SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 (IRS 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
Not Applicable
Former name, former address and former fiscal year,
if changed since last report
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
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock, without par value, 13,227,338 shares issued and
outstanding at August 1, 1996
INTRENET, INC.
FORM 10-Q
JUNE 30, 1996
INDEX
PAGE
Part I - Financial Information:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 .................... 3
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended .................... 4
June 30, 1996 and 1995
Condensed Consolidated Statement of Shareholders' Equity
Six Months Ended June 30, 1996 ................... 5
Condensed Consolidated Statements of Cash Flows
Three Months and Six Months Ended .................... 6
June 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements...... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 8
Part II - Other Information:
Item 1. Legal Proceedings ................... 11
Item 2. Changes in Securities .................. 11
Item 3. Defaults Upon Senior Securities ................... 11
Item 4. Submission of Matters to a Vote of Security Holders. 11
Item 5. Other Information ................... 11
Item 6. Exhibits and Reports on Form 8-K.................. 11
<TABLE>
INTRENET, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
(In Thousands of Dollars)
<CAPTION>
Assets 1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 222 $ 171
Receivables, principally freight revenue less
allowance for doubtful accounts of $613 in 1996
and $572 in 1995 27,437 20,972
Prepaid expenses and other 6,047 5,573
Total current assets 33,706 26,716
Property and equipment, at cost, less accumulated
depreciation 28,728 29,577
Reorganization value in excess of amounts allocated
to identifiable assets, net of accumulated amortization 7,821 8,031
Deferred income taxes, net 2,723 2,723
Other assets 747 591
Total assets $ 73,725 $ 67,638
Liabilities and Shareholders' Equity
Current liabilities:
Current debt and capital lease obligations $ 6,670 $ 6,134
Accounts payable and cash overdrafts 9,357 7,744
Current accrued claim liabilities 7,504 7,031
Other accrued expenses 6,883 6,430
Total current liabilities 30,414 27,339
Long-term debt and capital lease obligations 19,263 14,981
Long-term accrued claim liabilities 2,300 2,300
Total liabilities 51,977 44,620
Shareholders' equity:
Common stock, without par value; 20,000,000
shares authorized; 13,227,338 and 13,197,728 shares
issued and outstanding, respectively 16,294 16,245
Retained earnings since January 1, 1991 5,454 6,773
Total shareholders' equity 21,748 23,018
Total liabilities and shareholders' equity $ 73,725 $ 67,638
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
INTRENET, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended June 30, 1996 and 1995
(In Thousands of Dollars, Except Per Share Data)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating revenues $ 57,615 $ 54,949 $ 110,315 $ 109,699
Operating expenses:
Purchased transportation
and equipment rents 22,187 20,450 42,602 40,235
Salaries, wages, and benefits 15,232 15,350 29,665 29,772
Fuel and other operating expenses 12,579 10,802 24,533 23,150
Operating taxes and licenses 2,658 2,614 5,265 4,999
Insurance and claims 2,117 1,781 4,028 3,903
Depreciation 1,066 1,240 2,145 2,326
Other operating expenses 897 908 1,987 2,232
56,736 53,145 110,225 106,617
Operating income (loss) 879 1,804 90 3,082
Interest expense (614) (733) (1,190) (1,521)
Other expense, net (110) (116) (219) (231)
Earnings (loss) before income taxes 155 955 (1,319) 1,330
Provision for income taxes - (286) - (399)
Net earnings (loss) $ 155 $ 669 $ (1,319) $ 931
Earnings (loss) per common and common
equivalent share $ 0.01 $ 0.05 $ (0.10) $ 0.08
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
INTRENET, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity
For the Six Months Ended June 30, 1996
(In Thousands of Dollars)
<CAPTION>
Retained
Common Stock Earnings Equity
Shares Dollars
<S> <C> <C> <C> <C>
Balance, December 31, 1995 13,197,728 $16,245 $6,773 $23,018
Exercise of stock options 29,610 49 - 49
Net loss for 1996 - - (1,319) (1,319)
Balance, June 30, 1996 13,227,338 $16,294 $5,454 $21,748
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
INTRENET, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three Months and Six Months Ended June 30, 1996 and 1995
(In Thousands of Dollars)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 155 $ 669 $ (1,319) $ 931
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Deferred income taxes 0 34 0 147
Depreciation and amortization 1,171 1,345 2,355 2,536
Provision for doubtful accounts 73 88 156 300
Changes in assets and liabilities, net:
Receivables (4,134) 27 (6,621) (1,238)
Prepaid expenses 1,644 442 (475) (1,260)
Accounts payable and accrued expenses 1,151 (348) 2,384 2,347
Other 0 130 0 74
Net cash provided by (used in)
operating activities 60 2,387 (3,520) 3,837
Cash flows from financing activities:
Net borrowings on line of credit, net (811) 333 3,942 1,709
Principal payments on long-term debt (1,707) (1,418) (3,556) (2,800)
Proceeds from exercise of stock options 0 53 49 304
Net cash provided by financing activities (2,518) (1,032) 435 (787)
Cash flows from investing activities:
Additions to property and equipment (283) (2,147) (690) (4,228)
Disposals of property and equipment 2,653 385 3,826 531
Net cash provided by (used in)
investing activities 2,370 (1,762) 3,136 (3,697)
Net increase (decrease) in cash
and cash equivalents (88) (407) 51 (647)
Cash and cash equivalents:
Beginning of period 310 2,494 171 2,734
End of period $ 222 $ 2,087 $ 222 $ 2,087
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
INTRENET, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1996
(Unaudited)
(1) Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements
include the accounts of Intrenet, Inc. and all of its
subsidiaries (collectively, the Company). Operating subsidiaries
at June 30, 1996 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 truckload carrier services on a
regional basis throughout the forty-eight continental states and
Canada.
