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EXHIBIT 10.5
PROMISSORY NOTE
$1,700,000.00 AUGUST 16, 2000
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND HEREBY, U.S. Trucking,
Inc., a Colorado corporation ("BORROWER"), promises to pay to the order of
Zanett Lombardier Master Fund, L.P., having an address at 135 E. 57th Street,
15th Street, New York, New York 10022 ("LENDER"), the principal sum of One
Million Seven Hundred Thousand Dollars ($1,700,000.00) (the "LOAN AMOUNT"),
together with interest as set forth below, until the date on which the Loan
Amount is paid in full, payable in lawful money of the United States of America
in accordance with the terms of this Promissory Note (this "NOTE").
1. USE OF PROCEEDS. Borrower shall use the proceeds of the loan evidenced
in accordance with its agreement with Lender to make payments on a
line of credit Borrower has outstanding with G.E. Capital.
2. INTEREST.
a. In the absence of an Event of Default (as defined hereinafter),
interest shall not be charged on the outstanding principal amount
hereunder.
b. Upon and after the occurrence of an Event of Default, the unpaid
principal balance hereunder shall accrue interest at the greater
of (i) Eighteen Percent (18%) per annum and, (ii) the highest
rate permitted under applicable law.
c. Interest shall be calculated hereunder for the actual number of
days that the principal is outstanding upon and after the
occurrence of an Event of Default, based on a three hundred sixty
(360) day year. Interest shall continue to accrue on the
principal balance, unpaid interest, and other charges and amounts
due and owing hereunder, at the then-applicable rate of interest
specified in this Note, notwithstanding any demand for payment,
acceleration and/or the entry of any judgment against Borrower,
until all principal, unpaid interest, and other charges and
amounts due and owing hereunder is paid in full.
d. If at any time, the rate of interest applicable hereunder shall
be finally determined by any court of competent jurisdiction,
governmental agency or tribunal to exceed the maximum rate of
interest permitted by any applicable law, then for such time as
such rate would be deemed excessive, application thereof shall be
suspended and there shall be charged in lieu thereof the maximum
rate of interest permissible under such law.
3. PAYMENT. Beginning on the date which is one (1) week from the date
hereof, principal payments in the amount of Twenty Thousand Dollars
($20,000.00), shall be paid by Borrower to Lender in seventeen (17)
successive weekly installments. Such payments shall be due on the same
weekday each week. All remaining
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principal, interest and other charges and amounts due and owing in
connection with this Note shall be due and payable on the date which
is one hundred twenty (120) days from the date hereof (the "MATURITY
DATE").
4. EVENTS OF DEFAULT. Each of the following shall constitute an "EVENT OF
DEFAULT" hereunder:
a. Borrower fails to make, in full, any payment of interest or
principal when due;
b. The breach by Borrower of any covenant contained herein or the
discovery by Lender of any false or misleading representation
made by Borrower in any information submitted to Lender by
Borrower;
c. Borrower makes an assignment for the benefit of its creditors,
becomes insolvent, or files or has filed against it any petition,
action, case or proceeding, voluntary or involuntary, under any
state or federal law regarding Bankruptcy, insolvency,
reorganization, receivership or dissolution, including the United
States Bankruptcy Code;
d. The dissolution of Borrower;
e. A writ or warrant of attachment, garnishment, execution,
distraint or similar process shall have been issued against
Borrower or any of Borrower's properties which shall have
remained undischarged and unstayed for a period of thirty (30)
consecutive days; or
f. A material adverse change in the business, operations or
condition, financial or otherwise, of Borrower shall have
occurred.
5. LENDER'S RIGHTS UPON DEFAULT.
a. Upon the occurrence of any Event of Default and without the
necessity of giving any prior written notice to Borrower, Lender
may (i) accelerate the maturity of this Note and all amounts
payable hereunder and demand immediate payment thereof and (ii)
exercise all of Lender's rights and remedies under this Note or
any other document, instrument or agreement executed in
connection therewith or available at law.
