
LANDAIR TRANSPORTATION
PROPERTIES, INC.
By: /s/ Richard H. Roberts
Title: President
4
<PAGE> 1
EXHIBIT 10.6
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, made as of March 25, 1999, by LANDAIR
CORPORATION, a Tennessee corporation having its address at 430 Airport Road,
Greeneville, Tennessee 37745 ("Guarantor"), for the benefit of FIRST TENNESSEE
BANK NATIONAL ASSOCIATION, a national banking association with offices in
Greeneville, Tennessee at 2841 E. Andrew Johnson Highway, Greeneville, Tennessee
37745 ("Lender").
W I T N E S S E T H:
WHEREAS, Lender has made available to Landair Transportation
Properties, Inc., a Tennessee corporation with principal offices in Greeneville,
Tennessee ("Borrower"), a term loan in the original principal amount of
$3,000,000 which loan is evidenced by that certain Note Secured by Real Estate
from Borrower to Lender of even date herewith (the "Note");
WHEREAS, Lender has previously made available to Guarantor an equipment
loan facility in the original principal amount not exceeding $10,000,000 and a
line of credit in the original principal amount not exceeding $15,000,000 on the
terms and conditions set forth in that certain Loan and Security Agreement
between Lender and Guarantor dated September 10, 1998 (the "Guarantor Loan
Agreement") which loans were guaranteed by the Borrower;
WHEREAS, the Guarantor is an affiliate of Borrower; and
WHEREAS, the Guarantor has agreed to guarantee the payment and
performance of Borrower's obligations under the Note, as provided herein.
NOW, THEREFORE, in consideration of the foregoing and in further
consideration of the anticipated benefits to the Guarantor by virtue of its
relationship to the Borrower, to induce the Lender to make the Loan, the
Guarantor hereby covenants and agrees as follows:
1. Guaranteed Obligations. The Guarantor hereby guarantees to the
Lender the full and prompt payment and performance of the following (hereinafter
referred to collectively as "Guaranteed Obligations"): (a) the indebtedness
evidenced by the Note, principal and any and all interest accrued or to accrue
thereon, and (b) the obligations required to be made or performed by the
Borrower under the Note and the Mortgage (as defined in the Note), and any and
all instruments, documents and/or agreements now or hereafter evidencing,
securing or otherwise related to the indebtedness evidenced by the Note.
2. Term of Guaranty. This Guaranty shall be a continuing, absolute and
unconditional Guaranty and shall remain in full force and effect until all
Guaranteed Obligations are made or performed in full by the Borrower or the
Guarantor, as the case may be, provided that if such Guaranteed Obligations are
made or performed in full by the Borrower, the obligations of the Guarantor
hereunder shall not thereby be discharged unless a period of 91 days beginning
with the date of the last such Guaranteed Obligation made or performed by the
Borrower shall elapse
<PAGE> 2
during which no petition in bankruptcy shall be filed by or against the
Borrower, and the Guarantor shall not be entitled to return of this Guaranty
until expiration of such 91-day period. If for any reason any payment (including
principal, interest, costs, expenses and attorney's fees) by, or undertaking of,
Borrower to the Lender shall be determined at any time to be a voidable
preference or otherwise shall be set aside or required to be returned or repaid,
this Guaranty, nevertheless, shall remain in effect and shall be fully
enforceable against the Guarantor for the undertaking or payment thus set aside,
returned or repaid, as well as any obligations hereunder still outstanding,
together with any costs, expenses and attorney's fees incurred by the Lender in
connection with such determination.
3. Guaranty of Payment. This is a guaranty of payment and not of
collection, and the Guarantor expressly waives any right to require that any
action be brought against the Borrower or any other guarantor of any of the
Guaranteed Obligations or to require that resort be had to any security. The
Guarantor further waives any right of the Guarantor to require that an action be
brought against Borrower under the provisions of Title 47, Chapter 12, Tennessee
Code Annotated, as the same may be amended from time to time. If the Borrower
shall fail to make any Guaranteed Obligation when and as the same becomes due
(whether at maturity, by acceleration or call for prepayment or otherwise), the
Guarantor, upon demand, without notice other than such demand and without the
necessity of further action by the Lender, shall promptly and fully make or
perform such Guaranteed Obligation. The Guarantor shall pay all reasonable costs
and expenses, including reasonable counsel fees and expenses, paid or incurred
by the Lender in connection with the enforcement of the obligations of the
Guarantor hereunder. All payments by the Guarantor shall be made in lawful money
of the United States of America and may be applied to the Guaranteed Obligations
as the Lender in its sole discretion deems fit. Each default in any Guaranteed
Obligation shall give rise to a separate cause of action hereunder, and separate
suits may be brought hereunder as each cause of action arises. The Guarantor
binds and obligates itself for the payment and performance of the Guaranteed
Obligations the same as if the Guaranteed Obligations had been contracted for by
and was due from the Guarantor personally, hereby agreeing to and binding itself
and its successors and assigns by all terms and conditions contained in the
Note, the Mortgage, or any other document or other evidence of indebtedness,
signed or to be signed by Borrower, and any other documents executed by the
Borrower in connection therewith or as security therefor, making itself a party
thereto, hereby waiving notice of any such indebtedness and of demand,
presentment, protest or notice of demand or nonpayment and of any act to
establish the liability of any party on any commercial or other paper,
indebtedness or obligation covered by this Guaranty.