The consolidated financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC). In management's opinion, these
financial statements include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation
of the results of operations for the interim periods presented.
Pursuant to SEC rules and regulations, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted from these statements
unless significant changes have taken place since the end of the
most recent fiscal year. For this reason, the accompanying
consolidated financial statements and notes thereto should be
read in conjunction with the financial statements and notes for
the year ended December 31, 1995 included in the Company's 1995
Annual Report on Form 10-K.
The results for the three month and six month periods ended
June 30, 1996 are not necessarily indicative of the results to
be expected for the entire year.
(2) Earnings Per Common and Common Equivalent Share
Earnings per common and common equivalent share have been
computed on the basis of the weighted average common shares
outstanding during the periods. No effect has been included for
options or warrants outstanding, if the effect would be
antidilutive.
(3) Income Taxes
Income taxes in interim periods are generally provided on the
basis of the estimated effective tax rate for the year. In 1996,
however, as a result of the year-to-date pre-tax losses, and the
uncertainty related to forecasting future operating results in
the current competitive operating environment, the Company has
not recorded any income tax benefit in the six months ended June
30, 1996. The tax benefit from the losses will be recorded when
earnings recover, and the tax benefit becomes realizable.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Introduction
The Company reported net earnings of $ 155,000 ($ 0.01 per
share) on revenues of $ 57.6 million in the three months and a
net loss of $ 1.3 million ($ 0.10 per share) on revenues of $
110.3 million in the six months ended June 30, 1996. This
compares with net earnings of $ 669,000 on revenues of $ 54.9
million, and net earnings of $ 931,000 on revenues of $ 109.7
million in the comparable periods of 1995, respectively. The
1995 six months results include a $ 1.8 million pre-tax loss
from the operations of the Company's former munitions carrier,
C. I. Whitten Transfer Company (CIW), which was sold in August,
1995.
As discussed in more detail below, the Company's performance in
1996 reflects the soft market trends which began in the third
and fourth quarters of 1995 and continued into the first quarter
of 1996. Over-capacity in the truckload industry, severe weather
conditions and higher fuel costs combined to produce lower
freight rates, reduced equipment utilization, and significantly
higher operating costs in the first quarter of 1996. These
factors lead to reduced profit margins, resulting in an
inability to cover other fixed costs in the first quarter
period. Business began to strengthen in the second quarter as
better weather, a strengthening U.S. economy and a resumption of
construction activity in the country resulted in increased
demand for transportation services which allowed the Company to
return to more favorable operating efficiencies. Substantially
higher fuel prices, and other increased costs, however,
continued to negatively impact the Company's profit margins.
While the effects of the higher fuel costs were blunted, to a
degree, through the implementation of fuel surcharges,
competitive conditions limited the surcharges to only a small
portion of the Company's revenues. Management estimates that the
higher fuel costs, net of surcharge revenue retained by the
Company, reduced margins by approximately $ 500,000 in the three
months and $ 1 million in the six months ended June 30, 1996,
when compared to fuel prices paid in the comparable periods of
1995.
A discussion of the impact of the above and other factors on
the results of operations in the three months and six months
ended June 30, 1996 as compared to the comparable periods of
1995 follows.
1996 Compared to 1995
Three Months Ended June 30 Six Months Ended June 30
Key Operating Statistics 1996 1995 %Change 1996 1995 %Change
Operating Revenues ($ millions) $ 57.6 $ 54.9 5.0% $ 110.3 $ 109.7 0.5%
Net Earnings (Loss) ($ 000's) $ 155 $ 669 (76.8%) ($ 1,319) $ 931 NM
Average Number of Tractors 2,041 1,927* 5.9% 2,079 1,908* 9.0%
Total Loads (000's) 66.1 60.8* 8.7% 128.1 120.9* 5.9%
Revenue Miles (millions) 42.8 38.2* 12.0% 81.9 75.6* 8.3%
Average Revenue per
Revenue Mile $ 1.35 $ 1.38* (2.2%) $ 1.35 $ 1.39* (2.8%)
* Certain 1995 amounts exclude the effects of CIW, which was
sold in August, 1995.
