U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
Commission File Number: 33-30123-A
GENERAL PARCEL SERVICE, INC.
(Name of small business issuer in its charter)
State of Florida
(State or other jurisdiction of incorporation or organization)
59-2576629
(I.R.S. Identification No.)
8923 Western Way, Suite 22, Jacksonville, FL 32256
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (904) 363-0089
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class registered Name of Exchange on which
Common Stock NASDAQ
Warrants (two warrants entitle
holder to purchase at a one share
of common stock at a price of $7.50
per share) NASDQ
Check whether issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities and 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
<PAGE>
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-KSB or
any amendment to this form 10-KSB. [ ]
Issuer's revenues for the year ended December 31, 1995:
$20,567,498
The aggregate market value of the voting stock held by the
non-affiliates of the registrant was $3,065,679 based on the
closing sale price reported on March 20, 1996.
There were 3,758,671 shares of the Company's common stock
outstanding as of March 20, 1996.
Documents Incorporated by Reference: Portions of the Proxy
Statement for the Registrant's 1995 Annual Meeting of
Shareholders are incorporated by reference into Part III.
An index to the exhibits to this report begins on page 17 hereof.
<PAGE>
PART I
Item 1. BUSINESS
Introduction
General Parcel Service, Inc. ("GPS" or "Company"), is in the
small package shipping and delivery business. The Company's
business purpose is to offer its customers and potential
customers a more flexible just-in-time shipping alternative to
its major competitor, United Parcel Service ("UPS"). GPS
currently provides pickup and delivery services throughout the
State of Florida, between Florida and Atlanta, Georgia, between
Atlanta and Charlotte and Greensboro, North Carolina and in the
metropolitan areas of Atlanta, Charlotte, Winston Salem, Raleigh
and Durham. The Company has concentrated on tailoring its
services to the commercial or business shipper. Management
believes that business to business shipping, as compared to
shipping to residential consumers, provides a greater likelihood
of multiple-package and repeat deliveries, which result in
higher revenues and lower costs per delivery.
In management's belief, sociological and marketing trends have
resulted in major changes in the general method of purchasing
goods. These changes have resulted in both retail consumers and
businesses purchasing substantially more goods by telephone and
through catalogs, with a consequential decrease in historic
retail storefront operations. Generally, businesses which sell
products by telephone or through catalogs deliver purchased
items to their customers by parcel delivery services, such as
UPS or the U.S. Post Office. In addition, most business
shippers require prompt delivery of their parcels. In keeping
with the Company's motto "We Deliver Next Day, Everyday," at the
present time over 98% of all packages are delivered by GPS to
any business address in Florida "next day."
Management believes that it has developed an operating formula
that has enabled the Company to experience substantial growth in
Florida and Georgia. The Company intends to continue to refine
its operating formula on an ongoing basis and to replicate the
operating formula, state-by-state, as the Company expands along
the "Eastern Corridor" of the United States, which is generally
defined as the geographic area surrounding Interstate Highways
85 and 95. Management believes that expansion will enable GPS to
use economies of scale, resulting in lower marginal costs, and
to attract additional customers because of the Company's
expanded service area.
The goal of GPS is to expand its business by attracting a
substantial portion of the business to business parcel delivery
market in the Eastern Corridor. Management believes the Eastern
Corridor represents a significant growth area in population and
a large portion of the business market purchasing goods by
telephone and through catalogs. During 1996, the Company plans
to concentrate on continuing to build volume in its Florida and
Atlanta markets where excess capacity exists and selectively
expand its operations in North Carolina or other Southeastern
areas where profitable volume can be obtained with minimum
capital outlays. Because of the Company's limited resources,
any expansion will be into areas where the Company will able to
produce positive contributions in a short period of time by
shipping a large volume of parcels from existing customers into
the area covered by the new terminal and avoid substantial
start-up costs.
Through December 31, 1995, the Company has experienced operating
losses of $13,487,409 and its working capital deficiency at
December 31, 1995, was $3,214,219. Management's estimates of
cash requirements to fund operating losses and debt service are
substantial. While revenues continue to increase and expense
containment measures have been instituted, management is
nonetheless pursuing several strategies for raising additional
resources through debt or equity transactions.
Page 1
Management has reassessed the operating practices at each
of its terminals and has instituted a number of changes directed
towards cost containment including elimination of unprofitable
delivery routes. Strict accountability over all costs are being
implemented at all locations through budgetary controls and
improved reporting of actual operating results to operations
managers.
The Board of Directors has engaged KPMG Baymark Capital LLC
("BayMark") to render certain financial advisory and investment
banking services to the Company. Under the terms of the
engagement, BayMark will familiarize itself to the extent it
deems appropriate and feasible with the business, operations,
properties, financial condition and prospects of the Company and
will advise and assist the Company in identifying and/or
evaluating various strategic or financial alternatives that may
be available to the Company to enhance shareholder value.
HISTORY AND DEVELOPMENT
On August 28, 1985, E. Hoke Smith, Jr., President of the
Company, incorporated General Parcel Service of Florida, Inc., a
Florida corporation, in order to engage in the parcel shipping
and delivery business within the State of Florida. The initial
terminal operation commenced September, 1985, from a 2,000
square foot terminal located in Jacksonville, Florida with a
single panel truck. In 1986, the Company's service area was
expanded to provide coverage of north Florida with the opening
of terminals in Gainesville and Tallahassee. Coverage expanded
to central Florida in 1987 through an acquisition which opened
up Orlando and Tampa. In 1988, the Company's service area was
expanded to include the entire state of Florida with the
addition of terminals in Miami, Ft. Myers and West Palm Beach.
The Company expanded north in March, 1990 to Atlanta. Florida
operations were expanded by the opening of terminals in Riveria
Beach in 1991, Ft. Lauderdale and Crestview in 1992, South Miami
and Rockledge in 1993 and Clearwater in 1994. In 1993, the
Company opened operations in Charlotte, North Carolina and
expanded those operations in 1995 through the acquisition of
Transit Express of Charlotte, Inc. as discussed below. In 1996,
the Company opened a terminal in Greensboro, North Carolina.
The Company has continued to expand its business by increasing
the number of trucks and employees to meet increasing demand.
The Company's corporate name was changed to General Parcel
Service, Inc. in February, 1988.
On November 2, 1989, the Company completed an initial public
offering of 600,000 shares of its common stock and 600,000
common stock purchase warrants. The Company realized $2,350,000
in net proceeds from the offering after deducting underwriting
discounts, commissions, and expenses. On December 2, 1989, the
underwriters exercised an over-allotment option, and the Company
issued an additional 90,000 shares of its common stock and
90,000 common stock purchase warrants. The Company realized
$391,500 in net proceeds from the exercise of the over-allotment
option, after deducting underwriting discounts, commissions, and
expenses. On December 30, 1993, the Company issued 100,000
shares of convertible preferred stock and realized $2,417,489 in
net proceeds. On March 5, 1996, the Company issued another
120,000 shares of convertible preferred stock and realized net
proceeds of $3,000,000.
On February 10, 1995, the Company acquired certain assets of
Transit Express of Charlotte, Inc. ("TE"). TE was based in
Charlotte, North Carolina, and provided scheduled carrier and
package delivery services. The Company acquired these certain
assets at a purrchase price of $1,408,670. To acquire the assets,
the Company paid $75,000 in cash to the seller, incurred expenses of
$76,674, and assumed liabilities of $1,256,996 by issuing debt
and assuming certain accounts and notes payable. The acquisition
Page 2
of the TE assets was accounted for as a purchase and, accordingly,
the purchase price was allocated to the acquired assets based
upon their respective fair values. The excess of the purchase
price over the fair value of the net assets acquired in the
amount of $1,090,126 will be amortized over 15 years on a
straight line basis.
TE's unaudited sales for the six month period ended December 31,
1994, were approximately $1,029,000. Management believes the
acquisition of TE gives the Company a better opportunity to
penetrate the North Carolina and South Carolina markets.
COMPETITION
The parcel delivery business is highly competitive. The
Company's principal competition is from UPS. Management
believes that competition in the parcel delivery industry is
based primarily on service and efficiency, and to a lesser
degree, on rates. Many smaller companies serve local
geographical areas and are therefore limited in the range of
customers that they serve. While many well-known carriers, such
as Federal Express, have entered the overnight-parcel service
business, non-priority small parcel delivery has been largely
ignored by most such companies, except UPS. Since the
deregulation of the trucking industry beginning in 1980,
however, entry into the field is relatively easy, and the
Company's concept may be copied by any number of companies
already in the trucking industry. Consequently, there can be no
assurance that the Company will not encounter competition in the
future from companies in addition to UPS which have greater
resources than the Company.
REGULATION
Federal law has eliminated most regulations formerly enforced by
the Interstate Commerce Commission. However, such matters as
weight and dimensions of equipment are subject to federal and
state regulations. Motor carrier operations also are subject to
safety requirements prescribed by the Department of Transportation
governing interstate operations and certain state regulatory
agencies.
ADVERTISING AND MARKETING
The Company markets its services through its own sales force,
direct mail and by telephone. Marketing efforts, including
limited advertising, are maintained on an ongoing basis to
emphasize the Company's ability to effectively service all
business shippers in Florida and Georgia and to a more limited
degree, North Carolina. The Company's marketing program
emphasizes GPS's flexibility, high professional delivery
standards and personalized service. As a Southeastern regional
company, GPS believes that it offers a better alternative to the
large volume business shipper when shipping within or into the
Georgia/Florida service area.
OPERATIONS
The Company's business operations are divided into three
divisions: administration, sales and operations. The operations
division is headed by the Executive Vice President and Chief
Operating Officer; the sales division is headed by a
Vice-President; and the administrative division is headed by a
Vice President and Chief Financial Officer. All division heads
report to the President and Chief Executive Officer. The Chief
Financial Officer is responsible for the general administrative,
finance, and internal and external reporting functions. The
Vice-President of Sales is responsible for marketing the
Company's package pickup and delivery services. He, in
conjunction with the President, develops and implements the
Page 3
Company's marketing objectives. The Chief Operating Officer is
responsible for package delivery operations, including route
control, personnel, equipment maintenance, and delivery service
personnel control.
The Company presently operates thirteen terminals located in the
Florida cities of Jacksonville, Miami, Ft. Lauderdale, Orlando,
Tampa, Clearwater, Gainesville, Riviera Beach, Ft. Myers,
Milton, Rockledge and Tallahassee, two terminals in the Georgia
cities of College Park (a suburb of Atlanta) and Tifton and two
terminals in the North Carolina cities of Charlotte and
Greensboro. The principal hub for sorting and redistribution of
packages for delivery throughout the system is located in
Orlando because of its central location.
The Company's operations are conducted through a "hub and spoke"
network with the terminals in Orlando and Atlanta serving as the
hubs. Each day packages picked up by the origination terminals
are transferred to the hub during the night and redistributed to
the destination terminals by the following morning for next day
delivery.
Typical daily operations consist of the following activities:
Morning Sort and Delivery Cycle:
The morning sort and delivery cycle generally occurs from
4 a.m. to 3 p.m., during which time packages are loaded
onto delivery trucks and delivered.
Pick-up cycle:
The pick-up cycle generally occurs from 2 p.m. to 6 p.m.,
during which time packages are picked up from shippers
and returned to the local origin terminal.
Pre-sort Transfer:
After packages arrive at the origin terminals (usually
by 6 p.m.), they are sorted for distribution (by zip code).
Packages which are to be delivered in the local area are
separated and loaded onto the appropriate delivery
trucks. Packages which are destined for intercity delivery
are loaded onto trailers and shuttled to the hubs in
Orlando and Atlanta for redistribution.
Hub Sort/Transfer:
Between 6 p.m. and 3 a.m. inbound packages are sorted at the
hub by zip code and loaded onto the appropriate outbound
trailers which transfer the packages to the destination
terminals in time for the morning sort and delivery cycle.
The Company currently utilizes 282 delivery vehicles and 23
straight trucks and tractors in its pickup and delivery
operation and 22 tractors and straight trucks and 126 trailers
in its intercity shuttle operation. The terminals dispatch an
average of approximately 14 pickup and delivery routes each day.
The average driver makes approximately 71 pickup and delivery
stops per route, and an average of 2.2 packages are delivered
per delivery stop.
Sorting operations are assisted by power belt conveyer systems
at the six largest terminals: Orlando, Tampa, Miami, Ft.
Lauderdale, Jacksonville and Atlanta. Gravity roller systems
are used in sorting operations at the other locations.
PACKAGE TRACKING
The Company has developed an advanced bar code tracking system.
The system traces the location of the package from pickup
through transfer to delivery allowing customer service
Page 4
representatives to provide real time response to customer
inquiries regarding the delivery status of its shipments. The
system comprises a hand held and overhead bar code scanners in
the terminals, electronic clipboards capable of digital capture
of consignees' signatures for the delivery driver and a central
computer for retention of the data. This system is expandable
far beyond its current level of use. The bar-coding computer
system coupled with radio equipped vans provides an efficient
means of tracking packages, expediting delivery and adjusting to
revised requirements as needed.
CUSTOMER SERVICE
The Company's operations are designed to provide individualized
service to customers while maximizing equipment utilization.
Each of the Company's terminals serves as the base for specified
vehicles and equipment. Each terminal is supervised by a
terminal manager who oversees the response to customer orders,
the dispatch of trucks, the coordination with headquarters, the
relationship between management and drivers based at the
terminal, and the maintenance of revenue-producing equipment.
Each terminal is inspected monthly on a random basis by the
Company's Chief Operating Officer in order to verify that each
terminal is operating at a high level of efficiency. The
average terminal utilizes approximately 15 delivery service
personnel, with the largest terminal having 35 delivery service
personnel. The relatively small number of delivery service
personnel at each terminal allows the Company's terminal
managers to maintain a close working relationship with the
personnel assigned to these terminals.
In order to compete successfully with UPS, the Company must
offer its customers not only a viable, but better alternative.
Management believes that GPS customers encounter simpler
paperwork, faster turnaround of C.O.D. funds, and rates
averaging approximately 10% lower than UPS. In addition to its
normal package service, the Company offers GPS Overnight service
which provides a time guarantee of delivery.
GPS has developed and implemented a parcel-processing computer
package for use by its customers' shipping departments. The
computer package is comprised of a personal computer and
specialized software developed by GPS. The software included in
the package provides the GPS customer with an efficient means of
recording each parcel shipped and its destination information.
The software then automatically produces a shipping manifest and
per-parcel shipping charges. Management believes that this
automated procedure substantially reduces the use of the
customer's employee time in completing such tasks.
DELIVERY SERVICE PERSONNEL
Because of their direct contact with customers, the Company
places great emphasis on hiring qualified "delivery service
personnel," which the Company believes is more descriptive of
their responsibilities than the term "drivers." At December 31,
1995, the Company employed 276 such personnel. The Company
hires delivery service personnel from each terminal area, which
the Company believes enhances its ability to attract qualified
personnel. Delivery service personnel are selected in
accordance with Company guidelines relating primarily to safety
record, driving experience, and a personal interview. In
addition, all delivery service personnel must pass a road test
and drug screening prior to being hired. Once selected, a
delivery service person is trained in all phases of Company
policies and operations as well as safety techniques and fuel
efficient operation of the Company's vehicles. Generally, such
training includes review of the GPS personnel manual and a
ninety day on-the-job training program with a GPS supervisor.
During the training period, each trainee is evaluated by his
supervisor and either recommended for full employment status or
termination.
Page 5
As a result of its emphasis on maintaining high morale among
delivery service personnel, the Company believes that its level
of retention of such employees is very good. However, the
Company anticipates that competition for qualified employees
will intensify in the future.
At December 31, 1995, the Company employed a total of 585
persons, of whom 276 were delivery service personnel, 171 were
sorting and maintenance personnel, 97 were management personnel
and 41 were administrative and sales personnel. No employees
are represented by a collective bargaining unit. The Company
considers relations with all of its employees to be good.
DELIVERY EQUIPMENT
The Company's fleet consists of 453 owned and leased vehicles
and trailers. Step-vans are used for local delivery, and larger
trucks and tractor-trailer combinations are used for longer
distance hauls between the major terminals. The Company's policy
is to purchase equipment to standardized specification.
Standardization of equipment enables the Company to control the
cost of spare parts inventory, facilitate its preventive
maintenance program and simplify orientation for delivery
service personnel. The Company adheres to a comprehensive
maintenance program, based on the amount of use of each unit,
designed to minimize equipment down-time. Furthermore, because
each delivery service person is assigned to specific equipment,
such personnel have an incentive to keep their trucks clean and
well maintained. The Company regularly monitors the fuel
efficiency of its equipment. The following table shows
information about the Company's delivery equipment as of
December 31, 1995.
<TABLE>
<CAPTION>
Number of
Delivery Number of Number of
Model Year Vehicles Tractors Trailers Total
<S> <C> <C> <C> <C>
1996 - - 20 20
1995 18 7 10 35
1994 18 - 39 57
1993 25 10 26 61
1992 10 7 1 18
1991 - - 1 1
1990 and earlier 224 8 29 261
--- --- --- ---
Total 295 32 126 453
=== === === ===
</TABLE>
The Company typically leases or finances vehicles with a 5% or
10% deposit. The Company's policy is to replace vehicles based
on factors such as age and condition, interest rates, fuel
efficiency and the market for used equipment.
Page 6
ITEM 3. PROPERTIES
The Company's executive offices are located at 8923 Western Way,
Suite 22, Jacksonville, Florida 32256, and contain approximately
7,000 square feet of office space. The Company leases and
operates terminals at the following locations:
Location Size
Charlotte, North Carolina 14,240 Sq. Ft.
Clearwater, Florida 16,500 Sq. Ft.
College Park, Georgia (1), (3) 42,560 Sq. Ft.
Ft. Lauderdale, Florida 13,000 Sq. Ft.
Ft. Myers, Florida 8,900 Sq. Ft.
Gainesville, Florida 6,000 Sq. Ft.
Greensboro, North Carolina 4,733 Sq. Ft.
Jacksonville, Florida (2) 33,471 Sq. Ft.
Medley, Florida 26,300 Sq. Ft.
Miami, Florida 15,600 Sq. Ft.
Milton, Florida 7,500 Sq. Ft.
Orlando, Florida (3) 25,000 Sq. Ft.
Riviera Beach, Florida 18,000 Sq. Ft.
Rockledge, Florida 7,500 Sq. Ft.
Tallahassee, Florida 12,300 Sq. Ft.
Tampa, Florida 20,600 Sq. Ft.
Tifton, Georgia 8,000 Sq. Ft.
(1) Suburb of Atlanta, Georgia
(2) Includes 7,000 square feet of office space.
(3) Distribution Hub.
ITEM 3. LEGAL PROCEEDINGS
On February 14, 1995, the Company filed a civil complaint in the
Federal Court of Northern Georgia against UPS. The civil
complaint alleges among other things, that UPS has attempted to
monopolize the market for ground-based business-to-business
parcel delivery service in Georgia and Florida, in violation of
federal and state antitrust laws and as a result of civil
violations, GPS has suffered the loss of several customers.
The Company has cited damages in the complaint in excess of $10
million from these actions. The case is in the final phase of
the discovery process. UPS has filed a motion for summary
judgment and the Judge has deferred a ruling on summary
judgment until the end of discovery. No trial date has yet been
set.
Page 7
Inforite Corporation has filed a suit against the Company,
seeking damages of $374,203 for alleged breach of a contract in
which Inforite agreed to sell the Company certain electronic
"clipboards" along with supporting accessories and computer
software. The Company has asserted that the Inforite products
are defective, and has revoked acceptance of the products
pursuant to California Commercial Code sections 2608 and 2609.
In the same action, Inforite has also alleged intentional
interference with contract and defamation, claiming an
unspecified amount of damages. The Company has denied all
material allegations and has counterclaimed for breach of
contract, breach of warranty and fraud, seeking recovery of
approximately $175,000 it paid for the products and for an
undetermined amount in incidental damages. Outside counsel for
the Company has advised that at this stage in the proceedings,
no opinion can be offered as to the probable outcome. A trial
date has been set for August 16, 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Page 8
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
The Company's Common Stock is traded on the NASDAQ System under
the trading symbol "GPSX". The Company's Warrants are also
traded on the NASDAQ System, under the trading symbol "GPSXW".
As of March 28, 1995, there were 192 shareholders of record of
the common stock and 17 warrant holders of record, not including
individuals and entities holding shares in street name. The
closing sale price for the Company's Common Stock on March 28,
1995, was $2 7/8, and the closing sale price of the Company's
Warrants was $ 5/16.
The quarterly high and low closing bid prices of the Company's
Common Stock are as shown below:
<TABLE>
<CAPTION> Market Price of Common Stock - GPSX
1995 1994
--------- ----------
Quarter High Low High Low
<S> <C> <C> <C> <C>
First 6 4 1/2 4 7/8 3 3/8
Second 5 3/8 3 3/8 6 4 1/2
Third 3 7/8 3 6 1/8 5 5/8
Fourth 3 7/8 3 5/8 6 5/8 4 5/8
</TABLE>
The quarterly high and low closing bid prices of the
Company's Warrants are shown below:
<TABLE>
<CAPTION>
Market Price of Warrants - GPSXW
1995 1994
---------- ----------
Quarter High Low High Low
<S> <C> <C> <C> <C>
First 9/16 1/2 5/8 1/2
Second 9/16 1/2 5/8 5/8
Third 9/16 3/8 11/16 5/8
Fourth 5/16 5/16 13/16 1/2
</TABLE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements including the footnotes and is
qualified in its entirety by the forgoing and other more
detailed financial information appearing elsewhere herein.
Historical results of operations and the percentage
relationships among any amounts included in the Consolidated
Statements of Earnings, and any trends which may appear to be
inferable therefrom, should not be taken as being necessarily
indicative of trends in operations or results of operations for
any future periods.
LIQUIDITY AND CAPITAL RESOURCES
Except for the year ending December 31, 1993, the Company has
experienced negative operating cash flows since its inception.
Expansion of operations and operating losses since inception
Page 9
have been funded from six major sources: 1) private placements
of restricted shares of common and preferred stock to its
principal shareholders, 2) proceeds from its initial public
offering of common stock in November, 1989, 3) installment loans
and leases from third party lenders collateralized by equipment
acquired to support business growth, 4) a bank line of credit
collateralized by accounts receivable and stock owned by a major
shareholder and his affiliates, 5) short term borrowings from
banks and shareholders, 6) debt issued and liabilities assumed
in connection with the acquisition of the assets of TE.
As of December 31, 1995, the Company had raised net equity
capital of $8,145,052 from private placements of restricted
common shares, $2,417,489 from private placements of preferred
stock, $2,715,700 from its initial public offering of November
2, 1989 and $150,000 from the sale of unrestricted common
shares. When combined with cumulative operating losses since
inception of $13,487,409 and $175,000 of dividends paid on
preferred stock, the Company's net stockholders' deficit as of
December 31, 1995 was $234,168. There were no issuances of the
Company's restricted common stock or preferred stock in 1995.
As of December 31, 1995, the Company was contractually obligated
to repay $8,494,761 of indebtedness to equipment lessors, banks
and other secured lenders and $300,000 to holders of its
convertible debentures. In addition, the Company owed
$1,953,468 to suppliers of goods and services necessary for the
conduct of ongoing business including amounts represented by
issued and outstanding checks, and had accrued salaries and
other expenses of $738,404, which were unpaid at the end of the
year.
As discussed above, the Company has experienced negative
operating cash flows. Cash used in operations in 1995 was
$724,084 as compared to cash used in operations in 1994 of
$223,518. The net cash used in operations resulted primarily
from the net loss and an increase in accounts receivable. These
were partially offset by the non-cash expense of depreciation
and amortization, a decrease in current assets, and increases in
accounts payable and accrued expenses. The Company increased
cash and cash equivalents by $1,164 in 1995 which resulted from
increases in cash provided by financing activities. The Company
increased its borrowings under its bank lines of credit by
$3,099,000 during 1995. Because of the Company's continuing
requirement for cash to fund operating losses, it has increased
its line of credit from $2,000,000 available during 1994 to an
aggregate bank credit facility of $5,700,000 at December 31,
1995. On March 3,1996, the Company issued 120,000 shares of
cumulative convertible preferred stock to an affiliate of the
Company's Chairman for $3,000,000 which was used to repay the
$3,000,000 bank term loan. Shortly after the sale of the
preferred stock, the Company increased its revolving line of
credit to $3,250,000.
On August 12, 1994, the Company entered into a $2,000,000
revolving credit loan agreement ("Line of Credit") with a bank.
The aggregate principal amount due under the agreement was
increased during 1995 and the form of the debt was modified to
include a $3,000,000, five year term loan and a $2,700,000
revolving credit loan at December 31, 1995. The term loan and
the revolving credit agreement provide for interest payable
monthly for advances of $1,000,000 or greater at the lower
interest of the thirty day LIBOR rate plus .75% or the Bank's
prime interest rate less .75% and for all other advances at the
Bank's prime interest rate less .75%. The loan is
collateralized by the Company's accounts receivable and certain
stock certificates pledged by the Company's Chairman. As of
December 31, 1995, the Company had borrowed $3,000,000 under the
term loan and $1,599,000 against the line of credit and had
$1,101,000 of credit available. As noted above, the Company has
repaid the term loan and increased its line of credit to
$3,250,000 in the first quarter of 1996. As of March 21, 1996,
the Company has borrowed $2,886,000 against the line of credit.
