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FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File No. 1-8129.
US 1 INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana
(State of Incorporation)
(I.R.S. Employer Identification No.) 95-3585609
1000 Colfax, Gary, Indiana 46406
(Address of principal executive offices)
(ZipCode)
Registrant's telephone number, including area code: (219) 944-6116
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, no par value None
Securities registered pursuant to Section 12(g) of the Act: None
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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
On March 15, 2001, there were 10,618,224 shares of registrant's common stock
were outstanding, and the aggregate market value of the voting stock held by
non affiliates of the registrant was approximately $1,000,000. For purposes of
the forgoing statement, directors and officers of the registrant have been
assumed to be affiliates.
PART 1
Item 1. Business.
The registrant, US 1 Industries, Inc. (hereinafter referred to, together
with its subsidiaries, as "US 1" or the "Company"), through its subsidiaries is
an interstate trucking company operating in 48 states. The Company's business
consists principally of a truckload operation for which the Company obtains
substantially all of its business through independent sales agents who then
arrange with independent truckers to haul the freight to the desired
destination.
US 1 was incorporated in California under the name Transcon Incorporated on
March 3, 1981. In March 1994, the Company changed its name to US 1 Industries,
Inc. In February 1995, the Company was merged with an Indiana corporation for
purposes of re-incorporation under the laws of Indiana. The Company's
subsidiaries consist of Blue and Grey Transport, Inc., an Indiana corporation,
("BGT"), Blue and Grey Brokerage, Inc., an Indiana corporation, ("BGB"),
Carolina National Logistics, Inc. an Indiana corporation,("CNL"), Carolina
National Transportation, Inc., an Indiana corporation ("CNT"), Accu Scan Drug
Testing, Inc., an Indiana corporation ("ACCU"), Keystone Logistics, Inc. an
Indiana corporation, ("KYL"), Unity Logistics, Inc. and Indiana Corporation,
("UNL"), Gulf Line Brokerage, Inc., an Indiana corporation ("GLB"), Gulf Line
Transportation, Inc., an Indiana corporation ("GLT"), Keystone Lines, a
California corporation ("Keystone"), CAM Transport, Inc., an Indiana
corporation,("CAM"), and TC Services, Inc., a California corporation ("TCS").
BGT, BGB, CAM, CNL, CNT, GLB, GLT,ACCU,KYL and Keystone operate under authority
granted by the United States Department of Transportation (the "DOT") and
various state agencies.
Operations
The Company carries virtually all forms of freight transported by truck,
except bulk goods, including specialized trucking services such as
containerized, refrigerated, and flatbed transportation, and this year started
a division that hauls over-size and over-weight loads.
The Company is a non-asset based business, contracting with independent
truckers (who generally own the truck they drive) and sales agents. The
Company pays the independent truckers and agents a percentage of the revenue
received from customers for the transportation of goods. The expenses related
to the operation of the trucks are the responsibility of the independent
contractors. Consequently, short-term fluctuations in operating activity have
less of an impact on the Company's net income than they have on the net income
of truck transportation companies that bear substantially all of the fixed cost
associated with the ownership of the trucks. Like other truck transportation
companies, however, US 1's revenues are affected by competition and the state
of the economy.
The Company's principal focus during 2000 was business growth. The Company
focused on the expansion of Carolina National Transportation, Inc., the startup
of the division that specializes in over-weight/over-sized freight, the start
up of CAM Transportation, Inc., and controlling the cost of operations.
Marketing and Customers
The Company conducts its business through a network of independent sales
agents who are in regular contact with shippers at the local level. The sales
agents have facilities and personnel to monitor and coordinate shipments and
respond to shipper' needs in a timely manner.
These agents are typically paid a commission of 6% to 10% of the Company's
revenues from its trucking operations.
During 2000, the Company utilized the services of approximately 40 sales
agents. One agent accounted for 13%,18%, and 15% of the Company's revenue for
the years ended December 31, 2000, 1999, and 1998 respectively. The Company
shipped freight for approximately 1,000 customers in 2000, none of which
accounted for more than of 10% of the Company's total revenues.
Independent Contractors
The independent contractors used by the Company must enter into standard
equipment operating agreements. The agreements provide that independent
contractors must bear many of the costs of operations, including drivers'
compensation, maintenance costs, fuel costs, collision insurance, taxes related
to the ownership and operation of the vehicle, licenses, and permits. The
Company requires independent contractors to maintain their equipment to
standards established by the DOT, and the drivers are subject to qualification
and training procedures established by the DOT. The Company is also required
to have random drug testing, enforce hours of service requirements, and monitor
maintenance of vehicles.
Employees
At December 31, 2000, the Company had approximately fifty-five full-time
employees. The Company's employees are not covered by a collective bargaining
agreement.
Competition
The trucking industry is highly competitive. The Company competes for
customers primarily with other nationwide carriers, some of which have company-
owned equipment and company drivers, and many, have greater volume and
financial resources. The Company also competes with private carriage conducted
by existing and potential customers. In addition, the Company competes with
other modes of transportation including rail.
The Company also faces competition for the services of independent trucking
contractors and sales agents. Sales agents routinely do business with a number
of carriers on an ongoing basis. The Company has attempted to develop a strong
sales agent network by maintaining a policy of prompt payment for services
rendered.
Competition is based on several factors; principally cost, timely
availability of equipment and quality of service.
Insurance
The Company insures the trucks with liability insurance coverage of up to
$2 million per occurrence with a $5,000 deductible. The Company has cargo
insurance coverage of up to $1,000,000 per occurrence with a $10,000
deductible. The Company also maintains a commercial general liability policy
with a limit of $1,000,000 per occurrence and no deductible.
Independent Contractor Status
From time to time, various legislative or regulatory proposals are
introduced at the federal or state levels to change the status of independent
contractors' classification to employees for either employment tax purposes
(withholding, social security, Medicare and unemployment taxes) or other
benefits available to employees. Currently, most individuals are classified as
employees or independent contractors for employment tax purposes based on 20
"common-law" factors rather than any definition found in the Internal Revenue
Code or Internal Revenue Service regulations. In addition, under Section 530
of the Revenue Act of 1978, taxpayers that meet certain criteria may treat
similarly situated workers as employees, if they have received a ruling from
the Internal Revenue Service or a court decision affirming their treatment, or
if they are following a long-standing recognized practice. Although
management is unaware of any proposals currently pending to change the employee
/independent contractor classification, the costs associated with potential
changes, if any, in the employee/independent contractor classification could
adversely affect the Company's results of operations if the Company were unable
to reflect them in its fee arrangements with the independent contractors and
agent or in the prices charged to its customer.
Regulation
The Company is a common and contract motor carrier regulated by the DOT and
various state agencies. Historically, the Interstate Commerce Commission
(the "ICC") and various state agencies regulated motor carriers' operating
rights, accounting systems, mergers and acquisitions, periodic financial
reporting, and other matters. In 1995 federal legislation preempted state
regulation of prices, routes, and services of motor carriers and eliminated the
ICC. Several ICC functions were transferred to the DOT. Management does not
believe that regulation by the DOT or by the states in their remaining areas of
authority will have a material effect on th Company's operations. The Company's
independent contractor drivers also must comply with the safety and fitness
regulation promulgated by the DOT, including those relating to drug and alcohol
testing and hours of service.
The Company's operations are subject to various federal, state, and local
environmental laws and regulations, implemented principally by the EPA and
similar state regulatory agencies, governing the management of hazardous
wastes, other discharge of pollutants into the air and surface and underground
waters, and the disposal of certain substances. Management believes that its
operations are in material compliance with current laws and regulations and
does not know of any existing condition that would cause compliance with
applicable environmental regulations to have a material effect on the Company's
earnings or competitive position.
Environmental Regulation
The Company owns property in Phoenix, Arizona that was formerly leased to
Transcon Lines ("Lines") as a terminal facility, where soil contamination
problems existed or are known to exist currently. State environmental
authorities notified the Company of potential soil contamination from
underground storage tanks, and management has been working with the regulatory
authorities to implement the required remediation. The underground storage
tanks were removed from the Phoenix facility in February 1994. Currently the
State environmental authorities are requiring further testing of the property.
The Company believes it is in substantial compliance with state and federal
environmental regulations relative to the trucking business. However, the
Company is working with regulatory officials to eliminate any sources of
contamination and determine extent of existing problems. Estimates of the
costs to complete the future remediation of approximately $141,000 are
considered in the land valuation allowance at December 31, 2000 and 1999.
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
The statements contained in Item 1 (Description of Business) and Item 6
(Management Discussion and Analysis of Financial Condition and Results of
Operation); particularly the statements under "Future Prospects" contain
forward-looking statements that are subject to a variety of risks and
uncertainties. The Company cautions readers that these risks and uncertainties
could cause the Compan's actual results in 2001 and beyond to differ materially
from those suggested by any forward-looking statements. These risks and
uncertainties include, without limitation, a lack of historic information for
new operations on which expectations regarding their future performance can be
based, general economic and business conditions affecting the trucking
industry, competition from, among others, national and regional trucking
companies that have greater financial and marketing resources than the Company,
the availability of sufficient capital, and the Company's ability to
successfully attract and retain qualified owner operators and agents.
Item 2. Properties
The Company's administrative offices are at 1000 Colfax, Gary, Indiana.
The Company leases its administrative offices on a month to month basis for
$2,200 per month from Mr. Michael E. Kibler, President, Chief Executive Officer
and a director of the Company, and Mr. Harold Antonson, Treasurer, Chief
Financial Officer and a director of the Company.
Carolina National Transportation, Inc. leases 3,900 sq. ft of office space
in Mt. Pleasant, SC for $5,700 per month. The current lease expires June 30,
2001. The Company anticipates that the lease will be renewed in fiscal year
2001.
Keystone Logistics, Inc. leases 1,591 sq. ft of office space in South Bend,
Indiana for $1,250 per month. The current lease expires October 31, 2002.
Cam Transport, Inc. leases an office building in Gulfport, Mississippi for
$2,250 per month. The current lease expires November 1, 2003.
Management believes that the Company' leased properties are adequate for
its current needs and can be retained or replaced at acceptable cost.
Item 3. Legal Proceedings
Cam Regional Transport filed a complaint against the Company in 1994 which
alleges breach of contract, claiming that Trailblazer Transportation, Inc., a
subsidiary of the Company which filed bankruptcy, failed to abide by a purchase
agreement entered into with Cam Regional Transport, Inc and Laurel Mountain
Leasing, Inc. The complaint seeks damages of $284,000 plus interest from
November 1992.
The Company is currently involved in two lawsuits, one of which is a class
action lawsuit, as a result of an August 1999 incident in which a Carolina
National Transportation, Inc., truck overturned leaking chemicals. It is the
Company's position that it is not at fault. The Company contends that the
materials inside the container were improperly packaged by a third party, that
the chemicals which leaked were not harmful in nature, and that those persons
alleging injuries were not harmed.
The Company is also involved in two lawsuits as a result of a chemical
leak that occured in a container hauled by a Carolina National Transportation,
Inc., truck. It is the Company's position that they are not at fault for this
incident because they are merely the shipper and a third party had the
responsibility to package the load for safe transportation.
At this time, the Company and its legal counsel are unable to assess the
outcome of these complaints. The Company intends to vigorously defend itself
in these matters.
The Company is involved in other litigation in the normal course of its
business. Management intends to vigorously defend these cases. In the opinion
of management, the litigation now pending will not have a material adverse
effect on the consolidated financial position of the company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of 2000.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Shares of Common Stock of the Company are listed and traded on the NASD
Electronic "bulletin board market" under the symbol USOO.
The following table sets forth for the period indicated the high and low
sales prices per share of the Common Stock as reported from NASDAQ quotations
provided by North American Quotations and reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.
Calendar Year High Low
------------------------------------------------------------------------
2000
First Quarter .3750 .0500
Second Quarter .2500 .0620
Third Quarter .3120 .0620
Forth Quarter .1800 .0625
1999
First Quarter .0937 .0312
Second Quarter .1250 .0156
Third Quarter .1250 .0156
Fourth Quarter .1406 .0468
As of March 15, 2001, there were 3,246 holders of record of Common Stock.
The Company has not paid any cash dividends on its Common Stock.
Management does not anticipate paying any dividends on the Common Stock in the
foreseeable future, and the Company's current credit agreement prohibits the
payment of dividends.
Item 6. Selected Financial Data
The selected consolidated financial data presented below have been derived
from the Company's consolidated financial statements. The consolidated
financial statements for the years ended December 31, 2000,1999 and 1998 have
been audited by the Company's independent certified public accountants, whose
report on such consolidated financial statements is included herein under Item
8. The information set forth below should be read in conjunction with the
consolidated financial statements and notes thereto under Item 8 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
(in thousands, except per share data)
Fiscal Year Ended December 31,
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA:
Operating revenues $49,055 $32,333 $30,177 $25,422 $15,412
Purchased transportation 38,337 24,846 23,417 19,676 11,694
Commissions 4,438 3,052 3,178 2,361 1,498
Other operating costs and expenses 4,988 3,481 3,408 3,806 2,394
Operating income (loss) 1,292 954 174 (421) (174)
Interest expense 623 661 744 435 282
Income(loss) before extraordinary item 1,602 412 173 (803) (339)
Net income (loss) 1,602 412 173 (192) 341
Income (loss) per common share before
Net Income before extraordinary items:
Basic $0.14 $0.03 $0.01 ($0.08) ($0.01)
Diluted $0.14 $0.03 $0.01 ($0.08) ($0.01)
Extraordinary item
Basic $0.00 $0.00 $0.00 $0.06 $0.05
Diluted $0.00 $0.00 $0.00 $0.06 $0.05
Net Income
Basic $0.14 $0.03 $0.01 ($0.02) $0.04
Diluted $0.14 $0.03 $0.01 ($0.02) $0.04
Weighted average shares outstanding:
Basic 10,618,224 10,618,224 10,618,224 10,616,397 9,879,077
Diluted 10,618,224 10,618,224 10,618,224 10,616,397 9,879,077
BALANCE SHEET DATA:
Total assets 11,891 5,352 4,499 6,261 2,198
Long-term debt, including
current portion 4,259 2,547 2,967 2,571 583
Working capital 1,846 (712) (861) (1,451) (3,016)
Shareholders' deficiency (2,459) (3,968) (4,298) (4,399) (4,020)
OTHER DATA:
Cash (used in) provided by
operating activities (2,833) (370) 490 (3,630) (445)
Cash (used in) provided by
investing activities ( 84) 74 58 (269) 149
Cash provided by (used in)
financing activities 2,916 296 (848) 3,971 468
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Overview
Purchased transportation represents the amount an independent
contractor is paid to haul freight and is primarily based on a contractually
agreed-upon percentage of revenue generated by the haul for truck capacity
provided by independent contractors. Purchased transportation is the largest
component of operating expenses and, on a consolidated basis increases or
decreases in proportion to the revenue generated through independent
contractors. Commission to agents and brokers are primarily based on
contractually agreed-upon percentages of revenue. Commissions to agents and
brokers as a percentage of consolidated revenue will vary directly with
revenue generated through independent commission sales agents.
A majority of the insurance and claims expense is based on a percentage of
revenue and, as a result, will increase or decrease, on a consolidated basis
with the Company's revenue. Potential liability associated with accidents in
the trucking industry is severe and occurrences are unpredictable. A material
increase in the frequency or severity of accidents or the unfavorable
development of existing claims could adversely affect the Company's operating
income.
The following table set forth the percentage relationships of expense items
to revenue for the periods indicated:
Fiscal Years
--------------------------
2000 1999 1998
------ ------ ------
Revenue 100.0% 100.0% 100.0%
Operating expenses:
Purchased transportation 78.2 76.8 77.6
Commissions 9.0 9.4 10.5
Insurance and claims 3.2 3.3 3.1
Salaries, wages and other 3.5 3.9 4.1
Other operating expenses 3.5 3.6 4.1
------- ------ ------
Total operating expenses 97.4 97.0 99.4
------ ------ ------
Operating income 2.6 3.0 0.6
2000 Compared to 1999
Revenue for the 2000 fiscal year was $49.1 million, an increase of $16.7
million, or 51.7%, over revenue for the 1999 fiscal year. The increase was
attributable to continued growth at Carolina National Transportation, the
operations of a new agent who specialized in over-size loads at Keystone Lines,
expansion of Keystone Logistics, Inc. and the startup of two new Companies,
CAM Transport, Inc. and Unity Logistics, Inc.
Purchased transportation was 78.2% of revenue in 2000 compared with 76.8%
in 1999. Purchased transportation has increased 1.4% as a percentage of
revenue for the year ended December 31, 2000, compared to the year ended
December 31,1999. Due to the increase in diesel fuel prices, the Company has
begun to bill their customers a fuel surcharge that is reimbursable to the
owner operator at 100%. Because this portion of the revenue is reimbursed at
100% to the owner operator, the purchased transportation as a percentage
of revenue will increase.
Commissions to agents were 9.0% of revenue in 2000 compared with 9.4% in
1999 primarily due to contracts with newer agents being negotiated at a lower
percentage rate.
Insurance and claims were 3.2% of revenue in 2000 compared with 3.3% in
1999 primarily due to a decrease in claims relative to revenue and a slight
decrease in liability insurance rates.
Salaries, wages and other expenses were 3.5% of revenue in 2000 and 3.9%
in 1999. The slight decrease in salaries, wages and other expenses as a
percentage of revenue was due to the Company's continued efforts to control
overhead costs coupled with the increase in revenue. Other operating expenses
were 3.5% of revenue in 2000 and 3.6% in 1999. The decrease in other operating
expenses as a percentage of revenue was also primarily attributable to the cost
containment measures coupled with the increase in revenue.
Based on the changes in revenue and expenses discussed above, operating
income increased by $337,814 from $953,859 in 1999 to $1,291,673 in 2000.
Interest expense decreased slightly to $0.62 million in 2000 from $0.66
million in 1999. Although the Company's new lender is charging lower interest
rates, the loan balance is higher due to continued Company growth. The net
effect was a small decrease in interest expense.
Non-operating income (expense), exclusive of interest expense, increased
from $118,547 in 1999 to $132,988 in 2000. The increase was primarily
attributable to a refund from the state of Alabama for permits paid in prior
years but was reversed by the courts and refunded to the Company.
The Company has net operating loss carry-forwards of approximately $57
million at December 31, 2000. These carry-forwards are available to offset
taxable income in future years and substantially all of these carry-forwards
will expire in the years 2003 through 2010. Based on the Company's
profitability in recent years, at December 31, 2000, the Company has realized a
net deferred tax asset of $800,000. The Company believes it is more likely
than not that this amount will be realized as a result of anticipated future
taxable income to be generated. Due to the uncertainty of the remaining tax
asset, a valuation allowance has been maintained for the remaining deferred tax
asset at December 31, 2000.
Net income in 2000 was $1,601,671 compared with $411,897 in 1999. Income
before Income Tax Benefit was $ 801,671 in 2000 compared with 411,897 in 1999
a 95% increase. Income available to common shareholders was $1,509,099, or
$0.14 per common share, in 2000 compared with $329,611, or $0.03 per common
share, in the prior year.
1999 Compared to 1998
Revenue for the fiscal year 1999 was $32.3 million, an increase of $2.2
million, or 7.1%, over revenue for the 1998 fiscal year. The increase was
attributable to continued growth at Carolina National Transportation, and the
operations of a new agent at Keystone Lines.
Purchased transportation was 76.8% of revenue in 1999 compared with 77.6%
in 1998. The decrease in the percentage of purchased transportation to revenue
was primarily attributable to management having better control over the
ancillary costs.
Commissions to agents were 9.4% of revenue in 1999 compared with 10.5% in
1998 primarily due to contracts with newer divisions negotiated a lower
percentage rate.
Insurance and claims were 3.3% of revenue in 1999 compared with 3.1% in
1998 primarily due to higher premium costs associated with a new insurance
carrier for Carolina National Transportation, Inc.
Salaries, wages and other expenses were 3.9% of revenue in 1999 and 4.1% in
1998. The slight decrease in salaries, wages and other expenses as a
percentage of revenue was due to the Company's continued efforts to control
overhead costs. Other operating expenses were 3.6% of revenue in 1999 and
4.1% in 1998. The decrease in other operating expenses as a percentage of
revenue was also primarily attributable to the cost containment measures
established by the Company.
Based on the changes in revenue and expenses discussed above, operating
income increased by $780,000 from $174,000 in 1998 to $964,000 in 1999.
Interest expense remained constant at $0.7 million for fiscal year 1999
and 1998. An increase in the Company's interest rate on its revolving line of
credit to a default rate of prime plus 4.75% was equally offset by a decrease
in the average outstanding balance in 1999.
Non-operating income (expense), exclusive of interest expense, decreased
from $743,000 in 1998 to $119,000 in 1999. The decrease was primarily
attributable to the write off of old payables in 1998 as discussed in Note 13
to the consolidated financial statements.
Net income in 1999 was $412,000 compared with $173,000 in 1998. Income
available to common shareholders was $330,000, or $0.03 per common share, in
1999 compared with $101,000, or $0.01 per common share, in the prior year.
Liquidity and Capital Resources
During fiscal 2000, the Company's financial position continued to improve.
The Company had a net deficiency in shareholders' equity of $2.5 million at
December 31, 2000 compared with $4.0 million at December 31, 1999. Working
capital at December 31, 2000 was $1.8 million compared to a deficiency of
($0.7) million at the end of 1999. This increase in working capital is due to
refinancing a portion of the former line of credit with long-term shareholder
debt and continuing profitability.
Net cash used in operating activities increased $2.4 million from $0.4
million for the year ended December 31, 1999 to $2.8 million for the year ended
December 31, 2000. The cash used in operations is due primarily to an increase
in accounts receivable of $5.0 million resulting from increased revenue in
fiscal 2000 as the Company continued to add new agents and expand operations.
The impact of the increased accounts receivable on cash flows is partially
offset by an increase in accounts payable of $1.3 million, an increase in
accrued expenses of $0.6 million, and net income of $1.6 million during fiscal
2000.
Net cash used in investing activities was $84,000 for the year ended
December 31, 2000, compared to net cash provided by investing activities of
$74,000 for the year ended December 31, 1999. Net cash used in investing
activities during 2000 related to the investment in additional equipment.
During 1999, the Company sold some equipment.
Net cash provided by financing activities increased $2.6 million from $0.3
million for the year ended December 31, 1999 to $3.0 million for the year ended
December 31, 2000. The cash provided by financing activities is primarily due
to a net increase in the Company's line of credit of $1.2 million, an increase
in the bank overdraft of $0.2 million, and an increase in shareholder loans of
$1.5 million. The overall increase in debt is due to the increased revenues of
the company resulting in an increase in the accounts receivable balance.
In April 2000, the Company refinanced its line of credit with a new lender.
The Company received a $2,000,000 line of credit that was subsequently
increased to $3,500,000 in June 2000. In December 2000, the lender agreed to
further amend the Loan Agreement to establish a separate line of equipment
financing in the amount of $500,000 and increase the amount of the Revolving
Loan Commitment from $3,500,000 to $5,500,000. Advances under this new
line-of-credit are limited to 70% of eligible accounts receivable. Advances
bear interest at the lender's prime rate plus .5%. This new line of credit is
secured by substantially all of the Company's assets and required personal
guarantees totaling $3 million from the Company's Chief Executive Officer and
Chief Financial Officer. In connection with this debt refinancing, officers of
the Company advanced approximately $1.5 million of subordinated debt to the
company.
Environmental Liabilities
The Company is not a party to any Super-fund litigation and otherwise does
not have any known environmental claims against it. However, the Company does
have one property where soil contamination problems existed or are known to
exist currently. The Company has preliminarily evaluated its potential
liability as this site and believes that it has reserved appropriately for its
remediation or that the fair market value of the property exceeds its net book
value by an amount in excess of any remediation cost. There can be no
assurance, however, that the cost of remediation would not exceed the expected
amounts. The Company continues to monitor soil contamination and may be
required to remediate the property in the near future.
Inflation
Changes in freight rates charged by the Company to its customers are
generally reflected in the cost of purchased transportation and commissions
paid by the Company to independent contractors and agents, respectively.
Therefore, management believes that future operating results of the Company
will be affected primarily by changes in volume of business. However, due to
the highly competitive nature of the truckload motor carrier industry, it is
possible that future freight rates and cost of purchased transportation may
fluctuate, affecting the Company's profitability.
Recently Issued Accounting Standards
During the second quarter of 1998, the FASB issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities." In June 1999, the FASB issued SFAS No. 137, which amended
SFAS No. 133 to delay its effective date by one year. SFAS No. 133 is
effective for the Company on January 1, 2001. SFAS No. 133 required that all
derivative instruments be recorded on the consolidated balance sheet at their
fair value. Changes in the fair value of derivatives will be recorded each
period in earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. In June 2000, the FASB issued SFAS No. 138, which
amended SFAS No. 133. The Company's management has reviewed the terms of all
material contracts and financial instruments and has determined that the
adoption of SFAS No. 133, as amended, will have no material impact on its
financial position or results of operations.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
The Company has a revolving line of credit with a bank which bears interest
at the prime rate (9.5% at December 31, 2000) plus .5%. Beginning in January
2001, the interest rate will be based on certain financial covenants and may
range from prime to prime plus .5%. The Company also has subordinated debt
with related parties which bears interest at rates ranging from prime + .75% to
prime plus 1%.
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
US 1 Industries, Inc.
Gary, Indiana
We have audited the accompanying consolidated balance sheets of US 1
Industries, Inc. and Subsidiaries as of December 31, 2000 and 1999 and the
related consolidated statements of operations, shareholders' deficiency, and
cash flows for each of the three years in the period ended December 31, 2000.
We have also audited the schedule listed in the accompanying index. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements and the schedule are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and schedule. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements and schedule. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of US 1
Industries, Inc. and Subsidiaries at December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.
Also in our opinion, the schedule presents fairly, in all material
respects, the information set forth therein.
BDO Seidman, LLP
Chicago, Illinois
March 13, 2001
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS
2000 1999
---- ----
CURRENT ASSETS:
Accounts receivable-trade, less allowance for
doubtful accounts of $209,000 and $67,000
respectively $9,911,436 $4,972,846
Other receivables 382,057 105,770
Deposits 309,897 162,173
Prepaid expenses 166,911 9,245
Current Deferred tax asset 400,000 0
------------ ----------
Total current assets 11,170,301 5,250,034
FIXED ASSETS:
Equipment 335,402 100,738
Less accumulated depreciation and amortization (68,797) (52,756)
------------ ----------
Net fixed assets 266,605 47,982
------------ ----------
ASSETS HELD FOR SALE:
Land 195,347 195,347
Valuation allowance (141,347) (141,347)
------------- -----------
Net assets held for sale 54,000 54,000
Noncurrent Deferred tax asset 400,000 0
------------- -----------
TOTAL ASSETS $11,890,906 $ 5,352,016
============= ===========
The accompanying notes are an integral part of the consolidated financial
statements.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
2000 1999
---- ----
CURRENT LIABILITIES:
Short-term debt 4,503,896 3,173,990
Accounts payable $2,621,107 $ 1,341,134
Bank overdraft 522,201 345,719
Accrued expenses 244,446 215,505
Insurance and claims 418,450 204,592
Accrued compensation 33,891 17,314
Accrued interest 836,019 613,567
Fuel and other taxes payable 143,796 49,948
----------- -----------
Total current liabilities 9,323,806 5,961,769
----------- -----------
LONG-TERM DEBT TO RELATED PARTIES 4,026,210 2,451,028
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
Authorized 5,000,000 shares; no par value,
Series A shares issued and outstanding:
2000 and 1999 - 1,094,224
Liquidation preference $0.3125 per share 1,000,112 907,540
SHAREHOLDERS' DEFICIENCY:
Common stock, authorized 20,000,000 shares;
no par value; shares issued and outstanding:
2000 and 1999 - 10,618,224 40,844,296 40,844,296
Accumulated deficit (43,303,518) (44,812,617)
----------- -----------
Total shareholders' deficiency (2,459,222) (3,968,321)
----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIENCY $11,890,906 $5,352,016
=========== =============
The accompanying notes are an integral part of the consolidated financial
statements.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000, AND 1999
2000 1999 1998
OPERATING REVENUES $49,055,354 $32,333,528 $30,176,818
OPERATING EXPENSES:
Purchased transportation 38,336,905 24,846,421 23,416,624
Commissions 4,438,324 3,052,406 3,177,908
Insurance and claims 1,553,892 1,070,564 938,044
Salaries, wages, and other 1,719,291 1,248,089 1,223,113
Other Operating expenses 1,715,269 1,162,189 1,247,334
--------- --------- ---------
Total operating expenses 47,763,681 31,379,669 30,003,023
---------- ---------- ----------
OPERATING INCOME 1,291,673 953,859 173,795
NON OPERATING INCOME (EXPENSE):
Interest income 19,003 9,840 7,702
Interest expense (622,990) (660,509) (743,953)
Write off of old payables 530,674
Other income, net 113,985 108,707 204,419
------- ------- -------
Total non operating expense (490,002) (541,962) ( 1,158)
NET INCOME BEFORE INCOME TAXES 801,671 411,897 172,637
Income tax benefit 800,000 0 0
_________ ________ _______
NET INCOME 1,601,671 411,897 172,637
DIVIDENDS ON PREFERRED SHARES 92,572 82,286 72,000
NET INCOME AVAILABLE TO COMMON SHARES $ 1,509,099 $ 329,611 $ $100,637
=========== =========== ===========
Basic and Diluted Net Income
Per Common Share $0.14 $0.03 $0.01
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 10,618,224 10,618,224 10,618,224
The accompanying notes are an integral part of the consolidated financial
statements.
US 1 INDUSTRIES AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 31, 2000,1999,1998, and 1997
Common Stock Accumulated
Shares Amount Deficit Total
Balance at
December 31, 1997 10,618,224 $40,844,296 $(45,242,865) $(4,398,569)
Dividends on Preferred Stock (72,000) (72,000)
Net income 172,637 172,637
Balance at __________ ___________ ___________ __________
December 31, 1998 10,618,224 40,844,296 (45,142,228) (4,297,932)
Dividends on Preferred Stock (82,286) (82,286)
Net Income 411,897 411,897
Balance at __________ ___________ ___________ __________
December 31, 1999 10,618,224 40,844.296 (44,812,617) (3,968,321)
Dividends on Preferred Stock (92,572) (92,572)
Net Income 1,601,671 1,601,671
Balance at 10,618,224 $40,844,296 $(43,303,518) $(2,459,222)
December 31, 2000 ========== =========== =========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000,1999 AND 1998
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,601,671 $ 411,897 $ 172,637
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 26,818 30,795 74,963
Deferred Income Tax benefit (800,000) 0 0
Write off of old payables (530,674)
Loss on disposal of equipment 3,609 30,177 17,488
Gain on sale of property (44,800)
Changes in operating assets and liabilities:
Accounts receivable-trade (4,938,590) (930,880) 1,024,290
Other receivables (276,287) (46,116) 277,265
Prepaid expenses (147,724) 18,553 55,933
Deposits (157,666) (29,744) 21,639
Accounts payable 1,279,973 (104,755) (758,417)
Accrued expenses 28,941 32,105 207,570
Insurance and claims 213,858 23,068 (60,083)
Accrued interest 222,452 220,684 252,059
Accrued compensation 16,577 (277) (20,711)
Fuel and other taxes payable 93,848 (25,747) (198,206)
__________ __________ _________
Net cash (used in) provided by operating
activities (2,832,520) (370,240) 490,953
___________ __________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (92,500) (5,183) (2,566)
Proceeds from sale of property and equipment 8,885 79,358 61,055
___________ __________ _________
Net cash (used in) provided by investing
activities (83,615) 74,175 58,489
___________ __________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line of credit 1,193,498 630,745 (741,720)
Proceeds from long-term debt 158,052 0 0
Repayment of long-term debt (121,808) (64,277) (123,308)
Net proceeds (repayments of) from shareholder loans 1,509,911 (355,718) 287,236
Increase (decrease)in bank overdraft 176,482 85,315 (269,729)
_________ __________ _________
Net cash provided by (used in)financing
activities 2,916,135 296,065 (847,521)
_________ __________ _________
NET INCREASE (DECREASE)IN CASH (298,079)
CASH, BEGINNING OF YEAR 298,079
_________
CASH, END OF YEAR $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION--
Cash paid during year for interest $400,538 $439,825 $491,894
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Note payable incurred for purchase of equipment $165,435 $ 0 $232,700
The Company recorded $92,572, $82,286, and $72,000 in 2000,1999, and 1998
respectively, for dividends on preferred stock.
The accompanying notes are an integral part of the consolidated financial
statements.
US 1 INDUSTRIES, INC. AND SUBSIDIARIE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000, AND 1999
1. OPERATIONS
The Company is primarily an interstate truckload carrier of general
commodities, which uses independent agents and owner-operators to contract for
and haul freight for its customers in 48 states with a concentration in the
Southeastern United States. One agent accounted for 13%,18%, and 15% of the
Company's revenue in 2000,1999, and 1998, respectively. No other agent
represented more than 10% of sales for the year ended December 31, 2000,1999
and 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation--The consolidated financial statements include
the accounts of US 1 Industries, Inc. and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Revenue Recognition--Revenue for freight in transit is recognized upon
delivery. Amounts payable for purchased transportation; commissions and
insurance expense are accrued when the related revenue is recognized.
Fixed Assets--Fixed assets are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets,
which range from three to eight years.
Assets Held for Sale--Such assets comprise real estate, not required for the
Company's operations, which is carried at the lower of historical cost or
estimated net realizable value. See Note 12.
Long-Lived Assets - The Company assesses the realizability of its long-
lived assets in accordance with statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be disposed of."
Accounting Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
Recently Issued Accounting Standards-During the second quarter of 1998, the
FASB issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities." In June 1999, the FASB
issued SFAS No. 137, which amended SFAS No. 133 to delay its effective date by
one year. SFAS No. 133 is effective for the Company on January 1, 2001. SFAS
No. 133 required that all derivative instruments be recorded on the
consolidated balance sheet at their fair value. Changes in the fair value of
derivatives will be recorded each period in earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. In June 2000, the
FASB issued SFAS No. 138, which amended SFAS No. 133. The Company's management
has reviewed the terms of all material contracts and financial instruments
and has determined that the adoption of SFAS No. 133, as amended, will have no
material impact on its financial position or results of operations.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
YEARS ENDED DECEMBER 31, 2000, AND 1999
Income Taxes--Deferred income taxes are recognized for the tax consequences
of "temporary differences" by applying enacted statutory tax rates applicable
to future years to differences between the financial statement carrying amounts
and the tax bases of existing assets and liabilities. In addition, the amount
of any future tax benefits are reduced by a valuation allowance to the
extent such benefits are not expected to be fully utilized.
Earnings Per Common Share-The Company computes loss per share under
Statement of Financial Accounting Standards No. 128 "Earnings Per Share." The
statement required presentation of two amounts, basic and diluted loss per
share. Basic loss per share is computed by dividing loss available to common
stock holders by the weighted average common shares outstanding. Dilutive
earnings per share would include all common stock equivalents. There are no
common stock equiviliants at December 31, 2000, 1999, or 1998.
Business Segments - Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" requires
public enterprises to report certain information about reporting segments in
financial statements. The Company presents its operations in one business
segment.
3. REDEEMABLE PREFERRED STOCK
The Series A preferred shares are not convertible into common stock, are
non-voting, and earn dividends at the rate of $0.0375 per share per annum
(increasing by $0.0063 on each of January 1, 1995, 1996 and 1997, and by
$0.0094 on January 1, 1998 and on each January 1 thereafter until redeemed)
payable quarterly on the first day of February, May, August, and November. The
Series A preferred stock is redeemable at the option of the Company or the
holders at any time.
As of December 31, 2000, Series A cumulative preferred stock dividends are
in arrears by $452,000. The Company's current line of credit prohibits the
payment of dividends.
