SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED]
For the transition period from to .
Commission file number 0-14060
Intrenet, Inc.
(Exact name of registrant as specified in its charter)
Indiana 35-1597565
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 TechneCenter Drive, Suite 200
Milford, Ohio 45150
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513)576-6666
Securities registered pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, without par value
(Title of class)
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. [ ]
The aggregate market value of the common stock (based upon the
closing sale price on such date) held by non-affiliates of the
registrant as of March 1, 1996, was approximately $ 4,745,966.
Applicable only to registrants involved in bankruptcy
proceedings during the preceding five years: Indicate by check
mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court. Yes X No
(Applicable only to corporate registrants) Indicate the number
of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. As of March 1,
1996, there were 13,227,338 shares issued and outstanding.
Documents Incorporated By Reference: Portions of the
following documents have been incorporated by reference into
this report:
Identity of Document Parts of Form 10 - K into
Proxy Statement to be filed for the Which Document is Incorporated
1996 Annual Meeting of Shareholders of Part III
Registrant
Page 1 of ___ pages
INTRENET, INC.
1995 Annual Report on Form 10-K
Table of Contents
Part I Page
Item 1. Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosures 12
Part III
Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners and
Management 12
Item 13. Certain Relationships and Related Transactions 12
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 13
Signatures 14
Index to Exhibits 15
PART I
Item 1. Business.
General
The Company was incorporated in 1983 under the laws of the
State of Indiana, as a holding company for truckload carrier
subsidiaries. The Company owns, directly or indirectly, 100% of
four licensed truckload carrier subsidiaries (the Operating
Subsidiaries), which provide general and specialized regional
truckload carrier services throughout North America. The
Operating Subsidiaries are Roadrunner Trucking, Inc., (RRT); Eck
Miller Transportation Corporation, (EMT); Advanced Distribution
System, Inc., (ADS); and, Roadrunner Distribution Services,
Inc., (RDS). In addition, the Company owns an intercompany
employee leasing subsidiary, and an inactive Bermuda
captive-insurance subsidiary.
The Company's Operating Subsidiaries presently operate more
than 2,100 tractors, including tractors provided by
owner-operators. Some of the Company's Operating Subsidiaries
rely partially upon a network of commissioned agents and
independent contractors who own and operate tractors and
trailers. Other Operating Subsidiaries primarily use
company-operated equipment. In 1995, the Company's fleet
traveled over 150 million revenue miles delivering approximately
234,000 loads for Company customers. The Company also brokered
over 12,000 loads to other carriers.
The Company's executive offices are located at 400 TechneCenter
Drive, Suite 200, Milford, Ohio 45150 and its telephone number
is (513) 576-6666. Except as otherwise indicated by the
context, the term Company, as used herein, means Intrenet, Inc.
and its consolidated subsidiaries.
Operating Subsidiaries
Select operating statistics as of December 31, 1995 are as
follows:
RRT EMT ADS RDS Total
Company Tractors 532 372 192 181 1,277
Owner-Operator Tractors 68 414 322 55 859
Total Tractors 600 786 514 236 2,136
Company Trailers 864 458 210 428 1,960
Company Drivers 566 375 186 198 1,325
Total Employees 744 515 270 248 1,777
Sales Agents 20 184 134 14 352
Length of Haul 789 563 519 1,002 660
miles miles miles miles miles
Roadrunner Trucking, Inc. RRT is a truckload carrier
transporting a wide variety of general commodities, including
machinery, building materials, steel, paper, cable and wire.
RRT's primary traffic flows are in the western two-thirds of the
United States where it operates one of the largest fleets of
flatbed trailers in its market area. RRT also operates a
nationwide freight brokerage business. RRT is a New Mexico
corporation, headquartered in Albuquerque, New Mexico.
Eck Miller Transportation Corporation. EMT is a truckload
carrier that transports a variety of general commodity freight,
including aluminum, steel, automotive products, and building
materials over routes primarily in the Great Lakes, Central and
Southeastern regions of the United States. EMT is an Indiana
corporation, headquartered in Rockport, Indiana.
EMT depends in part on commissioned agents as sources for
business and on owner-operators to provide equipment and drivers
to haul shipments. The utilization of owner-operators limits
EMT's investment in labor and equipment.
Advanced Distribution System, Inc. ADS is a truckload carrier
that transports general commodity freight, including iron,
steel, pipe, heavy machinery and building products, throughout
service lanes in the Southeast, Midwest and Central States on
flatbed trailers. ADS is a Florida corporation, headquartered
in Columbus, Ohio.
ADS is primarily dependent upon commissioned agents as sources
for business. ADS also depends in part on owner-operators to
provide equipment and drivers to haul shipments. The utilization
of owner-operators limits ADS' investment in labor and
equipment.
Roadrunner Distribution Services, Inc. RDS is a van truckload
carrier that transports a wide variety of general commodities,
including electronics, auto parts, sportswear and consumer goods
throughout service lanes in the Central and Southwestern regions
of the United States. RDS is a Texas corporation, headquartered
in Indianapolis, Indiana.
Other Factors
The Operating Subsidiaries which use commissioned agents and
independent owner-operators generally do not have long-term
contractual agreements with their agents or owner-operators.
Working relationships with such persons are dependent upon
mutually beneficial characteristics including confidence in
service levels, support in customer relations, compensation
levels and systems and opportunities for growth. Many of the
Company's agreements with commissioned agents are non-exclusive.
No customer accounted for more than 10% of the Company's
revenues in 1995.
<PAGE>
Revenue Equipment
At December 31, 1995, the Company owned or leased 1,277
tractors, 1,496 flatbed trailers and 464 dry van trailers. The
following is a summary of Company owned and leased revenue
equipment at December 31, 1995:
Trailers
Tractors Flatbed Dry Van
Model year prior to 1993 106 708 452
1993 510 243 12
1994 255 261 0
1995 361 153 0
1996 45 131 0
1,277 1,496 464
In addition, at the same date owner-operators under
contract provided 859 tractors for Company operations.
Employees
At December 31, 1995, the Company employed 1,777 individuals,
of whom 1,325 were drivers. Management considers its
relationship with employees to be good. None of the Company's
employees are represented by a collective bargaining unit.
Competition and Availability of Drivers
The trucking industry is characterized by intense competition,
resulting from the presence of many carriers in the market, low
barriers to entry, and the commodity nature of the services
provided by many carriers. The Company competes with other
irregular route, long-haul carriers and, to a lesser extent,
with medium-haul carriers, railroads, less-than-truckload
carriers, freight brokers and proprietary transportation
systems. The Federal Aviation Administration Authorization Act
of 1994 (the FAA Act) preempts, effective January 1, 1995,
certain state and local laws regulating the prices, routes, or
services of motor carriers, thereby deregulating intra-state
transport, and increasing competitive conditions.
Competition for drivers is intense in the trucking industry,
and the Company has at times experienced difficulty attracting
and retaining sufficient qualified drivers. From time to time,
there have been industry wide shortages of qualified drivers and
there can be no assurance that the Company will not be affected
by a shortage of qualified drivers in the future. Prolonged
difficulty in attracting or retaining qualified drivers could
have a material adverse effect on the Company's operations and
limit its growth.
Regulation
Each of the Operating Subsidiaries is a motor carrier regulated
by various federal and state agencies. Effective January 1,
1996, the ICC Termination Act of 1995 (the Act) abolished the
Interstate Commerce Commission (ICC) and established within the
Department of Transportation (DOT) the Surface Transportation
Board. The Surface Transportation Board will perform a number of
functions previously performed by the ICC. The Act eliminates
most tariff filings and rate regulation, but retains most other
regulations issued by the ICC, until modified or terminated by
the Surface Transportation Board.
Each of the Operating Subsidiaries is subject to safety
requirements prescribed by the DOT. Such matters as weight and
dimension of equipment are also subject to federal and state
regulations. All of the Company's drivers are required to
obtain national commercial driver's licenses pursuant to the
regulations promulgated by the DOT. Also, DOT regulations
impose mandatory drug and alcohol testing of drivers. Each of
the Operating Companies had a Satisfactory safety rating with
the DOT at December 31, 1995.
The trucking industry is subject to possible regulatory and
legislative changes (such as increasingly stringent
environmental regulations or limits on vehicle weight and size)
that may affect the economics of the industry by requiring
changes in operating practices or by changing the demand for
common or contract carrier services or the cost of providing
truckload services. These future regulations may unfavorably
affect the Company's operations.
Risk Management and Insurance
The Company's risk management programs provide protection of
its assets and interests through a combination of insurance and
self-insurance. The Company maintains both primary and excess
auto liability insurance with limits and deductibles in amounts
customary for the industry, and in amounts management believes
to be adequate.
Workers' compensation and employer's liability exposure is
covered by a combination of large-deductible insurance policies,
a state approved self-insurance program, monopolistic state
workers compensation funds, and a self-insured ERISA accident
indemnity plan. Coverage is for statutory limits, with
deductibles generally for the first $ 250,000 of exposure.
The Company also maintains insurance with varying deductibles
for cargo, property, and physical damage exposures.
Fuel
As part of the Company's ongoing program to reduce fuel costs,
drivers are required to refuel at one of the Company's bulk fuel
storage facilities whenever possible. When impractical to fuel
at a Company location, drivers purchase fuel with a Company
credit card at pre-authorized truckstops and fueling locations.
While shortages of fuel, increases in fuel prices or rationing
of petroleum products could have a material adverse effect on
the trucking industry, including the Company, management
believes that the Company's operations and profits are no more
susceptible to such conditions than those of its competitors.
In the past, sharp increases in fuel prices have been partially
recovered from customers through increased rates or surcharges.
However, there can be no assurance that the Company will be able
to recover increased fuel costs and fuel taxes through increased
rates in the future. The Company does not presently hedge its
future fuel purchase requirements.
The Company's fuel storage facilities are subject to
environmental regulatory requirements imposed by the U.S.
Environmental Protection Agency which imposes standards and
requirements for regulation of underground storage tanks of
petroleum and certain other substances, and by state law in some
of the jurisdictions in which the Company maintains fuel
terminals. The Company believes that it is in material
compliance with such requirements that are applicable to tanks
it owns or operates, and believes that future compliance-related
expenditures, in the aggregate, will not be material to the
Company's financial or competitive position.
Item 2. Properties.
The Company leases its headquarters facility, which consists of
approximately 4,000 square feet of office space. The lease
provides for rent at approximately $ 5,000 per month and is
presently for a three year period expiring in August, 1996, with
an option for an additional two year period.
The following table provides information concerning other
significant properties owned or leased by the Operating
Subsidiaries.
Owned
Operating Type of or Approximate
Location Subsidiary Facility Leased Acreage
Albuquerque, NM RRT Company Headquarters, Owned 15
Terminal, Maintenance
Facility and Bulk Fueling
Station
Albuquerque, NM RRT Terminal and Office Facility Owned 6
(Under lease to others)
Snowflake, AZ RRT Terminal & Bulk Fueling Leased 1
Station
Vinton, TX RRT Terminal, Maintenance Leased 4
Facility and Bulk Fueling
Station
Fontana, CA RRT/RDS Terminal and Bulk Fueling Leased 4
Station
Indianapolis, IN. RDS Company Headquarters Leased 4
and Terminal
El Paso, TX RDS Terminal, Maintenance Owned 4
Facility and Bulk Fueling
Station
Rockport, IN. EMT Company Headquarters, Owned 13
Terminal, Maintenance
Facility and Bulk Fueling
Station
Columbus, OH ADS Company Headquarters Leased 2
Rock Hill, SC ADS Terminal Leased 2
All properties owned by the Company and the Operating
Subsidiaries are subject to liens in favor of the Company's
primary lender or independent mortgage lenders. See Note 2 of
Notes to Consolidated Financial Statements.
Item 3. Legal Proceedings.
Except as discussed below, there are no material pending legal
proceedings to which the Company or any of its subsidiaries is a
party or of which any of their property is the subject, other
than routine litigation incidental to its business, primarily
involving claims for personal injury and property damage
incurred in the transportation of freight. The Company
maintains insurance which covers liability resulting from such
transportation related claims in amounts customary for the
industry and which management believes to be adequate. The
Company is not aware of any claims or threatened claims that are
likely to materially affect the Company's operating results or
financial condition.
On January 2, 1996, Compton Management Corporation ("Compton")
commenced an action in the United States District Court for the
District of New Jersey against the Company for alleged
violations of federal securities laws, fraudulent
misrepresentation and breach of contract arising out of
Compton's option to purchase 264,212 shares of the Company's
common stock and subsequent sale of the stock pursuant to a
registration statement filed by the Company at Compton's
request. Compton provided management services to the Company
from January 1991 to January 1993. Compton alleged that the
Company wrongfully delayed filing the registration statement and
that the delay prevented Compton from selling its shares at
favorable market prices. The complaint seeks compensatory
damages of not less than $1,000,000 and punitive damages of at
least $5,000,000. The Complaint was only filed recently and the
Company has not yet been required to respond. Management
believes that the Company has no liability to Compton and
intends to vigorously defend the claims.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders of the
Company during the three months ended December 31, 1995.
Executive Officers of the Registrant.
Pursuant to federal Instruction G(3) of Form 10-K and
Instruction 3 to Item 401(b) of Regulation S-K, the following
information is included in lieu of being included in the Proxy
Statement for its Annual Meeting of Stockholders:
Certain information concerning the executive officers of the
Company as of December 31, 1995 is set forth below.
Name and Position Age
Jackson A. Baker 57
President and Chief Executive Officer
James V. Davis 55
Executive Vice President
Jonathan G. Usher 41
Vice President-Finance , Chief Financial
Officer, Secretary and Treasurer
Officers of the Company serve at the discretion of the Board of
Directors.
Jackson A. Baker has been a Director and President and Chief
Executive Officer since January, 1993. Prior to joining the
Company, Mr. Baker was self-employed as a transportation
consultant from January 1990 to December 1992. Mr. Baker was
President and Chief Operating Officer of Sea-Land Service, Inc.
(a container shipping company) from February 1987 to December
1989.
James V. Davis has been Executive Vice President since August,
1993. Prior to joining the Company, Mr. Davis was Executive
Vice President and Chief Operating Officer of Mitsui O.S.K.
Lines (America), Inc. from April, 1990. Prior to Mitsui, he
held several positions at Sea-Land Service, Inc., including Vice
President for the Atlantic Division.
Jonathan G. Usher has been Vice President - Finance and Chief
Financial Officer of the Company since June 1989. Previously,
Mr. Usher was a manager in the audit division of Arthur Andersen
LLP in the Indianapolis, Indiana office.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Common Stock is traded on The NASDAQ Small-Cap Market
(NASDAQ) under the symbol INET. The following table sets forth
the high and low sales prices as reported by NASDAQ.
1994 HIGH LOW
First Quarter 4.500 3.125
Second Quarter 4.375 3.375
Third Quarter 3.875 3.250
Fourth Quarter 4.500 3.250
1995
First Quarter 6.000 3.562
Second Quarter 4.375 3.000
Third Quarter 4.125 3.250
Fourth Quarter 3.250 1.625
1996
First Quarter
(through February 28) 2.625 1.750
On March 1, 1996, there were 253 holders of record of Common
Stock.
The Company has never paid a cash dividend on its Common Stock.
The Company's bank agreement contains covenants which restrict
the Company's ability to pay cash dividends. See Note 2 of
Notes to Consolidated Financial Statements. The Company does
not anticipate paying cash dividends on Common Stock in the
foreseeable future.
<TABLE>
<CAPTION>
Item 6. Selected Financial Data.
Year Ended December 31,
(In Thousands, Except Share and Per Share Amounts)
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
STATEMENT OF OPERATIONS DATA
Operating revenues $ 214,973 $ 214,838 $ 191,390 $ 174,801 $ 179,183
Operating expenses:
Purchased transportation
and equipment rents 80,997 79,946 73,071 73,741 79,559
Salaries, wages and benefits 58,733 53,281 44,245 37,486 38,660
Fuel and other operating expenses 46,610 44,777 41,196 36,177 34,678
Operating taxes and licenses 10,093 9,846 7,196 4,459 4,559
Insurance and claims 6,986 7,680 8,622 8,010 6,709
Depreciation 4,651 4,826 5,386 5,478 5,491
Other operating expenses 3,842 4,077 4,941 4,728 5,310
Total operating expenses 211,912 204,433 184,657 170,079 174,966
Operating income (loss) 3,061 10,405 6,733 4,722 4,217
Interest expense (2,886) (3,557) (3,949) (4,622) (4,861)
Other income (expense), net (82) (357) (352) (344) 10
Earnings (loss) before income taxes
and extraordinary items 93 6,491 2,432 (244) (634)
Income taxes (305) (1,326) (922) - -
Earnings (loss) before
extraordinary items (212) 5,165 1,510 (244) (634)
Extraordinary gain, net 0 0 1,188 - -
Net earnings (loss) $ (212) $ 5,165 $ 2,698 $ (244) $ (634)
Primary
Before extraordinary items $ (0.02) $ 0.52 $ 0.16 $ (0.05) $ (0.13)
Extraordinary items, net $ - $ - $ 0.12 $ - $ -
Net earnings (loss) $ (0.02) $ 0.52 $ 0.28 $ (0.05) $ (0.13)
Fully Diluted
Before extraordinary items $ (0.02) $ 0.40 $ 0.14 $ (0.05) $ (0.13)
Extraordinary items, net $ - $ - $ 0.09 $ - $ -
Net earnings (loss) $ (0.02) $ 0.40 $ 0.23 $ (0.05) $ (0.13)
BALANCE SHEET DATA
Current assets $ 26,716 $ 29,320 $ 27,206 $ 24,099 $ 27,739
Current liabilities 27,339 28,329 24,170 29,014 37,437
Total assets 67,638 69,058 64,636 67,702 66,952
Long-term debt 14,981 22,291 26,223 33,258 23,041
Shareholders' equity 23,018 16,438 11,243 2,430 2,674
</TABLE>
8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Introduction
The Company reported a net loss of $ (0.2) million ($ 0.02 per
share) in 1995, on revenues of $ 215.0 million, as compared to
net earnings of $ 5.2 million ($0.52 per share) on revenues of $
214.8 million in 1994, and net earnings of $2.7 million ($0.28
per share) on revenues of $191.4 million in 1993.