Page 10
Management's estimates of cash requirements to fund operating
losses and debt service are substantial. All of these factors
raise the question as to whether the Company will continue to
operate as a going concern. While revenues continue to increase
and expense containment measures have been instituted,
management is nonetheless pursuing several strategies for
raising additional resources through debt or equity transactions.
Management believes, but can offer no assurances, that it can
improve operating performance and cash flows through the
following measures:
*A large portion of the Company's expenses since inception have
been related to efforts to develop its marketing, distribution
and service network. The Company has developed extensive
distribution networks in Florida and in Atlanta, Georgia and is
endeavoring to expand its North Carolina service area.
Management believes that it has acquired sufficient delivery
vehicles to service its market area, although the Company
continues to replace or upgrade equipment as deemed necessary.
Management believes that additional market penetration will
improve the productivity of its delivery fleet and result in
profitable operations.
*During 1996, the Company plans to concentrate on continuing to
build volume in its Florida and Atlanta markets where excess
capacity exists and selectively expand its operations in North
Carolina or other Southeastern areas where profitable volume can
be obtained with minimum capital outlays. Because of the
Company's limited resources, any expansion will be into areas
where the Company will be able to produce positive cash flows
in a short period of time by shipping a large volume of parcels
from existing customers into the area covered by the new
terminal and avoid substantial start-up losses.
*Management has reassessed the operating practices at each of
its terminals and has instituted a number of changes directed
towards cost containment including elimination of unprofitable
delivery routes. Strict accountability over all costs are being
implemented at all locations through budgetary controls and
improved reporting of actual operating results to operations
managers.
*The Board of Directors has engaged KPMG Baymark Capital LLC
("BayMark") to render certain financial advisory and investment
banking services to the Company. Under the terms of the
engagement, BayMark will familiarize itself to the extent it
deems appropriate and feasible with the business, operations,
properties, financial condition and prospects of the Company and
will advise and assist the Company in identifying and/or
evaluating various strategic or financial alternatives that may
be available to the Company to enhance shareholder value. Among
the alternatives which may be available to the Company are an
acquisition of all or a significant portion of the assets or
equity securities of another corporation or business entity; a
sale of the Company or significant portion of it equity
securities, assets or businesses to one or more third parties; a
recapitalization or restructuring of the Company; repurchases
by the Company of its common stock or other securities; a
public or private sale of additional equity or debt securities
of the Company; or such other form of transaction that BayMark
believes may be of possible interest to the Company.
*Should the Company not obtain additional funding through the
efforts of BayMark and not be able to provide cash for its
operations to fund operations losses or debt service, it will
Page 11
rely on the commitment of one of its major shareholders to
fund losses of the Company through December 31, 1996.
FINANCIAL CONDITION
As of December 31, 1995, the Company's working capital deficit
(current liabilities less current assets) was $3,214,219, which
was an increase of $1,167,630 from the $2,046,589 working
capital deficit at December 31, 1994. Total current assets of
$2,455,804 included cash of $6,739, accounts receivable of
$2,068,975, prepaid insurance premiums and deposits of $99,897,
inventories of tires, parts, uniforms and supplies of $136,856
and other prepaid expenses of $143,337. Current liabilities of
$5,670,023 included current obligations under leases and other
lending agreements of $2,978,151, amounts owed to trade
creditors of $1,953,468, including amounts represented by issued
and outstanding checks, and other accrued expenses of $738,404.
Total assets as of December 31, 1995, increased by $1,256,145
(or 12.6%) during the year ended December 31, 1995 to
$11,252,465, primarily from goodwill purchased in the TE
acquisition, an increase in accounts receivable and an increase
in equipment at net book value.
Accounts receivable increased by $524,230 (or 33.9%) during the
year ended December 31, 1995 to $2,068,975 because of a 14%
increase in revenue for the month of December 1995, compared to
the month of December 1994 and to a longer collection period.
The number of weeks sales in outstanding receivables was 5.2 at
December 31, 1995, compared to 4.1 at December 31, 1994. Other
current assets of $380,090 decreased by $315,493 (or 45.4%)
primarily because of a decrease in prepaid expenses.
The net book value of equipment increased by $25,052 (or .3%) to
$7,593,626 during the year as a result of additions of
$1,883,373 exceeding depreciation of $1,773,618 and disposals of
$84,703. The additions included $460,733 for twelve new
delivery vans, $288,672 for twenty new trailers, $367,965 for
other rolling stock equipment, $208,341 for equipment acquired
in the TE acquisition, $399,333 for conveyor equipment,
electronic clipboards, and other terminal equipment and $158,329
for computers and other office equipment. Other assets
increased by $5,408 (or 3%) to $187,251 because of advance
rental payments and security deposits related to new facilities
lease agreements.
Total liabilities of $11,486,633 increased by $4,436,126 (or
62.9%) during the year ending December 31, 1995. This resulted
primarily from an increase in total bank and other debt of
$3,483,105 (or 122.4%) to $6,328,650, an increase in accounts
payable by $930,168 (or 90.9%) to $1,953,468 and an increase
in accrued expenses by $421,065 (or 132.7%) to $738,404. The
increases in total bank and other debt, accounts payable and
accrued expenses were offset by the decrease in capital lease
obligations.
Capital lease obligations of $2,466,111 decreased by $398,212
(or 13.9%) during the year as a result of $1,094,191 of
scheduled principal payments in excess of $695,979 of new
additions. The additions to capitalized leases were for twelve
new delivery vans, twenty new trailers, certain assets acquired
in the TE acquisition and computer equipment. Long term debt of
$4,429,650 increased $3,384,105 (or 3.2%) as a result of
$4,056,510 of new borrowings in excess of $672,405 of scheduled
principal payments. The additions were incurred to fund
operating losses, to purchase the TE assets, and to purchase
communications equipment. Short-term borrowings increased by
$99,000 to $1,599,000 (or 6.6%) as a result of an increase in
the Company's utilization of its line of credit to fund
operations.
Page 12
The Company's stockholders' equity decreased during 1995 by
$3,179,981 to a stockholders' deficit of $234,168 at December
31, 1995, as a result of a net loss for the period and the
payment of a dividend on the Company's preferred stock.
RESULTS OF OPERATIONS - 1995 VERSUS 1994
Revenue for 1995 was $20,567,498 and represented an increase of
$743,510 (or 3.8%) over 1994 revenue. Beginning in 1994, the
Company acquired additional rolling stock and incurred
additional operating expenses to service certain major
customers. During the third quarter of 1994, several of those
major customers were lost to UPS. The increase in revenues from
existing customers plus customers acquired as a result of the
acquisition of TE during 1995 did not offset the operating
expenses and costs which could not be reduced in the Florida
delivery area when the major customers were lost to UPS.
Moreover, a loss of freight volume from existing customers
during 1995 contributed to the increased loss of 1995 over
1994. Finally, the Company incurred additional expenses related
to its increased revenue due to expansion required in the areas
outside Florida which were required to properly service new
customers. In response to the loss of these major customers,
the Company filed a civil complaint in federal district court
against UPS, alleging, among other things, that UPS has
attempted to monopolize the market for ground-based
business-to-business parcel delivery service in Georgia and
Florida in violation of federal and state anti-trust laws.
In early 1995, the Company redirected part of its sales and
marketing efforts to new market segments such as the courier
market through the TE acquisition and the pool distribution
market. As a result of these efforts, the Company replaced the
revenue from customers lost to UPS. However, the margins on the
replacement business are not as large as the margins on the
revenue lost to UPS. Moreover, as referenced above, the Company
was required to incur additional operating expenses due to the
fact that many of its new customers were located in market areas
outside of its main operations area, Florida.
During 1996, the Company plans to concentrate on continuing to
build volume in its Florida and Atlanta markets and selectively
expand its operations in North Carolina or other Southeastern
areas where profitable volume can be obtained with minimum
capital outlays. Because of the Company's limited resources,
any expansion will be into areas such as Greensboro, North
Carolina, where a terminal was opened at the beginning of 1996.
By opening terminals in areas such as Greensboro, the Company
expects to be able to minimize start-up losses by shipping a
large volume of parcels from existing customers into the area
covered by the new terminal.
Total operating expenses (excluding interest expense) of
$22,827,848 for 1995 increased by $2,779,522 (or 13.9%)
compared to the 1994 total. The operating ratio (total operating
expenses excluding interest expense as a percentage of revenue),
was 111% in 1995 compared to 101.1% in 1994.
Operating salaries and benefits of $11,199,966 increased by
$1,335,850 (or 13.5%) in 1995, and were 54.5% of revenue
compared to 49.8% in 1994. The increase in operating salaries
and benefits occurred primarily in the Charlotte terminal
because of the TE acquisition and in Atlanta where significant
new business was generated. However, the Company was unable to
reduce salaries and benefits at its Florida terminals and
continue to service existing package volume at those terminals.
Fuel costs of $1,231,251 in 1995, increased $33,544 (or 2.8%)
from the 1994 level and were 6% of revenue in both 1994 and
1995. Tires and maintenance expense of $789,173 increased by
$52,338 (or 7.1%) from the 1994 level and represented 3.8% of
revenue compared to 3.7% in 1994. Insurance costs decreased by
$289,304 (or 14.1%) to $1,759,549 (or 8.6%) of revenue in 1995
as compared to 10.3% of 1994 revenue. The decrease in insurance
Page 13
costs resulted from continued success of the safety control
program.
The fixed components of operating cost (depreciation and
amortization, facilities and terminal expense) increased in 1995
because of an increase in the number of vehicles in service for
the full year, the utilization of electronic clipboards and
amortization of intangible assets acquired in the TE
acquisition. Depreciation and amortization attributable to
operations of $1,780,026 increased by $441,555 (or 33%) and was
8.7% of revenue in 1995 compared to 6.7% in 1994. Facilities
expense (rent plus utilities) of $1,275,258 increased by $68,493
(or 5.7%) and was 6.2% of 1995 revenue versus 6.1% in 1994.
Terminal expense increased by $196,522 (or 116.9%) to $364,563
which was 1.8% of revenue in 1995 versus 0.8% in 1994.
Purchased transportation, which includes amounts paid to
trucking companies to bring packages from customers'
distribution points outside the Company's geographical operating
area to the Company's terminals for delivery, increased to
$291,836 in 1995, from $119,652 for 1994. The $172,183 (or
143.9%) increase was a result of packages brought into the
Company's distribution area from outside the operating area for
the entire year of 1995, but only for a portion of 1994.
Selling and administrative expense of $3,932,147 was 28.8%
higher than the 1994 level and increased as a percentage of
revenue from 15.4% in 1994 to 19.1% in 1995. The increase
relates primarily to additional personnel costs, legal expenses
associated with the UPS and Inforite litigation and additional
taxes and licenses. Interest expense of $744,631 increased by
$172,107 (or 30.1%) compared to 1994 as the Company incurred new
debt to fund operating losses and acquire the TE assets.
RESULTS OF OPERATIONS - 1994 VERSUS 1993
Revenue for 1994 was $19,823,988 and represented an increase of
$3,641,530 (or 22.5%) over 1993 revenue. The increased customer
base and resulting revenue can be attributed to a reorganization
of the Company's sales force coupled with intense sales
training. These results were negatively impacted by the loss of
several major accounts to UPS in the third quarter of 1994.
The Company's productivity improved in 1994. The number of
packages delivered per day increased 20%. The number of routes
driven per day increased 14% while the revenue per delivery
route increased by 6.9%. The number of stops per route
increased 6.3%. Additionally, the distance between stops was
reduced 10.5%. These improvements in productivity were achieved
through careful route planning and review and resulted in
reductions in fuel, tires and maintenance as percentages of
revenue from 1993 to 1994.
Total operating expenses (excluding interest expense) of
$20,048,326 for 1994 increased by $3,662,409 (or 22.3%) compared
to the 1993 total. The operating ratio (total operating expenses
excluding interest as a percentage of revenue) was 101.1% in
1994 compared to 101.2% in 1993.
Operating salaries and benefits of $9,864,116 increased by
$1,845,065 (or 23%) in 1994, but were consistent at 49.7% of
revenue compared to 49.6% in 1993. Fuel costs were $1,197,707
or 6% of revenue in 1994, and although they increased $176,012
from the 1993 level, they were lower as a percentage of revenue
than the 6.3 % of revenue in 1993. Tires and maintenance
expense of $736,835 increased by 14.9% from the 1993 level and
represented 3.7% of revenue compared to 4.0% in 1993 as improved
Page 14
cost controls and preventative maintenance procedures were
enacted. Insurance costs increased by 28.2% to $2,048,853 or
10.3% of revenue in 1994 as compared to 9.9% of 1993 revenue.
The fixed components of operating cost (depreciation and
amortization, facilities and terminal expense) were increased in
1994 because of an increase in the number of vehicles in service
for the full year and an increase in the number of terminals.
Depreciation and amortization at $1,338,471 was increased by
$223,665 (or 20.1%) and was 6.7% of revenue in 1994 compared to
6.9% in 1993. Facilities expense (rent plus utilities) of
$1,206,765 was increased by $302,293 (or 33.4%) and was 6.1% of
1994 revenue versus 5.6% in 1993. Terminal expense increased by
$10,716 (or 6.8%) to $168,041.
Selling and administrative expense of $3,052,027 was 16.1%
higher than the 1993 level but was reduced as a percentage of
revenue from 16.2% in 1993 to 15.4% in 1994. Interest expense of
$572,524 decreased by $18,270 (or 3.1%) compared to 1993 as
obligations under capital leases were reduced and a new line of
credit at a reduced interest rate was obtained.
INFLATION
Inflation and changing prices have not had a material effect on
the Company's operations, except to the extent of fluctuating
fuel costs.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements are submitted in Item 13 (a) of this Form
10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On October 17, 1995, Coopers & Lybrand L.L.P. resigned as
auditors for the Registrant. The auditor's reports for the last
two fiscal years did not contain adverse opinions or disclaimers
of opinion, nor were they modified as to uncertainty, audit
scope, or accounting principles. There were no disagreements
with Coopers and Lybrand L.L.P. on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure.
In January, 1996 the Company engaged Grenadier, Appleby,
Collins & Company to audit the Company's financial statements
for the year ended December 31, 1995.
Page 15
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding directors contained under the caption
"Election of Directors - Nominees" in the Company's Proxy
Statement for the 1996 Annual Meeting of Shareholders is
incorporated herein by reference.
The information regarding executive officers contained under the
caption "Election of Officers - Executive Officers" in the
Company's Proxy Statement for the 1996 Annual Meeting of
Shareholders is incorporated herein by reference.
ITEM 10. EXECUTIVE COMPENSATION
The information contained under the caption "Election of
Directors - Executive Compensation" in the Company's Proxy
Statement for the 1996 Annual Meeting of Shareholders is
incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information contained under the caption "Voting Securities
and Principal Holders Thereof - Security Ownership of Certain
Beneficial Owners" in the Company's Proxy Statement for the 1996
Annual Meeting of Shareholders is incorporated herein by
reference.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the caption "Election of
Directors - Certain Transactions" in the Company's Proxy
Statement for the 1996 Annual Meeting of Shareholders is
incorporated herein by reference.
Page 16
<PAGE>
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
Pages
(a) Financial Statements
(1) Report of Independent Certified
Public Accountants 26-27
(2) Financial Statements 28-31
(3) Notes to Financial Statements 32-42
(b) Exhibits required by Item 601, Regulation S-B
The following documents heretofore filed by the Company
with the commission are hereby incorporated by reference
herein.
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession None
(3) Articles of Incorporation and By-Laws
(a) Articles of Incorporation, as amended,
filed as Exhibit 3.1 to General Parcel Service, Inc.,
Form S-18, registration No. 33-30123A.
(b) By-Laws, as amended and restated,
filed as Exhibit 3.2 to General Parcel Service, Inc.,
Form S-18, registration No. 33-30123A.
(c) Certificate of Amendment to the Articles
of Incorporation of General Parcel Service, Inc.,
dated May 14, 1992, filed as Exhibit F to General
Parcel Service, Inc., 1992 Form 10-KSB, registration
No. 33-30123A.
(d) Certificate of Amendment to the Articles
of Incorporation of General Parcel Service, Inc.,
dated December 29, 1993, filed as Exhibit C to
General Parcel Service, Inc., 1993 Form 10-KSB,
registration No. 33-30123A.
(4) Instruments defining the Rights of Security
holders (a) Specimen Stock Certificate filed as
Exhibit 4.1 to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(b) Warrant, void after December 31, 1993,
granting stock purchase warrants to J. Ray Gatlin,
filed as Exhibit 4.2 to General Parcel Service, Inc.,
Form S-18, registration No. 33-30123A.
Page 17
(c) Warrant, void after December 31, 1993,
granting stock purchase rights to T. Wayne Davis,
filed as Exhibit 4.3 to General Parcel Service, Inc.,
Form S-18, registration No. 33-30123A.
(d) Warrant, void after May 31, 1994, granting
stock purchase rights to T. Wayne Davis, filed as
Exhibit 4.4 to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(e) Warrant, void after May 31, 1994, granting
stock purchase rights to Drue B. Linton, filed as
Exhibit 4.5 to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(f) Warrant, void after May 31, 1994, granting
stock purchase rights to Steven C. Koegler, filed as Exhibit
4.7 to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(g) Warrant, void after May 31, 1994, granting
stock purchase rights to J. Ray Gatlin, filed as Exhibit
4.8 to General Parcel Service, Inc., Form S-18, registration
No. 33-30123A.
(h) Form of Warrant issued, filed as Exhibit 4.9
to General Parcel Service, Inc., Form S-18, registration
No. 33-30123A.
(i) Form of Warrant Agreement between the Company
and American Transtech, Inc., as Warrant Agent filed as
Ehibit 4.10 to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(j) Preferred Stock Purchase Agreement and specimen
stock certificate between the Company and T. Wayne Davis
filed a Exhibit Z to General Parcel Service, Inc. 1993
Form 8-K, registration No. 33-30123A.
(9) Voting Trust Agreements None
(10) Material Contracts
(a) Employment Agreement between the Company and
E. Hoke Smith, Jr., dated April 20, 1989, filed as Exhibit
10.1 to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(b) Incentive Stock Option Plan filed as Exhibit
10.2 to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(c) Secretary Certificates certifying that GPS
granted options to purchase 61,000, 60,000 and 2,500 shares
of Common Stock to E. Hoke Smith, Jr. on June 6, 1989,
April 20, 1989 and May 10, 1988, respectively, filed
as Exhibit 10.3 to General Parcel Service, Inc., Form
S-18, registration No. 33-30123A.
(d) Purchase and Sale Agreement, Security Agreement,
and Bill of Sale and Assignment, each dated January 15,
1987, between GPS and Bestway Parcel Service, Inc., a
Florida corporation, filed as Exhibit 10.4 to General
Parcel Service, Inc., Form S-18, registration No.
33-30123A.
Page 18
(e) Lease Agreement governing GPS's lease of its
terminal in Jacksonville, Florida dated November 12, 1986,
between GPS and Lakepoint Joint Venture, filed as
Exhibit 10.9 to General Parcel Service, Inc., Form
S-18, registration No. 33-30123A.
(f) Lease Agreement governing GPS's lease of its
executive offices in Jacksonville, Florida dated
December 8, 1988, between GPS and Lakepoint Joint
Venture, filed as Exhibit 10.10 to General Parcel
Service, Inc., Form S-18, registration No. 33-30123A.
(g) Lease Agreement governing GPS's terminal in Ft.
Myers, Florida, dated March 26, 1990, between GPS and
Palmetto Grove, Inc., filed as Exhibit A to General
Parcel Service, Inc., 1990 Form 10-K, registration
No. 33-30123A.
(h) Lease Agreement governing GPS's terminal in
Gainesville, Florida, dated June 25, 1990, between
GPS and W. Marvin Gresham, filed as Exhibit B to
General Parcel Service, Inc., 1990 Form 10-K,
registration No. 33-30123A.
(i) Lease Agreement governing GPS's Miami terminal
in Medley, Florida, dated March 28, 1990, between GPS
and North River Associates, filed as Exhibit C to
General Parcel Service, Inc., 1990 Form 10-K,
registration No. 33-30123A.
(j) Lease Agreement governing GPS's terminal in
Orlando, Florida, dated December 2, 1987, between GPS and
Hooker-Moore-Ward Properties, filed as Exhibit 10.14
to General Parcel Service, Inc., Form S-18,
registration No. 33-30123A.
(k) Lease Agreement governing GPS's terminal in
Riviera Beach, Florida, dated July 9, 1990, between GPS and
Gary, Sands, McClosky-Bills, Partnership, filed as
Exhibit D to General Parcel Service, Inc., 1990 Form
10- K, registration No. 33-30123A.
(l) Lease Agreement governing GPS's terminal in
Tampa, Florida, dated March 6, 1987, between GPS and Kraus
Portfolio, Ltd., filed as Exhibit 10.16 to General
Parcel Service, Inc., Form S-18, registration No. 33- 30123A.
(m) Lease Agreement governing GPS's Atlanta terminal
Norcross, Georgia, dated February 8, 1990, between
GPS and VRS Realty Services, Inc., filed as Exhibit E
to General Parcel Service, Inc. 1990 Form 10-K,
registration No. 33-30123A.
(n) Lease Agreement governing GPS's terminal in
Tallahassee, Florida, dated December 19, 1991, between
GPS and Barnett Bank of Tallahassee, filed as Exhibit A
to General Parcel Service, Inc., 1991 Form 10-K,
registration No.33-30123A.
(o) Lease Agreement governing GPS's terminal in
Rockledge, Florida, dated October 21, 1991, between GPS
and Robert Carl Cook and Sara E. Cook, filed as Exhibit B
to General Parcel Service, Inc. 1991 Form 10-K,
registration No. 33-30123A.
Page 19
(p) Lease Agreement governing GPS's terminal in
Crestview, Florida, dated November 21, 1991, between GPS
and D. Corinne Liddell, filed as Exhibit C to General Parcel
Service, Inc., 1991 Form 10-K, registration No. 33-30123A.
(q) Lease Agreement governing GPS's terminal in Ft.
Lauderdale, Florida, dated December 18, 1991, between GPS
and C. E. Pickering Investments, Inc., filed as Exhibit D
to General Parcel Service, Inc., 1991 Form 10-K,
registration No. 33-30123A.
(r) Lease Agreement governing GPS's vacant terminal
in Garden City, Georgia, dated November 25, 1991, between
GPS and Robert H. Keen, filed as Exhibit E to General
Parcel Service, Inc., 1991 Form 10-K, registration
No. 33-30123A.
(s) Letter of Intent for private placement of
securities, dated March 26, 1992, between GPS and
Libra Investments, Inc., filed as Exhibit A to General
Parcel Service, Inc., 1991 Form 10-K, registration
No. 33-30123A.
(t) Lease Agreement governing GPS's terminal in
Charlotte, North Carolina, dated November 16, 1992,
between GPS and Golden Eagle Properties, Inc., filed
as Exhibit A to General Parcel Service, Inc. 1992
10-KSB, registration No. 33-30123A.
(u) Lease Agreement governing GPS's terminal in
Orlando, Florida, dated December 20, 1992, between GPS
and Michel Kurban filed as Exhibit B to General Parcel
Service, Inc. 1992 10-KSB, registration No. 33-30123A.
(v) Lease Agreement governing GPS's terminal in
Clearwater, Florida, dated January 20, 1993, between
GPS and Robert P. Gorby filed as Exhibit C to General
Parcel Service, Inc. 1992 10-KSB, registration
No. 33-30123A.
(w) Lease Agreement governing GPS's terminal in
Fort Myers, Florida, dated February 25, 1993, between
GPS and C.S.L. & G. Development, Ltd. filed as Exhibit
D to General Parcel Service, Inc., 1992 10-KSB,
registration No. 33-30123A.
(x) Lease Agreement governing GPS's terminal in
Medley, Florida, dated March 16, 1993, between GPS and
Gran Central Corporation filed as Exhibit E to General
Parcel Service, Inc. 1992 10-KSB, registration
No. 33-30123A.
(y) Employment Agreement between the Company and
Gayle Smith, dated April 5, 1993, filed a Exhibit A to
General Parcel Service, Inc., 1993 10-KSB, registration
No. 33-30123A.
(z) Lease Agreement governing GPS's terminal in
Macon, Georgia, dated May 10, 1993, between GPS and
Ronald K. Howell filed as Exhibit B to General Parcel
Service, Inc. 1993 10-KSB, registration No. 33-30123A.
(aa) Lease Agreement governing GPS's terminal in
Miami, Florida, dated June 1, 1993, between GPS and
Arango Development Corporation filed as Exhibit D to
General Parcel Service, Inc. 1993 10-KSB, registration
No. 33-30123A.
Page 20
(ab) Lease Agreement governing GPS's terminal in
College Park, Georgia, dated August 26, 1993, between
GPS and General Cinema Beverages of Georgia, Inc., filed
as Exhibit E to General Parcel Service, Inc. 1993
10-KSB, registration No. 33-30123A.
(ac) Lease Agreement governing GPS's terminal in
Tifton, Georgia, dated October 7, 1993, between GPS and
National Foods, Inc., filed as Exhibit G to General
Parcel Service, Inc. 1993 10-KSB, registration
No. 33-30123A.
(ad) Lease Agreement governing GPS's terminal in
Doraville, Georgia, dated October 12, 1993, between
GPS and CB Institutional Fund III., filed as Exhibit H
to General Parcel Service, Inc. 1993 10-KSB, registration
No. 33-30123A.