4. RELATED PARTY TRANSACTIONS
One of the Company's subsidiaries provides safety, management, and
accounting services to companies controlled by the Chief Executive Officer and
Chief Financial Officer of the Company. These services are priced to cover the
cost of the employees providing the services. Revenues related to those
services totaled $100,251, $77,640, $70,607 in 2000, 1999, and 1998,
respectively.
The Company has an investment of $126,460 in American Inter-Fidelity Exchange
("AIFE"), an entity which provides the Company with truck liability insurance.
AIFE is currently in receivership and managed by the State of Indiana,thus, the
Company exercised no control over the operations of AIFE. As a result, the
Company has recorded its investment in AIFE under the cost method of accounting
for these periods.
Under the cost method, the investment in AIFE is reflected at its original
amount and income is recognized only to the extent of dividends paid by the
investee. There were no dividends declared by AIFE for the years ended December
31, 2000, 1999 and 1998.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
If AIFE is released from the control of the State of Indiana, the
investment in AIFE will be determined based on the Company's ownership
percentage in and control over AIFE.
A director of the company also manages an affiliated insurance carrier,
Indiana Truckers Exchange (ITE). For the years ended December 31, 2000, 1999
and 1998, cash paid for related party insurance premiums and deductibles
amounted to $729,434, $532,586, and $751,123, respectively. The Company also
has long term notes payable to AIFE and ITE as described in Note 8.
The Company has notes payable due to its Chief Executive Officer, Chief
Financial Officer, and August Investment Partnership, an entity affiliated
through common ownership, as described in Note 8.
5. LEASES
The Company leases office space on a month-to-month basis for its
headquarters in Gary, Indiana for $2,200 per month from the Company's Chief
Executive Officer and Chief Financial Officer. No formal lease agreement with
the Company existed at December 31, 2000. The Company leases office space in
Mt. Pleasant, South Carolina for approximately $5,700 per month. The lease
agreement expires in June, 2001. The Company leases office space in South
Bend, Indiana for approximately $1,250 per month. The lease expires
in October, 2002. The Company leases an office building in Gulfport,
Mississippi for approximately $2,250 per month. The lease expires in
November, 2003. Rent expense for the years ended December 31, 2000, 1999, and
1998 was approximately $110,000, $59,000, and $59,000 respectively.
Future commitments under these operating leases are as follows:
2001 76,200
2002 39,500
2003 24,750
------
140,450
=======
6. SHORT-TERM DEBT
Short-term debt at December 31, 2000 and 1999 comprises:
December 31, December 31,
2000 1999
----------- ----------
Line of credit $4,271,104 $3,077,606
Current portion of long-term debt 232,792 96,384
----------- ----------
Total $4,503,896 $3,173,990
=========== ==========
In April 2000, the Company refinanced its existing debt with a new lender.
The Company initially received a $2 million line of credit which was
subsequently increased to $5.5 million. The difference between the amount
outstanding on the former line of credit and the initial amount of the new line
of credit has been financed through subordinated debt from the Company's Chief
Executive Officer and Chief Financial Officer or entities controlled by them.
During 2000, these officers advanced approximately $1.5 million to the Company
to fund the difference between the former line of credit and the new line of
credit agreement.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. SHORT-TERM DEBT (Continued)
Under the new revolving line of credit agreement, borrowings are limited to
70% of eligible accounts receivable and bear interest at the prime rate (9.5%
at December 31, 2000) plus .5%. Beginning in January 2001, the interest rate
will be based on certain financial covenants and may range from prime to prime
plus .5%. This line of credit agreement expires in September 2001. Advances
under the agreement are collateralized by the Company's accounts receivable,
property, and other assets. Borrowings of up to $3 million are guaranteed by
the Chief Executive Officer and Chief Financial Officer of the Company. At
December 31, 2000, the
outstanding borrowings on this line of credit were $4.27 million.
In addition to the $5.5 million line of credit with FIRSTAR BANK, the
Company has also established a separate line for equipment financing in the
amount of $500,000 with FIRSTAR BANK. The principal balance of the Equipment
Loan shall bear interest in an amount equal to the Prime Rate in effect plus 1%
per annum. At December 31, 2000, the outstanding borrowings were $82,860
(see note 8).
The line of credit is subject to termination upon various events of
default, including failure to remit timely payments of interest, fees and
principal, any adverse change in the business of the Company or the insecurity
of the lender concerning the ability of the Company to repay its obligations as
and when due or failure to meet certain financial covenants. Financial
covenants include: minimum net worth requirements, total debt service coverage
ratio, capital expenditure limitations, and prohibition of additional
indebtedness without prior authorization.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. LONG-TERM DEBT
Long-term debt at December 31, 2000 and 1999 comprises:
2000 1999
Note payable to the Chief Executive Officer
And Chief Financial Officer, interest at
prime + .75%, interest only payments required,
principal balance due October, 2002 $3,042,075 1,532,165
Mortgage note payable to the Chief Executive
Officer and Chief Financial Officer
collateralized by land, interest at
prime + .75%, interest only payments
required, principal balance due
July 2003 500,000 500,000
Note payable to August Investment
Partnership, interest at prime + .75%,
interest only payments required, principal
balance due October 2002 250,000 250,000
Note payable, cargo insurance premium financing,
monthly payments of $18,376 including
interest at 11% through September 2001 141,124 0
Mortgage note payable to August Investment
Partnership, interest at prime + .75%, interest
only payments required, principal balance due
October, 2002 100,000 100,000
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
YEARS ENDED DECEMBER 31, 2000, AND 1999
7. LONG-TERM DEBT (Continued)
Note payable, collateralized by equipment,
monthly payments of $1,760.53 including interest
at prime +1% through January, 2006 82,860 0
Note payable, collateralized by equipment,
monthly payments of $2,077 including
interest at 9.55% through April 2004 70,899 0
Mortgage note payable to ITE,
Monthly payments of $2,850 including
Interest at 9% through March 2002 39,217 68,443
Mortgage note payable to AIFE,
monthly payments of $2,150 including
interest at 9% through March 2002 29,646 51,689
Note payable, collateralized by equipment,
monthly payments of $3,181 including
interest at 7.8% through February, 2001 3,181 45,115
--------- ----------
Total debt 4,259,002 2,547,412
Less current portion 232,792 96,384
--------- ----------
Total long-term debt $ 4,026,210 $ 2,451,028
========== ==========
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Interest expense on related party notes was approximately $342,500, $261,000,
and $325,000 for the years ended December 31, 2000, 1999, and 1998
respectively.
Scheduled maturities of the long-term debt at December 31, 2000 are due as
follows:
2001 $ 232,792
2002 3,439,272
2003 539,210
2004 26,120
2005 19,862
Thereafter 1,746
---- ------
$4,259,002
==========
8. STOCK OPTIONS
The Company has a stock option plan which allows the Board of Directors to
grant options to officers and certain key employees to purchase common stock at
the fair market value on the date of the grant. At December 31, 2000 and 1999,
96,500 share were available for future option grants under the stock option
plan. There were no options outstanding under the stock option plan as of
December 31, 2000 and 1999.
9. INCOME TAXES
The composition of taxes on income (benefit) is as follows:
Current 2000 1999 1998
---- ---- ----
Federal 273,000 140,000 59,000
State 48,000 25,000 10,000
Utilization of net operating loss (321,000) (165,000) (69,000)
carry-forward
Adjustment of valuation allowance (800,000) 0 0
------------------------------------------------------------------
Income tax expense (benefit) (800,000) 0 0
------------------------------------------------------------------------
The Company and its subsidiaries file a consolidated federal income tax
return.
Deferred income taxes consist of the following:
December 31, 2000 1999 1998
-------------------------------------------------------------------
Total deferred tax assets, relating
principally to net operating
loss carry-forwards 22,728,000 23,049,000 23,214,000
Deferred tax liabilities 0 0 0
-------------------------------------------------------------------
22,728,000 23,049,000 23,214,000
Less valuation allowance (21,928,000) (23,049,000) (23,214,000)
----------------------------------------------------------------------
Total net deferred tax asset 800,000 0 0
US 1 INDUSTIRES, INC. AND SUBSIDARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
At December 31, 2000, the Company has realized a net deferred tax asset of
$800,000 as it is more likely than not that this amount will be realized as a
result of anticipated future taxable income to be generated by the Company.
Due to the uncertainty of realization, a valuation allowance has been
maintained for the remaining deferred tax asset at December 31, 2000.
The Company has net operating loss carry-forwards of approximately $57
million at December 31, 2000. These carry-forwards are available to offset
taxable income in future years and substantially all of these carry-forwards
will expire in the years 2003 through 2010.
10. COMMITMENTS AND CONTINGENCIES
Cam Regional Transport filed a complaint against the Company in 1994 which
alleges breach of contract, claiming that Trailblazer Transportation, Inc.,
a subsidiary of the Company which filed bankruptcy, failed to abide by a
purchase agreement entered into with Cam Regional Transport, Inc. and Laurel
Mountain Leasing, Inc. The complaint seeks damages of $284,000 plus interest
from November 1992.
The Company is currently invloved in two lawsuits, one of which is a class
action lawsuit, as a result of an August 1999 incident in which a Carolina
National Transportation, Inc. truck overturned leaking chemicals. It is the
Company's position that it is not at fault. The Company contends that the
materials inside the container were improperly packaged by a third party, that
the chemicals which leaked were not harmful in nature, and that those persons
alleging injuries were not harmed.
The Company is also involved in two lawsuits as a result of a chemical
leak that occured in a container hauled by a Carolina National Transportation,
Inc., truck. It is the Company's position that they are not at fault for this
incident because they are merely the shipper and a third party had the
responsibility to package the load for safe transportation.
At this time, the Company and its legal counsel are unable to assess the
outcome of these complaints. The Company intends to vigorously defend itself
in these matters.
The Company is involved in other litigation in the normal course of its
business. Management intends to vigorously defend these cases. In the opinion
of management, the litigation now pending will not have a material adverse
effect on the consolidated financial position of the Company.
The Company has entered into an agreement with certain key employees of
Carolina National Transportation, Inc. ("Carolina"), a wholly owned subsidiary
of the Company, in which these employees will receive up to 40% ownership in
Carolina.
These key employees will earn the 40% ownership interest in Carolina over
a three year period beginning in the year in which Carolina achieves positive
retained earnings. Carolina has a negative retained earnings of $18,195 and
$482,000 at December 31, 2000 and 1999, respectively.
The Company carries insurance for public liability and property damage, and
cargo loss and damage through various programs. The Company's insurance
liabilities are based upon the best information currently available and are
subject to revision in future periods as additional information becomes
available. Management believes it has adequately provided for insurance
claims.
11. ENVIRONMENTAL MATTERS
The Company owns a piece of property in Phoenix where soil contamination
problems exist. The Company has been working with regulatory officials to
eliminate new contamination sources and determine the extent of existing
problems. Estimates of the cost to complete the future remediation of
approximately $141,000 are considered in the land valuation allowance at
December 31, 2000 and 1999.
US 1 INDUSTIRES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-- (Continued)
12. OTHER MATTERS
a) In 1999 and 1998, other income (expense), net, in the consolidated
statement of operations is comprised primarily of a write off net
payables from fiscal years 1996 and 1997 relating to revisions of
estimates of amounts due from or payable to drivers and agents.
b) During 1998, the Company has written off approximately $531,000 in
vendor accounts payable which are no longer considered by
management and the Company's legal Counsel to be valid obligations of
the Company. These payables relate to fiscal years prior to 1994 and
no claims have been made against these amounts since September 1993.
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data) Net
Net Income
Operating Operating Income (loss)
Revenue Income (loss) per share
(basic and diluted)
_______________________________________________________________________________
2000
$49,055 $1,292 $1,602 $0.14
_______________________________________________________________________________
Quarters:
Fourth 15,671 449 1,161 0.10
Third 12,761 324 189 0.02
Second 11,593 282 170 0.01
First 9,030 237 82 0.01
_______________________________________________________________________________
1999
$32,334 $ 954 $412 $0.03
_______________________________________________________________________________
Quarters:
Fourth 8,666 261 185 0.02
Third 8,078 233 78 0.00
Second 8,198 279 106 0.01
First 7,392 181 43 0.00
_______________________________________________________________________________
1998
$30,177 $ 174 $173 $0.01
_______________________________________________________________________________
Quarters:
Fourth 7,287 (327) 95 0.00
Third 7,682 108 ( 1) (0.00)
Second 8,082 230 77 0.01
First 7,126 163 2 0.00
US 1 INDUSTRIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 1, 1998,1999 AND 2000
Item 9. Changes in and Disagreements with Accountants' on Accounting and
Financial Disclosure.
None.
Schedule II
Balance At Charged to Write-Offs,
Beginning of Costs and Retirements & Balance At
Year Expenses Collection End of Year
---- -------- ---------- -----------
Description
Year Ended December 31, 1998
Allowance for Doubtful Accounts
Receivable $195,000 $319,256 $419,256 $ 95,000
Year Ended December 31, 1999
Allowance for Doubtful Accounts
Receivable $ 95,000 $ 49,027 $ 77,027 $ 67,000
Year Ended December 31, 2000
Allowance for Doubtful Accounts
Receivable $ 67,000 $186,233 $ 44,233 $209,000
PART III
Item 10. Directors and Executive Officers of the Registrant.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the company as of March 15, 2001 were as follows
NAME AGE POSITION
- ---- --- --------
Michael E. Kibler 60 President, Chief Executive
Officer,
and Director
Harold E. Antonson 61 Chief Financial Officer, treasurer,
and Director
Lex Venditti 48 Director
Robert I. Scissors 67 Director
Gage Blue 30 Director
Brad James 45 Director
Name Office and Experience
- ---- ---------------------
Michael E. Kibler Mr. Kibler is President and Chief Executive
Officer of the Company and has held these
positions since September 13, 1993. He also has
been President of Enterprise Truck Lines, Inc.,
an interstate trucking company engaging in
operations similar to the Company's, since 1972.
Mr. Kibler is also a director of American
Inter-Fidelity Exchange, an insurance reciprocal
located in Indiana that is the subject of an
Order of Rehabilitation by the Indiana
Department of Insurance. Mr. Kibler has served
as a Director of the Company since 1993.
Harold E. Antonson Mr. Antonson is Chief Financial Officer of the
Company, a position he has held since March
1998. Mr. Antonson is a certified public
accountant. Prior to joining the Company,
he was Secretary/Treasurer of American
Inter-fidelity Exchange. Mr Antonson is also a
partner in August Investment Partnership. Mr.
Antonson was elected a director and Treasurer of
the Company in November 1999.
Lex Venditti Mr. Venditti has served as a Director of the
Company since 1993. Mr. Venditti has been the
General Manager of American Interfidelity, an
insurance reciprocal located in Indiana that is
the subject of an order of rehabilitation by the
Indiana Department of Insurance, since 1995.
Robert Scissors Mr. Scissors has been a Director of the Company
since 1993. Mr. Scissors began his career in
the Insurance Industry in 1957. Later, in
1982, Mr. Scissors joined a brokerage firm
called Alexander/Alexander where he worked until
retiring in 1992. Mr. Scissors currently serves
as an insurance consultant and broker.
Directors and Executive Officers of the Registrant (continued)
Gage Blue Mr. Blue was elected Director in 1999. Mr. Blue
is Vice President of Operations for Carolina
National, a subsidiary of US1 Industries, which
began operations in 1996. Mr. Blue has held the
position of Vice President of Operations since
December 1996.
Brad James Mr. James is the President of Seagate
Transportation Services, Inc. Mr. James
graduated from Bowling Green University with a
Bachelors Degree in Science in Business
Administration. He has been in the trucking
industry since 1977.
Mr. James was elected Director of the Company in
1999.
Item 11. Executive Compensation
The following Summary Compensation Table sets forth compensation paid by
the Company during the years ended December 31,2000,1999 and 1998 to its Chief
Executive Officer. No other officer earned in excess of $ 100,000.
Summary Compensation Table
Annual Compensation
Name and Position Year Salary Bonus Other
- ----------------- ---- ------ ----- -----
Michael Kibler 2000 33,048 0 0
President 1999 33,048 0 0
1998 33,048 0 0
EMPLOYEE STOCK OPTIONS
The company's 1987 Stock Option Plan (Nonqualified) (the "Option Plan")
authorizes the Board of Directors or a committee thereof to grant to officers,
including officers who are also directors, and employees of the Company options
to purchase from the Company shares of Common Stock. The Option Plan
originally covered an aggregate of 570,000 shares of Common Stock. At
December 31, 2000, there were no options outstanding under the Option Plan and
96,500 shares remained available for future grants of options thereunder.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Management
The following table sets forth the number and percentage of shares of
Common Stock that as of March 15, 2001 are deemed to be beneficially owned by
each director of the company and director nominee, by each executive officer of
the Company and by all directors and executive officers of the company as a
group.
Number of Shares of
Common Stock
Name and position Beneficially Owned Percentage of Class
- ----------------- ------------------ -------------------
Michael E Kibler 3,489,507 (1,2) 32.9%
Director, President and
Chief Executive Officer
Robert I. Scissors, 36,770 0
Director
Lex L. Venditti 20,000 0
Director
Harold E. Antonson 3,489,507 (1,3) 32.9%
Chief Financial Officer,
Treasurer and Director
All Directors and Executive Officers 3,735,919 35.2%
(1) As partners of August Investment Partnership (AIP), Messrs. Kibler and
Antonson, may be deemed to be beneficial owners of 3,067,840 shares of
common stock owned by AIP
(2) As Director of Eastern Refrigerated Express Inc, )an entity under
common control) Messrs. Kibler, Antonson may be deemed to
be beneficial owner of 366,667 Shares of Common Stock owned by Eastern.
(3) Mr. Antonson disclaims beneficial ownership of 197,500 shares of Common
Stock owned by American Inter-Fidelity Exchange, of which Mr Antonson is
Secretary and Treasurer
Security Ownership of Certain Beneficial Owners
The following table sets forth the number and percentage of shares of
Common Stock beneficially owned as of March 15, 2001 by any person who is known
to the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock:
Number of Shares of
Name and Address of Common Stock Percentage
Beneficial Owner Beneficially Owned of Class
- ---------------- ------------------ --------
Harold E. Antonson 3,489,507 (1,2,3) 32.9%
8400 Louisiana Street
Merrillville, IN 46410
August Investment Partnership 3,067,840 28.9%
8400 Louisiana Street
Merrillville, IN 46410
Michael Kibler 3,489,507 (1,3) 33.0%
8400 Louisiana Street
Merrillville, IN 46410
Security Ownership of Certain Beneficial Owners and Management (continued)
John K. Lavery 3,438,507 (1,3) 32.4%
8400 Louisiana Street
Merrillville, IN 46410
(1) As partners of AIP, Messrs. Kibler, and Antonson, and Lavery may be deemed
to be beneficial owners of the shares of Common Stock owned by AIP.
(2) Mr. Antonson disclaims beneficial ownership of 197,500 shares of Common
Stock owned by American Inter-Fidelity Exchange, of which Mr. Antonson is
Secretary and Treasurer.
(3) As directors of Eastern Refrigerated Express, Inc. Messrs. Antonson,
Kibler and Lavery may be deemed to be beneficial owners of 366,667 shares
of Common Stock owned by Eastern.
Item 13. Certain Relationships and Related Transactions.
The company leases office space for its headquarters in Gary, Indiana, for
$2,200 per month from Michael E. Kibler, the presiden and Chief Executive
Officer and a director of the Company, and Harold E. Antonson, the Chief
Financial Officer, treasurer and a director of the Company. Messrs. Kibler and
Antonson own the property as joint tenants.
One of the Company's subsidiaries provides safety, management, and
accounting services to companies controlled by the President and Chief
Financial Officer of the Company. These services are priced to cover the cost
of the employees providing the services. Revenues related to those services
totaled $100,251, $77,640, and $70,607 in 2000, 1999, and 1998 respectively.
One of the Company's insurance providers, American Inter-Fidelity Exchange
(AIFE) is managed by a Director of the Company and the Company has an
investment in the Provider. In addition, the Director also manages an
affiliated insurance carrier, Indiana Truckers Exchange (ITE). For the years
ended December 31, 2000, 1999, and 1998 cash paid for related party
insurance premiums and deductibles amounted to $729,434, $532,586, and $751,123
respectively. The Company also has long term notes payable to AIFE and ITE as
described in Note 8 to the consolidated financial statements.
The Company has notes payable due to its Chief Executive Officer, Chief
Financial Officer, and August Investment Partnership, an entity affiliated
through common ownership, as described in Note 8 to the consolidated financial
statements.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements:
Reports of Independent Certified Public Accountants 13
Consolidated Balance Sheets as of December 31, 1999 and 1998 14
15
Consolidated Statements of Operations for the years ended 16
December 31, 2000, 1999, 1998 and 1997
Consolidated Statements of Shareholders' Deficiency 17
for the years ended December 31, 2000, 1999,1998, and 1997
Consolidated Statements of Cash Flows 18
for the years ended December 31, 2000, 1999,1998, and 1997
Notes to Consolidated Financial Statements 19
(a)(2) Financial Statement Schedules:
Schedules are not included because of the absence of the conditions under
which they are required or because the required information is included in the
consolidated financial statements or notes thereto.
(a)(3) List of Exhibits
The following exhibits, numbered in accordance with Item 601 of Regulation
S-K, are filed as part of this report:
Exhibit 3.1 Articles of Incorporation of the Company.
(incorporated herein by reference to the Company's Proxy
Statement of November 9, 1993).
Exhibit 3.2 By-Laws of the Company.
(incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994).
Exhibit 10.1 Loan and Security Agreement with FIRSTAR and Carolina National
Transportation Inc., Keystone Lines, Inc., Gulfline Transporet
Inc., and US1 Industries, Inc.
Exhibit 10.2 Loan agreements with August Investment Partnership and US 1
Industries.
Exhibit 10.3 Loan agreements with Michael Kibler/Harold Antonson and US 1
Industries.
Exhibit 10.4 First Amendment of Loan and Security Agreement with Firstar and
Carolina National Transportation Inc., Keystone Lines, Gulfline
Transport Inc., and US 1 Industries, Inc.
(by reference to the Company's Form 10-Q for the quarterly period
ended June 30, 2000, filed on August 14, 2000) Loan agreements
with AIFE/ITE and US 1 Industries.
Exhibit 10.5 Second Amendment of Loan and Security Agreement with Firstar and
Carolina National Transportation Inc., Keystone Lines, Gulfline
Transport Inc., and US 1 Industries, Inc.
(b) Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of Sections 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned there unto duly authorized.
US 1 INDUSTRIES, INC.
Date:_________________ By: _________________________
Michael E. Kibler
President & Chief Executive Officer
(Principal Executive Officer)
Date:_________________ By: _________________________
Harold Antonson
Chief Financial Officer & Treasurer
(Principal Financial & Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date:_________________ _________________________
Michael E. Kibler, Director
Date:_________________ _________________________
Robert I. Scissors, Director
Date:_________________ _________________________
Lex L. Venditti, Director
Date:_________________ _________________________
Gage Blue, Director
Date:_________________ _________________________
Brad James, Director
Date:_________________ _________________________
Harold Antonson, Director
Exhibit 10.1
LOAN AGREEMENT
between
CAROLINA NATIONAL TRANSPORTATION, INC.,
KEYSTONE LINES,
GULF LINE TRANSPORT, INC.,
and
FIVE STAR TRANSPORT, INC.
as Borrower
and
US 1 INDUSTRIES, INC.,
as Guarantor
and
FIRSTAR BANK N.A.,
as Lender
Dated as of April ____, 2000
TABLE OF CONTENTS
ARTICLE I.....................................................................6
DEFINITIONS AND DETERMINATIONS.............................................6
1.1 Definitions.......................................................6
1.2 Time Periods.....................................................15
1.3 Accounting Terms and Determinations..............................16
1.4 References.......................................................16
1.5 Lender's Discretion..............................................16
1.6 Borrower's or Guarantor's Knowledge..............................16
ARTICLE II...................................................................17
REVOLVING LOANS AND TERMS OF PAYMENT......................................17
2.1 Revolving Loan...................................................69
2.1.1 Amount and Disbursement....................................69
2.1.2 Revolving Loan Note........................................69
2.1.3 Reborrowing................................................69
2.1.4 Conditions of Advances of the Revolving Loan...............69
2.2 Use of Proceeds of the Revolving Loan............................18
2.3 Interest.........................................................70
2.3.1 Interest Rate..............................................18
2.3.2 Interest Computation.......................................18
2.3.3 Maximum Interest...........................................71
2.3.4 Increased Costs............................................72
2.4 Principal and Interest Payments..................................73
2.4.1 Interest...................................................73
2.4.2 Principal..................................................73
2.5 Mandatory Prepayments of the Revolving Loan......................73
2.6 Payments after Event of Default..................................20
2.7 Method of Payment................................................20
ARTICLE III..................................................................20
SECURITY..................................................................20
ARTICLE IV...................................................................21
CONDITIONS OF CLOSING.....................................................21
4.1 Representations and Warranties...................................21
4.2 Delivery of Documents............................................21
4.3 Performance; No Default..........................................22
4.4 Opinions of Counsel..............................................22
4.5 Approval of Loan Instruments and Security Interests; Consents....22
4.6 Security Interests...............................................22
4.7 Financial Statements, Reports and Projections....................22
4.8 Year 2000 Compliance.............................................22
4.9 Material Adverse Change..........................................23
4.10 Use of Assets....................................................23
4.11 Fees and Expenses................................................23
4.12 Insurance........................................................23
4.13 Existing Indebtedness............................................23
ARTICLE V....................................................................23
REPRESENTATIONS AND WARRANTIES............................................23
5.1 Existence and Power..............................................23
5.2 Authority........................................................24
5.3 Binding Agreements...............................................24
5.4 Business and Property of Borrower and Guarantor..................24
5.4.1 Business and Property......................................24
5.4.2 Operating Agreements.......................................24
5.4.3 Facility Sites.............................................24
5.4.4 Leases.....................................................25
5.4.5 Real Property..............................................25
5.4.6 Operation and Maintenance of Equipment.....................25
5.4.7 Existing Indebtedness......................................25
5.5 Title to Property; Liens.........................................25
5.6 Financial Statements.............................................26
5.7 Litigation.................................,.....................26
5.8 Defaults in Other Agreements; Consents; Conflicting Agreements...26
5.9 Taxes............................................................26
5.10 Compliance with Applicable Laws..................................27
5.11 Patents, Trademarks, Franchises and Agreements...................27
5.12 Regulatory Matters...............................................27
5.13 Environmental Matters............................................27
5.14 Application of Certain Laws and Regulations......................28
5.14.1 Investment Company Act.....................................28
5.14.2 Holding Company............................................28
5.14.3 Foreign or Enemy Status....................................28
5.14.4 Regulations as to Borrowing................................28
5.15 Margin Regulations...............................................28
5.16 Other Indebtedness...............................................29
5.17 No Misrepresentation.............................................29
5.18 Employee Benefit Plans...........................................29
5.18.1 No Other Plans.............................................29
5.18.2 ERISA and Code Compliance and Liability....................29
5.18.3 Funding....................................................30
5.18.4 Prohibited Transactions and Payments.......................30
5.18.5 No Termination Event.......................................30
5.18.6 ERISA Litigation...........................................30
5.19 Employee Matters.................................................30
5.19.1 Collective Bargaining Agreements; Grievances...............30
5.19.2 Claims Relating to Employment..............................31
5.20 Burdensome Obligations...........................................31
5.21 Subsidiaries.....................................................31
ARTICLE VI...................................................................31
AFFIRMATIVE COVENANTS.....................................................31
6.1 Legal Existence; Good Standing...................................32
6.2 Inspection.......................................................32
6.3 Financial Statements and Other Information.......................32
6.3.1 Monthly Statements.........................................32
6.3.2 Quarterly Statements.......................................32
6.3.3 Annual Statements..........................................33
6.3.4 Compliance Certificate.....................................33
6.3.5 Accountants' Certificate...................................33
6.3.6 Audit Reports..............................................34
6.3.7 Notice of Defaults; Loss...................................34
6.3.8 Notice of Suits; Adverse Events............................34
6.3.9 Reports to Members, Creditors and Governmental Bodies......34
6.3.10 ERISA Notices and Requests.................................35
6.3.11 Other Information..........................................36
6.4 Reports to Governmental Bodies and Other Persons.................36
6.5 Maintenance of Licenses and Other Agreements.....................36
6.6 Insurance........................................................36
6.6.1 Maintenance of Insurance...................................36
6.6.2 Claims and Proceeds........................................36
6.7 Future Leases....................................................37
6.8 Environmental Matters............................................37
6.9 Compliance with Laws.............................................38
6.10 Taxes and Claims.................................................38
6.11 Maintenance of Properties........................................38
6.12 Governmental Approvals...........................................38
6.13 Payment of Indebtedness..........................................38
6.14 Maintenance of Accounts..........................................39
ARTICLE VII..................................................................39
NEGATIVE COVENANTS........................................................39
7.1 Borrowing........................................................39
7.2 Liens............................................................39
7.3 Merger and Acquisition...........................................39
7.4 Contingent Liabilities...........................................39
7.5 Dividends and Distributions......................................39
7.6 Capital Expenditures.............................................40
7.7 Payments of Indebtedness for Borrowed Money......................40
7.8 Investments, Revolving Loans.....................................40
7.9 Fundamental Business Changes.....................................40
7.10 Facility Sites...................................................40
7.11 Sale or Transfer of Assets.......................................41
7.12 Amendment of Certain Agreements..................................41
7.13 Acquisition of Additional Properties.............................41
7.14 Transactions with Affiliates.....................................41
7.15 Compliance with ERISA............................................41
7.16 Unsubordinated Indebtedness to Tangible Net Worth Ratio..........42
7.17 Net Income for 1999..............................................42
7.18 Minimum Net Worth................................................42
7.19 Minimum Debt Service Ratio.......................................42
7.20 Testing of Financial Covenants...................................43
ARTICLE VIII.................................................................43
DEFAULT AND REMEDIES......................................................43
8.1 Events of Default................................................43
8.1.1 Default in Payment.........................................43
8.1.2 Breach of Covenants........................................43
8.1.3 Breach of Warranty.........................................43
8.1.4 Default Under Other Indebtedness for Borrowed Money........43
8.1.5 Bankruptcy.................................................44
8.1.6 Judgments..................................................44
8.1.7 Impairment of Licenses; Other Agreements...................44
8.1.8 Collateral.................................................44
8.1.9 Plans......................................................45
8.1.10 Change in Control; Sale of Borrower........................45
8.1.11 Material Adverse Effect....................................45
8.2 Acceleration of Borrower's Obligations...........................46
8.3 Remedies on Default..............................................46
8.3.1 Enforcement of Security Interests..........................46
8.3.2 Other Remedies.............................................46
8.4 Application of Funds.............................................46
8.4.1 Expenses...................................................46
8.4.2 Borrowers' Obligations.....................................47
8.4.3 Surplus....................................................47
8.5 Performance of Borrower's Obligations............................47
ARTICLE IX...................................................................47
CLOSING...................................................................47
ARTICLE X....................................................................48
EXPENSES AND INDEMNITY....................................................48
10.1 Attorney's Fees and Other Fees and Expenses......................48
10.1.1 Fees and Expenses for Preparation of Loan Instruments......48
10.1.2 Fees and Expenses in Enforcement of Rights or Defense
of Loan Instruments........................................48
10.2 Indemnity........................................................49
10.2.1 Brokerage Fees.............................................49
10.2.2 General....................................................49
10.2.3 Operation of Collateral; Joint Venturers...................49
10.2.4 Environmental Indemnity....................................49
ARTICLE XI...................................................................50
MISCELLANEOUS.............................................................50
11.1 Notices..........................................................50
11.2 Survival of Loan Agreement; Indemnities..........................51
11.3 Further Assurance................................................51
11.4 Taxes and Fees...................................................51
11.5 Severability.....................................................51
11.6 Waiver...........................................................52
11.7 Modification of Loan Instruments.................................52
11.8 Captions.........................................................52
11.9 Successors and Assigns...........................................52
11.10 Remedies Cumulative...........................................52
11.11 Entire Agreement; Conflict....................................52
11.12 Applicable Law................................................53
11.13 JURISDICTION AND VENUE........................................53
11.14 WAIVER OF RIGHT TO JURY TRIAL.................................54
11.15 Time of Essence...............................................54
11.16 Estoppel Certificate..........................................54
11.17 Consequential Damages.........................................54
11.18 Counterparts..................................................54
11.19 No Fiduciary Relationship.....................................54
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of April _, 2000, is between
CAROLINA NATIONAL TRANSPORTATION, INC., an Indiana corporation, ("Carolina"),
KEYSTONE LINES, a California corporation, ("Keystone"), GULF LINE TRANSPORT,
INC., an Indiana corporation, ("Gulf Line") and FIVE STAR TRANSPORT, INC.,
an Indiana corporation, ("Five Star") (Carolina, Keystone, Gulf Line and
Five Star hereinafter collectively referred to as "Borrowers" or
individually as "Borrower"), US 1 INDUSTRIES, INC., an Indiana corporation
("Guarantor") and FIRSTAR BANK N.A., a national banking association ("Lender").
PRELIMINARY STATEMENT:
Borrowers desire to borrow the Revolving Loan from Lender, the
proceeds of which shall be used (i) to refinance Borrowers' and Guarantor's
secured loan obligations to Finova Capital Corporation ("Finova"); (ii)
for Borrowers' working capital; and (iii) to pay related transactions costs.
Lender has agreed to make the Revolving Loan upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, it is hereby agreed as follows:
1.
DEFINITIONS AND DETERMINATIONS
Definitions.
As used in this Loan Agreement and in the other Loan Instruments,
unless otherwise expressly indicated herein or therein, the following terms
shall have the following meanings (such meanings to be applicable equally to
both the singular and plural forms of the terms defined):
Accountants: any independent certified public accounting firm selected
by Borrower and reasonably satisfactory to Lender, and shall include Borrower's
current independent public accounting firm.
Accounting Changes: as defined in Section 1.3.
Accounts: all presently existing and hereafter arising accounts
receivable and other rights to payment owing to any of Borrowers or Guarantor
for goods sold or leased or services rendered by any of Borrowers or Guarantor,
whether or not earned by performance, and any and all credit insurance,
guaranties or security therefor.
Advance: any advance of the Revolving Loan.
Affiliate: any Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
another Person. The term "control" means having the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
equity interests, by contract or otherwise. For the purposes hereof any Person
which owns or controls, directly or indirectly, 10% or more of the securities
or equity interests, as applicable, whether voting or non-voting, of any other
Person shall be deemed to "control" such Person.
Bankruptcy Code: the United States Bankruptcy Code and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Basic Financial Statements: as defined in subsection 6.3.3.
Borrowers: has the meaning assigned to that term in the Preamble to
this Revolving Loan Agreement.
Borrowers' Obligations: (i) any and all Indebtedness due or to become
due, whether contingent or otherwise, now existing, or hereafter arising, of
Borrowers to Lender pursuant to the terms of this Loan Agreement or any other
Loan Instrument, and (ii) the performance of the covenants of Borrowers
contained in the Loan Instruments, for all of which each of Borrowers shall be
jointly and severally liable.
Business Day: any day other than a Saturday, Sunday or other day on
which banks in Chicago, Illinois are required or authorized to close.
Business Insurance: such property, casualty, liability, business
interruption and other insurance as Lender from time to time requires Borrowers
and Guarantor to maintain other than cargo insurance insuring the value of
goods being transported by Borrowers.
Capital Expenditures: payments that are made or liabilities that are
incurred by a Person for the lease, purchase, improvement, construction or use
of any Property, the value or cost of which under GAAP is required to be
capitalized and appears on such Person's balance sheet in the category of
property, plant or equipment, without regard to the manner in which such
payments or the instruments pursuant to which they are made are characterized,
and shall include, without limitation, payments for or liabilities incurred
with respect to the installment purchase of Property and payments under
Capitalized Leases.
Capitalized Lease: any lease of Property, the obligations for the
rental of which are required to be capitalized in accordance with GAAP.
Closing: the initial disbursement of the Revolving Loan.