In 1995, particularly in the fourth quarter, the slower growth
of the U.S. economy, coupled with increased trucking industry
capacity, led to intense competitive pressures. These increased
pressures reduced average freight rates per total mile by nearly
3 % for the year, and over 4 % in the fourth quarter, when
compared to the same time periods of 1994, and made it more
difficult to operate the fleet efficiently, leading to a higher
proportion of empty miles to paid miles, and substantially lower
operating margins. Further, continued competition for qualified
drivers resulted in higher empty truck factors in 1995, and led
the Company to increase driver wages and driver recruiting
expenditures at a time of slowing volumes and declining rates.
Lastly, the 1995 results were negatively impacted by $ 1.85
million of pre-tax losses, net of a $ 350,000 gain on sale, at
the Company's former munitions specialty carrier, C. I. Whitten
Transfer Company (CIW), which was sold on August 28, 1995. All
of the above factors combined to reduce the Company's
profitability significantly in 1995 when compared to the results
achieved by the Company in 1994, which occurred at a time of an
expanding U.S. economy, and record industry profits.
The Company operated profitably during the first three quarters
of 1995, despite the significant losses at CIW. Freight volumes
and rates, however, declined sharply in the fourth quarter of
1995 as a result of the slowing U.S economy, and winter seasonal
and holiday factors. The Company lost money in the fourth
quarter of 1995 as a result of the reduced volumes and prices,
and the less efficient operation of the fleet. These
unprofitable competitive conditions continued into the first
quarter of 1996, and have been compounded by the inclement
weather experienced across much of the country in January and
February. The Company is implementing a number of steps intended
to increase the Company's competitiveness including disposing of
excess tractors, realigning staffing levels, combining certain
aspects of the operations of RRT and RDS, and increasing
marketing efforts. Management is cautiously optimistic that
these and other actions will strengthen the Company's
operations, and return them to profitability. However, other
factors outside of the Company's control, including the growth
of the U.S. economy and actions of competitors, may adversely
affect the Company in 1996 to a greater extent. The Company
expects to report a loss for the first quarter of 1996.
A discussion of the impact of the above and other factors on
the results of operations in 1995 as compared to 1994, and 1994
as compared to 1993 follows.
1995 Compared to 1994
%
Key Operating Statistics 1995 1994 Change
Operating Revenues ($ millions) $215.0 $214.8 - %
Net Earnings (0.2) 5.2 (100%)
Average Tractors 2,063 1,840 12.1%
Total Loads (000's) 246.9 233.1 5.9%
Revenue Miles (millions) 155.3 155.3 - %
Average Revenue per Revenue Mile $1.307 $ 1.322 (1.0%)
Operating Revenues. Operating revenues were essentially
unchanged in 1995 at $ 215.0 million versus $ 214.8 million in
1994. While total revenues remained unchanged, revenues
generated with company-operated equipment increased $ 2.9
million or 2.3 %, and brokered revenues increased $ 2.5 million
or 25.7 %. At the same time, owner operator revenues declined by
$ 5.3 million, or 6.8 %. The decrease in owner operator revenues
is primarily attributable to the sharply reduced owner operator
revenues at CIW in 1995 over 1994.
The 5.9% increase in total loads (volume) in 1995 is primarily
attributable to an increase in the average number of Company
trucks (up 11.4%), coupled with an increase in brokered traffic,
offset by reduced loads hauled by owner operators. The 1.0%
decrease in revenue per revenue mile (price) is a result of
reduced traffic opportunities in 1995 due to the less robust
U.S. economy, which required the Company to move more equipment
with lower priced spot market loads. In addition, the lower
revenue contribution by CIW in 1995 over 1994 reduced the
average Company-wide rate per revenue mile.
Operating Expenses. The following table sets forth the
percentage relationship of operating expenses to operating
revenues for the years ended December 31, 1995 and 1994.
1995 1994
Operating Revenues 100.0% 100.0%
Operating Expenses:
Purchased transportation and
equipment rents 37.8 37.2
Salaries, wages and benefits 27.3 24.9
Fuel and other operating expenses 21.6 20.8
Operating taxes and licenses 4.7 4.6
Insurance and claims 3.2 3.6
Depreciation 2.1 2.2
Other operating expenses 1.8 1.9
Total Operating Expenses 98.5% 95.2%
In 1995 and 1994, the mix of company-operated versus
owner-operator equipment continued to shift, although less
significantly than in recent years, toward company-operated
equipment as a result of increased competition for qualified
owner-operators, and the Company's ability to secure affordable
financing and freight to operate additional Company tractors.
Approximately 61% of the Company's revenue was generated with
company-operated equipment in 1995, as compared to approximately
60% in 1994.
The relatively higher use of company-operated equipment
resulted in increases in salaries, wages and benefits, fuel and
other operating expenses and fixed costs related to ownership or
lease of the equipment, and decreases in owner operator
purchased transportation as a percentage of revenue. In
addition, the Company has raised the pay rates for its drivers
in order to continue to be able to attract sufficient qualified
drivers. Lastly, in February 1995, the Company commenced
treating all driver pay as taxable compensation, and eliminated
driver road expense payments. This increased taxable driver
compensation, resulted in higher payroll-related taxes and
insurance.
The Company's insurance expense decreased to 3.2% of revenue in
1995 from 3.6% of revenue in 1994. This decrease results
primarily from reduced liability insurance premium rates due to
improved accident control over the past several years, and to
higher deductible retentions by the Company. Approximately
two-thirds of the Company's insurance expense in 1995
represented premium payments which are not susceptible to
significant adjustment in the future. The remaining one-third of
the expense is comprised of estimates for claim and deductible
obligations as a result of accidents and claims.
Operating taxes and licenses increased in 1995 as compared to
1994 as a result of the greater proportion of company-operated
equipment in 1995, for which the Company is responsible for
operating taxes and licenses.
Depreciation expense decreased in 1995 as compared to 1994 as
the Company has replaced owned or capital-leased tractors
primarily with operating-leased tractors.
Other operating expenses decreased to 1.8% of revenue in 1995
from 1.9% in 1994 due to reduced communication and other
miscellaneous expenses, offset somewhat by increased
expenditures for legal and professional fees in 1995 as compared
to 1994.
Interest Expense. Interest expense decreased by approximately
$0.7 million in 1995 as compared to 1994, primarily as a result
of 1) the replacement of capital-leased equipment with equipment
financed under operating leases, coupled with 2) reduced bank
interest and fees as a result of lower average bank borrowings,
offset by higher average interest rates in 1995 as compared to
1994, and 3) the Company's 7% Convertible Subordinated
Debentures were converted to common stock on March 31, 1995,
thereby eliminating the related interest expense thereafter.
Following is a summary of interest expense for the years ended
December 31, (in millions):
1995 1994
Interest on Debentures $ 0.1 $ 0.4
Interest and fees on notes
payable to banks 1.3 1.4
Interest on capital leases and
other indebtedness 1.5 1.8
$ 2.9 $ 3.6
Provision For Income Taxes. A provision for income taxes of
approximately $ 0.3 million, or approximately 328 % of pre-tax
earnings, was provided in 1995. The higher than statutory
effective tax rate results from the effect of certain
non-deductible expenses. A provision for income taxes of
approximately $ 1.3 million, or approximately 20% of pre-tax
earnings, was provided in 1994. As more fully discussed in Note
5 of Notes to Consolidated Financial Statements, the Company's
1994 provision for income taxes was favorably influenced by the
release of valuation allowances held against certain net
deferred tax assets.
1994 Compared to 1993
%
Key Operating Statistics 1994 1993 Change
Operating Revenues ($ millions) $214.8 $191.4 12.2%
Net Earnings 5.2 2.7 91.4%
Average Tractors 1,840 1,708 7.7%
Total Loads (000's) 233.1 208.1 12.0%
Revenue Miles (millions) 155.3 142.5 9.0%
Average Revenue per Revenue Mile $1.322 $ 1.281 3.1%
Operating Revenues. Operating revenues increased in 1994 to $
214.8 million from $191.4 million in 1993. This 12.2% increase
in revenues in 1994 is attributable to an increase of
approximately 12.0% in the total number of loads and
approximately 9.0% in the number of revenue miles billed in
1994 as compared to 1993.
The 9.0% increase in volume in 1994 is attributable to an
increase in the average number and productivity of the Company's
trucks, coupled with an overall improvement in general economic
conditions. Management attributes this improvement to the
strengthening of general economic activity in the full year of
1994 as compared to 1993.
The 3.1% improvement in revenue per mile is a result of strong
shipper demand for the Company's services, which allowed the
Company to selectively choose loads that yield higher revenues,
coupled with rate increases implemented in late 1993 and
throughout 1994.
Operating Expenses. The following table sets forth the
percentage relationship of operating expenses to operating
revenues for the years ended December 31, 1994 and 1993.
1994 1993
Operating Revenues 100.0% 100.0%
Operating Expenses:
Purchased transportation and
equipment rents 37.2 38.2
Salaries, wages and benefits 24.9 23.1
Fuel and other operating expenses 20.8 21.5
Operating taxes and licenses 4.6 3.8
Insurance 3.6 4.5
Depreciation 2.2 2.8
Other operating expenses 1.9 2.6
Total Operating Expenses 95.2% 96.5%
In 1994 and 1993, the mix of company-operated versus
owner-operator equipment continued to shift toward
company-operated equipment as a result of increased competition
for qualified owner-operators, and the Company's improved access
to financing for equipment, and additional drivers and freight.
Approximately 60% of the Company's revenue was generated with
company-operated equipment in 1994, as compared to approximately
56% in 1993.
The relatively higher use of company-operated equipment results
in increases in salaries, wages and benefits, fuel and other
operating expenses and fixed costs related to ownership or lease
of the equipment, and decreases in purchased transportation as a
percentage of revenue. Fuel and other operating expenses
declined as a percentage of revenue in 1994 as compared to 1993.
While the total gallons consumed increased in 1994 as a result
of the larger company-operated fleet, the average fuel economy
improved, and the average cost of fuel per gallon decreased,
offsetting the effect of the increased consumption.
The Company's insurance expense decreased to 3.6% of revenue in
1994 from 4.5% of revenue in 1993. This decrease results
primarily from reduced liability insurance premium rates due to
improved accident control over the past several years.
Approximately two-thirds of the Company's insurance expense in
1994 represented premium payments which are not susceptible to
significant adjustment in the future. The remaining one-third of
the expense is comprised of estimates for claim and deductible
obligations as a result of accidents and claims.
Depreciation expense decreased in 1994 as compared to 1993 as
the Company has replaced owned or capital-leased tractors
primarily with operating-leased tractors.
Operating taxes and licenses increased in 1994 as compared to
1993 as a result of the greater proportion of company-operated
equipment in 1994, for which the Company is responsible for
operating taxes and licenses.
Other operating expenses decreased to approximately 1.9% of
revenue in 1994 from 2.6% in 1993, primarily as a result of
reduced legal, professional and consulting expenses, coupled
with reduced communication expenses. Also, the Company incurred
certain management change costs in 1993 which were not incurred
in 1994.
Interest Expense. Interest expense decreased by approximately
$0.3 million in 1994 as compared to 1993, primarily as a result
of the replacement of capital-leased equipment with equipment
financed under operating leases, coupled with reduced interest
as a result of lower average bank borrowings, offset by higher
average interest rates in 1994 as compared to 1993.
Following is a summary of interest expense for the years ended
December 31, (in millions):
1994 1993
Interest on Debentures $ 0.4 $ 0.4
Interest and fees on notes
payable to banks 1.4 1.5
Interest on capital leases and
other indebtedness 1.8 2.0
$ 3.6 $ 3.9
Provision For Income Taxes. A provision for income taxes of
approximately $ 1.3 million, or approximately 20% of pre-tax
earnings, was provided in 1994, as compared to a provision of
approximately $ 1.5 million which was provided in 1993. As more
fully discussed in Note 5 of Notes to Consolidated Financial
Statements, the Company's 1994 provision for income taxes was
favorably influenced by the release of valuation allowances held
against net deferred tax assets.
Extraordinary Gain On Retirement Of Debt, Net. On January 19,
1993, in connection with a private offering of $ 12 million of
debt and equity securities, the Company retired approximately
$7.2 million of bank debt for approximately $5.4 million,
yielding an after-tax extraordinary gain of $1.2 million in
1993. No similar transaction occurred in 1994.
Liquidity and Capital Resources
The Company used $ 2.6 million of cash and cash equivalents in
the year ended December 31, 1995, as compared to generating $0.4
million in 1994. As reflected in the accompanying Consolidated
Statements of Cash Flows, in 1995, $ 6.1 million of cash was
generated from operating activities, $ 5.1 million, net, was
used in financing activities, and $ 3.6 million, net, was used
in investing activities. The Company's cash balance was drawn
down in 1995 as the Company's bank lenders allowed the Company
to make term loan payments from certain restricted money market
balances.
The Company's day-to-day financing is provided by borrowings
under a $ 33 million bank credit facility, as most recently
amended on January 15, 1996. The credit facility consists of a
$ 5 million term loan with a final maturity of December 31,
1999, and a $ 28 million revolving line of credit which expires
January 15, 1999. Quarterly principal payments of $ 312,500 on
the term loan commence April 1, 1996. The line of credit
includes provisions for the issuance of up to $ 12 million in
stand-by letters of credit which, as issued, reduce available
borrowings under the line of credit. Borrowings under the line
of credit are limited to amounts determined by a formula tied to
the Company's eligible accounts receivable and inventories, as
defined in the credit facility. The credit facility requires the
Company to meet certain minimum net worth, debt to net worth and
current ratio requirements, prohibits the payment of dividends,
and limits capital expenditures to specified amounts which
management believes are currently adequate. Borrowings under
the credit facility totaled $ 5.0 million at December 31, 1995,
and outstanding stand-by letters of credit totaled $ 7.7 million
at that date. The combination of these two bank credits totaled
$ 12.7 million, leaving $ 7.3 million of borrowing capacity
available at December 31, 1995. Borrowing capacity under the
amended credit facility as of March 1, 1996 was $ 5.5 million.
The decreased availability results primarily from the financing
of plates and permits for the Company's tractor and trailer
fleet, and to the increased working capital needs of the
business during the first quarter of 1996.
The Company has plans to acquire approximately 300 tractors in
1996, of which approximately 200 will replace older tractors
and the balance of approximately 100 units will be incremental
growth units. The Company has the ability to cancel the tractors
anytime prior to 60 days before delivery (and in certain cases
has already done so), and the growth units will not be accepted
if competitive conditions do not improve. The new tractors will
be financed primarily under walk-away operating leases, and are
not expected to require any significant deposits or down
payments.
The Company currently believes that cash generated from
operating, financing and investing activities and cash available
to it under the bank credit facility will be sufficient to meet
the Company's needs during 1996.
Other Factors.
Inflation can be expected to have an impact on most of the
Company's operating costs although the impact of inflation in
recent years has been minimal.
Management believes the continued intense competition for
qualified drivers will lead to higher driver wages and
recruiting costs in the future. Changes in market interest
rates can be expected to impact the Company to the extent that
revenue equipment is added and replaced and because the
Company's bank financing is based on the prime rate.
The trucking industry is generally affected by customer
business cycles and by seasonality. Revenues are also affected
by inclement weather and holidays because revenues are directly
related to available working days of shippers. Customers
typically reduce shipments during and after the winter holiday
season. The Company's revenues tend to follow this pattern and
are strongest in the summer months. Generally, the second and
third calendar quarters have higher load bookings than the
fourth and first calendar quarters.
Item 8. Financial Statements and Supplementary Data.
Index to Consolidated Financial Statements
Page
Consolidated Balance Sheets 16
Consolidated Statements of Operation 17
Consolidated Statements of Shareholders' Equity 18
Consolidated Statements of Cash Flows 19
Notes to Consolidated Financial Statements 20
Report of Independent Public Accountants 24
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures.
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item is incorporated herein by
reference to the Company's definitive Proxy Statement for its
annual meeting of shareholders to be filed with the Commission
pursuant to Regulation 14A.
Item 11. Executive Compensation.
The information required by this Item is incorporated herein by
reference to the Company's definitive Proxy Statement for its
annual meeting of shareholders to be filed with the Commission
pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this Item is incorporated herein by
reference to the Company's definitive Proxy Statement for its
annual meeting of shareholders to be filed with the Commission
pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item is incorporated herein by
reference to the Company's definitive Proxy Statement for its
annual meeting of shareholders to be filed with the Commission
pursuant to Regulation 14A.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
(a)(1) Financial Statements
All financial statements of the Registrant are set forth under
Item 8 of this Report.
(2) Financial Statement Schedule
Schedule Number Description Page
II Valuation and Qualifying Accounts 25
The report of the Registrant's independent public accountants
with respect to the above-listed financial statements and
financial statement schedules appears on page 24 of this
Report.
All other financial statement schedules not listed above have
been omitted because the required information is included in the
consolidated financial statements or the notes thereto, or is
not applicable or required.
(3) Exhibits - See Index to Exhibits on page 15 of this Report.
THE COMPANY WILL FURNISH ANY EXHIBIT UPON REQUEST AND UPON
PAYMENT OF THE COMPANY'S REASONABLE EXPENSES IN FURNISHING SUCH
EXHIBIT.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of
1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 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,
thereunto duly authorized.
INTRENET, INC.
By: /s/ Jackson A. Baker
Jackson A. Baker
President and Chief Executive Officer
Date: March 12, 1996
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.
Signature Title Date
/s/ Jackson A. Baker President, Chief Executive March 12, 1996
Jackson A. Baker Officer and Director
(Principal Executive Officer)
/s/ Jonathan G. Usher Vice President-Finance, Chief March 12, 1996
Jonathan G. Usher Financial Officer, Treasurer
and Secretary (Principal
Financial and Accounting
Officer)
/s/ Edwin H. Morgens Chairman of the Board and March 12, 1996
Edwin H. Morgens Director
/s/ Joseph A. Ades Director March 12, 1996
Joseph A. Ades
/s/ Eric C. Jackson Director March 12, 1996
Eric C. Jackson
/s/ Fernando Montero Director March 12, 1996
Fernando Montero
/s/ Thomas J. Noonan, Jr. Director March 12, 1996
Thomas J. Noonan, Jr.