(ae) Lease agreement governing GPS's terminal in
Charlotte, North Carolina, dated June 27, 1994, between
GPS and Lincoln National Life Insurance Company. 1994
10-KSB, registration No. 33-30123A
(af) Lease agreement governing GPS's terminal in
Milton, Florida, dated June 30, 1994, between GPS and
Scott Steel, Inc. 1994 10-KSB, registration No. 33-30123A
(ag) Promissory note and security agreement dated
August 12, 1994, governing the line of credit agreement
between GPS and First Union National Bank of Florida.
1994 10-KSB, registration No. 33-30123A
(ah) Promissory note and security agreement dated
June 15, 1995, governing the line of credit agreement
between GPS and First Union National Bank of Florida.
(See Exhibit 10.1)
(ai) Promissory note and security agreement dated
December 29, 1995, governing the line of credit agreement
between GPS and First Union National Bank of Florida.
(See Exhibit 10.2)
(aj) Lease agreement governing GPS's terminal in
Greensboro, North Carolina, dated December 31,1995,
between GPS and Koury Corporation.
(See Exhibit 10.3)
(ak) Lease agreement governing GPS Acquisition Corp.'s
leasehold in Charlotte, North Carolina, dated February 10,
1995, between GPS and TE.
(See Exhibit 10.4)
(al) Purchase Agreement governing purchase by GPS
Acquisition Corp. of certain assets of TE, dated
February 6, 1995.
(See Exhibit 10.5)
Page 21
(am) Security Agreement securing indebtedness of GPS
Acquisition Corp. to Stephen L. Lit and Gerianne P. Lit,
dated February 6, 1995.
(See Exhibit 10.6)
(11) Statement re: Computation of Per Share Earnings.
See Page 35, Note 1
(13) Annual Report to security holders, Form 10-Q or
quarterly report to security holders. None
(16) Letter re: Change in Certifying Accountant
(a) The Company filed an Amended Form 8-K dated
October 17, 1995 which included a letter from Coopers
& Lybrand L. L. P. that they had read the statements
made by the Company in the Form 8-K dated October 17,
1995 and that they agreed with the statements concerning
Coopers & Lybrand L. L. P. in such Form 8-K.
(18) Letter re: Change in Accounting Principles None
(21) Subsidiaries of the Registrant None
(22) Published Report Re: Matters Submitted
to Vote of Security Holders None
(23) Consent of Experts and Counsel None
(24) Power of Attorney None
(27) Financial Data Schedules
See Exhibit 27.1
(28) Information furnished to state insurance
regulatory authorities None
(99) Additional Exhibits None
(c) Reports filed on Form 8-K
(1) The Company filed a Form 8-K dated February
10, 1995 announcing the acquisition of certain
assets of TE and the filing of a civil complaint
against UPS in the Federal District Court of
Northern Georgia.
(2) The Company filed a Form 8-K dated October
17, 1995 announcing that Coopers & Lybrand L.L.P.
resigned as auditors for the Registrant.
(3) The Company filed an Amended Form 8-K dated
October 17, 1995 which included a letter from Coopers
& Lybrand L. L. P. that they had read the statements
made by the Company in the Form 8-K dated October 17,
1995 and that they agreed with the statements concerning
Coopers & Lybrand L. L. P. in such Form 8-K.
Page 22
(4) The Company filed a Form 8-K dated January
10, 1996, reporting that the Company's Audit Committee
had approved the selection of Grenadier, Appleby, Collins
& Company to audit the Company's financial statements for
the year ended December 31, 1995.
(5) The Company filed a Form 8-K dated March 4, 1996
reporting that on February 28, 1996, an affiliate of the
Chairman of the Board of the Company entered into a
subscription agreement with the Company to purchase
$3,000,000 of the Class A Series 2 Cumulative Convertible
Preferred Stock of the corporation. Such subscription
was fully funded on March 4, 1996. After the sale of the
stock, the Company was in compliance with the
capital requirements of NASD bylaws.
(6) The Company filed a Form 8-K dated March 5, 1996
reporting that on February 28, 1996, the Company's Board
of Directors approved an amendment to the Company's
Articles of Incorporation, Creating a new Class A Series
2 Preferred Stock ("Series 2 Preferred"). The Series 2
Preferred is identical to the Company's Class A Series
1 Preferred except that the conversion price per share is
at a rate of $2.50 per share rather than $3.00 per share.
The Company issued 120,000 shares of the newly
authorized Series 2 Preferred to an affiliate of the
Chairman of the Board of the Registrant for a total
purchase price of $3 million or $25.00 per share on
March 5, 1996.
Page 23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GENERAL PARCEL SERVICE, INC.
BY: /s/E. Hoke Smith, Jr.
E. Hoke Smith, Jr.,
Chief Executive Officer,
Director
Date: April 12, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Registrant in the capacities and on the date
indicated.
Signature Title Date
- --------------------- --------------------- --------------
/s/T. Wayne Davis Chairman of the Board April 12, 1996
T. Wayne Davis of Directors
/s/E. Hoke Smith, Jr. Director and Chief April 12, 1996
E. Hoke Smith, Jr. Executive Officer
/s/Gayle Smith Director and Chief April 12, 1996
Gayle Smith Operating Officer
/s/Steven C. Koegler Director April 12, 1996
Steven C. Koegler
/s/Wayne N. Nellums Chief Financial Officer April 12, 1996
Wayne N. Nellums
Page 24
<PAGE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
1995 CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
--------
Pages
------
Reports of Independent Accountants 26 - 27
Consolidated Financial Statements
Consolidated Balance Sheets as of
December 31, 1995 and 1994 28
Consolidated Statements of Operations
for the years ended December 31, 1995,
1994, and 1993 29
Consolidated Statements of Stockholders'
(Deficit) Equity for the years ended
December 31, 1995, 1994 and 1993 30
Consolidated Statements of Cash Flows
for the years ended December 31, 1995,
1994 and 1993 31
Notes to Consolidated Financial Statements 32 - 42
Page 25
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ----------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
We have audited the accompanying consolidated balance sheet of
General Parcel Service, Inc. and Subsidiary as of December 31,
1995, and the related consolidated statements of operations,
changes in stockholders' (deficit) equity, and cash flows for
the year then ended. These consolidated financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based upon our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of General Parcel Service, Inc. and
Subsidiary as of December 31, 1995, and the results of their
operations and cash flows for the years then ended in
conformity with generally accepted accounting principles.
Grenadier, Appleby, Collins & Company
(Signed)
Jacksonville, Florida
March 22, 1996
Page 26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
General Parcel Service, Inc.
We have audited the accompanying balance sheet of General
Parcel Service, Inc. as of December 31, 1994, and the related
statements of operations, stockholders' equity, and cash
flows for each of the two years then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of General
Parcel Service, Inc. as of December 31, 1994, and the results of
its operations and its cash flows for each of the two years then
ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
(Signed)
Jacksonville, Florida
March 31, 1995
Page 27
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
--------------------
1995 1994
---------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 6,739 $ 5,575
Accounts receivable (net of allowance for doubtful
accounts of $7,846 and $5,835 at December 31,
1995 and 1994 respectively) 2,068,975 1,544,745
Other current assets 380,090 695,583
---------- ----------
Total current assets 2,455,804 2,245,903
---------- ----------
Long term assets:
Equipment, at net book value 7,593,626 7,568,574
Goodwill, net 1,015,784 --
Other assets 187,251 181,843
---------- ----------
Total long term assets 8,796,661 7,750,417
---------- ----------
Total assets $ 11,252,465 $ 9,996,320
========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Short term borrowings $ 1,599,000 $ 1,500,000
Current obligations under capital leases 860,309 994,714
Current maturities of long-term debt 518,842 457,139
Accounts payable 1,953,468 1,023,300
Accrued expenses and other current liabilities 738,404 317,339
---------- ----------
Total current liabilities 5,670,023 4,292,492
---------- ----------
Long term liabilities:
Long-term obligations under capital leases 1,605,802 1,869,609
Long-term debt 3,910,808 588,406
Convertible debentures 300,000 300,000
---------- ----------
Total long term liabilities 5,816,610 2,758,015
---------- ----------
Total liabilities 11,486,633 7,050,507
---------- ----------
Commitments and contingencies
Stockholders' (deficit) equity:
Preferred stock, $.01 par value, 200,000 shares authorized,
100,000 issued and outstanding at December 31, 1995, and
1994, liquidation preference $2,500,000. 1,000 1,000
Common stock, $.01 par value, 10,000,000 shares authorized,
3,758,671 shares issued and outstanding at December 31,
1995 and 1994. 37,586 37,586
Additional paid-in capital 13,389,655 13,389,655
Deficit (13,662,409) (10,482,428)
---------- ----------
Total stockholders' (deficit) equity (234,168) 2,945,813
---------- ----------
Total liabilities and stockholders' (deficit) equity $ 11,252,465 $ 9,996,320
========== ==========
<FN>
<F1> Read accountants report and accompanying notes
</FN>
</TABLE>
Page 28
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY CONSOLIDATED
STATEMENT OF OPERATIONS
<CAPTION>
Years Ended December 31,
---------------------------------------
1995 1994 1993
-------------- -------------- -------------
<S> <C> <C> <C>
Revenue $ 20,567,498 $ 19,823,988 $ 16,182,458
Operating expenses:
Operations salaries & benefits 11,199,966 9,864,116 8,019,051
Fuel 1,231,251 1,197,707 1,021,695
Equipment Rental 52,475 193,777 225,620
Insurance 1,759,549 2,048,853 1,598,180
Tires & maintenance 789,173 736,835 641,024
Depreciation & amortization 1,780,026 1,338,471 1,114,806
Facilities expense 1,275,258 1,206,765 904,472
Terminal expense 364,563 168,041 157,325
Purchased transportation 291,836 119,653 --
Other operating costs 151,604 122,082 75,485
Selling and administrative
expense 3,932,147 3,052,027 2,628,260
----------- ----------- -----------
Total operating expenses 22,827,848 20,048,327 16,385,918
----------- ----------- -----------
Operating loss (2,260,350) (224,339) (203,460)
Interest expense (744,631) (572,524) (590,794)
----------- ----------- -----------
Net loss (3,004,981) (796,863) (794,254)
Preferred stock dividend
requirement (175,000) (175,000) --
----------- ----------- -----------
Earnings available to
common shares $ (3,179,981) $ (971,863) $ (794,254)
=========== =========== ===========
Net loss per common
share (primary and
fully diluted) $ (0.85) $ (0.26) $ (0.22)
=========== =========== ===========
Weighted average number of
common shares outstanding 3,758,671 3,758,671 3,575,442
============ ========= =========
<FN>
<F1>
Read accountants report and accompanying notes
Page 29
</FN>
</TABLE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
<CAPTION>
Years Ended December 31,
-------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Preferred stock:
Beginning balance (100,000 in 1995 and 1994) $ 1,000 $ 1,000 $ --
Issuance of preferred stock (100,000 shares
in 1993) -- -- 1,000
------------ ------------ ------------
Ending balance (100,000 shares in 1995, 1994
and 1993) 1,000 1,000 1,000
------------ ------------ ------------
Common stock:
Beginning balance (3,758,671 shares in 1995
and 1994 and 3,439,461 in 1993) 37,586 37,586 34,395
Issuance of common stock (319,210 shares
in 1993) -- -- 3,191
------------ ------------ ------------
Ending balance (3,758,671 shares in 1995,
1994 and 1993) 37,586 37,586 37,586
------------ ------------ ------------
Additional paid-in capital:
Beginning balance 13,389,655 13,389,655 9,866,357
Issuance of common stock -- -- 1,106,809
Issuance of preferred stock -- -- 2,416,489
------------ ------------ ------------
Ending balance 13,389,655 13,389,655 13,389,655
------------ ------------ ------------
Deficit:
Beginning balance (10,482,428) (9,685,565) (8,891,311)
Net loss (3,004,981) (796,863) (794,254)
Dividends paid on preferred stock (175,000) -- --
------------ ------------ ------------
Ending balance (13,662,409) (10,482,428) (9,685,565)
------------ ------------ ------------
Total stockholders' (deficit) equity $ (234,168) $ 2,945,813 $ 3,742,676
============ ============ ============
<FN>
<F1>
Read accountants report and accompanying notes
Page 30
</FN>
</TABLE>
<PAGE>
<TABLE>
GENERAL PARCEL SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years Ended December 31,
------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows (used in) provided by operating activities:
Net loss $ (3,004,981) $ (796,863) $ (794,254)
Adjustments to reconcile net loss to cash
(used in) provided by operating activities:
Loss on disposal of fixed assets 26,992 5,965 --
Depreciation and amortization 1,847,960 1,375,114 1,149,775
Changes in assets and liabilities:
Increase in accounts receivable (414,028) (303,411) (198,394)
Decrease (increase) in other current assets 315,494 (120,584) (163,443)
Increase in other assets (5,408) (7,759) (63,891)
Increase (decrease) in accounts payable 233,631 (476,407) 254,806
Increase (decrease) in accrued expenses 274,504 100,427 (182,986)
------------ ------------ ------------
Total adjustments 2,279,145 573,345 795,867
------------ ------------ ------------
Net cash (used in) provided by operating activities (725,836) (223,518) 1,613
------------ ------------ ------------
Cash flows for investing activities:
Business combination (151,674) -- --
Proceeds from disposal of equipment 59,462 5,500 --
Purchase of equipment (919,031) (1,367,665) (483,174)
------------ ------------ ------------
Net cash used in investing activities (1,011,243) (1,362,165) (483,174)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock -- -- 1,110,000
Proceeds from issuance of preferred stock -- -- 2,417,489
Proceeds from issuance of convertible debentures -- -- 300,000
Dividends paid on preferred stock (175,000) -- --
Repayment of short-term debt -- -- (890,526)
Repayment of long-term debt (652,474) (386,461) (353,078)
Principal payments under capital lease obligations (1,101,396) (1,116,905) (1,033,317)
Increase in long-term borrowings 3,000,000 -- --
Increase in short-term borrowings 99,000 1,499,000 --
Increase in bank overdraft 568,113 526,617 --
------------ ------------ ------------
Net cash provided by financing activities 1,738,243 522,251 1,550,568
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents 1,164 (1,063,432) 1,069,007
Cash and cash equivalents, beginning of year 5,575 1,069,007 --
------------ ------------ ------------
Cash and cash equivalents, end of year $ 6,739 $ 5,575 $ 1,069,007
============ ============ ============
Supplemental cash flow data:
Cash paid during the year for interest $ 694,176 $ 553,759 $ 590,646
============ ============ ============
Supplemental schedule of noncash investing
and financing activities:
Capital leases and notes payable obligations
incurred for new vehicles and equipment $ 756,000 $ 1,195,394 $ 1,355,342
============ ============ ============
Business combination
Fair value of assets acquired $ 1,408,670 $ -- $ --
Fair value of liabilities assumed (1,256,996) -- --
------------ ------------ ------------
Net cash payments $ 151,674 $ -- $ --
============ ============ ============
<FN>
<F1>
Read accountants report and accompanying notes
Page 31
</FN>
</TABLE>
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies:
Business Description
General Parcel Service, Inc. (the "Company") was formed in
September, 1985, and is engaged in the business of delivering
small parcels in Florida, Georgia and North Carolina. In 1995,
the Company formed GPS Acquisition Corp. to acquire the
assets of Transit Express of Charlotte, Inc. ("TE").
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary GPS Acquisition
Corp., collectively referred to as the Company. The accounts
and operations of GPS Acquisition Corp. are included since the
date of its incorporation on February 10, 1995. All significant
intercompany accounts and transactions have been eliminated.
Use of Estimates
The process of preparing financial statements requires the use
of estimates and assumptions regarding certain types of assets,
liabilities, revenues and expenses. Such estimates primarily
relate to unsettled transactions and events as of the date of
the financial statements. Accordingly, upon settlement, actual
results may differ from estimated amounts.
Revenue Recognition
Revenue from parcel delivery is recorded when parcels have been
picked up for delivery.
Income Taxes
The Company applies Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS
109, the deferred tax liability or asset is determined based on
the difference between the financial statement and tax bases of
assets and liabilities as measured by the enacted tax rates
which will be in effect when these differences reverse. The
measurement of deferred taxes is reduced, if necessary, by the
amount of any tax benefits that, based on available evidence,
are not expected to be realized (i.e. valuation allowance).
Cash
The Company considers all highly liquid investments purchased
with original maturities of three months or less to be cash
equivalents. The Company's cash management program utilizes zero
balance accounts. Accordingly, all bank overdraft balances have
been reclassified to accounts payable.
Equipment
Equipment is stated at cost, net of accumulated depreciation and
amortization. Except for life extending repair costs (such as
engine overhauls), all equipment maintenance and repair costs
are charged to operating expense as incurred. Depreciation is
provided using the straight-line method over the estimated
useful life of the asset. Leased equipment is amortized over
varying periods not in excess of the estimated useful life of
Page 32
the asset or lease term depending on the type of capital lease.
Gain or loss upon retirement or disposal of equipment is
recorded as income or expense. The ranges of depreciable lives
principally used for financial statement purposes are:
Years
Autos, trucks and life extending repairs 2 to 9
Office equipment and furniture 3 to 10
Terminal equipment 3 to 10
Goodwill
Goodwill was acquired in the TE acquisition and is being
amortized using the straight-line method over 15 years.
Amortization expense for 1995 was $74,342. The Company
periodically reviews the value of its goodwill to determine
if an impairment has occurred. The Company measures the
potential impairment of recorded goodwill by the undiscounted
value of the expected future operating cash flows in relation
to its net capital investment in the acquired business. Based
on its review, the Company does not believe that an impairment
has occurred.
Net Loss per Common Share
Net loss applicable to common share is based on the weighted
average number of shares outstanding during the periods
reported. Any assumption of conversion of common stock
equivalents, such as options and warrants, as described in Note
12, is anti-dilutive and has not been considered in determining
net loss per share or the weighted average number of shares
outstanding.
Reclassification
Certain reclassifications have been made to the prior year
financial statements to conform with current presentation.
2. Company Operations:
Through December 31, 1995, the Company has experienced operating
losses of $13,487,409 and its working capital deficiency at
December 31, 1995, was $3,214,219. Management's estimates of
cash requirements to fund operating losses and debt service are
substantial. All of these factors raise the question as to
whether the Company will continue to operate as a going concern.
While revenues continue to increase and expense containment
measures have been instituted, management is nonetheless
pursuing several strategies for raising additional resources
through debt or equity transactions.
Management believes, but can offer no assurances, that it can
improve operating performance and cash flows through the
following measures:
*A large portion of the Company's expenses since inception have
been related to efforts to develop its marketing, distribution
and service network. The Company has developed extensive
distribution networks in Florida and in Atlanta, Georgia and is
Page 33
endeavoring to expand its North Carolina service area.
Management believes that it has acquired sufficient delivery
vehicles to service its market area, although the Company
continues to replace or upgrade equipment as deemed necessary.
Management believes that additional market penetration will
improve the productivity of its delivery fleet and result in
profitable operations.
*During 1996, the Company plans to concentrate on continuing to
build volume in its Florida and Atlanta markets where excess
capacity exists and selectively expand its operations in North
Carolina or other Southeastern areas where profitable volume can
be obtained with minimum capital outlays. Because of the
Company's limited resources, any expansion will be into areas
where the Company expects to be able to minimize start-up losses
in a short period of time by shipping a large volume of parcels
from existing customers into the area covered by the new
terminal.
*Management has reassessed the operating practices at each of its
terminals and has instituted a number of changes directed
towards cost containment including elimination of unprofitable
delivery routes. Strict accountability over all costs are being
implemented at all locations through budgetary controls and
improved reporting of actual operating results to operations
managers.
*The Board of Directors has engaged KPMG Baymark Capital LLC
("BayMark") to render certain financial advisory and investment
banking services to the Company. Under the terms of the
engagement, BayMark will familiarize itself to the extent it
deems appropriate and feasible with the business, operations,
properties, financial condition and prospects of the Company and
will advise and assist the Company in identifying and/or
evaluating various strategic or financial alternatives that may
be available to the Company to enhance shareholder value. Among
the alternatives which may be available to the Company are an
acquisition of all or a significant portion of the assets or
equity securities of another corporation or business entity; a
sale of the Company or significant portion of its equity
securities, assets or businesses to one or more third parties; a
recapitalization or restructuring of the Company; repurchases by
the Company of its common stock or other securities; a public or
private sale of additional equity or debt securities of the
Company; or such other form of transaction that BayMark believes
may be of possible interest to the Company.
*Should the Company not obtain additional funding through the
efforts of BayMark and not be able to provide cash for its
operations to fund operating losses or debt service, it will
rely on the commitment of one of its major shareholders to fund
losses of the Company through December 31, 1996.
3. Business Combination:
On February 10, 1995, the Company acquired certain assets of
Transit Express of Charlotte, Inc. ("TE"). TE was based in
Charlotte, North Carolina, and provided scheduled carrier and
package delivery services. The Company acquired these certain
assets at a purchaase price of $1,408,670. To acquire these
assets, the Company paid $75,000 in cash to the seller, incurred
expenses of $76,674, and assumed liabilities of $1,256,996 by
issuing debt and assuming certain accounts and notes payable.
The acquisition of the TE assets was accounted for as a purchase
Page 34
and, accordingly, the purchase price was allocated to the acquired
assets based upon their respective fair values. The excess of the
purchase price over the fair value of the net assets acquired in the
amount of $1,090,126 has been recorded as goodwill which is being
amortized over 15 years on a straight line basis.
Proforma Financial Statements
The unaudited pro forma statement of operations of the Company
for the years ended December 31, 1995 and 1994 account for the
acquisition as if it had occurred on January 1, 1995 and 1994,
respectively The pro forma results give effect to the
amortization of goodwill and the effects of additional
interest expense.
Unaudited Pro Forma Combined Results of Operations
For the Years Ended December 31,
--------------------------------
1995 1994
Pro Forma Pro Forma
Combined Combined
------------- -------------
Sales $ 20,752,210 $ 21,878,776
============ ============
Net loss $ (3,029,464) $ (931,750)
============ ============
Net loss per common share $ (0.85) $ (0.29)
============ ============
The above pro forma statements do not purport to be indicative
of the results of operations which would have occurred had the
acquisition been made on January 1, 1995 or 1994.
4. Related Party Transactions:
The Company incurred fees related to legal services provided to
the Company by a firm owned in part by a director of the Company of
$39,633, $40,600 and $37,400 in 1995, 1994 and 1993, respectively.
As of December 31, 1995, the Company owed this director $5,041.
The Company leases aircraft transportation services under an informal
agreement from the President of the Company. The expenses for
this lease were $103,438, $90,700 and $26,500 in 1995, 1994 and
1993, respectively. At December 31, 1995, the Company owed the
President $8,025.
5. Equipment:
Equipment consists of the following:
December 31,
------------------
1995 1994
---------- ----------
Autos, trucks and life extending repairs $ 10,800,131 $ 9,789,797
Office equipment and furniture 616,017 454,384
Terminal equipment 2,487,612 2,084,239
----------- -----------
13,903,760 12,328,420
Less: accumulated depreciation (6,310,134) (4,759,846)
----------- -----------
$ 7,593,626 $ 7,568,574
=========== ===========
Page 35
Autos and trucks included $5,426,413 and $6,782,073 of vehicles
under capital leases at December 31, 1995 and 1994, respectively.
During 1995, the Company exercised its option to acquire the
residual value of 87 leased vehicles with an original cost of
$1,898,449 and accumulated amortization of $1,213,809. Accumulated
amortization for vehicles under capital leases at December 31,
1995 and 1994 totaled $1,632,372 and $2,882,610, respectively
and is included in accumulated depreciation shown above.
Amortization expense was $646,211, $723,945 and 626,220 for
1995, 1994 and 1993, respectively. Depreciation expense for
owned equipment was $1,127,407, $651,169 and $523,555 for 1995,
1994 and 1993 respectively. Depreciation expense of $67,934,
$36,643 and $34,696 was included in selling and administrative
expense for 1995, 1994 and 1993, respectively.
6. Short Term Borrowings:
Short term borrowings consist of the following:
December 31,
------------------
1995 1994
---------- ----------
$2,700,000 line of credit to a bank,
due upon demand, interest paid monthly
at .75% over LIBOR rate collateralized by
accounts receivable and certain stock
certificates pledged by the Company's
Chairman $1,599,000 $ --
$2,000,000 line of credit to a bank,
due upon demand, interest paid monthly
at .75% over LIBOR rate collateralized by
accounts receivable and other
stockholder guarantees. -- 1,500,000
--------- ---------
$1,599,000 $ 1,500,000
========= =========
On August 12, 1994, the Company entered into a $2,000,000
revolving credit loan agreement ("Line of Credit") with a bank.
The aggregate principal amount due under the agreement was
increased during 1995 and the form of the debt was modified to
include a $3,000,000, five year term loan and a $2,700,000
revolving credit loan at December 31, 1995. The term loan and
the revolving credit agreement provide for interest payable
monthly for advances of $1,000,000 or greater at the lower
interest of the thirty day LIBOR rate plus .75% or the Bank's
prime interest rate less .75% and for all other advances at the
Bank's prime interest rate less .75%. The loan is
collateralized by the Company's accounts receivable and certain
stock certificates pledged by the Company's Chairman. As of
December 31, 1995, the Company had borrowed $3,000,000 under the
term loan and $1,599,000 against the line of credit and had
$1,101,000 of credit available. As noted below, the Company has
repaid the term loan and increased its line of credit to
$3,250,000 in the first quarter of 1996. As of March 21, 1996,
the Company has borrowed $2,886,000 against the line of credit.