Closing Certificate: a closing certificate executed by each Borrower
to Lender.
Closing Date: the date upon which the Closing occurs.
Code: the Internal Revenue Code of 1986, as amended, and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Collateral: the Accounts and all existing and after-acquired Property
of Borrowers and Guarantor (other than the real property in Arizona currently
owned by Guarantor or a Borrower), including without limitation all existing
and after-acquired, equipment, inventory and general intangibles, and all
proceeds of the foregoing.
Compliance Certificate: a compliance certificate executed by Borrowers
in the form of Exhibit 1.1(A) attached hereto.
Corporate Guaranty: the unlimited secured corporate guaranty of US 1
Industries, Inc., Borrowers' parent company, in form and substance satisfactory
to Lender, wherein Guarantor shall guarantee all of Borrowers' Obligations.
Default Rate: the Interest Rate, as defined herein, plus 2.0% per
annum.
Default Rate Period: a period of time commencing on the date that an
Event of Default has occurred and ending on the date that such Event of Default
is cured or waived.
Dollars: lawful currency of the United States.
EBITDA: for any period, without duplication, the Net Income of
Borrowers or Guarantor for such period:
1.1.1 plus the sum of the following, to the extent deducted in determining
such Net Income for such period:
(a) losses from sales, exchanges and other dispositions of Property not in
the ordinary course of business;
(b) interest paid or accrued on Indebtedness, including, without
limitation, interest on Capitalized Leases that is imputed in
accordance with GAAP;
(c) depreciation and amortization of assets during such period; and
(d) charges against net income for taxes;
1.1.2 minus gains from sales, exchanges and other dispositions of Property
or other extraordinary gains not in the ordinary course of business.
Eligible Accounts Receivable: the total amount of the Accounts from
completed transactions after deducting (i) Accounts over 75 days past invoice
date, (ii) intercompany Accounts, (iii) foreign Accounts, (iv) Accounts to the
extent subject to customer setoffs (v) Accounts for which the portion of the
Account aged 75 days past the invoice date is in excess of 25% of the total
indebtedness owed to any of Borrowers by the account debtor, and (vi) such
other reserves as Lender may reasonably deem appropriate.
Employee Benefit Plan: any employee benefit plan within the meaning
of Section 3(3) of ERISA which (i) is maintained for employees of any of
Borrowers or any ERISA Affiliate or (ii) has at any time within the preceding
six years been maintained for the employees of any of Borrowers or any
current or former ERISA Affiliate.
Environmental Laws: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public or
occupational health and safety or protection of the environment, as now or
hereafter in effect and as have been or hereafter may be amended or
reauthorized, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss.9601 et seq.), the
Hazardous Materials Transportation Act (42 U.S.C. ss.1802 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss.2601 et seq.), the Clean Air Act (42 U.S.C. ss.7901
et seq.), the National Environmental Policy Act (42 U.S.C. ss.4231, et seq.),
the Refuse Act(33 U.S.C.ss.407, et se .), the Safe Drinking Water Act(42 U.S.C.
ss.300(f) et seq.), the Occupational Safety and Health Act (29 U.S.C. ss.651 et
seq.), and all rules, regulations, codes, ordinances and guidance ocuments
promulgated or published thereunder, and the provisions of any licenses,
permits, orders and decrees issued pursuant to any of the foregoing.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, thereto, and the rules and regulations
issued thereunder, as in effect from time to time.
ERISA Affiliate: any Person who is a member of a group which is
under common control with Borrowers or Guarantor, who together with Borrowers
or Guarantor is treated as a single employer within the meaning of Section
414(b), (c) and (m) of the Code.
Event of Default: any of the Events of Default set forth in Section
8. 1.
Excess Interest: as defined in subsection 2.3.3.
Existing Indebtedness: all Indebtedness for Borrowed Money owed by
any of Borrowers or Guarantor, immediately prior to the Closing.
Funding Date: the date of disbursement of any Advance, which shall be
a Business Day.
GAAP: generally accepted accounting principles in effect from time to
time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
Good Funds: Dollars available in federal funds to Lender at or before
2:00 p.m., Chicago time, on a Business Day.
Governmental Body: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Hazardous Materials: any hazardous, toxic, dangerous or other waste,
substance or material defined as such in, regulated by or for purposes of any
Environmental Law.
Incipient Default: any event or condition which, with the giving of
notice or the lapse of time, or both, would become an Event of Default.
Indebtedness: all liabilities, obligations and reserves,contingent or
otherwise, which, in accordance with GAAP, would be reflected as a liability on
a balance sheet or would be required to be disclosed in a financial statement,
including, without duplication: (i) Indebtedness for Borrowed Money, (ii)
obligations secured by any Lien upon Property, (iii) guaranties and letters of
credit, and (iv) liabilities in respect of unfunded vested benefits under any
Pension Plan or in respect of withdrawal liabilities incurred under ERISA by
any of Borrowers, Guarantor or any ERISA Affiliate to any Multi-employer Plan.
Indebtedness for Borrowed Money: without duplication, all Indebtedness
(i) in respect of money borrowed, (ii) evidenced by a note, debenture or other
like written obligation to pay money (including, without limitation, all of
Borrowers' Obligations, Permitted Senior Indebtedness and Permitted
Subordinated Indebtedness), (iii) in respect of rent or hire of Property under
Capitalized Leases or for the deferred purchase price of Property, (iv) in
respect of obligations under conditional sales or other title retention
agreements, and (v) all guaranties of any or all of the foregoing.
Instruments: the Loan Instruments.
Intellectual Property: collectively, all of Borrowers' and Guarantor's
patents, trademarks, service marks, trade names, copyrights, franchises and all
other intellectual property rights with respect thereto.
Interest Rate: the interest which the Revolving Loan bears, other than
during a Default Rate Period, as provided in subsection 2.3.1 hereunder.
Inventory: all present and future inventory in which any Borrower has
any interest, including, without limitation, all goods held for sale, lease or
other disposition by a Borrower, or to be furnished under a contract of
service, and all of Borrowers' present and future raw materials, work in
process, finished goods, goods consigned to any Borrower to the extent of such
Borrower's interest therein as consignee, materials and supplies of any kind,
nature or description which are or might be used in connection with the
manufacture, packing, shipping, advertising, selling or furnishing of any such
goods and all documents of title or other documents representing the same.
Landlord: a lessor under a Lease.
Landlord's Consent: a landlord's consent in form and substance
reasonably satisfactory to Lender.
Lease: any lease of real estate under which a Borrower or Guarantor
is, or will be, the lessee.
Leasehold Property: any real estate which is the subject of a Lease.
Lender: Firstar Bank N.A., a national banking association, its
successors and assigns.
Lien: any mortgage, deed of trust, pledge, assignment, lien, charge,
encumbrance or security interest of any kind, or the interest of a vendor or
lessor under any conditional sale agreement, Capitalized Lease or other title
retention agreement.
Loan Agreement: this Loan Agreement and any amendments or supplements
hereto.
Loan Instruments:
(a) Loan Agreement;
(b) Note;
(c) Corporate Guaranty;
(d) Security Instruments;
(e) Closing Certificate;
(f) Subordination Agreements;
(g) Uniform Commercial Code financing statements required by Lender;
(h) the Personal Guaranties; and
(i) such other instruments and documents as Lender reasonably may
require in connection with the transactions contemplated by
this Loan Agreement.
Material Adverse Effect: (i) a material adverse effect upon the
business, operations, Property, prospects, profits or financial condition of
any Borrowers or Guarantor or upon the validity, enforceability or priority of
the Security Interests or (ii) a material impairment of the ability of any
Borrower or Guarantor to perform its obligations under any Loan Instrument to
which it is a party or of Lender to enforce or collect any of Borrowers'
Obligations or the Obligations (as defined in the Corporate Guaranty) of
Guarantor.
Maximum Rate: as defined in subsection 2.3.3.
Multiemployer Plan: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which a Borrower or Guarantor or any ERISA Affiliate
makes, or accrues an obligation to make, contributions, or has made, or been
obligated to make, contributions within the preceding six years.
Net Income: shall have the meaning accorded to such term by GAAP.
Operating Agreement: any joint venture agreement, supply agreement,
requirements contracts, equipment lease, right-of-entry agreement, access
agreement, vendor agreement, distributing agreement, service agreement,
advertising contract, employment agreement, management agreement, collective
bargaining agreement or other similar agreement relating to the operation of a
Borrower's or Guarantor's business.
Overadvance: as defined in subsection 2.5.
Pay-Off Letter: a pay-off letter from each holder of the Existing
Indebtedness addressed to Lender.
PBGC: the Pension Benefit Guaranty Corporation or any Governmental
Body succeeding to the functions thereof
Pension Plan: any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of ERISA, Title
IV of ERISA, or Section 412 of the Code and which (i) is maintained for
employees of any Borrower or Guarantor or any ERISA Affiliate, or (ii) has at
any time within the preceding six years been maintained for the employees of
any Borrower or Guarantor or any of its current or former ERISA Affiliates.
Permitted Liens: any of the following Liens:
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness
Liens;
(iii) Liens for taxes or assessments and
similar charges, which either are (A) not delinquent
or (B) being contested diligently and in good faith
by appropriate proceedings, and as to which
Borrowers and Guarantor have set aside reserves on
its books in accordance with GAAP;
(iv) statutory Liens, such as mechanic's,
material-man's, repairmen's, warehouseman's,
carrier's, landlord's, banks and related rights of
set-off, or other like Liens, incurred in good faith
in the ordinary course of business, provided that
the underlying obligations relating to such Liens
are paid in the ordinary course of business, or are
being contested diligently and in good faith by
appropriate proceedings and as to which Borrowers
and Guarantor have set aside reserves on its books
in accordance with GAAP, or the payment of which
obligations are otherwise secured in a manner
satisfactory to Lender;
(v) zoning ordinances, easements, licenses,
reservations, provisions, covenants, conditions,
waivers or restrictions on the use of Property and
other title exceptions, in each case, that are
acceptable to Lender;
(vi) Liens in respect of judgments or
awards with respect to which no Event of Default
would exist pursuant to subsection 8.1.6;
(vii) Liens to secure payment of insurance
premiums (A) to be paid in accordance with
applicable laws in the ordinary course of business
relating to payment of worker's compensation, or (B)
that are required for the participation in any fund
in connection with worker's compensation,
unemployment insurance, old-age pensions or other
social security programs; and
(viii) the interest or title of a lessor
under the stated terms of any Lease to which a
Borrower is a party.
Permitted Prior Liens: any of the following Liens:
(i) the Permitted Senior Indebtedness
Liens;
(ii) the Permitted Liens described in
clauses (iii), (iv) and (viii) of the definition of
Permitted Liens that are accorded priority to the
Security Interests by law; and
(iii) the Permitted Liens described in
clauses (v) and (vii) of the definition of Permitted
Liens, subject to the limitations or requirements
set forth therein.
Permitted Senior Indebtedness: Existing Indebtedness, other than
Borrowers' Obligations, and less Indebtedness to Finova Capital Corp. and
Permitted Subordinated Indebtedness ("Permitted Senior Existing Indebtedness"),
together with any other Indebtedness for Borrowed Money incurred after the date
hereof, provided (i) no Event of Default exists at the time or will be caused
as a result of the incurrence of any Indebtedness, and (ii) the aggregate
amount of Permitted Senior Indebtedness at any one time outstanding may not
exceed the sum of the Permitted Senior Existing Indebtedness as of the date
hereof plus $50,000.
Permitted Senior Indebtedness Liens: Liens that secure Permitted
Senior Indebtedness, provided that (i) each such Lien attaches only to the
Property purchased or leased with the proceeds of the Permitted Senior
Indebtedness incurred with respect to such Property and (ii) Lender is
granted a Lien upon suc Property, subordinate only to the Lien granted to the
holder of the applicable Permitted Senior Indebtedness.
Permitted Subordinated Indebtedness: means the indebtedness of any
Borrower or Guarantor to Michael Kibler and/or Harold Antonson or August
Investment Partnership as set forth in Schedule 5.16 hereto, which the holders
of such indebtedness have agreed to subordinate to the senior rights of Lender,
pursuant to Subordination Agreements of even date between Lender and the holders
of such indebtedness, and any additional indebtedness of any Borrower or
Guarantor to Michael Kibler and/or Harold Antonson or August Investment
Partnership which has been made expressly subordinate to the senior rights of
Lender by execution of subordination agreements between Lender and the holders
of such indedebtedness having the same terms and conditions as the
Subordination Agreements.
Person: any individual, firm, corporation, limited liability company,
business enterprise, trust, association, joint venture, partnership,
Governmental Body or other entity, whether acting in an individual, fiduciary
or other capacity.
Personal Guaranties: the individual guaranties of Michael Kibler and
Harold Antonson limited to $500,000 per guaranty.
Personal Guarantors: Michael Kibler and Harold Antonson, both of whom
are directors and officers and who together, indirectly or directly, hold or
control in the aggregate at least 22% of the outstanding voting tock of
Guarantor and each of Borrowers.
Prime Rate: the per annum rate of interest announced or published
publicly from time to time by Lender as its corporate base (or equivalent) rate
of interest, which rate shall change automatically without notice and
simultaneously with each change in such corporate base rate. The Prime Rate is
a reference rate and does not necessarily represent the lowest or prime rate
actually charged to any customer by Lender.
Principal Balance: the unpaid principal balance of the Revolving Loan
or any specified portion thereof outstanding from time to time.
Property: all types of real, personal or mixed property and all types
of tangible or intangible property.
Qualified Depository : a member bank of the Federal Reserve System
having a combined capital and surplus of at least $ 100,000,000.
Real Property: all interests in real estate owned, or which, upon the
Closing Date, will be owned, by Borrower other than the Leasehold Property.
Revolving Loan: the revolving loan made by Lender to Borrower pursuant
to Section 2.1.
Revolving Loan Commitment: $2,000,000.
Revolving Loan Maturity Date: the earlier of (i) September 30, 2001 or
(ii) the date on which Borrowers' Obligations are accelerated pursuant to this
Loan Agreement.
Revolving Loan Note: the promissory note executed by Borrower payable
to the order of Lender in the amount of the Revolving Loan Commitment, dated as
of the Closing Date and in form and substance satisfactory to Lender.
Securities Act: the Securities Act of 1933, as amended, or any similar
Federal statute, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, as in effect from time to time.
Security Agreements: the security agreements executed by Borrowers and
Guarantor in favor of Lender.
Security Instruments: collectively, the Security Agreements and any
other document now or hereafter executed by Borrowers or Guarantor which
purports to create a Lien on the Property of any of Borrowers or Guarantor in
favor of Lender.
Security Interests: the Liens in the Collateral granted to Lender
pursuant to the Security Instruments.
Stated Rate: as defined in subsection 2.3.3.
Subordinated Indebtedness: Indebtedness for Borrowed Money at any
date of Guarantor and all of its subsidiaries (on a consolidated basis)
which is subordinated to Borrowers' Obligation by written agreement of
the obligees thereof.
Subordination Agreements: means subordination agreements of even
date between Lender and the holders of the Permitted Subordinated
Indebtedness, wherein the holders of such junior and subordinate indebtedness
have agreed to subordinate their rights and claims to the senior rights of
Lender.
Tangible Net Worth: at any date means Guarantor's net worth at such
date after subtracting therefrom the aggregate amount at such date of any
intangible assets of Borrowers and any other subsidiaries of Guarantor,
including, without limitation, prepaid amounts, goodwill, franchises, licenses,
patents, trademarks, trade names, copyrights, service marks and brand names.
Termination Event: (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder; or (ii) the withdrawal
of any Borrower, Guarantor or any ERISA Affiliate from a Pension Plan during a
plan year in which it was a "substantial employer" as defined in Section 4001
(a)(2); or (iii) the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a termination under Section 4041 of ERISA; or (iv) the institution of
proceedings to terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC; or (v) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; or (vi) the
partial or complete withdrawal of any Borrower, Guarantor or any ERISA
Affiliate from a Multiemployer Plan; or (vii) the imposition of a lien pursuant
to Section 412 of the Code or Section 302 of ERISA; or (viii) any event or
condition which results in the reorganization or insolvency of a Multiemployer
Plan under Sections 4241 or 4245 of ERISA; or (ix) any event or condition which
results in the termination of a Multiemployer Plan under Section 4041A of ERISA
or the institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
Unsubordinated Indebtedness: Indebtedness for Borrowed Money at any
date of Guarantor and all of its subsidiaries (on a consolidated basis) other
than Subordinated Indebtedness.
Time Periods.
In this Loan Agreement and the other Loan Instruments, in the
computation of periods of time from a specified date to a later specified date,
(i) the word "from" means "from and including," (ii) the words "to" and "until"
each mean "to, but excluding" and (iii) the words "through," "end of' and
"expiration" each mean "through and including." Unless otherwise specified, all
references in this Loan Agreement and the other Loan Instruments to (i) a
"month" shall be deemed to refer to a calendar month, (ii) a "quarter" shall be
deemed to refer to a calendar quarter and (iii) a "year" shall be deemed to
refer to a calendar year.
Accounting Terms and Determinations.
All accounting terms not specifically defined herein shall be
construed, all accounting determinations hereunder shall be made and all
financial statements required to be delivered pursuant hereto shall be prepared
in accordance with GAAP as in effect at the time f such interpretation,
determination or preparation, as applicable. In the event that any Accounting
Changes occur and such changes result in a change in the method of calculation
of financial covenants, standards or terms contained in this Loan Agreement,
then Borrower and Lender agree to enter into negotiations to amend such
provisions of this Loan Agreement so as to reflect such Accounting Changes with
the desired result that the criteria for evaluating the financial condition of
Borrower shall be the same after such Accounting Changes as if such Accounting
Changes had not been made. For purposes hereof, "Accounting Changes" shall mean
(i) changes in GAAP required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or any successor thereto)
or other appropriate authoritative body and (ii) changes in accounting
principles as approved by the Accountants.
References.
All references in this Loan Agreement to "Article," "Section,"
"subsection," "subparagraph," "clause" or "Exhibit," unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
Lender's Discretion.
Whenever the terms "satisfactory to Lender," "determined by
Lender," "acceptable to Lender," "Lender shall elect," "Lender shall
request," "at the option or election of Lender," or similar terms are
used in the Loan Instruments, except as otherwise specifically provided
therein, such terms shall mean satisfactory to, at the election or option of,
determined by, acceptable to or requested by Lender, in its sole and unlimited
discretion.
Borrower's or Guarantor's Knowledge.
Any statements, representations or warranties that are based upon the
best knowledge of Borrowers or Guarantor or an officer thereof shall be deemed
to have been made after due inquiry by Borrowers, Guarantor or such officer, as
applicable, with respect to the matter in question.
2.
REVOLVING LOANS AND TERMS OF PAYMENT
Revolving Loan.
1.2 Amount and Disbursement.
Upon the terms and subject to the conditions herein
set forth, Lender agrees to make Advances of the Revolving
Loan to Borrowers from time to time from the Closing Date to
the Revolving Loan Maturity Date in an aggregate amount
outstanding at any one time not in excess of the Revolving
Loan Commitment then in effect. If at any time, however,
Borrowers' Obligations exceed the Revolving Loan Commitment
then in effect, all of such excess nevertheless shall
constitute a part of Borrowers' Obligations and shall be
secured by the Security Interests. Each of Borrower shall
remain jointly and severally liable with the other Borrowers
for all of Borrowers' Obligations.
1.3 Revolving Loan Note.
The Revolving Loan shall be evidenced by the
Revolving Loan Note.
1.4 Reborrowing.
Subject to the conditions set forth in this Section
2.1, Borrowers may from time to time prior to the Revolving
Loan Maturity Date reborrow all or any portion of any
Advance of the Revolving Loan which is repaid.
1.5 Conditions of Advances of the Revolving Loan.
The obligation of Lender to disburse any Advance of
the Revolving Loan is subject to the satisfaction of the
following conditions precedent:
1.5.1 no Event of Default or Incipient Default shall exist or would be
created by the making of any such Advance;
1.5.2 each such Advance shall be in a minimum amount of $1,000 and integral
multiples of $1,000 in excess of that amount;
1.5.3 Lender shall have received, no later than 2:00 p.m., Chicago time, on
the applicable Funding Date, a Notice of Borrowing from Borrower in
the orm of Exhibit 2.1.4 with respect to such Advance;
1.5.4 on the applicable Funding Date, each of Borrowers' and Guarantor's
representations and warranties set forth in the Loan Instruments shall
be true and correct in all material respects when made and at and as
of the time of the Funding Date, except to the extent that any such
representations and warranties expressly relate to an earlier date;
and
1.5.5 availability shall be limited to Lender's dvance of funds not
exceeding seventy percen (70%) of Borrowers' Eligible Accounts
Receivable.
Use of Proceeds of the Revolving Loan.
The proceeds of the Revolving Loan shall be used (i) to refinance
Borrowers' and Guarantor's secured loan obligations to Finova; (ii) for
Borrowers' working capital; and (iii) to pay related transactions costs.
Interest.
1.6 Interest Rate.
The Principal Balance shall bear interest in an
amount equal to: (i) the Prime Rate in effect from time to
time; plus (ii) 0.5% per annum, provided, however, that
during a Default Rate Period, Borrowers' Obligations shall
bear interest at the applicable Default Rate.
1.7 Interest Computation.
Interest shall be computed on the basis of a year
consisting of 360 days and charged for the actual number of
days during the period for which interest is being charged.
In computing interest, the Funding Date shall be included and
the date of payment shall be excluded.
1.8 Maximum Interest.
Notwithstanding any provision to the contrary
contained herein or in any other Loan Instrument, Lender
shall not collect a rate of interest on any obligation or
liability due and owing by Borrowers to Lender in excess of
the maximum contract rate of interest permitted by applicable
law ("Excess Interest"). If any Excess Interest is provided
for or determined by a court of competent jurisdiction to
have been provided for in this Loan Agreement or any other
Loan Instrument, then in such event (i) Borrowers shall not
be obligated to pay such Excess Interest, (ii) any Excess
Interest collected by Lender shall be, at Lender's option,
(A) applied to the Principal Balance or to accrued and unpaid
interest not in excess of the maximum rate permitted by
applicable law or (B) refunded to the payor thereof, (iii)
the interest rates provided for herein (collectively the
"Stated Rate") shall be automatically reduced to the maximum
rate allowed from time to time under applicable law (the
"Maximum Rate") and this Loan Agreement and the other Loan
Instruments, as applicable, shall be deemed to have been, and
shall be, modified to reflect such reduction, and (iv)
Borrowers shall not have any action against Lender for any
damages arising out of the payment or collection of such
Excess Interest; provided, however, thatif at any time
thereafter the Stated Rate is less than the Maximum Rate,
Borrowers shall, to the extent permitted by law, continue to
pay interest at the Maximum Rate until such time as the total
interest received by Lender is equal to the total interest
which Lender would have received had the Stated Rate been
(but for the operation of this provision) the interest rate
payable. Thereafter, the interest rate payable shall be the
Stated Rate unless and until the Stated Rate again exceeds
the Maximum Rate, in which event the provisions contained in
this subsection 2.3.3 again shall apply.
1.9 Increased Costs.
If, after the Closing Date, either (i) any change in
or in the interpretation of any law or regulation is
introduced (other than changes in taxation of the net income
of Lender), including, without limitation, with respect to
reserve requirements applicable to Lender, (ii) Lender
complies with any future guideline or request from any
central bank or other Governmental Body proposed or
promulgated after the Closing Date or (iii) Lender determines
that the adoption of any applicable law, rule or regulation
(other than changes in taxation f the net income of Lender)
regarding capital adequacy or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged
with the interpretation or administration thereof announced
after the Closing Date has or would have the effect described
below, or Lender complies with any request or directive
regarding capital adequacy (whether or not having the force
of law) of any such Governmental Body, central bank or
comparable agency announced after the Closing Date and in
case of any event set forth in this clause (iii), such
adoption, change or compliance has or would have the direct
or indirect effect of reducing the rate of return on any of
Lender's capital as a consequence of its obligations
hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking
into consideration Lender's policies with respect to capital
adequacy) by an amount deemed by Lender to be material, and
any of the foregoing events described in clauses (i), (ii) or
(iii) increases the cost to Lender of (A) funding or
maintaining the Revolving Loan or the Revolving Loan
Commitment or (B) issuing, causing the issuance of making or
maintaining any Letter of Credit, or reduces the amount
receivable in respect thereof by Lender, then Borrowers
shall upon demand by Lender at any time within 180 days after
the date on which an officer of Lender responsible for
overseeing this Loan Agreement knows or has reason to know of
its right to additional compensation under this Section
2.3.4, pay to Lender additional amounts sufficient to
reimburse Lender against such increase in cost or reduction
in amount receivable; provided, however, such entity shall
only be entitled to additional compensation for any such
costs incurred from and after the date that is 30 days prior
to the date Borrowers receive such demand. A certificate as
to the amount of such increased cost, and setting forth in
reasonable detail the calculation thereof, shall be submitted
to Borrowers by Lender, and shall be conclusive absent
manifest error. Lender will promptly notify Borrowers of any
event of which it has knowledge that would entitle Lender to
additional compensation under this subsection 2.3.4. Lender
shall not request any additional compensation under this
subsection 2.3.4 unless it is generally making similar
requests of other borrowers similarly situated, and Lender
agrees to use a reasonable basis for calculating amounts
allocable to its Commitments hereunder.
Principal and Interest Payments.
1.10 Interest.
Interest on (i) the Revolving Loan shall be payable
monthly in arrears on the first Business Day of each month
beginning with May 1, 2000.
1.11 Principal.
The Principal Balance of the Revolving Loan,
together with all other sums due to Lender pursuant to the
terms of the Loan Instruments, shall be due and payable in
full on the Revolving Loan Maturity Date.
Mandatory Prepayments of the Revolving Loan.
If at any time or for any reason, Borrowers' Obligation exceeds the
Revolving Loan Commitment or, if for any reason, Borrowers' Obligation exceeds
the availability requirements set forth in Section 0 hereof (any such excess
being referred to herein as an "Overadvance"), Borrowers shall immediately pay
to Lender, in Good Funds, the amount of such Overadvance.
Payments after Event of Default.
All payments received by Lender during the existence of an Event of
Default shall be applied in accordance with Section 8.4.
Method of Payment.
All payments to be made pursuant to the Loan Instruments by Borrowers
to Lender shall be made by (i) direct debit from Borrowers' operating account;
or (ii) wire transfer of Good Funds to Lender.
3.
SECURITY
Borrowers' Obligations shall be secured by a Lien upon all of the
Collateral, which Lien at all times shall be superior and prior to all other
Liens, except Permitted Prior Liens.
4.
CONDITIONS OF CLOSING
The obligation of Lender to make the Revolving Loan shall be subject
to the satisfaction or waiver of all of the following conditions in a manner,
form and substance satisfactory to Lender:
Representations and Warranties.
On the Closing Date, Borrowers', Guarantor's and Personal Guarantors'
representations and warranties set forth in the Loan Instruments shall be true
and correct.
Delivery of Documents.
The following shall have been delivered to Lender, each duly
authorized and executed, where applicable, and in form and substance
satisfactory to Lender:
1.11.1 the Loan Instruments;
1.11.2 a certificate of good standing or similar certification for each
Borrower and Guarantor from the states in which each Borrower and
Guarantor are organized and from all states in which the laws thereof
require each Borrower and Guarantor to be licensed and/or qualified to
do business, except any state where the failure to be so qualified
could not reasonably be expected to result in a Material Adverse
Effect, in each case dated not more than 10 days prior to the Closing
Date;
1.11.3 copies of the corporate charter or articles of incorporation for each
Borrower and Guarantor, certified by the Secretary of State of the
state of each Borrower's and Guarantor's organization, together with
all effective and proposed amendments thereto;
1.11.4 certified copies of resolutions adopted by the board of directors of
each Borrower and Guarantor, authorizing the execution and delivery of
the Loan Instruments and the consummation of the transactions
contemplated therein;
1.11.5 signature and incumbency certificates for each Borrower and Guarantor;
1.11.6 copies of each of the following, certified as true, correct and
complete by a duly authorized officer of each Borrower and Guarantor:
all instruments and documents evidencing Permitted Senior Indebtedness
and Permitted Subordinated Indebtedness existing as of the Closing
Date;
1.11.7 a Landlord's Consentfrom the Landlord under the Lease for Borrowers'
headquarters;
1.11.8 the Pay-Off Letter; and
1.11.9 such other instruments, documents, certificates, consents, waivers and
opinions as Lender reasonably may request.
Performance; No Default.
Borrower and Guarantor shall have performed and complied with all
agreements and conditions contained in the Loan Instruments to be performed by
or complied with by such Person prior to or at the Closing, and no Event of
Default shall then exist or result from the making of the initial disbursement
of the Revolving Loan.
Opinions of Counsel.
Lender shall have received the opinion of Borrowers' and Guarantor's
counsel, Troutman Sanders, dated the Closing Date and any special counsel
required by Lender, each addressed to Lender, in such form and covering such
matters as Lender may require.
Approval of Loan Instruments and Security Interests; Consents.
Lender shall have received evidence that the approval or consent shall
have been obtained from all Governmental Bodies and all other Persons whose
approval or consent is required to enable (i) each Borrower to enter into and
perform its obligations under the Loan Instruments; and (ii) each Borrower and
Guarantor to grant to Lender the Security Interests contemplated in the
Security Instruments.
Security Interests.
All filings of Uniform Commercial Code financing statements and all
other filings and actions necessary to perfect and maintain the Security
Interests as first, valid and perfected Liens in the Property covered thereby,
subject only to Permitted Prior Liens, shall have been filed or taken and
Lender shall have received such UCC, state and federal tax Lien, pending suit,
judgment and other Lien searches as it deems reasonably necessary to confirm
the foregoing.
Financial Statements, Reports and Projections.
Lender shall have received such financial reports and other
information with respect to each Borrower and Guarantor as Lender shall
request, all in form and substance satisfactory to Lender.
Year 2000 Compliance.
Lender shall be satisfied that there are no material Year 2000
compliance issues pertaining to any Borrower or Guarantor.
Material Adverse Change.
No event shall have occurred since February 28, 2000, which has had or
could have a Material Adverse Effect, and no laws, statute, rule, regulation,
order or decree shall be in effect or proceedings pending which prevent or
enjoin the Closing.
Use of Assets.
Lender shall be satisfied that each Borrower and Guarantor at all times
shall be entitled to the use and quiet enjoyment of all Property necessary
for the continued ownership and operation of its business, including, without
limitation, the use of equipment, fixtures, licenses, offices and means of
ingress and egress thereto, and any easements or rights-of-way necessary to
reach any equipment or other items necessary for the operation of such
business.
Fees and Expenses.
Lender shall have received evidence that all fees and expenses
described in subsection 10.1.1 have been paid in full.
Insurance.
At least two (2) Business Days prior to the Closing Date, Borrowers
shall have delivered to Lender evidence satisfactory to Lender that all
Business Insurance coverage required pursuant to Section 6.6 is in full force
and effect and all premiums then due thereon have been paid in full.
Existing Indebtedness.
Lender shall have received evidence that the Existing Indebtedness
(including all indebtedness owed to Finova) has been paid in full or will be
paid in full concurrently with the Closing.
5.
REPRESENTATIONS AND WARRANTIES
Borrowers and Guarantor, jointly and severally, represent and warrant
to Lender as follows:
Existence and Power.
Each Borrower and Guarantor are business corporations, duly formed and
validly existing under the laws of the jurisdiction of their respective
formation. Each Borrower and Guarantor are in good standing under the laws of
each other jurisdiction in which the failure to be in good standing could have
a Material Adverse Effect. Each Borrower and Guarantor have all requisite power
and authority to own their property and to carry on their business as has been
conducted prior to the Closing Date and as proposed to be conducted by each
Borrower and Guarantor following the Closing Date.
Authority.
Each Borrower and Guarantor have full power and authority to enter
into, execute, deliver and carry out the terms of the Loan Instruments and to
incur the obligations provided for therein, all of which have been duly
authorized by all proper and necessary action and, are not prohibited by the
organizational instruments of any Borrower or Guarantor.
Binding Agreements.
This Loan Agreement and the other Loan Instruments, when executed and
delivered, will constitute the valid and legally binding obligations of each
Borrower and Guarantor, enforceable against each Borrower and Guarantor in
accordance with their respective terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, oratorium or
similar laws now or hereafter in effect affecting the enforcement of creditors'
rights generally and (ii) equitable principles (whether or not any action to
enforce such document is brought at law or in equity).
Business and Property of Borrower and Guarantor.
1.12 Business and Property.
Each Borrower and Guarantor (i) own, and upon the Closing Date,
will own, all Property necessary to conduct their business as
presently conducted and as has been conducted prior to the
Closing Date and (ii) have not engaged in and do not propose
to engage in any business activity other than the business in
which they are presently engaged, provided Borrowers or
Guarantor may acquire or initiate additional trucking
brokerage businesses within the United States provided any
such action does not cause a violation of any other term or
covenant of this Agreement including without limitation
Sections 7.1, 7.2 and 7.6 hereunder, and further provided
that, to the extent such business is conducted in an entity
other than one of Borrowers or Guarantor, such entity is
added as a Borrower under this facility and agrees to be
bound by the terms hereof and executes a Security Agreement
in favor of Lender and appropriate financing statements
granting a lien in its Property junior only to Permitted
Senior Indebtedness Liens.
1.13 Operating Agreements.
All Operating Agreements are in full force and effect
and no event has occurred which could result in the
cancellation or termination of any such Operating Agreement
or the imposition thereunder of any liability upon any
Borrower or Guarantor which could have a Material Adverse
Effect.
1.14 Facility Sites.
There is set forth in Schedule 5.4.3 the locations
of Borrowers' and Guarantor's (i) chief executive office,
(ii) Property and (iii) books and records.
1.15 Leases.
There is set forth in Schedule 5.4.4 a list of all
Leases, together with a complete and accurate address and
legal description of each parcel of Leasehold Property
subject to such Leases. Each Lease is in full force and
effect, there has been no default in the performance of any
of its terms or conditions by any Borrower or Guarantor or,
to the best knowledge of any Borrower or Guarantor, any other
party thereto, and, to the best knowledge of any Borrower or
Guarantor, no claims of default have been asserted with
respect thereto.
1.16 Real Property.
Except for certain Real Property owned in Arizona
which has been identified to Lender, none of Borrowers or
Guarantors own any Real Property.
1.17 Operation and Maintenance of Equipment.
No equipment owned or operated will be owned or
operated by a Borrower which is necessary for the operation
of its business has been used, operated or maintained in a
manner which now or hereafter could result in the
cancellation or termination of the right of a Borrower to use
or make use of the same or which could be expected to result
in any material liability of a Borrower for damages in
connection therewith. All of the equipment and other
tangible personal property which will be owned by Borrowers
upon the Closing Date and necessary to the operation of each
Borrowers' businesses is, in all material respects, in good
operating condition and repair (subject to normal wear and
tear) and has been used, operated and maintained in
substantial compliance with all applicable laws, rules and
regulations.
1.18 Existing Indebtedness.
There is set forth in Schedule 5.4.7 a complete
description of the Existing Indebtedness.
Title to Property; Liens.
Each Borrower has (i)good and marketable title to all of its Property,
except the portion thereof consisting of a leasehold estate and (ii) a valid
leasehold estate in each portion of its Property which consists of a leasehold
estate. All of such Property is free and clear of all Liens, except Permitted
Liens. Upon the proper filing with the appropriate Governmental Bodies of
appropriate Uniform Commercial Code financing statements, the applicable Loan
Instruments will create valid and perfected first Liens in the Collateral,
subject only to Permitted Prior Liens.
Financial Statements.
Each of Borrowers and Guarantor have delivered to Lender the financial
statements described in Schedule 5.6. To the best of each of Borrowers' and
Guarantor's knowledge, such financial statements present fairly in all material
respects the results of their operations for the periods covered thereby and
their financial condition as of the dates indicated therein. All of such
financial statements have been prepared in conformity with GAAP consistently
applied. Since the date of the most recent financial statement, there has been
no change which has had a Material Adverse Effect.