Operating Revenues
Operating revenues for the three months and six months ended
June 30, 1996 totaled $ 57.6 million and $ 110.3 million,
respectively, as compared to $54.9 million and $ 109.7 million
for the same periods in 1995. Despite intense competitive
conditions in the truckload industry, the Company's four
carriers continued to grow in 1996. Revenue at these carriers
was up $ 4.8 million, or 9.1%, in the three months, and $ 5.6
million, or 5.3%, in the six months ended June 30, 1996, over
the comparable 1995 periods. Approximately $ 250,000 of fuel
surcharges are included in revenues for the three month and six
month periods ended June 30, 1996.
The approximately 8.3 % increase in revenue miles (volume) in
1996 over 1995 (excluding CIW), is attributable to a 9.0 %
increase in the average number of tractors deployed, offset by
lower equipment utilization resulting from excess capacity in
the truckload industry. Volumes in the second quarter of 1996,
however, were substantially better than in the first quarter of
1996, as well as the second quarter of 1995, as a result of a
strengthening U.S. economy and a return to more favorable
operating efficiencies. Revenue miles in the second quarter of
1996 were up 9.5% over the first quarter of 1996, and were up
12.0% over the comparable 1995 quarter. The increased number of
tractors in 1996 over 1995 is the result of the Company's
internal growth plans implemented in 1995 and 1994 which
increased the number of company-operated tractors, coupled with
an increase in the average number of owner-operator tractors.
Approximately 60 % of the Company's revenue in the three month
and six month periods ended June 30, 1996 was generated by
company-operated equipment, and 35 % by owner-operator
equipment. This relationship is essentially unchanged from the
comparable 1995 periods. The remaining revenues were from
freight brokered to other carriers.
The decline in the average revenue per revenue mile (price) of
2.8 % in 1996 as compared to 1995, is the result of reduced
traffic opportunities in 1996 due to excess industry capacity,
which required the Company to move more equipment with lower
priced spot market loads, and to generally lower transportation
rates due to increased competition.
Operating Expenses
The following table sets forth the percentage relationship of
operating expenses to operating revenues for the three months
ended June 30. The reduced per mile freight rates in 1996
account partially for the increase in operating expenses
expressed as a percentage of revenue.
Three Months Six Months
Ended June 30 Ended June 30
1996 1995 1996 1995
Operating revenues 100% 100% 100% 100%
Operating expenses:
Purchased transportation
and equipment rents 38.5 37.2 38.6 36.7
Salaries, wages and benefits 26.4 27.9 26.9 27.1
Fuel and other operating expenses 21.8 19.7 22.2 21.1
Operating taxes and licenses 4.6 4.8 4.8 4.6
Insurance and claims 3.7 3.2 3.7 3.6
Depreciation 1.9 2.3 1.9 2.1
Other operating expenses 1.6 1.6 1.8 2.0
Total operating expenses 98.5% 96.7% 99.9% 97.2%
Purchased transportation and equipment rents increased in 1996
over 1995 as a percentage of revenue due to the increased use of
owner-operators and to increased company-operated equipment
rents. Salaries and wages decreased as a result of reduced
non-driver headcounts primarily as a result of the sale of CIW,
offset by driver wage increases implemented in 1995 in response
to competitive conditions. Fuel and other operating expenses
increased as fuel costs were two cents per total mile higher in
1996 versus 1995, as a result of the approximately ten cent per
gallon increase in the cost of diesel fuel. The Company
estimates the increased fuel costs added approximately $
500,000, net of fuel surcharges retained by the Company, to
second quarter 1996 operating expenses, and approximately $ 1.0
million, net, to operating expenses in the first half of 1996.
Insurance and claims expense was higher in the second quarter of
1996 over 1995 as a result of higher accident levels, but was up
only slightly in the first half period. Depreciation decreased
as a result of the continued use of operating lease financing
for the Company's power equipment. Other operating expenses
remained relatively constant in 1996 over 1995.
Interest Expense
Interest expense decreased in 1996 over 1995, primarily as a
result of a $ 105,000 decline in interest costs attributable to
the conversion of the Company's 7% convertible subordinated
debentures on March 31, 1995. Further, the Company's bank credit
facility, amended January 15, 1996, carried lower interest rates
and fees in 1996 than in 1995.
