<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(AS FILED VIA EDGAR ON MAY 15, 2000
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
--------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
- ----
For the transition period from to ______________ 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, 15,037,066 shares issued and
outstanding at May 1, 2000.
<PAGE> 2
INTRENET, INC.
FORM 10-Q
MARCH 31, 2000
INDEX
PAGE
Part I - Financial Information:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 2000 and December 31, 1999 ................ 3
Condensed Consolidated Statements of
Operations Three Months Ended
March 31, 2000 and 1999 ............................. 4
Condensed Consolidated Statement of
Shareholders' Equity Three Months
Ended March 31, 2000 ................................ 5
Condensed Consolidated Statements of
Cash Flows Three Months Ended
March 31, 2000 and 1999 ............................. 6
Notes to Condensed Consolidated
Financial Statements ................................ 7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations ................................ 9
Part II - Other Information:
Item 1. Legal Proceedings ..................................... 13
Item 2. Changes in Securities ................................. 13
Item 3. Defaults Upon Senior Securities ....................... 13
Item 4. Submission of Matters to a Vote
of Security Holders ................................. 13
Item 5. Other Information ..................................... 13
Item 6. Exhibits and Reports on Form 8-K ...................... 13
2
<PAGE> 3
INTRENET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(In Thousands of Dollars)
<TABLE>
<CAPTION>
ASSETS 2000 1999
---- ----
(UNAUDITED)
<S> <C>
Current assets:
Cash and cash equivalents $ 837 $ 782
Receivables, principally freight revenue less
allowance for doubtful accounts of $1,711 in 2000
and $1,816 in 1999 39,154 38,078
Prepaid expenses and other 7,919 6,293
------- -------
Total current assets 47,910 45,153
Property and equipment, at cost, less accumulated
depreciation 21,882 24,080
Reorganization value in excess of amounts allocated
to identifiable assets, net of accumulated amortization 4,336 4,441
Deferred income taxes, net 2,886 2,886
Other assets 404 281
------- -------
Total assets $77,418 $76,841
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current debt and capital lease obligations $ 3,927 $ 4,858
Accounts payable and cash overdrafts 10,776 8,304
Current accrued claim liabilities 7,224 8,159
Other accrued expenses 6,177 7,612
------- -------
Total current liabilities 28,104 28,933
------- -------
Long-term debt and capital lease obligations 25,416 25,208
Long-term accrued claim liabilities 2,800 2,800
------- -------
Total liabilities 56,320 56,941
------- -------
Shareholders' equity:
Common stock, without par value; 20,000,000
shares authorized; 15,037,066 and 13,844,066 shares
issued and outstanding, respectively 19,633 17,224
Retained earnings since January 1, 1991 1,465 2,676
------- -------
Total shareholders' equity 21,098 19,900
------- -------
Total liabilities and shareholders' equity $77,418 $76,841
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
INTRENET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
(In Thousands of Dollars, Except Shares and Per Share Data)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Operating revenues $ 71,305 $ 66,316
Operating expenses:
Purchased transportation
and equipment rents 33,011 30,333
Salaries, wages, and benefits 17,642 16,890
Fuel and other operating expenses 14,437 11,730
Operating taxes and licenses 2,495 2,524
Insurance and claims 1,671 1,756
Depreciation 927 982
Other operating expenses 1,586 1,004
------------ ------------
71,769 65,219
------------ ------------
Operating income (loss) (464) 1,097
Interest expense (627) (619)
Other expense, net (105) (105)
------------ ------------
Income (loss) before income taxes (1,196) 373
Provision for income taxes (15) (140)
------------ ------------
Net income (loss) $ (1,211) $ 233
============ ============
Basic and diluted earnings
(loss) per share $ (0.09) $ 0.02
============ ============
Weighted average shares
outstanding during period 14,111,176 13,669,244
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
INTRENET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Retained Shareholders'
Common Stock Earnings Equity
---------------------------------- -------------------- -------------------
Shares Dollars
------------- ----------------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 13,844,066 $ 17,224 $ 2,676 $ 19,900
Exercise of stock options 43,000 109 - 109
Private issuance of stock 1,150,000 2,300 - 2,300
Net loss for 2000 - - (1,211) (1,211)
------------- ---------------- -------------------- -------------------
Balance, March 31, 2000 15,037,066 $ 19,633 $ 1,465 $ 21,098
============= ================ ==================== ===================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
INTRENET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,211) $ 233
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Deferred income taxes 0 61
Depreciation and amortization 1,016 1,094
Provision for doubtful accounts 147 106
Changes in assets and liabilities, net:
Receivables (1,224) (3,242)
Prepaid expenses (1,625) (1,701)
Accounts payable and accrued expenses (20) (162)
------- -------
Net cash used in operating activities (2,917) (3,611)
------- -------
Cash flows from financing activities:
Net borrowings on line of credit, net 24 4,251
Principal payments on long-term debt (747) (879)
Proceeds from private sale of Common Stock 2,300 0
Proceeds from exercise of stock options 109 25
------- -------
Net cash provided by financing activities 1,686 3,397
------- -------
Cash flows from investing activities:
Additions to property and equipment (143) (948)
Disposals of property and equipment 1,429 1,376
------- -------
Net cash provided by investing activities 1,286 428
------- -------
Net increase in cash
and cash equivalents 55 214
Cash and cash equivalents:
Beginning of period 782 271
------- -------
End of period $ 837 $ 485
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
INTRENET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
(1) UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited Condensed Consolidated Financial Statements
include the accounts of Intrenet, Inc. and all of its subsidiaries
(collectively, the "Company"). Truckload carrier subsidiaries at March 31, 2000,
were Roadrunner Trucking, Inc. (RRT), Eck Miller Transportation Corporation
(EMT), Advanced Distribution System, Inc. (ADS), and Roadrunner Distribution
Services, Inc. (RDS). Also included is the Company's broker and logistics
manager, INET Logistics, Inc. (INL). All significant intercompany transactions
are eliminated in consolidation. Through its subsidiaries, the Company provides
general and specialized truckload carrier, brokerage and logistics management
services throughout the United States.
The condensed 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, 1999, included in the Company's 1999 Annual Report on Form 10-K.
The results for the three month period ended March 31, 2000, are not
necessarily indicative of the results to be expected for the entire year.
(2) INCOME TAXES
Income taxes in interim periods are generally provided on the basis of
the estimated effective tax rate for the year.