Litigation.
There is set forth in Schedule 5.7 a description of all actions,suits,
arbitration proceedings and claims pending or, to the best knowledge of each
Borrower and Guarantor, threatened against any Borrower or Guarantor, at law or
in equity or before any Governmental Body on the Closing Date. There are no
actions, suits, arbitration proceedings or claims pending, or to the best
knowledge of any Borrower or Guarantor, threatened against any Borrower or
Guarantor, at law or in equity or before any Governmental Body, including the
matters set forth in such Schedule 5.8, which could reasonably be expected to
have a Material Adverse Effect.
Defaults in Other Agreements; Consents; Conflicting Agreements.
No Borrower or Guarantor is in default under any agreement to which it
is a party or by which it or any of its Property is bound, the effect of which
default could reasonably be expected to have a Material Adverse Effect. No
authorization, consent, approval or other action by, and no notice to or filing
with, any Governmental Body or any other Person which has not already been
obtained, taken or filed, as applicable, is required (i) for the due execution,
delivery or performance by each Borrower and Guarantor of any of the
Instruments to which any Borrower or Guarantor is a party or (ii) as a
condition to the validity or enforceability of any of the Instruments to which
any Borrower or Guarantor is a party or any of the transactions contemplated
thereby or the priority of the Security Interests, except for certain filings
to establish and perfect the Security Interests. No provision of any mortgage,
indenture, contract, agreement, statute, rule, regulation, judgment, decree or
order binding on any Borrower or Guarantor or affecting its Property conflicts
with, or requires any consent which has not already been obtained under, or
would in any way prevent the execution, delivery or performance of the terms of
any of the Instruments or affect the validity or priority of the Security
Interests. The execution, delivery and performance of the terms of the
Instruments will not constitute a default under, or result in the creation or
imposition of, or obligation to create, any Lien upon the Property of any
Borrower or Guarantor pursuant to the terms of any such mortgage, indenture,
contract or agreement.
Taxes.
Borrowers and Guarantor have each filed all tax returns required to be
filed, and have paid, or made adequate provision for the payment of, all taxes
shown to be due and payable on such returns or in any assessments made against
it, and no tax liens have been filed and, to the best knowledge of each
Borrower and Guarantor, no claims are being asserted in respect of such taxes
which are required by GAAP to be reflected in the financial statements of
Borrowers and Guarantor and are not so reflected therein. The charges,
accruals and reserves on the books of Borrowers and Guarantor with respect to
all federal, state, local and other taxes are considered by the management of
Borrowers and Guarantor to be adequate, and no Borrower or Guarantor knows of
any unpaid assessment which is or might be due and payable by a Borrower or
Guarantor or creates a Lien against any of a Borrowers' or Guarantor's
Property, except such assessments as are being contested in good faith and by
appropriate proceedings diligently conducted, and for which adequate reserves
have been set aside in accordance with GAAP. None of the tax returns of any
Borrower and Guarantor are under audit.
Compliance with Applicable Laws.
None of Borrowers or Guarantor is in default in respect of any
judgment, order, writ, injunction, decree or decision of any Governmental Body,
which default could have a Material Adverse Effect. Each Borrower and Guarantor
is in compliance in all material respects with all applicable statutes and
regulations, including, without limitation, all Environmental Laws, ERISA and
all laws and regulations relating to unfair labor practices, equal employment
opportunity and employee safety, of all Governmental Bodies. No material
condemnation, eminent domain or expropriation has been commenced or, to the
best knowledge of any Borrower or Guaranty, threatened against the Property
which any Borrower or Guarantor owns or will own upon the Closing.
Patents, Trademarks, Franchises and Agreements.
There is set forth in Schedule 5.11 a complete and accurate list of
all of the Intellectual Property material to the operation of the business of
Borrowers and Guarantor. Each Borrower and Guarantor owns, possesses or has the
right to use such Intellectual Property (i) which is necessary for the conduct
of the business proposed to be conducted by such Borrower after the Closing
date and (ii) for which the failure to own, possess or have the right to use
could have a Material Adverse Effect, in each case, without any known conflict
with the rights of others and free of any Liens other than the Security
Interests.
Regulatory Matters.
Each Borrower and Guarantor have duly and timely filed all reports and
other filings which are required to be filed by each such Borrower and
Guarantor under any applicable law, rule or regulation of any Governmental
Body, the non-filing of which could have a Material Adverse Effect, and is in
compliance with all such laws, rules and regulations, the noncompliance with
which could have a Material Adverse Effect.
Environmental Matters.
Each Borrower is in compliance in all material respects with all
applicable Environmental Laws and no portion of any of the Leasehold Property
or the Real Property has been used as a landfill. There currently are not any
known Hazardous Materials generated, manufactured, released, stored, buried or
deposited over, beneath, in or on (or used in the construction and/or
renovation of) the Real Property or Leasehold Property in violation of
applicable Environmental Laws.
Application of Certain Laws and Regulations.
No Borrower is and Guarantor is not and no Affiliate of Borrower or
Guarantor is:
1.19 Investment Company Act.
An "investment company," or a company "controlled"
by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
1.20 Holding Company.
A "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company," as
such terms are defined in the Public Utility Holding Company
Act of 1935, as amended.
1.21 Foreign or Enemy Status.
(i) An "enemy" or an "ally of an enemy" within the
meaning of Section 2 of the Trading with the Enemy Act, (ii)
a "national" of a foreign country designated in Executive
Order No. 8389, as amended, or of any "designated enemy
country" as defined in Executive Order No. 9095, as amended,
of the President of the United States of America, in each
case within the meaning of such Executive Orders, as amended,
or of any regulation issued thereunder, (iii) a "national of
any designated foreign country" within the meaning of the
Foreign Assets Control Regulations or the Cuban Assets
Control Regulations of the United States of America (Code of
Federal Regulations, Title 31, Chapter V, Part 515, Subpart
B, as amended) or (iv) an alien or a representative of any
alien or foreign government within the meaning of Section 310
of Title 47 of the United States Code.
1.22 Regulations as to Borrowing.
Subject to any statute or regulation which regulates
the incurrence of any Indebtedness for Borrowed Money,
including, without limitation, statutes or regulations
relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other
public utility services.
Margin Regulations.
None of the transactions contemplated by this Loan Agreement or any of
the other Instruments, including the use of the proceeds of the Revolving
Loans, will violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant thereto,
including, without limitation, Regulations G, T, U and X, and no Borrower owns
or intends to carry or purchase any "margin security" within the meaning of
such Regulation U or G.
Other Indebtedness.
Upon the Closing there will be no Indebtedness for Borrowed Money owed
by any Borrower to any Person, except (i) Borrowers' Obligations, and (ii)
Permitted Senior Indebtedness and Permitted Subordinated Indebtedness permitted
to exist as of the Closing Date pursuant to this Loan Agreement. All such
Permitted Subordinated Indebtedness is listed and described in Schedule 5.16
hereto.
No Misrepresentation.
Neither this Loan Agreement nor any other Loan Instrument,
certificate, information or report furnished or to be furnished by or on behalf
of a Borrower or Guarantor to Lender in connection with any of the transactions
contemplated hereby or thereby, contains or will contain a misstatement of
material fact, or omits or will omit to state a material fact required to be
stated in order to make the statements contained herein or therein, taken
as a whole, not misleading in the light of the circumstances under which such
statements were made. There is no fact, other than information known to the
public generally, known to any Borrower or Guarantor after diligent inquiry,
that could have a Material Adverse Effect that has not expressly been disclosed
to Lender in writing.
Employee Benefit Plans.
1.23 No Other Plans.
Neither any Borrower, Guarantor nor any ERISA
Affiliate maintains or contributes to, or has any obligation
under, any Employee Benefit Plan other than those identified
on Schedule 5.18.1. Each Borrower has provided Lender
accurate and complete copies of all contracts, agreements and
documents described on Schedule 5.18.1.
1.24 ERISA and Code Compliance and Liability.
Each Borrower, Guarantor and each ERISA Affiliate
are in compliance with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with
respect to all Employee Benefit Plans except where failure to
comply would not result in a material liability to any
Borrower or Guarantor and except for any required amendments
for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has
been determined to be exempt under Section 401(a)of the Code.
No material liability has been ncurred by any Borrower or
Guarantor or any ERISA Affiliate which remains unsatisfied
for any taxes or penalties with respect to any Employee
Benefit Plan or any Multiemployer Plan.
1.25 Funding.
No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of
the Code) been insured (without regard to any waiver granted
under Section 412 of the Code), nor has any funding waiver
from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has Borrower or any
ERISA Affiliate failed to make any contributions or to pay
any amounts due and owing as required by Section 412 of the
Code, Section 302 of ERISA or the terms of any Pension Plan
prior to the due dates of such contributions under Section
412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under Section 4041(c)(3)(
C), 4063(a) or 4068 of ERISA with respect to any Pension
Plan.
1.26 Prohibited Transactions and Payments.
Neither any Borrower, Guarantor nor any ERISA
Affiliate has: (i) engaged in a nonexempt "prohibited
transaction" as such term is defined in Section 406 of ERISA
or Section 4975 of the Code; (ii) incurred any liability to
the PBGC which remains outstanding other than the payment of
premiums and there are no premium payments which are due and
unpaid; (iii) failed to make a required contribution or
payment to a Multiemployer Plan; or (iv) failed to make a
required installment or other required payment under Section
412 of the Code.
1.27 No Termination Event.
No Termination Event has occurred or is reasonably expected
to occur.
1.28 ERISA Litigation.
No material proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of any
Borrower or Guarantor, threatened concerning or involving any
(i) employee welfare benefit plan (as defined in Section 3(l)
of ERISA) currently maintained or contributed to by Borrower
or any ERISA Affiliate, (ii) Pension Plan or (iii)
Multiemployer Plan.
Employee Matters.
1.29 Collective Bargaining Agreements; Grievances.
Except as set forth in Schedule 5.19.1, (i) none of
the employees of any Borrower or Guarantor is subject to any
collective bargaining agreement with such Borrower or
Guarantor, (ii) no petition for certification or union
election is pending with respect to the employees of any
Borrower or Guarantor and no union or collective bargaining
unit has sought such certification or recognition with
respect to the employees of any Borrower and (iii) there are
no strikes, slowdowns, work stoppages, unfair labor practice
complaints, grievances, arbitration proceedings or
controversies pending or, to the best knowledge of any
Borrower or Guarantor, threatened against any Borrower or
Guarantor by any of such Borrower's or Guarantor's employees,
other than employee grievances or controversies arising in
the ordinary course of business that could not in the
aggregate be expected to have a Material Adverse Effect.
1.30 Claims Relating to Employment.
Neitherany Borrower or Guarantor is subject to any
non-competition agreement with any Person. To the best of
Borrowers' or Guarantor's knowledge, no employees of any
Borrower or Guarantor is subject to an employment agreement
which would have a Material Adverse Effect due to (i) any
information which any Borrower or Guarantor would be
prohibited from using under the terms of such agreement or
(ii) any legal considerations relating to unfair competition,
trade secrets or proprietary information.
Burdensome Obligations.
After giving effect to the transactions contemplated by the
Instruments (i) neither any Borrower nor Guarantor (A) will be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, or be
subject to any restriction, which is so unusual or burdensome so as to cause,
in the foreseeable future, a Material Adverse Effect or (B intends to incur,
or believes that it will incur, debts beyond its ability to pay such debts as
they become due. No Borrower or Guarantor presently anticipates that future
expenditures needed to meet the provisions of federal or state statutes,
orders, rules or regulations will be so burdensome so as to have a Material
Adverse Effect.
Subsidiaries.
None of Borrowers have any subsidiaries.
6.
AFFIRMATIVE COVENANTS
Until all of Borrowers' bligations and the Obligations of Guarantor
under the Corporate Guaranty are paid and performed in full, each of Borrowers
and Guarantor agree that they will:
Legal Existence; Good Standing.
Maintain their existence and their good standing in the jurisdiction
of their formation and maintain their qualification to transact business in
each jurisdiction in which the failure so to qualify would have a Material
Adverse Effect.
Inspection.
Permit representatives of Lender, at any time without notice, to (i)
visit their offices, (ii) examine their books and records and Accountants'
reports relating thereto, (iii) make copies or extracts therefrom, (iv) discuss
their affairs with their employees, (v) examine and inspect their Property and
(vi) meet and discuss their affairs with the Accountants, and such Accountants,
as a condition to their retention by Borrowers and Guarantor, are hereby
irrevocably authorized by Borrowers and Guarantor to fully discuss and disclose
all such affairs with Lender.
Financial Statements and Other Information.
Maintain a standard system of accounting in accordance with GAAP and
furnish to Lender:
1.31 Monthly Statements.
As soon as is available and in any event within
forty (40) days after the close of each month (except the
months of January and February, as to which the following
must be furnished within seventy-five (75) days after the
close of the month):
1.31.1 copy of the consolidating balance sheets of Borrowers and Guarantor,
as of the end of such month;
1.31.2 statements of operations and EBITDA of Borrower and Guarantor for
such month; and
1.31.3 an accounts receivable aging and borrowing base certificate from
Borrowers, as of the end of such month.
1.32 Quarterly Statements.
As soon as is available and in any event within
forty-five (45) days after the close of each quarter:
1.32.1 copy of the balance sheet of Borrowers and Guarantor, as of the end
of such quarter;
1.32.2 statements of operations and EBITDA of Borrowers and Guarantor for
such quarter; and
1.32.3 such other financial information for the Borrowers and Guarantor as is
contained in Guarantor's 10-Q Report for such quarter.
1.33 Annual Statements.
As soon as available and in any event within 90 days
after the close of Guarantor's fiscal year:
1.33.1 the consolidated balance sheet of Guarantor and its subsidiaries as
of the end of such fiscal year and the statements of operations, cash
flows, shareholders' equity and EBITDA of Guarantor for such fiscal
year (collectively, the "Basic Financial Statements");
1.33.2 an opinion of the Accountants which shall accompany the Basic
Financial Statements which opinion (except the opinion as to 12/31/99
Basic Financial Statement, which may be so qualified) shall be
unqualified as to going concern and scope of audit, stating that (i)
the examination by the Accountants in connection with such Basic
Financial Statements has been made in accordance with generally
accepted auditing standards, (ii) such Basic Financial Statements have
been prepared in conformity with GAAP and in a manner consistent with
prior periods, and (iii) such Basic Financial Statements fairly
present in all material respects the financial position and results of
operations of Guarantor and its subsidiaries;
1.33.3 a letter from the Accountants stating that the statements of EBITDA
were computed in accordance with the requirements of this Loan
Agreement; and
1.33.4 the personal financial statements of each of the Personal Guarantors
certified as true and correct by the respective Personal Guarantors.
1.34 Compliance Certificate.
As soon as is available and in any event within
forty-five (45) days after the close of each quarter, a
Compliance Certificate as of the end of such quarter.
1.35 Accountants' Certificate.
Simultaneously with the delivery of the certified
Basic Financial statements required by subsection 1.33, copies
of a certificate of the Accountants stating that (i) they have
checked the computations delivered by Guarantor in compliance
with subsection 1.33, and (ii) in making the examination
necessary for their audit of the Basic Financial Statements
for such year, nothing came to their attention of a financial
or accounting nature that caused them to believe that (A)
Guarantor was not in compliance with the terms, covenants,
provisions or conditions of any of the Loan Instruments, or
(B) there shall have occurred any condition or event which
would constitute an Event of Default, or, if so, specifying in
such certificate all such instances of non-compliance and the
nature and status thereof.
1.36 Audit Reports.
Promptly upon receipt thereof, a copy of each report,
other than the reports referred to in subsection 1.33,
including any so-called "Management Letter" or similar report,
submitted to any Borrower or Guarantor by the Accountants in
connection with any annual, interim or special audit made by
the Accountants of the books of any Borrower or Guarantor.
1.37 Notice of Defaults; Loss.
Prompt written notice if: (i) any Indebtedness of any
Borrower or Guarantor is declared or shall become due and
payable prior to its declared or stated maturity, or called
and not paid when due, (ii) an event has occurred that enables
the holder of any note, or other evidence of such
Indebtedness, certificate or security evidencing any such
Indebtedness of any Borrower or Guarantor to declare such
Indebtedness due and payable prior to its stated maturity,
(iii) there shall occur and be continuing an Event of Default,
accompanied by a statement setting forth what action a
Borrower or Guarantor proposes to take in respect thereof, or
(iv) any event shall occur which has a Material Adverse
Effect, including the amount or the estimated amount of any
loss or adverse effect.
1.38 Notice of Suits; Adverse Events.
Prompt written notice of: (i) any citation, summons,
subpoena, order to show cause or other order naming any
Borrower or Guarantor a party to any proceeding before any
Governmental Body which might reasonably be expected to have a
Material Adverse Effect, including with such notice a copy of
such citation, summons, subpoena, order to show cause or other
order, (ii) any lapse or other termination of any license,
permit, franchise, agreement or other authorization issued to
any Borrower or Guarantor by any Governmental Body or any
other Person that is material to the operation of the business
of Borrower or Guarantor, (iii) any refusal by any
Governmental Body or any other Person to renew or extend any
such license, permit, franchise, agreement or other
authorization and (iv) any dispute between Borrower or
Guarantor and any Governmental Body or any other Person, which
lapse, termination, refusal or dispute referred to in clauses
(ii) and (iii) above or in this clause (iv) could have a
Material Adverse Effect.
1.39 Reports to Members, Creditors and Governmental Bodies.
1.39.1 Promptly upon becoming available, copies of all regular and periodic
reports sent by any Borrower or Guarantor to any of its creditors,
and all registration statements and prospectuses filed by Guarantor
with any securities exchange or with the Securities and Exchange
Commission or any Governmental Body succeeding to any of its
functions, and of all statements generally made available by a
Borrower or Guarantor concerning material developments in the
business of such Borrower or Guarantor.
1.39.2 Promptly upon becoming available, copies of any periodic or special
reports filed by a Borrower or Guarantor with any Governmental Body
or Person, if such reports indicate any material change in the
business, operations, affairs or condition of such Borrower or
Guarantor, or if copies thereof are requested by Lender, and copies
of any material notices and other communications from any
Governmental Body or Person which specifically relate to a Borrower
or Guarantor.
1.40 ERISA Notices and Requests.
1.40.1 With reasonable promptness, and in any event within 30 days after
occurrence of any of the following, notice and/or copies of: (i) the
establishment of any new Employee Benefit Plan, Pension Plan or
Multiemployer Plan; (ii) the commencement of contributions to any
Employee Benefit Plan, Pension Plan or Multiemployer Plan to which a
Borrower or any of its ERISA Affiliates was not previously
contributing or any increase in the benefits of any existing
Employee Benefit Plan, Pension Plan or Multiemployer Plan; (iii) each
funding waiver request filed with respect to any Employee Benefit
Plan and all communications received or sent by a Borrower or any
ERISA Affiliate with respect to such request; and (iv) the failure
of a Borrower or any of its ERISA Affiliates to make a required
installment or payment under Section 302 of ERISA or Section 412 of
the Code by the due date.
1.40.2 Promptly and in any event within 10 days of becoming aware of the
occurrence of or forthcoming occurrence of any (i) Termination Event
or (ii) "prohibited transaction," as such term is defined in Section
406 of ERISA or Section 4975 of the Code, in connection with any
Pension Plan or any trust created thereunder, a notice specifying the
nature thereof, what action Borrower or Guarantor has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto.
1.40.3 With reasonable promptness but in any event within 10 days after the
occurrence of any of the following, copies of: (i) any favorable or
unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan under Section
401 (a) of the Code; (ii) all notices received by a Borrower or any
ERISA Affiliate of the PBGC's intent to terminate any Pension Plan
or to have a trustee appointed to administer any Pension Plan; (iii)
each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) filed by a Borrower or any ERISA Affiliate with the
Internal Revenue Service with respect to each Pension Plan; and (iv)
all notices received by Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA; and written
notice within two Business Days of Borrower's or any ERISA
Affiliate's filing of or intention to file a notice of intent to
terminate any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA.
1.41 Other Information.
1.41.1 Immediate notice of any change in the location of any Property of any
Borrower or Guarantor which is material to or necessary for the
continued operation of Borrower's business, any change in the name of
a Borrower, any sale or purchase of Property outside the regular
course of business of a Borrower, any change in the residence of any
Personal Guarantor and any change in the business or financial
affairs of Borrower, which change could have a Material Adverse
Effect.
1.41.2 Promptly upon request therefor, such other information and reports
relating to the past, present or future financial condition,
operations, plans and projections of Borrowers or Guarantor as Lender
reasonably may request from time to time.
Reports to Governmental Bodies and Other Persons.
Timely file all material reports, applications, documents,
instruments and information required to be filed pursuant to all rules and
regulations of any Governmental Body or other Person having jurisdiction over
the operation of the business of a Borrower or Guarantor, including, but not
limited to, such of the Loan Instruments as are required to be filed with any
such Governmental Body or other Person pursuant to applicable rules and
regulations promulgated by such Governmental Body or other Person.
Maintenance of Licenses and Other Agreements.
Maintain in full force and effect at all times, and apply in a timely
manner for renewal of, all licenses, trademarks, trade names and agreements
necessary for the operation of their business, the loss of any of which could
have a Material Adverse Effect.
Insurance.
1.42 Maintenance of Insurance.
Maintain in full force and effect Business Insurance
as may be required by law or by the Loan Instruments and as
may be customarily maintained by a similarly situated
business, all of which shall be written by insurers and in
amounts and forms satisfactory to Lender. Lender shall be
named as an additional insured on each policy of liability
insurance. Each policy of casualty insurance shall contain a
standard "Lender loss payable" endorsement in favor of Lender.
1.43 Claims and Proceeds.
Each Borrower and Guarantor hereby direct all
insurers under all policies of Business Insurance to pay all
proceeds payable thereunder directly to Lender and each
Borrower and Guarantor hereby authorize Lender to collect all
such proceeds. Each Borrower and Guarantor irrevocably appoint
Lender (and all officers, employees of Lender), as such
Borrower and Guarantor's true and lawful attorney and agent in
fact for the purpose of and with power to make, settle and
adjust claims under such policies of insurance, endorse the
name of such Borrower or Guarantor on any check, draft,
instrument or other item of payment for the proceeds of such
policies of insurance, and to make all determinations and
decisions with respect to such policies of insurance.
Borrowers and Guarantor acknowledge that such appointment as
attorney and agent in fact is a power, coupled with an
interest, and therefore is irrevocable. Borrowers and
Guarantor shall promptly notify Lender of any loss, damage,
destruction or other casualty to the Collateral. The insurance
proceeds received on account of any loss, damage, destruction
or other casualty at the option of Lender may be (i) applied
to the payment of Borrowers' Obligations in the following
order of priority: (A) first, to the payment of any and all
sums which then are due and payable pursuant to the terms of
the Loan Instruments, other than the Principal Balance and
interest accrued thereon, (B) next, to accrued and unpaid
interest on the Principal Balance, and (C) then, to the
Principal Balance, or (ii) held by Lender and applied to pay
for the cost of repair or replacement of the Property which
was the subject of such loss, damage, destruction or other
casualty, in which event such proceeds shall be made available
in the manner and under such conditions as Lender reasonably
may require. In the event such proceeds are to be applied to
the repair or replacement of Property, the Property shall be
repaired or replaced so as to be of at least equal value and
substantially the same character as prior to such loss,
damage, destruction or other casualty.
Future Leases.
Deliver to Lender, concurrently with the execution by any Borrower or
Guarantor, as lessee, of any lease pertaining to real property, (i) an executed
copy thereof, and (ii) a Landlord's Consent from the lessor under such lease.
Environmental Matters.
At all times comply with, and be responsible for, their respective
obligations under all Environmental Laws applicable to the Real Property and
Leasehold Property and any other Property owned by any Borrower or Guarantor or
used by Borrower in the operation of Borrowers' business. At their sole cost
and expense, Borrowers and Guarantor shall (i) comply in all respects with (A)
any notice of any violation or administrative or judicial complaint or order
having been filed against Borrower or Guarantor, any portion of any Real
Property or Leasehold Property or any other Property owned by any Borrowers or
Guarantor or used by any Borrower or Guarantor in the operation of its business
alleging violations of any law, ordinance and/or regulation requiring any of
Borrowers or Guarantor to take any action in connection with the release,
transportation and/or clean-up of any Hazardous Materials, and (B) any notice
from any Governmental Body or any other Person alleging that any Borrower or
Guarantor is or may be liable for costs associated with a response or clean-up
of any Hazardous Materials or any damages resulting from such release or
transportation, or (ii) diligently contest in good faith by appropriate
proceedings any demands set forth in such notices, provided (A) reserves in an
amount reasonably satisfactory to Lender to pay the costs associated with
complying with any such notice are established by any Borrower or Guarantor and
(B) no Lien would or will attach to the Property which is the subject of any
such notice as a result of any compliance by Borrowers or Guarantor which is
delayed during any such contest. Promptly upon receipt of any notice described
in the foregoing clause (i), a Borrower or Guarantor shall deliver to Lender a
copy thereof. At the request of Lender, a Borrower or Guarantor shall deliver
to Lender an environmental audit with respect to any real estate acquired or
leased by such Borrower or Guarantor.
Compliance with Laws.
Comply with all federal, state and local laws, ordinances,
requirements and regulations and all judgments, orders, injunctions and decrees
applicable to any Borrower or Guarantor and their operations, the failure to
comply with which would reasonably be expected to have a Material Adverse
Effect.
Taxes and Claims.
Pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any Property
belonging to it, prior to the date on which penalties attach thereto, and all
lawful claims which, if unpaid, might become a Lien (other than a Permitted
Lien) upon the Property of any Borrower or Guarantor, provided that neither
Borrowers nor Guarantor shall be required by this Section 6.10 to pay any such
amount if the same is being contested diligently and in good faith by
appropriate proceedings and as to which Borrowers and Guarantor have set aside
reserves on their books reasonably satisfactory to Lender.
Maintenance of Properties.
Maintain all of its Properties necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted.
Governmental Approvals.
Upon the exercise by Lender of any power, right or privilege pursuant
to the provisions of any of the Loan Instruments requiring any consent,
approval or authorization of any Governmental Body, promptly execute and cause
the execution of all applications, certificates, instruments and other
documents that Lender may be required to obtain for such consent, approval or
authorization.
Payment of Indebtedness.
Except as to matters being contested in good faith and by appropriate
proceedings, promptly pay when due, or in conformance with customary trade
terms, all of its Indebtedness.
Maintenance of Accounts.
Commencing on the Closing Date, maintain its primary disbursement
account and all of its collection accounts (including all such accounts for its
affiliates) with Lender under Lender's customary terms and conditions. No
Borrower shall be required to maintain a compensating balance in its
disbursement accounts other than balances sufficient to cover disbursement
activities and to pay service charges.
7.
NEGATIVE COVENANTS
Until all of Borrowers' Obligations are paid and performed in full,
no Borrower or Guarantor shall:
Borrowing.
Create, incur, assume or suffer to exist any liability for
Indebtedness for Borrowed Money except (i) Borrowers' Obligations; (ii)
Permitted Senior Indebtedness; and (iii) Permitted Subordinated Indebtedness.
Liens.
Create, incur, assume or suffer to exist any Lien upon any of its
Property, including Guarantor's capital stock ownership of Borrower, whether
now owned or hereafter acquired, except Permitted Liens.
Merger and Acquisition.
Consolidate with or merge with or into any Person, or acquire
directly or indirectly all or substantially all of the capital stock, equity
interests or Property of any Person without Lender's prior written consent.
Contingent Liabilities.
Assume, guarantee, endorse, contingently agree to purchase, become
liable in respect of any letter of credit, or otherwise become liable upon the
obligation of any Person, except for liabilities arising from the endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business.
Dividends and Distributions.
Make any dividends, distributions or other expenditures with respect
to any Borrower's or Guarantor's capital stock ownership interests or apply
any of its Property to the purchase, redemption or other retirement of, or set
apart any sum for the payment of, or make any other distribution by reduction
of capital or otherwise in respect of, any Borrower's or Guarantor's capital
stock ownership interests, except that up to $50,000 in cash may be paid to
shareholders of Guarantor in connection with a reverse stock split.
Capital Expenditures.
In any year, make or incur, any Capital Expenditures, other than
Capital Expenditures not in excess of the sum of $150,000 without Lender's
prior written consent.
Payments of Indebtedness for Borrowed Money.
Make any voluntary or optional prepayment of any Indebtedness for
Borrowed Money other than Borrowers' Obligations and other than interest
payments due to the holders of the Permitted Subordinated Indebtedness. Such
interest payments with respect to the Permitted Subordinated Indebtedness may
only be made upon regular terms and conditions and only so long as no Event of
Default exists or has been declared.
Investments, Revolving Loans.
At any time purchase or otherwise acquire, hold or invest in the
capital stock of, or any other interest in, any Person, or make any loan or
advance to, or enter into any arrangement for the purpose of providing funds
or credit to, or make any other investment, whether by way of capital
contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate, except (i) investments in direct obligations of, or
instruments unconditionally guaranteed by, the United States of America or in
certificates of deposit issued by a Qualified Depository, (ii) investments in
commercial or finance paper which, at the time of investment, is rated "A" or
better by Moody's Investors Service, Inc., or Standard & Poor's Corporation,
respectively, or at the equivalent rate by any of their respective successors,
(iii) any interests in any money market account maintained, at the time of
investment, with a Qualified Depository, the investments of which, at the time
of investment, are restricted to the types specified in clause (i) above, and
(iv)advances to sales agents or other third parties not exceeding $200,000 in
the aggregate to all such parties at any point in time. All investments
permitted pursuant to clauses (i), (ii), (iii) and (iv) of this Section 7.8
shall have a maturity date not exceeding one year.
Fundamental Business Changes.
Materially change the nature of its business.
Facility Sites.
Change the locations of its chief executive office or other Property
used in the operation of its business unless (i) Lender shall have received at
least 30 days' prior written notice thereof, (ii) Lender shall have received
satisfactory evidence that such change could not reasonably be expected to
have a Material Adverse Effect and (iii) each Borrower and Guarantor shall
have executed and delivered to Lender any documents Lender reasonably may
require in order to maintain the validity and priority of the Security
Interests.
Sale or Transfer of Assets.
Sell, lease, assign, transfer or otherwise dispose of any Property
(other than in the ordinary course of business), including but not limited to
Guarantor's stock ownership interests in Borrower, except for the sale or
disposition of (A) Property which is not material to or necessary for the
continued operation of its business and (B) obsolete or unusable items of
equipment which promptly are replaced with new items of equipment of like
function and comparable value to the unusable items of equipment when the same
were new or not obsolete or unusable, provided such replacement items of
equipment shall become subject to the Security Interests.
Amendment of Certain Agreements.
Amend, modify or waive any material term or provision of its articles
of organization, the Leases or any of the instruments, or agreements relating
to any of the Permitted Senior Indebtedness or Permitted Subordinate
Indebtedness.
Acquisition of Additional Properties.
Acquire any additional Property except such Property as is necessary
to or useful in the operation of its business, provided such acquisitions shall
be subject to the conditions and limitations set forth in this Loan Agreement.
Transactions with Affiliates.
Sell, lease, assign, transfer or otherwise dispose of any Property to
any of its Affiliates, lease Property, render or receive services or purchase
assets from any such Affiliate, or otherwise enter into any contractual
relationship with any such Affiliate, except in the ordinary course of business
on terms no less favorable to any Borrower or Guarantor than would be
obtainable on an arm's-length basis by such Borrower or Guarantor from a Person
who is not an Affiliate of such Borrower or Guarantor.
Compliance with ERISA.
1.43.1 Permit the occurrence of any Termination Event which would result in
a liability to any Borrower or any ERISA Affiliate in excess of
$50,000;
1.43.2 Permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities by more than
$50,000;
1.43.3 Permit any accumulated funding deficiency in excess of $50,000
(as defined in Section 302 of ERISA and Section 412 of the Code)
with respect to any Pension Plan, whether or not waived;
1.43.4 Fail to make any contribution or payment to any Multiemployer Plan
which any Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or
any law pertaining thereto which results in or is likely to result in
a liability in excess of $50,000;
1.43.5 Engage, or permit any ERISA Affiliate to engage, in any "prohibited
transaction" as such term is defined in Section 406 of ERISA or
Section 4975 of the Code for which a civil penalty pursuant to
Section 502(i) of ERISA or a tax pursuant to Section 4975 of the
Code in excess of $50,000 is imposed;
1.43.6 Permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee
Benefit Plan which establishment or amendment could result in
liability to any Borrower or any ERISA Affiliate or increase the
obligation of any Borrower or any ERISA Affiliate to a
Multiemployer Plan which liability or increase, individually or
together with all similar liabilities and increases, is material
to any Borrower or any ERISA Affiliate; or
1.43.7 Fail, or permit any ERISA Affiliate to fail, to establish, maintain
and operate each Employee Benefit Plan in compliance in all material
respects with ERISA, the Code and all other applicable laws and
regulations and interpretations thereof.
Unsubordinated Indebtedness to Tangible Net Worth Ratio.
Permit the ratio of Unsubordinated Indebtedness to the sum of
Tangible Net Worth plus Subordinated Indebtedness to exceed 4 to 1.
Net Income for 1999.
Fail to report Net Income for Guarantor and its subsidiaries (on a
consolidated basis)of less than $200,000 for the year ending December
31, 1999.
Minimum Net Worth.
Fail to Maintain Tangible Net Worth plus Permitted Subordinated
Indebtedness of at least $1,000,000.
Minimum Debt Service Ratio.
Fail to maintain a minimum debt service ratio for Grantor and its
subsidaries (on a consolidated basis)of 1.25:1 based on a rolling four (4)
quarter average, to be calculated as follows: the sum of Net Income before
taxes plus depreciation and amortization expense plus interest expense
minus taxes, dividends and distributions divided by the sum of the current
maturity of long term debt plus interest expense. For purposes of testing
the minimum debt service ratio, interest expense in the denominator shall
be defined as interest expense on Unsubordinated Indebtedness plus
interest paid on Subordinated Indebtedness.
Testing of Financial Covenants.
All of the financial covenants set forth in paragraphs 0 through 0
shall be fully satisfied by Guarantor and Borrowers on a quarterly reporting
basis.
8.
DEFAULT AND REMEDIES
Events of Default.
The occurrence of any of the following shall constitute an "Event of
Default" under the Loan Instruments:
1.44 Default in Payment.
If any Borrowers shall fail to pay all or any portion of Borrowers'
Obligations when the same become due and payable.
1.45 Breach of Covenants.
1.45.1 If any Borrower or Guarantor shall fail to observe or perform any
covenant or agreement made by Borrower contained in Section 6.1, 6.2,
6.6, or in Article VII;
1.45.2 If any Borrower or Guarantor shall fail to observe or perform any
covenant or agreement contained in Section 6.3, and such failure
shall continue for 10 days after the occurrence of such Event of
Default; or
1.45.3 If Borrower or Guarantor shall fail to observe or perform any covenant
or agreement (other than those referred to in subparagraph (a) or (b)
above or specifically addressed elsewhere in this Section 8.1) in any
of the Loan Instruments, and such failure shall continue for a period
of 30 days after the occurrence of such Event of Default.
1.46 Breach of Warranty.
If any representation or warranty made by or on
behalf of any Borrower or Guarantor in or pursuant to any of
the Loan Instruments or in any instrument or document
furnished in compliance with the Loan Instruments shall prove
to be false or misleading in any material respect.
1.47 Default Under Other Indebtedness for Borrowed Money.
If any Borrower or Guarantor at any time shall in
default (as principal or guarantor or other surety) in the
payment of any principal of or premium or interest on any
Indebtedness for Borrowed Money (other than Borrower's
Obligations or the Permitted Subordinated Indebtedness) beyond
the grace period, if any, applicable thereto.