Interest expense is expected to increase in the remaining
quarters of 1996, as the Company has ceased selling certain
accounts receivable to a collection clearing house. Instead, the
Company is now financing these accounts receivable with its bank
credit facility. The increased interest costs will be more than
offset by reduced collection fees from the clearing house, which
are presently included in Other operating expenses.
Provision for Income Taxes
Income taxes in interim periods are generally provided on the
basis of the estimated effective tax rate for the year. In 1996,
however, as a result of the year-to-date pre-tax losses, and the
uncertainty related to forecasting future operating results in
the current competitive operating environment, the Company has
not recorded any income tax benefit in the six months ended June
30, 1996. The tax benefit attributable to the first quarter
losses will be recorded when earnings recover, and the tax
benefit becomes realizable.
Liquidity and Capital Resources
The Company generated $ 0.1 million of cash in the first six
months of 1996. As reflected in the accompanying Consolidated
Statements of Cash Flows, the Company used $ 3.5 million of cash
in operating activities, primarily to finance increased accounts
receivable and to purchase plates and permits for the Company's
fleet. This cash use was funded by $ 0.4 million of cash
generated by financing activities, and $ 3.1 million generated
from investing activities, primarily from the sale of aging 48
foot van trailers at RDS. In March 1996, the Company began to
reduce the sale of certain customer accounts receivable to a
collection clearing house, a process which was completed on June
30, 1996. This resulted in an increased use of cash from
operating activities to finance approximately $ 4.0 million of
accounts receivable which would otherwise have been sold.
The Company's day-to-day financing is provided by borrowings
under a bank credit facility. 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 commenced on 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. Borrowings under the revolving
line of credit totaled $ 4.3 million at June 30, 1996, and
outstanding letters of credit totaled $ 7.6 million at that
date. The combination of these two bank credits totaled $11.9
million, leaving $ 8.2 million of borrowing capacity available
at June 30, 1996. Since that date, the Company's available
borrowing capacity under the credit facility has increased due
to reduced letter of credit requirements, and now averages
approximately $ 10.0 million as of the date of this report.
The Company believes that cash generated from operations, and
cash available to it under the bank credit facility will be
sufficient to meet the Company's needs for the foreseeable
future.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
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 proceedings
previously reported in the Company's 1995 Annual Report on Form
10-K, and litigation incidental to its business, primarily
involving claims for personal injury and property damage
incurred in the transporting of freight. There have been no
material developments in any previously reported proceedings.
The Company maintains insurance which covers liability resulting
from transportation related claims in amounts management
believes are prudent and consistent with accepted industry
practices, subject to deductibles for the first $100,000 to
$250,000 of exposure for each incident. The Company is not
aware of any claims or threatened claims that might materially
affect the Company's operating or financial results.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders was held on May 22, 1996. The following
individuals were elected as directors for the ensuing year or until their
successors are duly elected and qualified with the following votes cast for or
against. There were no abstentions or broker non-votes.
For Against
Jackson A. Baker 10,449,584 330,660
Eric C. Jackson 10,762,663 17,581
Fernando Montero 10,762,673 17,571
Edwin H. Morgens 10,449,584 330,660
Thomas J. Noonan, Jr. 10,762,673 17,571
A. Torrey Reade 10,762,673 17,571
Philip Scaturro 10,762,673 17,571
The shareholders of the Company also ratified the selection of Arthur
Andersen LLP as auditors for 1996, with 10,718,563 votes in favor, 9,418
against and 52,263 abstentions. There were no broker non-votes.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit 10.1 - First Amendment to the Fourth Amended and
Restated Loan Agreement between Intrenet, Inc. and subsidiaries
and The Huntington National Bank dated as of March 31, 1996.
Exhibit 10.2 - Employment Agreement between Intrenet, Inc.and
John P. Delavan dated June 4, 1996
Exhibit 10.3 - Stock Option Agreement between Intrenet, Inc.
and John P. Delavan dated June 4, 1996
Exhibit 11 - Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
INTRENET, INC.
(Registrant)
August 7, 1996 /s/ Jonathan G. Usher
Jonathan G. Usher,
Vice President - Finance,
Treasurer and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
FIRST AMENDMENT TO FOURTH AMENDED AND
RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") to the Fourth Amended
and Restated Loan Agreement is entered into as of the 31st day
of March, 1996, by and between The Huntington National Bank (the
"Bank") as lender, and Intrenet, Inc. (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.