/s/ A. Torrey Reade Director March 12, 1996
A. Torrey Reade
/s/ Philip Scaturro Director March 12, 1996
Philip Scaturro
/s/ Jeffrey B. Stone Director March 12, 1996
Jeffrey B. Stone
INDEX TO EXHIBITS
Page Number or Incorporation
Exhibit by Reference to an Exhibit
Number Description Filed as Part of
3.1 Restated Articles of the Registrant Registration Statement on
Form 8-A/A filed on August
11, 1995, as Exhibit 2 (a)
3.2 Restated Bylaws of the Registrant Registration Statement on
Form 8-A/A filed on August
11, 1995, as Exhibit 2 (b)
10.1 Fourth Amended and Restated Loan ___
Agreement dated as of January 15, 1996
by and among the Registrant, certain
subsidiaries and The Huntington
National Bank
10.2 1992 Non-Qualified Stock Option Plan Annual Report on Form 10-K
for the year ended December
31, 1992 as Exhibit 10.2
10.3 Stock Option Agreement dated as of Annual Report on Form 10-K
December 31, 1992 between the Company for the year ended December
and Jackson A. Baker 31, 1992 as Exhibit 10.3
10.4 Stock Option Agreement dated as of Annual Report on Form 10-K for the
January 15, 1991 between the year ended December 31, 1990 as
Company and Compton Management Exhibit 10.4
Corporation
10.5 Employment Agreement dated as of Annual Report on Form 10-K for the
December 31, 1992 between the Company year ended December 31, 1992 as
and Jackson A. Baker Exhibit 10.5
10.51 Amendment to Employment Agreement ___
between the Company and Jackson A. Baker,
dated December 29, 1995
10.6 Employment Agreement dated as of Annual Report on Form 10-K for the
March 1, 1994 between the Company year ended December 31, 1993 as
and Jonathan G. Usher Exhibit 10.6
10.61 Amendment to Employment Agreement ___
between the Company and Jonathan G.
Usher dated December 8, 1995
10.7 Employment Agreement dated as of Annual Report on Form 10-K for the
August 1, 1993 between the Company year ended December 31, 1993 as
and James V. Davis Exhibit 10.7
10.8 Stock Option Agreement dated as of Annual Report on Form 10-K for the
August 1, 1993 between the Company year ended December 31, 1993 as
and James V. Davis Exhibit 10.8
10.9 1993 Stock Option and Incentive Plan Registration Statement on Form S-8
(Registration No. 33-69882) filed
September 29, 1993, as exhibit 4E.
11 Computation of Per Share Earnings ___
21 List of Subsidiaries of the Registrant ___
23 Consent of Independent Public Accountants ___
27 Financial Data Schedule ___
<TABLE>
<CAPTION>
INTRENET, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Years Ended December 31, 1995 and 1994
(In Thousands of Dollars)
<S> <C> <C>
Assets 1995 1994
Current assets:
Cash and cash equivalents $ 171 $ 2,734
Receivables, principally freight revenue less
allowance for doubtful accounts of $572 in 1995
and $1,363 in 1994 20,972 20,177
Prepaid expenses and other 5,573 6,409
Total current assets 26,716 29,320
Property and equipment, at cost, less accumulated
depreciation of $ 12,923 in 1995 and $ 11,164 in 1994 29,577 27,976
Reorganization value in excess of amounts allocated
to identifiable assets, net of accumulated amortization
of $4,138 in 1995 and $3,718 in 1994 8,031 8,451
Deferred income taxes, net 2,723 2,723
Other assets 591 588
Total assets $ 67,638 $ 69,058
Liabilities and Shareholders' Equity
Current liabilities:
Current debt and capital lease obligations $ 6,134 $ 7,425
Accounts payable and cash overdrafts 7,744 8,553
Current accrued claim liabilities 7,031 6,084
Other accrued expenses 6,430 6,267
Total current liabilities 27,339 28,329
Long-term debt and capital lease obligations 14,981 22,291
Long-term accrued claim liabilities 2,300 2,000
Total liabilities 44,620 52,620
Shareholders' equity:
Common stock, without par value; 20,000,000
shares authorized; 13,197,728 and 9,087,164 shares
issued and outstanding at December 31, respectively 16,245 9,453
Retained earnings since January 1, 1991 6,773 6,985
Total shareholders' equity 23,018 16,438
Total liabilities and shareholders' equity $ 67,638 $ 69,058
The accompanying notes are an integral part of these consolidated financial
statements.
16
</TABLE>
<TABLE>
<CAPTION>
INTRENET, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 1995, 1994 and 1993
(In Thousands of Dollars, Except Per Share Data)
<S> <C> <C> <C>
1995 1994 1993
Operating revenues $ 214,973 $ 214,838 $ 191,390
Operating expenses:
Purchased transportation
and equipment rents 80,997 79,946 73,071
Salaries, wages, and benefits 58,733 53,281 44,245
Fuel and other operating expenses 46,610 44,777 41,196
Operating taxes and licenses 10,093 9,846 7,196
Insurance and claims 6,986 7,680 8,622
Depreciation 4,651 4,826 5,386
Other operating expenses 3,842 4,077 4,941
211,912 204,433 184,657
Operating Income 3,061 10,405 6,733
Interest expense (2,886) (3,557) (3,949)
Other expense, net (82) (357) (352)
Earnings before income taxes and 93 6,491 2,432
extraordinary items
Provision for income taxes (305) (1,326) (922)
Earnings (loss) before extraordinary items (212) 5,165 1,510
Extraordinary gain on retirement of debt, net of
related income taxes of $612 1,188
Net earnings (loss) $ (212) $ 5,165 $ 2,698
Earnings (loss) per common and common
equivalent share
Primary:
Before extraordinary items $ (0.02) $ 0.52 $ 0.16
Extraordinary gain, net $ $ 0.12
Net earnings (loss) $ (0.02) $ 0.52 $ 0.28
Fully diluted:
Before extraordinary items $ (0.02) $ 0.40 $ 0.14
Extraordinary gain, net $ $ 0.09
Net earnings (loss) $ (0.02) $ 0.40 $ 0.23
The accompanying notes are an integral part of these consolidated financial
statements.
17
</TABLE>
<TABLE>
<CAPTION>
INTRENET, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 1995, 1994 and 1993
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
Retained Earn
Common Stock (Deficit) Equity
Shares Dollars
Balance, December 31, 1992 4,977,164 $3,308 ($878) $2,430
Issuance of common stock, net of costs 4,000,000 5,980 - 5,980
Exercise of stock options 90,000 135 - 135
Net Earnings for 1993 - - 2,698 2,698
Balance, December 31, 1993 9,067,164 9,423 1,820 11,243
Exercise of stock options 20,000 30 - 30
Net earnings for 1994 - - 5,165 5,165
Balance, December 31, 1994 9,087,164 9,453 6,985 16,438
Exercise of stock options, including
tax benefit 474,212 802 - 802
Conversion of 7% convertible
subordinate debentures 3,636,352 5,990 - 5,990
Net loss for 1995 - - (212) (212)
Balance, December 31, 1995 13,197,728 $16,245 $6,773 $23,018
The accompanying notes are an integral part of these consolidated financial
statements.
18
</TABLE>
<TABLE>
<CAPTION>
INTRENET, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
(In Thousands of Dollars)
<S> <C> <C> <C>
1995 1994 1993
Cash flows from operating activities:
Net earnings (loss) $ (212) $ 5,165 $ 2,698
Adjustments to reconcile net earnings(loss) to net cash
provided by operating activities:
Deferred income taxes 305 1,128 922
Extraordinary gain on retirement of debt, net (1,188)
Depreciation and amortization 5,071 5,246 5,806
Provision for doubtful accounts 85 93 701
Changes in assets and liabilities, net:
Receivables (880) (2,105) (3,654)
Prepaid expenses 422 215 1,220
Accounts payable and accrued expenses 1,392 1,774 (873)
Other (40) 20 (20)
Net cash provided by operating activities 6,143 11,536 5,612
Cash flows from financing activities:
Net borrowings (repayments) in line of credit, net (2,000) (2,949) (9,950)
Issuance of long-term debt 2,299 358 2,513
Principal payments on long-term debt (5,666) (8,719) (9,689)
Proceeds from sale of common stock and 7% convertible
subordinated debentures 12,000
Proceeds from exercise of stock options 304 30 135
Increase in claim liability collateral funds (1,500)
Net cash (used in) financing activities (5,063) (11,280) (6,491)
Cash flows from investing activities:
Additions to property and equipment (6,713) (3,244) (3,639)
Disposals of property and equipment 157 3,366 5,481
Sale of assets of C.I. Whitten 2,913
Net cash provided by (used in) investing activities (3,643) 122 1,842
Net increase (decrease) in cash and cash equivalents (2,563) 378 963
Cash and cash equivalents:
Beginning of period 2,734 2,356 1,393
End of period $ 171 $ 2,734 $ 2,356
The accompanying notes are an integral part of these consolidated financial
statements.
19
</TABLE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Intrenet, Inc., and all of its subsidiaries (the
Company). Truckload carrier subsidiaries at December 31, 1995
were Roadrunner Trucking, Inc. (RRT), Eck Miller Transportation
Corporation (EMT), Advanced Distribution System, Inc. (ADS), and
Roadrunner Distribution Services, Inc. (RDS). All significant
intercompany transactions are eliminated in consolidation.
Through its subsidiaries, the Company provides general and
specialized regional truckload carrier services throughout North
America.
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 amount
of assets and liabilities, and disclosure of contingent
liabilities, at the date of the financial statements, as well as
the reported amounts of revenues and expenses for the reporting
period(s). Actual results can, and do, differ from these
estimates. The effects of changes in accounting estimates are
accounted for in the period in which the estimate changes.
Revenue Recognition
Operating revenues are recognized when the freight is picked
up. Related transportation expenses including driver wages,
purchased transportation, fuel and fuel taxes, agent
commissions, and insurance premiums are accrued when the revenue
is recognized.
In 1991, the Emerging Issues Task Force (EITF) released Issue
91-9, "Revenue and Expense Recognition for Freight Services in
Process". The EITF reached the conclusion that the preferable
method for recognizing revenue and expense was either (1)
recognition of both revenue and direct cost when the shipment is
completed, or (2) allocation of revenue between reporting
periods based on relative transit time in each reporting period
and recognize expenses as incurred. The difference between the
Company's method of revenue recognition, and the preferable
methods described above, is not material to the results of
operations or financial condition of the Company.
Property and Equipment
Property and equipment is carried at cost less an allowance for
depreciation. Major additions and betterments are capitalized,
while maintenance and repairs that do not improve or extend the
life of the respective asset, are expensed as incurred.
Improvements to leased premises are amortized on a straight-line
basis over the terms of the respective lease. Operating lease
tractor rentals are expensed as a part of purchased
transportation and equipment rents. Depreciation of property and
equipment is provided on a straight-line basis over the
following estimated useful lives of the respective assets, or
life of the lease for equipment under capital leases:
Buildings and Improvements....................... 10 - 40 years
Revenue Equipment.................................... 3 - 8 years
Other Property....................................... 3 - 7 years
Reorganization Value in Excess of
Amounts Allocated to Identifiable Assets
Reorganization Value in Excess of Amounts Allocated to
Identifiable Assets, resulting from the Chapter 11
reorganization of the Company in 1990, is being amortized on a
straight-line basis over 35 years. Benefits from recognition of
pre-reorganization net operating loss carryforwards (see Note 5)
are reported as reductions of the Reorganization Value, and thus
reduce its effective life.
Debt Issuance Costs and Bank Fees
Debt issuance costs and bank fees are amortized over the period
of the related debt agreements.
Accrued Claim Liabilities
The Company maintains insurance coverage for liability, cargo
and workers compensation risks, among others, which have
deductible obligations ranging to $ 250,000 per occurrence.
Provision is made in the Company's financial statements for
these deductible obligations at the time the incidents occur,
and for claims incurred but not reported. Claim deductible
obligations which remain unpaid at the balance sheet date are
reflected in the financial statement caption "Accrued Claim
Liabilities" in the accompanying consolidated financial
statements. Current Accrued Claim Liabilities are claims
estimated to be paid in the twelve month period subsequent to
the balance sheet date, while Long-Term Accrued Claim
Liabilities are claims estimated to be paid thereafter.
Income Taxes
The Company and its subsidiaries file a consolidated Federal
income tax return. The Company recognizes income taxes under the
liability method of accounting for income taxes. The liability
method recognizes tax assets and liabilities for future taxable
income or deductions resulting from differences in the tax and
financial reporting basis of assets and liabilities reflected in
the balance sheet and the expected tax impact of carryforwards
for tax purposes.
Earnings (Loss) Per Share
Earnings (loss) per common and common equivalent share have
been computed using the weighted average common shares
outstanding during the periods (13.2 million in 1995, 9.1
million in 1994, and 8.8 million in 1993). No effect has been
included for options or warrants outstanding, if the effect
would be antidilutive. Fully diluted earnings per share for
1994 and 1993 have been computed under the assumption that the
Debentures were converted into common stock on the date of their
issuance, using the if-converted method.
Credit Risk
Financial investments that subject the Company to
concentrations of credit risk consist primarily of trade
accounts receivable. Concentrations of credit risk with respect
to customer receivables are limited due to the Company's diverse
customer base, with no one customer, industry, or geographic
region comprising a large percentage of customer receivables or
revenues.
Statements of Cash Flows
Cash equivalents consist of highly liquid investments such as
certificates of deposit or money market funds with original
maturities of three months or less.
Cash payments for interest were $ 2.8 million, $ 3.5 million,
and $4.1 million 1995, 1994, and 1993, respectively. Cash
payments for Federal alternative minimum income taxes were $ 0.1
million in 1995 and $ 0.2 million in 1994. No Federal tax
payments were made in 1993.
Capital lease obligations of $ 3.6 million, $ 8.0 million, and
$3.8 million were incurred in 1995, 1994 and 1993, respectively,
primarily for revenue equipment. In 1995, the Company converted
$ 5.9 million of Convertible Subordinated Debentures into common
stock.
Reclassifications
Certain 1994 and 1993 amounts have been reclassified for
purposes of comparison to the related 1995 amounts.
(2) Bank Credit Facility
On January 15, 1996, the Company amended its credit facility
with a bank. The $ 33 million credit facility now consists of a
$28.0 million revolving line of credit which expires January 15,
1999, and a $5.0 million term loan with a final maturity of
December 31, 1999. The line of credit includes provisions for
the issuance of up to $12.0 million in standby letters of credit
which, as issued, reduce available borrowings under the line of
credit. Borrowings under the line of credit are limited to
amounts determined by a formula tied to the Company's eligible
accounts receivable and inventories, as defined in the
agreement. Borrowings under the credit facility totaled $ 5.0
million at December 31, 1995, and outstanding letters of credit
totaled $ 7.7 million, leaving $ 7.3 million of available credit
under the then $22.0 million facility at that date. The interest
rate under the credit facility prior to the most recent
amendment was 1 1/4 % over the bank's prime rate, or 9.75%, at
December 31, 1995 and 1994.
Interest on the outstanding principal balance of loans under
the amended bank agreement is currently payable at a variable
rate of 1/2 % over the bank's prime rate. Principal of the $5.0
million term loan is not required to be paid prior to April
1996, at which time, quarterly payments of $ 312,500 commence.
The bank agreement requires the Company to meet certain minimum
net worth, debt to net worth and current ratio requirements,
prohibits the payment of dividends, and limits capital
expenditures to specific amounts which management believes to be
currently adequate. Obligations under the bank agreement are
secured by liens on or security interests in all of the
otherwise unencumbered assets of the Company and its
subsidiaries.
In connection with the bank agreement, in 1993 the Company
issued to the bank warrants to purchase 300,000 shares of common
stock at a price of $1.65 per share. The warrants are
exercisable at any time prior to December 31, 1998.
(3) Leases and Other Long-Term Obligations
The Company finances a majority of its revenue equipment under
various capital and non-cancelable operating leases, and with
collateralized equipment borrowings.
Long-term debt at December 31, 1995 and 1994 was:
1995 1994
Bank term loan, interest at 1 1/4 %
over bank prime rate $ 5,000 $7,000
Convertible subordinated
debentures, interest at 7 % - 5,988
Real estate mortgage obligation,
variable interest rate at 2.45 %
over commercial paper, currently
8.29 %, option to fix interest rate
at 2.50 % over ten year Treasury
rate, maturing in 2007 2,310 -
Obligations collateralized by
equipment, maturing through
2000, interest rates ranging
from 7.33 % to 10.80 % 3,216 5,684
Capital lease obligations
collateralized by equipment,
maturing through 2000,
interest rates ranging
from 7.33 % to 11.55 % 10,589 11,044
Total 21,115 29,716
Less current maturities (6,134) (7,425)
Long-term debt $ 14,981 $ 22,291
Maturities of long-term debt, excluding capital lease
obligations, in the coming five years are $ 2,714, 2,587, 1,726,
1,738 and 179 in 1996, 1997, 1998, 1999 and 2000.
Future minimum lease payments under capital and non-cancelable
operating lease agreements at December 31, 1995 were as follows:
Capital Operating
Leases Leases
1996 $ 4,283 $ 16,800
1997 3,605 11,370
1998 2,316 6,801
1999 1,702 2,191
Thereafter 484 -
Future minimum lease payments 12,390 $ 37,162
Amounts representing interest (1,801)
Principal amount $10,589
Total rental expense under non-cancelable operating leases was
$ 17,765, $14,728, and $10,924, in 1995, 1994, and 1993,
respectively. The Company presently intends to lease
approximately 300 tractors ($ 21 million) under operating
leases and approximately 650 trailers ($ 14 million) under
capital and operating leases in 1996.
Purchased transportation and equipment rents expense includes
payments to owner-operators of equipment under various
short-term lease arrangements.