1.48 Bankruptcy.
1.48.1 If any Borrower, Guarantor or any Personal Guarantor shall (i)
generally not be paying its debts as they become due, (ii) file, or
consent, by answer or otherwise, to the filing against it of a
petition for relief or reorganization or arrangement or any other
petition in bankruptcy or insolvency under the laws of any
jurisdiction, (iii) make an assignment for the benefit of creditors,
(iv) consent to the appointment of a custodian, receiver, trustee
or other officer with similar powers for it or for any substantial
part of its Property, or (v) be adjudicated insolvent.
1.48.2 If any Governmental Body of competent jurisdiction shall enter an
order appointing, without consent of any Borrower or Guarantor, a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its Property,
or if an order for relief shall be entered in any case or proceeding
for liquidation or reorganization or otherwise to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of any Borrower or Guarantor or
if any petition for any such relief shall be filed against it and such
petition shall not be dismissed or stayed within 60 days.
1.49 Judgments.
If there shall exist final judgments or awards
against any Borrower which shall have been outstanding for a
period of 30 days or more from the date of the entry thereof
and shall not have been discharged in full or stayed pending
appeal, if the aggregate amount of all such judgments and
awards not covered by insurance exceeds $10,000.
1.50 Impairment of Licenses; Other Agreements.
If (i) any Governmental Body shall revoke, terminate,
suspend or adversely modify any license of any Borrower, the
adverse modification or non-continuation of which could have a
Material Adverse Effect, or (ii) there shall exist any
violation or default in the performance of, or a material
failure to comply with, any agreement, or condition or term of
any license, which violation, default or failure has a
Material Adverse Effect, or (iii) any agreement which is
necessary to the operation of the business of any Borrower
shall be revoked or terminated and not replaced by a
substitute reasonably acceptable to Lender within 30 days
after the date of such revocation or termination, and such
revocation or termination and non-replacement could have a
Material Adverse Effect.
1.51 Collateral.
If any material portion of the Collateral shall be
seized or taken by a Governmental Body or Person, or any
Borrower or Guarantor shall fail to maintain or cause to be
maintained the Security Interests and priority of the Loan
Instruments as against any Person, or the title and rights of
any Borrower or Guarantor to any material portion of the
Collateral shall have become the subject matter of litigation
which could reasonably be expected to result in impairment or
loss of the security provided by the Loan Instruments.
1.52 Plans.
If an event or condition specified in subsection 1.40
hereof shall occur or exist with respect to any Pension Plan
or Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions,
any Borrower or any ERISA Affiliate shall incur, or in the
opinion of Lender be reasonably likely to incur, a liability
to a Pension Plan or Multiemployer Plan or the PBGC (or any of
them) which, in the reasonable judgment of Lender, would have
a Material Adverse Effect.
1.53 Change in Control; Sale of Borrower.
If, absent consent of the Lender, at least (i) 22% of
the Guarantor's common stock and 100% of its preferred Class A
stock is not owned by the Personal Guarantors or if either of
the Personal Guarantors dies or resigns from his position as
officer or director of any Borrower or Guarantor or (ii)
Guarantor ceases to own all of the stock of Borrower or any of
such stock is pledged, mortgaged, hypothecated or assigned to
anyone other than Lender, provided that, so long as the other
one of the Personal Guarantors survives, the death of one of
the Personal Guarantors shall not become an Event of Default
until the 60th day after such event, it being understood that
the death of the last to survive of the Personal Guarantors
shall be an immediate Event of Default.
1.54 Material Adverse Effect.
If, in Lender's reasonable opinion, the occurrence
and continuance of any event or condition, financial or
otherwise, could reasonably be likely to have a Material
Adverse Effect.
1.55 Payments on Indebtness.
If Guarantor or any of its subsidiaries, including
without limitation TC Services, Inc. or any of Borrowers,
shall (i) make any principal payments with respect to any
Indebtedness for Borrowed Money other than Permitted Senior
Indebtedness or (ii) make any interest payments or agree to
pay interest to the Personal Guarantors or either of them or
to anyone related o them or any entity in which either of
Personal Guarantors or anyone related to them have an
interest, other than with respect to Permitted Senior
Indebtedness, at interest rates higher than the interest rates
provided for with respect to the Permitted Subordinated
Indebtedness as of the date of this Agreement.
1.56 Affiliate Dividends.
If any subsidiary of Guarantor (other than a Borrower
as permitted in Section 7.5 above) shall make any distribution
or pay any dividend or the like to any of their respective
shareholders .
Acceleration of Borrower's Obligations.
Upon the occurrence of:
1.56.1 any Event of Default described in clauses (ii), (iii), (iv) and (v)
of subsection 8.1.5(a) or in 8.1.5(b), the Revolving Loan Commitment
shall automatically terminate and all of Borrowers' Obligations at
that time outstanding automatically shall mature and become due; and
1.56.2 any other Event of Default, Lender, at any time, at its option,
without further notice or demand, may declare all of Borrowers'
Obligations due and payable, whereupon the Revolving Loan Commitment
shall automatically terminate and all of Borrowers' Obligations
immediately shall mature and become due and payable, all without
presentment, demand, protest or notice (other than notice of the
declaration referred to in clause (b) above), all of which hereby are
waived.
Remedies on Default.
If Borrowers' Obligations have been accelerated pursuant to
Section 8.2, Lender may:
1.57 Enforcement of Security Interests.
Enforce its rights and remedies under the Loan
Instruments in accordance with their respective terms; and/or
1.58 Other Remedies.
Enforce any of the rights or remedies accorded to
Lender at equity or law, by virtue of statute or otherwise.
Application of Funds.
Any funds received by Lender pursuant to the exercise of any rights
accorded to Lender pursuant to, or by the operation of any of the terms of, any
of the Loan Instruments, including, without limitation, insurance proceeds,
condemnation proceeds or proceeds from the sale of Collateral, hall be applied
to Borrowers' Obligations in the following order of priority:
1.59 Expenses.
First to the payment of (i) all fees and expenses
actually incurred, including, without limitation, court costs,
fees of appraisers, title charges, costs of maintaining and
preserving the Collateral, costs of sale, and all other costs
incurred by Lender in exercising any rights accorded to such
Persons pursuant to the Loan Instruments or by applicable law,
including, without limitation, reasonable attorney's fees, and
(ii) all Liens superior to the Liens of Lender except such
superior Liens subject to which any sale of the Collateral may
have been made.
1.60 Borrowers' Obligations.
Next, to Lender, in such order as Lender may
determine, to repay the Borrowers' Obligation.
1.61 Surplus.
Any surplus, to the Person or Persons entitled
thereto.
Performance of Borrower's Obligations.
If any Borrower or Guarantor fails to (i) maintain in force and pay for
any insurance policy or bond which any Borrower or Guarantor is required to
provide pursuant to any of the Loan Instruments, (ii) keep the Collateral free
from all Liens except for Permitted Liens, (iii) pay when due all taxes, levies
and assessments on or in respect of the Collateral, except as otherwise
permitted pursuant to the terms hereof, (iv) make all payments and perform all
acts on the part of any Borrower or Guarantor to be paid or performed in the
manner required by the terms hereof and by the terms of the other Loan
Instruments with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral, (v) keep fully and perform promptly
any other of the obligations of any Borrower or Guarantor hereunder or under
any of the other Loan Instruments, and (vi) keep fully and perform promptly the
obligations of any Borrower with respect to any issue of Indebtedness for
Borrowed Money secured by a Permitted Prior Lien, then Lender may (but shall
not be required to) procure and pay for such insurance policy or bond, place
such Collateral in good repair and operating condition, pay, contest or settle
such Liens or taxes or any judgments based thereon or otherwise make good any
other aforesaid failure of such Borrower or Guarantor. Borrowers shall
reimburse Lender immediately upon demand for all sums paid or advanced on
behalf of any Borrower for any such purpose, together with costs and expenses
(including reasonable attorney's fees) paid or incurred by Lender in connection
therewith and interest on all sums advanced from the date of advancement until
repaid to Lender shall be calculated at the Default Rate. All such sums
advanced by Lender, with interest thereon, immediately upon advancement
thereof, shall be deemed to be part of Borrowers' Obligations.
9.
CLOSING
The Closing Date shall be such date as the parties shall determine,
and the Closing shall take place on such date, provided all conditions for the
Closing as set forth in this Loan Agreement have been satisfied or otherwise
waived by Lender. Unless the Closing occurs on or before April ___, 2000, this
Loan Agreement shall terminate and be of no further force or effect and, except
for any obligation of Borrowers to Lender pursuant to Article X, none of the
parties hereto shall have any further obligation to any other party.
10.
EXPENSES AND INDEMNITY
Attorney's Fees and Other Fees and Expenses.
Whether or not any of the transactions contemplated by this Loan
Agreement shall be consummated, Borrowers agree, jointly and severally to pay
to Lender on demand, except as otherwise expressly provided hereunder, all
expenses incurred by Lender in connection with the transactions contemplated
hereby (including, without limitation, any appraisal fees, environmental audit
fees and title and recording charges) and in connection with any amendments,
modifications or waivers (whether or not the same become effective) under or in
respect of any of the Loan Instruments, including, without limitation:
1.62 Fees and Expenses for Preparation of Loan Instruments.
All expenses, disbursements (including, without
limitation, charges for required mortgagee's title insurance,
lien searches, reproduction of documents, long distance
telephone calls and overnight express carriers) and reasonable
attorney's fees, actually incurred of special counsel and
other counsel retained by Lender in connection with (i) the
preparation and negotiation of the Loan Instruments or any
amendments, modifications or waivers hereto or thereto and
(ii) the administration of the Revolving Loan, except for
one-half of the Lender's legal fees relating to the initial
documentation of the Loan and Lender's due diligence review,
which portion of such legal fees shall be borne by Lender.
1.63 Fees and Expenses in Enforcementof Rights or Defense of Loan
Instruments.
Any expenses or other costs, including reasonable
attorney's fees actually incurred by Lender, in connection
with the enforcement or collection against any Borrower or
Guarantor of any provision of any of the Loan Instruments, and
in connection with or arising out of any litigation,
investigation or proceeding instituted by any Governmental
Body or any other Person with respect to any of the Loan
Instruments, whether or not suit is instituted, including, but
not limited to, such costs or expenses arising from the
enforcement or collection against any of Borrowers or
Guarantor of any provision of any of the Loan Instruments, in
any workout or restructuring or in any state or federal
bankruptcy or reorganization proceeding, except that no
payment shall be due with respect to the expenses, costs and
fees attendant to litigation if a judgment is entered in favor
of Borrowers or Guarantor against Lender.
Indemnity.
Borrowers and Guarantor agree, jointly and severally, to indemnify and
save Lender harmless of and from the following:
1.64 Brokerage Fees.
The fees, if any, of brokers and finders engaged by
any Borrower or Guarantor.
1.65 General.
Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred
by Lender in investigating, preparing for, defending against,
providing evidence, producing documents or taking other action
in respect of any commenced or threatened litigation,
administrative proceeding, suit instituted by any Person or
investigation under any law, including any federal securities
law, the Bankruptcy Code, any relevant state corporate statute
or any other securities law, bankruptcy law or law affecting
creditors generally of any jurisdiction, or any regulation
pertaining to any of the foregoing, or at common law or
otherwise, relating, directly or indirectly, to the
transactions contemplated by or referred to in, or any other
matter related to, the Loan Instruments, whether or not Lender
is a party to such litigation, proceeding or suit, or is
subject to such investigation, except to the extent of any
gross negligence or willful misconduct of Lender.
1.66 Operation of Collateral; Joint Venturers.
Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred
in connection with the ownership, operation or maintenance of
the Collateral, the construction of Lender and Borrowers or
Guarantor as having the relationship of joint venturers or
partners or the determination that Lender has acted as agent
for any Borrower.
1.67 Environmental Indemnity.
Any and all claims, losses, damages, response costs,
clean-up costs and expenses suffered and/or incurred at any
time by Lender arising out of or in any way relating to the
existence at any time of any Hazardous Materials in, on,
under, at transported to or from, or used in the construction
and/or renovation of, any of the Leasehold Property, or
otherwise with respect to any Environmental Law, and/or the
failure of any Obligor to perform its obligations and
covenants hereunder with respect to environmental matters,
including, but not limited to: (i) claims of any Persons for
damages, penalties, response costs, clean-up costs, injunctive
or other relief, (ii) costs of removal and restoration,
including fees of attorneys and experts, and costs of
reporting the existence of Hazardous Materials to any
Governmental Body, and (iii) any expenses or obligations,
including attorney's fees and expert witness fees, incurred
at, before and after any trial or other proceeding before any
Governmental Body or appeal therefrom whether or not taxable
as costs, including, without limitation, witness fees,
deposition costs, copying and telephone charges and other
expenses, all of which shall be paid by Borrower to Lender
when incurred by Lender.
11.
MISCELLANEOUS
Notices.
All notices and communications under this Loan Agreement shall be in
writing and shall be (i) delivered in person, (ii) sent by telecopy, or (iii)
mailed, postage prepaid, either by registered or certified mail, return receipt
requested, or by overnight express carrier, addressed in each case as follows:
To Lender:
......... Firstar Bank N.A.
......... 30 N. Michigan Avenue
......... Chicago, IL 60602
......... Attn: Craig B. Collinson
......... Senior Vice President
......... Telecopy: (312) 697-1397
Copy to:
......... Gould & Ratner
......... 222 N. LaSalle Street, 8th Floor
......... Chicago, IL 60601-1086
......... Attn: Christopher J. Horvay, Esq.
......... Telecopy: (312) 236-3241
To Borrowers and Guarantor:
......... US 1 Industries, Inc.
......... 1000 Colfax Street
......... Gary, IN 46406
......... Attn: Michael E. Kibler and
Harold Antonson
......... Telecopy: (219) 977-5227
Copy to:
......... Troutman Sanders L L P
......... 600 Peachtree Street, N.E.
......... Atlanta, GA 30342
......... Attn: W. Brinkley Dickerson, Jr.,
Esq.
......... Telephone No.: (404) 885-3822
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 11. 1 shall be deemed
received (i) if personally delivered, then on the Business Day of delivery,
(ii) if sent by telecopy before 2:00 p.m. Chicago time, on the day sent if a
Business Day or if such day is not a Business Day or if sent after 2:00 p.m.
Chicago time, then on the next Business Day, (iii) if sent by overnight,
express carrier, on the next Business Day immediately following the day sent,
or (iv) if sent by registered or certified mail, on the earlier of the fifth
Business Day following the day sent or when actually received. Any notice by
telecopy shall be followed by delivery on the next Business Day by overnight,
express carrier or by hand.
Survival of Loan Agreement; Indemnities.
All covenants, agreements, representations and warranties made in this
Loan Agreement and in the certificates delivered pursuant hereto shall survive
the making by Lender of the Revolving Loan and the execution and delivery to
Lender of the Revolving Note and of all other Loan Instruments, and shall
continue in full force and effect so long as any of Borrowers' Obligations
remain outstanding, unperformed or unpaid. Notwithstanding the repayment of all
amounts due under the Loan Instruments, the cancellation of the Revolving Note
and the release and/or cancellation of any and all of the Loan Instruments or
the foreclosure of any Liens on the Collateral, the obligations of Borrower and
Guarantor to indemnify Lender with respect to the expenses, damages, losses,
costs and liabilities described in Section 10.2 shall survive until all
applicable statute of limitations periods with respect to actions which may be
brought against Lender has run.
Further Assurance.
From time to time, Borrowers and Guarantor shall execute and deliver to
Lender such additional documents as Lender reasonably may require to carry out
the purposes of the Loan Instruments and to protect Lender's rights thereunder,
and not take any action inconsistent with the purposes of the Loan Instruments.
Taxes and Fees.
Should any tax (other than taxes based upon the net income of Lender),
recording or filing fees become payable in respect of any of the Loan
Instruments, or any amendment, modification or supplement thereof, Borrowers
jointly and severally, agree to pay the same on demand, together with any
interest or penalties thereon attributable to any delay by any Borrower in
meeting Lender's demand, and agrees to hold Lender harmless with respect
thereto.
Severability.
In the event that any provision of this Loan Agreement is deemed to be
invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court or any other Governmental Body, as
applicable, the validity, legality and enforceability of the remaining terms
and provisions of this Loan Agreement shall not in any way be affected or
impaired thereby, all of which shall remain in fall force and effect, and the
affected term or provision shall be modified to the minimum extent permitted by
law so as to achieve most fully the intention of this Loan Agreement.
Waiver.
No delay on the part of Lender in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege hereunder shall preclude other or
further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
Modification of Loan Instruments.
No modification or waiver of any provision of any of the Loan
Instruments shall be effective unless the same shall be in writing and signed
by Lender. Any such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Borrower or Guarantor in any case shall entitle any Borrower or Guarantor to
any other or further notice or demand in the same, similar or other
circumstances.
Captions.
The headings in this Loan Agreement are for purposes of reference only
and shall not limit or otherwise affect the meaning hereof.
Successors and Assigns.
This Loan Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided that no Borrower may assign any of its rights or delegate any
of its duties hereunder to any other Person.
Remedies Cumulative.
All rights and remedies of Lender pursuant to this Loan Agreement, any
other Loan Instruments or otherwise, shall be cumulative and non-exclusive, and
may be exercised singularly or concurrently. Lender shall not be required to
prosecute collection, enforcement or other remedies against any Person before
proceeding against any Borrower or Guarantor to enforce or resort to any
security, liens, collateral or other rights of Lender. One or more successive
actions may be brought against any Borrower and/or any other Person, either in
the same action or in separate actions, as often as Lender deems advisable,
until all of Borrowers' Obligations are paid and performed in full.
Entire Agreement; Conflict.
This Loan Agreement and the other Loan Instruments executed prior or
pursuant hereto constitute the entire agreement among the parties hereto with
respect to the transactions contemplated hereby or thereby and supersede any
prior agreements, whether written or oral, relating to the subject matter
hereof In the event of a conflict between the terms and conditions set forth
herein and the terms and conditions set forth in any other Loan Instrument, the
terms and conditions set forth herein shall govern.
Applicable Law.
The Loan Instruments shall be construed in accordance with and governed
by the laws and decisions of the State of Illinois, without regard to conflict
of laws principles. For purposes of this Section 11. 12, the Loan Instruments
shall be deemed to be performed and made in the State of Illinois.
JURISDICTION AND VENUE.
BORROWERS AND GUARANTOR HEREBY AGREE THAT ALL ACTIONS OR PROCEEDINGS
INITIATED BY ANY BORROWER AND GUARANTOR AND ARISING DIRECTLY OR INDIRECTLY OUT
OF THE LOAN INSTRUMENTS SHALL BE LITIGATED IN EITHER THE CIRCUIT COURT OF COOK
COUNTY, ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS, OR IF LENDER INITIATES SUCH ACTION, IN ADDITION TO THE
FOREGOING COURTS, ANY COURT IN WHICH LENDER SHALL INITIATE OR TO WHICH LENDER
SHALL REMOVE SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION. BORROWERS
AND GUARANTOR HEREBY EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN OR REMOVED BY
LENDER TO ANY OF SUCH COURTS, AND HEREBY AGREE THAT PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN MAY BE SERVED
IN THE MANNER PROVIDED FOR NOTICES HEREIN, AND AGREE THAT SERVICE OF SUCH
SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO BORROWERS OR GUARANTOR, AS THE CASE MAY BE. AT THE
ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO SECTION 11.1. BORROWERS AND
GUARANTOR WAIVE ANY CLAIM THAT EITHER THE CIRCUIT COURT OF COOK COUNTY,
ILLINOIS OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE.
TO THE EXTENT PROVIDED BY LAW, SHOULD ANY BORROWER OR GUARANTOR AFTER BEING SO
SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS
SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING
THEREOF, ANY SUCH BORROWER OR GUARANTOR SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST SUCH BORROWER AND/OR
GUARANTOR AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR
PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWERS AND GUARANTOR SET FORTH IN
THIS SECTION 11.13 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY LENDER OF
ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING BY LENDER OF ANY ACTION
TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND BORROWERS AND
GUARANTOR HEREBY WAIVE THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR
ACTION.
WAIVER OF RIGHT TO JURY TRIAL.
LENDER, BORROWERS AND GUARANTOR ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN INSTRUMENTS OR WITH RESPECT
TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON DIFFICULT AND
COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT
OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE SITTING WITHOUT A JURY.
Time of Essence.
Time is of the essence for the performance by Borrowers and Guarantor
of the obligations set forth in this Loan Agreement and the other Loan
Instruments.
Estoppel Certificate.
Within 15 days after Lender requests Borrowers and Guarantor to do so,
Borrowers and Guarantor will execute and deliver to Lender a statement
certifying (i) that this Loan Agreement is in full force and effect and has not
been modified except as described in such statement, (ii) the date to which
interest and principal on the Note has been paid, (iii) the Principal Balance,
(iv) whether or not to its knowledge an Incipient Default or Event of Default
has occurred and is continuing, and, if so, specifying in reasonable detail
each such Incipient Default or Event of Default of which it has knowledge,
v) whether to its knowledge it has any defense, set off or counterclaim to
the payment of the Note in accordance with its terms, and, if so, specifying
each defense, set off or counterclaim of which it has knowledge in reasonable
detail (including where applicable the amount thereof), and (vi)as to any other
matter reasonably requested by Lender.
Consequential Damages.
No party to this Agreement or attorney for such party shall be liable
to any other party to this Agreement for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Borrowers' Obligations.
Counterparts.
This Loan Agreement may be executed by the parties hereto in several
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute one and the same agreement.
No Fiduciary Relationship.
No provision in this Loan Agreement or in any other Loan Instrument,
and no course of dealing among the parties hereto, shall be deemed to create
any fiduciary duty by Lender to Borrower or Guarantor.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Loan Agreement has been executed and
delivered by each of the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
CAROLINA NATIONAL TRANSPORTATION, INC., an Indiana corporation
......... By: _____________________________
......... Name: ___________________________
......... Title: ____________________________
KEYSTONE LINES, a California corporation
......... By: _____________________________
......... Name: ___________________________
......... Title: ____________________________
GULF LINE TRANSPORT, INC., an Indiana corporation
......... By: _____________________________
......... Name: ___________________________
......... Title: ____________________________
FIVE STAR TRANSPORT, INC., an Indiana corporation
......... By: _____________________________
......... Name: ___________________________
......... Title: ____________________________
US 1 INDUSTRIES, INC., an Indiana corporation
......... By: _____________________________
......... Name: ___________________________
......... Title: ____________________________
FIRSTAR BANK N.A., a national banking association
......... By: _____________________________
......... Name: Craig B. Collinson
......... Title: Senior Vice President
LIST OF EXHIBITS TO LOAN AGREEMENT
Exhibit 1.1(A) ......... - Form of Compliance Certificate
Exhibit 2.1.4 ......... - Form of Notice of Borrowing
Schedule 5.4.3 ......... - Facility Sites, Locations of Property,
Books and Records
Schedule 5.4.4 ......... - Leases
Schedule 5.4.7 ......... - Existing Indebtedness
Schedule 5.6 ......... - Financial Statements
Schedule 5.7 ......... - Litigation
Schedule 5.11 ......... - Patents, Trademarks, Franchises and
Agreements
Schedule 5.16 ......... - Permitted Subordinated Indebtedness
Schedule 5.18.1 ......... - Employee Benefit Plans
Schedule 5.19.1 ......... - Collective Bargaining Agreements;
Grievances
EXHIBIT 1.1(A)
COMPLIANCE CERTIFICATE
Reference is made to that certain Loan Agreement dated as of April _,
2000 (as the same may be amended, modified, supplemented or restated from time
to time, the "Loan Agreement"), between Carolina National Transportation, Inc.,
Keystone Lines, Gulf Line Transport, Inc. and Five Star Transport, Inc. and the
undersigned, and Firstar Bank NA, a national banking association. All
capitalized terms used but not elsewhere defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.
Pursuant to the Loan Agreement, the undersigned hereby certifies to
Lender that:
(1) as of _______________, 2000, ________________ is the
[Chief Financial Officer] of each Borrower;
(2) except as set forth below, each Borrower is in full compliance
with all terms and conditions of the Loan Agreement; and
(3) attached hereto as Schedule I is the calculation of the following:
(i) Total Unsubordinated Indebtedness / (
Tangible Net Worth plus Subordinated
Indebtedness);
(ii) Tangible Net Worth plus the amount of
Permitted Subordinated Indebtedness
outstanding;
(iii) Minimum Debt Service Ratio calculated as
provided in Section 7.19 of the Loan
Agreement; and
(iv) Ratio of Total Indebtedness to EBITDA.
Compliance Exceptions (if any):
With respect to any item identified as not being in compliance, the
undersigned has attached and certifies as to the accuracy of statements
specifying the violation, condition, or events which result in such
non-compliance, the nature and status thereof, and the actions which Borrowers
propose to take with respect thereto to bring Borrowers into full compliance
with the Loan Agreement.
The foregoing certifications are made by, in his/her capacity as the
acting Chief Financial Officer of each Borrower, from his/her personal
knowledge, after due inquiry and with full knowledge that Lender will rely
thereon. This Certificate is given pursuant to and in compliance with
subsection 6.3.4 of the Loan Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Compliance
Certificate on this _________ day of ___________ 2000.
US 1 INDUSTRIES, INC.
By: _____________________________
Name: ___________________________
Title: ____________________________
SCHEDULE I
Covenant Calculations
For the quarter beginning on - and ending on
1. Total of Unsubordinated Indebtedness / (Tangible Net Worth plus
Subordinated Indebtedness);
2. Tangible Net Worth plus the amount of Permitted Subordinated
Indebtedness Outstanding;
3. Minimum Debt Service Ratio.
4. Ratio of Indebtedness to EBITDA.
EXHIBIT 2.1.4
FORM OF NOTICE OF BORROWING/DISBURSEMENT REQUEST
April _____, 2000
Firstar Bank N.A.
30 N. Michigan Avenue
Chicago, IL 60602
Dear Sir:
Reference is made to that certain Loan Agreement dated as of April
____, 2000 (the "Loan Agreement") between CAROLINA NATIONAL TRANSPORTATION,
INC., KEYSTONE LINES, GULF LINE TRANSPORT, INC., and FIVE TRANSPORT, INC., as
Borrowers, US 1 INDUSTRIES, INC. as Guarantor and FIRSTAR BANK N.A., a national
banking association. Capitalized terms used but not elsewhere defined herein
hall have the respective meanings ascribed to such terms in the Loan Agreement.
Borrowers hereby notify Lender that on the date hereof, Borrowers
desires to borrow $___________ of the Revolving Loan and Borrowers hereby
directs Lender to disburse such principal amount in accordance with the payment
instructions attached hereto as Exhibit A.
Borrowers acknowledge that this Notice of Borrowing/Disbursement
Request and acceptance by any Borrower or Borrowers of the proceeds of the
disbursements contemplated hereby constitute a representation and warranty that
the conditions contained in subsection 2.1.4 of the Loan Agreement have been
satisfied in all material respects.
......... Very truly yours,
CAROLINA NATIONAL TRANSPORTATION, INC., an Indiana
corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
KEYSTONE LINES, a California corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
GULF LINE TRANSPORT, INC., an Indiana corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
FIVE STAR TRANSPORT, INC., an Indiana corporation
By: _________________________________
Name: _________________________________
Title: _________________________________
EXHIBIT A
Entity, Payment Instructions Amount
Carolina National Transportation, Inc.,
Keystone Lines, Gulf Line Transport, Inc.,
and Five Star Transport, Inc.
By Wire Transfer to:
Bank Name: ......... __________________________
Bank Address: ......... __________________________
......... --------------------------
Acct. No.: ......... __________________________
ABA No.: ......... __________________________
Attention: ......... __________________________
Telephone No.: ......... __________________________
Exhibit 10.2
August Investment Partnership
8400 Louisiana Street
Merrillville, Indiana 46410
PROMISSORY NOTE
$50,000.00 ......... Date: December 31, 2000
For value received, the undersigned TC Services, Inc. (the "Promisor") promises
to pay to the order of August Investment Partnership (the "Payee"), at 8400
Louisiana, Merrillville, Indiana 46410, (or at such other place as the Payee
may designate in writing) the sum of $50,000.00 with interest from December 31,
2000, on the unpaid principal at the rate of .75 percent over the national
Price as published in the Wall Street Journal.
The unpaid principal shall be payable on October 1, 2002 with accrued interest
payable monthly. All payments on this Note shall be applied first in payment of
accrued interest and any remainder in payment of principal.
If any payment obligation under this Note is not paid when due, the Promisor
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
No renewal or extension of this Note, delay in enforcing any right of the Payee
under this Note, or assignment by Payee of this Note shall affect the liability
of the Promisor. All rights of the Payee under this Note are cumulative and may
be exercised concurrently or consecutively at the Payee's option.
This Note shall be construed in accordance with the laws of the State of
Indiana.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principal and interest on this Note shall be paid in the legal
currency of the United States.
Promisor waives presentment of payment, protest, and notice of protest and
nonpayment of this Note.
This note replaces the original dated December 31, 1998 Signed this 22nd day of
February, 2001, at Gary, Indiana
TC Services, Inc.
By:__________________________________________
Harold Antonson
Chief Financial Officer
August Investment Partnership
8400 Louisiana Street
Merrillville, Indiana 46410
PROMISSORY NOTE
$200,000.00 ......... Date: December 31, 2000
For value received, the undersigned TC Services, Inc. (the "Promisor") promises
to pay to the order of August Investment Partnership (the "Payee"), at 8400
Louisiana, Merrillville, Indiana 46410, (or at such other place as the Payee
may designate in writing) the sum of $200,000.00 with interest from December
31, 2000, on the unpaid principal at the rate of .75 percent over the national
Price as published in the Wall Street Journal.
The unpaid principal shall be payable on October 1, 2002 with accrued interest
payable monthly. All payments on this Note shall be applied first in payment of
accrued interest and any remainder in payment of principal.
If any payment obligation under this Note is not paid when due, the Promisor
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
No renewal or extension of this Note, delay in enforcing any right of the Payee
under this Note, or assignment by Payee of this Note shall affect the liability
of the Promisor. All rights of the Payee under this Note are cumulative and may
be exercised concurrently or consecutively at the Payee's option.
This Note shall be construed in accordance with the laws of the State of
Indiana.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principal and interest on this Note shall be paid in the legal
currency of the United States.
Promisor waives presentment of payment, protest, and notice of protest and
nonpayment of this Note.
This note replaces the original dated December 31, 1998 Signed this 22nd day of
February, 2001, at Gary, Indiana
TC Services, Inc.
By:__________________________________________
Harold Antonson
Chief Financial Officer
Exhibit 10.3
Antonson & Kibler
1000 Colfax Street
Gary, Indiana 46406
PROMISSORY NOTE
$3,042,074.00 ......... Date: December 31, 2000
For value received, the undersigned US1 Industries, Inc. (the "Promisor")
promises to pay to the order of Harold Antonson and Michael Kibler (the
"Payee"), at 1000 Colfax Street, Gary, Indiana 46406, (or at such other place
as the Payee may designate in writing) the sum of $3,042,074.00 with interest
from December 31, 2000, on the unpaid principal at the rate of .75 percent over
the national Price as published in the Wall Street Journal.
The unpaid principal shall be payable on October 1, 2002 with accrued interest
payable monthly. All payments on this Note shall be applied first in payment of
accrued interest and any remainder in payment of principal.
If any payment obligation under this Note is not paid when due, the Promisor
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
No renewal or extension of this Note, delay in enforcing any right of the Payee
under this Note, or assignment by Payee of this Note shall affect the liability
of the Promisor. All rights of the Payee under this Note are cumulative and may
be exercised concurrently or consecutively at the Payee's option.
This Note shall be construed in accordance with the laws of the State of
Indiana.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principal and interest on this Note shall be paid in the legal
currency of the United States.
Promisor waives presentment of payment, protest, and notice of protest and
nonpayment of this Note.
This note replaces the original dated December 31, 1999 Signed this 22nd day of
February, 2001, at Gary, Indiana
US1 Industries, Inc.
By:__________________________________________
Harold Antonson
Chief Financial Officer
SECOND AMENDMENT TO LOAN AGREEMENT
This Amendment, dated as of December 7, 2000, is between CAROLINA
NATIONAL TRANSPORTATION INC., an Indiana corporation ("Carolina"), KEYSTONE
LINES, a California corporation ("Keystone"), GULF LINE TRANSPORT INC., an
Indiana corporation ("Gulf Line"), FIVE STAR TRANSPORT, INC., an Indiana
corporation, ("Five Star") and CAM TRANSPORT, INC. ("Cam") (Carolina, Keystone,
Gulf Line, Five Star and Cam, hereinafter, collectively, referred to as
"Borrowers" or individually as "Borrower"), US 1 INDUSTRIES, INC., an Indiana
corporation ("Guarantor") and FIRSTAR BANK N.A., a national banking association
("Lender").
PRELIMINARY STATEMENT:
All Borrowers, other than Cam, have previously entered into a Loan
Agreement with Lender dated April 18, 2000, which was amended by Amendment to
Loan Agreement dated June 9, 2000 ("Loan Agreement"). Lender has agreed to
further amend such Loan Agreement to do the following: (i) establish a separate
line of equipment financing in the amount of $500,000, (ii) increase the amount
of the Revolving Loan Commitment therein from $3,500,000 to $5,500,000, and
(iii) add Cam as a Borrower, all on the terms and conditions hereinafter set
forth. Capitalized terms not defined herein shall have the meanings ascribed
to such terms in the Loan Agreement as amended hereby.
NOW, THEREFORE, it is hereby agreed as follows:
1. Each of Borrowers and Guarantor represent and warrant that no Event of
Default or Incipient Default exists or will occur as a result of any
Advance and that each of their representations and warranties set
forth in the Loan Instruments is true and correct as of the date
hereof, except to the extent that any such representations or
warranties relate to an earlier date. Cam hereby agrees to all of the
terms and conditions as set forth in the Loan Agreement as amended
hereby and assumes the obligations of Borrowers thereunder jointly and
severally with the other Borrowers and agrees to be bound by all of
the terms or covenants, agreements and conditions, thereof as the same
apply to Borrowers.
2. The parties hereby agree to amend and restate the following
definitions of the following terms in Section 1.1 and to add as
defined terms in the Loan Agreement those terms set forth below not
defined in Section 1.1 of the Loan Agreement prior to the date hereof
to read in their entirety as follows:
Advance: means any advance of the Revolving Loan or
Equipment Loan as the case may be.
Borrowers: means Carolina National Transportation, Inc., an
Indiana Corporation, Keystone Lines, a California
corporation, Gulf Line Transport, Inc., an Indiana
corporation, Five Star Transport, Inc., an Indiana
Corporation, Cam Transport, Inc., an Indiana corporation and
such other entities owned or controlled by any of the
foregoing or US 1 Industries, Inc., which elects in writing
to be designated as a Borrower hereunder in a writing on
terms satisfactory to Lender and as to which Lender elects to
extend credit hereunder.
Certificated Collateral: any equipment purchased with
proceeds of the Equipment Loan which is covered by title
issued under a statute of a state under the law of which
indication of a security interest on the certificate of title
is required as a condition of perfection.
Equipment Loan: means the Loan made by Lender to Borrowers
pursuant to Section 2.1A hereof.
Equipment Loan Commitment: $500,000
Equipment Loan Maturity Date: means the earlier of (i)
May 15, 2002, or (ii) the date on which Borrowers'
obligations are accelerated pursuant to this Loan Agreement;
Equipment Loan Note: the promissory note executed by
Borrowers payable to the order of Lender in the amount of the
Equipment Loan Commitment, dated as of the December 7, 2000,
in form and substance satisfactory to Lender.
Loan Instruments:
(i) Loan Agreement;
(ii) Revolving Loan Note;
(iii) Equipment Loan Note
(iv) Corporate Guaranty;
(v) Security Instruments;
(vi) Closing Certificate;
(vii) Subordination Agreements
(viii) Uniform Commercial Code financing statements required by Lender;
(ix) Personal Guaranties; and
(x) such other instruments and documents as Lender reasonably may require
in connection with the transactions contemplated by this Loan
Agreement;
as the same may be amended and/or restated from time to time,
including but without limitation as amended by or pursuant to that
certain Amendment to Loan Agreement dated June 9, 2000, and that
certain Second Amendment to Loan Agreement dated December 7, 2000.