7. Notes Payable and Long Term Debt:
Long-term debt and notes payable are due in installments through
2000 and bear interest at rates ranging from 8.7% to 12.0% and are
collateralized by vehicles and equipment. Long term debt maturing
in each of the five subsequent years as of December 31, 1995 is as
follows:
Page 36
Installment Total Long
Years Ended Notes Bank Term Term
December 31, Payable Loan Debt
-------------- ----------- ----------- ------------
1996 $ 518,842 $ -- $ 518,842
1997 299,359 500,000 799,359
1998 299,884 1,000,000 1,299,884
1999 234,216 1,000,000 1,234,216
2000 77,349 500,000 577,349
------------ ------------ -------------
Total long term debt 1,429,650 3,000,000 4,429,650
Less: current portion (518,842) -- (518,842)
------------ ------------ -------------
Long term portion of long term debt $ 910,808 $ 3,000,000 $ 3,910,808
============ ============ =============
The bank term loan was repaid on March 5, 1996 from funds
provided by the issuance of preferred stock.
See Footnote Number 15.
On August 1, 1993, the Company issued $300,000 in nonredeemable
7% convertible senior subordinated debentures which are due in
2000. The initial conversion price was $4.75. During 1995, the
Company breached a covenant of the debentures, however, the
breach has been waived by the debenture holders.
8. Capital Leases:
The Company has entered into certain lease agreements, which
have been accounted for as capital leases. Substantially all of
the capital leases are for vehicles. The minimum future lease
payments and the present value of such commitments for the
capital leases are as follows:
Years Ended
December 31,
1996 $ 1,107,506
1997 955,565
1998 601,039
1999 181,983
2000 94,962
----------
Total minimum obligations 2,941,055
Less: amount representing interest (474,944)
----------
Present value of net minimum obligations 2,466,111
Less: current portion (860,309)
----------
Long term obligations $ 1,605,802
==========
Page 37
The present values of minimum future obligations shown above are
calculated based on interest rates (the majority ranging from
9.5% to 16%) determined to be applicable at the inception of the
leases. Interest expense on outstanding obligations under
capital leases was $344,361, $373,683, and $358,870 for the
years ended December 31, 1995, 1994 and 1993, respectively.
9. Operating Leases:
The Company leases terminal and office facilities under
noncancellable operating lease agreements. Lease terms range
from one to fifteen years and provide that the Company will
pay real estate taxes, maintenance, insurance and certain
other expenses. The noncancelable operating leases are payable
through 2010. These lease obligations at December 31, 1995 are
as follows:
Years Ended
December 31,
------------
1996 $ 1,262,122
1997 1,136,931
1998 1,030,778
1999 468,130
2000 480,708
2001 and beyond 2,843,253
---------
Total $ 7,221,922
=========
Total rent expense under operating leases was $1,210,785,
$1,143,500, and $839,700 for the years ended December 31, 1995,
1994 and 1993, respectively.
10. Fair Values of Financial Instruments
Disclosure of fair value information about certain financial
instruments, whether or not recognized in the balance sheet for
which it is practicable to estimate that value, is required by
Statement of Financial Accounting Standards (SFAS) 107,
Disclosure about Fair Value of Financial Instruments. The
following methods and assumptions were used in estimating fair
values:
Cash, Accounts Receivable and Accounts Payable:
The carrying amount reported in the balance sheet
approximates fair value because of the short maturity of these
instruments.
Short and long term debt:
The carrying amounts of the Company's borrowings under its
revolving credit agreements, as well as all short-term borrowings,
approximate their fair values. The fair values of the Company's
long term debt were estimated using discounted cash flow analysis,
based on the Company's current incremental borrowing rates for
similar arrangements.
The carrying amounts and fair values of the Company's financial
instruments at December 31, 1995 are as follows:
Page 38
At December 31, 1995
--------------------------------
Carrying Estimated
Amount Fair Value
------------ ------------
Cash $ 6,739 $ 6,739
Accounts receivable 2,068,975 2,068,975
Accounts payable 1,953,468 1,953,468
Short term borrowings 1,599,000 1,599,000
Long term debt 4,429,650 4,418,447
Convertible debentures $ 300,000 $ 300,000
11. Preferred Stock
On December 29, 1993, the board of directors amended the
articles of incorporation to provide for 200,000 shares of a new
issue of Class A, Series 1 cumulative convertible preferred
stock. On December 30, 1993, 100,000 shares were sold for a
total purchase price of $2,500,000. The preferred shares are
nonvoting and generally provide for a conversion into common
stock at a rate of $3.125 per share and a cumulative dividend of
$1.75 per year per share. At december 31, 1995 and 1994, the
Company had preferred stock dividends in arrears of $175,000.
12. Stock Options and Warrants:
The Company has granted options and warrants to acquire its
common stock at various times under various plans, contracts and
employment agreements that approximated or exceeded fair market
value at the date of issue. Options and warrants may be
exercised over periods ranging from three to ten years.
A summary of outstanding options and warrants is as follows:
1995 1994 1993
---------- ---------- ----------
Outstanding, beginning of year 853,975 892,725 759,818
Granted during the year 428,750 11,250 182,907
Exercised or canceled during year -- (50,000) (50,000)
---------- ---------- ----------
Outstanding, end of year (at
prices ranging from $1.43 to
$7.75 per share) 1,282,725 853,975 892,725
========== ========= =========
Additionally, in conjunction with the initial public offering
(Note 2), the Company issued 690,000 warrants. Two warrants
entitle the holder thereof to purchase at a price of $7.50 per
share, one share of common stock at any time until November 16,
1996. The warrants are subject to redemption by the Company at
$.05 per warrant at any time on 30 days' written notice,
provided that the average closing bid price of the common stock
on NASDAQ is at least $8.50 for ten consecutive trading days
ending five days prior to the date of the notice of redemption.
All stock options and warrants described above are
noncompensatory.
Page 39
13. Income Taxes:
The following reflects the deferred income tax effects of
temporary differences between the tax bases of assets and
liabilities and the respective financial statement amounts for
the years ended December 31, 1995 and 1994:
1995 1994
----------- -----------
Deferred tax assets:
Net operating loss carryforwards $ 5,591,992 $ 4,375,519
Reserve for bad debts 2,973 2,188
----------- -----------
5,594,965 4,377,707
Deferred tax liability:
Excess of tax over book depreciation 604,818 532,967
----------- -----------
Net deferred tax asset 4,990,147 3,844,740
Valuation allowance (4,990,147) (3,844,740)
----------- -----------
Net deferred tax recognized $ -- $ --
=========== ===========
The valuation allowance was established to eliminate the net
deferred tax asset due to the uncertainty of the Company's
ability to utilize the net operating loss carryforwards before
they expire. Because of this uncertainty, no benefit was
provided for the current year. The Company's income tax expense
differed from the statutory federal rate of 34% as follows:
1995 1994 1993
----------- ----------- -----------
Statutory rate applied to loss
before income taxes $ (1,021,694) $ (270,933) $ (270,046)
Increase (decrease) in income taxes
resulting from:
State income taxes (117,362) (10,160) (10,127)
Change in deferred tax asset
valuation allowance 1,145,407 280,459 278,349
Other (6,351) 634 1,824
----------- ----------- -----------
Income tax expense $ -- $ -- $ --
=========== =========== ===========
At December 31, 1995, the Company has $14,758,490 of net
operating loss carryforwards potentially available to offset
taxable income which expire during the years 2000 to 2010. The
Company has not given recognition to tax benefits of net operating
loss carryforwards in the financial statements because management
believes the Company's history of operating losses diminishes the
Company's immediate ability to demonstrate that is more likely
than not that the future benefits will be realized. Additionally,
these operating loss carryforwards are subject to limitation in any
given year in the event of significant changes in ownership as set
forth in the Internal Revenue Code and related Treasury Regulations.
Consequently, a determination has not been made as to the amount,
if any, of the reduction in the net operating loss carryforwards
available against potential future taxable income. The valuation
allowance increased by $1,145,407 during 1995. Tax loss carryforwards
at December 31, 1995 expire as follows:
Page 40
Year of Expiration Federal State
------------------ ------------ ------------
2000 $ -- $ 26,940
2001 338,632 338,632
2002 584,316 584,318
2003 699,986 699,986
2004 1,475,420 1,475,420
2005 2,712,465 2,696,980
2006 2,138,152 2,125,475
2007 1,574,149 1,562,086
2008 1,148,633 1,069,463
2009 1,137,847 1,119,038
2010 2,948,890 2,654,001
----------- ----------
$ 14,758,490 $ 14,352,339
=========== ==========
14. Contingencies:
On February 14, 1995, the Company filed a civil complaint in the
Federal Court of Northern Georgia against United Parcel Service,
Inc. ("UPS"). The civil complaint alleges among other things,
that UPS has attempted to monopolize the market for ground-based
business-to-business parcel delivery service in Georgia and
Florida, in violation of federal and state antitrust laws and as
a result of civil violations, GPS has suffered the loss of
several customers. The Company has cited damages in the
complaint in excess of $10 million from these actions. The
case is in the final phase of the discovery process. UPS has
filed a motion for summary judgment and the Judge has deferred
a ruling on summary judgment until the end of discovery. No
trial date has been set,
Inforite Corporation has filed a suit against the Company,
seeking damages of $374,203 for alleged breach of a contract in
which Inforite agreed to sell the Company certain electronic
"clipboards" along with supporting accessories and computer
software. The Company has asserted that the Inforite products
are defective, and has revoked acceptance of the products
pursuant to California Commercial Code sections 2608 and 2609.
In the same action, Inforite has also alleged intentional
interference with contract and defamation, claiming an
unspecified amount of damages. The Company has denied all
material allegations and has counterclaimed for breach of
contract, breach of warranty and fraud, seeking recovery of
approximately $175,000 it paid for the products and for an
undetermined amount in incidental damages. Outside counsel
for the Company has advised that at this stage in the proceedings,
no opinion can be offered as to the probable outcome. A trial
date has been set for August 16, 1996.
15. Subsequent Event:
During March, 1996, the Company issued 120,000 shares of
cumulative convertible preferred stock to an affiliate of the
Company's Chairman for $3,000,000 which was used to repay the
$3,000,000 bank term loan. Shortly after the sale of the
preferred stock, the Company increased its revolving line of
credit to $3,250,000. To the extent the Company requires
additional cash for operations beyond its available credit line
during 1996, it will seek to further increase its credit line or
attempt to privately place common and/or preferred stock of the
Company with investors.
<PAGE>
Exhibit 10.1
------------
$3,000,000.00 No. 3332157596 June 15, 1995
(Date of Execution and Delivery)
LENDER: FIRST UNION NATIONAL BANK OF FLORIDA (hereinafter
termed "LENDER"), Jacksonville, Florida.
BORROWER: GENERAL PARCEL SERVICE, INC., 8923 WESTERN WAY,
JACKSONVILLE, DUVAL, FL, 32256. (hereinafter "Place of
Business").
BORROWER REPRESENTS HEREWITH THAT THE LOAN EVIDENCED IS HEREBY
BEING OBTAINED FOR THE FOLLOWING PRIMARY PURPOSE: Business.
FOR VALUE RECEIVED: to wit, money loaned the undersigned
BORROWER (hereinafter collectively termed "BORROWER"), jointly
and severally (if more than one borrower), promise(s) to pay to
the order of the LENDER at its office in the above city, or
wherever else LENDER may specify, the sum of Three Million &
00/100 ($3,000,000.00) dollars with interest until paid.
TERMS OF PAYMENT
(X) payable in consecutive Monthly payments
of principal; commencing on July 15, 1997,
in 35 equal payments of $83,333.33 plus
an irregular payment of $83,333.45 due on
June 15, 2000 with interest payable
Monthly commencing on July 15, 1995 and
each Month thereafter.
(X) with interest payable Monthly commencing
on July 15, 1995 and each Monthly
thereafter;
(X) see attached Schedule "B", terms of
which are incorporated by reference:
The undersigned agrees to pay a late charge equal to 5% of each
payment of principal and/or interest which is not paid within 10
days of the date on which it is due. AT LENDER'S option, the
contract rate shall become the highest rate allowed by the law
of the State of the LENDER'S office as set forth herein
commencing with and continuing for so long as the loan or
portion thereof is in Default (as herein defined). Further,
upon BORROWER'S default and where LENDER deems it necessary or
proper to employ an attorney to enforce collection of any unpaid
balance hereunder, then BORROWER agrees to pay LENDER'S
reasonable attorneys' fees (including appellate costs, if any)
and collection costs. Liability for reasonable attorneys' fees
and costs shall exist whether or not any suite or proceeding is
commenced.
INTEREST is computed on the basis of a 360 day year for the
actual number of days in the Interest period (Actual/360
computation) unless indicated below.
LENDER'S Actual/360 or365/360 computation determines the annual
effective interest yield by taking the stated (nominal) Interest
rate for a year's period and the dividing said rate by 360 to
determine the daily periodic rate to be applied for each day in
the Interest period. Application of such computation produces
an annualized effective interest rate exceeding that of the
nominal rate.
If the interest provision contained herein refers to LENDER'S
PRIME RATE, and BORROWER acknowledges that LENDER'S PRIME RATE
is not represented or intended to be the lowest or most
favorable rate of interest offered by LENDER.
All payments received during normal banking hours after 2:00
p.m. shall be deemed received at the opening of the next banking
day. At LENDER'S option, and repayments of the Note, other than
by U S currency, will not be credited to the outstanding loan
balance until LENDER receives collected funds.
BORROWER'S payment will increase if the scheduled payment amount
is insufficient to pay accrued interest. If the scheduled
payment in insufficient to pay accrued interest, the scheduled
payment amount shall be immediately increased as is necessary to
pay all accruals of interest for the period and all accruals of
unpaid interest from previous periods. Such adjustments to the
scheduled payment amount shall remain in effect for as long as
the interest accruals shall exceed the original scheduled
payment amount and shall be further adjusted upward or downward
to reflect changes in the variable interest rate. In no event
shall the scheduled payment amount be reduced below the
original scheduled payment specified herein.
Each of the undersigned, whether BORROWER, sureties, or
endorsers, and all others who may become liable for all or any
part of the obligations evidenced and secured hereby, do hereby,
jointly and severally: waive presentment, demand, protest,
notice of protest and/or of dishonor, and also notice of
acceleration of maturity on Default or other wise. Further,
they agree that LENDER from time to time, extend, modify, amend
or renew this Note and Security Agreement for any period
(whether or not longer than the original period of the Note) and
grant any releases, compromises or indulgences with respect to
the Note or any extensions, modifications, amendments or
renewals thereof or any security therefor, or to any party
liable thereunder or hereunder, all without notice to or consent
of any of the undersigned and without affecting the liability of
the undersigned hereunder.
If more than one person has signed this instrument, such parties
are jointly and severally obligated hereunder. Further, use of
the masculine pronoun herein shall include the feminine and
neuter and also the plural. If any provision of this instrument
shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Note.
Time is the essence hereof. Any notices to Borrower shall be
sufficiently given, if mailed or delivered to the Principal
Place of Business.
TO SECURE PAYMENT of this Note, all obligations of undersigned
BORROWER hereunder, and all other obligations of BORROWER to
LENDER, its successors and assign, howsoever created, arising or
evidenced; whether direct or indirect, absolute or contingent,
or now or hereafter existing or due to become due (the loan and
debt evidenced by this Note and secured by this Security
Agreement and all other present and future obligations of
BORROWER owed to LENDER are hereinafter collectively termed the
"OBLIGATIONS"); the undersigned BORROWER hereby mortgages,
conveys. and grants to LENDER, as permitted by law, a security
interest in, and herewith pledges and deposits as collateral the
following described and identified personal and/or real
property, and any and all additions, accessions and
substitutions thereto or therefor, (including all cash, stock,
or other dividends and all proceeds thereof, and all rights to
subscribe for securities incident thereto) are hereinafter
termed the "COLLATERAL"; and a Security interest in PROCEEDS AND
PRODUCTS of the COLLATERAL is granted to LENDER:
(X) If checked here, COLLATERAL is listed and described on
attached schedule "A"; Incorporated herein by reference.
BORROWER hereby warrants, covenants and agrees that:
(1) Borrower's principal place of business is that shown above.
If Borrower has no principal place of business in said State,
the Borrower's residence in said State is shown above.
(2) Borrower's other places of business in said State or State
of LENDER'S office not previously stated are as follow:
personal property COLLATERAL is used or being purchased for:
___Personal, Family or Household; ___Farming Operations;
___Business Use, and, ___if checked here, COLLATERAL IS BEING
ACQUIRED WITH THE PROCEEDS OF AN ADVANCE EVIDENCED BY THIS
AGREEMENT, which LENDER may disburse directly to the seller of
said personal property.
(4) The personal property COLLATERAL will be kept at the
Principal Place of Business; otherwise, ___if checked here,
at:
(5) If any personal property COLLATERAL will be used in more
than one State whether or not actually so used, and BORROWER has
a place(s) of business in more than one State, the Principal
Place of Business is that shown above unless otherwise stated as
follows: (6) ___If checked here, personal
property COLLATERAL is to be affixed to real property, a
description of the real estate is as follows:
(7) Said COLLATERAL is free and clear of all liens, security
interests, claims and/or encumbrances other than any to LENDER
except the following:
(8) ___If checked, this Note is subject to the terms and
conditions of a commitment letter and/or loan agreement
between BORROWER and LENDER dated: _________________, which is
herein incorporated herein by reference.
THIS PROMISSORY NOTE IS SUBJECT TO THE ADDITIONAL
PROVISIONS, TERMS, UNDERTAKINGS AND RIGHTS SET FORTH ON THE
REVERSE SIDE HEREOF, THE SAME BEING INCORPORATED HEREIN BY
REFERENCE.
Waiver: BORROWER agrees that LENDER shall after the occurrence
of any event of default, be entitled to immediate possession of
all the COLLATERAL. BORROWER agrees that LENDER'S interest in
the COLLATERAL arose out of a Commercial Transaction.
IN WITNESS THEREOF, the Borrower, on the day and year first
written above, has caused this Note to be executed under seal
by, (i) if a corporation, adoption of the facsimile seal printer
hereon for such special occasion and purpose (or if an
impression seal appears hereon by affixing such impression seal)
by its duly authorized officer(s) of, (ii) if by individuals, by
hereto setting their hand and seals.
General Parcel Service, Inc.
Name of Corporation CORPORATE BORROWER
BY: /s/ Wayne N. Nellums
BY: Wayne N. Nellums
VP of Finance,
ADDITIONAL PROVISIONS
BORROWER hereby further warrants, covenants and agrees, as
follows:
Anything contained herein to the contrary not withstanding, if
for any reason the effective rate of interest on this Note
should exceed the maximum lawful rate, the effective rate shall
be deemed reduced to and shall be such maximum lawful rate, and
any sums of interest which have been collected in excess of such
maximum lawful rate shall be applied as a credit against the
unpaid balance due hereunder.
No waivers, amendments or modifications shall be valid unless in
writing. No waiver by LENDER of any default(s) shall operate as
a waiver of any other default or the same default on a future
occasion. All rights of LENDER hereunder shall inure to the
benefit of its successors and assigns, and all obligations of
BORROWER shall bind his heirs, executors, administrators,
successors and/or assigns.
In the case of conflict between the terms of this Note and any
Loan Agreement and/or Commitment Letter issued in connection
herewith, the priority of controlling terms shall be first this
Note, then the Security Instrument, if any, the Loan Agreements,
then the Commitment Letter, except as otherwise provided herein.
In the event any provision(s) of this instrument shall be left
blank or incomplete, BORROWER hereby authorizes and empowers
LENDER to supply and complete the necessary information as a
ministerial task consistent with the understanding between the
parties.
BORROWER WILL IMMEDIATELY NOTIFY LENDER in writing of any (1)
change in: BORROWER'S Principal Place of Business and/or
Residence; (2) change in the BORROWER'S name or identity; (3)
change in BORROWER'S Corporate Structure.
BORROWER warrants that borrower does not have either a record or
reputation for violating laws of the United States or of any
State relating to liquor (as referred to in 18 USCA 3617, et
seq) or narcotics and/or any commercial crimes.
Upon occurrence of any other "EVENTS OF DEFAULT," as hereinafter
defined; LENDER is herewith expressly authorized to exercise its
right of Set-Off or Bank Lien as to any monies deposited in
demand, checking, time, savings or other accounts of any nature
maintained in and with it by any one of the undersigned, without
advance notice.
Said right of Set-Off shall also be exercised and applicable
where LENDER is indebted to any signer hereof by reason of any
Certificate of Deposit, Note or otherwise.
Borrower shall promptly pay all documentary and/or intangible
taxes on this transaction whether assessed at closing or arising
from time to time.
WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREES, THAT:
(A) NEITHER THE BORROWER, NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR
LEGAL REPRESENTATION OF ANY OF THE SAME SHALL SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAUM, OR ANY OTHER
LITIGATION PROCEDURE ARISING FROM OR BASED UPON THIS THE
PROMISSORY NOTE, ANY OTHER LOAN AGREEMENT OR ANY LOAN DOCUMENT
EVIDENCING, SECURING, OR RELATING TO THE OBLIGATIONS, OR TO THE
DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES THERETO;
(B) NEITHER THE BORROWER, NOR FUNB WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE
WAIVED; (C) THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
NEGOTIATED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS; (D) NEITHER THE BORROWER, NOR FUNB HAS
IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT
THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES; AND (E) THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER TO ENTER INTO THIS TRANSACTION.
EVENTS OF DEFAULT
BORROWER shall be in default under this Note, upon the happening
of any of the following events, circumstances or conditions; namely:
(1) Default in the payment or performance of any of the
OBLIGATIONS provided hereunder or in connection herewith or any
other OBLIGATIONS of BORROWER or any affiliate (as defined in 11
USC 101(2), hereinafter affiliate) of BORROWER or any endorser,
guarantor or surety for BORROWER to LENDER or any affiliate of
LENDER, howsoever created, primary or secondary, whether direct
or indirect, absolute or contingent, now or hereafter existing,
due or to become due, or of any other covenant, warranty or
undertaking expressed herein, therein, or in any other document
establishing said endorsement, guaranty, or surety; or
(2) Any warranty, representation or statement made or
furnished to LENDER by or on behalf of BORROWER, or any
guarantor, endorser, or surety for Borrower in connection with
this Note or to induce LENDER to make a loan to BORROWER which
was false in any material respect when made or furnished or has
become materially false. If such warranty of BORROWER or
guarantor, endorser or surety for Borrower was ongoing in
nature; or
(3) Death, dissolution, termination of existence, insolvency,
business failure, appointment of a receiver, custodian, or
trustee for any part of the property of, assignment for the
benefit of credits by, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against BORROWER
or any endorser, guarantor, or surety for BORROWER; or
(4) The acquisition of substantially all of Borrower's,
endorser's, guarantor's or sureties business or assets, or a
material portion of its business or assets if such a sale is
outside its ordinary course of business, or more than 50% of its
outstanding stock or voting power in a single transaction or a
series of transactions, or acquisition of substantially all of
the business or assets or more than 50% of the outstanding stock
or voting power of any other entity, or should Borrower,
endorsers, guarantors or sureties enter into any transaction or
merger or consolidation without prior written consent of LENDER;
or
(5) Failure of a corporate BORROWER or endorser, guarantor, or
surety for said BORROWER to maintain its corporate existence in
good standing; or
(6) Upon the entry of any monetary judgment or the assessment
and/or filing of any tax lien against BORROWER or any endorser,
surety or guarantor, or upon the issuance of any writ or
garnishment, judicial seizure of, or attachment against property
of, debts due or rights of BORROWER or any endorser, surety or
guarantor, to specifically include commencement of any action or
proceeding to seize monies of BORROWER or any indorser, surety
or guarantor on deposit in any bank account with LENDER; or
(7) Any BORROWER, endorser, guarantor or surety shall be a
debtor, either voluntarily or involuntarily, under (and as the
term debtor is defined in) the Bankruptcy Code or should any
BORROWER, endorser, guarantor or surety by generally not paying
their respective debts as such debts become due; or
(8) Failure of said BORROWER, endorsers, guarantors or
sureties to furnish financial statements or other financial
information reasonably requested by LENDER; or
(9) Loss, theft, substantial damage, destruction, sale or
encumbrance to or of any COLLATERAL, or the assertion or making
of any levy, seizure, mechanic's lien or attachment thereof or
thereon; or
(10) If LENDER should otherwise deem itself or the debt
created hereunder unsafe or insecure; or should LENDER, in good
faith, believe that the prospect of payment or other performance
is impaired.
ADDITIONAL PROVISIONS FOR PERSONAL PROPERTY COLLATERAL
BORROWER hereby further warrants, covenants, and agrees, as
follows:
THE COLLATERAL SHALL, AT ALL TIMES, BE AT BORROWER'S RISK. The
loss, injury to or destruction of COLLATERAL shall not release
BORROWER from payment or other performance hereof. BORROWER
agrees to obtain and keep in force Physical Damage and/or
Property Damage Insurance on said COLLATERAL and any other
insurance required by LENDER. Such insurance is to be in form
and amounts satisfactory to LENDER, with the same payable to
LENDER.
All such policies shall provide for ten days written minimum
cancellation notice to LENDER. BORROWER shall furnish to the
LENDER the original policies or certificates or other evidence
satisfactory to LENDER of compliance with the foregoing
provisions. LENDER is authorized, but not obligated, to
purchase any or all of said insurance or "single interest
insurance," protecting only its security interests, all at
BORROWER'S expense. In such event, BORROWER agrees to reimburse
LENDER for the cost of such insurance to the extent that the
same is not included in the principal amount of this Note.