(3) BANK CREDIT AGREEMENT
On February 4, 2000, the Company signed a new bank credit agreement,
which consists of a $32 million revolving line of credit, a $3.5 million term
loan and a $2.5 million capital expenditure loan, all with a final maturity date
of January 1, 2002. The applicable interest rate on borrowings under all
facilities is based upon a financial performance matrix, which has a maximum
level of 225 basis points over the daily LIBOR rate. Borrowings under the line
of credit are limited to amounts determined by a formula tied to the Company's
accounts receivable, as defined in the agreement. The line of credit also
includes provisions for the issuance of $15 million in standby letters of
credit, which as issued, reduce the amount available for borrowings. The term
loan requires quarterly principal payments of approximately $290,000. The
availability of the capital expenditure loan is limited based upon the
achievement of certain financial covenants and there are presently no
outstanding borrowings under such loan. The bank credit facility is secured by
substantially all of the Company's accounts receivable, property and equipment,
and contains, among other provisions, financial covenants which require the
Company to achieve a minimum level of net worth and specified ratios of fixed
charges, current ratio and of debt to earnings before interest, taxes,
depreciation and amortization (EBITDA). The minimum financial covenant targets
increase periodically throughout 2000 and compliance is required to be measured
on a monthly basis.
On April 13, 2000 the Company signed an amendment to the February 4,
2000, bank credit agreement. Under the terms of the amendment, the financial
covenants discussed above have been modified to more closely reflect the
Company's current operating performance, the interest rate on the revolving line
of credit has been increased from LIBOR plus 225 basis points to LIBOR plus 300
basis points, and the interest rate applied to issued standby letters of credit
has been increased from 1% to 1-3/8%. The amendment also requires the Company to
maintain an available borrowing capacity under the revolving credit agreement of
at least $2 million.
7
<PAGE> 8
(4) EQUITY INFUSION
On January 14, 2000, a group consitsting of an officer of the Company
and directors of the Company made $2.3 million in subordinated loans to the
Company. The infustion of at least $2.0 million of cash was a condition
precedent to the February 4, 2000 bank agreement. On March 13, 2000, the Company
repaid the loans in full with the proceeds of a private offering of 1,150,000
shares of the Company's common stock. The same persons who made the subordinated
loans to the Company purchased the stock at $2.00 per share.
(5) CONTINGENT LIABILITIES
The Company's subsidiary, RDS, is a defendant in an action brought on
March 20, 1997, in the 327th District Court, El Paso, Texas, by a former
employee. The plaintiff alleged that he was injured as a result of the
negligence and gross negligence of RDS and received discriminatory treatment in
violation of the Texas Health and Safety Code. On March 13, 1998, a default
judgment was entered against RDS in the approximate amount of $1.0 million,
representing damages for medical expenses, loss of wage earning capacity,
physical pain and mental anguish, physical impairment, disfigurement and
punitive damages. RDS filed an appeal to the 8th Circuit Court of Appeals in El
Paso, Texas, and on July 29, 1999, the 8th Circuit Court of Appeals in El Paso
issued a favorable ruling for RDS, reversing the default judgment and remanding
the case for trial. Management believes that this action should not have a
material adverse effect on the Company's liquidity, results of operations or
financial condition.
There are no other 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.
(6) TRANSACTIONS WITH AFFILIATED PARTIES
The Company leases tractors from unaffiliated leasing companies which
purchase the trucks from a dealership affiliated with a member of the Company's
Board of Directors and a current officer of the Company. The lessors pay a
selling commission to the dealership. The terms of the leases are the result of
negotiations between the Company and the lessor. The Company believes the
involvement of the selling dealership has not resulted in lease terms that are
more or less favorable to the Company than would otherwise be available to it.
During the last three years, the Company has leased an average of 191 tractors a
year that were purchased from the dealership, although none were leased during
the first quarter of 2000. The Company also purchases maintenance parts and
services from the dealership from time to time. Total payments to the dealership
for these services have averaged approximately $570,000 per year for the last
three years.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
INTRODUCTION
The following discussion should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto appearing
elsewhere in this report. Certain statements made in this report relating to
trends in the Company's business, as well as other statements including words
such as "believe", "expect", "estimate", "anticipate" and similar expressions,
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The matters referred to in these
forward looking statements could be affected by the risks and uncertainties
involved in the Company's business and in the trucking industry. These risks and
uncertainties include, but are not limited to, the effect of general economic
and market conditions, including downturns in customers' business cycles, the
availability and cost of qualified drivers, the availability and price of diesel
fuel, the impact and cost of government regulations and taxes on the operations
of the business, competition, as well as certain other risks described in this
report. Subsequent written and oral forward looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements in this paragraph and elsewhere in this
report.
The Company reported a net loss of $1,211,000 on revenues of $71.3
million in the three month period ended March 31, 2000. This compares with net
earnings of $233,000 on revenues of $66.3 million in the comparable period of
1999. The Company's revenue grew by 7.5 percent compared to the first quarter of
1999 and all of its four carrier subsidiaries (ADS, EMT, RRT and RDS) reported
revenue improvements. Despite the increases in revenue, the Company's operating
margin deteriorated, principally as a result of higher fuel costs. The average
cost of diesel fuel in the first quarter of 2000 was 47% higher than in the
first quarter of 1999. While the cost of fuel increased rapidly during the first
quarter of 2000, pricing to customers was not readily adjustable due to
contractual restrictions, the competitive environment, and the logistics of
achieving price increases throughout a large customer base. However, management
has increased prices and continues to pursue price increases to the extent
feasible. In addition, the Company has instituted cost reduction programs in the
areas of fuel purchasing, insurance costs, and general and administrative
overhead. Accordingly, management expects improved operating results during the
remainder of the year.
A discussion of the impact of the above and other factors on the
results of operations in the three months ended March 31, 2000, as compared to
the comparable period of 1999 follows.
2000 COMPARED TO 1999
<TABLE>
<CAPTION>
Three Months Ended March 31
--------------------------------
KEY OPERATING STATISTICS 2000 1999 % Change
- ------------------------ ------------- ------------- -----------
<S> <C> <C> <C>
Operating Revenues ($ millions) $ 71.3 $ 66.3 7.5%
Net Earnings (loss) ($ 000's) ($1, 211) $ 233 N/A
Average Number of Tractors 2,369 2,308 2.6%
Total Loads (000's) 90.0 92.8 (3.0%)
Revenue Miles (millions) 43.2 41.1 5.1%
Average Revenue per
Revenue Mile* $ 1.45 $ 1.38 5.1%
</TABLE>
* Excluding brokerage revenue
9
<PAGE> 10
OPERATING REVENUES
Operating revenues for the three months ended March 31, 2000, totaled
$71.3 million as compared to $66.3 million for the same period in 1999.
Company-owned tractor revenues increased 4.6%, or $1.5 million, and the freight
revenue brokered to others decreased by 9.0%, or $.9 million. Revenues generated
by owner operators increased over $4.4 million, or 18.7% over the same period in
1999. The overall increase in revenue of $5.0 million in the first quarter of
2000 compared to the first quarter of 1999 is comprised of price increases and
fuel surcharges amounting to $2.1 million and additional volume amounting to
$2.9 million. The average number of tractors increased 2.6% in the first quarter
2000, over 1999. The average Company operating fleet decreased by 40 tractors
while the owner operator average fleet increased by 101 tractors. Approximately
49% of the Company's revenue for the three months ending March 31, 2000, was
generated from company-owned equipment, while 38% was generated by
owner-operator equipment and 13% by freight revenue brokered to others. In 1999,
the company-owned equipment provided approximately 51% of total revenue while
the owner-operator equipment registered 35% with the balance attributable to
freight revenue brokered to others.