"Interest Rate: with respect to the Revolving Loan , the
interest which the Revolving Loan bears, other than during
a Default Rate Period, as provided in subsection 2.3.1(a)
hereunder; with respect to the Equipment Loan, the interest
which the Equipment Loan bears, other than during a Default
Rate Period, as provided in subsection 2.3.1(b) hereunder
Personal Guarantees: the individual guarantees of Michael
Kibler and Harold Antonson limited to $1,500,000 per
guaranty.
Purchase Date: the date or dates of purchase of any
equipment purchased with Advances from the Equipment Loan
under Section 2.1A.
Revolving Loan Commitment: $5,500,000.
Revolving Loan Note: the promissory note executed by
Borrowers payable to the order of Lender in the amount of the
Revolving Loan Commitment, dated as of the Closing Date, as
amended and restated as of June 9, 2000, and as further
amended and restated as of December 7, 2000."
3. Article II of the Loan Agreement is hereby amended by the insertion of
the following as Section 2.1A between Sections 2.1 and 2.2:
"2.1.A Equipment Loan.
2.1.A.1 Amount and Disbursement.
Upon the terms and subject to the conditions herein
set forth, Lender agrees to make Advances of the Equipment
Loan to Borrowers from time to time from the Closing Date to
March 15, 2001, in an aggregate amount outstanding at any one
time not in excess of the Equipment Loan Commitment. Lender
may remit Advances of the Equipment Loan directly to the
equipment seller. Each of Borrowers shall remain jointly and
severally liable with the other Borrowers for the repayment
of all such Advances of the Equipment Loan with interest.
2.1A.2 Equipment Loan Note.
The Equipment Loan shall be evidenced by the
Equipment Loan Note.
2.1A.3 Reborrowing.
Subject to the conditions set forth in this Section
2.1A, Borrowers may from time to time prior to the
March 15, 2001, reborrow all or any portion of any Advance of
the Equipment Loan which is repaid.
2.1A.4 Conditions of Advances of the Equipment
Loan.
The obligation of Lender to disburse any Advance of
the Equipment Loan is subject to the satisfaction of the
following conditions precedent:
(a) no Event of Default or Incipient
Default shall exist or would be
created by the making of and such
Advance;
(b) each such Advance shall be in a
minimum amount of $1,000;
(c) not less than ten (10) days prior
to the estimated Purchase Date,
Lender shall have:
(i) received a written request in
a form satisfactory to Lender
requesting an Advance on the
Equipment Loan
(ii) received and approved of a
copy of the purchase agreement
and all other agreements or
instruments relating to the
purchase of any equipment to
be purchased with such Advance
and shall have received any
other information which Lender
may request as to any such
equipment, including without
limitation UCC, judgment and
tax lien searches, invoices,
bills of sale, certificates of
title and other document
reports as Lender may request
establishing good title in the
Seller of the equipment to be
purchased free and clear of
all encumbrances and that
Lende's security interest
therein when perfected will be
a first Lien.
(iii)approved the purchase of such
equipment, which approval
shall not be unreasonably
withheld
(d) on the applicable Purchase Date,
each of Borrowers' and Guarantor's
representations and warranties set
forth in the Loan Instruments shall
be true and correct in all material
respects when made and at and as of
the time of the Purchase Date,
except to the extent that any such
representations and warranties
expressly relate to an earlier date;
(e) delivery to Lender of the original
certificate(s) of title as to any
Certificated Collateral with the
appropriate endorsements and
indications thereof of the security
interest in favor of Lender;
(f) Borrower shall have paid or made
available in a manner satisfactory
to Lender the balance due for the
purchase of the equipment to be
purchased;
(g) the amount of any Advance of the
Equipment Loan shall be limited to
eighty percent (80%) of the
purchase price for the equipment to
be purchased with the proceeds of
such Advance."
4. Sections 2.2, 2.3 and 2.4 of the Loan Agreement are hereby amended and
restated in their entirety to read as follows:
"2.2 Use of Proceeds of the Revolving Loan and Equipment Loan.
The proceeds of the Revolving Loan shall be used (i) to
refinance Borrower's and Guarantor's secured loan obligations
to Lender; (ii) for Borrowers' working capital; and (iii) to
pay related transactions costs. The proceeds of the
Equipment Loan shall be used to purchase equipment for use in
Borrowers' trucking businesses.
2.3 Interest.
2.3.1 Interest Rate.
(a) The Principal Balance of the
Revolving Loan shall bear interest
from the date hereof through
December 31, 2000, in an amount
equal to (i) the Prime Rate in
effect from time to time plus (ii)
0.5% per annum. Thereafter, such
Principal Balance shall bear
interest at a rate determined as
follows:
If the ratio of Unsubordinated The interest rate charged effective the
Indebtness to the sum of Tangible first day of the next quarter shall be
Net Worth plus Subordinated equal to:
Indebtedness is:
Greater than or equal to 4.0 to 1.0 The Prime Rate in effect from time to
time plus 0.5% per annum
Between 3.01 and 3.99 to 1.0 The Prime Rate in effect from time to
time plus 0.25% per annum
Less than or equal to 3.0 to 1.0 The Prime Rate in effect from time to
time provided, however, that during a
Default Rate Period, Borrowers'
Obligations shall bear interest at the
applicable Default Rate.
(b) The principal balance of the
Equipment Loan shall bear interest in
an amount equal to:
(i) the Prime Rate in effect from time
to time; plus (ii) 1% per annum,
provided, however, that during a
Default Rate Period, Borrowers'
Obligations shall bear interest at the
applicable Default Rate.
2.3.2 Interest Computation.
Interest shall be computed on the basis of
a year consisting of 360 days and charged for the
actual number of days during the period for which
interest is being charged. In computing interest,
the Funding Date shall be included and the date of
payment shall be excluded.
2.3.3 Maximum Interest.
Notwithstanding any provision to the
contrary contained herein or in any other Loan
Instrument, Lender shall not collect a rate of
interest on any obligation or liability due and
owing by Borrowers to Lender in excess of the
maximum contract rate of interest permitted by
applicable law ("Excess Interes"). f any Excess
Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in
this Loan Agreement or any other Loan Instrument,
then in such event (i) Borrowers shall not be
obligated to pay such Excess Interest, (ii) any
Excess Interest collected by Lender shall be, at
Lender's option, (A) applied to the Principal
Balance or the repayment of the Principal Balance of
the Equipment Loan, as approved, or to accrued and
unpaid interest not in excess of the maximum rate
permitted by applicable law or (B) refunded to the
payor thereof, (iii) the interest rates provided for
herein (collectively the "Stated Rate") shall be
automatically reduced to the maximum rate allowed
from time to time under applicable law (the "Maximum
Rate") and this Loan Agreement and the other Loan
Instruments, as applicable, shall be deemed to have
been, and shall be, modified to reflect such
reduction, and (iv) Borrowers shall not have any
action against Lender for any damages arising out of
the payment or collection of such Excess Interest;
provided, however, that if at any time thereafter
the Stated Rate is less than the Maximum Rate,
Borrowers shall, to the extent permitted by law,
continue to pay interest at the Maximum Rate until
such time as the total interest received by Lender
is equal to the total interest which Lender would
have received had the Stated Rate been (but for the
operation of this provision) the interest rate
payable. Thereafter, the interest rate payable
shall be the Stated Rate unless and until the Stated
Rate again exceeds the Maximum Rate, in which event
the provisions contained in this subsection 2.3.3
again shall apply.
2.3.4 Increased Costs.
If, after the Closing Date, either (i) any
change in or in the interpretation of any law or
regulation is introduced (other than changes in
taxation of the net income of Lender), including,
without limitation, with respect to reserve
requirements applicable to Lender, (ii) Lender
complies with any future guideline or request from
any central bank or other Governmental Body proposed
or promulgated after the Closing Date or (iii)
Lender determines that the adoption of any
applicable law, rule or regulation (other than
changes in taxation of the net income of Lender)
regarding capital adequacy or any change therein, or
any change in the interpretation or administration
thereof by any Governmental Body, central bank or
comparable agency charged with the interpretation or
administration thereof announced after the Closing
Date has or would have the effect described below,
or Lender complies with any request or directive
regarding capital adequacy (whether or not having
the force of law) of any such Governmental Body,
central bank or comparable agency announced after
the Closing Date and in case of any event set forth
in this clause (iii), such adoption, change or
compliance has or would have the direct or indirect
effect of reducing the rate of return on any of
Lender's capital as a consequence of its obligations
hereunder to a level below that which Lender could
have achieved but for such adoption, change or
compliance (taking into consideration Lender's
policies with respect to capital adequacy) by an
amount deemed by Lender to be material, and any of
the foregoing events described in clauses (i), (ii)
or (iii) increases the cost to Lender of (A) funding
or maintaining the Revolving Loan or the Revolving
Loan Commitment or the Equipment Loan or the
Equipment Loan Commitment or (B) issuing, causing
the issuance of making or maintaining any Letter of
Credit, or reduces the amount receivable in respect
thereof by Lender, then Borrowers shall upon demand
by Lender at any time within 180 days after the date
on which an officer of Lender responsible for
overseeing this Loan Agreement knows or has reason
to know of its right to additional compensation
under this Section 2.3.4, pay to Lender additional
amounts sufficient to reimburse Lender against such
increase in cost or reduction in amount receivable;
provided, however, such entity shall only be
entitled to additional compensation for any such
costs incurred from and after the date that is 30
days prior to the date Borrowers receive such demand.
A certificate as to the amount of such increased
cost, and setting forth in reasonable detail the
calculation thereof, shall be submitted to Borrowers
by Lender, and shall be conclusive absent manifest
error. Lender will promptly notify Borrowers of any
event of which it has knowledge that would entitle
Lender to additional compensation under this
subsection 2.3.4. Lender shall not request any
additional compensation under this subsection 2.3.4
unless it is generally making similar requests of
other borrowers similarly situated, and Lender
agrees to use a reasonable basis for calculating
amounts allocable to the Revolving Loan Commitment
and Equipment Loan Commitment.
2.4 Principal and Interest Payments.
2.4.1 Interest.
(a) Interest on the Revolving Loan
shall be payable monthly in arrears
on the first Business Day of each
month beginning with May 1, 2000.
(b) Interest on the Equipment Loan
shall be payable monthly in arrears
commencing January 1, 2001, with a
final payment due on the Equipment
Loan Maturity Date.
2.4.2 Principal.
(a) The Principal Balance of the
Revolving Loan, together with all
other sums due to Lender pursuant
to the terms of the Loan
Instruments, shall be due and
payable in full on the Revolving
Loan Maturity Date.
(b) The unpaid principal balance of the
Equipment Loan shall be due and
payable as follows: the amount of
such unpaid principal balance
divided by sixty (60) shall be
payable each month on the 15th day
of the month commencing March 15,
2001, and on the 15th day of each
month thereafter with any unpaid
balance of such principal balance
of the Equipment Loan becoming due
and payable, if not sooner paid, on
the Equipment Loan Maturity Date.
2.5 Mandatory Prepayments of the Revolving Loan.
If at any time or for any reason, Borrowers' Obligations
(less the unpaid principal balance of the Equipment Loan
and any interest accrued and unpaid on the Equipment Loan)
exceeds the Revolving Loan Commitment or, if for any reason,
Borrowers' Obligations (less the unpaid principal balance of
the Equipment Loan and any interest accrued and unpaid on the
Equipment Loan)exceeds the availability requirements set
forth in Section 2.1.4(e) hereof (any such excess being
referred to herein as an "Overadvance"), Borrowers shall
immediately pay to Lender, in Good Funds, the amount of such
Overadvance.
5. The third sentence of Section 5.5 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"Upon the proper filing with the appropriate Governmental
Bodies of appropriate Uniform Commercial Code financing statement in
the case of Collateral other than Certificated Collateral, and upon
filing of the properly executed and notarized certificate of title
with the appropriate Governmental Bodies in the case of Certificated
Collateral, the applicable Loan Instruments will create valid and
perfected first Liens in the Collateral, subject only to Permitted
Prior Liens."
6. Section 7.16 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"7.16 Unsubordinated Indebtedness to Tangible Net Worth Ratio.
Permit the ratio of Unsubordinated Indebtedness to the sum of Tangible
Net Worth plus Subordinated Indebtedness to exceed 4.5 to 1 from the
date hereof through June 30, 2001, or permit such ratio to exceed 4 to
1 after June 30, 2001."
7. Section 7.18 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"7.18 Minimum Net Worth. Fail to maintain Tangible Net Worth plus
Permitted Subordinated Indebtedness of at least $1,000,000, from the
date hereof until December 31, 2000, or to maintain Tangible Net Worth
plus Permitted Subordinated Indebtedness of at least $1,750,000 from
and after December 31, 2000."
8. Section 8.2 of the Loan Agreement is hereby amended by the insertion
of words "and Equipment Loan Commitment" after the words"Revolving
Loan Commitment" in the second line of subparagraph (a) and the third
line of subparagraph (b) thereof.
9. Subsection 10.1.1 of the Loan Agreement is hereby amended by insertion
of the words "and Equipment Loan" after the words "Revolving Loan" in
the seventh line of such subsection 10.1.1.
10. Section 11.2 of the Loan Agreement is hereby amended by the insertion
of the words "Equipment Loan" after the words "Revolving Loan" in the
third line thereof and the words"Revolving Loan Note and Equipment
Loan Not" for the words "a Revolving Note" in the third and ninth
lines of Section 11.2.
11. Lender hereby consents to the following:
(a) The pledge of accounts receivable of Borrowers and
Guarantor to secure Permitted Subordination
Indebtedness to August Investments and Michael
Kibler and Harold Antonson, as provided in the
attached Amendments to Subordination Agreement as
Exhibit "H-1" and "H-2", provided the lien created
thereby shall, in each case, be junior to the
respective liens in favor of Lender securing
Borrower' Obligations and the obligations of the
guarantors under the Personal Guarantees and the
Corporate Guaranty.
(b) The increase in Permitted Subordinated Indebtedness
under the Loan Agreement to $4,635,043.
12. Simultaneously with the execution hereof, Borrowers and Guarantor
shall deliver to Lender the following, duly executed by the parties
thereto other than Lender:
(i) Second Amended and Restated Revolving Loan Note in
the form attached hereto as Exhibit "A"
("Amended Not");
(ii) Equipment Loan Note attached hereto as Exhibit"B";
(ii) Security Agreement executed by Cam and attached
hereto as Exhibit "C");
(iii) Acknowledgements (Security Agreement) executed by
Guarantor and Borrowers other than Cam in the forms
attached hereto as Exhibits "D-1", "D-2", "D-3",
"D-4" and "D-5";
(iv) Uniform Commercial Code Financing Statements
executed by Cam in the forms attached hereto as
Exhibit "E-1" and "E-2";
(v) Amended and Restated Personal Guaranties of Michael
Kibler and Harold Antonson in the forms and attached
hereto as Exhibit "F-1" and "F-2";
(vi) Amended and Restated Corporate Guaranty of US 1
Industries, Inc. in the form attached hereto as
Exhibit "G";
(vii) Certified Resolutions of the Board of Directors of
the respective Borrowers and Guarantors authorizing
the execution and delivery and performance of this
Amendment and other documents referred to herein;
(viii) Amendments to Subordination Agreement in the forms
attached hereto as Exhibits "H-1" and "H-2"; and
(ix) Acknowledgements (Subordinated Debt) in the form
attached hereto as Exhibit "I-1" or "I-2"; and
(ix) An opinion letter from the law firm of Borrowers'
counsel in a form reasonably satisfactory to
Lender's counsel regarding authorization, execution
and delivery of this Amendment and the documents
referenced herein.
(x) Articles of Incorporation of each of Borrowers and
Guarantor certified as of date not earlier than
December 1, 2000.
13. Borrowers shall pay to Lender a fee of $10,000 upon the execution
hereby with respect to the transactions contemplated herein. In
addition, Borrowers shall reimburse Lender for all of Lende's out-of-
pocket costs related to the transaction contemplated herein, including
without limitation any lien searches ordered by Lender's counsel and
legal fees incurred by Lender in connection with the preparation of
documents, due diligence review or closing regarding the transaction
contemplated herein or the enforcement of the terms hereof or of any
of the Loan Instruments.
14. From time to time, Borrowers and Guarantor shall execute and deliver
to Lender such additional documents as Lender reasonably may require
to carry out the purposes of this Amendment and the Loan Instruments
and to protect Lender's rights hereunder and thereunder, and shall not
take any action inconsistent with the purposes of the Loan
Instruments.
15. Except as expressly amended hereby, the terms and conditions of the
Loan Agreement as originally set forth therein shall remain in full
force and effect.
IN WITNESS WHEREOF, the undersigned Borrowers have signed and Lender
has executed this Amendment as of the date first above written.
CAROLINA NATIONAL TRANSPORTATION INC., an indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES, a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC. an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
US 1 INDUSTRIES, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIRSTAR BANK N.A., a national banking association
By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
-4-
EXHIBIT "A"
REVOLVING LOAN NOTE $5,500,000.00
Dated as of April 18, 2000
Chicago, Illinois
Amended and Restated as of June 12, 2000
Further Amended and Restated as of December 7, 2000
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL TRANSPORTATION
INC., an Indiana corporation ("Carolina") KEYSTONE LINES, a California
corporation ("Keystone"), GULF LINE TRANSPORT INC., an Indiana corporation
("Gulf Line"), FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five Star")
and CAM TRANSPORT, INC., an Indiana corporation (Carolina, Keystone, Gulf Line,
Five Star and Cam hereinafter collectively referred to as "Maker")), hereby
promise, jointly and severally, to pay to the order of FIRSTAR BANK N.A., a
national banking association ("Lender"), the principal sum of FIVE MILLION FIVE
HUNDRED THOUSAND AND NO/100ths DOLLARS ($5,500,000.00), or, if less, the
aggregate unpaid amount of the Revolving Loan made by Lender pursuant to and in
accordance with the applicable provisions of that certain Loan Agreement dated
April 18, 2000, and amended as of June 12, 2000, and further amended as of
the date hereof (as the same may be amended, modified, supplemented or restated
from time to time, the "Loan Agreement") between Lender, Maker and US 1
INDUSTRIES, INC., an Indiana corporation ("Guarantor") and Lender, at the
office of Lender at 30 N. Michigan Avenue, Chicago, Illinois 60602, or at such
other place as the holder hereof may appoint, plus interest thereon as set
forth below.
This Revolving Loan Note is delivered by Maker to Lender pursuant to
and in accordance with the applicable provisions of the Loan Agreement. All
capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The Principal Balance of this Revolving Loan Note shall bear interest
at the per annum rate of interest set forth in subsection 2.3.1 of the Loan
Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Revolving Loan Note shall be paid in the manner set forth in Section 2.4 of the
Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual number of days during the period for
which interest is being charged.
During a Default Rate Period, the Principal Balance of this Revolving
Loan Note shall bear interest at the Default Rate, which interest at such
Default Rate shall be paid by Maker to Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement, at the
election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal Balance of this Revolving Loan
Note, and all accrued and unpaid interest thereon, shall be and become
immediately due and payable in full. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same in the event of any
subsequent Event of Default, and such failure shall not be deemed to establish
a custom or course of dealing or performance between Maker and Lender.
This Revolving Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan Agreement
applicable thereto.
All funds received by Lender during the existence of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the Loan
Agreement.
All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions therefor set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is in
receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interes"). If
any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Revolving Loan Note or any other
Loan Instrument, then in such event (i) Maker shall not be obligated to pay
such Excess Interest, (ii) any Excess Interest collected by Lender shall be,
(A) if any Event of Default exists and is continuing, applied to the Principal
Balance or to accrued and unpaid interest not in excess of the maximum rate
permitted by applicable law or (B) if no Event of Default exists and is
continuing, refunded to the payor thereof, (iii) the interest rates provided
for herein (collectively the "Stated Rate") shall be automatically reduced to
the maximum rate allowed from time to time under applicable law (the "Maximum
Rate") and this Revolving Loan Note and the other Loan Instruments, as
applicable, shall be deemed to have been, and shall be, modified to reflect
such reduction, and (iv) Maker shall not have any action against Lender for any
damages arising out of the payment or collection of such Excess Interest;
provided, however, that if at any time thereafter the Stated Rate is less than
the Maximum Rate, Maker shall, to the extent permitted by law, continue to pay
interest at the Maximum Rate until such time as the total interest received by
Lender is equal to the total interest which Lender would have received had the
Stated Rate been (but for the operation of this provision) the interest rate
payable. Thereafter, the interest rate payable shall be the Stated Rate unless
and until the Stated Rate again exceeds the Maximum Rate, in which event the
provisions contained in this paragraph again shall apply.
If any suit or action is instituted or attorneys are employed to
collect this Revolving Loan Note or any part thereof, Maker promises and
agrees, jointly and severally, to pay all costs of collection, including all
court costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand and
notice of protest, demand, dishonor and nonpayment of this Revolving Loan Note,
and expressly agrees that this Revolving Loan Note, or any payment hereunder,
may be extended from time to time before, at or after maturity, without in any
way affecting the liability of Maker hereunder or any guarantor hereof.
This Revolving Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without regard to
conflict of laws principles. All funds disbursed to or for the benefit of Maker
will be deemed to have been disbursed in Chicago, Illinois.
Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising directly or indirectly out of this Revolving Loan Note shall
be litigated in either the Circuit Court of Cook County, Illinois or in the
United States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts, any court in
which Lender shall initiate or to which Lender shall remove such action, to the
extent such court has jurisdiction. Maker hereby expressly submits and consents
in advance to such jurisdiction in any action or proceeding commenced by Lender
in or removed by Lender to any of such courts, and hereby agrees that personal
service of the summons and complaint, or other process or papers issued therein
may be made by registered or certified mail addressed to Maker at the address
to which notices are to be sent pursuant to Section 11.1 of the Loan Agreement.
Maker waives any claim that either the Circuit Court of Cook County, Illinois
or the United States District Court for the Northern District of Illinois is an
inconvenient forum or an improper forum based on lack of venue. To the extent
provided by law, should any Maker, after being so served, fail to appear or
answer to any summons, complaint, process or papers so served within the number
of days prescribed by law after the mailing thereof, Maker shall be deemed in
default and an order and/or judgment may be entered by the court against Maker
as demanded or prayed for in such summons, complaint, process or papers. The
exclusive choice of forum for Maker set forth in this paragraph shall not be
deemed to preclude the enforcement by Lender of any judgment obtained in any
other forum or the taking by Lender of any action to enforce the same in any
other appropriate jurisdiction, and Maker hereby waives the right to
collaterally attack any such judgment or action.
Maker acknowledges and agrees that any controversy which may arise
under this Revolving Loan Note would be based upon difficult and complex issues
and, therefore, Maker agrees that any lawsuit arising out of any such
controversy will be tried in a court of competent jurisdiction by a judge
sitting without a jury.
This Revolving Loan Note may not be changed or amended orally, but
only by an instrument in writing signed by the party against whom enforcement
of the change or amendment is sought.
This Revolving Loan Note shall be binding upon Maker and upon Maker's
successors and assigns, and shall inure to the benefit of the successors and
permitted assigns of Lender. If more than one party shall sign this Revolving
Loan Note as Maker, their obligations hereunder as Maker shall be joint and
several.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
placed thereon by any court or any Governmental Body, this Revolving Loan Note
shall be construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other provisions hereof, and any
and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.
Time for the performance of Maker's obligations under this Revolving
Loan Note is of the essence.
This Revolving Loan Note is entitled to the benefit of certain
collateral security, all as more fully set forth in the Loan Agreement.
The Revolving Loan Note amends and restates, in its entirety, a
Revolving Loan Note dated June 12, 2000, in the principal face amount of
$3,500,000 made by Borrowers and payable to the order of Lender, which amended
and restated a Revolving Loan Note dated April 18, 2000.
IN WITNESS WHEREOF, this Revolving Loan Note has been executed and
delivered by Maker by its duly authorized officer on the date first set forth
above.
CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES, a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC., an Indiana corporation
By: ______________________________
Name: ____________________________
Title: _____________________________
FIVE STAR TRANSPORT, INC., an Indiana corporation
By: _______________________________
Name: _____________________________
Title: ______________________________
CAM TRANSPORT, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
-4-
EXHIBIT"B"
EQUIPMENT LOAN NOTE
$500,000.00
Dated as of December 7, 2000
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL TRANSPORTATION
INC., an Indiana corporation ("Carolina"), KEYSTONE LINES, a California
corporation ("Keystone"), GULF LINE TRANSPORT INC., an Indiana corporation
("Gulf Line"), FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five Star")
and CAM TRANSPORT, INC., an Indiana corporation (Carolina, Keystone, Gulf Line,
Five Star and Cam hereinafter collectively referred to as "Make")), hereby
promise, jointly and severally, to pay to the order of FIRSTAR BANK N.A., a
national banking association ("Lender"), the principal sum of FIVE HUNDRED
THOUSAND AND NO/100ths DOLLARS ($500,000.00), or, if less, the aggregate unpaid
amount of the Equipment Loan made by Lender pursuant to and in accordance with
the applicable provisions of that certain Loan Agreement dated April 18, 2000,
and amended as of June 12, 2000, and further amended as of the date hereof (as
the same may be amended, modified, supplemented or restated from time to time,
the "Loan Agreement") between Lender, Maker and US 1 INDUSTRIES, INC., an
Indiana corporation ("Guarantor") and Lender, at the office of Lender at 30 N.
Michigan Avenue, Chicago, Illinois 60602, or at such other place as the holder
hereof may appoint, plus interest thereon as set forth below.
This Equipment Loan Note is delivered by Maker to Lender pursuant to
and in accordance with the applicable provisions of the Loan Agreement. All
capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The principal balance of this Equipment Loan Note ("Principal
Balance") shall bear interest at the per annum rate of interest set forth in
subsection 2.1A.6 of the Loan Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Equipment Loan Note shall be paid in the manner set forth in Section 2.1A.7 of
the Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual number of days during the period for
which interest is being charged.
During a Default Rate Period, the Principal Balance shall bear
interest at the Default Rate, which interest at such Default Rate shall be paid
by Maker to Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement, at the
election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal Balance, and all accrued and
unpaid interest thereon, shall be and become immediately due and payable in
full. Failure to exercise this option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent Event of Default, and
such failure shall not be deemed to establish a custom or course of dealing or
performance between Maker and Lender.
This Equipment Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan Agreement
applicable thereto.
All funds received by Lender during the existence of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the Loan
Agreement.
All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions therefor set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is in
receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interest"). If
any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Equipment Loan Note or any other
Loan Instrument, then in such event (i) Maker shall not be obligated to pay
such Excess Interest, (ii) any Excess Interest collected by Lender shall be,
(A) if any Event of Default exists and is continuing, applied to the Principal
Balance or to accrued and unpaid interest not in excess of the maximum rate
permitted by applicable law or (B) if no Event of Default exists and is
continuing, refunded to the payor thereof, (iii) the interest rates provided
for herein (collectively the "Stated Rate") shall be automatically reduced to
the maximum rate allowed from time to time under applicable law (the "Maximum
Rate") and this Equipment Loan Note and the other Loan Instruments, as
applicable, shall be deemed to have been, and shall be, modified to reflect
such reduction, and (iv) Maker shall not have any action against Lender for any
damages arising out of the payment or collection of such Excess Interest;
provided, however, that if at any time thereafter the Stated Rate is less than
the Maximum Rate, Maker shall, to the extent permitted by law, continue to pay
interest at the Maximum Rate until such time as the total interest received by
Lender is equal to the total interest which Lender would have received had the
Stated Rate been (but for the operation of this provision) the interest rate
payable. Thereafter, the interest rate payable shall be the Stated Rate unless
and until the Stated Rate again exceeds the Maximum Rate, in which event the
provisions contained in this paragraph again shall apply.
If any suit or action is instituted or attorneys are employed to
collect this Equipment Loan Note or any part thereof, Maker promises and
agrees, jointly and severally, to pay all costs of collection, including all
court costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand and
notice of protest, demand, dishonor and nonpayment ofthis Equipment Loan Note,
and expressly agrees that this Equipment Loan Note, or any payment hereunder,
may be extended from time to time before, at or after maturity, without in any
way affecting the liability of Maker hereunder or any guarantor hereof.
This Equipment Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without regard to
conflict of laws principles. All funds disbursed to or for the benefit of Maker
will be deemed to have been disbursed in Chicago, Illinois.
Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising directly or indirectly out of this Equipment Loan Note shall
be litigated in either the Circuit Court of Cook County, Illinois or in the
United States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts, any court in
which Lender shall initiate or to which Lender shall remove such action, to the
extent such court has jurisdiction. Maker hereby expressly submits and consents
in advance to such jurisdiction in any action or proceeding commenced by Lender
in or removed by Lender to any of such courts, and hereby agrees that personal
service of the summons and complaint, or other process or papers issued therein
may be made by registered or certified mail addressed to Maker at the address
to which notices are to be sent pursuant to Section 11.1 of the Loan Agreement.
Maker waives any claim that either the Circuit Court of Cook County, Illinois
or the United States District Court for the Northern District of Illinois is an
inconvenient forum or an improper forum based on lack of venue. To the extent
provided by law, should any Maker, after being so served, fail to appear or
answer to any summons, complaint, process or papers so served within the number
of days prescribed by law after the mailing thereof, Maker shall be deemed in
default and an order and/or judgment may be entered by the court against Maker
as demanded or prayed for in such summons, complaint, process or papers. The
exclusive choice of forum for Maker set forth in this paragraph shall not be
deemed to preclude the enforcement by Lender of any judgment obtained in any
other forum or the taking by Lender of any action to enforce the same in any
other appropriate jurisdiction, and Maker hereby waives the right to
collaterally attack any such judgment or action.
Maker acknowledges and agrees that any controversy which may arise
under this Equipment Loan Note would be based upon difficult and complex issues
and, therefore, Maker agrees that any lawsuit arising out of any such
controversy will be tried in a court of competent jurisdiction by a judge
sitting without a jury.
This Equipment Loan Note may not be changed or amended orally, but
only by an instrument in writing signed by the party against whom enforcement
of the change or amendment is sought.
This Equipment Loan Note shall be binding upon Maker and upon Maker's
successors and assigns, and shall inure to the benefit of the successors and
permitted assigns of Lender. If more than one party shall sign this Equipment
Loan Note as Maker, their obligations hereunder as Maker shall be joint and
several.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
placed thereon by any court or any Governmental Body, this Equipment Loan Note
shall be construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other provisions hereof, and any
and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.
Time for the performance of Maker's obligations under this Equipment
Loan Note is of the essence.
This Equipment Loan Note is entitled to the benefit of certain
collateral security, all as more fully set forth in the Loan Agreement.
IN WITNESS WHEREOF, this Equipment Loan Note has been executed and
delivered by Maker by its duly authorized officer on the date first set forth
above.
CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES, a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC., an Indiana corporation
By: ______________________________
Name: ____________________________
Title: _____________________________
FIVE STAR TRANSPORT, INC., an Indiana corporation
By: _______________________________
Name: _____________________________
Title: ______________________________
CAM TRANSPORT, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
-12-
EXHIBIT "C"
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December 7, 2000, is between CAM
TRANSPORT, INC., a Indiana corporation, ("Borrower"), and FIRSTAR BANK N.A., a
national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION, INC., GULF LINE TRANSPORT,
INC. and FIVE STAR TRANSPORT, INC. ("Other Borrowers") and US 1
INDUSTRIES, INC. ("Guarantor") and Lender have entered into a Second
Amendment to Loan Agreement of even date herewith (as the same may be
amended, modified, supplemented or restated from time to time, the
"Loan Agreement"), pursuant and subject to the terms and conditions of
which Lender has agreed to make loans and other financial
accommodations to Borrower and Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the Loan
Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the Illinois
Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used
herein indicates otherwise. All capitalized terms used but not
elsewhere defined in this Security Agreement shall have the
respective meanings ascribed to such terms in the Loan Agreement.
As used herein, the following terms shall have the following meanings:
Intellectual Property Collateral: collectively, the Patent Collateral
and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and applications
for letters patent of Borrower throughout the world, including all
patent applications of Borrower in preparation for filing anywhere in
the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals
and reexaminations of any Patent Collateral and (iv) all proceeds of,
and rights associated with, the foregoing (including licenses,
royalties and proceeds of infringement suits), the right of Borrower
to sue third parties for past, present and future infringements of any
patent or patent application, and for breach or enforcement of any
patent license of Borrower, and all rights corresponding thereto
throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business
names, trade dress, service marks, certification marks, collective
marks, logos, other sources of business identifiers, prints and labels
on which any of the foregoing have appeared or appear, designs and
general intangibles of a like nature of Borrower (each of the
foregoing items referred to as a "Trademark"), now existing anywhere
in the world or hereafter adopted or acquired, whether currently in
use or not, all registrations and recordings thereof and all
applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office and any
foreign country, (ii) all Trademark licenses of Borrower, (iii) all
reissues, extensions or renewals of any of the items described in
clauses (i) and (ii) above, (iv) all of the goodwill of the business
connected with the use of, and symbolized by the items described in
clauses (i) and (ii) above, and (v) all proceeds of, and rights
associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or
dilution of any Trademark, Trademark registration or Trademark
license, or for any injury to the goodwill associated with the use of
any such Trademark or for breach or enforcement of any Trademark
license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all addi
ions and accessions thereto, including, without limitation, the
Property described below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's goods,
machinery, equipment and inventory, wherever located, and all
additions and accessions thereto or replacements thereof, including,
but not limited to, all machinery, inventory and equipment of any and
every kind and description comprising, belonging to or used in
connection with the operation of the business of Borrower
(collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit
accounts, documents, and general intangibles, and all additions and
accessions thereto and replacements thereof, including, but not
limited to, all licenses, franchises, permits and authorizations
heretofore or hereafter granted or issued to Borrower under federal,
state or local laws (excluding, however, any licenses, franchises,
permits and authorizations issued by any Governmental Body to the
extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds
derived or arising from or in connection with the sale or assignment
of such licenses, franchises, permits and authorizations) which permit
or pertain to the operation of the business of Borrower, and all of
Borrowe's Intellectual Property Collateral, Operating Agreements,
income tax refunds, copyrights, patents, trademarks, trade names,
trade styles, goodwill, going concern value, franchise, supply and
distributorship agreements, non-competition agreements and employment
contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of
the Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively as
the "Collateral." The security interest of Lender in the Collateral shall be
superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral free
from any Lien except for Permitted Liens, except the portion thereof
consisting of after-acquired Property, and Borrower will be the owner
of such after-acquired Property, free from any Lien except for
Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of
business of Borrower and all locations where the Tangible Collateral
and the books and records of Borrower are kept. Except as described in
Exhibit A, none of the Collateral is in the possession of any
consignee, bailee, warehouseman, agent or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior
Indebtedness Liens, if any, no financing statement covering any
Collateral or any portion or proceeds thereof is on file in any public
office.