4. Obligations Unconditional. The obligations of the Guarantor
hereunder shall not be impaired, modified, released or limited by any occurrence
or condition whatsoever, including without limitation (a) any compromise,
settlement, release, waiver, renewal, extension, indulgence, change in or
modification of (1) any of the obligations and liabilities, either original or
assumed, of the Borrower contained in the Note, the Mortgage, or any documents
relating thereto (collectively, the "Financing Instruments"), (2) any other
security for the Borrower's obligations under the Financing Instruments, (b) any
impairment, modification, release or
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limitation of (1) the liability of the Borrower, (2) the liens and security
interests created by the Mortgage, or (3) any other security for the Borrower's
obligations under the Financing Instruments, or any remedy for the enforcement
thereof, resulting from the operation of any present or future provision of the
Federal bankruptcy laws or other statute or from the decision of any court
relating thereto, (c) the assertion or exercise by the Lender of any rights or
remedies under the Financing Instruments or this Guaranty or any other guaranty
of the Borrower's obligations under the Financing Instruments or any delay in
asserting or exercising, or failure to assert or exercise, any such rights or
remedies, and (d) the assignment or sale or the purported assignment or sale of
all or any part of the interest of the Borrower in the Premises (as defined in
the Mortgage). The liability of the Guarantor hereunder shall not be in any
manner affected, diminished or impaired by any lack of diligence, neglect or
omission on the part of the Lender to make any demand or protest, or give any
notice of dishonor or default, or to realize upon or protect any collateral or
security for the Guaranteed Obligations, or to exercise any lien upon or right
or appropriation or setoff of any monies, accounts, credits or property of
Borrower possessed by the Lender toward the liquidation of the Guaranteed
Obligations or by any application of payments or credits thereon. Any impairment
of collateral is hereby specifically waived. The Lender shall have the exclusive
right to determine how, when and what application of payments and credits, if
any, shall be made on the Guaranteed Obligations, or any part thereof, and shall
be under no obligation, at any time, to first resort to, make demand on, file a
claim against, or exhaust its remedies against Borrower, or other persons or
corporations, their properties or estates, or to resort to or exhaust its
remedies against any collateral, security, property, liens or other rights
whatsoever.
5. Setoff. As security for the undertakings and obligations of the
Guarantor hereunder, the Guarantor expressly grants and gives to the Lender a
right of immediate setoff, without demand or notice, of the balance of every
deposit account, now or at any time hereafter existing, of the Guarantor with
any Lender, and a general lien upon, and security interest in, all money,
negotiable instruments, commercial paper, notes, bonds, stocks, credits and/or
chooses in action, or any interest therein, and any other property, rights and
interests of the Guarantor or any evidence thereof, which has or at any time
shall come into the possession, custody or control of any Lender, and, in the
event of default hereunder, such Lender may sell or cause to be sold at public
or private sale in any manner which may be lawful, all or any of such security,
for cash or credit and upon such terms as such Lender may see fit, and (except
as may be otherwise expressly provided by the Uniform Commercial Code, or other
applicable law) without demand or notice to the Guarantor, and any Lender
(unless prohibited by the Uniform Commercial Code from so doing) or any other
person may purchase such property, rights or interests so sold and thereafter
hold the same free of any claim or right of whatsoever kind, including any right
or equity of redemption, of the Guarantor, such demand, notice, right or equity
of redemption being hereby expressly waived and released.
6. Subordination of Borrower's Indebtedness. The Guarantor hereby
subordinates all indebtedness of the Borrower owing to the Guarantor, whether
now existing or hereinafter arising, to the full and prompt payment of the
Guaranteed Obligations, when and as the same shall become
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due (whether at maturity, by acceleration, or otherwise). So long as there is no
default under the Financing Instruments, or hereunder, the Guarantor may
continue to receive and retain payment on said subordinated indebtedness when
and as the same becomes due. Any amounts received by the Guarantor as a payment
on said subordinated indebtedness subsequent to any such default shall be
retained and held in trust by such Guarantor for the benefit of the Lender.