OPERATING EXPENSES
The following table sets forth the percentage relationship of operating
expenses to operating revenues for the three months ended March 31.
<TABLE>
<CAPTION>
Three Months Ended March 31
----------------------------------------
2000 1999
----- ----
<S> <C> <C>
Operating revenues 100 % 100 %
Operating expenses:
Purchased transportation
and equipment rents 46.3 45.7
Salaries, wages and benefits 24.7 25.4
Fuel and other operating expenses 20.2 17.7
Operating taxes and licenses 3.6 3.8
Insurance and claims 2.4 2.7
Depreciation 1.3 1.5
Other operating expenses 2.2 1.5
----- ----
Total operating expenses 100.7% 98.3%
====== ====
</TABLE>
Purchased transportation and equipment rents increased as a percentage
of revenue due to the Company's increasing use of operating leases for
replacement equipment as well as increased use of owner-operated equipment as
previously described. The Company uses operating leases almost exclusively as a
means of financing its company fleet. If the same equipment were purchased, the
Company estimates that operating costs would be lower by 1.4% of revenue and
interest expense would increase by a corresponding amount. Salaries, wages and
benefits decreased as a percentage of revenue due to price increases, and fuel
surcharges (arising from increases in the cost of fuel) exceeding the percent by
which wages were increased; additionally, a higher percentage of revenue was
derived from owner-operator activity. The cost of fuel increased by 2.5% of
revenue. The average price per gallon of diesel fuel for the first quarter of
2000 was approximately 44 cents higher than the same period in 1999, but
company- owned tractors used over 136,000 less gallons in 2000 as a result of
better fuel economy and traveling 57,000 fewer miles.
10
<PAGE> 11
INTEREST EXPENSE
Non bank Interest expense decreased in 2000, primarily as a result of
the increase in the debt facility offset by the approaching maturity of capital
lease obligations and the replacement equipment financed with operating leases.
Interest expense on bank borrowings was approximately $110,000 higher in 2000
due to a higher average borrowings.
PROVISION FOR INCOME TAXES
Income taxes in interim periods are generally provided on the basis of
the estimated effective tax rate for the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash increased $55,000 in the first three months of 2000.
As reflected in the accompanying Condensed Consolidated Statement of Cash Flows,
$2.9 million of cash was used in operating activities as compared to $3.6
million used in the first quarter of 1999. Historically, the Company's cash
needs are greatest in the first quarter when plates and permits are purchased
for the Company's fleet. Borrowing under the Company's bank credit facility did
not change significantly from December 31, 1999.
On January 14, 2000, a group consisting of an officer of the Company
and directors of the Company made $2.3 million in subordinated loans to the
Company. The infusion of at least $2.0 million of cash was a condition precedent
to the February 4, 2000 bank agreement. On March 13, 2000, the Company repaid
the loans in full with the proceeds of a private offering of 1,150,000 shares of
the Company's common stock. The same persons who made the subordinated loans to
the Company purchased the stock at $2.00 per share.
On February 4, 2000, the Company signed a new bank credit agreement,
which consists of a $32 million revolving line of credit, a $3.5 million term
loan and a $2.5 million capital expenditure loan, all with a final maturity date
of January 1, 2002. The applicable interest rate on borrowings under all
facilities is based upon a financial performance matrix, which has a maximum
level of 225 basis points over the daily LIBOR rate. Borrowings under the line
of credit are limited to amounts determined by a formula tied to the Company's
accounts receivable, as defined in the agreement. The line of credit also
includes provisions for the issuance of $15 million in standby letters of
credit, which as issued, reduce the amount available for borrowings. The term
loan requires quarterly principal payments of approximately $290,000. The
availability of the capital expenditure loan is limited based upon the
achievement of certain financial covenants and there are presently no
outstanding borrowings under such loan. The bank credit facility is secured by
substantially all of the Company's accounts receivable, property and equipment.
The bank credit agreement signed on February 4, 2000 contained, among
other provisions, financial covenants which require the Company to achieve a
minimum level of net worth and specified ratios of fixed charges, current ratio
and of debt to earnings before interest, taxes, depreciation and amortization
(EBITDA). The minimum financial covenant targets increase periodically
throughout 2000 and compliance is required to be measured on a monthly basis.
During the three months ended March 31, 2000, the Company continued to
experience the effects of rising diesel fuel prices and a shortage of qualified
drivers available to operate equipment. In consideration of these factors,
effective April 13, 2000 the Company signed an amendment to the February 4,
2000, bank credit agreement. Under the terms of the amendment, the financial
covenants discussed above have been modified to more closely reflect the
Company's current operating performance, the interest rate on the revolving line
of credit has been increased from LIBOR plus 225 basis points to LIBOR plus 300
basis points, and the interest rate applied to issued standby letters of credit
has been increased from 1% to 1-3/8%. The amendment also requires the Company to
maintain an available borrowing capacity under the revolving credit agreement of
at least $2 million. Based upon management's current estimates of future
operations and cash flows, the Company believes that it will be able to maintain
compliance with the modified financial covenants contained in the amendment.
However, there can be no assurance that management's estimates of future
operations and cash flows will be achieved.
As previously discussed, the cost of fuel increased significantly
during the three months ended March 31, 2000, with the increase approximating
$.24 per gallon. The cost of oil hit a peak on March 8, 2000 at $34.37 per
barrel (New York price), and recently has stabilized at approximately $27 per
barrel. Based upon production estimates made by the Organization of Petroleum
Exporting Countries (OPEC), which indicate increased available supply during the
remainder
11
<PAGE> 12
of 2000, the Company believes that the cost of diesel fuel will remain stable or
decrease during the remainder of the year 2000. However, there are no assurances
that worldwide supply will remain at current levels or that other factors will
not impact the cost of fuel.
The Company 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 2000. Available borrowing
capacity at March 31, 2000 approximated $4.2 million.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There have been no material developments in the pending legal
proceedings described in the Company's 1999 Annual Report as Form 10-k. The
Company and its subsidiaries are subject to routine litigation incidental to
business, primarily claims for personal injury and property damage incurred in
the transporting of freight. 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.