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 certain Loan Agreement
(herein the "1988 Loan Agreement"), which set 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 certain 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 certain 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 certain 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 certain 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; and
G. On or about July 22, 1988, the Borrower, certain of its
subsidiaries, the Banks and the Agent executed a certain 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 a certain Amended
and Restated Loan Agreement (herein the "1989 Loan Agreement"),
which set 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 certain 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 certain 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 set 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 of the 1991
Loan Agreement); 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 set 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. On or about January 15, 1996, the Companies and the Bank
executed a certain Fourth Amended and Restated Loan Agreement
(the "1996 Loan Agreement"), setting forth the terms of certain
extensions of credit to the Companies; and
AA. In connection with the 1996 Loan Agreement, the Companies
executed and delivered to the Bank certain other loan documents,
promissory notes, amendments to open-end mortgages, assignment
of rents and security agreements, consents, assignments,
security agreements, agreements, instruments and financing
statements in connection with the indebtedness referred to in
the 1996 Loan Agreement (all of the foregoing, together with the
1996 Loan Agreement, are hereinafter collectively referred to as
the "1996 Loan Documents"); and
AB. The Companies have requested that the Bank amend and modify
certain terms and covenants in the 1996 Loan Agreement, and the
Bank is willing to do so upon the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and promises contained herein, the receipt and
sufficiency of which are hereby acknowledged, and intending to
be legally bound, the parties hereto for themselves and their
successors and assigns do hereby agree, represent and warrant as
follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the 1996 Loan
Agreement.
2. Section 10.12, "Book Net Worth," of the 1996 Loan Agreement
is hereby amended to recite in its entirety as follows:
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;
$20,500,000.00 as of June 30, 1996;
$21,000,000.00 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.
3. Conditions of Effectiveness. This Amendment shall become
effective as of March 31, 1996, upon satisfaction of all of the
following conditions precedent:
(a) The Bank shall have received two duly executed copies of
this Amendment and such other certificates, instruments,
documents, agreements, and opinions of counsel as may be
required by the Bank, each of which shall be in form and
substance satisfactory to the Bank and its counsel; and
(b) The Bank shall have received an amendment fee of $20,000.00
no later than May 20, 1996; and
(c) The representations contained in paragraph 4 below shall be
true and accurate.
4. Representations. Each of the Companies represents and
warrants that after giving effect to this Amendment (a) each and
every one of the representations and warranties made by or on
behalf of each of the Companies in the 1996 Loan Agreement or
the 1996 Loan Documents is true and correct in all respects on
and as of the date hereof, except to the extent that any of such
representations and warranties related, by the expressed terms
thereof, solely to a date prior hereto; (b) each of the
Companies has duly and properly performed, complied with and
observed each of its covenants, agreements and obligations
contained in the 1996 Loan Agreement and 1996 Loan Documents;
and (c) no event has occurred or is continuing, and no condition
exists which would constitute an Event of Default.
5. Amendment to 1996 Loan Agreement. (a) Upon the
effectiveness of Section 2 hereof, each reference in the 1996
Loan Agreement to "Fourth Amended and Restated Loan Agreement,"
"Loan and Security Agreement," "Loan Agreement," "Agreement,"
the prefix "herein," "hereof," or words of similar import, and
each reference in the 1996 Loan Documents to the 1996 Loan
Agreement, shall mean and be a reference to the 1996 Loan
Agreement as amended hereby. (b) Except as modified herein, all
of the representations, warranties, terms, covenants and
conditions of the 1996 Loan Agreement, the 1996 Loan Documents
and all other agreements executed in connection therewith shall
remain as written originally and in full force and effect in
accordance with their respective terms, and nothing herein shall
affect, modify, limit or impair any of the rights and powers
which the Bank may have thereunder. The amendment set forth
herein shall be limited precisely as provided for herein, and
shall not be deemed to be a waiver of, amendment of, consent to
or modification of any of the Bank's rights under or of any
other term or provisions of the 1996 Loan Agreement, any 1996
Loan Document, or other agreement executed in connection
therewith, or of any term or provision of any other instrument
referred to therein or herein or of any transaction or future
action on the part of the Companies which would require the
consent of the Bank, including, without limitation, waivers of
Events of Default which may exist after giving effect hereto.
Each of the Companies ratifies and confirms each term,
provision, condition and covenant set forth in the 1996 Loan
Agreement and the 1996 Loan Documents and acknowledges that the
agreement set forth therein continue to be legal, valid and
binding agreements, and enforceable in accordance with their
respective terms.
6. Authority. Each of the Companies hereby represents and
warrants to the Bank that as to such Company (a) such Company
has legal power and authority to execute and deliver the within
Amendment; (b) the officer executing the within Amendment on
behalf of such Company has been duly authorized to execute and
deliver the same and bind such Company with respect to the
provisions provided for herein; (c) the execution and delivery
hereof by such Company and the performance and observance by
such Company of the provisions hereof do not violate or conflict
with the articles of incorporation, regulations or by-laws of
such Company or any law applicable to such Company or result in
the breach of any provision of or constitute a default under any
agreement, instrument or document binding upon or enforceable
against such Company; and (d) this Amendment constitutes a valid
and legally binding obligation upon such Company in every
respect.