(4) Litigation and Contingencies
The Company is a party to routine litigation incidental to its
business, primarily involving claims for personal injury and
property damage incurred in the transporting of freight. The
Company maintains insurance programs in amounts customary for
the industry, and in amounts management believes to be adequate,
subject to deductibles ranging to $250,000 of exposure for each
incident. Except as discussed below, the Company is not aware
of any claims or threatened claims that are likely to materially
affect the Company's operating results or financial condition.
In January, 1996, an action against the Company was filed in
the United States District Court for the District of New Jersey
by Compton Management Corporation (Compton). Compton provided
executive management services to the Company from January 15,
1991 to January 19, 1993. Compton alleged violations of federal
securities laws, fraudulent misrepresentation and breach of
contract arising out of Compton's option to purchase 264,212
shares of the Company's common stock and subsequent sale of the
stock pursuant to a registration statement filed by the Company
at Compton's request. Compton alleged that the Company
wrongfully delayed filing the registration statement and that
the delay prevented Compton from selling its shares at favorable
market prices.
The complaint seeks compensatory damages of not less than
$1,000,000 and punitive damages of at least $5,000,000. The
Complaint was only filed recently and the Company has not yet
been required to respond. Management believes that the Company
has no liability to Compton and intends to vigorously defend the
claims.
(5) Income Taxes
The provision for income taxes for the years ended December 31,
1995, 1994 and 1993 was as follows:
1995 1994 1993
Current $ - $ 200 $ -
Deferred :
Income from operations 305 1,126 922
Extraordinary gain - - 612
Total Provision $ 305 $1,326 $ 1,534
Income tax expense attributable to income from operations
differs from the amounts computed by applying the U. S. Federal
statutory tax rate of 34% to pre-tax income from operations as a
result of the following:
1995 1994 1993
Taxes at statutory rate $ 31 $ 2,207 $ 827
Increase (decrease) resulting from:
Non-deductible amortization 143 143 143
Non-deductible driver
subsistence pay 131 1,489 499
Release of valuation
allowance held against
post-reorganization
net deferred tax assets - (2,538) (547)
Other, net - 25 -
Provision for Income Taxes $ 305 $ 1,326 $ 922
The tax effects of temporary differences that give rise to
significant portions of deferred tax assets and deferred tax
liabilities at December 31, 1995 and 1994 are as follows:
1995 1994
Deferred Tax Assets
Insurance claim liabilities $ 3,366 $ 2,816
Reserve for doubtful accounts 194 463
Other 220 192
3,780 3,471
Deferred Tax Liabilities
Property differences, primarily
depreciation (3,331) (2,927)
Other (386) (474)
(3,717) (3,401)
Net Temporary Differences 63 70
Carryforwards -
Pre-reorganization, limited, net
operating loss and other tax carryforwards
(Expiring 2004-2006) 5,541 5,570
Post-reorganization net operating
loss and other tax carryforwards
(Expiring 2006-2010) 2,003 1,967
Total Carryforwards 7,544 7,537
Net Deferred Tax Assets 7,607 7,607
Valuation Allowance (4,884) (4,884)
Recorded Net Deferred Tax Assets $ 2,723 $ 2,723
Net changes to the valuation allowance in 1994 and 1995, were as
follows:
Valuation allowance, beginning of year $ (4,884) $ (11,273)
Release of allowance held against pre-
organization deferred tax assets, and
credited against Reorganization Value - 3,851
Release of allowance held against post-
reorganization deferred tax assets, and
taken to income - 2,538
Valuation allowance, end of year $ (4,884) $ (4,884)
Benefits from realization of pre-reorganization net deferred
tax assets are reported as a reduction of Reorganization Value
in Excess of Amounts Allocated to Identifiable Assets.
Conversely, realization of post-reorganization net deferred tax
assets are recognized as a reduction of income tax expense. In
1993 and 1994, the Company released valuation allowances held
against both pre- and post-reorganization net deferred tax
assets to the extent those assets were realized in the Company's
tax returns for those years. In addition, in 1994, based upon
current and anticipated future operating results, the Company
concluded that future realization of a portion of the
pre-reorganization net deferred tax assets was more likely than
not. As a result, the Company released approximately $ 2.5
million of valuation allowances held against those assets, and
reduced the Reorganization Value in Excess of Amounts Allocated
to Identifiable Assets by a corresponding amount.
While management is optimistic that all net deferred tax assets
will be realized, such realization is dependent upon future
taxable earnings. The Company's carryforwards expire at specific
future dates and utilization of certain carryforwards is limited
to specific amounts each year. Accordingly, the Company has
recorded a valuation allowance against a portion of those net
deferred tax assets.
(6) Stock Options and Employee Compensation
On August 15, 1992, the Company adopted the 1992 Non-Qualified
Stock Option Plan (the 1992 Option Plan). The 1992 Option Plan
allows the Company to grant options to purchase up to 590,000
shares of Common Stock to employees and independent contractors
of the Company and its operating subsidiaries. On the same date
the 1992 Option Plan was approved, the Company granted all of
the options available under the 1992 Option Plan. All of the
options granted vested immediately and are exercisable at prices
ranging from $1.00 to $1.50 per share.
In 1993, the Company adopted the 1993 Stock Option and
Incentive Plan (the 1993 Option Plan). The 1993 Option Plan
allows the Company to grant options to purchase up to 1,000,000
shares of Common Stock to officers and key employees of the
Company and its operating subsidiaries. Options issued to date
under the 1993 Option Plan have an exercise price equal to
market value on the date of grant, and are generally exercisable
for a ten year period.
The activity in the Company's 1992 and 1993 Option Plans in
1995, 1994, and 1993 was as follows:
Balance at December 31, 1992 590,000 $1.00 to $1.50
Granted 100,000 $2.75
Exercised (90,000) $1.50
Canceled (20,000) $1.50
Balance at December 31, 1993 580,000 $1.00 to $2.75
Granted 258,750 $3.625 to 3.875
Exercised (20,000) $1.50
Canceled (9,000) $3.625 to 3.875
Balance at December 31, 1994 809,750 $1.00 to $3.875
Granted 400,000 $2.50
Exercised (210,000) $1.00 to $1.50
Canceled (27,750) $3.625 to 3.875
Balance at December 31, 1995 972,000 $1.00 to $3.875
In addition to those options granted above, on January 19,
1993, the Company granted non-qualified options to purchase
200,000 shares of Common Stock to an executive officer of the
Company, at $ 1.50 per share. These options are fully vested at
December 31, 1995.
(7) Property and Equipment
Property and equipment, substantially all of which is pledged
as security under the bank credit facility (see Note 2), other
indebtedness or capital leases, at December 31 follows (in
thousands of dollars):
1995 1994
Land $ 1,532 $ 1,621
Buildings and leasehold improvements 6,295 2,920
Revenue equipment 11,267 13,342
Revenue equipment under
capital leases 17,924 15,937
Other property 5,482 5,320
42,500 39,140
Less accumulated depreciation (12,923) (11,164)
$ 29,577 $ 27,976
(8) Prepaid and Accrued Expenses
An analysis of prepaid and accrued expenses at December 31,
1995, and 1994 follows (in thousands of dollars):
1995 1994
Prepaid expenses:
Insurance $ 789 $ 1,406
Shop and truck supplies 2,151 2,018
Other 2,633 2,985
$ 5,573 $ 6,409
Accrued Expenses:
Salaries and wages $ 1,921 $ 1,930
Fuel and mileage taxes 504 469
Equipment leases 618 585
Other 3,387 3,283
$ 6,430 $ 6,267
(9) Transactions with Affiliated Parties
In 1993, the Company entered into a financial consulting
agreement with an affiliate of a member of the Company's Board
of Directors. This agreement, which expired on January 31,
1994, provided for payments totaling $275,000 for consulting
services rendered.
In 1995, 1994 and 1993, the Company leased approximately 290,
150, and 430 tractors, respectively, from unaffiliated leasing
companies which had purchased the trucks from a dealership
affiliated with a member of the Company's Board of Directors.
The lessors paid a selling commission to the dealership. The
terms of the leases were the result of negotiations between the
Company and the lessors. The Company believes the involvement of
the selling dealership did not result in lease terms that are
more or less favorable to the Company than would otherwise be
available to it. The Company also purchases maintenance parts
and services from the dealership from time to time. Total
payments to the dealership for these services was $ 1,164,000 in
1995, $ 307,000 in 1994 and $ 123,000 in 1993.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Shareholders and Board of Directors of Intrenet, Inc.:
We have audited the accompanying consolidated balance sheets of
INTRENET, INC. (an Indiana corporation) and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated
statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31,
1995. These financial statements and the schedule referred to
below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. 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 Intrenet, Inc. and subsidiaries as of December 31,
1995, and 1994, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole.
The schedule listed in Item 14 (a) 2 is presented for purposes
of complying with the Securities and Exchange Commission's rules
and are not part of the basic consolidated financial statements.
This schedule has been subjected to the auditing procedures
applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as
a whole.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
February 20, 1996.
Schedule II
INTRENET, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands of Dollars)
Additions
Additions
Charged To
Beginning Costs and Charged To Ending
Balance Expenses Other Accounts Deductions Balance
Year Ended
December 31, 1995 :
Allowance for
doubtful accounts $ 1,363 $ 85 $ - $ (876) $ 572
Year Ended
December 31, 1994:
Allowance for
doubtful accounts $ 1,481 $ 93 $ - $ (211) $ 1,363
Year Ended
December 31, 1993:
Allowance for
doubtful accounts $ 1,368 $ 701 $ - $ (588) $ 1,481
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
dated as of
January 15, 1996
between
INTRENET, INC.
and its Subsidiaries
and
THE HUNTINGTON NATIONAL BANK
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
This Fourth Amended and Restated Loan Agreement (this
"Agreement") is entered into at Columbus, Ohio, by, between and
among The Huntington National Bank (herein the "Bank") as
lender, and Intrenet, Inc. (herein the "Borrower"), and
Advanced Distribution System, Inc., Eck Miller Transportation
Corporation, Mid-Western Transport, Inc., Roadrunner
Enterprises, Inc., Roadrunner Trucking, Inc., Roadrunner
Distribution Services, Inc. and Roadrunner International
Services, Inc. (herein collectively referred to as the
"Subsidiaries"; the Borrower and the Subsidiaries are herein
collectively and separately referred to as a "Company" or the
"Companies"), as borrowers, as of the 15th day of January, 1996.
The Agreement is made pursuant to the following recitals:
RECITALS
A. On February 24, 1988, the Borrower, certain of its
subsidiaries, the Bank, Merchants National Bank & Trust Company
of Indianapolis, now known as National City Bank, Indiana
(herein "National City"; the Bank and National City are
sometimes hereinafter collectively referred to as the "Banks"),
and The Huntington National Bank, as Agent for the Bank and
National City (the "Agent"), executed a loan agreement (herein
the "1988 Loan Agreement"), which sets forth the terms and
conditions of certain loans and extensions of credit; and
B. Pursuant to the 1988 Loan Agreement, on or about
February 24, 1988, and March 4, 1988, the Borrower and certain
of its Subsidiaries executed and delivered to the Banks and the
Agent certain other loan documents in connection with the
extensions of credit provided for in the 1988 Loan Agreement,
including without limitation, closing certificates, revolving
notes with term options, letter of credit reimbursement
agreements, security agreements, continuing guaranties
unlimited, an escrow agreement, a Regulation U Statement, and
related documents (herein collectively the "1988 Closing
Documents"); and
C. On or about March 18, 1988, the Borrower, certain of
its Subsidiaries, the Banks and the Agent executed a First
Amendment to Loan Agreement (herein the "First Amendment") which
modified provisions and terms of the 1988 Loan Agreement in
connection with a certain Employee Stock Ownership Plan
transaction; and
D. On or about April 15, 1988, the Borrower, certain of
its Subsidiaries, the Banks and the Agent executed a Second
Amendment to Loan Agreement (herein the "Second Amendment")
which modified provisions and terms of the 1988 Loan Agreement
in connection with the sale by the Borrower to Pinnacle
Enterprises, Inc. of shares of capital stock of Kintla
Enterprises, Inc.; and
E. On or about May 11, 1988, the Borrower, certain of its
subsidiaries, the Banks and the Agent executed a Third
Amendment to Loan Agreement (here in the "Third Amendment")
which modified provisions and terms of the 1988 Loan Agreement
in connection with certain ownership and management changes; and
F. On or about May 16, 1988, the Borrower, certain of its
subsidiaries, the Banks and the Agent executed a Fourth
Amendment to Loan Agreement (herein the "Fourth Amendment")
which modified provisions and terms of the 1988 Loan Agreement
in connection with certain duties and lending percentages
between Huntington and National City;
G. On or about July 22, 1988, the Borrower, certain of
its subsidiaries, the Banks and the Agent executed a Fifth
Amendment to Loan Agreement (herein the "Fifth Amendment") which
modified provisions and terms of the 1988 Loan Agreement in
connection with certain duties and lending percentages between
Huntington and National City, changes in management and
ownership, and the agreement of Roadrunner Enterprises, Inc. to
be bound by the terms and conditions of the 1988 Loan Agreement
(the First Amendment, Second Amendment, Third Amendment, Fourth
Amendment, and Fifth Amendment are herein collectively referred
to as the "Amendments"); and
H. On or about July 22, 1988, the Borrower and certain of
its subsidiaries executed and delivered to the Banks and the
Agent in connection with the 1988 Loan Agreement and the
Amendments, a collateral assignment and security agreement for a
certain promissory note owing to the Borrower from Pinnacle
Enterprises, Inc., substitute revolving notes and standby letter
of credit reimbursement agreements, closing certificate of
Roadrunner Enterprises, Inc., Federal Reserve Form U-l, a
continuing guaranty unlimited of Roadrunner Enterprises, Inc., a
security agreement of Roadrunner Enterprises, Inc., financing
statements of Roadrunner Enterprises, Inc. and related documents
(herein collectively the "Supplemental Documents"). The 1988
Loan Agreement, the 1988 Closing Documents, the Amendments and
the Supplemental Documents are herein collectively referred to
as the "1988 Loan Documents"; and
I. On or about February 6, 1989, the Borrower, certain of
its Subsidiaries, the Banks and the Agent executed an amended
and restated loan agreement (herein the "1989 Loan Agreement"),
which sets forth the terms and conditions of certain loans and
extension of credit; and
J. Pursuant to the 1989 Loan Agreement, on or about
February 6, 1989, the Borrower and certain of its subsidiaries
executed and delivered to the Banks and the Agent certain other
loan and security documents in connection with the extensions of
credit provided for in the 1989 Loan Agreement, including
without limitation, certain revolving promissory notes, a
certain letter of credit reimbursement agreement, mortgages,
deeds of trust, security agreements, assignments, powers of
attorney, cash management agreements, controlled disbursement
agreements, closing certificates, loan expense and disbursement
statements, covenants not to sue, a certain intercorporate
funding agreement, regulation, statements, a certain record
assignment, affidavits, and related documents (herein
collectively the "1989 Closing Documents"); and
K. On or about May 12, 1989, the Borrower, certain of its
subsidiaries, the Banks and the Agent executed a first amendment
to amended and restated loan agreement (the "First Amendment to
the 1989 Loan Agreement"), which modified provisions and terms
of the 1989 Loan Agreement in connection with the amount of the
extension of credit and to provide for a certain fee to the
Banks for the same; and
L. On or about September 7, 1990, the Borrower, certain
of its subsidiaries, the Banks and the Agent executed a second
amendment to amended and restated loan agreement (herein the
"Second Amendment to the 1989 Loan Agreement"), which modified
provisions and terms of the 1989 Loan Agreement in connection
with the maximum amount of credit extended under the 1989 Loan
Agreement and to modify the provisions of the lending formula
applicable to such extension of credit. The 1989 Loan
Agreement, the 1989 Closing Documents, the First Amendment to
the 1989 Loan Agreement, and the Second Amendment to the 1989
Loan Agreement are herein collectively referred to as the "1989
Loan Documents"; and
M. On or about January 15, 1991, the Banks, the Agent ,
and the Companies (with the exception of Roadrunner Distribution
Services, Inc. and Roadrunner International Services, Inc.)
executed a certain Second Amended and Restated Loan Agreement
(herein the "1991 Loan Agreement"), which sets forth the terms
and conditions of certain loans and extensions of credit; and
N. On or about January 15, 1991, pursuant to the 1991
Loan Agreement, the Companies (with the exception of Roadrunner
Distribution Services, Inc. and Roadrunner International
Services, Inc.) executed and delivered to the Banks and the
Agent certain other loan and security documents in connection
with the extension of credit provided for in the 1991 Loan
Agreement, including without limitation, certain revolving
notes, fixed asset notes, short term notes, a letter of credit
reimbursement agreement, an intercorporate funding agreement,
security agreements, Regulation U statements, stock
certificates, financing statements, mortgages, mortgage
modification agreements and related documents (herein
collectively the "1991 Closing Documents"); and
O. On or about September 27, 1991, the Banks, the Agent
and the Companies (with the exception of Roadrunner Distribution
Services, Inc. and Roadrunner International Services, Inc.)
executed a certain First Amendment to Second Amended and
Restated Loan Agreement (the "First Amendment to the 1991 Loan
Agreement"), thereby amending and modifying certain terms
contained in the 1991 Loan Agreement; and
P. On or about November 22, 1991, the Banks, the Agent
and the Companies (with the exception of Roadrunner Distribution
Services, Inc. and Roadrunner International Services, Inc.)