ITEM 2. CHANGES IN SECURITIES
On March 13, 2000 a group of investors including an officer of the
Company, members of the Board of Directors and persons affiliated with directors
of the Company purchased 1,150,000 shares of the Company's common stock at $2.00
per share. The transaction was not registered under the Securities Act of 1933,
as amended, in reliance of the exceptions contained in Section 4(2) relating to
private offerings.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 First Amendment to Fifth Amended and
Restated Loan Agreement
10.2 Employment Agreement dated 5/5/00 between
the Company and Thomas Bell
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
13
<PAGE> 14
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)
MAY 14, 2000 /s/ Eric C. Jackson
- ------------ --------------------------
Eric C. Jackson,
President and Chief
Executive Officer
/s/ Thomas J. Bell
-----------------------------
Thomas J. Bell,
Executive Vice-President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
<PAGE> 1
Exhibit 10.1
EXECUTION COPY
FIRST AMENDMENT TO FIFTH AMENDED AND
RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") to the Fifth Amended and
Restated Loan Agreement is entered into as of the 13TH day of APRIL , 2000, by
and between The Huntington National Bank (the "Bank") as lender, and Intrenet,
Inc. (the "Borrower"), and its wholly owned subsidiaries Advanced Distribution
System, Inc., Eck Miller Transportation Corporation, INET Logistics, Inc.,
Mid-Western Transport, Inc., Roadrunner Enterprises, Inc., Roadrunner Trucking,
Inc., Roadrunner Distribution Services, Inc. and Roadrunner International
Services, Inc. (collectively the "Subsidiaries") as borrowers. The Borrower and
the Subsidiaries are herein collectively referred to as the "Companies" and
separately as a "Company").
RECITALS:
A. On or about February 4, 2000, the Bank and the Companies executed a
certain Fifth Amended and Restated Loan Agreement, as amended from time to time
(the "2000 Loan Agreement"), which sets forth the terms and conditions of
certain loans and extensions of credit; and
B. From time to time prior to the date of the 2000 Loan Agreement, each
of the Companies executed and delivered to the Bank the Existing Closing
Documents and the 1996 Closing Documents (as such terms are defined in the 2000
Loan Agreement); and
C. On or about February 4, 2000, and at such other times as the
Companies have entered into amendments or consents, in connection with the 2000
Loan Agreement, the Companies executed and delivered to the Bank certain other
loan and security documents, including without limitation, an Amended and
Restated Revolving Note, an Amended and Restated Term Note, an Amended and
Restated Standby Letter of Credit Reimbursement AGREEMENT, an Amended and
Restated Master Fund Management Agreement, UCC-1 financing statements, UCC-3
amendments, mortgage modification agreements, and related documents (herein,
together with the Existing Closing Documents and the 1996 Closing Documents,
collectively the "Loan Documents") ; and
D. The Companies have requested that the Bank amend and modify certain
terms and covenants in the 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:
<PAGE> 2
1. DEFINITIONS. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the 2000 Loan Agreement.
2. The definition of "Eligible Unbilled Accounts" set forth in Section
1.8, "LENDING FORMULA," of the 2000 Loan Agreement is hereby amended to recite
in its entirety as follows:
"Eligible Unbilled Accounts" means the portion of the accounts
of any of the Companies that the Bank determines in good faith from
time to time, based on credit policies, market conditions, such
Company's business or the creditworthiness of such Account Debtor, 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 in
accordance with GAAP and arises in the ordinary course of one of the
Companies' businesses from a customer (an "Account Debtor"), an invoice
has been created to evidence such account, but such invoice has not
been mailed to the Account Debtor, and such account meets all the
following requirements: (a) the account arises from one of the
Companies' completed performance of services to an Account Debtor; (b)
not more than 15 days (7 days on and after December 31, 2000) have
elapsed from the dispatch date, as indicated in the unprinted freight
bill report or other report satisfactory to the Bank; (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 does not arise from a transaction
with a person, corporation or entity affiliated with one of the
Companies; (e) no Company has 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) the account arises from a sale to an Account Debtor in
the United States or one of the Canadian provinces other than Quebec;
(h) the account does not arise from any government or agency thereof
(provided, however, such account will be considered for eligibility if
such Company has complied in all respects with the Federal Assignment
of Claims Act and such account is satisfactory to the Bank) or from a
consumer; (i) the account does not arise from an Account Debtor who has
more than 25% of its accounts with any Company unpaid more than 90 days
from the original invoice therefor; (j) the account does not arise from
an Account Debtor to whom any Company has determined to ship goods on a
"cash on delivery" or C.O.D. basis; and (k) the Bank has not notified
the Borrower 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).
-2-
<PAGE> 3
The remainder of Section 1.8 shall remain as originally written.
3. Subparagraphs (w) and (x) and the Pricing Grid Table, all of which are a part
of the definition of "Prime Margin" set forth in Section 2.1, "PAYMENT OF
INTEREST PRIME COMMERCIAL RATE," of the 2000 Loan Agreement are hereby amended
to recite as follows:
(w) Upon the date that the First Amendment to Fifth Amended and
Restated Loan Agreement between the Companies and the Bank (the "First
Amendment") becomes effective, until changed hereunder in accordance
with the following provisions, the Prime Margin will be 75 basis points
(0.75%) per annum.
(x) Commencing as of March 31, 2000, and continuing as of the last day
of each month thereafter, the Bank will determine the Prime Margin for
each Loan in accordance with the Pricing Grid Table set forth below,
based on the Companies' Cash Flow Leverage Ratio and Fixed Charge
Coverage Ratio as of the end of such month; provided however, that if,
pursuant to the terms of this Agreement, the Bank, in its discretion,
notifies the Companies that the Cash Flow Leverage Ratio and the Fixed
Charge Coverage Ratio shall be determined on a quarterly basis, then
such determination of the Prime Margin shall be made as of the end of
each fiscal quarter. Changes in the Prime Margin based upon changes in
the Cash Flow Leverage Ratio and the Fixed Charge Coverage Ratio as of
the end of any month (or quarter, as the case may be) shall become
effective on the first day of the month following the receipt and
acceptance by the Bank pursuant to Section 11 of this Agreement of the
financial statements of the Borrower for such month (or quarter, as the
case may be), accompanied by such supporting documentation as may be
reasonably required by the Bank and by the certificate and calculations
referred to in Section 11 of this Agreement demonstrating the
computation of the Cash Flow Leverage Ratio and Fixed Charge Coverage
Ratio. No reduction in the Prime Margin shall occur unless the
Companies shall have achieved BOTH the Fixed Charge Coverage Ratio
requirement and the Cash Flow Leverage Ratio requirement associated
with a specified margin.
-3-
<PAGE> 4
PRICING GRID TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
FIXED CHARGE COVERAGE RATIO CASH FLOW LEVERAGE RATIO PRIME MARGIN
(expressed in basis points per annum)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
less than 1.00 to 1.00 or greater than 4.50 to 1.00 75 (0.75%)
greater than minimum ratio
required by Section 10.24
- ----------------------------------------------------------------------------------------------------------------------
greater than or equal to 1.00 to 1.00 less than or equal to 4.50 to 1.00 and 75 (0.75%)
and greater than or equal to minimum ratio less than or equal to maximum ratio
required by Section 10.24 permitted by Section 10.25
- ----------------------------------------------------------------------------------------------------------------------
greater than or equal to 1.00 to 1.00 and less than or equal to 4.00 to 1.00 75 (0.75%)
greater than or equal to minimum ratio
required by Section 10.24
- ----------------------------------------------------------------------------------------------------------------------
greater than or equal to 1.05 to 1.00 less than or equal to 3.75 to 1.00 75 (0.75%)
- ----------------------------------------------------------------------------------------------------------------------
greater than or equal to 1.15 to 1.00 less than or equal to 3.00 to 1.00 75 (0.75%)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The remainder of Section 2.1 shall remain as originally written.