BORROWER hereby assigns to LENDER the proceeds of all such
insurance to the extent of the unpaid balance hereunder, and
directs any insurer to make payments directly to LENDER.
BORROWER, further hereby grants to LENDER his Power of Attorney,
which shall be irrevocable for so long as any amount is unpaid
hereunder. Said Power of Attorney gives LENDER the sole right
to file Proof of Loss and/or any other forms required to collect
from any insurer any amount due from any loss, damage or
destruction of the COLLATERAL; to agree to and bind BORROWER as
to the amount of said recovery; to designate Payee(s) of such
recovery; to grant releases to payor-insurers for their
liability; to grant subrogation rights to any such
payor-insurer; to endorse any settlement check or draft.
BORROWER further agrees not to exercise any of the foregoing
Powers granted to LENDER, without the latter's written consent.
In the event of any default hereunder, LENDER is authorized in
its sole discretion to cancel any insurance and credit any
premium refund against the unpaid balance due on BORROWER'S
OBLIGATIONS.
If, with respect to any security pledged hereunder, a stock
dividend is declared or any stock split-up made or right to
subscribe issued, all the certificates for the shares
representing such stock dividend or stock split-up right to
subscribe will be immediately delivered, duly endorsed, to the
LENDER as additional COLLATERAL security.
If, at any time, the COLLATERAL shall be deemed unsatisfactory
to and by LENDER or in the event LENDER shall otherwise deem
itself, its security interests, its COLLATERAL or said debt
unsafe or insecure, then and on demand of LENDER, BORROWER shall
immediately furnish such further COLLATERAL or make such payment
on said accounts as will be satisfactory to LENDER, to be held
by said LENDER as it originally pledged hereunder.
At its option, LENDER may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on
said COLLATERAL, may pay for insurance and for the maintenance
and preservation of same. BORROWER agrees to reimburse LENDER,
on demand, for any such payment made, or any such expense
incurred by LENDER pursuant to the foregoing authorization.
Until default, as hereinafter defined, BORROWER shall have the
right to retain possession of the COLLATERAL, unless otherwise
agreed by the parties hereto, and to use it in any lawful manner
not inconsistent with this Note and with any policy of insurance
thereon.
LENDER may, with or without notice, before of after maturity of
this Note, transfer or register in the name of its nominee(s)
all or any part of the COLLATERAL and also exercise any or all
rights of collection, conversion, or exchange and other similar
rights, privileges and options pertaining to the COLLATERAL; but
shall have not duty to exercise any such rights, privileges or
options or to sell or otherwise realize upon any of the
COLLATERAL as herein authorized or to preserve the same and
shall not be responsible for any failure to do so or delay in so
doing. As to any COLLATERAL consisting of instruments or
chattel paper, it is agreed that LENDER shall not be required to
take any steps whatever to preserve any rights against prior
Parties.
LENDER shall have no custodial or ministerial duties to perform
with regard to COLLATERAL pledged except for its safekeeping;
and by way of explanation and not by way of limitation thereof.
LENDER shall incur no liability for any of the following: either
loss or depreciation of the COLLATERAL unless caused by its
willful misconduct; or its failure to present any paper for
payment or protest or to protest or give notice of non-payment
or any other notice with respect to any paper of COLLATERAL; or
its failure to present or surrender for redemption, conversion
or exchange any bond, stock, paper or other Security whether in
connection with any merger, consolidation, recapitalization,
reorganization or arising out of the intendment or refunding of
the original Security; or its failure to notify any party hereto
that the COLLATERAL should be so presented or surrendered.
Upon any transfer of this Note, the LENDER may deliver the
property held as security, or any part thereof, to the
transferee, as well as any subsequent holder thereof, who shall
thereupon become vested with all the powers and rights herein
given to the LENDER in respect to the
property so transferred and delivered; and the LENDER shall
thereafter be forever relieved and fully discharged from any
liability or responsibility with respect to such property so
transferred, but with respect to any property not so
transferred, the LENDER shall retain all rights and powers
hereby given.
With prior written assent of LENDER, other COLLATERAL may be
substituted for the original COLLATERAL herein, in which event
all rights, duties, obligations, remedies, and security
interests provided for, created for or granted shall apply fully
to such substitute COLLATERAL.
BORROWER will not use any COLLATERAL in any jurisdiction other
than a State in which Borrower shall have previously advised
LENDER such COLLATERAL will be used. If certificates are issued
or outstanding as to any of said COLLATERAL, BORROWER will cause
the security interests of LENDER to be properly protected and
perfected. Absent advance, written consent of LENDER, the
COLLATERAL therein described will not be used outside the
territorial limits of the USA.
BORROWER (or one or more of the undersigned) has, or forthwith
will acquire, full title to COLLATERAL, and will at all times,
keep same free of all liens, security interests, attachments
and/or claims whatsoever, other than the security interests
hereunder. BORROWER has good indefeasible marketable title
hereto and will warrant and defend same against all claims.
BORROWER is not to and will not attempt to transfer, sell or
encumber the COLLATERAL or use it for hire or in violation of
any statute or ordinance. BORROWER further agrees to pay
promptly all taxes and assessments upon the COLLATERAL and/or
for its use or operation, and/or on the Agreement to keep, use
and maintain said COLLATERAL in a reasonably careful manner so
as not to unreasonably or unnecessarily expose the same to waste
damage, wear or depreciation, and to keep the same in good order
and repair. LENDER may examine and inspect COLLATERAL or any
part thereof, wherever located at any reasonable time(s). All
equipment, accessories and parts shall become part of said
COLLATERAL by accession.
BORROWER will at all times keep LENDER'S security interest
property perfected and hereby designates LENDER as its attorney
in fact to do any acts or deeds or execute such documents
reasonably appropriate to accomplish said perfection. Said
designation shall be irrevocable as long as any obligation of
BORROWER is outstanding.
REMEDIES ON DEFAULT (Including Powers of Sale)
FOR PERSONAL PROPERTY COLLATERAL
Upon the occurrence of any of the foregoing events,
circumstances or conditions of default, all of the OBLIGATIONS
evidenced herein and secured hereby shall, at the option of the
LENDER, immediately be due and payable, without notice.
Further, LENDER shall then have all rights and remedies of a
SECURED PARTY under the Uniform Commercial Code, as adopted by
the State of LENDER'S office as set forth herein.
Without limitation thereto, LENDER shall have the following
specific rights and remedies:
(1) To take immediate possession of the COLLATERAL without
notice or resort to legal process; and for such purpose, to
enter upon any premises on which the COLLATERAL or any part
thereof may be situated and remove the same therefrom; or, at
its option, to render the COLLATERAL unusable. Further, also at
its option, to dispose of said COLLATERAL on BORROWER'S premises.
(2) To require BORROWER to assemble the COLLATERAL and make it
available to LENDER at a place to then be designated by said
LENDER, which is reasonably convenient to both parties.
(3) To exercise its rights of Set-Off by applying any monies of
BORROWER on deposit with LENDER toward payment of the
OBLIGATIONS evidenced or referred to herein or secured hereby,
without notice. If any process is issued or ordered to be
served on LENDER, seeking to seize BORROWER'S rights and/or
interest in any bank account maintained with LENDER, the balance
in any said account shall immediately be deemed to have been and
shall be set-off against any and all OBLIGATIONS of BORROWER to
LENDER, as of the time of issuance of any such writ or process;
whether or not BORROWER and/or LENDER shall then have been
served herewith.
(4) To dispose of COLLATERAL as allowed by the Uniform
Commercial Code, as adopted by the State of LENDER'S office as
set forth herein, in any County or place selected by LENDER, at
either Private or Public Sale (at which public Sale LENDER may
be the purchaser) with or without having the COLLATERAL
physically present at said sale.
(5) To make or have made any repairs deemed necessary or
desirable at time of repossession, possession or sale, the cost
of which is to be charged against BORROWER.
(6) To apply the proceeds realized from disposition of the
COLLATERAL to satisfy the following items, in the order here
listed:
(a) The cost of reimbursing any person whose interest in the
premises is physically damaged by the entry and removal of the
COLLATERAL upon the BORROWER'S failure to do so; next to
(b) The expenses of taking, removing, holding for sale,
repairing or otherwise preparing for sale and selling of said
COLLATERAL, specifically including the LENDER'S reasonable
Attorney's fees (including appellate costs, if any) and both
legal and collection expenses; next to
(c) The expense of liquidating any liens, security interests,
attachments or encumbrances superior to the security interests
herein created; and finally to
(d) The unpaid principal and all accumulated interest
hereunder and to any other debts owed to LENDER by any signer
hereof.
Any surplus, after the satisfaction of the foregoing items (a)
through (d) shall be paid to BORROWER or to any other Party
lawfully entitled thereto and known to this LENDER. Further, if
proceeds realized from disposition of the COLLATERAL shall fail
to satisfy any of the foregoing items (a) through (d), BORROWER
shall forthwith pay deficiency balance to LENDER.
No waivers, amendments or modifications shall be valid unless in
writing. Further, this Note shall be governed by and construed
under the laws of the State of the LENDER'S office as set forth
herein. All terms and expressions contained herein which are
defined in Articles 1, 3 or 9 of the Uniform Commercial Code of
the State of the LENDER'S office set forth herein shall have the
same meaning herein as is said Article of said Code.
ADDITIONAL PROVISIONS AS TO REAL PROPERTY COLLATERAL
BORROWER hereby further warrants, covenants and agrees, as
follows:
This Note is secured by a Security Instrument and such
instrument is Incorporated herein by reference.
BORROWER will discharge all of BORROWER'S duties and obligations
as stated in any Security Instrument to LENDER and any other
Instrument, including a commitment letter or a loan agreement,
if any, evidencing and securing the obligations in this Note.
REMEDIES FOR DEFAULT FOR REAL PROPERTY COLLATERAL
All remedies upon default for real property Collateral
encumbered to Lender by the Security Instrument will be
determined according to the terms of such Security Instrument.
<PAGE>
Schedule A to Promissory Note and Security Agreement Dated June
15, 1995
In The amount of $3,000,000.00 Between First Union National Bank
of Florida and General Parcel Service, Inc.
ACCOUNTS RECEIVABLE:
All accounts receivable presently existing and hereafter
arising. Further proceeds and produces thereof.
All accounts receivable: contracts rights, instruments,
documents, chattel paper general intangibles and all forms of
obligations owing to borrower, whether now or hereafter existing
or now owned or hereafter acquired, and all cash and non-cash
proceeds thereof and all of borrower's rights to any merchandise
which is represented thereby, and all of borrower's title.
security and guarantees with respect to each receivable
including the right of stoppage in transit.
5 -Winn Dixie Stores, Inc. Common Stock Certificates Number JCU
9416, JCU 9418, JCU 9419, JCU 9420, JCU 9421 each being
10.000 shares each and r/i/n/o ECD Trust u/a 7/3/80
1311 Shares Winn Dixie Stores, Inc. Common Stock Certificate
Number WWDA 24432 r/i/n/o ECD Trust u/a 7/3/80
9600 Shares Winn-Dixie Stores, Inc. Common Stock Certificate
Number JCU 9426 r/i/n/o ECD Trust u/a 7/3/80
765 Shares Winn Dixie Stores, Inc. Common Stock Certificate
Number WDF 17316 r/i/n/o ECD Trust u/a 7/3/80
51.744 Shares Winn-Dixie Stores, Inc. Common Stock Certificate
Number WDA 23637 r/i/n/o ECD Trust u/a 7/3/80
11.800 Shares Winn Dixie Stores, Inc. Common Stock Certificate
Number NVDA 23638 r/i/n/o ECD Trust u/a 7/3/80
PAGE 1 OF I
General Parcel Service, Inc.
BY: /s/ Wayne N. Nellums
Wayne N. Nellums, V.P. of Finance
<PAGE>
Schedule B to Promissory Note and Security Agreement Dated June
15, 1995
In the amount of $3,000,000.00. Between First Union National
Bank of Florida and General Parcel Service, Inc.
For the Period Commencing June 15, 1995 and ending, June 15.
2000. Borrower shall have the option of selecting the interest
rate on advances based on one of the two following options:
The 30 day London Interbank Offering Rate (L.I.B.O.R.) plus 75
basis points. (Definition of L.I.B.O.R. rate will be described
on Attachment A); or
First Union National Bank's Prime Rate minus Three-Quarter
(-.75%) percent.
The L.I.B.O.R. rate and Lender's Prime rate options shall be
floating daily as that rate may change from time to time.
Interest Period available for the L.I.B.O.R. rate and Lender's
Prime rate options may be changed monthly commencing July 15,
1995 and may continue to change on the first day of each
calendar month thereafter.
Borrower shall provide Bank notice of the rate option selected
two (2) business days prior to the first day of the Interest
Period. If notice is not received within the required period.
advances under the expiring Interest Period shall continue to
bear interest at the option previously selected until the next
permissible change in interest rate.
For the L.I.B.O.R. rate or Lender's Prime rate option. interest
shall be computed on the basis of a year of 360 days and charged
for the actual number of days elapsed from the date of the loan
advance(s) until paid.
PAGE I OF 1
General Parcel Service, Inc. BY: /s/ Wayne N. Nellums Wayne N.
Nellums, V.P. of Finance I
<PAGE>
"LIBOR-BASED RATE" shall mean a rate per annum (rounded upwards,
if necessary, to the next higher I / I 00 of I %) determined
pursuant to the following formula:
LIBOR-BASED RATE = LIBOR Base Rate = ***%
- --------------- 1.00-Eurodollar Reserve Percentage
1. "LIBOR Base Rate" shall mean the rate for deposits in United
States dollars for maturity of 30 days which appears on the
Telerate Page 3750 at Approximately 11: 00 a.m. London time,
two (2) London Business days prior to the effective date of
applicable LIBOR-Based Rate. If for any, reason. such rate is
not available. then "LIBOR Base Rate" shall mean the rate per
annum at which. in the opinion of the Lender, United States
Dollars in the amount of $5.000.000.00 are being offered to
leading reference banks for settlement in the London interbank
market at approximately 11:00 a.m. London time, two (2) London
business days prior to the effective date of the LIBOR-Based
Rate for a maturity of 30 days.
2. "Eurodollar Reserve Percentage" shall mean. for any day, the
percentage (expressed as a decimal and rounded upwards, if
necessary, to the next higher 1/100 of 1%) which is in effect,
if applicable, for such day as prescribed by the Federal Reserve
Board (or successor) for determining the maximum reserve
requirement (including without limitation any basic,
supplemental or emergency reserves) for Lender in respect of
Eurocurrency liabilities or similar category of liabilities.
<PAGE>
Exhibit 10.1
------------
$3,000,000.00 No. 3332157596
June 15, 1995
(Date of Execution and Delivery)
LENDER: FIRST UNION NATIONAL BANK OF FLORIDA (hereinafter
termed "LENDER"), Jacksonville, Florida.
BORROWER: GENERAL PARCEL SERVICE, INC., 8923 WESTERN WAY,
JACKSONVILLE, DUVAL, FL, 32256. (hereinafter "Place of
Business").
BORROWER REPRESENTS HEREWITH THAT THE LOAN EVIDENCED IS HEREBY
BEING OBTAINED FOR THE FOLLOWING PRIMARY PURPOSE: Business.
FOR VALUE RECEIVED: to wit, money loaned the undersigned
BORROWER (hereinafter collectively termed "BORROWER"), jointly
and severally (if more than one borrower), promise(s) to pay to
the order of the LENDER at its office in the above city, or
wherever else LENDER may specify, the sum of Three Million &
00/100 ($3,000,000.00) dollars with interest until paid.
TERMS OF PAYMENT
(X) payable in consecutive Monthly payments principal;
commencing on July 15, 1997, in 35 equal payments of
$83,333.33 plus an irregular payment of $83,333.45 due on June
15, 2000 with interest payable Monthly commencing on July 15,
1995 and each Month thereafter.
(X) with interest payable Monthly commencing on July 15,
1995 and each Monthly thereafter;
(X) see attached Schedule "B", terms of which are
incorporated by reference:
The undersigned agrees to pay a late charge equal to 5% of each
payment of principal and/or interest which is not paid within 10
days of the date on which it is due. AT LENDER'S option, the
contract rate shall become the highest rate allowed by the law
of the State of the LENDER'S office as set forth herein
commencing with and continuing for so long as the loan or
portion thereof is in Default (as herein defined). Further,
upon BORROWER'S default and where LENDER deems it necessary or
proper to employ an attorney to enforce collection of any unpaid
balance hereunder, then BORROWER agrees to pay LENDER'S
reasonable attorneys' fees (including appellate costs, if any)
and collection costs. Liability for reasonable attorneys' fees
and costs shall exist whether or not any suite or proceeding is
commenced.
INTEREST is computed on the basis of a 360 day year
for the actual number of days in the Interest period (Actual/360
computation) unless indicated below.
LENDER'S Actual/360 or365/360 computation determines
the annual effective interest yield by taking the stated
(nominal) Interest rate for a year's period and the dividing
said rate by 360 to determine the daily periodic rate to be
applied for each day in the Interest period. Application of
such computation produces an annualized effective interest rate
exceeding that of the nominal rate.
If the interest provision contained herein refers to LENDER'S
PRIME RATE, and BORROWER acknowledges that LENDER'S PRIME RATE
is not represented or intended to be the lowest or most
favorable rate of interest offered by LENDER.
All payments received during normal banking hours after 2:00
p.m. shall be deemed received at the opening of the next banking
day. At LENDER'S option, and repayments of the Note, other than
by U S currency, will not be credited to the outstanding loan
balance until LENDER receives collected funds.
BORROWER'S payment will increase if the scheduled payment
amount is insufficient to pay accrued interest. If the
scheduled payment in insufficient to pay accrued interest, the
scheduled payment amount shall be immediately increased as is
necessary to pay all accruals of interest for the period and all
accruals of unpaid interest from previous periods. Such
adjustments to the scheduled payment amount shall remain in
effect for as long as the interest accruals shall exceed the
original scheduled payment amount and shall be further adjusted
upward or downward to reflect changes in the variable interest
rate. In no event shall the scheduled payment amount be reduced
below the original scheduled payment specified herein.
Each of the undersigned, whether BORROWER, sureties, or
endorsers, and all others who may become liable for all or any
part of the obligations evidenced and secured hereby, do hereby,
jointly and severally: waive presentment, demand, protest,
notice of protest and/or of dishonor, and also notice of
acceleration of maturity on Default or other wise. Further,
they agree that LENDER from time to time, extend, modify, amend
or renew this Note and Security Agreement for any period
(whether or not longer than the original period of the Note) and
grant any releases, compromises or indulgences with respect to
the Note or any extensions, modifications, amendments or
renewals thereof or any security therefor, or to any party
liable thereunder or hereunder, all without notice to or consent
of any of the undersigned and without affecting the liability of
the undersigned hereunder.
If more than one person has signed this instrument, such
parties are jointly and severally obligated hereunder. Further,
use of the masculine pronoun herein shall include the feminine
and neuter and also the plural. If any provision of this
instrument shall be prohibited or invalid under applicable law,
such provision shall be ineffective but only to the extent of
such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Note.
Time is the essence hereof. Any notices to Borrower shall be
sufficiently given, if mailed or delivered to the Principal
Place of Business.
TO SECURE PAYMENT of this Note, all obligations of undersigned
BORROWER hereunder, and all other obligations of BORROWER to
LENDER, its successors and assign, howsoever created, arising or
evidenced; whether direct or indirect, absolute or contingent,
or now or hereafter existing or due to become due (the loan and
debt evidenced by this Note and secured by this Security
Agreement and all other present and future obligations of
BORROWER owed to LENDER are hereinafter collectively termed the
"OBLIGATIONS"); the undersigned BORROWER hereby mortgages,
conveys. and grants to LENDER, as permitted by law, a security
interest in, and herewith pledges and deposits as collateral the
following described and identified personal and/or real
property, and any and all additions, accessions and
substitutions thereto or therefor, (including all cash, stock,
or other dividends and all proceeds thereof, and all rights to
subscribe for securities incident thereto) are hereinafter
termed the "COLLATERAL"; and a Security interest in PROCEEDS AND
PRODUCTS of the COLLATERAL is granted to LENDER:
(X) If checked here, COLLATERAL is listed and described on
attached schedule "A"; Incorporated herein by reference.
BORROWER hereby warrants, covenants and agrees that:
(1) Borrower's principal place of business is that shown above.
If Borrower has no principal place of business in said State,
the Borrower's residence in said State is shown above.
(2) Borrower's other places of business in said State or State
of LENDER'S office not previously stated are as follow:
Personal property COLLATERAL is used or being
purchased for: ___Personal, Family or Household; ___Farming
Operations; ___Business Use, and, ___if checked here,
COLLATERAL IS BEING ACQUIRED WITH THE PROCEEDS OF AN ADVANCE
EVIDENCED BY THIS AGREEMENT, which LENDER may disburse directly
to the seller of said personal property.
(4) The personal property COLLATERAL will be kept at the
Principal Place of Business; otherwise, ___if checked here,
at:
(5) If any personal property COLLATERAL will be used in
more than one State whether or not actually so used, and
BORROWER has a place(s) of business in more than one State, the
Principal Place of Business is that shown above unless otherwise
stated as follows:
(6) ___If checked here,personal property COLLATERAL is to be affixed
to real property, a description of the real estate is as follows:
(7) Said COLLATERAL is free and clear of all liens, security interests,
claims and/or encumbrances other than any to LENDER except the following:
(8) ___If checked, this Note is subject to the terms and
conditions of a commitment letter and/or loan agreement
between BORROWER and LENDER dated: _________________, which is
herein incorporated herein by reference.
THIS PROMISSORY NOTE IS SUBJECT TO THE ADDITIONAL
PROVISIONS, TERMS, UNDERTAKINGS AND RIGHTS SET FORTH ON THE
REVERSE SIDE HEREOF, THE SAME BEING INCORPORATED HEREIN BY
REFERENCE.
Waiver: BORROWER agrees that LENDER shall after the occurrence
of any event of default, be entitled to immediate possession of
all the COLLATERAL. BORROWER agrees that LENDER'S interest in
the COLLATERAL arose out of a Commercial Transaction.
IN WITNESS THEREOF, the Borrower, on the day and year first
written above, has caused this Note to be executed under seal
by, (i) if a corporation, adoption of the facsimile seal printer
hereon for such special occasion and purpose (or if an
impression seal appears hereon by affixing such impression seal)
by its duly authorized officer(s) of, (ii) if by individuals, by
hereto setting their hand and seals.
General Parcel Service, Inc.
Name of Corporation
CORPORATE BORROWER
BY: /s/ Wayne N. Nellums
BY: Wayne N. Nellums
VP of Finance,
ADDITIONAL PROVISIONS
BORROWER hereby further warrants, covenants and agrees, as follows:
Anything contained herein to the contrary not withstanding, if
for any reason the effective rate of interest on this Note
should exceed the maximum lawful rate, the effective rate shall
be deemed reduced to and shall be such maximum lawful rate, and
any sums of interest which have been collected in excess of such
maximum lawful rate shall be applied as a credit against the
unpaid balance due hereunder.
No waivers, amendments or modifications shall be valid unless
in writing. No waiver by LENDER of any default(s) shall operate
as a waiver of any other default or the same default on a future
occasion. All rights of LENDER hereunder shall inure to the
benefit of its successors and assigns, and all obligations of
BORROWER shall bind his heirs, executors, administrators,
successors and/or assigns.
In the case of conflict between the terms of this Note and any
Loan Agreement and/or Commitment Letter issued in connection
herewith, the priority of controlling terms shall be first this
Note, then the Security Instrument, if any, the Loan Agreements,
then the Commitment Letter, except as otherwise provided herein.
In the event any provision(s) of this instrument shall be left
blank or incomplete, BORROWER hereby authorizes and empowers
LENDER to supply and complete the necessary information as a
ministerial task consistent with the understanding between the
parties.
BORROWER WILL IMMEDIATELY NOTIFY LENDER in writing of any
(1) change in: BORROWER'S Principal Place of Business and/or
Residence; (2) change in the BORROWER'S name or identity; (3)
change in BORROWER'S Corporate Structure.
BORROWER warrants that borrower does not have either a
record or reputation for violating laws of the United States or
of any State relating to liquor (as referred to in 18 USCA 3617,
et seq) or narcotics and/or any commercial crimes.
Upon occurrence of any other "EVENTS OF DEFAULT," as
hereinafter defined; LENDER is herewith expressly authorized to
exercise its right of Set-Off or Bank Lien as to any monies
deposited in demand, checking, time, savings or other accounts
of any nature maintained in and with it by any one of the
undersigned, without advance notice.
Said right of Set-Off shall also be exercised and applicable
where LENDER is indebted to any signer hereof by reason of any
Certificate of Deposit, Note or otherwise.
Borrower shall promptly pay all documentary and/or intangible
taxes on this transaction whether assessed at closing or arising
from time to time.
WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREES, THAT:
(A) NEITHER THE BORROWER, NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR
LEGAL REPRESENTATION OF ANY OF THE SAME SHALL SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAUM, OR ANY OTHER
LITIGATION PROCEDURE ARISING FROM OR BASED UPON THIS THE
PROMISSORY NOTE, ANY OTHER LOAN AGREEMENT OR ANY LOAN DOCUMENT
EVIDENCING, SECURING, OR RELATING TO THE OBLIGATIONS, OR TO THE
DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES THERETO;
(B) NEITHER THE BORROWER, NOR FUNB WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE
WAIVED; (C) THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
NEGOTIATED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS; (D) NEITHER THE BORROWER, NOR FUNB HAS
IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT
THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES; AND (E) THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER TO ENTER INTO THIS TRANSACTION.