7. Agreements with Regard to the Guarantor Loan Agreement. Each of the
representations made by or in regard to the Guarantor set forth in the Guarantor
Loan Agreement and all documents and other instruments relating thereto
(collectively, the "Guarantor Documents") is true and correct in all material
respects as of the date hereof, as if made on the date hereof, and all covenants
and conditions to be complied with and obligations to be performed by the
Guarantor under the Guarantor Documents have been complied with and performed.
Guarantor hereby agrees to comply with the covenants set forth in the Guarantor
Loan Agreement at all times while this Agreement is in effect regardless of
whether the Guarantor Loan Agreement remains in effect during the term of this
Agreement and such covenants are hereby incorporated by reference herein.
Furthermore, the Guarantor represents and warrants that as of the date hereof,
there has been no material adverse change in the most recent financial
information given by Guarantor to the Lender.
8. Cross-Default of Financing Instruments and Guarantor Loan Agreement.
The Guarantor hereby agrees that any default by the Borrower under the Financing
Instruments, subject to any applicable notice and cure periods, shall also
constitute an Event of Default under the Guarantor Loan Agreement and that any
Event of Default by the Guarantor under the Guarantor Loan Agreement shall
constitute a default under the Financing Instruments. The indebtedness
represented by the Guarantor Loan Agreement is paid and the Guaranty is still in
effect, all Events of Default under the Guarantor Loan Agreement shall continue
to be defaults hereunder, and if any such Event of Default occurs, a default
shall occur hereunder.
9. Information. The Guarantor shall provide to the Lender such
information respecting the business, properties or the condition or operations,
financial or otherwise, of the Guarantor as the Lender may from time to time
reasonably request.
10. Payment on Default. Upon the occurrence of a default under the
Note, Mortgage, this Guaranty or any other Financing Instrument, subject to any
applicable notice and cure periods, the Guarantor shall immediately pay to the
Lender, all amounts for which the Borrower is obligated to the Lender under the
Financing Instruments and the Lender may take whatever action at law or in
equity may appear necessary or desirable to collect payments then due or
thereafter to become due hereunder or to enforce observance or performance of
any covenant, condition or agreement of the Guarantor under this Guaranty.
11. Additional Indebtedness. The granting of credit from time to time
by the Lender to Borrower, in excess of the amount to which a right of recovery
under this Guaranty is limited and without notice to the Guarantor, is hereby
expressly authorized and shall in no way affect or
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<PAGE> 5
impair this Guaranty; and, in the event that the indebtedness of Borrower to the
Lender shall so exceed the amount to which this Guaranty is limited, any
payments by Borrower to the Lender and any collections or recovery by the Lender
from any sources other than this Guaranty may first be applied by the Lender to
any portion of the indebtedness which exceeds the limits of this Guaranty,
provided that any amounts collected by the Lender pursuant to the exercise of
any remedies under the Financing Instruments or any documents securing the
obligations of Borrower under the Financing Instruments shall be applied in
accordance with the applicable provisions, if any, of such documents.
12. Assignment by the Lender. The Lender may, without any notice
whatsoever to anyone, sell, assign or transfer all or any part of the Guaranteed
Obligations, and in that event each and every immediate and successive assignee,
transferee or holder of all or any part of the Guaranteed Obligations shall have
right to enforce this Guaranty, by suit or otherwise, for the benefit of such
assignee, transferee or holder, as fully as though such assignee, transferee or
holder were herein by name given such rights, powers and benefits; but the
Lender shall have an unimpaired right, prior and superior to that of any said
assignee, transferee or holder, to enforce this Guaranty for the benefit of the
Lender, as to so much of the Guaranteed Obligations that it has not sold,
assigned or transferred.
13. Actions of the Lender; Waiver of Rights. No act or omission of any
kind, or at any time, on the part of the Lender in respect to any matter
whatsoever shall in any way affect or impair this Guaranty. This Guaranty is in
addition to and not in substitution for or discharge of any other Guaranty held
by the Lender. The Guarantor waives any right of action it might have against
the Lender because of exercise by the Lender in any manner howsoever of any
rights granted to the Lender herein. The Guarantor further hereby expressly
waives any legal requirements incident to the making or incurring of the
Guaranteed Obligations by Borrower and specifically agrees that this Guaranty
shall be valid and binding as to the Guarantor in any event without regard to
whether or not it is enforceable against Borrower.