4. Subparagraphs (w) and (x) and the Pricing Grid Table, all of which
are a part of the definition of "Daily LIBOR Margin" set forth in Section 2.2,
"DAILY LIBOR," of the 2000 Loan Agreement are hereby amended to recite as
follows:
(w) Upon the date that the First Amendment becomes effective,
until changed hereunder in accordance with the following
provisions, the Daily LIBOR Margin will be 300 basis points
per annum.
(x) Commencing as of March 31, 2000, and continuing as of the
last day of each month thereafter, the Bank will determine the
Daily LIBOR Margin for each Loan in accordance with the
Pricing Grid Table set forth below, based on the Companies'
Cash Flow Leverage Ratio and Fixed Charge Coverage Ratio as of
the end of such month; provided however, that if, pursuant to
the terms of this Agreement, the Bank, in its discretion,
notifies the Companies that the Cash Flow Leverage Ratio and
the Fixed Charge Coverage Ratio shall be determined on a
quarterly basis, then such determination of the Prime Margin
shall be made as of the end of each fiscal quarter. Changes in
the Daily LIBOR Margin based upon changes in the Cash Flow
Leverage Ratio and the Fixed Charge Coverage Ratio as of the
end of any month (or quarter, as the case may be) shall become
effective on the first day of the month following the receipt
and acceptance by the Bank pursuant to Section 11 of this
Agreement of the financial statements of the Borrower for such
month (or quarter, as the case may be), accompanied by such
supporting documentation as may be reasonably required by the
Bank and by the certificate and calculations referred to in
Section 11 of this Agreement demonstrating the computation of
the Cash Flow Leverage Ratio and Fixed Charge Coverage Ratio.
No reduction in the Daily LIBOR Margin shall occur unless the
Companies shall have achieved both the Fixed Charge Coverage
Ratio requirement and the Cash Flow Leverage Ratio requirement
associated with a specified margin.
-4-
<PAGE> 5
PRICING GRID TABLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FIXED CHARGE COVERAGE RATIO CASH FLOW LEVERAGE RATIO DAILY LIBOR MARGIN
(expressed in basis points per annum)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
less than 1.00 to 1.00 or greater than 4.50 to 1.00 300 (3.00%)
greater than minimum required
ratio for Section 10.24
- -------------------------------------------------------------------------------------------------------------------
greater than or equal to 1.00 to 1.00 less than or equal to 4.50 to 1.00 275 (2.75%)
and greater than or equal to minimum less than or equal to maximum ratio
required ratio for Section 10.24 permitted by Section 10.25 financial
covenant
- -------------------------------------------------------------------------------------------------------------------
greater than or equal 1.00 to 1.00 and less than or equal to 4.00 to 1.00 250 (2.50%)
greater than or equal to minimum
required ratio for Section 10.24
- -------------------------------------------------------------------------------------------------------------------
greater than or equal to 1.05 to 1.00 less than or equal to 3.75 to 1.00 225 (2.25%)
- -------------------------------------------------------------------------------------------------------------------
greater than or equal to 1.15 to 1.00 less than or equal to 3.00 to 1.00 200 (2.00%)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The remainder of Section 2.2 shall remain as originally written.
5. Section 6.2, " LETTER OF CREDIT FEES," of the 2000 Loan Agreement is
hereby amended to recite in its entirety as follows:
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-and-three-eighths percent (1.375%) 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.
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. Section 6.3, "CLOSING FEE," of the 2000 Loan Agreement is hereby
redesignated "CLOSING FEE AND AMENDMENT FEE," and is amended to recite in its
entirety as follows:
6.3 Closing Fee and Amendment Fee.
The Companies shall jointly and severally pay to the
Bank a closing fee in respect of the Loan in the amount of
$75,000.00, which fee shall be fully earned as of the date of
this Agreement, but shall be payable in the following
installments: $25,000.00 on or before the date of this
Agreement, $25,000.00 on March 31, 2000, and $25,000.00 on or
before the date of execution of the First Amendment. In
addition, in respect of the First Amendment, the Companies
shall jointly and severally pay to the Bank an amendment fee
in the amount of $75,000.00, which fee shall be fully earned
as of the earlier of (i) the date of the Companies' acceptance
-5-
<PAGE> 6
of the Bank's commitment letter with respect to the First
Amendment or (ii) the date of execution of the First
Amendment, but shall be payable upon the earlier of (a) June
30, 2000; (b) the prepayment in full of the Revolving Loan,
the Term Loan and the Capex Loan; or (c) the occurrence of an
Event of Default hereunder.
7. Section 6.7, "COLLATERAL AUDITS," of the 2000 Loan Agreement is
hereby amended to recite in its entirety as follows:
6.7 Collateral Audits.
The Bank shall have the right, in its sole
discretion, to conduct full audits of each of the Companies up
to four times a year, provided, however, that during (i) the
occurrence of an Event of Default, or (ii) if the Bank deems
necessary in its sole discretion after reviewing the results
of scheduled audits, the Bank shall have the right in its sole
discretion to conduct audits more frequently. The scope of
such audits shall be determined by the Bank in its sole and
absolute discretion. In connection therewith, the Companies
will provide access to all of its books and records and such
other information which the Bank deems necessary to evaluate
the status of the Loan, of the collateral security therefor,
or any other matter pertaining to, or referred to in, this
Agreement or the documents executed in connection herewith.
8. Section 8.3, "FINANCIAL STATEMENTS; FULL DISCLOSURE," of the 2000
Loan Agreement is hereby amended to recite in its entirety as follows:
8.3 Financial Statements; Full Disclosure.
The financial statements for the fiscal year ending
December 31, 1998, and the fiscal period ending November 30,
1999, which have been supplied to the Bank have been prepared
in accordance with GAAP and fairly represent the Companies'
financial condition as of such date. No material adverse
change in the Companies' financial condition has occurred
since November 30, 1999, other than the Companies'
consolidated operating loss in the amount of $1,525,000 in
December, 1999. In addition, the financial analyses, reports,
business plans, projections, and pro forma financial
statements, dated March 22, 2000, and covering fiscal periods
ending December 31, 2000, which have been supplied to the
Bank, have been prepared in accordance with GAAP 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.
Furthermore, based upon the
-6-
<PAGE> 7
financial projections provided to the Bank from time to time
pursuant to Section 11 hereof, no set of facts or
circumstances is projected to exist during the period or
periods covered by such projections that, upon the giving of
notice, the lapse of time, or any one or more of the
foregoing, would constitute an Event of Default. The financial
statements and the financial analyses, reports, business
plans, projections and information referred to in this
paragraph do not, nor does this Agreement or any written
statement furnished by the Companies to the Bank 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 Bank 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.