3.5 Intangible Collateral. The Intangible Collateral hereunder represents
bona fide and existing indebtedness, obligations, liabilities, rights
and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there
is no valid defense, set-off or counterclaim against Borrower and in
connection with which there is no default with respect to any material
payment or material performance on the part of Borrower, or, to the
best of Borrower's knowledge, any other party. With respect to any
Intellectual Property Collateral of Borrower the loss, impairment or
infringement of which singly or in the aggregate could reasonably be
expected to have a Material Adverse Effect: (i) such Intellectual
Property Collateral is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all
filings and recordations necessary in the exercise of reasonable and
prudent business judgment to protect its interest in such Intellectual
Property Collateral in the United States Patent and Trademark Office,
the United States Copyright Office and in corresponding offices
throughout the world, as appropriate, (iv) Borrower is the owner of
the entire and unencumbered right, title and interest in and to such
Intellectual Property Collateral and no claim has been made that the
use of such Intellectual Property Collateral does or may violate the
asserted rights of any third party, and (v) Borrower has performed
and will continue to perform all acts and has paid and will continue
to pay all required fees and taxes to maintain each and every item of
such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
to use by license or otherwise, all Intellectual Property Collateral
of any Person used in, necessary for or material to the conduct of
Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower,
threatened which contains allegations respecting the validity,
enforceability, infringement or ownership of any of the Intellectual
Property Collateral of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral at all
times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge,
the legally valid and binding obligation of the account debtor
obligated to pay the same. The amount represented by Borrower to
Lender as owing by each account debtor is, or will be, the correct
amount actually and unconditionally owing, except for normal cash
discounts and allowances where applicable. To the best of Borrower's
knowledge, no account debtor has any defense, set-off, claim or
counterclaim against Borrower that can be asserted against Lender,
whether in any proceeding to enforce Lender's rights in the Collateral
or otherwise. None of the Accounts is, nor will any hereafter arising
Account be, evidenced by a promissory note or other instrument other
than a check, unless delivered to Lender with appropriate endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that
restricts Borrower's ability to manufacture and/or sell the Inventory
other than territorial restrictions not materially adverse to the
Borrower or its business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are paid
and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Taxes. Pay promptly when due all taxes, levies, assessments and
governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such
taxes, levies, assessments or charges is permitted by the Loan
Agreement.
4.2 Insurance. At its sole expense, keep the Collateral insured against
loss or damage by insurance policies which shall be in such form, with
such companies and in such amounts as may be reasonably satisfactory
to Lender and otherwise comply with the provisions of Section 6.6 of
the Loan Agreement.
4.3 Tangible Collateral.
4.3.1 Good Repair. Keep the Tangible Collateral in good working order and
repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all
times shall be maintained and preserved.
4.3.2 Insurance Requirements. Maintain the Tangible Collateral at all times
in accordance with the requirements of all insurance carriers which
provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.3.3 Certificates of Title. Upon the request of Lender (i) promptly deliver
to Lender all certificates of title pertaining to the Tangible
Collateral and (ii) take all actions reasonably requested by Lender to
cause the Lien granted to Lender hereunder to be noted on such
certificates of title.
4.3.4 Use of Collateral. Use the Tangible Collateral in material compliance
with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.4 Intangible Collateral.
4.4.1 Payments. Make all payments and perform all acts reasonably necessary
to maintain and preserve the Intangible Collateral, including, without
limitation, filing of documents, renewals or other information with
any Governmental Body or any other Person.
4.4.2 Delivery of Instruments and Letters of Credit. Upon the request of
Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the
Intangible Collateral, together with such endorsements, assignments
and other agreements as Lender may request in order to perfect the
Security Interests.
4.4.3 Accurate Records. At all times keep accurate and complete records of
payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and
permit Lender or any of its agents tocall at Borrower's place of
business without hindrance or delay to inspect, audit, check or make
extracts from the books, records, correspondence or other data
relating to the Intangible Collateral in accordance with the
provisions of the Loan Agreement.
4.4.4 Verification of Indebtedness. Upon request of Lender after the
occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to
verify directly with the obligors the indebtedness due Borrower on any
account or other item of Intangible Collateral.
4.4.5 Defaults, Other Claims. Immediately inform Lender of any default in
payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made
by others in regard to the Intangible Collateral, if either of which
could have a Material Adverse Effect.
4.4.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application
or registration relating to any material item of its Intellectual
Property Collateral may become abandoned or dedicated to the public or
placed in the public domain or invalid or unenforceable, or of any
adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office
or any foreign counterpart thereof or any court) regarding Borrowe's
ownership of any of its Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.
4.4.7 Maintenance of Intellectual Property Collateral. Take all necessary
steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.5 Collection of Proceeds. Use commercially reasonable efforts to collect
the proceeds of indebtedness owing to Borrower by any Person under any
instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.6 Financing Statements, Further Assurances. Concurrently with the
execution of this Security Agreement, and from time to time
hereafter as requested by Lender, execute and deliver to Lender such
financing statements, continuation statements, termination statements,
amendments to any of the foregoing and other documents, in form
satisfactory to Lender, as Lender may require to perfect and continue
in effect the Security Interests, to carry out the purposes of this
Security Agreement and to protect Lende's rights hereunder. Borrower,
upon demand, shall pay the cost of filing all such financing
statements, continuation statements, termination statements,
amendments to any of the foregoing and other documents.
5. Negative Covenants. Until all of Borrowe's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated,
Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license or
otherwise dispose of any of the Collateral, except as maybe permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of (i)
Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and
all action reasonably requested by Lender to maintain and preserve the
first perfected Lien in favor of Lender on all Property thereof free
and clear of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become
in any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or control of
any warehouseman, bailee or processor without Lender's prior written
consent and unless Lender has received warehouse receipts or bailee
letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or grant any
exclusive license with respect to the Intellectual Property Collateral
to an Affiliate of Borrower or otherwise take any action with respect
to its Intellectual Property Collateral in violation of any term or
provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees to,
unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible
economic value to Borrower or (ii) have a valid business purpose to do
otherwise: (A) fail to continue to use any of its Trademark Collateral
in order to maintain all of its Trademark Collateral in full force
free from any claim of abandonment for non-use, (B) fail to maintain
as in the past the quality of products and services offered under all
of its Trademark Collateral, (C) fail to employ all of its Trademark
Collateral registered with any federal, state or foreign authority
with an appropriate notice of such registration, (D) adopt or use any
trademark which is confusingly similar or a colorable imitation of any
of its Trademark Collateral except in compliance with applicable law,
(E) use any of its Trademark Collateral registered with any federal,
state or foreign authority except for the uses for which registration
or application for registration of such Trademark Collateral has been
made except in compliance with applicable law or (F) do or permit any
act or knowingly omit to do any act whereby any of its Trademark
Collateral may lapse or become invalid or unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i) reasonably and in
good faith determine that any of its Patent Collateral is of
negligible economic value to Borrower or (ii) have a valid business
purpose to do otherwise, do any act, or omit to do any act, whereby
any of Borrower's Patent Collateral may lapse or become abandoned or
dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of Borrower to
(i) maintain in force and pay for any insurance or bond which Borrower
is required to provide pursuant to this Security Agreement or the
other Loan Instruments, (ii) keep the Tangible Collateral in good
repair and operating condition, (iii) keep the Collateral free from
all Liens except for Permitted Liens, (iv) pay when due all taxes,
levies and assessments on or in respect of the Collateral, except as
permitted pursuant to the terms of Section 4.1 above, (v) make all
payments and perform all acts on the part of Borrower to be paid or
performed with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing,
insuring, handling and maintaining the Collateral or (vi) keep fully
and perform promptly any other of the obligations of Borrower under
this Security Agreement or the other Loan Instruments, Lender, at its
option, may (but shall not be required to) procure and pay for such
insurance, place such Collateral in good repair and operating
condition, pay or contest or settle such Liens or taxes or any
judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at the
Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this Security
Agreement upon the occurrence of an Event of Default
under the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall have the
right, from time to time, at Lender's discretion, to contact account
debtors of Borrower and Guarantor to verify that Accounts are valid
and not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the continuation
of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and remedies of
a secured party under the Code and all other rights and remedies
accorded to Lender at equity or law, including, without limitation,
the right to apply for and have a receiver appointed by a court of
competent jurisdiction to manage, protect and preserve the Collateral,
to continue operating the business of Borrower and to collect all
revenues and profits thereof. Any notice of sale or other disposition
of Collateral given not less than ten (10) days prior to such proposed
action shall constitute reasonable and fair notice of such action.
Lender may postpone or adjourn any such sale from time to time by
announcement at the time and place of sale stated in the notice of
sale or by announcement of any adjourned sale, without being required
to give a further notice of sale. Any such sale may be for cash or,
unless prohibited by applicable law, upon such credit or installment
terms as Lender shall determine. Borrower shall be credited with the
net proceeds of such sale only when such proceeds actually are
received by Lender in Good Funds. Despite the consummation of any such
sale, Borrower shall remain liable for any deficiency on Borrower's
Obligations which remains outstanding following any such sale. All net
proceeds received pursuant to a sale shall be applied in the manner
set forth in Section 8.4 of the Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender, Borrower shall
assemble and make the Collateral available to Lender at a place
designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the Collateral collected
by Borrower in trust for Lender, and, after Borrower receives notice
from Lender, promptly after the receipt of the proceeds of Collateral,
turn over such proceeds to Lender in the exact form in which they were
received.
9.4 Other Rights. Lender, at its election, and without notice to Borrower,
may:
9.4.1 Terminate Right of Collection. Terminate the rights of Borrower to
collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments and the
Account Debtors of any account, contract right, chattel paper or
general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or receive, in the
name of Borrower or Lender, any money or Property payable or
receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue upon or otherwise
enforce any item of Collateral as Lender may determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose of enforcing
Lender's rights under this Security Agreement, receive and open mail
addressed to Borrower, and endorse notes, checks, drafts, money
orders, documents of title or other forms of payment on behalf and in
the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be applied by
Lender in accordance with the applicable provisions of Section 8.4 of the Loan
Agreement.
10. Power of Attorney. To effectuate the rights and remedies of Lender
under this Security Agreement, Borrower hereby irrevocably appoints
Lender as its attorney-in-fact, in the name of Borrower or in the name
of Lender, (i) to execute and file from time to time financing
statements, continuation statements, termination statements and
amendments thereto, covering the Collateral, in form satisfactory to
Lender and (ii) take all action and execute all documents referred to
in Section 9.4 above. The power of attorney granted pursuant to this
Section 10 is coupled with an interest and shall be irrevocable until
all of Borrower's Obligations have been paid and performed in full and
the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the acceptance of
this Security Agreement and, except as otherwise specifically provided
in Section 9.1 and 9.3 above or in the Loan Agreement, all other
notices, demands or protests to which Borrower otherwise might be
entitled by law (and which lawfully may be waived) with respect to
this Security Agreement, Borrower's Obligations and the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall have no duty
as to the collection or protection of the Collateral or any income
thereon, (ii) may exercise the rights and remedies of Lender with
respect to the Collateral without resort or regard to other security
or sources for payment and (iii) shall not be deemed to have waived
any of the rights or remedies granted to Lender hereunder unless such
waiver shall be in writing and shall be signed by Lender. Borrower and
Lender acknowledge their intent that, upon the occurrence of an Event
of Default, Lender shall receive, to the fullest extent permitted by
law and governmental policy, all rights necessary or desirable to
obtain, use or sell the Collateral, and to exercise all remedies
available to Lender under the Loan Instruments, the Code or other
applicable law. Borrower and Lender further acknowledge and agree
that, in the event of changes in law or governmental policy occurring
subsequent to the date hereof that affect in any manner Lender's
rights of access to, or use or sale of, the Collateral, or the
procedures necessary to enable Lender to obtain such rights of access,
use or sale, Lender and Borrower shall amend the Loan Instruments, in
such manner as Lender shall request, in order to provide Lender such
rights to the greatest extent possible consistent with then applicable
law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay or omission
on the part of Lender in exercising any rights or remedies contained
herein shall operate as a waiver of such right or remedy or of any
other right or remedy, and no single or partial exercise of any right
or remedy shall preclude any other or further exercise thereof, or the
exercise of any other right or remedy. A waiver of any right or remedy
on any one occasion shall not be construed as a bar or waiver of any
right or remedy on future occasions, and no delay, omission, waiver or
single or partial exercise of any right or remedy shall be deemed to
establish a custom or course of dealing or performance between the
parties hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly agrees that,
anything herein to the contrary notwithstanding, Borrower shall remain
liable under each contract, agreement, interest or obligation assigned
by Borrower to Lender hereunder to observe and perform all of the
conditions and obligations to be observed and performed by Borrower
thereunder, all in accordance with and pursuant to the terms and
provisions thereof. The exercise by Lender of any of the rights
assigned hereunder shall not release Borrower from any of its duties
or obligations under any such contract, agreement, interest or
obligation. Lender shall have no duty, responsibility, obligation or
liability under any such contract, agreement, interest or obligation
by reason of or arising out of the assignment thereof to Lender or the
granting to Lender of a Security Interest therein or the receipt by
Lender of any payment relating to any such contract, agreement,
interest or obligation pursuant hereto, nor shall Lender be required
or obligated in any manner to perform or fulfill any of the
obligations of Borrower thereunder or pursuant thereto, or to make any
payment, or to make any inquiry as to the nature or sufficiency of
any payment received by Lender or the sufficiency of any performance
of any party under any such contract, agreement, interest or
obligation, or to present or file any claim, or to take any action to
collect or enforce any performance of the payment of any amounts which
may have been assigned to Lender, in which Lender may have been
granted a Security Interest or to which Lender may be entitled at any
time or times.
11.5 Grant of License to Use Intellectual Property Collateral. Borrower
hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower, and
wherever the same may be located, including in such license reasonable
access as to all media in which any of the licensed items may be
recorded or stored and to all computer programs and used for the
compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender pursuant to this
Security Agreement, the Loan Agreement or otherwise, shall be
cumulative and non-exclusive, and may be exercised singularly or
concurrently.
13. Severability. In the event that any provision of this Security
Agreement is deemed to be invalid by reason of the operation of any
law or by reason of the interpretation placed thereon by any court or
any other Governmental Body, this Security Agreement shall be
construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security Agreement
shall be in writing and delivered in the manner set forth in the Loan
Agreement.
15. Successors and Assigns. This Security Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective
successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning
hereof.
17. Counterparts. This Security Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which, when taken together, shall be one and the same instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed in
accordance with and governed by the laws and decisions of the State
Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all actions or
proceedings initiated by Borrower and arising directly or indirectly
out of this Security Agreement shall be litigated in either the
Circuit Court of Cook County, Illinois or in the United States
District Court for the Northern District of Illinois, or, if Lender
initiates such action, in addition to the foregoing courts, any other
court in which Lender shall initiate or to which Lender shall remove
such action, to the extent such court has jurisdiction. Borrower
hereby expressly submits and consents in advance to such jurisdiction
in any action or proceeding commenced by Lender in or removed by
Lender to any of such courts, and hereby agrees that personal service
of the summons and complaint, or other process or papers issued
therein may be served in the manner provided for notices herein, and
agrees that service of such summons and complaint or other process or
papers may be made by registered or certified mail addressed to
Borrower at the address to which notices are to be sent pursuant to
Section 11.1 of the Loan Agreement. Borrower waives any claim that
either the Circuit Court of Cook County, Illinois or the United States
District Court for the Northern District of Illinois is an
inconvenient forum or an improper forum based on lack of venue. To the
extent provided by law, should Borrower, after being so served, fail
to appear or answer to any summons, complaint, process or papers so
served within the number of days prescribed by law after the mailing
thereof, Borrower shall be deemed in default and an order and/or
judgment may be entered by the court against Borrower as demanded or
prayed for in such summons, complaint, process or papers. The
exclusive choice of forum for Borrower set forth in this Section 19
shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and agrees that
any controversy which may arise under any of the Loan Instruments or
with respect to the transactions contemplated thereby would be based
upon difficult and complex issues and, therefore, the parties agree
that any lawsuit arising out of any such controversy will be tried in
a court of competent jurisdiction by a judge sitting without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and security
interests granted hereunder shall not terminate until the full and
complete performance and payment and satisfaction of Borrower's
Obligations and the Loan Agreement shall have terminated, whereupon
Lender shall release all such Liens and security interests in favor of
Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each such party
on the date first set forth above.
Address: CAM TRANSPORT, INC.,
1000 Colfax Street an Indiana corporation
Gary, IN 46406
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: FIRSTAR BANK N.A., a national banking association
30 N. Michigan Avenue
Chicago, IL 60602
By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
1000 Colfax
Gary, IN
Location of Other Places of Business
NONE
Location of Books and Records
1000 Colfax
Gary, IN
Locations of All Tangible Collateral
[To be provided]
EXHIBIT "D-1"
ACKNOWLEDGEMENT
(Security Agreement)
The undersigned ("Borrower") hereby acknowledges that it has
previously entered into and executed a Security Agreement dated as of April 18,
2000 ("Security Agreement"), with Firstar Bank N.A. ("Lender"), wherein
property of Borrower was pledged to secure Borrowers' Obligations (as that term
is and defined in that certain Loan Agreement dated as of April 18, 2000,
between the undersigned others and Lender providing for a loan facility in the
principal amount of $2,000,000 in favor of the Borrower and related companies,
which amount was increased to $3,500,000 by Amendment to Loan Agreement dated
June 12, 2000 ("Loan Agreement")). Borrower hereby acknowledges that as of the
date hereof the Loan Agreement is being amended to increase the Revolving Loan
Commitment provided for therein to $5,500,000, and to make certain other
changes to the terms thereof. Borrower acknowledges that Borrowers'
Obligations as that term is used in the Loan Agreement and the Security
Agreement means Borrowers' Obligations under the Loan Agreement, as
amended by the Amendment to Loan Agreement and the Second Amendment to Loan
Agreement of even date herewith, and includes without limitation the obligation
to repay as and when due any and all amounts advanced by Lender to Borrowers
(as defined in the Loan Agreement), or any of them, together with interest
thereon, as provided in the Revolving Loan Note in the face amount of
$5,500,000, as amended and restated as of the date hereof and an Equipment Loan
Note of even date herewith, made by Borrowers and payable to
Lender.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered by a duly-authorized officer of the Borrower as of December 7, 2000.
FIVE STAR TRANSPORT, INC.
By ______________________________
EXHIBIT "D-2"
ACKNOWLEDGEMENT
(Security Agreement)
The undersigned ("Borrower") hereby acknowledges that it has
previously entered into and executed a Security Agreement dated as of April 18,
2000 ("Security Agreement"), with Firstar Bank N.A. ("Lender"), wherein
property of Borrower was pledged to secure Borrowers' Obligations (as that term
is defined in that certain Loan Agreement dated as of April 18, 2000, between
the undersigned and others and Lender providing for a loan facility in the
principal amount of $2,000,000 in favor of the Borrower and related companies,
which amount was increased to $3,500,000 by Amendment to Loan Agreement dated
June 12, 2000 ("Loan Agreement")). Borrower hereby acknowledges that as of the
date hereof the Loan Agreement is being amended to increase the Revolving Loan
Commitment provided for therein to $5,500,000, and to make certain other
changes to the terms thereof. Borrower acknowledges that Borrowers'
Obligations as that term is used in the Loan Agreement and the Security
Agreement means Borrowers' Obligations under the Loan Agreement, as
amended by the Amendment to Loan Agreement and the Second Amendment to Loan
Agreement of even date herewith, and includes without limitation the obligation
to repay as and when due any and all amounts advanced by Lender to Borrowers
(as defined in the Loan Agreement), or any of them, together with interest
thereon, as provided in the Revolving Loan Note in the face amount of
$5,500,000, as amended and restated as of the date hereof and an Equipment Loan
Note of even date herewith, made by Borrowers and payable to Lender.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered by a duly-authorized officer of the Borrower as of December 7, 2000.
CAROLINA NATIONAL TRANSPORTATION, INC.
By ________________________________________
EXHIBIT "D-3"
ACKNOWLEDGEMENT
(Security Agreement)
The undersigned ("Borrower") hereby acknowledges that it has
previously entered into and executed a Security Agreement dated as of April 18,
2000 ("Security Agreement"), with Firstar Bank N.A. ("Lender"), wherein
property of Borrower was pledged to secure Borrowers' Obligations (as that term
is defined in that certain Loan Agreement dated as of April 18, 2000, between
the undersigned and others and Lender providing for a loan facility in the
principal amount of $2,000,000 in favor of the Borrower and related companies,
which amount was increased to $3,500,000 by Amendment to Loan Agreement dated
June 12, 2000 ("Loan Agreement")). Borrower hereby acknowledges that as of the
date hereof the Loan Agreement is being amended to increase the Revolving Loan
Commitment provided for therein to $5,500,000, and to make certain other
changes to the terms thereof. Borrower acknowledges that Borrowers'
Obligations as that term is used in the Loan Agreement and the Security
Agreement means Borrowers' Obligations under the Loan Agreement, as amended by
the Amendment to Loan Agreement and the Second Amendment to Loan Agreement of
even date herewith, and includes without limitation the obligation to repay as
and when due any and all amounts advanced by Lender to Borrowers (as defined in
the Loan Agreement), or any of them, together with interest thereon, as
provided in the Revolving Loan Note in the face amount of $5,500,000, as
amended and restated as of the date hereof and an Equipment Loan Note of even
date herewith, made by Borrowers and payable to Lender.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered by a duly-authorized officer of the Borrower as of December 7, 2000.
KEYSTONE LINES
By ______________________________
EXHIBIT "D-4"
ACKNOWLEDGEMENT
Security Agreement)
The undersigned ("Borrower") hereby acknowledges that it has
previously entered into and executed a Security Agreement dated as of April 18,
2000 ("Security Agreement"), with Firstar Bank N.A. ("Lender"), wherein
property of Borrower was pledged to secure Borrowers' Obligations (as that term
is defined in that certain Loan Agreement dated as of April 18, 2000, between
the undersigned and others and Lender providing for a loan facility in the
principal amount of $2,000,000 in favor of the Borrower and related companies,
which amount was increased to $3,500,000 by Amendment to Loan Agreement dated
June 12, 2000 ("Loan Agreement")). Borrower hereby acknowledges that as of the
date hereof the Loan Agreement is being amended to increase the Revolving Loan
Commitment provided for therein to $5,500,000, and to make certain other
changes to the terms thereof. Borrower acknowledges that Borrowers'
Obligations as that term is used in the Loan Agreement and the Security
Agreement means Borrowers' Obligations under the Loan Agreement, as amended by
the Amendment to Loan Agreement and the Second Amendment to Loan Agreement of
even date herewith, and includes without limitation the obligation to repay as
and when due any and all amounts advanced by Lender to Borrowers (as defined in
the Loan Agreement), or any of them, together with interest thereon, as
provided in the Revolving Loan Note in the face amount of $5,500,000, as
amended and restated as of the date hereof and an Equipment Loan Note of even
date herewith, made by Borrowers and payable to Lender.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered by a duly-authorized officer of the Borrower as of December 7, 2000.
GULF LINE TRANSPORT INC.
By ______________________________
EXHIBIT "D-5"
ACKNOWLEDGEMENT
(Security Agreement)
The undersigned ("Guarantor") hereby acknowledges that it has
previously entered into and executed a Security Agreement dated as of April 18,
2000 ("Security Agreement"), with Firstar Bank N.A. ("Lender"), wherein property
of Guarantor was pledged to secure Borrowers' Obligations (as that term is
defined in that certain Loan Agreement dated as of April 18, 2000, between the
undersigned and certain of its subsidiaries ("Borrowers") and Lender providing
for a loan facility in the principal amount of $2,000,000 in favor of the
Borrowers, which amount was increased to $3,500,000 by Amendment to Loan
Agreement dated June 12, 2000 ("Loan Agreement")), and Guarantor's obligations
under that certain Corporate Guaranty in favor of Lender dated April 18, 2000,
which is being amended and restated in its entirety as of the date hereof.
Guarantor hereby acknowledges that as of the date hereof the Loan Agreement is
being amended to increase the Revolving Loan Commitment provided for therein to
$5,500,000, and to make certain other changes to the terms thereof. Guarantor
acknowledges that "Borrowers' Obligations" as that term is used in the Loan
Agreement and the Security Agreement means Borrowers' Obligations under the
Loan Agreement, as amended by the Amendment to Loan Agreement as of the Second
Amendment to Loan Agreement of even date herewith, and that "Obligations" as
that term is used in said Corporate Guaranty as amended and restated as of the
date hereof includes without limitation to obligation to pay all amounts due
under the Revolving Loan Note in the face amount of $5,500,000, as amended and
restated in its entirety as of the date hereof, and an Equipment Loan Note
of even date herewith, made by Borrowers and payable to Lender.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered by a duly-authorized officer of the Borrower as of December 7, 2000.
US 1 INDUSTRIES, INC.
By ______________________________
EXHIBIT "F-1"
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
LIMITED GUARANTY
The undersigned, Michael Kibler ("Kibler") ("Guarantor"), does hereby
absolutely and unconditionally, subject to the limitation as to amount set
forth below, guarantee to Firstar Bank N.A. ("Lender"), (i) prompt payment when
due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of that (a) certain Revolving Loan Note, dated April 18, 2000,
as amended and restated in its entirety as of June 9, 2000, and as further
amended and restated as of December 7, 2000, executed by Carolina National
Transportation, Inc., an Indiana corporation ("Carolina") Keystone Lines, a
California corporation ("Keystone"), Gulf Line Transport, Inc., an Indiana
corporation ("Gulf Line"), Five Star Transport, Inc., an Indiana corporation
("Five Star") and Cam Transport, Inc., an Indiana corporation ("Cam")
(Carolina, Keystone, Gulf Line, Five Star and Cam hereinafter collectively
referred to as "Borrowers") in the principal amount of $5,500,000 (including
all renewals, extensions and modifications thereof and all court costs, expert
witness fees and reasonable attorneys' fees incurred by Lender in connection
with the collection or enforcement thereof) (the "Revolving Note"), and (b)
that certain Equipment Loan Note dated December 7, 2000, executed by Borrowers
in favor of Lender in the principal amount of $500,000 (including all renewals,
extensions and modifications thereof and all court costs, expert witness fees
and reasonable attorneys' fees incurred by Lender in connection with the
collection or enforcement thereof) (the "Equipment Note", the Equipment Note
and Revolving Note hereinafter referred to as the "Notes") and (ii) prompt
performance and payment of all of Borrowers' Obligations (as defined in that
certain Loan Agreement dated April 18, 2000, as amended as of June 9, 2000, and
as further amended as of the date hereof between Borrowers, Lender and US 1
Industries, Inc. (the "Loan Agreement")) (any and all indebtedness represented
or evidenced by or arising with respect to the Notes in favor of Lender and
Borrower's Obligations hereinafter sometimes collectively referred to as the
"Guaranteed Debt").
The undersigned waives notice of the acceptance of this Guaranty and
of the extension or continuation of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment, protest, notice, demand or action
on delinquency and any other formalities required to charge the undersigned
with liability hereunder, in respect of the Guaranteed Debt or any part
thereof, or otherwise to enforce payment thereof against any collateral
securing the Guaranteed Debt or any part thereof. It is the intent hereof
that Guarantor remain liable as a principal until all of the Guaranteed Debt is
paid in full notwithstanding any act or thing that might otherwise operate as a
legal or equitable discharge of a surety.
In the event of default under the Notes or the Loan Agreement,
Guarantor agrees to pay on demand by Lender all sums then or thereafter due
under the Notes and Loan Agreement regardless of any defense, right of setoff
or claims which any Borrowers or Guarantor might have against Lender.
This is a guaranty of payment and performance, not collection. It is
expressly understood and agreed that the liability of the undersigned Guarantor
hereunder for the Guaranteed Debt, except any liability with respect to a
breach of Section 7.5 of the Loan Agreement, shall be limited to the sum of (i)
the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000) and
(ii) all interest, fees, charges, costs and attorneys' fees applicable thereto
which may accrue or be incurred after demand for payment of such principal sum.
It is further expressly understood and agreed that separate recovery may be had
by Lender for such sum regardless of whether action is taken or suit is brought
by Lender against any other person liable for the Guaranteed Debt and
regardless of whether any action is taken by Lender to enforce its rights
against any collateral for the Guaranteed Debt.
In any right of action which shall accrue to Lender by reason of this
Guaranty, Lender may, at its sole election, proceed against Guarantor with or
without (a) joining any of Borrowers or the Corporate Guarantor, US 1
Industries, Inc., in such action or (b) commencing any action against, or
obtain any judgment against any of Borrowers.
The validity and enforceability of this Guaranty shall not be impaired
or affected by any of the following, whether occurring before or after receipt
by Lender of notice of termination of this Guaranty: (a) any extension,
modification or renewal of, or indulgence with respect to, or substitutions
for, the Guaranteed Debt or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to enforce any right, power or remedy
with respect to the Guaranteed Debt or any part thereof or any agreement
relating thereto, or any collateral securing the Guaranteed Debt or any part
thereof; (c) any waiver of any right, power or remedy or of any default with
respect to the Guaranteed Debt or any part thereof or any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt or any
part thereof; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral
securing the Guaranteed Debt or any part thereof, any other guaranties with
respect to the Guaranteed Debt or any part thereof, or any other obligation of
any person or entity with respect to the Guaranteed Debt or any part thereof;
(e) the enforceability or validity of the Guaranteed Debt or any part thereof
or the genuineness, enforceability or validity of any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt or any
part thereof; or (f) the application of payments received from any source to
the permitted payment of indebtedness other than the Guaranteed Debt, any part
thereof or amounts which are not covered by this Guaranty even though Lender
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty, all
whether or not the undersigned shall have had notice or knowledge of any act or
omission referred to in the foregoing clauses (a) through (f) of this
paragraph. It is agreed that the undersigned's liability hereunder is joint and
several and independent of any other guaranties or other obligations at any
time in effect with respect to the Guaranteed Debt or any part thereof and that
the undersigned's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other
guaranties or other obligations.
The undersigned further agrees that if at any time all or any part of
any payment heretofore applied by Lender to the Guaranteed Debt hereby is or
must be rescinded or returned by Lender for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy, or reorganization of any
Borrower or any Guarantor), such indebtedness shall for the purposes of this
Guaranty, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
Lender, and this Guaranty shall continue to be effective or be reinstated as
the case may be, as to such guaranteed indebtedness, all as though such
application by Lender had not been made.
Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral, if any, which may from time to time secure the
Guaranteed Debt or any part thereof and (ii) the undersigned authorizes Lender
to take any action or exercise any remedy with respect thereto, which Lender in
its sole discretion shall determine, without notice to the undersigned. In the
event Lender in its sole discretion elects to give notice of any action with
respect to the collateral, if any, securing the Guaranteed Debt or any part
thereof, ten (10) days' written notice shall be deemed reasonable notice of any
matters contained in such notice. The payment by the undersigned of any amount
pursuant to this Limited Guaranty shall not entitle the undersigned to any
right, title or interest, whether by way of subrogation or otherwise, in and to
any of the Obligations, including, but not limited to, any indebtedness
evidenced by the Notes, or any collateral therefor. The undersigned does hereby
release Borrowers from any and all obligations of indemnification,
contribution, subrogation and exoneration which may arise or come into
existence as a result of the undersigned's assumption or performance of its
obligations in this Limited Guaranty on behalf of Borrowers in favor of Lender
or its successors and assigns.
The undersigned shall pay all costs, fees and expenses (including
court costs, expert witness fees and reasonable attorneys' fees) incurred by
Lender in collecting or enforcing the undersigned's obligations under this
Guaranty.
Any notice, demand or request which may be permitted, required or
desired to be given in connection therewith shall be given in writing and
directed to Lender and Guarantor as follows:
Lender: Firstar Bank N.A.
30 N. Michigan Avenue
Chicago, IL 60602
Fax: (312) 696-1397
With a copy to
its attorneys: Christopher J. Horvay
Gould & Ratner
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 235-3241
Guarantor: Michael Kibler
1000 Colfax Street
Gary, Indiana 46406
Fax: (219) 977-5227
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
100 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other overnight
courier; or (iii) delivered by facsimile provided a hard copy of any such
notice delivered by facsimile is delivered to the addressee within one business
day thereafter by either of the methods listed in (i) or (ii) above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
This Guaranty amends and restates in its entirety an original Guaranty
made by the Guarantor in favor of Lender dated April 18, 2000, and amended and
restated as of June 9, 2000.
Chicago, Illinois
_________________________
Michael Kibler
STATE OF _______________ )
) SS.
COUNTY OF _____________ )
The undersigned, a Notary Public in and for the above County and
State, certifies that Michael Kibler, personally known to me to be the same
person whose name is subscribed as guarantor to the foregoing Limited Guaranty,
appeared before me in person and acknowledged signing the said instrument as
the free and voluntary act of the guarantor.
Subscribed and sworn to before me this _____ day of ____________, 20__.
__________________________________
Notary Public
My commission expires:
_______________________
EXHIBIT "F-2"
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
LIMITED GUARANTY
The undersigned, Harold Antonson ("Antonson") ("Guarantor"), does
hereby absolutely and unconditionally, subject to the limitation as to amount
set forth below, guarantee to Firstar Bank N.A. ("Lender"), (i) prompt payment
when due, whether at stated maturity, upon acceleration or otherwise, and at
all times thereafter, of that (a) certain Revolving Loan Note, dated April 18,
2000, as amended and restated in its entirety as of June 9, 2000, and as
further amended and restated as of December 7, 2000, executed by Carolina
National Transportation, Inc., an Indiana corporation ("Carolina") Keystone
Lines, a California corporation ("Keystone"), Gulf Line Transport, Inc., an
Indiana corporation ("Gulf Line"), Five Star Transport, Inc., an Indiana
corporation ("Five Star") and Cam Transport, Inc., an Indiana corporation
("Cam") (Carolina, Keystone, Gulf Line, Five Star and Cam hereinafter
collectively referred to as "Borrowers") in the principal amount of $5,500,000
(including all renewals, extensions and modifications thereof and all court
costs, expert witness fees and reasonable attorneys' fees incurred by Lender in
connection with the collection or enforcement thereof) (the "Revolving Note"),
and (b) that certain Equipment Loan Note dated December 7, 2000, executed by
Borrowers in favor of Lender in the principal amount of $500,000 (including all
renewals, extensions and modifications thereof and all court costs, expert
witness fees and reasonable attorneys' fees incurred by Lender in connection
with the collection or enforcement thereof) (the "Equipment Note", the
Equipment Note and Revolving Note hereinafter referred to as the "Notes") and
(ii) prompt performance and payment of all of Borrowers' Obligations (as
defined in that certain Loan Agreement dated April 18, 2000, as amended as of
June 9, 2000, and as further amended as of the date hereof between Borrowers,
Lender and US 1 Industries, Inc. (the "Loan Agreement")) (any and all
indebtedness represented or evidenced by or arising with respect to the Notes
in favor of Lender and Borrower's Obligations hereinafter sometimes
collectively referred to as the "Guaranteed Debt").
The undersigned waives notice of the acceptance of this Guaranty and
of the extension or continuation of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment, protest, notice, demand or action
on delinquency and any other formalities required to charge the undersigned
with liability hereunder, in respect of the Guaranteed Debt or any part
thereof, or otherwise to enforce payment thereof against any collateral
securing the Guaranteed Debt or any part thereof. It is the intent hereof
that Guarantor remain liable as a principal until all of the Guaranteed Debt is
paid in full notwithstanding any act or thing that might otherwise operate as a
legal or equitable discharge of a surety.
In the event of default under the Notes or the Loan Agreement,
Guarantor agrees to pay on demand by Lender all sums then or thereafter due
under the Note and Loan Agreement regardless of any defense, right of setoff or
claims which any Borrowers or Guarantor might have against Lender.
This is a guaranty of payment and performance, not collection. It is
expressly understood and agreed that the liability of the undersigned Guarantor
hereunder for the Guaranteed Debt, except any liability with respect to a
breach of Section 7.5 of the Loan Agreement, shall be limited to the sum of (i)
the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000) and
(ii) all interest, fees, charges, costs and attorneys' fees applicable thereto
which may accrue or be incurred after demand for payment of such principal sum.
It is further expressly understood and agreed that separate recovery may be had
by Lender for such sum regardless of whether action is taken or suit is brought
by Lender against any other person liable for the Guaranteed Debt and
regardless of whether any action is taken by Lender to enforce its rights
against any collateral for the Guaranteed Debt.
In any right of action which shall accrue to Lender by reason of this
Guaranty, Lender may, at its sole election, proceed against Guarantor with or
without (a) joining any of Borrowers or the Corporate Guarantor, US 1
Industries, Inc., in such action or (b) commencing any action against, or
obtain any judgment against any of Borrowers.