executed a certain Second Amendment to Second Amended and
Restated Loan Agreement (the "Second Amendment to the 1991 Loan
Agreement"), thereby amending and modifying certain terms
contained in the 1991 Loan Agreement; and
Q. On or about March 24, 1992, the Banks, the Agent and
the Companies (with the exception of Roadrunner International
Services, Inc.) executed a certain Third Amendment to Second
Amended and Restated Loan Agreement (the "Third Amendment to the
1991 Loan Agreement") thereby amending and modifying certain
terms contained in the 1991 Loan Agreement; and
R. On or about April 9, 1992, the Banks, the Agent and
the Companies executed a certain Fourth Amendment to Second
Amended and Restated Loan Agreement (the "Fourth Amendment to
the 1991 Loan Agreement") thereby amending and modifying certain
terms contained in the 1991 Loan Agreement; and
S. On or about September 27, 1991, November 22, 1991,
March 24, 1992, April 9, 1992 and on various other dates, the
Companies executed and delivered to the Banks certain other loan
and security documents, agreements, instruments, certificates,
mortgages, mortgage modification agreements and financing
statements in connection with the 1991 Loan Agreement and the
indebtedness referred to therein (all of the foregoing, together
with the 1991 Closing Documents, the First Amendment to the 1991
Loan Agreement, the Second Amendment to the 1991 Loan Agreement,
the Third Amendment to the 1991 Loan Agreement and the Fourth
Amendment to the 1991 Loan Agreement are herein collectively
referred to as the "1991 Loan Documents"); and
T. As of January 19, 1993, the Companies satisfied their
obligations to National City under a certain Revolving Note
dated as of January 15, 1991 in the original principal amount of
$5,361,300.00, a certain Fixed Asset Note dated as of January
15, 1991 in the original principal amount of $2,164,500.00, and
a certain Short Term Note dated as of January 15, 1991 in the
original principal amount of $999,000.00, and National City
assigned to the Bank all of its risk participation interest in
the Letters of Credit (as defined in Section 1.3 below); and
U. On or about January 19, 1993, the Bank and the
Companies executed a certain Third Amended and Restated Loan
Agreement (hereinafter the "1993 Loan Agreement"), which sets
forth the terms and conditions of certain loans and extensions
of credit; and
V. On or about January 19, 1993, pursuant to the 1993
Loan Agreement, the Companies executed and delivered to the Bank
certain other loan and security documents in connection with the
extensions of credit provided for in the 1993 Loan Agreement,
including without limitation, a Revolving Note, a Term Note, a
substitute Standby Letter of Credit Reimbursement Agreement, a
Master Fund Management Agreement, a substitute Intercorporate
Funding Agreement, a Warrant Certificate with respect to rights
to purchase shares of common stock of the Borrower, UCC-1
financing statements, UCC-3 amendments and continuation
statements, mortgages, mortgage modification agreements, a
Covenant Not to Sue, a Compliance Certificate, a Registration
Rights Agreement and related documents (herein collectively the
"1993 Closing Documents"); and
W. On or about November 10, 1993, the Bank and the
Companies executed a certain First Amendment to Third Amended
and Restated Loan Agreement (the "First Amendment to the 1993
Loan Agreement"), thereby amending and modifying certain terms
contained in the 1993 Loan Agreement; and
X. On or about August 3, 1994, the Bank and the Companies
executed a certain Second Amendment to Third Amended and
Restated Loan Agreement (the "Second Amendment to the Third
Amended and Restated Loan Agreement"), thereby amending and
modifying certain terms contained in the 1993 Loan Agreement; and
Y. On or about November 10 , 1993, August 3, 1994, and on
various other dates, the Companies executed and delivered to the
Bank certain other loan and security documents, agreements,
instruments, certificates, mortgages, mortgage modification
agreements and financing statements in connection with the 1993
Loan Agreement and the indebtedness referred to therein (all of
the foregoing, together with the 1993 Closing Documents, the
First Amendment to the 1993 Loan Agreement and the Second
Amendment to the 1993 Loan Agreement are herein collectively
referred to as the "1993 Loan Documents"); and
Z. The Bank and the Companies desire to amend and restate
the 1993 Loan Agreement. NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and
promises contained herein, the Bank and Companies do hereby
amend, restate, modify and agree as follows:
SECTION 1. AMOUNT OF LOAN.
The Bank agrees to extend credit to the Companies up to the
aggregate sum of $33,000,000.00 (herein referred to as the
"Loan"), subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties
contained herein. The Loan shall be comprised of the credit
facilities described in paragraphs 1.1, 1.2, and 1.3 below.
1.1 Revolving Loan.
The Bank agrees to extend credit to the Companies pursuant
to a revolving credit facility up to the maximum principal
amount of $28,000,000.00 (herein referred to as the "Revolving
Loan"), subject to paragraphs 1.3 and 1.4 below and to the terms
and conditions of this Agreement; provided, however, that the
outstanding principal balance of the Revolving Loan, plus the
aggregate outstanding stated amounts of the Letters of Credit
(as defined below) shall never exceed $28,000,000.00. The
outstanding principal of the Revolving Loan may be increased and
decreased an unlimited number of times prior to January 1, 1999
(the Revolving Loan Termination Date"). The Companies' right to
obtain advances pursuant to the Revolving Loan shall terminate
on, and the unpaid principal balance plus all accrued interest
on the Revolving Loan shall be due and payable on, the Revolving
Loan Termination Date; provided, however, that the Bank shall
have no obligation to advance or re-advance any sums pursuant to
the Revolving Loan at any time when there exists any set of
facts or circumstances that, by itself, upon the giving of
notice, the lapse of time, or any one or more of the foregoing,
would constitute an Event of Default under this Agreement.
1.2 Term Loan.
The Bank agrees to extend credit to the Companies pursuant
to a term facility in the principal amount of $5,000,000.00
(herein referred to as the "Term Loan"), subject to paragraph
1.4 below and to the terms and conditions of this Agreement.
The principal balance of the Term Loan shall be due and payable
in sixteen consecutive quarterly installments of $312,500.00
each, beginning on April 1, 1996, and continuing on each July
1, October 1, January 1 and April 1 thereafter through and
including October 1, 1999, and with the final installment due on
December 31, 1999 (the "Term Loan Termination Date").
1.3 Letters of Credit.
The Bank agrees to issue for the account of the Companies,
subject to paragraph 1.4 below and to the terms and conditions
of this Agreement, one or more standby letters of credit (the
"Letters of Credit") (which commitment and commitment amount
shall include standby letters of credit issued pursuant to the
1989 Loan Documents, 1991 Loan Documents and 1993 Loan
Documents), up to the maximum aggregate stated amount
outstanding at any one time of $12,000,000.00 for the purposes
stated in Section 5 hereof; provided, however, that the
outstanding principal balance of the Revolving Loan, plus the
aggregate outstanding stated amounts of the Letters of Credit
shall never exceed $28,000,000.00; provided, further, that the
Bank shall have no obligation to issue any such Letter of Credit
at any time that there exists any set of facts or circumstances
that, by itself, upon the giving of notice, or the lapse or
time, or any one or more of the foregoing, would constitute an
Event of Default under this Agreement. None of the Letters of
Credit shall have an expiration date later than the Revolving
Loan Termination Date.
1.4 Maximum Amount of the Loan.
Notwithstanding the individual limits of the Revolving
Loan, the Term Loan, and the Letters of Credit set forth in
Sections 1.1, 1.2 and 1.3 above, the outstanding principal
balance of the Revolving Loan, plus the outstanding principal
balance of the Term Loan, plus the aggregate outstanding stated
amounts of the Letters of Credit shall never exceed the sum of
$33,000,000.00.
1.5 Amendment and Restatement of Loan Agreement, Assumption and
Reaffirmation.
The indebtedness and obligations evidenced by this
Agreement and all instruments, agreements, and documents
executed in connection herewith constitute an amendment,
renewal, modification, restatement, and restructure of the
indebtedness and obligations of the Companies evidenced by the
1988 Loan Documents, the 1989 Loan Documents, the 1991 Loan
Documents and the 1993 Loan Documents. All Uniform Commercial
Code financing statements and all security agreements and/or
collateral assignments executed and delivered to the Banks in
connection with the 1988 Loan Documents, the 1989 Loan
Documents, the 1991 Loan Documents and the 1993 Loan Documents
shall remain in full force and effect in all respects as if the
indebtedness and obligations secured and perfected with respect
to such Uniform Commercial Code financing statements, security
agreements, and collateral assignments had been payable
originally as provided by this Agreement and by the instruments,
agreements, and documents executed in connection herewith. Any
and all references in the 1988 Loan Documents, 1989 Loan
Documents, 1991 Loan Documents or 1993 Loan Documents to the
effect that such 1988 Loan Documents, 1989 Loan Documents, 1991
Loan Documents or 1993 Loan Documents have been executed
pursuant to, in connection with, or subject to the 1988 Loan
Agreement, 1989 Loan Agreement, 1991 Loan Agreement or 1993 Loan
Agreement or to the indebtedness or obligations outstanding
pursuant to the 1988 Loan Agreement, 1989 Loan Agreement, 1991
Loan Agreement or 1993 Loan Agreement shall, unless the context
otherwise requires, hereinafter be deemed to constitute a
reference to the effect that such 1988 Loan Documents, 1989 Loan
Documents, 1991 Loan Documents and 1993 Loan Documents are
executed pursuant to, in connection with, or subject to this
Agreement and to the indebtedness and obligations outstanding
pursuant to this Agreement. The Companies hereby assume and
reaffirm all of the monetary obligations and indebtedness
evidenced by the 1988 Loan Documents, 1989 Loan Documents, 1991
Loan Documents and 1993 Loan Documents and agree that all of
their monetary obligations and indebtedness set forth therein
shall remain in full force and effect, except as modified by
this Agreement or by the terms of any notes, instruments or
agreements executed in connection herewith.
1.6 Lending Formula.
The aggregate stated amount outstanding pursuant to the
Letters of Credit plus the aggregate unpaid principal balance of
the Revolving Loan shall not exceed (a) 80% of the Companies'
"Eligible Accounts," plus (b) 70% of the Companies' "Eligible
Unbilled Accounts," plus (c) 50% of "Eligible Maintenance
Inventory" (collectively the "Borrowing Base"), as defined below.
The term "Eligible Unbilled Accounts" means the portion of
the Companies' accounts that the Bank determines in good faith
from time to time, based on credit policies, market conditions,
the Companies' business or the creditworthiness of the
Companies' account debtors is eligible for use in calculating
the Borrowing Base. Without limiting the Bank's right to
determine which accounts are Eligible Unbilled Accounts, no
account will be eligible for use in calculating the Borrowing
Base, unless, at a minimum, such account is an account arising
in the ordinary course of the Companies' business owing to the
Companies (excluding sales or other taxes) from a party (the
"Account Debtor") which meets all the following requirements
until it is lawfully invoiced to the Account Debtor (a) the
account arises from the Companies' completed performance of
services that have not yet been invoiced to the Account Debtor;
(b) upon being invoiced, the account shall be due and payable
not more than 15 days from the date of the invoice therefor; (c)
the account is not subject to any prior assignment, claim, lien,
security interest, setoff, credit, contra account, allowance,
adjustment, levy, return of goods, or discount; (d) the account
did not arise from a transaction with a person, corporation or
entity affiliated with the Companies; (e) the Companies have not
received notice of bankruptcy or insolvency of the Account
Debtor; (f) the account is not evidenced by any chattel paper,
promissory note, payment instrument or written agreement; (g)
except for accounts that arise from an Account Debtor whose
mailing address or executive office is located in Canada and
that do not arise from a contract with any government or agency
thereof or from a consumer, the account does not arise from an
Account Debtor whose mailing address or executive office is
located outside the United States; (h) the account does not
arise from an Account Debtor who has more than 50% of its
accounts with the Companies more than 45 days past due; and (i)
the Bank has not notified the Companies that the account or the
Account Debtor is unsatisfactory or unacceptable (although the
Bank reserves the right to do so in good faith and in its sole
discretion at any time).
The term "Eligible Accounts" means the portion of the
Companies' accounts that the Bank determines in good faith from
time to time, based on credit policies, market conditions, the
Companies' business or the creditworthiness of the Companies'
account debtors is eligible for use in calculating the Borrowing
Base. Without limiting the Bank's right to determine which
accounts are Eligible Accounts, no account will be eligible for
use in calculating the Borrowing Base, unless, at a minimum,
such account is an account arising in the ordinary course of the
Companies' business owing to the Companies (excluding sales or
other taxes) from a party (the "Account Debtor" ) which meets
all the following requirements until it is collected in full:
(a) the account is due and payable not more than 15 days from
the date of the invoice therefor and is not more than 45 days
past-due; (b) the account arises from the Companies' completed
performance of services that have been lawfully invoiced to the
Account Debtor; (c) the account is not subject to any prior
assignment, claim, lien, security interest, setoff, credit,
contra account, allowance, adjustment, levy, return of goods, or
discount; (d) the account did not arise from a transaction with
a person, corporation or entity affiliated with the Companies;
(e) the Companies have not received notice of bankruptcy or
insolvency of the Account Debtor; (f) the account is not
evidenced by any chattel paper, promissory note, payment
instrument or written agreement; (g) except for accounts that
arise from an Account Debtor whose mailing address or executive
office is located in Canada and that do not arise from a
contract with any government or agency thereof or from a
consumer, the account does not arise from an Account Debtor
whose mailing address or executive office is located outside the
United States; (h) the account does not arise from an Account
Debtor who has more than 50% of its accounts with the Companies
more than 45 days past due; (i) the account does not arise from
an Account Debtor to whom the Company has determined to ship
goods on a "cash on delivery" or C.O.D. basis, unless the Bank
determines in its sole discretion that said account is
acceptable and (j) the Bank has not notified the Companies tat
the account or the Account Debtor is unsatisfactory or
unacceptable (although the Bank reserves the right to do so in
good faith and in its sole discretion at any time).
The term "Eligible Maintenance Inventory" means the portion
of the Companies' inventory consisting of supplies and
replacement parts for trucks and trailers that the Bank
determines from time to time, based upon credit policies, market
conditions, the Companies' business and other matters is
eligible for use in calculating the Borrowing Base. For
purposes of determining the Borrowing Base, Eligible Maintenance
Inventory (unless the Bank agrees otherwise in writing) shall
not include slow moving, obsolete or discontinued inventory,
packaging, inventory in the control of a third person for
storage, consigned inventory or inventory in transit, and all
inventory shall be valued at the lesser of cost (on a FIFO
basis) or market.
SECTION 2. INTEREST RATES.
2.1 Prime Commercial Rate.
The Companies, jointly and severally, agree to pay to the
Bank monthly interest on the unpaid balance of the Revolving
Loan at a variable rate of interest per annum equal to one-half
percentage point per annum (1/2%) in excess of the Prime
Commercial Rate of the Bank, from time to time in effect, with
each change in the Prime Commercial Rate automatically and
immediately changing the interest rate on the Revolving Loan
without notice to the Companies; Accrued interest on the
unpaid principal balance of the Revolving Loan shall be payable
monthly on the first day of each month, and at maturity, whether
by acceleration or otherwise (the "Revolving Loan Interest
Payment Dates"). The Companies, jointly and severally, agree to
pay to the Bank quarterly interest on the unpaid balance of the
Term Loan at a variable rate of interest per annum equal to
one-half percentage point (1/2%) in excess of the Prime
Commercial Rate of the Bank, from time to time in effect, with
each change in the Prime Commercial Rate automatically and
immediately changing the interest rate on the Term Loan without
notice to the Companies. Accrued interest on the unpaid
principal balance of the Term Loan shall be payable quarterly on
each January 1, April 1, July 1 and October 1, and at maturity,
whether by acceleration or otherwise (the "Term Loan Interest
Payment Dates"). Interest shall be calculated on a 360 day
year basis and shall be based on the actual number of days which
elapse during the interest calculation period. "Prime
Commercial Rate" as used herein shall mean the rate established
by the Bank from time to time based on its consideration of
economic, money market, business and competitive factors, and it
is not necessarily the Bank's most favored rate.
2.2 Interest Rate After Default.
If the Companies fail to make any payment of interest or
principal or other payment due on any note or letter of credit
reimbursement agreement executed in connection with this
Agreement on or before five (5) business days after the date
such payment is due, or if the Companies shall fail to make any
payment required by Section 6.1 or 6.2 of this Agreement on or
before thirty (30) business days after the date such payment is
due, or if any other Event of Default occurs hereunder and is
not cured or waived with 120 days after the date of such Event
of Default, or if the Bank shall declare the entire principal
and all interest accrued on all notes and any other obligations
outstanding pursuant to this Agreement to be due and payable,
then interest shall thereafter accrue on the outstanding
principal balance of the Revolving Loan and Term Loan and any
unreimbursed draws under the Letters of Credit at a rate equal
to three and one-half percentage points (3-1/2%) in excess of
the Prime Commercial Rate of the Bank.
SECTION 3. EVIDENCE OF THE LOAN.
The Revolving Loan shall be evidenced by a promissory note,
which note shall be in the form of Exhibit A attached hereto, or
by one or more notes subsequently executed in substitution
therefor. The Term Loan shall be evidenced by a promissory
note, which note shall be in the form of Exhibit B attached
hereto, or by one or more notes subsequently executed in
substitution therefor. The obligations of the Companies
pursuant to the issuance of the Letters of Credit shall be
evidenced by a Standby Letter of Credit Reimbursement Agreement,
which agreement shall be in the form of Exhibit C attached
hereto, or by one or more applications and agreements for
standby letters of credit executed in substitution therefor.
Repayment of the Loan shall be made in accordance with the terms
of the notes and agreements then outstanding pursuant to this
Agreement.
SECTION 4. PREPAYMENT.
Subject to the terms and conditions of this Agreement, the
Companies shall have the right to prepay at any time and from
time to time before maturity any amount or amounts due to the
Bank pursuant to this Agreement or to any notes or agreements
executed pursuant hereto or to seek cancellation of the Letters
of Credit; provided, that if the Companies prepay the Revolving
Loan and the Term Loan in full prior to (i) December 31, 1996,
the Companies shall jointly and severally pay to the Bank a
prepayment fee equal to $300,000.00; (ii) December 31, 1997,
but on or after December 31, 1996, the Companies shall jointly
and severally pay to the Bank a prepayment fee equal to
$250,000.00; (iii) December 31, 1998, but on or after December
31, 1997, the Companies shall jointly and severally pay to the
Bank a prepayment fee equal to $200,000.00; provided, however,
that no such prepayment fee shall be due if the Revolving Loan
and the Term Loan are prepaid in full solely as a result of the
refinancing or restructuring of such obligations by the Bank.