EVENTS OF DEFAULT
BORROWER shall be in default under this Note, upon the
happening of any of the following events, circumstances
or conditions; namely:
(1) Default in the payment or performance of any of the
OBLIGATIONS provided hereunder or in connection herewith or any
other OBLIGATIONS of BORROWER or any affiliate (as defined in 11
USC 101(2), hereinafter affiliate) of BORROWER or any endorser,
guarantor or surety for BORROWER to LENDER or any affiliate of
LENDER, howsoever created, primary or secondary, whether direct
or indirect, absolute or contingent, now or hereafter existing,
due or to become due, or of any other covenant, warranty or
undertaking expressed herein, therein, or in any other document
establishing said endorsement, guaranty, or surety; or
(2) Any warranty, representation or statement made or
furnished to LENDER by or on behalf of BORROWER, or any
guarantor, endorser, or surety for Borrower in connection with
this Note or to induce LENDER to make a loan to BORROWER which
was false in any material respect when made or furnished or has
become materially false. If such warranty of BORROWER or
guarantor, endorser or surety for Borrower was ongoing in
nature; or
(3) Death, dissolution, termination of existence, insolvency,
business failure, appointment of a receiver, custodian, or
trustee for any part of the property of, assignment for the
benefit of credits by, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against BORROWER
or any endorser, guarantor, or surety for BORROWER; or
(4) The acquisition of substantially all of Borrower's,
endorser's, guarantor's or sureties business or assets, or a
material portion of its business or assets if such a sale is
outside its ordinary course of business, or more than 50% of its
outstanding stock or voting power in a single transaction or a
series of transactions, or acquisition of substantially all of
the business or assets or more than 50% of the outstanding stock
or voting power of any other entity, or should Borrower,
endorsers, guarantors or sureties enter into any transaction or
merger or consolidation without prior written consent of LENDER;
or
(5) Failure of a corporate BORROWER or endorser, guarantor, or
surety for said BORROWER to maintain its corporate existence in
good standing; or
(6) Upon the entry of any monetary judgment or the assessment
and/or filing of any tax lien against BORROWER or any endorser,
surety or guarantor, or upon the issuance of any writ or
garnishment, judicial seizure of, or attachment against property
of, debts due or rights of BORROWER or any endorser, surety or
guarantor, to specifically include commencement of any action or
proceeding to seize monies of BORROWER or any indorser, surety
or guarantor on deposit in any bank account with LENDER; or
(7) Any BORROWER, endorser, guarantor or surety shall be a
debtor, either voluntarily or involuntarily, under (and as the
term debtor is defined in) the Bankruptcy Code or should any
BORROWER, endorser, guarantor or surety by generally not paying
their respective debts as such debts become due; or
(8) Failure of said BORROWER, endorsers, guarantors or
sureties to furnish financial statements or other financial
information reasonably requested by LENDER; or
(9) Loss, theft, substantial damage, destruction, sale or
encumbrance to or of any COLLATERAL, or the assertion or making
of any levy, seizure, mechanic's lien or attachment thereof or
thereon; or
(10) If LENDER should otherwise deem itself or the
debt created hereunder unsafe or insecure; or should LENDER, in
good faith, believe that the prospect of payment or other
performance is impaired.
ADDITIONAL PROVISIONS FOR PERSONAL PROPERTY COLLATERAL
BORROWER hereby further warrants, covenants, and
agrees, as follows:
THE COLLATERAL SHALL, AT ALL TIMES, BE AT BORROWER'S
RISK. The loss, injury to or destruction of COLLATERAL shall
not release BORROWER from payment or other performance hereof.
BORROWER agrees to obtain and keep in force Physical Damage
and/or Property Damage Insurance on said COLLATERAL and any
other insurance required by LENDER. Such insurance is to be in
form and amounts satisfactory to LENDER, with the same payable
to LENDER.
All such policies shall provide for ten days written minimum
cancellation notice to LENDER. BORROWER shall furnish to the
LENDER the original policies or certificates or other evidence
satisfactory to LENDER of compliance with the foregoing
provisions. LENDER is authorized, but not obligated, to
purchase any or all of said insurance or "single interest
insurance," protecting only its security interests, all at
BORROWER'S expense. In such event, BORROWER agrees to reimburse
LENDER for the cost of such insurance to the extent that the
same is not included in the principal amount of this Note.
BORROWER hereby assigns to LENDER the proceeds of all such
insurance to the extent of the unpaid balance hereunder, and
directs any insurer to make payments directly to LENDER.
BORROWER, further hereby grants to LENDER his Power of Attorney,
which shall be irrevocable for so long as any amount is unpaid
hereunder. Said Power of Attorney gives LENDER the sole right
to file Proof of Loss and/or any other forms required to collect
from any insurer any amount due from any loss, damage or
destruction of the COLLATERAL; to agree to and bind BORROWER as
to the amount of said recovery; to designate Payee(s) of such
recovery; to grant releases to payor-insurers for their
liability; to grant subrogation rights to any such
payor-insurer; to endorse any settlement check or draft.
BORROWER further agrees not to exercise any of the foregoing
Powers granted to LENDER, without the latter's written consent.
In the event of any default hereunder, LENDER is authorized in
its sole discretion to cancel any insurance and credit any
premium refund against the unpaid balance due on BORROWER'S
OBLIGATIONS.
If, with respect to any security pledged hereunder, a stock
dividend is declared or any stock split-up made or right to
subscribe issued, all the certificates for the shares
representing such stock dividend or stock split-up right to
subscribe will be immediately delivered, duly endorsed, to the
LENDER as additional COLLATERAL security.
If, at any time, the COLLATERAL shall be deemed unsatisfactory
to and by LENDER or in the event LENDER shall otherwise deem
itself, its security interests, its COLLATERAL or said debt
unsafe or insecure, then and on demand of LENDER, BORROWER shall
immediately furnish such further COLLATERAL or make such payment
on said accounts as will be satisfactory to LENDER, to be held
by said LENDER as it originally pledged hereunder.
At its option, LENDER may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on
said COLLATERAL, may pay for insurance and for the maintenance
and preservation of same. BORROWER agrees to reimburse LENDER,
on demand, for any such payment made, or any such expense
incurred by LENDER pursuant to the foregoing authorization.
Until default, as hereinafter defined, BORROWER shall have the
right to retain possession of the COLLATERAL, unless otherwise
agreed by the parties hereto, and to use it in any lawful manner
not inconsistent with this Note and with any policy of insurance
thereon.
LENDER may, with or without notice, before of after maturity of
this Note, transfer or register in the name of its nominee(s)
all or any part of the COLLATERAL and also exercise any or all
rights of collection, conversion, or exchange and other similar
rights, privileges and options pertaining to the COLLATERAL; but
shall have not duty to exercise any such rights, privileges or
options or to sell or otherwise realize upon any of the
COLLATERAL as herein authorized or to preserve the same and
shall not be responsible for any failure to do so or delay in so
doing. As to any COLLATERAL consisting of instruments or
chattel paper, it is agreed that LENDER shall not be required to
take any steps whatever to preserve any rights against prior
Parties.
LENDER shall have no custodial or ministerial duties to perform
with regard to COLLATERAL pledged except for its safekeeping;
and by way of explanation and not by way of limitation thereof.
LENDER shall incur no liability for any of the following: either
loss or depreciation of the COLLATERAL unless caused by its
willful misconduct; or its failure to present any paper for
payment or protest or to protest or give notice of non-payment
or any other notice with respect to any paper of COLLATERAL; or
its failure to present or surrender for redemption, conversion
or exchange any bond, stock, paper or other Security whether in
connection with any merger, consolidation, recapitalization,
reorganization or arising out of the intendment or refunding of
the original Security; or its failure to notify any party hereto
that the COLLATERAL should be so presented or surrendered.
Upon any transfer of this Note, the LENDER may deliver the
property held as security, or any part thereof, to the
transferee, as well as any subsequent holder thereof, who shall
thereupon become vested with all the powers and rights herein
given to the LENDER in respect to the property so transferred
and delivered; and the LENDER shall thereafter be forever relieved
and fully discharged from any liability or responsibility with respect
to such property so transferred, but with respect to any property not so
transferred, the LENDER shall retain all rights and powers
hereby given.
With prior written assent of LENDER, other COLLATERAL may be
substituted for the original COLLATERAL herein, in which event
all rights, duties, obligations, remedies, and security
interests provided for, created for or granted shall apply fully
to such substitute COLLATERAL.
BORROWER will not use any COLLATERAL in any
jurisdiction other than a State in which Borrower shall have
previously advised LENDER such COLLATERAL will be used. If
certificates are issued or outstanding as to any of said
COLLATERAL, BORROWER will cause the security interests of LENDER
to be properly protected and perfected. Absent advance, written
consent of LENDER, the COLLATERAL therein described will not be
used outside the territorial limits of the USA.
BORROWER (or one or more of the undersigned) has, or forthwith
will acquire, full title to COLLATERAL, and will at all times,
keep same free of all liens, security interests, attachments
and/or claims whatsoever, other than the security interests
hereunder. BORROWER has good indefeasible marketable title
hereto and will warrant and defend same against all claims.
BORROWER is not to and will not attempt to transfer, sell or
encumber the COLLATERAL or use it for hire or in violation of
any statute or ordinance. BORROWER further agrees to pay
promptly all taxes and assessments upon the COLLATERAL and/or
for its use or operation, and/or on the Agreement to keep, use
and maintain said COLLATERAL in a reasonably careful manner so
as not to unreasonably or unnecessarily expose the same to waste
damage, wear or depreciation, and to keep the same in good order
and repair. LENDER may examine and inspect COLLATERAL or any
part thereof, wherever located at any reasonable time(s). All
equipment, accessories and parts shall become part of said
COLLATERAL by accession.
BORROWER will at all times keep LENDER'S security interest
property perfected and hereby designates LENDER as its attorney
in fact to do any acts or deeds or execute such documents
reasonably appropriate to accomplish said perfection. Said
designation shall be irrevocable as long as any obligation of
BORROWER is outstanding.
REMEDIES ON DEFAULT (Including Powers of Sale)
FOR PERSONAL PROPERTY COLLATERAL
Upon the occurrence of any of the foregoing events,
circumstances or conditions of default, all of the OBLIGATIONS
evidenced herein and secured hereby shall, at the option of the
LENDER, immediately be due and payable, without notice.
Further, LENDER shall then have all rights and remedies of a
SECURED PARTY under the Uniform Commercial Code, as adopted by
the State of LENDER'S office as set forth herein.
Without limitation thereto, LENDER shall have the following
specific rights and remedies:
(1) To take immediate possession of the COLLATERAL without
notice or resort to legal process; and for such purpose, to
enter upon any premises on which the COLLATERAL or any part
thereof may be situated and remove the same therefrom; or, at
its option, to render the COLLATERAL unusable. Further, also at
its option, to dispose of said COLLATERAL on BORROWER'S premises.
(2) To require BORROWER to assemble the COLLATERAL and make it
available to LENDER at a place to then be designated by said
LENDER, which is reasonably convenient to both parties.
(3) To exercise its rights of Set-Off by applying any monies of
BORROWER on deposit with LENDER toward payment of the
OBLIGATIONS evidenced or referred to herein or secured hereby,
without notice. If any process is issued or ordered to be
served on LENDER, seeking to seize BORROWER'S rights and/or
interest in any bank account maintained with LENDER, the balance
in any said account shall immediately be deemed to have been and
shall be set-off against any and all OBLIGATIONS of BORROWER to
LENDER, as of the time of issuance of any such writ or process;
whether or not BORROWER and/or LENDER shall then have been
served herewith.
(4) To dispose of COLLATERAL as allowed by the Uniform
Commercial Code, as adopted by the State of LENDER'S office as
set forth herein, in any County or place selected by LENDER, at
either Private or Public Sale (at which public Sale LENDER may
be the purchaser) with or without having the COLLATERAL
physically present at said sale.
(5) To make or have made any repairs deemed necessary or
desirable at time of repossession, possession or sale, the cost
of which is to be charged against BORROWER.
(6) To apply the proceeds realized from disposition of the
COLLATERAL to satisfy the following items, in the order here
listed:
(a) The cost of reimbursing any person whose interest in the
premises is physically damaged by the entry and removal of the
COLLATERAL upon the BORROWER'S failure to do so; next to
(b) The expenses of taking, removing, holding for sale,
repairing or otherwise preparing for sale and selling of said
COLLATERAL, specifically including the LENDER'S reasonable
Attorney's fees (including appellate costs, if any) and both
legal and collection expenses; next to
(c) The expense of liquidating any liens, security
interests, attachments or encumbrances superior to the security
interests herein created; and finally to
(d) The unpaid principal and all accumulated interest
hereunder and to any other debts owed to LENDER by any signer
hereof.
Any surplus, after the satisfaction of the foregoing items (a)
through (d) shall be paid to BORROWER or to any other Party
lawfully entitled thereto and known to this LENDER. Further, if
proceeds realized from disposition of the COLLATERAL shall fail
to satisfy any of the foregoing items (a) through (d), BORROWER
shall forthwith pay deficiency balance to LENDER.
No waivers, amendments or modifications shall be valid unless
in writing. Further, this Note shall be governed by and
construed under the laws of the State of the LENDER'S office as
set forth herein. All terms and expressions contained herein
which are defined in Articles 1, 3 or 9 of the Uniform
Commercial Code of the State of the LENDER'S office set forth
herein shall have the same meaning herein as is said Article of
said Code.
ADDITIONAL PROVISIONS AS TO REAL PROPERTY COLLATERAL
BORROWER hereby further warrants, covenants and agrees, as
follows:
This Note is secured by a Security Instrument and such
instrument is Incorporated herein by reference.
BORROWER will discharge all of BORROWER'S duties and
obligations as stated in any Security Instrument to LENDER and
any other Instrument, including a commitment letter or a loan
agreement, if any, evidencing and securing the obligations in
this Note.
REMEDIES FOR DEFAULT FOR REAL PROPERTY COLLATERAL
All remedies upon default for real property Collateral
encumbered to Lender by the Security Instrument will be
determined according to the terms of such Security Instrument.
<PAGE>
Schedule A to Promissory Note and Security
Agreement Dated June 15. 1995
In The amount of $3,000,000.00
Between First Union National Bank of Florida and
General Parcel Service, Inc.
.ACCOUNTS RECEIVABLE:
All accounts receivable presently. existing and hereafter
arising,. Further proceeds and produces thereof.
All accounts receivable, contracts rights, instruments,
documents, chattel paper general intangibles and all forms of
obligations owing to borrower, whether now or hereafter existing
or now owned or hereafter acquired, and all cash and non-cash
proceeds thereof and all of borrower's rights to any merchandise
which is represented thereby, and all of borrower's title,
security and guarantees with respect to each receivable
including the right of stoppage in transit.
5 -Winn Dixie Stores, Inc. Common Stock Certificates Number JCU
9416, JCU 9418, JCU 9419, JCU 9420, JCU 9421 each being
10.000 shares each and r/i/n/o ECD Trust u/a 7/3/80
1311 Shares Winn Dixie Stores, Inc. Common Stock
Certificate Number WWDA 24432 r/i/n/o ECD Trust u/a 7/3/80
9600 Shares Winn-Dixie Stores, Inc. Common Stock Certificate
Number JCU 9426 r/i/n/o ECD Trust u/a 7/3/80
765 Shares Winn Dixie Stores, Inc. Common Stock Certificate
Number WDF 17316 r/i/n/o ECD Trust u/a 7/3/80
51.744 Shares Winn-Dixie Stores, Inc. Common Stock Certificate
Number WDA 23637 r/i/n/o ECD Trust u/a 7/3/80
11.800 Shares Winn Dixie Stores, Inc. Common Stock Certificate
Number NVDA 23638 r/i/n/o ECD Trust u/a 7/3/80
PAGE 1 OF I
General Parcel Service, Inc.
BY: /s/ Wayne N. Nellums
Wayne N. Nellums, V.P. of Finance
<PAGE>
Schedule B to Promissory Note and Security Agreement Dated June
15, 1995
In the amount of $3,000,000.00.
Between First Union National Bank of Florida and
General Parcel Service, Inc.
For the Period Commencing June 15, 1995 and ending, June 15.
2000. Borrower shall have the option of selecting the interest
rate on advances based on one of the two following options:
The 30 day London Interbank Offering Rate (L.I.B.O.R.) plus 75
basis points. (Definition of L.I.B.O.R. rate will be described
on Attachment A); or
First Union National Bank's Prime Rate minus Three-Quarter
(-.75%) percent.
The L.I.B.O.R. rate and Lender's Prime rate options shall be
floating daily as that rate may change from time to time.
Interest Period available for the L.I.B.O.R. rate and Lender's
Prime rate options may be changed monthly commencing July 15,
1995 and may continue to change on the first day of each
calendar month thereafter.
Borrower shall provide Bank notice of the rate option selected
two (2) business days prior to the first day of the Interest
Period. If notice is not received within the required period.
advances under the expiring Interest Period shall continue to
bear interest at the option previously selected until the next
permissible change in interest rate.
For the L.I.B.O.R. rate or Lender's Prime rate option. interest
shall be computed on the basis of a year of 360 days and charged
for the actual number of days elapsed from the date of the loan
advance(s) until paid.
PAGE I OF 1
General Parcel Service, Inc.
BY: /s/ Wayne N. Nellums
Wayne N. Nellums, V.P. of Finance
<PAGE>
"LIBOR-BASED RATE" shall mean a rate per annum (rounded upwards,
if necessary, to the next higher I / I 00 of I %) determined
pursuant to the following formula:
LIBOR-BASED RATE = LIBOR Base Rate = ***%
--------------
1.00-Eurodollar Reserve Percentage
1. "LIBOR Base Rate" shall mean the rate for deposits in United
States dollars for maturity of 30 days which appears on the
Telerate Page 3750 at Approximately 11: 00 a.m. London time,
two (2) London Business days prior to the effective date of
applicable LIBOR-Based Rate. If for any, reason. such rate is
not available. then "LIBOR Base Rate" shall mean the rate per
annum at which. in the opinion of the Lender, United States
Dollars in the amount of $5.000.000.00 are being offered to
leading reference banks for settlement in the London interbank
market at approximately 11:00 a.m. London time, two (2) London
business days prior to the effective date of the LIBOR-Based
Rate for a maturity of 30 days.
2. "Eurodollar Reserve Percentage" shall mean. for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary,
to the next higher 1/100 of 1%) which is in effect, if applicable,
for such day as prescribed by the Federal Reserve Board (or successor)
for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) for Lender
in respect of Eurocurrency liabilities or similar category of liabilities.
<PAGE>
Exhibit 10.3
------------
OFFICE/INDUSTRIAL LEASE AGREEMENT
between
KOURY CORPORATION
Landlord
and
GENERAL PARCEL SERVICE, INC.
Tenant
For Premises Located at:
2903/2905 Pacific Avenue
TABLE OF CONTENTS
ARTICLE I - REFERENCE PROVISIONS, PROPERTY, LEASED PREMISES AND
TERM
Section 1.1 - Reference Provisions
Section 1.1(a) - Leased Premises
Section 1.1(b) - Term
Section 1.1(c) - Minimum Annual Rent
Section 1.1(d) - INTENTIONALLY DELETED
Section 1.1(e) - Use
Section 1.1(0 - Area of Leased Premises
Section 1.1(g) - Security Deposit
Section 1.1(h) - Notice Address
Section 1.2 - Commencement Date
Section 1.3 - Acceptance of Leased Premises
Section 1.4 - Quiet Enjoyment
ARTICLE 11 - RENT AND OTHER CHARGES
Section 2.1 - Annual Rents
Section 2.2 - Taxes
Section 2.3 - Common Areas
Section 2.4 - Utilities
Section 2.5 - Tenant's Share of Property Tax and Insurance
Escalations
Section 2.6 - Services
ARTICLE III - UPFIT OF LEASED PREMISES
ARTICLE TV - USE OF LEASED PREMISES
Section 4.1 - Permitted Use of Leased Premises
Section 4.2 - INTENTIONALLY DELETED
Section 4.3 - Additional Covenants of Tenant
Section 4.4 - Signs, Awnings and Canopies
<PAGE>
Table of Contents
Lease between KOURY CORPORATION, Landlord and
GENERAL PARCEL SERVICE, INC., Tenant
ARTICLE V - INSURANCE
Section 5.1 - Insurance Required of Tenant
Section 5.2 - Limitation of Landlord's Duty to Rebuild
Section 5.3 - Fire Insurance Rate and Requirements
Section 5.4 - Waiver of Subrogation
ARTICLE VI - REPAIRS AND MAINTENANCE
Section 6.1 - Repairs by Landlord
Section 6.2 - Repairs and Maintenance by Tenant
Section 6.3 - Inspection
Section 6.4 - Obstructions
ARTICLE VII - ADDITIONS AND ALTERATIONS
Section 7.1 - By Landlord
Section 7.2 - By Tenant
ARTICLE VIII - DAMAGE, DESTRUCTION OR CONDEMNATION OF THE LEASED
PREMISES
Section 8.1 - Damage or Destruction
Section 8.2 - Condemnation
ARTICLE IX - INTENTIONALLY DELETED
ARTICLE X - FINANCING
Section 10.1 - Financing
Section 10.2 - Subordination
ARTICLE XI - DEFAULT BY TENANT
Section 11.1 - Default
Section 11.2 - Landlord's Rights on Default
Section 11.3 - Non-Waiver Provisions
Section 11.4 - Inability to Perform
Section 11.5 - Landlord's Expenses, Etc.
<PAGE>
ARTICLE XII - OTHER PROVISIONS
Section 12.1 - Definition and -Liability of Landlord
Section 12.2 - Relationship of the Parties
Section 12.3 - Security Deposit
Section 12.4 - Indemnity
Section 12.5 - Damage to Property or Persons
Section 12.6 - Assignment or Subletting
Section 12.7 - Surrender of Premises and Holding Over
Section 12.8 - Lien of Landlord for Rent, Taxes and Other Sums
Section 12.9 - Liens
Section 12.10 - Interest
Section 12.11 - Late Payments
Section 12.12 - Consents
<PAAGE>
Table of Contents
Lease between KOURY CORPORATION, Landlord and
GENERAL PARCEL SERVICE INC., Tenant
Section 12.13 - Waiver of Right of Redemption
Section 12.14 - Notices
Section 12.15 - Broker
Section 12.16 - Short Form Lease
Section 12.17 - Entire and Binding Agreement
Section 12.18 - Provisions Severable
Section 12.19 - Interpretation/Goveming Law
Section 12.20 - Tenant's Financial Information
Section 12.21 - Irrevocable Offer
Section 12.22 - Lease Extension
Exhibit "A"
Exhibit "B"
Guaranty (If applicable)
<PAGE>
NOTICE ADDRESS -
TO TENANT:
GENERAL PARCEL SERVICE, INC.
8923 Western Way .
Jacksonville, FL 32256
Attn.: President
TO LANDLORD:
KOURY CORPORATION
c/o Koury Corporation
400 Four Seasons Town Centre
Greensboro, NC 27407
Attn.: Vice- Pre sident,
Commercial Properties
AND:
KOURY CORPORATION
400 Four Seasons Town Centre
Greensboro, NC 27407
Attn.: General Counsel
[END OF PAGE]
<PAGE>
OFFICE/INDUSTRLIAL LEASE AGREEMENT
This Lease made and entered into as of the 21st day of December,
1995, by and between KOURY CORPORATION, a North Carolina
corporation ("Landlord") and GENERAL PARCEL SERVICE, INC., a
Florida corporation ("Tenant").
ARTICLE I
REFERENCE PROVISIONS, PROPERTY, LEASED PREMISES AND TERM
SECTION 1.1 REFERENCE PROVISIONS
(a) LEASED PREMISES (sometimes herein also referred to as the
"Premises") - as designated on EXHIBIT A annexed hereto and made
a part hereof, and containing approximately 4,733 square feet.
The Leased Premises are located at 2903/2905 Pacific Avenue in
the City of Greensboro, County of Guilford, State of North
Carolina. The building in which the Leased Premises are
located is sometimes referred to herein as the "Building". The
Building, together with walkways, driveways, parking areas,
landscaped areas, other buildings and improvements and other
appurtenances thereto, and the land upon which same are
situated, are hereinafter sometimes collectively referred to as
the 'Property'.
(b) TERM - shall be for a period of two (2) years (hereinafter
sometimes referred to as the "Primary Term") commencing as
provided in Section 1.2. If the Term commences on a day other
than the first day of the month, then the Primary Term shall be
extended by the number of days remaining in such fractional
month.
(c) MINIMUM ANNUAL RENT TWENTY-THREE THOUSAND SIX HUNDRED
SIXTY-FIVE AND No/100 DOLLARS ($23,665.00) payable in equal
monthly installments of ONE THOUSAND NINE HUNDRED SEVENTY-TWO
AND 08/100 DOLLARS ($1,972.08).
(d) INTENTIONALLY DELETED
(e) USE - General office and storage uses and for no other
purpose whatsoever.