b. In addition to the rights of Lender set forth above, for each
seven (7) day period that there exists an Event of Default, the
Borrower shall issue to Lender a warrant in the form attached
hereto as Exhibit A for 35,000 shares of the Borrower's common
stock (the "Common Stock"). The Borrower shall be obligated to
issue such warrant as of 5:00 p.m. New York City time on the
seventh day of each seven (7) day period an Event of Default
exists. The exercise price for any and all warrants issued
pursuant to this Section 5(b) shall be the lower of (i) $1.46,
and (ii) eighty percent (80%) of the Closing
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Bid Price (as defined below) on the date on which the Lender
becomes obligated to issue such warrant. For purposes of this
Section 5(b), "CLOSING BID PRICE" means (x) the Closing Bid Price
of the Common Stock, as reported on The Nasdaq Over-the-Counter
Bulletin Board (the "BULLETIN BOARD") by Bloomberg Financial
Markets ("BLOOMBERG") on such date, or (y) if the Bulletin Board
is not the principal trading market for the Common Stock, the
Closing Bid Price as reported by Bloomberg on the principal
trading market for the Common Stock on such date, or, if there is
no sale price for such period, the last reported bid price as
reported by Bloomberg, or (z) if market value cannot be
calculated as of such date on any of the foregoing bases, the
Closing Bid Price shall be the average fair market value as
reasonably determined by an investment banking firm selected by
the Borrower and reasonably acceptable to the Lender, with the
costs of the appraisal to be borne by the Borrower. The shares of
Common Stock in which the Lender shall receive upon exercise of
any and all warrants issued pursuant to this Section 5(b) are
referred to herein as the "SHARES."
6. NO FIVE PERCENT HOLDERS. Unless Zanett delivers a waiver in accordance
with the last sentence of this Paragraph 6, in no event shall Zanett
be entitled to receive Shares, to the extent that the sum of (a) the
number of shares of Common Stock beneficially owned by Zanett and its
affiliates, and (b) the number of Shares into which the warrants,
issuable pursuant to Section 5(b) hereof, are exercisable would result
in beneficial ownership by Zanett and its affiliates of more than
4.99% of the outstanding shares of Common Stock. For purposes of this
subparagraph, beneficial ownership shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended,
and Regulation 13D-G thereunder. Except as provided in the immediately
succeeding sentence, the restriction contained in this Paragraph 6
shall not be altered, amended, deleted or changed in any manner
whatsoever unless Zanett shall approve such alteration, amendment,
deletion or change. Notwithstanding the foregoing, Zanett may, by
providing written notice to the Company, (x) adjust the restriction
set forth in this Paragraph 6 so that the limitations on beneficial
ownership of 4.99% of the outstanding shares of Common Stock referred
to above shall not be applicable to Zanett, which adjustment shall not
take effect until the 61st day after the date of such notice and (y)
irrevocably waive the right to deliver a waiver in accordance with
clause (x) of this sentence; provided, however, that if such
adjustment would result in beneficial ownership greater than 9.99% of
the outstanding shares of Common Stock by Zanett and its affiliates
then such adjustment shall not take effect until the 75th day after
the date of such notice.
7. APPLICATION OF FUNDS. All sums realized by Lender on account of this
Note, from whatever source received, shall be applied first to any
fees, costs and expenses (including attorney's fees) incurred by
Lender, second to accrued and unpaid interest, and then to principal.
8. ATTORNEY'S FEES AND COSTS. In the event that Lender engages an
attorney to represent it in connection with (a) any alleged default by
Borrower under this Note,
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(b) any potential and/or actual bankruptcy or other insolvency
proceedings commenced by or against Borrower and/or (c) any potential
and/or actual litigation arising out of or related to any of the
foregoing, then Borrower shall be liable to and shall reimburse Lender
on demand for all attorneys' fees, costs and expenses incurred by
Lender in connection with any of the foregoing.
9. WAIVER OF RIGHT TO JURY TRIAL. BORROWER HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LENDER.
10. GOVERNING LAW. This Note shall be governed by the internal laws of the
State of New York without regard to conflicts of laws principles.
11. MISCELLANEOUS.
a. Borrower hereby waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand. To the extent permitted
by law, Borrower hereby waives and releases all errors, defects
and imperfections in any proceedings instituted by Lender under
the terms of this Note.
b. The rights and privileges of Lender under this Note shall inure
to the benefit of its successors and assigns. All
representations, warranties and agreements of Borrower made in
connection with this Note shall bind Borrower's successors and
assigns.
c. If any provision of this Note shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof, but this Note shall
be construed as if such invalid or unenforceable provision had
never been contained herein.
d. The waiver of any Event of Default or the failure of Lender to
exercise any right or remedy to which it may be entitled shall
not be deemed to be a waiver of any subsequent Event of Default
or of Lender's right to exercise that or any other right or
remedy to which Lender is entitled.
e. The rights and remedies of Lender under this Note shall be in
addition to any other rights and remedies available to Lender at
law or in equity, all of which may be exercised singly or
concurrently.
f. Lender shall have the right, without the prior consent of
Borrower, to assign to an affiliate of Lender all of Lender's
rights and obligations hereunder.
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IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note the
day and year first above written and has hereunto set hand and seal.
U.S. TRUCKING, INC.
By: _____________________________
Name:
Title:
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