If the Bank, in its sole and absolute discretion, determines not
to renew or extend the maturity of the Revolving Loan, then the
Term Loan shall be due and payable at the maturity of the
Revolving Loan.
SECTION 5. USE OF PROCEEDS.
The proceeds of the Revolving Loan and the Term Loan shall
be used by the Companies for working capital needs and expenses
incurred in the ordinary course of the Companies' businesses.
The Letters of Credit shall be used to assure performance by the
Companies under insurance plans and bonding plans, for fuel
purchase and fuel tax requirements, in connection with fuel
credit cards and driver advances in an amount not to exceed
$500,000.00, and to secure performance by the Companies under
any equipment leasing transactions permitted by this Agreement.
SECTION 6. COSTS, EXPENSES AND FEES.
6.1 Revolving and Term Loan Fee.
The Companies shall jointly and severally pay to the Bank
in respect of the Revolving Loan and the Term Loan a monthly
service and collateral management fee (the "Revolving and Term
Loan Fee") in the amount of $9,000.00, payable on the first day
of each month during which any balance under the Revolving Loan
or Term Loan is outstanding.
6.2 Letter of Credit Fees.
The Companies shall jointly and severally pay to the Bank a
fee in respect of the Letters of Credit in the amount of one
percent (1%) per annum of the stated amount of each Letter of
Credit issued or renewed and outstanding during such year, which
fee shall be paid to the Bank upon the issuance or renewal of
each Letter of Credit and which fee shall be prorated for each
Letter of Credit for which the expiry date is less than one
year. The Companies shall also pay any and all other fees,
costs and expenses as may be provided for in the Standby Letter
of Credit Reimbursement Agreement.
6.3 Restructure Fee.
The Companies shall jointly and severally pay to the Bank a
restructure fee in respect of the Loan in the amount of
$50,000.00, which fee shall be fully earned as of the date of
this Agreement, but shall be payable (a) in the following
installments: $25,000.00 on February 1, 1996; and $25,000.00 on
January 1, 1997; or (b) upon acceleration of the Loan, whichever
is earlier.
6.4 Other Costs.
The Companies jointly and severally agree to pay all costs
and expenses (a) incidental to the extensions of credit provided
for in this Agreement and any amendment, extension,
modification, restatement, restructure hereof, (b) as provided
in any security agreement or document executed in connection
herewith, (c) in connection with the enforcement of the Bank's
rights related to any of the foregoing, (d) in connection with
any sale or attempted sale of any interest herein to a
participant or co-lender, and (e) in connection with any
litigation, contest, dispute, proceeding or action in any way
relating to any collateral security or to this Agreement,
whether any of the foregoing are incurred prior to or after
maturity, the occurrence of an Event of Default, or the
rendering of a judgment. Such costs shall include, but not be
limited to, reasonable fees and out-of-pocket expenses of the
Bank's counsel, title insurance premiums and costs, recording
fees, appraisal fees, Phase I environmental survey fees, other
survey fees, inspection fees, revenue stamps and note and
mortgage taxes.
6.5 Increased Capital.
If, after the date hereof, the Bank determines that (i) the
adoption or implementation of or any change in, or in the
interpretation or administration of, any law or regulation or
any guideline or request from any central bank or other
governmental authority or quasi-governmental authority
exercising jurisdiction, power or control over the Bank or banks
or financial institutions generally (whether or not having the
force of law), compliance with which affects or would affect the
amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank and (ii) the amount
of such capital is increased by or based upon (A) the making or
maintenance by the Bank of the Loan, any participation in or
obligation to participate in the Loan, Letters of Credit or
other advances made hereunder or the existence of any obligation
to make the Loan, or (B) the issuance or maintenance by the Bank
of, or the existence of the Bank's obligation to issue, Letters
of Credit, then, in any such case, upon written demand by the
Bank, the Companies, jointly and severally, shall immediately
pay to the Bank, from time to time as specified by the Bank,
additional amounts sufficient to compensate the Bank or such
corporation therefor. Such demand shall be accompanied by a
statement as to the amount of such compensation and include a
summary of the basis for such demand with detailed calculations.
SECTION 7. SECURITY FOR LOAN.
As security for the Loan, the Companies shall grant to the
Bank a first priority lien against all the Companies' accounts
receivable, contract rights, general intangibles, documents,
inventory, fixtures, equipment, instruments, licenses,
franchises, real estate, chattel paper, motor vehicles,
automobiles, trucks, vans and trailers, lease rentals, patents,
trademarks, trade names, intellectual property, stock,
securities, all of the Companies' real and personal property,
and the proceeds of all of the foregoing whether now owned or
hereafter acquired or created by the Companies subject only to
those liens and encumbrances set forth on Exhibit D to this
Agreement. At the request of the Bank, the Companies shall
authorize and cause to be executed any and all documents which
the Bank shall reasonably require in order to effect the
foregoing. The Companies shall execute and deliver to the Bank
security agreements, mortgages, deeds of trust, assignments of
rents and leases and Uniform Commercial Code financing
statements in form and content reasonably satisfactory to the
Bank. In addition, the Companies shall provide the Bank with
any title insurance policies, surveys, environmental surveys,
appraisals and other documents or assurances reasonably required
by the Bank in form and content satisfactory to the Banks.
Nothing contained in this Agreement or in any security
agreement, mortgage, deed of trust or other document executed in
connection herewith shall affect or modify any security
interest, assignment, financing statement or mortgage previously
granted to the Bank prior to the date hereof. All such
interests and financing statements previously granted or
executed and delivered to the Banks shall remain in full force
and effect.
SECTION 8. WARRANTIES AND REPRESENTATIONS.
The Companies warrant and represent to the Bank:
8.1 Subsidiaries.
The Companies have no subsidiaries except as set forth on
the attached Exhibit E.
8.2 Corporate Organization and Authority.
The Companies:
(a) are corporations duly organized, validly existing and
in good standing under the laws of the State of their
respective incorporation as set forth on the attached Exhibit E;
(b) have all requisite power and authority and all
necessary licenses and permits to own and operate their
properties and to carry on their businesses as now conducted and
as presently proposed to be conducted, except where the
failure to obtain licenses and permits would not have a
material adverse effect on the Companies taken as a whole;
and
(c) are qualified and authorized to do business as
corporations or foreign corporations in every
jurisdiction in which they do business, except where the failure
to be so qualified would not have a material adverse
effect on the Companies taken as a whole.
8.3 Financial Statements; Full Disclosure.
The financial statements for the fiscal year ending
December 31, 1994, and the fiscal quarter ending September 30,
1995, which have been supplied to the Bank have been prepared in
accordance with Generally Accepted Accounting Principles and
fairly represent the Companies' financial condition as of such
date. No material adverse change in the Companies' financial
condition has occurred since September 30, 1995. In addition,
the financial analyses, reports, business plans, projections,
and pro forma financial statements for fiscal years 1995 through
1998 which have been supplied to the Bank have been prepared in
accordance with Generally Accepted Accounting Principles and are
based on reasonable, good faith assumptions about the Company's
financial condition and projected financial condition as of the
dates of such financial information or projections. No adverse
change has occurred which would materially alter any such
analyses, reports, business plans, financial statements,
projections, or assumptions. The financial statements and the
financial analyses or information referred to in this paragraph
do not, nor does this Agreement or any written statement
furnished by the Companies to the Banks in connection with
obtaining the Loan, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements
contained therein or herein not misleading. The Companies have
disclosed to the Banks in writing or orally all facts which
materially affect the properties, business, prospects, profits
or condition (financial or otherwise) of the Companies or the
ability of the Companies to perform this Agreement.
8.4 Pending Litigation.
Except as may be disclosed on Exhibit F attached hereto,
there are no proceedings pending, or, to the knowledge of the
Companies, threatened against or affecting the Companies in any
court or before any governmental authority or arbitration board
or tribunal which, individually or in the aggregate, involve the
possibility of materially and adversely affecting the
properties, businesses, prospects, profits or condition
(financial or otherwise) of the Companies, taken as a whole or
the ability of the Companies to perform this Agreement.
8.5 Title to Properties.
The Companies have good and marketable title to all the
property which they purport to own (except as sold or otherwise
disposed of in the ordinary course of business), free from any
liens and encumbrances, except in favor of the Bank or as set
forth on Exhibit D to this Agreement. Moreover, the Companies
lease only that real property set forth on Exhibit G attached
hereto.
8.6 Borrowing is Legal and Authorized.
(a) The Boards of Directors of the Companies have duly
authorized the execution and delivery of this Agreement
and of each of the notes and documents contemplated
herein, and the note or notes executed in connection with this
Agreement will constitute valid and binding obligations
of the Companies enforceable in accordance with their
terms.
(b) The execution of this Agreement and related notes and
documents and the compliance by the Companies with all
the provisions of this Agreement:
(i) are within the corporate powers of the Companies;
and
(ii) are legal and will not conflict with, result in
any breach of any of the provisions of, constitute
a default under, or result in the creation of any lien
or encumbrance upon any property of the Companies under the
provisions of, any agreement, charter instrument,
bylaw, or other instrument to which the Companies
are parties or by which they may be bound.
(c) There are no limitations in any indenture, mortgage,
deed of trust or other material agreement or instrument
to which the Companies are now parties or by which the
Companies may be bound with respect to the payment of principal,
interest, or other payment on the Loan.
8.7 No Defaults.
No event has occurred and no condition exists which, but
for notice or lapse of time, would constitute an Event of
Default pursuant to this Agreement. None of the Companies are
in violation in any material respect of any term of any, charter
instrument, bylaw or other material agreement or instrument to
which they are parties or by which they may be bound.
8.8 Government Consent.
Neither the nature of the Companies or of their businesses
or properties, nor any relationship between the Companies and
any other entity or person, nor any circumstance in connection
with the execution of this Agreement, is such as to require a
consent, approval or authorization of, or filing, registration
or qualification with, any governmental authority on the part of
the Companies as a condition to the execution and delivery of
this Agreement and the notes and documents contemplated herein.
8.9 Taxes.
(a) All tax returns required to be filed by the Companies
on or before the date hereof in any jurisdiction have in fact
been filed or the time for filing has been extended, and all
undisputed taxes, assessments, fees and other governmental
charges upon the Companies, or upon any of its respective
properties, which are due and payable have been paid except as
set forth in Exhibit H to this Agreement. The Companies do not
know of any proposed additional tax assessment against them or
their properties that would have a material adverse effect on
the Companies, except as set forth in Exhibit H to this
Agreement.
(b) The provisions for taxes on the books of the Companies
for their current fiscal period are adequate.
8.10 Compliance with Law.
The Companies:
(a) are not in violation of any laws, ordinances,
governmental rules or regulations to which they are
subject, which violation might materially and adversely affect
the business, prospects, profits, properties or
condition (financial or otherwise) of the Companies
taken as a whole; and
(b) have not failed to obtain any licenses, permits,
franchises or other governmental authorizations
necessary to the ownership of their properties or to the conduct
of their businesses, which violation or failure to
obtain might materially and adversely affect the
businesses, prospects, profits, properties or condition
(financial or otherwise) of the Companies taken as a
whole.
8.11 Restrictions on Companies.
The Companies are not parties to any contract or agreement
or subject to any charter or other corporate restriction which
materially and adversely affects the business of the Companies.
The Companies are not parties to any contract or agreement which
restricts the right or ability of the Companies to incur
indebtedness, other than this Agreement. The Companies have not
agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a lien
or encumbrance, except to the Bank, except as disclosed on
Exhibit D to this Agreement, and except with respect to that
certain real property described in a certain Commercial Deed of
Trust, Security Agreement, Assignment of Leases and Rents, and
Fixture Filing (the "MetLife Deed of Trust") dated August 28,
1995, that was executed and delivered to First American Title
Insurance Company, for the benefit of MetLife Capital Financial
Corporation, by Roadrunner Trucking, Inc. Except with respect
to that certain real property described in the MetLife Deed of
Trust, the Companies have not granted a negative pledge related
to their assets under any instrument or document to which they
are parties.
8.12 No Insolvency.
On the date of the Companies' entering into the Loan and
after giving effect to all indebtedness of the Companies
(including the Loan), (a) the Companies (taken as a whole) will
be able to pay their obligations as they become due and payable;
(b) the present fair saleable value of the Companies' assets
exceeds the amount that will be required to pay their probable
liability on their obligations as the same become absolute and
matured; (c) the sum of the Companies' property at a fair
valuation exceeds Companies' indebtedness; and (d) the Companies
will have sufficient capital to engage in their respective
businesses.
8.13 Locations of Companies.
The Companies' principal places of business, chief
executive offices and all locations in which the Companies
maintain real or personal property (not including tractors and
trailers) are set forth in Exhibit I attached hereto, the books
and records of the Companies are and shall be kept at such
addresses described on Exhibit I, and the Companies have no
other place of business except as shown in Exhibit I.
8.14 Environmental Protection.
Except as disclosed in Exhibit K to this Agreement, the
Companies (a) have no actual knowledge of the permanent
placement, burial or disposal of any Hazardous Substances (as
hereinafter defined) on any real property owned, leased, or used
by the Companies (the "Premises"), of any spills, releases,
discharges, leaks, or disposal of Hazardous Substances that have
occurred or are presently occurring on, under, or onto the
Premises, or of any spills, releases, discharges, leaks or
disposal of Hazardous Substances that have occurred or are
occurring off the Premises as a result of the Companies'
improvement, operation, or use of the Premises which would
result in non-compliance with any of the Environmental Laws (as
hereinafter defined); (b) are and have been in compliance with
all applicable Environmental Laws; (c) know of no pending or
threatened environmental civil, criminal or administrative
proceedings against the Companies relating to Hazardous
Substances; (d) know of no facts or circumstances that would
give rise to any future civil, criminal or administrative
proceeding against the Companies relating to Hazardous
Substances; and (e) will not permit any of their employees,
agents, contractors, subcontractors, or any other person
occupying or present on the Premises to generate, manufacture,
store, dispose or release on, about or under the Premises any
Hazardous Substances which would result in the Premises not
complying with the Environmental Laws.
As used herein, "Hazardous Substances" shall mean and
include all hazardous and toxic substances, wastes, materials,
compounds, pollutants and contaminants (including, without
limitation, asbestos, polychlorinated biphenyls, and petroleum
products) which are included under or regulated by the
Comprehensive Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. Section9601, et seq., the Toxic
Substances Control Act, 15 U.S.C. Section2601, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section6901,
et seq., the Water Quality Act of 1987, 33 U.S.C. Section1251,
et seq., and the Clean Air Act, 42 U.S.C. Section7401, et seq.,
and any state or local statute ordinance, law, code, rule,
regulation or order regulating or imposing liability (including
strict liability) or standards of conduct regarding Hazardous
Substances (hereinafter the "Environmental Laws"), but does not
include such substances as are permanently incorporated into a
structure or any part thereof in such a way as to preclude their
subsequent release into the environment, or the permanent or
temporary storage or disposal of household hazardous substances
by tenants, and which are thereby exempt from or do not give
rise to any violation of the aforementioned Environmental Laws.
Notwithstanding anything contained herein to the contrary,
the Bank acknowledges that Hazardous Substances may be used on
the Premises in the ordinary course of the Companies' business,
but each of the Companies represents and warrants to the Bank
that such Hazardous Substances shall at all times be used in
accordance with all Environmental Laws. The acknowledgment by
the Bank in the immediately preceding sentence shall not
restrict or otherwise limit the indemnification and other
obligations of the Companies under this Agreement.
SECTION 9. CLOSING CONDITIONS.
The obligation of the Bank to make the Loan shall be
subject to the following conditions precedent:
9.1 Opinion of Counsel.
The Bank shall have received from counsel for the Companies
such closing opinions, in form and content satisfactory to the
Bank, as are required to be delivered to the Bank as of the date
hereof.
9.2 Compliance with this Agreement.
The Companies shall have performed and complied with all
agreements and conditions contained herein which are required to
be performed or complied with by the Companies before or at
closing.
9.3 Compliance Certificate.
The Bank shall have received a certificate dated the date
upon which this Agreement is executed and signed by an
authorized officer of the Companies, certifying that the
conditions specified in Section 9.2 have been fulfilled.
9.5 Warranties and Representations.
On the date of each advance pursuant to the Loan the
warranties and representations set forth in Section 8 hereof
shall be true and correct on and as of such date with the same
effect as though such warranties and representations had been
made on and as of such date, except to the extent that such
warranties and representations expressly relate to an earlier
date.
SECTION 10. COMPANIES' BUSINESS COVENANTS.
The Companies covenant that on and after the date of this
Agreement, so long as any of the indebtedness provided for
herein remains unpaid:
10.1 Payment of Taxes and Claims.
The Companies will pay before they become delinquent:
(a) all taxes, assessments and governmental charges or
levies imposed upon it or its property; and
(b) all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords, bailee and other
like persons which, if unpaid, might result in the creation of a
lien or encumbrance upon its property,
provided that items of the foregoing description need not be
paid while being contested in good faith and by appropriate
proceedings and provided further that adequate book reserves
have been established with respect thereto; provided further
that the Companies' title to, and their right to use, their
property is not materially adversely affected thereby, and
provided further that no tax liens have attached to the
Companies' accounts, contract rights, chattel paper, general
intangibles, or inventory. In the case of any item of the
foregoing description involving in excess of the amount which
the Companies' independent public accountants shall fix as the
threshold of materiality for purposes of their audit of the then
current year, the appropriateness of the proceedings shall be
supported by an opinion of the independent counsel responsible
for such proceedings and the adequacy of such reserves shall be
supported by the opinion of the independent accountants.