14. Payments. All payments hereunder shall be made to the Lender at its
office at 2841 E. Andrew Johnson Highway, Greeneville, Tennessee 37745, or to
such other address as the Lender may advise the Guarantor.
15. Severability. If any term of this Guaranty, or the application
thereof to any person or circumstances, shall, to any extent, be invalid or
unenforceable, the remainder of this Guaranty, or the application of such term
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term of this Guaranty
shall be valid and enforceable to the fullest extent permitted by law.
16. Enforceability. It is the intention of the Guarantor and the Lender
that the Guarantor's Obligations hereunder shall be in, but not in excess of,
the maximum amount permitted by applicable federal bankruptcy, state insolvency,
or similar laws ("Applicable Law"). To that end, but only to the extent such
obligations would otherwise be subject to avoidance under
5
<PAGE> 6
Applicable Law if the Guarantor is not deemed to have received valuable
consideration, fair value or reasonably equivalent value for its obligations
hereunder, the Guarantor's obligations hereunder shall be reduced to that amount
which, after giving effect thereto, would not render the Guarantor insolvent, or
leave the Guarantor with an unreasonably small capital to conduct its business,
or cause the Guarantor to have incurred debts (or intended to have incurred
debts) beyond its ability to pay such debts as they mature, at the time such
obligations are deemed to have been incurred under Applicable Law. As used
herein, the terms "insolvent" and "unreasonably small capital" shall likewise be
determined in accordance with Applicable Law. This Section is intended solely to
preserve the rights of the Lender hereunder to the maximum extent permitted by
Applicable Law, and neither the Guarantor nor any other person shall have any
right or claim under this Section that would not otherwise be available under
Applicable Law.
17. Notices. All notices to be given pursuant to this Guaranty shall be
sufficient if personally delivered or if mailed by U. S. Mail, postage prepaid,
certified or registered mail, return receipt requested, or forwarded by a
nationally recognized overnight courier service or telecopier facsimile
transmission, to the addresses of the parties hereto given above and/or
telecopier numbers specified in any document(s) executed by the parties hereto,
or to such other address and/or telecopier number as a party may request in
writing. Any time period provided in the giving of any notice hereunder shall
commence upon the date such notice is deposited in the mail or with such courier
service, as applicable.
18. General Construction. The gender and number used in this Guaranty
are used as a reference term only and shall apply with the same effect whether
the parties are of the masculine or feminine gender, corporate or other form,
and the singular shall likewise include the plural.
19. Entire Agreement. The entirety of this Guaranty is set forth herein
and in the documents referred to herein and there is no other verbal or other
agreement, understanding or custom affecting this Guaranty. This Guaranty may
not be amended, modified or changed nor shall any waiver of any provision hereof
be effective, except only by an instrument in writing and signed by the party
against whom enforcement of any waiver, amendment, change, modification or
discharge is sought.
20. Governing Law. This Guaranty and all rights, obligations and
liabilities arising hereunder shall be interpreted and construed according to
the laws of the State of Tennessee.
21. Successors and Assigns. This Guaranty shall be binding upon the
Guarantor, its successors and assigns, and all rights against the Guarantor
arising under this Guaranty shall be for the sole benefit of the Lender.
6
<PAGE> 7
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and the Lender has caused this Guaranty to be accepted as of the date
first above written.
LANDAIR CORPORATION
By: /s/ E.R. Brown
Title: President
Accepted by:
FIRST TENNESSEE NATIONAL BANK NATIONAL ASSOCIATION
By: /s/ Larry Estepp
Title: Regional President
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LANDAIR CORPORATION FOR THE THREE MONTHS ENDED MARCH 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 12
<SECURITIES> 0
<RECEIVABLES> 15,880
<ALLOWANCES> 364
<INVENTORY> 0
<CURRENT-ASSETS> 22,595
<PP&E> 116,244
<DEPRECIATION> 32,778
<TOTAL-ASSETS> 110,111
<CURRENT-LIABILITIES> 20,983
<BONDS> 0
0
0
<COMMON> 63
<OTHER-SE> 45,622
<TOTAL-LIABILITY-AND-EQUITY> 110,111
<SALES> 0
<TOTAL-REVENUES> 31,930
<CGS> 0
<TOTAL-COSTS> 30,806
<OTHER-EXPENSES> (51)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 497
<INCOME-PRETAX> 678
<INCOME-TAX> 257
<INCOME-CONTINUING> 421
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