9. Section 9.3, "WARRANTIES AND REPRESENTATIONS," of the 2000 Loan
Agreement is hereby amended to recite in its entirety as follows:
9.3 Warranties and Representations.
On the date of each advance pursuant to the Loan the
warranties and representations set forth in Section 8 hereof
(except for and excluding the warranties and representations
set forth in the second sentence of Section 8.3 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.
10. Section 10.10, "MINIMUM SECURITY," of the 2000 Loan Agreement is
hereby amended to recite in its entirety as follows:
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 Incomplete Booked
Accounts 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
difference of (i) the Borrowing Base, MINUS $2,000,000.00.
11. Section 10.14, "CURRENT RATIO," of the 2000 Loan Agreement is
hereby amended to recite in its entirety as follows:
-7-
<PAGE> 8
10.14 Current Ratio.
The Companies, on a combined and consolidated basis,
shall maintain a ratio of current assets to current
liabilities of not less than 1.00 to 1.00 as of the end of
each fiscal year. For purposes of this Section 10.14, the Loan
shall be considered to be a long-term liability.
12. The first two paragraphs of Section 10.24, "FIXED CHARGE COVERAGE
RATIO," of the 2000 Loan Agreement are hereby amended to recite in their
entirety as follows:
10.24 Fixed Charge Coverage Ratio.
The Companies, on a consolidated basis, shall
maintain at all times specified below a ratio of (a) EBITDA
PLUS Historical Operating Lease Payments PLUS Non-Recurring
Expenses to (b) Fixed Charges PLUS Prospective Operating Lease
Payments (the "Fixed Charge Coverage Ratio") of not less than
(i) 0.80 to 1.00 for the period beginning with the date of this
Agreement and continuing through and including December 31,
2000, (ii) 0.95 to 1.00 for the period beginning January 1,
2001, and continuing through and including March 30, 2001,
(iii) 1.00 to 1.00 for the period beginning on March 31, 2001,
and continuing through and including June 29, 2001; and (iv)
1.05 to 1.00 for the period beginning on June 30, 2001, and
continuing at all time thereafter. If the Companies or their
auditors make any adjustment in EBITDA, the Companies shall
immediately (i) provide notice of such adjustment to the Bank,
(ii) reflect such adjustment in the calculation of the Fixed
Charge Coverage Ratio, and (iii) provide financial statements
to the Bank reflecting such adjustments for all periods to
which the adjustments relate.
In determining the numerator of the Fixed Charge
Coverage Ratio, (i) EBITDA, Historical Operating Lease Payments
and Non-Recurring Expenses shall each be determined as of the
last day of each month for the twelve month period ending on
such date. In determining the denominator of the Fixed Charge
Coverage Ratio, (i) Consolidated Taxes, (ii) Consolidated
Interest Expense, and (iii) Net Investment in Fixed Assets (and
each component thereof) shall each be determined as of the last
day of each month for the twelve month period ending on such
date; and (iv) Prospective CMLTD, and (v) Prospective Operating
Lease Payments shall each be determined by calculating the
scheduled payments due and to become due during the twelve
month period beginning on such date. Provided, however, that if
(w) as of the date of the Bank's notification to the Companies
as contemplated in this sentence, no set of facts or
circumstances exists that, upon the giving of notice, the lapse
of time, or one or more of the foregoing, would constitute an
Event of Default, and (x)
-8-
<PAGE> 9
if the Bank, in its sole and absolute discretion, is satisfied
with the results of its audits of each of the Companies that
are conducted after the date of execution of the First
Amendment and prior to September 30, 2000, and has notified the
Companies in writing of such determination and that the Fixed
Charge Coverage Ratio is to be henceforth determined on a
quarterly basis, then, from and after September 30, 2000, (y)
in determining the numerator of the Fixed Charge Coverage
Ratio, (i) EBITDA, (ii) Historical Operating Lease Payments and
(iii) Non-Recurring Expenses shall each be determined as of the
last day of each calendar quarter for the twelve month period
ending on such date, and (z) in determining the denominator of
the Fixed Charge Coverage Ratio, (i) Consolidated Taxes, (ii)
Consolidated Interest Expense, and (iii) Net Investment in
Fixed Assets (and each component thereof) shall each be
determined as of the last day of each calendar quarter for the
twelve month period ending on such date, and (iv) Prospective
CMLTD and (v) Prospective Operating Lease Payments shall each
be determined by calculating the scheduled payments due and to
become due during the twelve month period beginning on such
date.
The remainder of Section 10.24 shall remain as originally written.
13. The first two paragraphs of Section 10.25, "CASH FLOW LEVERAGE," of
the 2000 Loan Agreement are hereby amended to recite in their entirety as
follows:
10.25 Cash Flow Leverage.
The Companies, on a consolidated basis, shall
maintain at all times specified below a ratio of (a) Funded
Debt to (b) EBITDA PLUS Non-Recurring Expenses (the "Cash Flow
Leverage Ratio") of not greater than (a) 9.00 to 1.00 for the
period beginning with the date of this Agreement and
continuing through and including March 30, 2000, (b) 9.50 to
1.00 for the period beginning March 31, 2000 and continuing
through and including April 29, 2000, (c) 10.25 to 1.00 for
the period beginning April 30, 2000 and continuing through and
including May 30, 2000, (d) 10.50 to 1.00 for the period
beginning May 31, 2000 and continuing through and including
June 29, 2000, (e) 10.00 to 1.00 for the period beginning June
30, 2000 and continuing through and including August 30, 2000,
(f) 9.50 to 1.00 for the period beginning August 31, 2000 and
continuing through and including September 29, 2000, (g) 9.00
to 1.00 for the period beginning September 30, 2000 and
continuing through and including October 30, 2000, (h) 8.00 to
1.00 for the period beginning October 31, 2000 and continuing
through and including November 29, 2000, (i) 6.50 to 1.00 for
the period beginning November 30, 2000 and continuing through
and including December 30, 2000, (j) 5.50 to 1.00 for the
period beginning December 31, 2000 and continuing through and
including January 30,
-9-
<PAGE> 10
2001, (k) 4.75 to 1.00 for the period beginning January
31,2001 and continuing through and including June 29, 2001,
and (l) 4.25 to 1.00 for the period beginning June 30, 2001
and continuing at all times thereafter.