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which, when so executed and delivered,
shall be an original, but all of which together shall constitute
one and the same document. Separate counterparts may be
executed with the same effect as if all parties had executed the
same counterparts.
8. Governing Law. This Amendment shall be governed by and
construed in accordance with the law of the State of Ohio.
IN WITNESS WHEREOF, the Companies and the Bank have hereunto
set their hands as of the date first set forth above.
THE BORROWER:
INTRENET, INC.
By: /s/ Jonathan G. Usher
Jonathan G. Usher
Its: Vice President-Finance, Secretary and Treasurer
THE SUBSIDIARIES:
ADVANCED DISTRIBUTION SYSTEM, INC.
By: /s/ Jonathan G. Usher
Its: Assistant Secretary
ECK MILLER TRANSPORTATION CORPORATION
By: /s/ Jonathan G. Usher
Its: Assistant Secretary
MID-WESTERN TRANSPORT INC.
By: /s/ Jonathan G. Usher
Its: Treasurer and Secretary
ROADRUNNER ENTERPRISES, INC.
By: /s/ Jonathan G. Usher
Its: Treasurer and Assistant Secretary
ROADRUNNER TRUCKING, INC.
By: /s/ Jonathan G. Usher
Its: Assistant Secretary
ROADRUNNER DISTRIBUTION SERVICES, INC.
By: /s/ Jonathan G. Usher
Its: Assistant Secretary
ROADRUNNER INTERNATIONAL SERVICES, INC.
By: /s/ Jonathan G. Usher
Its: Assistant Secretary
THE BANK:
THE HUNTINGTON NATIONAL BANK
By: Raymond Feldman
Its: Vice President
COLUMBUS/0237147.01
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and dated as
of June 4, 1996, by and between INTRENET, Inc., an Indiana
corporation ("Employer"), and John Delavan ("Employee").
W I T N E S S E T H
WHEREAS, Employer desires to employ Employee as its President
and Chief Executive Officer;
WHEREAS, Employee desires to be assured of certain
compensation and other benefits from Employer for his services
over a defined term; and
WHEREAS, Employer desires to provide such assurances to
Employee on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained, Employer and
Employee, each intending to be legally bound, covenant and agree
as follows:
1. Employment. Upon the terms and subject to the conditions
set forth in this Agreement, Employer agrees to employ Employee
as its President and Chief Executive Officer and Employee agrees
to accept such employment.
2. Duties. Employee agrees to serve as Employer's President
and Chief Executive Officer and to perform such duties in that
office as may reasonably be assigned to him by the Employer's
Board of Directors (the "Board"). While employed by Employer,
Employee shall devote substantially all of his business time and
efforts to Employer's business and shall not engage in any other
business activities without the prior approval of the Board.
3. Term. The term of this Agreement shall commence as of the
date hereof and continue through June 30, 1998, (such term,
including any extension thereof shall herein be referred to as
the "Term").
4. Base Compensation. Employee shall receive a base salary of
$175,000.00 per annum ("Base Compensation") payable at regular
intervals in accordance with Employer's normal payroll practices
now or hereafter in effect.
5. Benefit Plans. Employee shall be included as a participant
in all present and future employee benefit, retirement and
compensation plans generally available to employees of Employer,
consistent with his Base Compensation and position with
Employer, including, without limitation, any pension plan,
401(k) Plan, Stock Option Plan, and hospitalization, major
medical, disability and group life insurance plans, upon the
terms set forth in such plans, as amended from time to time.
Employer may amend or eliminate any such plan in its discretion
to the extent permitted by law, as long as the change does not
apply solely to Employee to the exclusion of all other
participants in such plan.
6. Options. Concurrently with the execution of this
Agreement, the Incentive Compensation Committee of the Board
administering the Employer's 1993 Stock Option and Incentive
Plan (the "Plan"), a copy of which has been provided to
Employer, has granted to Employee options to purchase 100,000
shares of Employer's Common Stock at an initial exercise price
equal to the closing price per share of the Common Stock as
reported by NASDAQ for the trading date preceding the date of
this Agreement, exercisable commencing six (6) months and one
day after the date of grant through June 30, 2001 (the
"Options"). The Options shall be evidenced by a separate Stock
Option Agreement. In addition, the Committee shall grant to
Employee additional options under the Plan to acquire 100,000
shares of Common Stock that will be conditioned upon achievement
of targeted amounts for Employee's reported earnings per share
to be agreed upon by Employee and the Board.