(f) AREA OF LEASED PREMISES - The Leased Premises shall extend to
the centerline of exterior walls or to the Building line where
there is no wall, or the center line of those walls separating
said Premises from other areas of the Building, but reserving
and excepting to Landlord the right to install, maintain, use,
repair and replace pipes, ductwork, conduits, utility lines and
wires through hung ceiling space, column space, and partitions,
within any interior or exterior walls of the Premises and in or
beneath the floor slab or above or below the Leased Premises or
other parts of the Building, except that Landlord shall make
reasonable efforts not to interfere with or interrupt the
business operations of Tenant within the Leased Premises. The
square footage (leasable area) of the Ieased Premises is
determined by measurement from the outside of exterior walls to
the center of demising walls, and adding thereto the square
footage (if any) of all covered loading areas constituting a
construction inset to the rear exterior wall of the Leased
Premises.
(g) SECURITY DEPOSIT - TWO THOUSAND AND No/100 DOLLARS
($2,000.00) to be paid by tenant to Landlord upon delivery by
Landlord of a fully executed copy of this Lease to Tenant.
SECTION 1.2 COMMENCEMENT DATE. (a) Landlord hereby leases to
Tenant and Tenant rents from Landlord the Leased Premises
described in Section 1.1 (a). The Term [as described in Section
1.1 (b)] shall commence on the day Landlord tenders possession
of the Leased Premises to Tenant (the 'Commencement Date") which
is intended to be January 1, 1996 or such later date as occurs
ten (10) days following the full execution of this Lease by
Landlord and Tenant (the 'target Commencement Date"). Provided
that such entry does not interfere with Landlord's general
construction work upon the Property and/or Landlord's work to be
done, if any, in preparing the Leased Premises for Tenant's
occupancy, and further provided that the Premises shall then
have been vacated and surrendered by any current tenant thereof,
Tenant, its agents, employees, and contractors, shall have the
right to enter the Leased Premises prior to the tender of
possession for the purpose of taking measurements and obtaining
other information required in connection with Tenant's
prospective occupancy thereof. Any access by Tenant to the
Leased Premises prior to the Commencement Date shall be upon all
of the terms, covenants and conditions of this Lease except for
the payment of rent and other charges. Tender of possession
shall be deemed to have occurred when Landlord has substantially
completed Landlord's Work, if any, required by EXHIBIT B annexed
hereto and made a part hereof, or such other date as Landlord
notifies Tenant in writing.
(b) If Landlord cannot for any reason tender possession of the
Leased Premises to Tenant in the condition required hereunder
upon the target Commencement Date, this Lease shall not be void
or voidable, nor shall Landlord be liable to Tenant for any
loss, damages or cost to Tenant resulting therefrom; yet, in
such an event, there shall be an abatement of all rent due prior
to tender of possession to Tenant. If possession is not
tendered to Tenant within sixty (60) days following the target
Commencement Date (unless such delay is attributable to action
or inaction of Tenant or persons under its control), Tenant may
then terminate this Lease by written notice to Landlord received
within ten (10) days following the expiration of such 60-day
period. Landlord shall have the right to terminate the Lease if
the Commencement Date is delayed more than sixty (60) days
beyond the target Commencement Date due to action or inaction of
Tenant, its agents, contractors or employees. Tenant agrees to
any reasonable substitution of construction materials if
unavailability of the materials specified in the upfit plans and
specifications for the Leased Premises would delay the
Commencement Date by more than fifteen (15) days.
SECTION 1.3 ACCEPTANCE OF LEASED PREMISES. As often as may be
requested by Landlord, Tenant shall promptly and without cost to
Landlord execute, acknowledge and deliver to Landlord and/or
Landlord's designee a written acceptance or estoppel certificate
with respect to the Leased Premises in form and substance
acceptable to Landlord. Tenant's occupancy of any portion of
the Leased Premises shall be deemed acceptance of all of
Landlord's work, if any, required to be performed in accordance
with EXHIBIT B.
SECTION 1.4 QUIET ENJOYMENT. Tenant, upon paying the rents
herein reserved and performing and observing all of the other
terms, covenants and conditions of this Lease on Tenant's part
to be performed and observed, shall peaceably and quietly have,
hold and enjoy the Leased Premises during the Term, subject,
nevertheless, to the terms of this Lease and to any mortgages,
ground or underlying leases, agreements and encumbrances, to
which this Lease is or shall become subordinate.
ARTICLE II
RENT AND OTHER CHARGES
SECTION 2.1 ANNUAL RENTS. Tenant shall pay to Landlord, without
previous demand therefor and without any setoff or deduction
whatsoever, (i) the Minimum Annual Rent provided in Section 1.1
(c), payable in equal monthly installments, in advance, on the
first day of each calendar month throughout the Term, and (H)
all, other amounts of Rent payable by Tenant as and when due
hereunder. 'Rent' herein means the Minimum Annual Rent together
with all other financial obligations of Tenant under this Lease
which are herein sometimes described as "additional rent'. If
the Term commences on a date other than the first day of the
month, Tenant shall pay Landlord on the first day of the Term, a
pro-rata portion of such Minimum Annual Rent, calculated on the
basis of a thirty (30) day calendar month.
Page 6
SECTION 2.2 TAXES. Tenant shall pay promptly when due (or make
reimbursement to Landlord for) all taxes imposed upon Tenant's
lease and business operations, including, without limitation,
all sales taxes, use taxes, value added taxes, and all taxes
assessed upon the personal property of Tenant.
SECTION 2.3 COMMON AREAS. All common areas and other common
facilities (herein collectively called 'common areas') made
available by Landlord on or about the Property shall be subject
to the exclusive control and management of Landlord, expressly
reserving to Landlord, without limitation, the right to erect
any structures, freestanding buildings, additional stories to
buildings, or other improvements on or within the Property.
Common areas (as currently existing or as the same may be
enlarged or reduced at any time hereafter) shall mean all areas,
space, facilities, equipment, signs and special services from
time to time made available by Landlord for the common and joint
use and benefit of Landlord and tenants of the Property, and
their respective employees, agents, subtenants, concessionaires,
licensees, customers and invitees, which may include without
limitation (but shall not be deemed a representation as to their
availability), the sidewalks, parking areas, access roads,
driveways, landscaped areas, truck serviceways, loading docks,
pedestrian walkways (enclosed or open), courts, stairs, ramps,
postal areas and vending areas. Landlord hereby expressly
reserves the right from time to time, to construct, maintain and
operate lighting and other facilities, equipment and signs on
all of said common areas; to police the same; to change the
area, level, location and arrangement of the parking areas and
other facilities forming a part of said common areas; to build
multi-story parking facilities; to restrict parking by tenants
and other occupants of the Property and their employees, agents,
subtenants, concessionaires and licensees; to close temporarily
all or any portion of the common areas for the purpose of making
repairs or changes thereto and to discourage non-customer
parking; to establish, modify and enforce reasonable rules and
regulations with respect to the common areas and the use to be
made thereof; and to grant individual tenants and/or licensees
the right to conduct business in the common areas. Landlord
shall operate, manage, equip, light and maintain the common
areas in such manner as Landlord may from time to time reasonably
determine, and Landlord shall have the right and exclusive
authority to employ and discharge all personnel with respect
thereto. Tenant is hereby given a non-exclusive license to
use, during the Term, the common areas of the Property provided
for the benefit of tenants of the Building as they may now
or at any time during the Term exist, provided, however,
that if the size, location or arrangement of such common
areas or the type of facilities at any time forming a part
thereof be changed or diminished, (or if any such areas
shall be withdrawn) Landlord shall not be subject to any
liability therefor, nor shall Tenant be entitled to any
compensation or diminution or abatement of rent therefor, nor
shall such change or diminution of such areas be deemed a
constructive or actual eviction. Landlord reserves the right to
grant to third persons (or to the public in general) the
nonexclusive right to cross over and use in common with Landlord
and all tenants of the Property the common areas as designated
from time to time by Landlord.
SECTION 2.4 UTILITIES. Tenant shall pay monthly as additional
rent the amount of Twenty and No/100 Dollars ($20.00) for water
and sewer services provided to the Leased Premises. Tenant
shall arrange for and pay all charges (promptly as and when due)
for all other utilities necessary to be provided to the Leased
Premises, including all taxes, user fees and other charges
related to such utilities. Landlord shall not be responsible
for any interruption of any nature whatsoever in utility
services for the Leased Premises.
SECTION 2.5 TENANT'S SHARE OF OPERATING EXPENSE ESCALATIONS. In
addition to all other amounts payable by Tenant hereunder,
Tenant shall also pay to Landlord as additional rent, Tenant's
pro-rata share of all increases (but not more than five percent
(5%) per calendar year determined upon a cumulative and
compounded basis) in the aggregate of (a) real estate taxes
applicable to the Property (b) the cost of insuring the
Property, and (c) all expenses incurred by Landlord in
connection with the common areas of the Property, including but
not limited to costs of maintaining, operating, servicing,
repairing, managing and providing utility services for all areas
of the Property not consisting of lease space occupied by
Tenants of the Property, over the base year cost of such taxes,
insurance, and common area expenses. The 'base year" for
purposes of the foregoing sentence shall be the calendar year
during which the Term of this Lease commences. Tenant's share
of such excess (escalations) shall be based upon the ratio of
the total number of square feet of leasable area within the
Leased Premises to the total leasable area of the Property.
Landlord shall provide a detailed accounting of all such
expenses at the end of each calendar year, and Tenant shall pay
to Landlord such additional rent each year within thirty (30)
days following Landlord's billing therefor. The term 'real
estate taxes" shall mean all taxes and assessments (special or
otherwise) levied or assessed directly or indirectly against the
land, buildings and improvements as the same may be enlarged or
reduced from time to time, and other taxes arising out of the
use and/or occupancy of the Property imposed by federal state,
or local governmental authority and any other taxing authority
having jurisdiction over the Property, including expenses
directly incurred by Landlord in contesting the validity of, in
seeking a reduction in, or in seekingto prevent an increase in
any such taxes) or assessment(s), but shall exclude franchise
and income taxes personal in nature to Landlord.
SECTION 2.6 SERVICES. Provided Tenant is not in default under
any of the terms, covenants and conditions of this Lease,
Landlord exclusively shall furnish and supply-
(a) Heating and air conditioning equipment for all office areas
having a capacity necessary to provide a temperature condition
between 68 degrees and 78 degrees Fahrenheit daily under normal
business operations. Whenever machines or equipment are used
in the Premises which adversely affect the temperature otherwise
maintained by the heating and air conditioning system, Landlord
reserves the right at its option, either to require Tenant to
discontinue use of such machines or equipment or to install
appropriate supplementary equipment in the Premises to reduce or
offset such effect, and the cost of such equipment and
installation shall be paid by Tenant to Landlord promptly on
being billed therefor. The warehouse space (if any) contained
within the Leased Premises shall contain heating equipment and
adequate ventilation but not air cooling equipment (unless same
is currently serving such portion of the Leased Premises).
(b) Conduits for electric current reasonable in Landlord's
judgment for normal lighting and fractional horsepower office
machines will be supplied through conventional wall or floor
outlets. If Tenant desires to use any equipment, such as data
processing equipment or any other computer equipment or
terminals, apparatus or device which will cause the amount of
electricity furnished or supplied to the Premises to exceed the
amount of electricity usually furnished to such space, Tenant
may do so provided, however, (i) that Tenant obtain prior
written consent of Landlord, and (ii) all additional cost and
expense (whether of a capital or operating nature) of such
additional electrical usage shall be borne by Tenant.
(c) Water at those points of supply provided for general use of
tenants in the Property drawn through fixtures provided by
Landlord, and/or additional equipment installed by Tenant at
Tenant's risk and expense and with Landlord's written consent.
(d) Tenant shall provide at its expense all janitorial services
for the Leased Premises.
(e) Landlord shall provide in parking areas reasonably
accessible to the Building such number of parking spaces as is
required by applicable code provisions of the locality in which
the Property is located. If Landlord designates any portion of
such areas as employee parking or restricts any areas to the use
of customers of tenants of the Property, Tenant agrees to
abideby such parking regulations and to provide assistance to
Landlord's enforcement of same.
(f) Garbage collection services by such method and in such
manner as deemed reasonable by Landlord.
ARTICLE III
UPFIT OF LEASED PREMISES
The Leased Premises shall be constructed (upfit) or refurbished
by Landlord and/or Tenant in accordance with the provisions of
EXHIBIT B annexed hereto and made a part hereof
ARTICLE IV
USE OF LEASED PREMISES
SECTION 4.1 PERMITTED USE OF LEASED PREMISES. Tenant agrees to
use the Leased Premises only for the permitted uses set forth in
Section 1.1(e) above. Additionally, Tenant covenants that the
Leased Premises shall during the Term of this Lease, be used
only and exclusively for lawful and moral purposes, and no part
of the Leased Premises or improvements thereto shall be used in
any manner whatsoever for any purposes in violation of the laws,
ordinances, regulations, or orders of the United States, or of
the State, County, and/or City where the Leased Premises are
located. Tenant shall comply with all such laws, ordinances,
regulations, or orders now in effect or hereafter enacted or
passed during the Term of this Lease insofar as Tenant's
business, the Leased Premises and any signs of the Tenant are
concerned, including, but not limited to zoning ordinances,
building codes and fire codes, and shall make at Tenant's own
cost and expense all additions and alterations to the Leased
Premises ordered or required by such authorities, whether in
order to meet the special needs of Tenant, or by reason of the
occupancy of Tenant, or otherwise.
SECTION 4.2 INTENTIONALLY DELETED.
SECTION 4.3 ADDITIONAL COVENANTS OF TENANT. Tenant's use of the
Leased Premises and the common areas shall be subject at all
times during the Term to reasonable rules and regulations
adopted by Landlord (not in conflict with any of the express
provisions hereof governing the use of the parking areas,
driveways, passageways, signs, exteriors of buildings, fighting
and other matters affecting tenants in and the general
management and appearance of the Property. Tenant agrees to
comply with all such rules and regulations without delay upon
notice to Tenant from Landlord. Tenant further expressly agrees
as follows:
(a) All deliveries to or from the Leased Premises shall be done
only at such times, in the areas and through the entrances
designated for such purposes by Landlord. AU garbage and refuse
shall be kept inside the Leased Premises or placed outside the
Leased Premises for collection in the containers specified by
Landlord.
(b) No radio or television aerial or other device shall be
erected on the roof or exterior walls of the Leased Premises or
the Building in which the Leased Premises are located or
elsewhere upon the Property without first obtaining in each
instance the Landlord's prior consent in writing. Any aerial or
device installed without such written consent shall be subject
to removal at Tenant's expense without notice at any time. No
loud speakers, televisions, phonographs, radios, tape players or
other devices shall be used in a manner so as to be heard or
seen outside of the Leased Premises without the prior written
consent of Landlord, nor shall Tenant solicit business in any
manner in the common areas of the Property.
(c) The plumbing facilities shall not be used for any other
purpose than that for which they are constructed, no foreign
substance of any kind shall be deposited therein, and the
expense of any breakage, stoppage, or damage resulting from a
violation of this provision shall be borne by Tenant.
(d) Tenant shall not burn any trash or garbage of any kind
in the Leased Premises or upon the Property.
(e) Tenant shall take no action which would violate Landlord's
contracts, if any, affecting the Property, nor create any work
stoppage, picketing, labor disruption or dispute, or any
interference with the business of Landlord or any other tenant
or occupant of the Property or with the rights and privileges of
any customer or other person lawfully upon the Property, nor
shall Tenant cause any impairment or reduction of the goodwill
of the Property in any manner.
(f) Tenant shall pay before delinquency all license or
permit fees and charges of a similar nature for
the conduct of any business in the Leased Premises.
(g) Tenant shall not perform any act or carry on any practice
which may damage, mar or deface the Leased Premises or any other
part of the Property. Tenant shall not place a load on any
floor in the interior of the Leased Premises, or in any area of
the Property, exceeding the floor load which such floor was
designed to carry, nor shall Tenant install operate or maintain
therein any heavy item or equipment except in such manner as to
achieve a proper distribution of weight. Tenant shall not
install operate or maintain in the Leased Premises or any other
area of the Property any electrical equipment which would
overload the electrical system or any part thereof beyond its
normal capacity for proper and safe operation.
(h) Tenant shall not suffer, allow or permit any vibration,
noise, light, odor or other effect to emanate from the Leased
Premises or from any machine or other installation therein, or
otherwise suffer, allow or permit the same to constitute a
nuisance or otherwise interfere with the safety, comfort and
convenience of Landlord or any of the other occupants of the
Property or their customers, agents, or invitees or any others
lawfully in or upon the Property.
(i) Tenant shall not store, display, store or distribute
any alcoholic beverages or any dangerous materials (including
specifically without limitation fireworks) unless specifically
permitted in this Lease.
(j) Tenant shall not use or occupy the Leased Premises or do or
permit anything to be done therein in any manner which shall
prevent Landlord and/or Tenant from obtaining at standard rates
any insurance required or desired, or which would invalid ,ate
or increase the cost to Landlord of any existing insurance, or
which might cause structural injury to any building, or which
would constitute a public or private nuisance or which would
violate any present or future laws, regulation, ordinances or
requirements (ordinary or extraordinary, foreseen or unforeseen)
of the federal, state or municipal governments, or of any
department, subdivisions, bureaus or offices thereof, or of any
other governmental public or quasi-public authorities now
existing or hereinafter created having jurisdiction over the
Leased Premises or the Property of which they form a part,
specifically including, but not limited to, all environmental
laws, regulations, ordinances or requirements concerning
hazardous waste or substances.
(k) The common areas shall not be obstructed or encumbered by
Tenant or used for any purpose other than ingress and egress to
and from the Premises. No awnings or other projections shall be
attached to the outside walls of the Building without the prior
written consent of the Landlord. No curtains, blinds, shades,
or screens shah be attached or hung in, or used in connection
with, any window or door without the prior written consent of
the Landlord. The skylights, windows, and doors that reflect or
admit light and air into the Leased Premises shall not
be covered or obstructed by Tenant, nor shall any articles be
placed on the window sills of the Leased Premises.
(1) Landlord agrees to furnish to Tenant, free of charge, two
(2) keys to each door entering the Leased Premises, and
additional keys will be furnished at a charge by Landlord of
$5.00 per key after a delivery of an order for said keys signed
by Tenant or Tenant's authorized representative. All keys shall
remain the property of Landlord. No additional locks shall be
allowed on any door of the Leased Premises nor on the Property,
and Tenant shall not make or permit to be made any duplicate
keys, except those furnished by Landlord. Upon termination of
this Lease, Tenant shall surrender to Landlord all keys which
Tenant obtained hereunder. Landlord shall have the right to
constantly have pass keys to the Premises in order to fulfill
the obligations and enforce the rights of Landlord hereunder.
(m) Landlord shall have the right (in the reasonable discretion
of Landlord) to prohibit any adv(mertising by Tenant which tends
to impair the reputation of the Property, and upon written
notice from Landlord, Tenant shall immediately refrain from or
discontinue all such advertising. Canvassing, soliciting and
peddling upon the Property is prohibited, and Tenant shall
cooperate to prevent the same. Tenant shall not use the name of
the Property for any purpose other than as the address of the
business to be conducted by the Tenant in the Premises.
(n) Landlord reserves the right to exclude from the Property at
any time other than normal business hours all persons who do not
present identification acceptable to Landlord or its agents; but
Landlord shall not in any event be responsible for death or
injury to person or loss or damage to property of Tenant, or of
any guest, visitor, licensee, invitee, or other user of the
Property.
(o) Nothing contained in this Lease shall be construed to
exclude or prohibit Landlord from using or leasing any offices,
facilities, or other space in the Property, or any part or
portion thereof, or any other property owned or controlled by
Landlord, for any lawful purpose, although in direct competition
with Tenant. At any reasonable time during the Term hereof,
Landlord shall have the right to advertise, display, and show
the Premises to prospective tenants, lenders, insurance agents,
prospective purchasers, or others. Landlord may exhibit the
Premises to prospective tenants and decorate, remodel, repair,
alter or otherwise prepare the Premises for re-occupancy (so
long as such actions do not unreasonably interfere with the
conduct of Tenant's business within the Premises) without any
rent abatement, and may display signs on the Premises and/or the
Property offering the Premises or any other part of the Property
(or any adjacent property) for sale or lease in the sole
discretion of Landlord.
(p) Tenant shall not (either with or without negligence) cause
or permit the escape, disposal or release of any biologically or
chemically active or other hazardous substances or materials.
Tenant shall not allow the storage or use of such substances or
materials in any manner except as explicitly sanctioned by
applicable law and by the highest standards prevailing in the
industry for the storage and use of such substances or
materials. Tenant shall not allow to be brought onto or within
the Property any hazardous materials or substances except to use
in the ordinary course of Tenant's business, and then only after
(i) written notice is given to Landlord of the identity of such
substances or materials and (ii) approval by Landlord of the
precautions to be taken in connection therewith. Without
limitation, hazardous substances and materials shall
include those described in any applicable federal state or local
laws and the re rations adopted thereunder. If any lender or
governmental agency shall ever require testing by Landlord to
ascertain whether or not there has been any release of hazardous
materials by Tenant, then the reasonable cost thereof shall be
reimbursed by Tenant to Landlord upon determination that any
hazardous materials were stored, used or released by Tenant
within the Leased Premises or upon the Property. Tenant shall
execute affidavits, representations and the like from time to
time at Landlord's request concerning Tenant's best knowledge
and belief regarding the presence of hazardous substances or
materials on or within the Property and respecting Tenant's
compliance with the provisions of this Lease. In all events,
Tenant shall indemnify and hold harmless Landlord, its
successors and assigns from any cost or liability resulting
(directly or indirectly) from the storage, use or release of any
hazardous materials on or within the Property occurring during
the Term of this Lease or any later time while Tenant is in
possession of the Leased Premises, or elsewhere if caused by
Tenant or persons acting under Tenant, regardless of whether any
such actions were taken with the consent of Landlord, and such
covenants shall survive the expiration or earlier termination of
the Lease Term.
SECTION 4.4 SIGNS, AWNINGS AND CANOPIES. Tenant may erect and
maintain only such signage as Landlord may approve in writing.
If a signage criteria is attached as an exhibit to this Lease,
the provisions therein contained shall be deemed controlling as
to the matters addressed therein, and same shall be deemed
incorporated herein by this reference thereto. Tenant shall
submit to Landlord detailed drawings of any such sign for review
and approval by Landlord in its sole discretion prior to
erecting any said sign on the Leased Premises. Tenant shall
keep insured and maintain any such sign in good condition,
repair and operating order at all times. If any damage is done
to Tenant's sign, Tenant shall commence to repair same within
five (5) days or Landlord may at its option repair same at
Tenant's expense. Tenant shall not place or permit to be placed
or maintained on any door, exterior wall, window, or beyond the
lease line of the Leased Premises, any awning, or canopy or
advertising matter or other thing of any kind, and shall not
place or maintain any decoration, lettering or advertising
matter on the glass of any window or door of the Leased Premises
without first obtaining Landlord's written consent. Landlord
may erect and maintain such suitable signs as in its sole
discretion may deem appropriate on the Property and/or Leased
Premises.
ARTICLE V
INSURANCE
SECTION 5.1 INSURANCE REQUIRED OF TENANT. (a) Tenant shall
obtain and provide at its sole expense, on or before the earlier
of the Commencement Date or Tenant's entering the Leased
Premises for any purpose, and keep in force at all times
thereafter, the following insurance coverages with respect to
the Leased Premises:
(i) Commercial General Liability Insurance, with contractual
liability endorsement, relating to the Leased Premises and its
appurtenances and all of Tenant's business operations related
thereto on an occurrence basis with a minimum single limit of
One Million Dollars ($1,000,000.00).
(ii) Fire and Lightning, Extended Coverage, Vandalism and
Malicious Mischief and Flood (if required by Landlord, any
mortgagee or governmental authority) Insurance in an amount
adequate to cover the replacement cost of all personal property,
decorations, trade fixtures, furnishings, equipment, and all
contents at any time located at the Leased Premises.
(iii) Business interruption insurance covering those
risks referred to in Section 5.1 (ii) in an amount not less than
one hundred fifty percent (150%) of all Rents payable under this
Lease for a period of twelve (12) months commencing with the
date of any covered casualty resulting in a loss of business or
profits, loss of possession of the Leased Premises by Tenant,
and any other loss, damages and expenses of Tenant.
(iv) Workmen's Compensation Insurance covering all persons
employed, directly or indirectly, in connection with any work
performed by Tenant or any repair or alteration authorized by
this Lease or consented to by Landlord, and all employees and
agents of Tenant with respect to whom death or bodily injury
claims could be asserted against Landlord or Tenant, as required
by the law of the state where the Leased Premises are located.
(v) Such other insurance as may be carried on the
Leased Premises and Tenant's operation thereof, as may be
determined necessary or advisable by any mortgagee of the Property.
(b) Before undertaking any alterations, additions, improvements
or construction, Tenant shall obtain at its expense a public
liability policy insuring Tenant and Landlord against any
liability which may arise on account of such proposed
alterations, additions, improvements or construction on an
occurrence basis with the minimum limits set forth in this
Section 5.1.