10.2 Maintenance of Properties and Corporate Existence.
The Companies shall:
(a) Property--maintain their property in good condition
and make all renewals, replacements, additions,
betterments and improvements thereto which are deemed
necessary by the Companies;
(b) Insurance--maintain, (i) self insurance and (ii)
insurance with financially sound and reputable
insurers, with respect to their properties and businesses
against such casualties and contingencies, of
such types (including but not limited to fire and
casualty, public liability, products liability, larceny,
embezzlement or other criminal misappropriation
insurance), both such self insurance and insurance to be in such
amounts as is customary in the case of corporations of
established reputations engaged in the same or a
similar business and similarly situated;
(c) Financial Records--keep true books of records and
accounts in which full and correct entries will be
made of all its business transactions, and reflect in its
financial statements adequate accruals and
appropriations to reserves, all in accordance with
generally accepted accounting principles;
(d) Corporate Existence and Rights--do or cause to be done
all things necessary (i) to preserve and keep in full
force and effect their existence, rights and franchises, and
(ii) to maintain their status as a corporation duly
organized and existing and in good standing under the
laws of the State of their incorporation; and
(e) Compliance with Law--not be in violation of any laws,
ordinances, or governmental rules and regulations to
which they are subject and will not fail to obtain any licenses,
permits, franchises or other governmental authorizations
necessary to the ownership of their properties or to
the conduct of their businesses, which violation or failure
to obtain might materially and adversely affect the
businesses, prospects, profits, properties or condition
(financial or otherwise) of the Companies taken as a whole.
10.3 Liens and Encumbrances, Negative Pledge.
The Companies will not (i) cause or permit or (ii) agree or
consent to cause or permit in the future (upon the happening of
a contingency or otherwise), any of their or any of the
Subsidiaries' property, whether now owned or hereafter acquired,
to be subject to a lien or encumbrance to any entity or person
other than the Bank, except liens or encumbrances permitted or
acknowledged by Sections 8.5 (Exhibit D) or 10.4 hereof.
In addition, except as set forth in the MetLife Deed of
Trust, the Companies will not contractually agree with any other
creditor or third party to provide such party a negative pledge,
or other covenants similar to this Section 10.3.
10.4 Other Borrowings.
The Companies will not create or incur any indebtedness for
borrowed money, credit extensions, or advances except for (i)
the Loan, (ii) insurance premium financing transactions, (iii)
equipment leases and purchase money financing transactions
permitted by Section 10.25 herein with respect to tractors
and/or trailers and related equipment and accessories not to
exceed the purchase price of such items being purchased or
leased; (iv) trade debt payable in the ordinary course of the
Companies' businesses, (v) purchase money financing in
connection with the capital expenditures permitted by Section
10.24 herein and (vi) indebtedness to MetLife Capital Financial
Corporation in a principal amount not to exceed $2,350,000 that
is secured only by the property referred to in the MetLife Deed
of Trust.
10.5 Contingent Liabilities.
The Companies represent and warrant that they have no known
contingent liabilities, except as set forth in Exhibit J to this
Agreement. The Companies will not guarantee, indorse or
otherwise become surety for or upon the obligations of others,
except (i) by indorsement of negotiable instruments for deposit
or collection in the ordinary course of business, (ii) the
Companies's liability for fuel tax bonds, and (iii) in
connection with the borrowings permitted pursuant to paragraph
10.4 above.
10.6 Loans and Advances by the Companies.
The Companies will not make any loans or advances to any
inactive subsidiaries, including without limitation those
entities designated on Exhibit E to this Agreement as inactive
subsidiaries (the "Inactive Subsidiaries"), or to any other
person, corporation or entity; provided, however, the Companies
may make advances to owner-operators, trip lessors, and
commissioned agents in the ordinary course of business not to
exceed the aggregate amount outstanding at any one time of
$6,000,000. Notwithstanding the foregoing, the Companies shall
be permitted to make loans to any entity comprising the
Companies in such amounts, from time to time, as they may deem
necessary and appropriate.
10.7 Acquisition of Capital Stock.
So long as the Loan is outstanding, the Companies will not
purchase, redeem, or otherwise acquire or retire any of its
capital stock, bonds or warrants, rights, or options to acquire
stock of the Companies, without the prior written consent of the
Banks, which consent shall not be withheld unreasonably.
10.8 Investments.
None of the Companies shall purchase for investment
securities of any kind except securities, or other financial
instruments or obligations acquired through the Bank's Prime
Interest Program, shares of the capital stock of LTV Steel
Company, Inc. owned by any of the Companies as of the date
hereof, bonds or other obligations of the United States,
certificates of deposit issued by commercial banks or building
and loan associations and commercial paper rated at least A-1 or
P-1 and having a maturity of no more than one year, securities
rated at least Aaa by Moody Investor Services, Inc. or at least
AAA by Standard & Poors, or other marketable securities having a
market value not to exceed the sum of $500,000.00 in the
aggregate outstanding at any one time. None of the Companies
shall hereafter make any investment in any of the Inactive
Subsidiaries, whether by means of loan or advance, contribution
of capital, contribution of assets, acquisition, sale, lease,
transfer or other disposition of assets, or otherwise.
10.9 Sale of Accounts; No Consignment.
The Companies shall not sell, assign, or encumber, except
to the Bank and to Transport Clearings East, Inc. in respect of
the accounts of Eck Miller Transportation Corporation, Inc.,
Advanced Distribution System, Inc., Roadrunner Trucking, Inc.
and Roadrunner Distribution Services, Inc. pursuant to certain
Intercreditor Agreements between the Bank and Transport
Clearings East, Inc. and other agreements satisfactory to the
Bank in its sole discretion, any of their Accounts or notes
receivable. The Companies shall use their best efforts to
discontinue as soon as practicable their practice of selling or
assigning accounts to Transport Clearings East, Inc., as
permitted by this paragraph. The Companies shall not permit any
of their Inventory to be sold or transferred on consignment or
acquire or possess any of their Inventory on consignment.
10.10 Minimum Security.
The Companies shall maintain, as minimum security for the
Revolving Loan and Letters of Credit, Eligible Accounts,
Eligible Unbilled Accounts, and Eligible Maintenance Inventory
having an aggregate value such that the aggregate stated amount
of the Letters of Credit plus the outstanding principal balance
of the Revolving Loan shall not exceed the Borrowing Base.
10.11 Management.
The Borrower shall not after the date of this Agreement
permit any material change in the persons occupying the
positions of President, Chief Executive Officer or Chief
Operating Officer of the Borrower without the prior written
consent of the Bank, which consent will not be withheld
unreasonably.
10.12 Book Net Worth.
The Companies shall achieve a Book Net Worth of not less
than:
$22,500,000.00 as of December 31, 1995;
$22,000,000.00 as of June 30, 1996;
$22,500,000.00 as of December 31, 1996;
$23,000,000.00 as of June 30, 1997;
$23,500,000.00 as of December 31, 1997;
$24,250,000.00 as of June 30, 1998; and
$25,000,000.00 as of December 31, 1998, and continuing at
all times thereafter.
10.13. Ratio of Total Liabilities to Book Net Worth.
The Companies shall achieve a ratio of Total Liabilities to
Book Net Worth of not greater than (a) 3.50 to 1.00 as of
December 31, 1995; (b) 3.00 to 1.00 as of June 30, 1996; (c)
3.00 to 1.00 as of December 31, 1996; (d) 2.50 to 1.00 as of
December 31, 1997, and (e) 2.00 to 1.00 as of December 31, 1998
and continuing at all times thereafter.
10.14 Current Ratio.
The Companies, on a combined and consolidated basis, shall
achieve a ratio of current assets to current liabilities of not
less than (a) 0.90 to 1.00 as of December 31, 1995, (b) 1.00 to
1.00 as of December 31, 1996, (c) 1.00 to 1.00 as of December
31, 1997, (d) 1.10 to 1.00 as of December 31, 1998, and (e) 1.20
to 1.00 as of June 30, 1999, and continuing at all times
thereafter.
10.15 Sale of Assets; Merger.
The Companies, without the prior written consent of the
Bank, which consent will not be withheld unreasonably, except in
the ordinary course of business, will not sell, lease, transfer,
or otherwise dispose of, any of their assets. In addition, the
Companies, without the prior written consent of the Bank, which
consent will not be withheld unreasonably, will not consolidate
with or merge into any other entity, or permit any other entity
to consolidate with or merge into it. The Companies, without
the prior written consent of the Bank, which consent will not be
withheld unreasonably, will not acquire all or substantially all
of the assets or business of any other company, person or
entity. The Companies, without the prior written consent of the
Bank, which consent will not be withheld unreasonably, will not
create or acquire any direct or indirect subsidiaries, or
conduct business under any tradenames. In obtaining the consent
of the Bank with respect to any proposed transaction referred to
in this Section 10.15, the Companies shall provide to the Bank
all such information as the Bank reasonably deems necessary to
enable it to evaluate such transaction.
10.16 ERISA.
The Companies shall with respect to any employee benefit
pension plan under Title IV of the Employee Retirement Income
Security Act, as amended, established, now or hereafter, by the
Companies, any subsidiary of the Companies, or any business
under common control with the Companies, or to which the
Companies, any subsidiary, or any business under common control
with the Companies is, now or hereafter, required to contribute:
(a) at all times make prompt payment of contributions
required to meet the minimum funding standards set
forth in Section 302 through 305 of ERISA with respect to its
plan,
(b) promptly, after the filing thereof, furnish to the
Bank copies of each annual report required to be filed
pursuant to Section 103 of ERISA in connection with their plan
for the plan year, including any certified financial
statements or actuarial statements required pursuant to
said Section 103,
(c) notify the Bank immediately of any fact, including,
but not limited to, any "Reportable Event," as that
term is defined in Section 4043 of ERISA, arising in
connection with the plan which might constitute grounds for
termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate
United States District Court of a Trustee to administer the
plan, and
(d) notify the Bank upon becoming aware of any "Prohibited
Transaction" as that term is defined in Section 406 of
ERISA.
The Companies will not:
(e) engage in any "Prohibited Transaction," which
violation might materially and adversely affect the
business, prospects, profits, properties or condition (financial
or otherwise) of the Companies; or
(f) terminate any such plan in a manner which could result
in the imposition of a lien on the property of the
Companies pursuant to Section 4068 of ERISA.
10.17 Lock-box and Collection of Accounts.
The Companies shall cause all accounts, accounts
receivable, and contract rights to be collected through a
lock-box arrangement with the Bank that includes a "blocked"
account at Norwest Bank - New Mexico or any successor thereof,
and shall execute such agreements with respect to the same in
form and substance satisfactory to the Bank. Upon request of
the Bank at any time after an occurrence of an Event of Default
under this Agreement, the Companies agree to notify all of their
account debtors and indicate on all billings that the accounts
are payable to the Bank.
10.18 Concentration Account.
If the Companies make collections on any of the accounts,
accounts receivable, or contract rights, they shall hold the
proceeds received from collections in trust for the Bank, and
turn over all checks, drafts, cash and other remittances and
proceeds to the Bank each business day in the exact form in
which they are received. Said proceeds and the monies or other
funds collected through the lock-box account described in the
immediately preceding paragraph shall be deposited in a
concentration account maintained with the Bank (the
"Concentration Account"). The Bank shall apply the whole or any
part of the collected funds on deposit in the Concentration
Account against the principal and/or interest of the Revolving
Loan, the Term Loan, or any other indebtedness or obligation of
the Companies. The Companies shall execute any and all
supporting documentation in form and content satisfactory to the
Bank to effectuate the foregoing lock-box and concentration
account arrangements.
10.19 Controlled Disbursement Account.
The Companies shall maintain with the Bank controlled
disbursement accounts and shall execute such documents in form
and content satisfactory to the Bank as may be necessary to
effectuate the foregoing.
10.20 Deposits with the Bank.
The Companies represent and warrant that they maintain all
of their operating and deposit accounts with the Bank except for
(a) Account No. 7650595 maintained by Roadrunner Trucking, Inc.
with Norwest Bank - New Mexico, (b) Account No. 2-100098-0
maintained Eck Miller Transportation Corporation with Farmers
State Bank in Rockport, Indiana, (c) Accounts 2010774743,
2010772983, 05296DH010, and 05296DD0118 with the Bank of N.T.
Butterfield & Son, Limited maintained by RWI COMPANY Ltd., (d)
Account No. 031203054 maintained by Intrenet, Inc. with United
Jersey Bank, (e) Account No. L31025-1 maintained by Intrenet,
Inc. with AIGRM Liquid Asset, Pool, (f) Account No. 0596001053
maintained by Advanced Distribution System, Inc. with First
City, Texas, (g) Account Nos. 7650595, 7655155, and 07675814
maintained by Roadrunner Trucking, Inc. with Norwest Bank - New
Mexico, (h) Account No. 7300195018 maintained by Roadrunner
Trucking, Inc. with MBank, (i) Account No. 0020078714 maintained
by Roadrunner Trucking, Inc. with Western Bank, (j) Account No.
55028115 maintained by Roadrunner Trucking, Inc. with Citibank,
(k) Account No. 0596001046 maintained by Roadrunner Trucking,
Inc. with First City Bank-Houston, and (1) Account No. 297500767
maintained by Roadrunner Enterprises, Inc. with Norwest Bank New
Mexico. The Companies shall maintain all of their operating and
deposit accounts with the Bank, except for the accounts
specified above, and shall cause RWI COMPANY Ltd. (except as
specified above) and all of the Inactive Subsidiaries to
maintain all deposit accounts, cash equivalents and monies or
securities constituting insurance reserves with the Bank.
10.21 Environmental Compliance and Indemnification.
The Companies hereby indemnify the Bank and hold the Bank
harmless from and against any loss, damage, cost, expense or
liability (including strict liability) directly or
indirectly arising from or attributable to the generation,
storage, release, threatened release, discharge, disposal or
presence (whether prior to or during the term of the Loan) of
Hazardous Substances on, under or about the Premises (whether by
the Companies or any employees, agents, contractor or
subcontractors of the Companies or any predecessor in title or
any third persons occupying or present on the Premises), or the
breach of any of the representations and warranties regarding
the Premises, including, without limitation: (a) those damages
or expenses arising under the Environmental Laws; (b) the costs
of any repair, cleanup or detoxification of the Premises,
including the soil and ground water thereof, and the preparation
and implementation of any closure, remedial or other required
plans; (c) damage to any natural resources; and (d) all
reasonable costs and expenses incurred by the Bank in connection
with clauses (a), (b) and (c) including, but not limited to
reasonable attorneys' fees.
The indemnification provided for herein shall not apply to
any losses, liabilities, damages, injuries, expenses or costs
which: (i) arise from the gross negligence or willful
misconduct of the Bank, or (ii) relate to Hazardous Substances
placed or disposed of on the Premises after the Bank acquires
title to the Premises through foreclosure or otherwise.
10.22 Cash Dividends and Other Distributions.
The Borrower shall not declare or pay any cash dividends.
The Borrower shall make no other distributions of any kind to
shareholders.
10.23 Capital Expenditures.
The Companies will not make any expenditure for fixed or
capital assets (excluding truck tractors and trailers),
including by way of the incurrence of capitalized leased
obligations, expenditures for maintenance and repairs which
should be capitalized in accordance with generally accepted
accounting principles or otherwise, in excess of $3,300,000.00
during the fiscal year ending December 31, 1996 and during each
fiscal year thereafter.
10.24 Expenditures for Tractor and Trailer Fleet
The Companies will not make any expenditure for truck
tractors or trailers, including by way of the incurrence of
capitalized lease obligations, expenditures for maintenance and
repairs which should be capitalized in accordance with generally
accepted accounting principles, obligations arising under or in
connection with conditional sales contracts, operating leases,
or conventional financing, or otherwise, in excess of (i)
$35,000,000.00 during the fiscal year ending December 31, 1996;
(iii) $45,000,000.00 during the fiscal year ending December 31,
1997; (iv) $45,000,000.00 during the fiscal year ending December
31, 1998; and (v) $45,000,000.00 during the fiscal year ending
December 31, 1999.
10.25 Corporate Overhead Allocation Accounting Between the
Borrower and the Subsidiaries.
Each Subsidiary shall pay to the Borrower during each
fiscal year during the term of this Agreement, a fee in
consideration of the benefits received by such Subsidiary in
connection with the Loan, the services provided to such
Subsidiary by the Borrower in connection with the Loan and
corporate office overhead and charges in the aggregate amount of
two percent of such Subsidiary's gross revenues during such
fiscal year.
SECTION 11. INFORMATION AS TO THE COMPANIES.
The Companies shall deliver for themselves and for the
Subsidiaries the following to the Bank:
(a) within 30 days after the end of each month, financial
statements, including a balance sheet and statements of
income and surplus and consolidated and consolidating
schedules, that fairly represent the Companies' financial
condition as of the end of such period;
(b) within 45 days after the end of each fiscal quarter, a
statement signed by the president or chief financial
officer of the Borrower certifying that the Companies are in
compliance with terms of this Agreement and that the
financial statements contained in the Companies' most
recent report filed with the Securities and Exchange
Commission on Form 10-Q fairly represent the Companies'
financial condition as of the end of such period;
(c) within 90 days of the end of each fiscal year,
unqualified, audited financial statements prepared on a
consolidated basis in accordance with Generally Accepted
Accounting Principles and certified by independent
public accountants satisfactory to the Bank, containing
a balance sheet, statements of income and surplus, statements of
cash flows and reconciliation of capital accounts,
along with any management letters written by such
accountants;
(d) within 90 days of the end of each fiscal year,
financial statements prepared on a consolidating basis
in accordance with Generally Accepted Accounting Principles,
containing a balance sheet, statements of income and surplus;
(e) within 90 days of the end of each fiscal year, a
statement or letter signed by the Companies'
independent public accountants certifying that upon the basis of
the procedures described in such statement or letter,
nothing has come to their attention that would lead
them to believe that the Companies are in violation of the terms
of this Agreement;
(f) within 45 days after the end of each calendar month, a
statement or reconciliation signed by the president or
chief financial officer of the Borrower certifying the
calculation of the Borrowing Base as of the end of such period;
(h) immediately upon the filing or release, as the case
may be, copies of any Securities and Exchange
Commission disclosures, filings, documents or any press releases;
(i) within 20 days after the end of each month, a report,
setting forth the number and dollar total of accounts
receivable of the Companies past due for not more than 30
days, the number and dollar total past due for not more than 60
days, and the number and dollar total past due for more
than 60 days;
(j) within 20 days after the end of each month, a report,
setting forth the number and dollar total of accounts
receivable of the Companies that have not yet been invoiced
to the account debtor; and
(k) at the request of the Bank, such other information as
the Bank may from time to time reasonably require.