7. Expenses; Living Quarters; Automobile; Vacations. So long
as Employee is employed by Employer pursuant to this Agreement,
Employee shall receive reimbursement from Employer for all
reasonable business expenses incurred in the course of his
employment by Employer, upon submission to Employer of written
vouchers and statements for reimbursement in accordance with
Employer's policies and procedures. During the first two (2)
years of the Term of this Agreement, Employer shall lease, at
its expense, appropriate living quarters for Employee near
Employer's headquarters. Employer shall also furnish Employee
with an appropriate automobile during the Term of this
Agreement. Employee shall participate in Employer's vacation
policies for senior executives and shall be entitled to three
(3) weeks of paid vacation per year during the Term of this
Agreement.
8. Termination. Subject to the respective continuing
obligations of the parties, Employee's employment may be
terminated prior to the expiration of the Term of this Agreement
as follows:
a. Employer, by action of its Board of Directors and upon
written notice to Employee, may terminate Employee's employment
at any time effective immediately for cause. For purposes of
this subsection 8a, "cause" shall be defined as any (i)
dishonest or fraudulent conduct in connection with his
employment, (ii) conviction of Employee by a federal or state
court for the commission of a felony, (iii) repeated failure on
the part of Employee to perform the duties assigned to him under
this Agreement or any other duties assigned by the Board; or
(iv) unlawful taking or misappropriation of any material and
substantial tangible or intangible property (other than
corporate opportunities) or misappropriation of any corporate
opportunity belonging to Employer or any subsidiary or in which
any of them has an interest.
b. Employer, by action of its Board and upon thirty (30) days
written notice to Employee, may terminate Employee's employment
without cause.
c. Employee, by written notice to Employer, may terminate his
employment at any time on thirty (30) days written notice to the
Board.
d. Employee's employment shall terminate in the event of
Employee's death or disability. For purposes hereof,
"disability" shall be defined as Employee's inability by reason
of illness or other physical or mental incapacity to perform the
duties required by his employment for any consecutive one
hundred twenty (120) day period, provided that notice of any
termination by Employer because of Employee's "disability" shall
have been given to Employee prior to the full resumption by him
of the performance of such duties.
9. Compensation Upon Termination or During Disability. In the
event of termination of Employee's employment pursuant to
section 8 hereof, compensation shall continue to be paid to
Employee as follows:
a. In the event of termination pursuant to subsection 8a or
8c, compensation provided for herein (including Base
Compensation) shall continue to be paid, and Employee shall
continue to participate in the employee benefit, retirement, and
compensation plans and other perquisites as provided in sections
5, 6 and 7 hereof, through the date of termination specified in
the notice of termination. Any benefits payable under
insurance, health, retirement and bonus plans as a result of
Employee's participation in such plans through such date shall
be paid when due under those plans.
b. In the event of termination pursuant to subsection 8b
during the first two years of the Term of this Agreement,
compensation provided for herein (including Base Compensation)
shall continue to be paid, the Employee shall continue to
participate in the employee benefit, retirement, and
compensation plans and other perquisites as provided in sections
5, 6 and 7 hereof, through the date of termination specified in
the notice of termination. Any benefits payable under
insurance, health, retirement and bonus plans as a result of
Employee's participation in such plans through such date shall
be paid when due under those plans. In addition, Employee shall
be entitled to receive from Employer after the date of
termination an amount equal to the Base Compensation then being
paid to Employee for the remaining portion of such two-year
period. Such payments shall be in full satisfaction of
Employer's remaining obligations to Employee under this
Agreement.
c. In the event of termination pursuant to subsection 8d,
compensation provided for herein (including Base Compensation)
shall continue to be paid, and Employee shall continue to
participate in the employee benefit, retirement, and
compensation plans and other perquisites as provided in sections
5, 6 and 7 hereof, (i) in the event of Employee's death, through
the date of death, or (ii) in the event of Employee's
disability, through the date of proper notice of disability as
required by subsection 8d. Any benefits payable under
insurance, health, retirement and bonus plans as a result of
Employer's participation in such plans through such date shall
be paid when due under those plans.
10. Notice of Termination. Any termination of Employee's
employment with Employer as contemplated by section 8 hereof,
except in the circumstances of Employee's death, shall be
communicated by written "Notice of Termination" by the
terminating party to the other party hereto. Any "Notice of
Termination" pursuant to subsection 8a shall indicate the
specific provisions of this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination.
11. Successors. Should Employee die after termination of his
employment with Employer while any amounts are payable to him
hereunder, this Agreement shall inure to the benefit of and be
enforceable by Employee's executors, administrators, heirs,
distributees, devisees and legatees and all amounts payable
hereunder shall be paid in accordance with the terms of this
Agreement to Employee's devisee, legatee or other designee or,
if there if no such designee, to his estate.
12. Notice. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: John Delavan
7457 Moss Canyon Road
Cherry Valley, IL 61016
If to Employer: Intrenet, Inc.