The validity and enforceability of this Guaranty shall not be impaired
or affected by any of the following, whether occurring before or after receipt
by Lender of notice of termination of this Guaranty: (a) any extension,
modification or renewal of, or indulgence with respect to, or substitutions
for, the Guaranteed Debt or any part thereof or any agreement relating thereto
at any time; (b) any failure or omission to enforce any right, power or remedy
with respect to the Guaranteed Debt or any part thereof or any agreement
relating thereto, or any collateral securing the Guaranteed Debt or any part
thereof; (c) any waiver of any right, power or remedy or of any default with
respect to the Guaranteed Debt or any part thereof or any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt or any
part thereof; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification, with or without consideration, of any collateral
securing the Guaranteed Debt or any part thereof, any other guaranties with
respect to the Guaranteed Debt or any part thereof, or any other obligation of
any person or entity with respect to the Guaranteed Debt or any part thereof;
(e) the enforceability or validity of the Guaranteed Debt or any part thereof
or the genuineness, enforceability or validity of any agreement relating
thereto or with respect to any collateral securing the Guaranteed Debt or any
part thereof; or (f) the application of payments received from any source to
the permitted payment of indebtedness other than the Guaranteed Debt, any part
thereof or amounts which are not covered by this Guaranty even though Lender
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty, all
whether or not the undersigned shall have had notice or knowledge of any act or
omission referred to in the foregoing clauses (a) through (f) of this
paragraph. It is agreed that the undersigned's liability hereunder is joint and
several and independent of any other guaranties or other obligations at any
time in effect with respect to the Guaranteed Debt or any part thereof and that
the undersigned's liability hereunder may be enforced regardless of the
existence, validity, enforcement or non-enforcement of any such other
guaranties or other obligations.
The undersigned further agrees that if at any time all or any part of
any payment heretofore applied by Lender to the Guaranteed Debt hereby is or
must be rescinded or returned by Lender for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy, or reorganization of any
Borrower or any Guarantor), such indebtedness shall for the purposes of this
Guaranty, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
Lender, and this Guaranty shall continue to be effective or be reinstated as
the case may be, as to such guaranteed indebtedness, all as though such
application by Lender had not been made.
Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral, if any, which may from time to time secure the
Guaranteed Debt or any part thereof and (ii) the undersigned authorizes Lender
to take any action or exercise any remedy with respect thereto, which Lender in
its sole discretion shall determine, without notice to the undersigned. In the
event Lender in its sole discretion elects to give notice of any action with
respect to the collateral, if any, securing the Guaranteed Debt or any part
thereof, ten (10) days' written notice shall be deemed reasonable notice of any
matters contained in such notice. The payment by the undersigned of any amount
pursuant to this Limited Guaranty shall not entitle the undersigned to any
right, title or interest, whether by way of subrogation or otherwise, in and to
any of the Obligations, including, but not limited to, any indebtedness
evidenced by the Notes, or any collateral therefor. The undersigned does hereby
release Borrowers from any and all obligations of indemnification,
contribution, subrogation and exoneration which may arise or come into
existence as a result of the undersigned's assumption or performance of its
obligations in this Limited Guaranty on behalf of Borrowers in favor of Lender
or its successors and assigns.
The undersigned shall pay all costs, fees and expenses
(including court costs, expert witness fees and reasonable attorneys'fees)
incurred by Lender in collecting or enforcing the undersigned's obligations
under this Guaranty.
Any notice, demand or request which may be permitted, required or
desired to be given in connection therewith shall be given in writing and
directed to Lender and Guarantor as follows:
Lender: Firstar Bank N.A.
30 N. Michigan Avenue
Chicago, IL 60602
Fax: (312) 696-1397
With a copy to
its attorneys: Christopher J. Horvay
Gould & Ratner
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 235-3241
Guarantor: Harold Antonson
1000 Colfax Street
Gary, Indiana 46406
Fax: (219) 977-5227
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
100 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other overnight
courier; or (iii) delivered by facsimile provided a hard copy of any such
notice delivered by facsimile is delivered to the addressee within one business
day thereafter by either of the methods listed in (i) or (ii) above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
This Guaranty amends and restates in its entirety an original Guaranty
made by the Guarantor in favor of Lender dated April 18, 2000, and amended and
restated as of June 9, 2000.
Chicago, Illinois
_________________________
Harold Antonson
EXHIBIT "G"
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
CORPORATE GUARANTY
To induce Firstar Bank N.A., whose address is 30 N. Michigan Avenue,
Chicago, Illinois 60602 ("Lender"), to advance funds to Carolina National
Transportation, Inc., an Indiana corporation, Keystone Lines, a California
corporation ("Keystone"), Gulf Line Transport, Inc., an Indiana corporation
("Gulf Line"), Five Star Transport, Inc. an Indiana corporation ("Five Star")
and Cam Transport, Inc., an Indiana corporation ("Cam") (Carolina, Keystone,
Gulf Line, Five Star and Cam hereinafter collectively referred to as
"Borrowers") and to enter into a Second Amendment to Loan Agreement of even
date herewith between Borrowers and Lender (which Second Amendment to Loan
Agreement together with the original Loan Agreement dated April 18, 2000, and
Amendment to Loan Agreement dated June 9, 2000 between Borrowers (other than
Cam) and Lender and U.S.1 Industries, Inc. is hereafter referred to as
"Loan Agreement") and to otherwise extend credit to Borrowers, the
undersigned hereby irrevocably, absolutely and unconditionally guarantees
payment and performance when due of all presently existing or hereafter
incurred direct, indirect, absolute or contingent indebtedness, liabilities and
other obligations of Borrowers to Lender arising out of or incurred in
connection with the Revolving Loan Note dated April 18, 2000 from Borrowers to
Lender, as amended and restated in its entirety as of June 9, 2000, and as
further amended and restated as of the date hereof (the "Revolving Loan Note")
and the Equipment Loan Note from Borrowers to Lender of even date herewith (the
Revolving Loan Note and Equipment Loan Note herein collectively referred to as
the "Notes"), or any document, instrument, mortgage, guaranty, or security
agreement given or delivered to evidence or secure the indebtedness evidenced
by the Notes, and all modifications, amendments and supplements thereto
including, but not limited to, charges, interest and the principal, interest
and other sums payable pursuant to the Notes or the Loan Agreement or any of
the Loan Instruments (as defined in the Loan Agreement) (collectively, the
"Obligations"). The undersigned further agrees to pay all costs of collection
and attorneys'fees paid or incurred by Lender in the collection of the
Obligations and the enforcement of this Corporate Guaranty. This Corporate
Guaranty shall continue in full force and effect until all of the Obligations,
including, but not limited to, all indebtedness evidenced by the Notes,
have been fully and irrevocably paid and discharged. This is a guarantee of
payment and not of collection and shall be enforceable directly without
resorting to any other right, remedy or security.
If Borrowers do not pay or otherwise fully perform the Obligations in
a timely manner as provided in the Notes and Loan Agreement, the undersigned
will promptly pay the amount due and payable by Borrowers to Lender upon
demand. The undersigned acknowledges that it will benefit from the extension
of credit described herein made by Lender to Borrowers and that, in order to
induce Lender to accept the Notes and to otherwise extend credit to Borrowers
that it has agreed to execute and deliver this Corporate Guaranty on the
understanding that doing so is a condition precedent to Lender accepting the
Notes and otherwise agreeing to extend credit. The undersigned represents and
warrants that it (i) has personal knowledge of and is familiar with Borrowers'
business affairs, books and records; and (ii) has the ability to influence
Borrowers' decision making process. The undersigned further represents and
warrants that Borrowers are in sound financial condition, that all financial
statements of Borrowers and the undersigned heretofore provided to Lender are
true, correct and complete and that Borrowers are able to and will perform
their obligations in accordance with the terms and conditions of the Notes.
The undersigned acknowledges that Lender is relying upon the undersigned's
representations, warranties and covenants herein in accepting the Notes and
agreeing to otherwise extend credit to Borrowers, and undertakes to perform or
cause Borrowers to perform the Obligations promptly and in good faith.
If Borrowers do not pay any sum when due under the Notes or Loan Agreement,
upon the expiration of the applicable cure period, if any, Lender in its sole
discretion, may proceed directly against the undersigned under this Corporate
Guaranty without first proceeding against any of Borrowers or any of the
collateral or exhausting any of its remedies against any of Borrowers. The
payment by the undersigned of any amount pursuant to this Corporate Guaranty
shall not entitle the undersigned to any right, title or interest, whether by
way of subrogation or otherwise, in and to any of the Obligations, including,
but not limited to, any indebtedness evidenced by the Notes, or any collateral
therefor. The undersigned does hereby release Borrowers from any and all
obligations of indemnification, contribution, subrogation and exoneration which
may arise or come into existence as a result of the undersigned's assumption or
performance of its obligations in this Corporate Guaranty on behalf of
Borrowers in favor of Lender or its successors and assigns.
The liability and obligation of the undersigned hereunder shall not be
affected or impaired in any manner by (and Lender is hereby expressly
authorized to make, from time to time, without notice to the undersigned) any
sale, pledge, surrender, compromise, release, renewal, extension,
modification, or other disposition of or with respect to any of the
Obligations, including, without limitation, the indebtedness evidenced by the
Notes, or any collateral therefor, and such obligation and liability of the
undersigned shall not in any manner be affected or impaired by any acceptance
of security for or other guarantees of any such indebtedness or by any
forbearance or indulgence in the collection thereof or any failure, neglect or
omission to realize upon any collateral therefor. Diligence in collection and
presentment for payment, demand, protest and/or notice of dishonor, default or
nonpayment and notice of the creation or existence of any and all Obligations
and security therefor and of the acceptance of this Corporate Guaranty are
hereby expressly waived.
The undersigned agrees that, if at any time all or any part of any
payment theretofore applied to any of the Obligations is rescinded or returned
for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy, liquidation, receivership, arrangement or reorganization of any
party or by any defense which any Borrower or any shareholder thereof may have
by reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding), such Obligation shall, for the purposes of
this Corporate Guaranty, be deemed to have continued in existence to the extent
of such payment, notwithstanding such application by Lender, and this Corporate
Guaranty shall continue to be effective or be reinstated, as the case may be,
as to such Obligation, all as though such application had not been made.
The undersigned agrees that the obligations, covenants and agreements
of the undersigned under this Corporate Guaranty shall not be affected or
impaired by any act of Lender, or any event or condition except full
performance of the Obligations and any other sums due hereunder. The
undersigned agree that, without full performance of the Obligations, the
liability of the undersigned hereunder shall not be discharged or diminished
by: (i) the renewal or extension of time for the performance of the Obligations
under the Loan Instruments or any other agreement relating to the Obligations,
whether made with or without the knowledge or consent of the undersigned; (ii)
any transfer, waiver, compromise, settlement, modification, surrender, or
release of the Loan Instruments or any collateral assigned, pledged or
hypothecated thereby; (iii) the existence of any defenses to enforcement of the
Loan Instruments; (iv) any failure, omission, delay or inadequacy, whether
entire or partial, of Lender to exercise any right, power or remedy under the
Loan Instruments regarding the Obligations; (v) the existence of any setoff,
claim, reduction, or diminution of the Obligations, or any defense of any
kind or nature, which the undersigned may have against any of the Borrowers or
which any party has against Lender; (vi) the application of payments received
from any source to the payment of any obligation other than the Obligations,
even though Lender might lawfully have elected to apply such payments to any
part or all of the Obligations; or (vii) the addition of any and all other
endorsers, guarantors, obligors and other persons liable for the performance of
the Obligations and the acceptance of any and all other security for the
performance of the Obligations, all whether or not the undersigned shall have
had notice or knowledge of any act or omission referred to in the foregoing
clauses (i) through (vii) of this paragraph. The undersigned intends that the
undersigned shall remain liable hereunder as a principal until all Obligations
shall have been performed in full, notwithstanding, any fact, act, event or
occurrence which might otherwise operate as a legal or equitable discharge of a
surety or guarantor other than payment and performance in full of the
Obligations.
If this Corporate Guaranty is signed by more than one person, firm or
corporation, every obligation of each signatory shall be joint and several.
No release or discharge of any one or more of the undersigned, if there be more
than one, shall release or discharge any other or others of the undersigned
unless and until all of the Obligations shall have been fully paid. This
Corporate Guaranty and each and every part hereof shall be binding upon the
undersigned jointly and severally (if there be more than one)and upon the
heirs, legal representatives, successors and assigns of the undersigned, and
shall inure to the benefit of Lender and its successors and assigns.
The undersigned expressly waives: (i) notice of the acceptance by
Lender of this Corporate Guaranty; (ii) notice of the existence, creation,
payment or nonpayment of the Obligations; (iii) presentment, demand at
maturity, notice of dishonor, protest, and all other notices whatsoever; and
(iv) any failure by Lender to inform the undersigned of any facts Lender may
now or hereafter know about any of Borrowers or the transactions contemplated
by the Loan Instruments, it being understood and agreed that Lender has no duty
so to inform and that the undersigned is fully responsible for being and
remaining informed by Borrowers of all circumstances bearing on the existence,
creation, or risk of nonpayment of the Obligations. Credit may be granted or
continued from time to time by Lender to Borrowers without notice to or
authorization from the undersigned, regardless of the financial or other
condition of any of Borrowers at the time of any such grant or continuation.
Lender shall have no obligation to disclose or discuss with the undersigned
its assessment of the financial condition of any Borrower. No modification
or waiver of any of the provisions of this Corporate Guaranty will be binding
upon Lender except as expressly set forth in a writing duly signed and
delivered on behalf of Lender. The undersigned further agrees that any
exculpatory language pertaining to any Borrower contained in the Loan
Instruments or any document executed and delivered by any Borrower
thereunder shall in no event apply to this Corporate Guaranty, and will not
prevent Lender from proceeding against the undersigned to enforce this
Corporate Guaranty.
This Corporate Guaranty has been executed in Chicago, Illinois, and
shall be governed by the laws of the State of Illinois. If any provision of
this Corporate Guaranty, or any paragraph, sentence, clause, phrase, or word,
or the application thereof, in any circumstances, is adjudicated by a court of
competent jurisdiction to be invalid, the validity of the remainder of this
Corporate Guaranty shall be construed as if such invalid part were never
included herein. Time is of the essence of this Corporate Guaranty. All
payments to be made hereunder shall be made in currency and coin of the United
States of America which is legal tender for public and private debts at the
time of payment.
This Corporate Guaranty is secured by a Security Agreement dated
April 18, 2000 from Guarantor to Lender and by all collateral described therein.
The undersigned hereby submits to personal jurisdiction in the State
of Illinois for the enforcement of this Corporate Guaranty and waives any and
all personal rights to object to such jurisdiction for the purposes of
litigation to enforce this Corporate Guaranty. The undersigned hereby consents
to the jurisdiction of either the Circuit Court of Cook County, Illinois,
or the United States District Court for the Northern District of Illinois,
Eastern Division, in any action, suit or proceeding which Lender may at any
time wish to file in connection with this Corporate Guaranty or any related
matter. The undersigned hereby agrees that any action, suit or proceeding to
enforce this Corporate Guaranty may be brought in any State or Federal Court in
the State of Illinois and hereby waive any objection which the undersigned may
have to the laying of the venue of any such action, suit or proceeding in any
such Court; provided, however, that the provisions of this paragraph shall not
be deemed to preclude Lender from filing any such action, suit or proceeding in
any other appropriate forum. THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ALL ACTIONS OR PROCEEDINGS IN ANY WAY,
MANNER OR RESPECT ARISING OUT OF OR RELATING. TO THIS CORPORATE GUARANTY.
Any notice, demand or other communication which either party may
desire or may be required to give to the other party shall be in writing, and
shall be deemed given (i) if and when personally delivered, or (ii) upon
receipt via facsimile transmission provided that a copy is also sent via
overnight mail, addressed to the intended recipient at its address set forth
below, or to such other address as such party may have designated to all other
parties by notice furnished in accordance herewith:
if to Lender: Firstar Bank N.A.
30 N. Michigan Avenue Drive
Chicago, Illinois 60602
Attention: Craig B. Collinson,
Senior Vice President
Fax No.: (312) 696-1397
With a copy to: Gould & Ratner
222 North LaSalle Street
Suite 800
Chicago, Illinois 60601
Attention: Christopher J. Horvay
Fax No.: (312) 236-3241
and if to the undersigned: at the address set forth below its name
Except as otherwise specifically required herein, notice of the exercise of
any right, option or power granted to Lender by this Corporate Guaranty is not
required to be given.
This Corporate Guaranty amends and restates in its entirety an
original Corporate Guaranty in favor of Lender made by the undersigned dated
April 18, 2000, and amended and restated as of June 9, 2000.
US 1 INDUSTRIES, INC., an Indiana corporation
By:_________________________________
Name:_______________________________
Title:________________________________
Address: 1000 Colfax Street
Gary, IN 46406
Fax No.: (219) 977-5227
"EXHIBIT H-1"
AMENDMENT TO SUBORDINATION AGREEMENT
This Amendment dated as of December 7, 2000, is entered into by and
between August Investment Partnership ("Junior Creditor") with offices at 1000
Colfax Street, Gary, IN 46406 and Firstar Bank N.A. ("Lender") with offices at
30 N. Michigan Avenue, Chicago, IL 60602.
WITNESSETH:
WHEREAS, Lender has previously extended credit to Carolina National
Transportation Inc. ("Carolina"), Keystone Lines ("Keystone"), Gulf Line
Transport Inc. ("Gulf Line") and First Star Transport, Inc. ("First Star") and
is about to extend credit to Cam Transport, Inc. ("Cam") (Carolina, Keystone,
Gulf Line, First Star and Cam are hereinafter referred to collectively as
"Borrowers") pursuant to that certain Loan Agreement dated April 18, 2000, as
amended by Amendment to Loan Agreement dated June 9, 2000 and as further
amended by Second Amendment to Loan Agreement of even date herewith (the "Loan
Agreement");
WHEREAS, US 1 Industries, Inc. ("Guarantor"), the parent of each of
Borrowers, has guaranteed the obligations of Borrowers under the Loan Agreement
and the Revolving Loan Note and Equipment Loan Note issued pursuant thereto
under a Corporate Guaranty dated April 18, 2000, and amended and restated as of
June 9, 2000, and as further amended and extended as of the date hereof (the
"Corporate Guaranty").
WHEREAS, Guarantor may hereafter be liable to Lender under the
Corporate Guaranty as a result of the advance of monies and other extensions of
credit under the Loan Agreement;
WHEREAS, the owners of Junior Creditor are financially interested in
Guarantor and TC Services, Inc. and Borrowers, and Guarantor and TC Services,
Inc. are indebted to Junior Creditor for monies previously advanced by Junior
Creditor to Guarantor or TC Services, Inc. ("Subordinated Debt");
WHEREAS, Junior Creditor has previously entered into a Subordination
Agreement with Lender subordinating its rights to be paid by Guarantor or TC
Services, Inc. or any of Borrowers on account of the Subordinated Debt (as
defined in the Subordination Agreement) to the rights of Lender as holder of
the Senior Debt (as defined in the Subordination Agreement); and
WHEREAS, the Subordination Agreement imposes various restrictions on
Junior Creditor's ability to take security in the assets of Guarantor or
Borrowers, and the parties wish to amend those restrictions all as hereinafter
provided to allow for a junior pledge of assets to secure the repayment of the
Subordinated Debt; and
WHEREAS, Borrowers desire to increase the amount of credit available
to them from Lender.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged by Junior Creditor, and in order to induce Lender to
make loans or extend credit or any other financial accommodation to or for the
benefit of the Borrowers pursuant to the Loan Agreement, or to grant such
renewals or extensions thereof as Lender may deem advisable, to better secure
Lender in respect of the foregoing, and to induce Lender to consent to the
junior pledge described above, and a partial payment of principal of the
Subordinated Debt, the Junior Creditor and Lender hereby agrees as follows:
1. Consent to Junior Pledge. Lender hereby consents to Junior Creditor
accepting a pledge of collateral from Guarantor and Borrowers
consisting of amounts received and other assets of Guarantor and/or
Borrower as security for the repayment of the Subordinated Debt,
provided Junior Creditor hereby agrees that any liens created thereby
("Permitted Junior Liens") shall be junior in every respect to any
lien in favor of the Lender securing the Senior Debt, and Junior
Creditor hereby agree not to accept such collateral or any other
assets of Guarantor or Borrowers, or any of them, as security for any
debt payable to Junior Creditor other than the Subordinated Debt
without the prior written consent of the Lender, which may be withheld
by Lender's in its absolute discretion. The form of any security
agreement or other document creating or perfecting the Permitted
Junior Lien, including without limitation any financing statement
shall be subject to the approval of Lender, which shall not be
unreasonably withheld. Not in limitation of the foregoing, any such
security agreement or financing statement securing the Permitted
Junior Lien shall indicate on its face by language and in a manner
approved by Lender that the lien credited thereby is junior to the
lien in favor of Lender securing the Senior Debt, and that any further
borrowing by Borrowers and/or Guarantor without the prior written
consent of Lender is, subject to certain limited exceptions stated in
the Loan Agreement, prohibited by the terms of the Loan Agreement.
Junior Creditor, warrants and represents that, as of the date hereof,
it has no lien on or security interest in any of the assets of
Guarantor or Borrowers as security for the repayment of the
Subordinated Debt, and agrees that, except as expressly provided in
this Section or to the Subordinated Debt, Junior Creditor shall not
take, accept the assignment of or hold any security interest in any of
the assets of Guarantor or Borrowers as security for any obligation,
until the Senior Debt shall have been fully discharged and all
financing agreements between the Guarantor and Borrowers and the
Lender have been terminated.
2. Delivery of Original Subordinated Debt Instruments. Junior Creditor
hereby agrees to deliver the Lender all original instruments
evidencing the Subordinated Debt together with a separate endorsement
or assignment thereof to Lender as additional security to be held by
Lender as additional security until the Senior Debt has been paid in
full.
3. Subordinated Debt Owed Only to the Junior Creditor. Junior Creditor
warrants and represents that as of the date hereof, Junior Creditor
has not previously assigned any interest in the Subordinated Debt or
any security interest in connection therewith, that no other party
owns an interest in the Subordinated Debt or security therefor (other
than as an unsecured trade creditor) other than Junior Creditor
(whether as joint holders of the Subordinated Debt, participants or
otherwise) and that the entire Subordinated Debt is owing only to
Junior Creditor and Junior Creditor covenants that the entire
Subordinated Debt shall continue to be owing only to the Junior
Creditor and all security therefor shall continue to be held solely
for the benefit of the Junior Creditor (except to the extent held for
the benefit of unsecured trade creditors). Junior Creditor further
warrants and covenants to Lender that Junior Creditor shall not make
further loans, advances or extensions of credit to Guarantor or any
Borrowers or TC Services, Inc. without the prior written consent of
Lender.
4. Waiver. Junior Creditor hereby waives, to the extent permitted under
law, any requirement that, if and when Lender finds it necessary to
enforce its security interest with respect to the Senior Debt, Lender
shall marshal assets of Guarantor or Borrowers as required by law.
5. Amendment. Except as expressly provided herein, the terms of the
Subordination Agreement shall remain in full force and effect as
originally stated therein. This Amendment to Subordination Agreement
may not be amended except by the express written agreement of the
parties hereto.
IN WITNESS WHEREOF, this instrument has been executed and delivered as
of this 7th day of December, 2000.
_________ AUGUST INVESTMENT PARTNERSHIP
_________ By: _________________________________
_________ Harold Antonson
_________ By: _________________________________
_________ Michael Kibler
Acknowledged and Accepted
in Chicago, Illinois as of this
7th day of December, 2000
_________ FIRSTAR BANK N.A.
_________ By: ________________________________
_________ Craig B. Collinson
_________ Title: Senior Vice President
The undersigned hereby accept and acknowledge receipt of a copy of,
the foregoing Subordination Agreement dated as of this 7th day of December,
2000, and agree that neither will pay any of the Subordinated Debt (as defined
in the Subordination Agreement) or grant any security therefor, except as the
foregoing agreement provides. In the event of a breach by Junior Creditor any
of the provisions herein or of the foregoing Agreement, all of the Senior Debt
(as defined in the Subordination Agreement) shall, without presentment, demand,
protest or notice of any kind, become immediately due and payable, unless
Lender shall otherwise elect in writing. The undersigned further agrees that
the terms of this Agreement shall not give the undersigned any substantive
rights vis-a-vis Lender or the subordinating creditor named above.
TC SERVICES, INC. _________ US 1 INDUSTRIES, INC.
By: ________________________ By: _____________________________
Name: _____________________ Name: ___________________________
Title: ______________________ Title: ____________________________
EXHIBIT "H-2"
AMENDMENT TO SUBORDINATION AGREEMENT
This Amendment dated as of December 7, 2000, is entered into by and
between Harold Antonson ("Antonson") and Mike Kibler ("Kibler") with offices at
1000 Colfax Street, Gary, IN 46406 (Antonson and Kibler are hereinafter
referred to as "Junior Creditors") and Firstar Bank N.A. ("Lender") with
offices at 30 N. Michigan Avenue, Chicago, IL 60602.
WITNESSETH:
WHEREAS, Lender has previously extended credit to Carolina National
Transportation Inc. ("Carolina"), Keystone Lines ("Keystone"), Gulf Line
Transport Inc. ("Gulf Line") and First Star Transport, Inc. ("First Star") and
is about to extend credit to Cam Transport, Inc. ("Cam") (Carolina, Keystone,
Gulf Line, First Star and Cam are hereinafter referred to collectively as
"Borrowers") pursuant to that certain Loan Agreement dated April 18, 2000, as
amended by Amendment to Loan Agreement dated June 9, 2000, and as further
amended by Second Amendment to Loan Agreement of even date herewith
(the "Loan Agreement");
WHEREAS, US 1 Industries, Inc. ("Guarantor"), the parent of each of
Borrowers, has guaranteed the obligations of Borrowers under the Loan Agreement
and the Revolving Loan Note and Equipment Loan Note issued pursuant thereto
under a Corporate Guaranty dated April 18, 2000, and amended and restated as of
June 9, 2000, and as further amended and restated as of the date hereof (the
"Corporate Guaranty").
WHEREAS, Guarantor may hereafter be liable to Lender under the
Corporate Guaranty as a result of the advance of monies and other extensions of
credit under the Loan Agreement;
WHEREAS, Junior Creditors are financially interested in Guarantor and
Borrowers, and Guarantor is indebted to Junior Creditors for monies previously
advanced by Junior Creditors to Guarantor ("Subordinated Debt");
WHEREAS, Junior Creditors have previously entered into a Subordination
Agreement with Lender subordinating their rights to be paid by Guarantor or any
of Borrowers on account of the Subordinated Debt (as defined in the
Subordination Agreement) to the rights of Lender as holder of the Senior Debt
(as defined in the Subordination Agreement); and
WHEREAS, the Subordination Agreement imposes various restrictions on
Junior Creditors' ability to advance further funds to Guarantor and to take a
security interest in the assets of Guarantor or Borrowers prior to the payment
in full of the Senior Debt, and the parties wish to amend those restrictions
all as hereinafter provided to allow for (i) the amount of Subordinated Debt to
be increased, and (ii) a junior pledge of assets to secure the repayment of the
Subordinated Debt.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged by Junior Creditors, and in order to induce Lender to
make loans or extend credit or any other financial accommodation to or for the
benefit of the Borrowers pursuant to the Loan Agreement, or to grant such
renewals or extensions thereof as Lender may deem advisable, to better secure
Lender in respect of the foregoing, and to induce Lender to consent to an
increase in the amount of the Subordinated Debt, the junior pledge described
above, and a partial payment of principal of the Subordinated Debt, Junior
Creditors and Lender hereby agree as follows:
1. Increase in Amount of Subordinated Debt. Lender hereby consents to
the increase in the amount of the Subordinated Debt as of the date
hereof to $4,285,043, $613,567 of which constitutes interest accrued
as of April 18, 2000 ("Pre-Closing Interest Amount"). Junior
Creditors, jointly and severally, represent and warrant that there is
no debt outstanding to them from Guarantor or Borrowers or any related
company or any of them for borrowed money other than the Subordinated
Debt in the aforesaid amount, and agree that they shall neither
individually nor jointly loan any additional monies to Guarantor or
Borrowers or any related company without the prior written consent of
Lender.
2. Consent to Junior Pledge. Lender hereby consents to Junior Creditors
accepting a pledge of collateral from Guarantor and Borrowers
consisting of amounts received and other assets of Guarantor and/or
Borrower as security for the repayment of the Subordinated Debt,
provided Junior Creditors hereby agree that any liens created thereby
("Permitted Junior Liens") shall be junior in every respect to any
lien in favor of the Lender securing the Senior Debt, and Junior
Creditors hereby agree not to accept such collateral or any other
assets of Guarantor or Borrower, or any of them, as security for any
debt payable to Junior Creditors other than the Subordinated Debt
without the prior written consent of the Lender, which may be withheld
by Lender's in its absolute discretion. The form of any security
agreement or other document creating or perfecting the Permitted
Junior Lien, including without limitation any financing statement
shall be subject to the approval of Lender, which shall not be
unreasonably withheld. Not in limitation of the foregoing, any such
security agreement or financing statement securing the Permitted
Junior Lien shall indicate on its face by language and in a manner
approved by Lender that the lien credited thereby is junior to the
lien in favor of Lender securing the Senior Debt, and that any further
borrowing by Borrowers and/or Guarantor without the prior written
consent of Lender is, subject to certain limited exceptions stated in
the Loan Agreement, prohibited by the terms of the Loan Agreement.
Junior Creditors, jointly and severally, warrant and represent that,
as of the date hereof, they have no lien on or security interest in
any of the assets of Guarantor or Borrowers as security for the
repayment of the Subordinated Debt, and agree that, except as
expressly provided in this Section or to the Subordinated Debt,
Junior Creditors shall neither jointly or individually take, accept
the assignment of or hold any security interest in any of the assets
of Guarantor or Borrowers as security for any obligation, until the
Senior Debt shall have been fully discharged and all financing
agreements between the Guarantor and Borrowers and the Lender have
been terminated.
3. Delivery of Original Subordinated Debt Instruments. Junior Creditor
hereby agrees to deliver the Lender all original instruments
evidencing the Subordinated Debt together with a separate endorsement
or assignment thereof to Lender as additional security to be held by
Lender as additional security until the Senior Debt has been paid in
full.
4. Subordinated Debt Owed Only to the Junior Creditor. Junior Creditors
warrant and represent, jointly and severally, that as of the date
hereof, Junior Creditors have not previously assigned any interest in
the Subordinated Debt or any security interest in connection
therewith, that no other party owns an interest in the Subordinated
Debt or security therefor (other than as an unsecured trade creditor)
other than Junior Creditors (whether as joint holders of the
Subordinated Debt, participants or otherwise) and that the entire
Subordinated Debt is owing only to Junior Creditors and Junior
Creditors covenant that the entire Subordinated Debt shall continue to
be owing only to Junior Creditors and all security therefor shall
continue to be held solely for the benefit of Junior Creditors (except
to the extent held for the benefit of unsecured trade creditors).
Junior Creditors further warrant and covenant to Lender that Junior
Creditors shall not make further loans, advances or extensions of
credit to Guarantor or any Borrowers or TC Services, Inc. without the
prior written consent of Lender.
5. Waiver. Junior Creditors hereby waive, to the extent permitted under
law, any requirement that, if and when Lender finds it necessary to
enforce its security interest with respect to the Senior Debt, Lender
shall marshal assets of Guarantor or Borrowers as required by law.
6. Amendment. Except as expressly provided herein, the terms of the
Subordination Agreement shall remain in full force and effect as
originally stated therein. This Amendment to Subordination Agreement
may not be amended except by the express written agreement of the
parties hereto.
IN WITNESS WHEREOF, this instrument has been executed and delivered as
of this 7th day of December, 2000.
_________ By:_________________________________
_________ HAROLD ANTONSON
_________ By:_________________________________
_________ MICHAEL KIBLER
Acknowledged and Accepted
in Chicago, Illinois as of this
7th day of December, 2000
_________ FIRSTAR BANK N.A.
_________ By:________________________________
_________ Craig B. Collinson
_________ Title: Senior Vice President
The undersigned hereby accepts and acknowledges receipt of a copy of,
the foregoing Subordination Agreement dated as of this 7th day of December,
2000, and agrees that it will not pay any of the Subordinated Debt (as defined
in the Subordination Agreement) or grant any security therefor, except as the
foregoing agreement provides. In the event of a breach by Junior Creditors or
either of them of any of the provisions herein or of the foregoing Agreement,
all of the Senior Debt (as defined in the Subordination Agreement) shall,
without presentment, demand, protest or notice of any kind, become immediately
due and payable, unless Lender shall otherwise elect in writing. The
undersigned further agrees that the terms of this Agreement shall not give the
undersigned any substantive rights vis-a-vis Lender or the subordinating
creditor named above.
US 1 INDUSTRIES, INC.
By: _____________________________
Name: ___________________________
_________ Title: ____________________________
EXHIBIT "I-1"
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned, Harold Antonson and Michael Kibler, hereby
acknowledge that Firstar Bank N.A ("Lender") has agreed to loan additional sums
to Carolina National Transportation Inc., Keystone Lines, Gulf Line Transport
Inc., Five Star Transport, Inc. and Cam Transport, Inc. (collectively
"Borrowers") pursuant to a Second Amendment to Loan Agreement dated as of the
date hereof between Borrowers and Lender and US 1 Industries, Inc., the parent
of Borrowers ("Borrowers' Parent"), and further acknowledge and agree that the
Subordinated Debt (as defined in that certain Subordination Agreement dated
April 18, 2000, as amended as of the date hereof, between Lender and the
undersigned (the "Subordination Agreement")) is and shall continue to be
subordinate, all as provided in the Subordination Agreement, to any such
additional sums loaned to the Borrowers or any of them as provided in such
Second Amendment to Loan Agreement in addition to being subordinate to any
amounts otherwise advanced to Borrowers or any of them by Lender prior to or
subsequent to the date hereof under that certain Loan Agreement among
Borrowers, Lender and Borrowers' Parent dated April 18, 2000, or the Amendment
to Loan Agreement dated June 9, 2000, among Borrowers, Lender and Borrowers'
Parent and that any amounts advanced to any of Borrowers prior to or subsequent
to the date hereof under said Loan Agreement, as amended by such Amendment to
Loan Agreement and Second Amendment to Loan Agreement, shall constitute Senior
Debt for purposes of the Subordination Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered as of ___________, 2000.
_________ ______________________________
_________ Harold Antonson
_________ ______________________________
_________ Michael Kibler
EXHIBIT "I-2"
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned, August Investment Partnership, hereby acknowledges
that Firstar Bank N.A ("Lender") has agreed to loan additional sums to Carolina
National Transportation Inc., Keystone Lines, Gulf Line Transport Inc., Five
Star Transport, Inc. and [Cam Transport, Inc.] (collectively "Borrowers")
pursuant to an Amendment to Loan Agreement dated as of the date hereof between
Borrowers and Lender and US 1 Industries, Inc., the parent of Borrowers
("Borrowers' Parent"), and further acknowledges and agrees that the
Subordinated Debt (as defined in that certain Subordination Agreement dated
April 18, 2000, as amended as of the date hereof, between Lender and the
undersigned (the "Subordination Agreement")) is and shall continue to be
subordinate, all as provided in the Subordination Agreement, to any such
additional sums loaned to the Borrowers or any of them as provided in such
Amendment to Loan Agreement in addition to being subordinate to any amounts
otherwise advanced to Borrowers or any of them by Lender prior to or subsequent
to the date hereof under that certain Loan Agreement among Borrowers and Lender
and Borrowers' Parent dated April 18, 2000, or the Amendment to Loan Agreement
dated June 8, 2000, among Borrower, Lender and Borrowers' Parent and that any
amounts advanced to any of Borrowers prior to or subsequent to the date hereof
under said Loan Agreement, as amended by such Amendment to Loan Agreement and
Second Amendment to Loan Agreement, shall constitute Senior Debt for purposes
of the Subordination Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered as of ___________, 2000.
_________ AUGUST INVESTMENT PARTNERSHIP
_________ By: ______________________________
_________ General Partner
_________ By: ______________________________
_________ General Partner