SECTION 12. EVENTS OF DEFAULT.
12.1 Nature of Events.
An "Event of Default" shall exist if any of the following
occurs and is continuing:
(a) the Companies fail to make any payment of interest or
principal, or other payment due on any note or letter
of credit reimbursement agreement executed in connection with
this Agreement on or before five business days after the
date such payment is due;
(b) any of the Companies fail to perform or observe any
covenant contained in Sections 5, 7, 10.1 or 10.25 of
the Agreement;
(c) any of the Companies fail to perform or observe any
covenant contained in Sections 10.2(a)-(d), 10.3
through 10.11, 10.15, or 10.17 through 10.21 of this Agreement
and such failure continues for more than five (5)
business days after such failure shall first become
known to any officer of the Companies;
(d) any of the Companies fail to comply with any other
provision of this Agreement or of any of the security
agreements, mortgages, agreements, notes, instruments or
documents executed in connection herewith, and such failure
continues for more than ten (10) business days after
such failure shall first become known to any officer of the
Companies;
(e) any warranty, representation or other statement by or
on behalf of any of the Companies contained in this
Agreement or in any instrument furnished in compliance
with or in reference to this Agreement is false or misleading in
any material respect;
(f) any of the Companies become insolvent, or makes an
assignment for the benefit of creditors, or consents to
the appointment of a trustee, receiver or liquidator;
(g) bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings are instituted by or against
any of the Companies;
(h) a final judgment or judgments, from which no further
right of appeal exists, for the payment of money
aggregating in excess of $500,000.00 is or are outstanding
against any of the Companies and any one of such
judgments has been outstanding for more than 30 days
from the date of its entry and has not been discharged in full
or stayed;
(i) a default occurs and continues beyond the expiration
of any grace or cure period under any material
instrument of indebtedness to which any of the Companies are
parties and results in an acceleration of such indebtedness;
or
(j) any of the Companies fail to maintain, with
financially sound and reputable insurers, liability
insurance in such amounts as is customary in the case of
corporations of established reputations engaged in the
same or a similar business and similarly situated.
12.2 Default Remedies.
(a) Acceleration--If an Event of Default exists, the Bank
may immediately exercise any right, power or remedy permitted to
the Bank by law, and shall have, in particular, without limiting
the generality of the foregoing, the right to declare the entire
principal and all interest accrued on all notes and any other
obligations then outstanding pursuant to this Agreement to be
forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived by the Companies.
(b) Nonwaiver--No course of dealing on the part of the
Banks nor any delay or failure on the part of the Bank to
exercise any right shall operate as a waiver of such right or
otherwise prejudice the Bank's rights, powers and remedies.
(d) Set-Off--Upon the occurrence and continuance of any
Event of Default hereunder, the Bank is hereby authorized at any
time and from time to time without notice to the Companies (any
such notice being expressly waived by the Companies) and to the
fullest extent permitted by law to set-off and apply any and all
deposits, general or special, time or demand, provisional or
final at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of the Companies
against any and all obligations of the Companies to the Bank now
or hereafter existing under this Agreement, irrespective of
whether or not the Bank shall have made any demand hereunder and
although such obligations may be unmatured.
SECTION 13. DEFINITIONS.
For the purpose of this Agreement, the following terms
shall have the following meanings:
13.1 "Account Debtor" shall have the meaning set forth in
Section 1.6 hereof.
13.2 "Agent" is defined in the Recitals hereof.
13.3 "Agreement" is defined in the preamble.
13.4 "Bank" is defined in the preamble.
13.5 "Banks" is defined in the Recitals hereof.
13.6 "Book Net Worth" shall mean at a particular date all
amounts which would be included under "shareholders' equity"
on a consolidated balance sheet of the Companies, including
preferred stock, common stock, retained earnings, and
paid-in capital, all as determined in accordance with
Generally Accepted Accounting Principles consistently applied as
of such date. Book Net Worth shall not include any
subordinated debt
13.7 "Borrower" is defined in the preamble.
13.8 "Borrowing Base" shall have the meaning set forth in
Section 1.6 hereof.
13.9 "Companies" is defined in the preamble.
13.10 "Concentration Account" shall have the meaning set
forth in Section 10.9 hereof.
13.11 "Default" shall have the same meaning as "Event of
Default" as set forth in Section 12.1 hereof.
13.12 "Eligible Accounts" shall have the meaning set forth
in Section 1.6 hereof.
13.13 "Eligible Maintenance Inventory" shall have the
meaning set forth in Section 1.6 hereof.
13.14 "Eligible Unbilled Accounts" shall have the meaning
set forth in Section 1.6 hereof.
13.15 "Environmental Laws" shall have the meaning set forth
in Section 8.14 hereof.
13.16 "Event of Default" shall mean any of the events
specified in Section 12.1 hereof.
13.17 "Generally Accepted Accounting Principles" shall mean,
unless the context otherwise requires, that all
accounting terms shall be determined in accordance with
generally accepted accounting principles, consistently
applied.
13.18 "Hazardous Substances" shall have the meaning set
forth in Section 8.14 hereof.
13.19 "Inactive Subsidiaries" shall have the meaning set
forth in Section 10.6 hereof.
13.20 "Letters of Credit" shall have the meaning set forth
in Section 1.3 hereof.
13.21 "Loan" shall have the meaning set forth in Section 1
hereof.
13.22 "MetLife Deed of Trust" shall have the meaning set
forth in Section 8.11 hereof.
13.23 "National City" is defined in the Recitals hereof.
13.24 "1988 Loan Agreement" shall have the meaning set forth
in recitals hereof.
13.25 "1989 Loan Agreement" shall have the meaning set forth
in recitals hereof.
13.26 "1991 Loan Agreement" shall have the meaning set forth
in recitals hereof.
13.27 "1993 Loan Agreement" shall have the meaning set forth
in recitals hereof.
13.28 "1988 Loan Documents" shall have the meaning set forth
in recitals hereof.
13.29 "1989 Loan Documents" shall have the meaning set forth
in recitals hereof.
13.30 "1991 Loan Documents" shall have the meaning set forth
in the recitals hereof.
13.31 "1993 Loan Documents" shall have the meaning set forth
in the recitals hereof.
13.32 "Premises" shall have the meaning set forth in Section
8.14 hereof.
13.33 "Prime Commercial Rate" shall have the meaning set
forth in Section 2.1 hereof.
13.34 "Prohibited Transaction" shall have the meaning set
forth in Section 406 of ERISA.
13.35 "Reportable Event" shall have the meaning set forth in
Section 4043 of ERISA.
13.36 "Revolving and Term Loan Fee" shall have the meaning
set forth in Section 6.1 hereof.
13.37 "Revolving Loan" shall have the meaning set forth in
Section 1.1 hereof.
13.38 "Revolving Loan Interest Payment Dates" shall have the
meaning set forth in Section 2.1 hereof.
13.39 "Revolving Loan Termination Date" shall have the
meaning set forth in Section 1.1 hereof.
13.40 "Security Agreement" shall mean those agreements among
and between the Banks and Companies which further
evidence and describe the security interests granted by
Companies pursuant to the Agreement.
13.41 "Standby Letter of Credit Reimbursement Agreement"
shall mean the Agreement among the Bank and the
Companies with respect to the repayment of advances under any of
the Letters of Credit.
13.42 "Subsidiaries" is defined in the preamble.
13.43 "Term Loan" shall have the meaning set forth in
Section 1.2 hereof.
13.44 "Term Loan Interest Payment Dates" shall have the
meaning set forth in Section 2.1 hereof.
13.45 "Term Loan Termination Date" shall have the meaning
set forth in Section 1.2 hereof.
13.46 "Total Liabilities" shall mean with respect to the
Companies (a) all indebtedness for borrowed money or
for the deferred purchase price of property or services, (b) any
other indebtedness which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations with
respect to any letter of credit issued for the account of any
of the Companies, (d) all obligations in respect of
acceptances issued or created for the account of any of the
Companies, (e) lease obligations which, in accordance with
GAAP, should be capitalized, (f) all liabilities
(including lease obligations) secured by any lien or encumbrance
on any property owned by any of the Companies even
though any such Company has not assumed or otherwise
become liable for the payment thereof, (g) all obligations with
respect to interest rate protection agreements (valued
at the termination value thereof computed in accordance
with a method approved by the International Swap Dealer's
Association), and (i) all other obligations which, in
accordance with GAAP, would be classified upon a balance sheet
as liabilities (except capital stock and surplus
earned).
SECTION 14. MISCELLANEOUS.
14.1 Notices.
(a) All communications under this Agreement or under the
notes or reimbursement agreements executed pursuant hereto shall
be in writing and shall be mailed by first class mail, postage
prepaid,
(1) if to the Bank, at the following address, or at
such other address as may have been furnished in
writing to the Companies by the Bank:
The Huntington National Bank 41
South High Street P.O. Box 1558 HCO
431 Columbus, Ohio 43216 Attn:
Raymond J. Feldman, Vice President
(2) if to the Companies, at the following address, or
at such other address as may have been furnished
in writing to the Bank by the Companies:
Intrenet, Inc. 400 TechneCenter
Drive, Suite 200 Milford, OH 45150
Attn: Jonathan G. Usher, Vice President-Finance
(b) any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed.
14.2 Reproduction of Documents.
This Agreement and all documents relating hereto,
including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents
received by the Bank at the closing or otherwise, and (c)
financial statements, certificates and other information
previously or hereafter furnished to the Bank, may be reproduced
by the Bank by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process and
the Bank may destroy any original document so reproduced. The
Companies agree and stipulate that any such reproduction shall
be admissible in evidence as the original itself in any judicial
or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the
Bank in the regular course of business) and that any
enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
14.3 Survival, Successors and Assigns.
All warranties, representations, and covenants made by the
Companies herein or on any certificate or other instrument
delivered by them or on their behalf under this Agreement shall
be considered to have been relied upon by the Bank and shall
survive the closing of the Loan regardless of any investigation
made by the Bank on their behalf. All statements in any such
certificate or other instrument shall constitute warranties and
representations by the Companies. This Agreement shall inure to
the benefit of and be binding upon the heirs, successors and
assigns of each of the parties.
14.4. Amendment and Waiver, Duplicate Originals, and
References to the Agreement.
This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the
written consent of the Companies and the Bank; provided however
that nothing herein shall change the Bank's sole discretion (as
set forth elsewhere in this Agreement) to make advances,
determinations, decisions or to take or refrain from taking
other actions. No delay or failure or other course of conduct
by the Bank in the exercise of any power or right shall operate
as a waiver thereof; nor shall any single or partial exercise of
the same preclude any other or further exercise thereof, or the
exercise of any other power or right. Two or more duplicate
originals of this Agreement may be signed by the parties, each
of which shall be an original but all of which together shall
constitute one and the same instrument. Any references to this
Agreement that are contained in any documents executed in
connection herewith shall be deemed to constitute a reference to
this Agreement as the same may hereafter be amended, modified or
restated.
14.5 Uniform Commercial Code and Generally Accepted Accounting
Principles.
Unless the context otherwise requires, all terms used
herein which are defined in the Uniform Commercial Code as
enacted in Ohio shall have the meaning stated therein, and all
accounting terms shall be determined in accordance with
generally accepted accounting principles, consistently applied.
14.6 Enforceability and Governing Law.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction, as to such jurisdiction,
shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. No delay or omission on
the part of the Bank in exercising any right shall operate as a
waiver of such right or any other right. All of the Bank's
rights and remedies, whether evidenced hereby or by any other
agreement or instrument, shall be cumulative and may be
exercised singularly or concurrently. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Ohio. The Companies agree that any legal suit, action
or proceeding arising out of or relating to this Agreement may
be instituted in a state or federal court of appropriate subject
matter jurisdiction located in the City of Columbus, Ohio;
waives any objection which it may have now or hereafter to the
venue of any suit, action or proceeding; and irrevocably submits
to the jurisdiction of any such court in any such suit, action
or proceeding.
14.7 Waiver of Right to Trial by Jury.
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE: AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
14.8 Term of Agreement.
The term of this Agreement shall commence with the date
hereof and end on the date when, after written notice from
either party to the other that no further loans are to be made
hereunder, the Companies pay in full the Loan and all other fees
and obligations of the Companies to the Bank set forth in this
Agreement or in any other agreement in favor of the Bank, and
the Bank has no further obligations of any type to the Companies.
IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be executed and delivered as of the date and
year first set forth above.
BORROWER:
INTRENET, INC.
By:
Its:
SUBSIDIARIES:
ADVANCED DISTRIBUTION SYSTEM, INC.
By:
Its:
ECK MILLER TRANSPORTATION CORPORATION
By:
Its:
MID-WESTERN TRANSPORT INC.
By:
Its:
ROADRUNNER ENTERPRISES, INC.
By:
Its:
ROADRUNNER TRUCKING, INC.
By:
Its:
ROADRUNNER DISTRIBUTION SERVICES, INC.
By:
Its:
ROADRUNNER INTERNATIONAL SERVICES, INC.
By:
Its:
THE BANK:
THE HUNTINGTON NATIONAL BANK
By:
Its:
EXHIBIT 10.1
COLUMBUS/0131624.05
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made and
dated as of December 29, 1995, by and between Intrenet, Inc., an
Indiana corporation ("Employer"), and Jackson A. Baker ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is currently employed by Employer under an
Employment Agreement dated as of December 31, 1992 (the "Prior
Agreement") as Employer's President and Chief Executive Officer;
WHEREAS, the parties now desire to amend the Prior Agreement on the
terms contained herein.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and undertakings herein contained, the parties agree as
follows:
1. Amendment. Section 3 of the Prior Agreement is amended to read
as follows:
"3. Term. The term of this Agreement (the "Term") shall
continue after December 31, 1995 on a month-to-month basis
until either party provides written notice to the other
that the Term shall expire at the end of the month
following the month in which the notice is sent. The
expiration of the Term of this Agreement shall not
constitute termination without cause as provided in Section
7b hereof."
2. Other Provisions. Except as expressly modified in this
Amendment, the other provisions of the Prior Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered as of the day and year first above set forth.
INTRENET, INC.
By /s/ Edwin H. Morgens
Edwin H. Morgens,
Chairman of the Board
"Employer"
/s/ Jackson A. Baker
Jackson A. Baker
"Employee"
EXHIBIT 10.51
dcworrel\intrenet\jab-emp.95;12/15/95
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is made and
dated as of December 8, 1995, by and between Intrenet, Inc., an Indiana
corporation ("Employer"), and Jonathan G. Usher ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is currently employed by Employer under an
Employment Agreement dated as of March 1, 1994 (the "Prior Agreement")
as Employer's Chief Financial Officer;
WHEREAS, the parties now desire to amend the Prior Agreement on the
terms contained herein.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and undertakings herein contained, the parties agree as
follows:
1. Amendment. Section 3 of the Prior Agreement is amended to read
as follows:
"3. Term. This Agreement shall become effective on March
1, 1994 and continue through February 28, 1997."
2. Other Provisions. Except as expressly modified in this
Amendment, the other provisions of the Prior Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered as of the day and year first above set forth.
INTRENET, INC.
By /s/ Jackson A. Baker
Jackson A. Baker, President
And Chief Executive Officer
"Employer"
/s/ Jonathan G. Usher
Jonathan G. Usher
"Employee"
EXHIBIT 10.61
dcworrel\intrenet\jgu-emp.95;12/08/95
<TABLE>
<CAPTION>
INTRENET, INC.
STATEMENT RE: COMPUTATION
OF PER SHARE EARNINGS
<S> <C> <C> <C>
1995 1994 1993
Weighted average shares outstanding during period 13,197,728 9,080,131 8,797,536
Assumed exercise of options and warrants 605,209 884,370 757,721
Shares assumed for primary earnings per share 13,802,937 9,964,501 9,555,257
Effect on number of shares of using yearend share
price for fully diluted calculation 0 83,198 -
Assumed conversion of 7% Convertible
Subordinated Debentures 0 3,636,363 3,457,036
Shares assumed for fully diluted earnings per share 13,802,937 13,684,062 13,012,293
Earnings for the period:
($ in Thousands)
Before extraordinary items $ (212) $ 5,165 $ 1,510
Extraordinary items 0 - 1,188
Net earnings $ (212) $ 5,165 $ 2,698
Earnings per common and common
equivalent share:
Primary:
Before extraordinary items $ (0.02) $ 0.52 $ 0.16
Extraordinary gain, net - - 0.12
Net earnings $ (0.02) $ 0.52 $ 0.28
Fully diluted:
Before extraordinary items $ (0.02) $ 0.40 $ 0.14
Extraordinary gain, net - - 0.09
Net earnings $ (0.02) $ 0.40 $ 0.23
EXHIBIT 11
26
</TABLE>
SUBSIDIARIES OF THE REGISTRANT
Intrenet, Inc.
December 31, 1995
Advanced Distribution System, Inc., a Florida Corporation
Eck Miller Transportation Corporation, an Indiana corporation
Mid-Western Transport, Inc., an Indiana corporation
Roadrunner Enterprises, Inc., an Indiana corporation
EXHIBIT 21
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into
the Company's previously filed Registration Statement File No.
33-69882.
Indianapolis, Indiana, Arthur Andersen LLP
March 8, 1996.
EXHIBIT 23
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000778161
<NAME> INTRENET, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 171
<SECURITIES> 0
<RECEIVABLES> 21,544
<ALLOWANCES> (572)
<INVENTORY> 0
<CURRENT-ASSETS> 26,716
<PP&E> 42,500
<DEPRECIATION> (12,923)
<TOTAL-ASSETS> 67,638
<CURRENT-LIABILITIES> 27,339
<BONDS> 14,981
0
0
<COMMON> 16,245
<OTHER-SE> 6,773
<TOTAL-LIABILITY-AND-EQUITY> 67,638
<SALES> 0
<TOTAL-REVENUES> 214,973
<CGS> 0
<TOTAL-COSTS> 211,912
<OTHER-EXPENSES> 82
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,886
<INCOME-PRETAX> 93
<INCOME-TAX> 305
<INCOME-CONTINUING> (212)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (212)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