400 TechneCenter Drive
Milford, Ohio 45150
Attn: Chairman of the Board
or to such address as either party hereto may have furnished to
the other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
13. Indiana Law. The validity, interpretation, and
performance of this Agreement shall be governed by the laws of
the State of Indiana.
14. Amendment and Waiver. No provision of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by
Employee and Employer. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of
dissimilar provisions or conditions at the same or any prior or
subsequent time. No agreements or representation, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not set
forth expressly in this Agreement.
15. Severability. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement which
shall remain in full force and effect.
16. Assignment. This Agreement is personal in nature and
neither party hereto shall, without consent of the other, assign
or transfer this Agreement or any rights or obligations
hereunder, except as provided in section 11.
IN WITNESS WHEREOF, the parties have caused this Agreement 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"
By: /s/ John Delavan
John Delavan
"Employee"
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Agreement"), dated as of June 4,
1996, between Intrenet, Inc., an Indiana corporation (the
"Company"), and John Delavan (the "Participant").
W I T N E S S E T H:
WHEREAS, the Participant has been granted options (the
"Options") to purchase shares of the Company's Common Stock,
without par value (the "Common Stock"), pursuant to the
Company's 1993 Stock Option and Incentive Plan (the "Plan", a
copy of which is attached hereto as Appendix A); and
WHEREAS, the parties hereto desire by this Agreement to
document the grant of the Options, but intend that, except to
the extent set forth herein, all of the terms and conditions of
the Options shall be as contained in the Plan.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and in the
Plan, the parties hereto hereby agree as follows:
1. The Options. Subject to the terms and conditions set
forth herein and in the Plan, the Company's Incentive
Compensation Committee has granted the Participant Options to
purchase 100,000 shares of the Common Stock (the "Shares") at an
initial exercise price of [$2.125] per Share (the last reported
sale price of the Common Stock on June 3, 1996) exercisable
after December 5, 1996 and through June 30, 2001.
2. Exercise. The Options may be exercised by the Participant
only at the times and in the manner set forth herein and in the
Plan.
3. Incentive Stock Options. It is understood that the Options
are intended to qualify as Incentive Stock Options under Section
422 of the Internal Revenue Code of 1986, as amended.
4. Section 83(b) Election. In the event that the Participant
makes an election under Section 83(b) of the Code with respect
to the Options or the Shares issuable upon the exercise thereof,
the Participant shall notify the Company of such election within
five business days thereafter.
5. Representations and Warranties of Participant. The
Participant represents and warrants to the Holding Company that:
(a) he has received and carefully reviewed a copy of the
Plan; and
(b) he understands that neither the Options nor any of the
rights and interests under the Plan or hereunder may be
assigned, encumbered or otherwise transferred (collectively,
"Transferred") except, in the event of his death, by will or the
laws and descent and distribution.
6. Plan Controlling. The parties agree that, except to the
extent set forth herein, all of the terms and conditions of the
Options are contained in the Plan and there are no other
agreements, written or oral, with respect thereto. Neither this
Agreement nor the existence of the Options shall be construed as
giving Participant any right to be retained in the employ of the
Company or any of its affiliates.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the date first hereinabove
written.
INTRENET, INC.
By: /s/ Edwin H. Morgens
Edwin H. Morgens,
Chairman of the Board
By: /s/ John Delavan
John Delavan, Participant
<TABLE>
INTRENET, INC.
STATEMENT RE: COMPUTATION
OF PER SHARE EARNINGS
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Weighted average shares outstanding 13,227,338 13,197,728 13,221,481 11,409,687
during period
Assumed exercise of options and 165,148 488,701 184,479 546,536
warrants
Shares assumed for fully diluted earnings 13,392,486 13,686,429 13,405,960 11,956,223
per share
Earnings for the period:
($ in Thousands)
Net earnings $ 155 $ 669 $ (1,319) $ 931
Earnings per common and common
equivalent share:
Primary: $ 0.01 $ 0.05 $ (0.10) $ 0.08
Fully diluted: $ N/A $ N/A $ N/A $ N/A
Exhibit 11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000778161
<NAME> INTRENET, INC.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 222
<SECURITIES> 0
<RECEIVABLES> 28,050
<ALLOWANCES> (613)
<INVENTORY> 0
<CURRENT-ASSETS> 33,706
<PP&E> 28,728
<DEPRECIATION> 0
<TOTAL-ASSETS> 73,725
<CURRENT-LIABILITIES> 30,414
<BONDS> 19,263
0
0
<COMMON> 16,294
<OTHER-SE> 5,454
<TOTAL-LIABILITY-AND-EQUITY> 73,725
<SALES> 0
<TOTAL-REVENUES> 110,315
<CGS> 0
<TOTAL-COSTS> 110,225
<OTHER-EXPENSES> 219
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,190
<INCOME-PRETAX> (1,319)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,319)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,319)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