For the purposes of calculating the Cash Flow
Leverage Ratio EBITDA and Non-Recurring Expenses shall be
determined as of the last day of each month, beginning January
31, 2000, for the twelve month period ending on such date, and
Funded Debt shall be determined as of the last day of such
month. Provided, however, that if (x) as of the date of the
Bank's notification to the Companies as contemplated in this
sentence, no set of facts or circumstances exists that, upon
the giving of notice, the lapse of time, or one or more of the
foregoing, would constitute an Event of Default, and (y) the
Bank, in its sole and absolute discretion, is satisfied with
the results of its audits of each of the Companies that are
conducted after the date of the First Amendment and prior to
September 30, 2000, and has notified the Companies in writing
of such determination and that the Cash Flow Leverage Ratio is
to be henceforth determined on a quarterly basis, then, (z)
from and after September 30, 2000, for purposes of calculating
the Cash Flow Leverage Ratio, (i) EBITDA and Non-Recurring
Expenses shall be determined as of the last day of each
calendar quarter, beginning September 30, 2000, for the twelve
month period ending on such date, and (ii) Funded Debt shall
be determined as of the last day of such calendar quarter.
The remainder of Section 10.25 shall remain as originally written.
14. A new Section 10.29, "MINIMUM PROJECTED AVAILABILITY," is hereby
added to the 2000 Loan Agreement and shall recite in its entirety as follows:
10.29 Minimum Projected Availability
The financial projections provided to the Bank from
time to time pursuant to Section 11(m) hereof shall
demonstrate to the satisfaction of the Bank that the
Companies, on a projected basis, will maintain at all times
during the period or periods covered by such projections, as
minimum security for the Revolving Loan and Letters of Credit,
Eligible Accounts, Eligible Unbilled Accounts and Eligible
Incomplete Booked Accounts 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 difference of (i) the Borrowing Base, MINUS (ii)
$2,000,000.00.
-10-
<PAGE> 11
15. Subparagraph (b) of Section 11, "INFORMATION AS TO THE COMPANIES,"
of the 2000 Loan Agreement is hereby amended to recite in its entirety as
follows:
(b) within 30 days after the end of each month,
statements, in form satisfactory to the Bank, signed by a
president or chief financial officer of the Borrower
certifying the compliance of the Companies with the terms of
this Agreement and the calculation of the financial covenants
contained in Section 10 above and accompanied by such
supporting documentation as the Bank may reasonably request;
provided, however, that if (x) as of the date of the Bank's
notification to the Companies as contemplated in this
subparagraph (b), no set of facts or circumstances exists
that, upon the giving of notice, the lapse of time, or one or
more of the foregoing, would constitute an Event of Default,
and (y) the Bank, in its sole and absolute discretion, is
satisfied with the results of its audits of each of the
Companies that are conducted after the date of the First
Amendment and prior to September 30, 2000, and has notified
the Companies in writing of such determination and that the
statements regarding calculation of financial covenants
required by this subparagraph may be submitted on a quarterly
basis, then, (z) from and after September 30, 2000, the
statements and supporting documentation required by this
subparagraph (b) shall be delivered to the Bank within thirty
days of the end of each month, except that statements and
supporting documentation as to the calculation of the
financial covenants contained in Section 10 above shall be
delivered to the Bank within thirty days of the end of each
calendar quarter;
Except as otherwise modified herein, the remainder of Section 11 shall remain as
originally written.
16. Subparagraph (d) of Section 11, "INFORMATION AS TO THE COMPANIES,"
of the 2000 Loan Agreement is hereby amended to recite in its entirety as
follows:
(d) within 120 days of the end of the fiscal year
ending December 31, 1999, and within 90 days of the end of
each fiscal year thereafter, unqualified, audited financial
statements prepared on a consolidated basis in accordance with
GAAP 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 (1) any
management letters written by such accountants, and (2) a
lender reliance letter from such accountants authorizing the
Bank to rely on such accountants' certifications;
-11-
<PAGE> 12
Except as otherwise modified herein, the remainder of Section 11 shall remain as
originally written.
17. Subparagraph (f) of Section 11, "INFORMATION AS TO THE COMPANIES,"
of the 2000 Loan Agreement is hereby amended to recite in its entirety as
follows:
(f) within 120 days of the end of the fiscal year
ending December 31, 1999, and within 90 days of the end of
each fiscal year thereafter, 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;
Except as otherwise modified herein, the remainder of Section 11 shall remain as
originally written.
18. Subparagraph (m) of Section 11, "INFORMATION AS TO THE COMPANIES,"
of the 2000 Loan Agreement is hereby amended to recite in its entirety as
follows:
(m) within 25 days after the end of each month,
financial projections, in form and content satisfactory to the
Bank, as to the Companies' cash flow for the 90-day period
beginning the day after such month end, which projections
shall include pro forma calculations, made with respect to the
last day of each month during such 90-day period, of each of
the financial covenants set forth in Section 10 above;
Except as otherwise modified herein, the remainder of Section 11 shall remain as
originally written.
19. Subparagraph (b) of Section 12, "EVENTS OF DEFAULT," OF THE 2000
Loan Agreement is hereby amended to recite in its entirety as follows:
(b) any of the Companies fail to perform or observe any
covenant contained in Sections 5, 7, 10.1, 10.22 or 10.29 of
the Agreement;
The remainder of Section 12 shall remain as originally written.
20. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
as of _____APRIL 13__________, 2000, upon satisfaction of all of the following
conditions precedent:
-12-
<PAGE> 13
(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;
(b) The Bank shall have received the remaining installment of the
closing fee provided for in Section 6.3 of the 2000 Loan Agreement in the amount
of $25,000.00;
(c) Arthur Andersen shall have issued to the Companies its unqualified
opinion regarding the audited financial statements of the Companies for the
fiscal year ending December 31, 1999, and the Companies shall have provided
evidence satisfactory to the Bank of the same; and
(d) The representations contained in the immediately following
paragraph shall be true and accurate.
21. 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 2000 Loan Agreement or the 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 2000 Loan Agreement and the Loan Documents; and (c)
no event has occurred or is continuing, and no condition exists which would
constitute an Event of Default.
22. AMENDMENT TO 2000 LOAN AGREEMENT. (a) Upon the effectiveness of
this Amendment, each reference in the 2000 Loan Agreement to "Fifth Amended and
Restated Loan Agreement," "Loan and Security Agreement," "Loan Agreement,"
"Agreement," the prefix "herein," "hereof," or words of similar import, and each
reference or deemed reference in the Loan Documents to the 2000 Loan Agreement,
shall mean and be a reference to the 2000 Loan Agreement, as amended hereby. (b)
Except as modified herein, all of the representations, warranties, terms,
covenants and conditions of the 2000 Loan Agreement, the 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 2000 Loan
Agreement, any 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 2000 Loan Agreement
-13-
<PAGE> 14
and the Loan Documents and acknowledges that the agreements set forth therein
continue to be legal, valid and binding agreements, and enforceable in
accordance with their respective terms.
23. 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.
24. COUNTERPARTS; FACSIMILE TRANSMISSION. 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. The facsimile or
other electronically transmitted copy of this Amendment shall be treated the
same as an originally executed copy hereof.
25. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the law of the State of Ohio.
IN WITNESS WHEREOF, each of the Companies and the Bank have
hereunto set their hands as of the date first set forth above.
THE BORROWER:
INTRENET, INC.
By: /s/ John P. Chandler
-------------------------------------------
Its: Executive Vice President, Chief Operating
Officer
-14-
<PAGE> 15
THE SUBSIDIARIES:
ADVANCED DISTRIBUTION SYSTEM, INC.
By: /s/ Thomas J. Bell
-------------------------------------------
Its: Vice President and Assistant Secretary
ECK MILLER TRANSPORTATION
CORPORATION
By: /s/ Russell L. Deeg
-------------------------------------------
Its: Vice President and Assistant Secretary
INET LOGISTICS, INC.
By: /s/ Russell L. Deeg
-------------------------------------------
Its: Vice President, Treasurer and Secretary
MID-WESTERN TRANSPORT, INC.
By: /s/ Thomas J. Bell
-------------------------------------------
Its: Vice President, Treasurer and Secretary
ROADRUNNER ENTERPRISES, INC.
By: /s/ Thomas J. Bell
-------------------------------------------
Its: Vice President and Assistant Secretary
-15-
<PAGE> 16
ROADRUNNER TRUCKING, INC.
By: /s/ Thomas J. Bell
-------------------------------------------
Its: Vice President and Assistant Secretary
ROADRUNNER DISTRIBUTION
SERVICES, INC.
By: /s/ Thomas J. Bell
-------------------------------------------
Its: Vice President and Assistant Secretary
ROADRUNNER INTERNATIONAL
SERVICES, INC.
By: /s/ Thomas J. Bell
-------------------------------------------
Its: Vice President and Assistant Secretary
THE BANK:
THE HUNTINGTON NATIONAL BANK
By: /s/ Jerry L. Kelsheimer
-------------------------------------------
Its: Vice President
-16-
<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of March
17, 2000, by and between Intrenet, Inc., an Indiana corporation ("Employer"),
and Thomas J. Bell ("Employee").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Employer desires to employ Employee;
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 and Employee agrees
to accept such employment.
2. DUTIES. Employee agrees to serve as Employer's Chief Financial
Officer and to perform such duties in that office as may reasonably be assigned
to him by Employer's Board of Directors (the "Board"), Chief Executive Officer
("CEO") or Chief Operating Officer ("COO"), if any. While so employed, 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, the CEO or the COO. Without limiting the foregoing,
Employee agrees to be in the principal offices of Employer or on Employer's
business during normal working hours (8:00 a.m. to 5:00 p.m.) Monday through
Friday. Employee shall hold such other offices and titles as the Board
determines.
3. TERM. The term of this Agreement shall commence as of the date
hereof and shall expire on March 17, 2001 (such term, including any extension
thereof shall herein be referred to as the "Term"). The Term shall be
automatically extended for additional periods of one year unless at least six
(6) months prior to the scheduled expiration date, Employer notifies Employee in
writing of its intention not to extend the Term. Any notice of intention not to
renew may be treated, at Employee's option, as a termination of employment under
section 8(c) of this Agreement.
4. COMPENSATION.
(a) 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.
(b) In addition to Base Compensation, on the third
Tuesday of April of each year of the Term, Employee shall be
eligible to receive a bonus equal to eight-tenths of one
<PAGE> 2
percent (0.8%) of Employer's net income before taxes for the
preceding year. The amount of the bonus for any partial year of
employment shall be pro rated based on the actual number of
calendar months of employment and the total of Employee's Base
Compensation and bonus in any year shall not exceed $400,000 (or
such smaller amount if pro rated for any partial year).
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. EXPENSES; 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. Employee shall be provided with a vehicle for his use of his
selection at a total cost to Employer not to exceed $35,000. Employee will be
reimbursed for all operating costs related to the vehicle. Employee shall
participate in Employer's vacation policies for senior executives and shall be
entitled to twelve (12) paid vacation days during 2000 and three (3) weeks of
paid vacation per year each year thereafter.
7. OPTIONS. Employee shall participate in Employer's stock option
plan. Employer agrees to grant Employee options to purchase 43,750 shares of the
Company's Common Stock on the third Tuesday of April, 2001 if the Company's
operating ratio for the year ended December 31, 2000 is less than or equal to
97.5. The number of shares underlying the additional options to be granted if
such condition is met shall be not less than 43,750 or more than 87,500 with the
number to be determined as follows:
Operating Ratio Total Number of Shares
Equal to or Less Than: Underlying Options
---------------------- ----------------------
97.5 43,750
96.5 56,875
95.5 65,625
94.5 74,375
93.5 87,500
The exercise price of any options shall be equal to the closing price per share
of the Common Stock as reported by Nasdaq for the trading date preceding the
date of the grant and shall be exercisable immediately from the date of grant
through five (5) years from the date of grant.
-2-
<PAGE> 3
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, "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) insubordinate or
intentional failure on the part of Employee to perform the duties
assigned to him under this Agreement or any other duties assigned
to him in writing by the CEO, the COO or 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 be paid to Employee as follows:
(a) In the event of termination pursuant to
subsection 8a or 8c, Base Compensation shall continue to be paid
to Employee, 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, Base Compensation shall continue to be paid to
Employee 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
-3-
<PAGE> 4
under those plans. In addition, Employee shall be entitled to
receive from Employer after the date of termination as severance,
a lump sum amount equal to the Base Compensation then payable to
Employee for twelve month period.
(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.
Payments made under this Section 9 shall be in full satisfaction of Employer's
remaining obligations to Employee under this Agreement.
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 a 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 sent by mail, express delivery or facsimile
transmission as follows:
If to Employee: 963 Creek Knoll Drive
Milford, Ohio 45150
If to Employer: Intrenet, Inc.
400 TechneCenter Drive
Milford, Ohio 45150
Attn: President and CEO
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.
-4-
<PAGE> 5
13. 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.
14. 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.
15. 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.
-5-
<PAGE> 6
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/ John P. Chandler
------------------------------------------
John P. Chandler, Executive Vice President
and Chief Operating Officer
"Employer"
/s/ Thomas J. Bell
------------------------------------------
Thomas J. Bell
"Employee"
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 39,154
<ALLOWANCES> 1,711
<INVENTORY> 0
<CURRENT-ASSETS> 47,910
<PP&E> 40,885
<DEPRECIATION> 19,003
<TOTAL-ASSETS> 77,418
<CURRENT-LIABILITIES> 28,104
<BONDS> 25,416
0
0
<COMMON> 19,633
<OTHER-SE> 1,465
<TOTAL-LIABILITY-AND-EQUITY> 77,418
<SALES> 0
<TOTAL-REVENUES> 71,305
<CGS> 0
<TOTAL-COSTS> 71,769
<OTHER-EXPENSES> 105
<LOSS-PROVISION> 147
<INTEREST-EXPENSE> 627
<INCOME-PRETAX> (1,196)
<INCOME-TAX> 15
<INCOME-CONTINUING> (1,211)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