(c) All of the aforesaid insurance except the Workmen's
Compensation insurance required by subparagraph (a) (iv) above
shall be written in the name of Landlord (and any designee(s) of
Landlord) and Tenant and shall be written by one or more
responsible insurance companies satisfactory to Landlord and in
form satisfactory to Landlord; all such insurance may be carried
under a blanket policy covering the Leased Premises and any
other of Tenant's business locations. All such insurance shall
contain endorsements that: such insurance may not be canceled or
amended with respect to Landlord (or its designees) except upon
ten (10) days' prior written notice to Landlord (and any such
designees) by the insurance company-, Tenant shall be solely
responsible for payment of premiums and that Landlord (or its
designees) shall not be required to pay any premium for such
insurance. In the event of payment of any loss covered by such
policy, Landlord (or its designees) shall be paid first by the
insurance company for Landlord's loss. The minimum limits of
the commercial general liability policy of insurance shall in no
way limit or diminish Tenant's liability hereunder or impose any
liability upon Landlord with respect to any loss in excess of
such limits. Tenant shall deliver to Landlord at least fifteen
(15) days prior to the time such insurance is first required to
be carried by Tenant, and thereafter at least fifteen (15) days
prior to the expiration of such policy, either a duplicate
original or a certificate of insurance on all policies procured
by Tenant in compliance with its obligations hereunder, together
with evidence satisfactory to Landlord of the payment of the
premium therefor. If Tenant fails to obtain and provide any or
all of the aforesaid insurance, then Landlord may, but shall not
be required to, purchase such insurance on behalf of Landlord
and/or Tenant and add the cost of such insurance as additional
rent payable with the next installment of Minimum Annual Rent.
(d) The minimum limits of the commercial general liability
policy of insurance shall be subject to increase at any time,
and from time to time (but not more frequently than once in any
calendar year), after the commencement of the second (2nd) full
year of the Term if Landlord shall deem same necessary for
adequate protection. Within thirty (30) days after request
therefor by Landlord, Tenant shall furnish Landlord with
evidence of Tenant's compliance with such request.
SECTION 5.2 LIMITATION OF LANDLORD'S DUTY TO REBUILD. If Tenant
shall fail to comply with any of the foregoing provisions of
this Article V, then in addition to any other rights or remedies
reserved by Landlord under this Lease, Landlord's obligations
under Article VIII of this Lease to repair, replace and/or
rebuild the Leased Premises, shall be further limited to the
repair and/or reconstruction of the Leased Premises to the
condition existing at the time of execution of this Lease, and
Tenant shall be responsible for such other work necessary to
restore without delay the Leased Premises to the condition
acting at the time of the casualty or other occurrence
necessitating such repairs and/or rebuilding.
SECTION 5.3 FIRE INSURANCE RATE AND REQUIREMENTS.
(a) Tenant agrees, at its own cost and expense, to comply with
all of the rules and regulations of the applicable fire
insurance rating organization, Landlord's insurer and any
governmental agency having jurisdiction over the Property. If,
at any time and from time to time, as a result of or in
connection with any failure by Tenant to comply with the
foregoing sentence or any act of omission or commission by
Tenant, its employees, agents, contractors or licensees, or as a
result of or in connection with the use to which the Leased
Premises are put (notwithstanding that such use may be for the
purposes herein permitted or that such use may have been
consented to by Landlord), the fire insurance rate(s) applicable
to the Leased Premises, or the Building in which same are
located, or to any other premise in said Building, or to any
adjacent property owned or controlled by Landlord or an
affiliate of Landlord, and/or to the contents in any or all of
the aforesaid properties shall be higher than the standard rates
applicable to such type of property, Tenant agrees that it will
pay to Landlord, on demand, as additional rent, such portion of
the premiums for all fire insurance and/or other casualty
insurance policies in force with respect to the aforesaid
properties (including rent insurance relating thereto) and the
contents of any occupant thereof as shall be attributable to
such higher rate(s).
(b) If gas is used in the leased Premises, Tenant shall install
at its expense gas cut-off devices (manual and automatic) prior
to Tenant's use or occupancy of the Leased Premises. Except as
currently serving the Premises, no gas shall be used by Tenant
within the Premises without the prior written consent of
Landlord.
SECTION 5.4 WAIVER OF SUBROGATION. Landlord shall not be liable
for any damage by fire or any other event includable in the
coverage afforded to Tenant by a standard form of fire insurance
policy with extended coverage endorsement attached (whether or
not such coverage is in effect) no matter how caused, it being
understood that Tenant will look solely to its insurer for
reimbursement.
ARTICLE VI
REPAIRS AND MAINTENANCE
SECTION 6.1 REPAIRS BY LANDLORD. Within a reasonable period of
time after receipt of written notice from Tenant, Landlord will
make necessary repairs (excluding such repairs for which Tenant
is responsible under this Lease) to the roof, foundation, HVAC
system as required by Landlord under Section 6.2 below and
structural integrity and exterior surfaces of exterior and
supporting walls of the Leased Premises and to the sidewalks,
parking areas, curbs and other common areas of the Property.
Landlord shall not be required to make any repairs whatsoever
where same were made necessary by any act, omission and/or
negligence of Tenant, any subtenant or concessionaire, or by
their respective employees, agents, invitees, licensees,
visitors or contractors, or by fire or other casualty or
condemnation except as provided in ARTICLE VIII hereunder.
SECTION 6.2 REPAIRS AND MAINTENANCE BY TENANT. Except as
otherwise specifically required of Landlord in Section 6.1 above
or as required under the last sentence of this Section 6.2,
Tenant agrees, at its own cost and expense to keep and maintain
the Leased Premises in good condition and repair and shall
surrender same to Landlord in such condition. The repair and
maintenance obligations of Tenant under this Lease shall include
without limitation all electrical fixtures, conduit and
equipment, plumbing equipment, pipes and fixtures, ceilings,
interior walls and the interior surfaces of all exterior walls,
signage, floor coverings, doors, windows and window treatments,
hardware, machinery, and other equipment located within or
serving the Leased Premises, whether same shall be the property
of Landlord or Tenant. If either (a) Tenant does not maintain
and repair the Leased Premises as required hereunder to the
reasonable satisfaction of Landlord, or (b) Landlord determines
that emergency repairs are needed, then Landlord may make such
repairs without liability to Tenant, and Tenant shall
immediately reimburse Landlord for the cost thereof Respecting
the HVAC system(s) serving the Leased Premises, Tenant shall
enter into, and keep in force at Tenant's expense, a preventive
maintenance contract covering the heating, ventilation and air
conditioning equipment with a contractor approved by Landlord.
Tenant shall be responsible for all repairs to the HVAC
equipment except as provided below. Landlord shall be
responsible for any major repairs to such equipment exceeding a
cost of more than $350.00 if (i) such repair is not due to the
failure of Tenant to properly maintain such equipment or due to
any negligent act or willful misconduct of Tenant, its agents,
employees, contractors, or invitees, and (ii) the need for such
repair is reported by Tenant to Landlord in writing (or verbally
followed by prompt written notice) on a timely basis (prior to
contracting with any contractor for repairs that Landlord shall
be responsible).
SECTION 6.3 INSPECTION. Landlord or its representatives shall have
the right to enter the Leased Premises during any business day (and in
emergency at all times) during the Lease Term.
SECTION 6.4 OBSTRUCTIONS. Tenant agrees to keep its loading
facilities, if any, and the walkway areas immediately adjoining
the Leased Premises free from trash, litter or obstructions, and
to keep said outside sidewalk area immediately adjoining the
Leased Premises free from ice and snow.
ARTICLE VII
ADDITIONS AND ALTERATIONS
SECTION 7.1 BY LANDLORD. In the event Landlord shall
hereinafter determine in its sole discretion during the Term to
alter in any manner the buildings, common areas or any
appurtenance to the Property (or any portions thereof as
designated by Landlord) as said Property may be enlarged or
reduced at the sole option of Landlord by addition to the
Property of land and/or buildings or by the diminution thereof,
or to take any such action with respect to any adjacent property
owned or managed by Landlord, Tenant hereby consents thereto and
the performance of work necessary to effect the same and any
reasonable inconvenience caused thereby. The design, materials
and performance of necessary work therefor shall be in the sole
unrestricted discretion of Landlord.
SECTION 7.2 BY TENANT. Tenant shall not alter the Leased
Premises or any part of the Property in any manner except with
Landlord's prior written consent and in all respects in full
compliance with the provisions of EXHIBIT B which is fully
incorporated herein by reference.
ARTICLE VIII
DAMAGE, DESTRUCTION OR CONDEMNATION OF THE LEASED PREMISES
SECTION 8.1 DAMAGE OR DESTRUCTION. (a) If all or any part of the
Leased Premises shall be damaged or destroyed by fire or other
casualty under the standard fire insurance policy with approved
standard extended coverage endorsement applicable to the Leased
Premises, Landlord shall, except as otherwise provided herein,
repair and/or rebuild the same with reasonable diligence, but
Landlord's obligation hereunder shall be limited to the
restoration of the Leased Premises to the condition existing as
of the date of this Lease plus performance of Landlord's work,
if any, in accordance with EXHIBIT B hereof Landlord shall not
be obligated to commence such repairs and/or rebuilding until
insurance proceeds are released to Landlord. Landlord's
obligation hereunder shall be further limited (i) to the
proceeds received and retained by Landlord under its insurance
policy which are allocable to the Leased Premises, and (ii) by
rights of landlord's mortgagee with respect to the Property.
Should Tenant have notified Landlord in writing of the permanent
leasehold improvements and betterments installed by Tenant in
the completed Leased Premises (whether same have been paid for
entirely or partially by Tenant) and should such notice request
that Landlord's casualty insurance coverage be extended to such
items and accurately state the full insurable value of such
permanent leasehold improvements and betterments and should
Tenant have reimbursed Landlord, upon demand, for the cost of
the inclusion of the amount of such permanent leasehold
improvements and betterments in Landlord's insurance coverage,
then and in those events, and subject to the foregoing
provisions of this subsection and other applicable provisions of
this Lease, Landlord shall repair and/or rebuild the Leased
Premises to a condition comparable to that existing prior to
such damage or destruction. Nothing hereinabove contained shall
impose upon Landlord any liability or responsibility to repair,
rebuild or replace any personal property belonging to Tenant.
If there should be a substantial interference with the operation
of Tenant's business in the Leased Premises as a result of
damage or destruction to the Premises which requires Tenant to
temporarily close its business to the public for a longer
duration than five (5) business days, the
Minimum Annual Rent and other sums payable hereunder shall abate
during such period that Tenant is forced to close its business
at the Leased Premises, but only to the extent of the proceeds
actually received by Landlord under any policy of rent
insurance. Unless this Lease is terminated by Landlord as
hereinafter provided, Tenant shall repair, redecorate and
refixture the Leased Premises and restock the contents thereof
in a manner and to at least a condition equal to that existing
prior to its destruction or casualty, and the proceeds of all
insurance carried by Tenant on its personal property,
decorations, trade fixtures, furnishings, equipment and contents
in the Leased Premises shall be held in trust by Tenant for such
purposes. Tenant agrees to exercise reasonable diligence to
resume full business operations in the Leased Premises as soon
as practicable unless this Lease is terminated by Landlord, as
hereinafter provided.
(b) Notwithstanding anything else to the contrary contained in
this Section 8.1 or elsewhere in this Lease, Landlord, at its
option, may terminate this Lease upon notice to Tenant given
within one hundred eighty (180) days after the occurrence of any
of the following:
(i) The Leased Premises and/or Building in which the Leased Premises are
located shall be damaged or destroyed as a result of an occurrence which
is not covered by Landlord's insurance; or
(ii) The Leased Premises and/or Building in which the Leased Premises are
located shall be damaged or destroyed and the cost to repair the same shall
amount to more than twenty-rive percent (25%) of the cost of replacement
(excluding land value) thereof; or
(iii) The Leased Premises shall be damaged or destroyed during the last
eighteen (18) months of the Term or any extended Term of this Lease; or
(iv) Any or all of the buildings or common areas
of the Property are damaged (whether or not the Leased Premises
are damaged) to such an extent that, in the sole judgment of
Landlord, the Property cannot be operated as an economically
viable unit.
(c) Except to the extent specifically provided for in this
Lease, none of the Minimum Annual Rent and other sums payable by
Tenant, nor any of Tenant's other obligations under any
provisions of this Lease, shall be affected by any damage to or
destruction of the Leased Premises by any cause whatsoever, and
Tenant hereby specifically waives all other rights it might
otherwise have under any law or statute.
(d) The term "cost of replacement" as used in Paragraph (b)(ii)
above shall be determined by the company or companies selected
by Landlord insuring L-andlord against the casualty in question,
or if there shall be no insurance, then as the parties hereto
shall agree, or in the absence of an insurance company
determination or an agreement, as shall be determined by an
independent appraiser familiar with construction methods and
costs in the locality in which the Premises are located.
(e) Tenant shall give to Landlord and to all mortgagee of record
prompt written notice of any damage to or destruction of any
portion of the Leased Premises, the Building, or the common
areas of the Property resulting from fire or other casualty.
SECTION 8.2 CONDEMNATION. (a) If the entire Leased Premises
shall be appropriated or taken under the power of eminent domain
by any public or quasi-public authority, or conveyance shall be
made in lieu thereof, this Lease shall terminate and expire as
of the date of such taking or conveyance, and the parties shall
thereupon be released from all liability hereunder which accrues
after the date of such taking.
(b) Anything in this Lease to the contrary notwithstanding, in
the event more than fifteen percent (15%) of the Leased Premises
or more than twenty-five percent (25%) of the then existing
paved parking spaces for the Building shall be appropriated or
taken, or conveyance made in lieu thereof, either party shall
have the right to cancel and terminate this Lease as of the date
of such taking upon giving notice to the other of such election
within fifteen (L5) days after such taking. In the event of
such cancellation, the parties shall thereupon be released from
any further liability under this Lease (except for obligations
existing on the effective date of such termination); provided,
however, that if more than twenty-five percent (25%) of the then
existing paved parking spaces shall be appropriated or taken and
fifteen percent (15%) or less of the Leased Premises shall be
appropriated or taken, and Tenant shah give notice to Landlord
of cancellation, Landlord may at its option nullify and vacate
Tenant's cancellation by giving Tenant notice within fifteen
(15) days after receipt of such notice from Tenant that Landlord
will provide substitute parking on or adjacent to the Property
sufficient to cause the paved parking spaces for the Building
after such substitution to be reduced by not more than fifteen
percent (15%) of the number of spaces prior to such taking, in
which event the Lease shall remain in full force and effect.
(c) If a portion of the Leased Premises is taken, or conveyance
made in lieu thereof, and if this Lease shall not be terminated
as provided in the preceding paragraph, then the Minimum Annual
Rent shall be ratably apportioned according to the space so
taken, and Landlord shall at its own expense, restore the
remaining portion of the leased Premises to a complete
architectural unit, but such work shall not exceed the scope of
work required to be done by Landlord, if any, pursuant to
EXHIBIT B hereto. The cost of Landlord's obligation hereunder
shall be limited to that portion of the net proceeds of the
condemnation award actually received and retained by L-andlord
which are allocable to the Leased Premises.
(d) If more than fifteen percent (15%) of the leasable floor
space within the Building shall be so taken, regardless of
whether or not the Leased Premises shall have been partially
taken, then Landlord shall have the right to terminate this
Lease on thirty (30) days written notice given within six (6)
months following such taking.
(e) AU compensation awarded or paid to Landlord upon such a
total or partial taking of the Leased Premises shall belong to
and be the property of Landlord without any participation by
Tenant. Tenant may file at Tenant's sole expense a separate
claim with or against the condemning authority for any loss or
damages related to Tenant's leasehold interest in the Premises,
in which case Tenant shall be entitled to all amounts awarded in
such action. Tenant shall hold harmless and indemnify Landlord
for any loss or expense related to any such claim filed by
Tenant.
(f) It is mutually agreed that (i) any reduction in the parking
area, number of parking spaces for the Building, and/or
restriction(s) upon the size or the number of motor vehicles
that may enter the Property by action or order of any
governmental authority, quasi-govermnental
authority, and/or by any court having jurisdiction which does
not in fact constitute a physical taking of property shall not
constitute such a taking or condemnation under this Lease that
would entitle Tenant to terminate the Lease, (ii) any
environmental condemnation and/or any action taken by Landlord
of any nature whatsoever in compliance with any order, rule or
regulation of any governmental or quasi-governm rental
authority, with any judicial decree, and/or any existing or
future law shall not constitute a default under this Lease by
Landlord, and the Lease shall remain in full force and effect,
and (iii) as between Landlord and Tenant, Landlord may but shall
not be obligated to comply with any such order, rule,
regulation, judicial decree or law (with or without exercise of
any rights to protest or appeal any such action).
ARTICLE IX
INTENTIONALLY DELETED
ARTICLE X
FINANCING
SECTION 10.1 FINANCING. If any lending institution and/or any
bonding authority with which Landlord has negotiated or may
negotiate interim or long term financing for the Property (or
for any part thereto does not approve the credit rating of
Tenant, or if such lending institution or bonding authority
shall require change(s) in this Lease as a condition of its
approval of this Lease for such financing; and if within fifteen
(15) days after notice from Landlord (i) Tenant fails or refuses
to supply or execute guarantees which are stated by Landlord as
necessary to secure the approval of Tenant's credit by any such
lending institution or bonding authority, or (ii) Tenant fails
or refuses to execute with Landlord the amendment or amendments
of this Lease accomplishing the change(s) which are stated by
Landlord to be needed in connection with approval of this Lease
for purposes of such financing, or (iii) for any reason, such
financing in an amount satisfactory to L-andlord cannot be
obtained, Landlord shall have the right to cancel this Lease at
any time prior to the Commencement Date. In the event of
cancellation by Landlord hereunder, this Lease shall be and
become null and void and both parties shall automatically be
released as of the date of Landlord's cancellation notice from
any and all liability or obligation under this Lease, except
that Landlord shall return the Security Deposit and rental
prepayments, if any, paid by Tenant. Notwithstanding anything
contained herein to the contrary, Tenant shall not be required
to agree, and Landlord shall not have any right of cancellation
for Tenant's refusal to agree, to any modification of the
provisions of this Lease relating to the amount of Minimum
Annual Rent reserved, the size and/or location of the leased
Premises, the duration and/or Commencement Date of the Term, or
reducing the improvements to be made by Landlord to the Leased
Premises prior to tender of possession in accordance with
EXHIBIT B hereto.
SECTION 10.2 SUBORDINATION. (a) Landlord and Tenant agree that
this Lease is and shall be subject and subordinate at all times
to all ground and underlying leases and to all mortgages (in any
amounts and all advances thereon which may now or hereafter
affect the real property of which the Leased Premises forms a
part) and to all renewals, modifications, consolidations,
participations, replacements and extensions thereof. The term
'mortgage(s)' as used herein shall be deemed to include trust
indenture(s), deed(s) of trust, and security deed(s) now
existing or hereinafter executed in the sole discretion of
Landlord. Tenant agrees to attorn to any underlying ground
lessor or mortgagee who shall succeed to Landlord's interest in
this Lease upon request of such ground lessor or mortgagee.
(b) If any mortgagee requires that this Lease be prior rather
than subordinate to any such mortgage, Tenant shall promptly
upon request therefor by Landlord or such mortgagee, and without
charge therefor, execute a document effecting and/or
acknowledging such priority, which document shall contain, at
the option of such mortgagee, an attorney obligation to the
mortgagee as Landlord in the event of foreclosure or to any
party acquiring tide to any portion of the Property through such
mortgage in such event.
(c) Upon request of any mortgagee, Tenant shall give prompt
written notice of any default of Landlord hereunder, and Tenant
shall allow such mortgagee a reasonable length of time [in any
event, not less than thirty (30) days from the date of such
notice] in which to cure such default. Any such notice shall be
sent to such mortgagee at the address indicated by notice given
to Tenant by Landlord or such mortgagee.
ARTICLE XI
DEFAULT BY TENANT
SECTION 11.1 DEFAULT. Tenant shall be in default hereunder if
(a) Tenant fails to pay when due Minimum Annual Rent or any
other sums due under this Lease and such default shall continue
for more than five (5) days after written notice from Landlord
to Tenant; or (b) Tenant fails to observe and perform any of the
other terms, covenants and/or conditions of this Lease and such
failure shall continue for more than seven (7) days or shall
reoccur within twelve (12) months after written notice from
Landlord to Tenant; or (c) Tenant fails to pay when due the
Minimum Annual Rent or any other sums payable under this Lease
three (3) or more times in any period of twelve (12) consecutive
months; or (d) the Leased Premises shall be abandoned, deserted,
vacated, or if Tenant fails to take possession of the Leased
Premises and initially open for business within thirty (30) days
following the Commencement Date. If the nature of a default
under (b) above is such that it cannot reasonably be cured
within the aforesaid cure period, and work thereon shall be
commenced within said period and diligently prosecuted to
completion, then Landlord's rights under Section 11.2 shall be
inapplicable (but only if the default shall be cured within a
reasonable period of time). The Leased Premises and all trade
fixtures, equipment and inventory therein shall be conclusively
deemed abandoned by Tenant upon (1) fifteen (15) consecutive
days absence from the Leased Premises by Tenant or its agents
(unless such absence results from fire or other casualty)
together with any failure to pay Minimum Annual Rent, or (2)
removal of all or a substantial portion of Tenant's trade
fixtures, equipment or inventory from the Leased Premises
together with a failure to pay Minimum Annual Rent. In such
event, and in addition to Landlord's remedies set forth in
Section 11.2, Landlord may enter the Leased Premises and may
remove all such remaining trade fixtures, equipment and
inventory at Tenant's expense. AU such property shah, at
Landlord's option, become the property of Landlord, or said
property may be placed in storage at Tenant's cost and expense,
or sold or otherwise disposed of, in which event the proceeds of
such sale or other disposition shall belong to Landlord to be
applied in satisfaction of any monetary default by Tenant
hereunder. If at any time during the Term there shall be filed
by or against Tenant or any successor tenant then in possession,
or any guarantor of either under this Lease, in any court
pursuant to any statute either of the United States or of any
state, a petition (i) in bankruptcy, (ii) alleging insolvency,
(iii) for reorganization, (iv) for the appointment of a
receiver, or (v) for an arrangement under the Bankruptcy Acts,
or if a similar type of proceeding shall be filed, Landlord may
terminate Tenant's rights under this Lease by
notice in writing to Tenant, and thereupon Tenant shall
immediately quit and surrender the Premises to Landlord, but
Tenant shall continue liable for the payment of rent and all
other sums due hereunder, and any such action by Landlord shall
not prejudice any other rights or remedies of Landlord in the
event of Tenant's default under this Lease,
SECTION 11.2 LANDLORD'S RIGHTS ON DEFAULT. (a) In the event of
any default by Tenant, Landlord may (1) apply the Security
Deposit, if any, specified in Section 1.1 (g) toward the
satisfaction and cure of such a default, and/or (2) cure
Tenant's default at Tenant's cost and expense, and/or (3)
re-enter the Leased Premises and remove all persons and all or
any property therefrom, by any suitable action or proceeding at
law, or by force or otherwise, without being liable for any
prosecution therefor or damages therefrom, and repossess and
enjoy the Leased Premises with all additions, alterations and
improvements, and Landlord may, at its option, repair, alter,
remodel and/or change the character of the Leased Premises as it
may deem fit, and/or (4) at any time relet the Leased Premises
or any part or parts thereof, as the Agent of Tenant or in
Landlord's own right, and/or (5) terminate this Lease upon not
less than three (3) days written notice to Tenant. The exercise
by Landlord of any right granted in this Section shall not
relieve Tenant from the obligation to make all rental payments
and to fulfill all other covenants required by this Lease, at
the time and in the manner provided herein, and if Landlord so
desires, all current and future rent and other monetary
obligations due hereunder less the then fair rental value of the
Leased Premises shall become immediately due and payable.
Tenant throughout the remaining Term hereof shall pay Landlord,
no later than the Fifteenth (15th) day of each month during the
Term, the then current excess, if any, of the sum of the unpaid
rentals and costs to Landlord resulting from such default by
Tenant over the proceeds, if any, received by Landlord from such
reletting, if any, but Landlord shall have no liability to
account to Tenant for any excess of the proceeds from reletting
of the Premises over the amounts owed by Tenant hereunder.
Landlord shall not be required to relet the Premises nor
exercise any other right granted to Landlord, hereunder, nor
shall Landlord be under any obligation to minimize Tenant's loss
as a result of Tenant's default. If Landlord attempts to relet
the Premises, Landlord shall be the sole judge as to whether or
not a proposed tenant and the economics of such proposed
transaction is suitable and acceptable.
(b) In the event of a breach by Tenant of any of the covenants
or provisions hereof, Landlord shall have, in addition to any
other remedies which it may have, the right to invoke any remedy
allowed at law or in equity to enforce Landlord's rights or any
of them, as if re-entry and other remedies were not herein
provided for. With respect to any litigation arising out of
this Lease, Tenant hereby expressly waives the right to a trial
by jury and the right to file any countersuit or crossclaim
against Landlord. Tenant agrees that no demand for rent and no
re-entry for condition broken and no notice to quit possession
or other notices prescribed by statute and no judicial
proceeding shall be necessary to enable Landlord to recover
possession of the Premises or to enforce any of Landlord's
rights hereunder, but that all right to any such demand and any
such re-entry and any notice to quit possession or other
statutory notices or prerequisites are hereby expressly waived
by Tenant.
SECTION 11.3 NON-WAIVER PROVISIONS. No failure of Landlord to
insist upon the strict performance of any of the terms,
conditions and covenants herein or to exercise any right or
remedy consequent upon a breach thereof, and no acceptance of
full or partial rent during the continuance of any such breach
shall constitute a waiver of any existing or subsequent breach
or default in the terms, conditions and covenants herein
contained except as may be expressly waived in writing.
The maintenance of any action or proceeding to recover
possession of the Leased Premises, or any installment or
installments of rent or any other moneys that may be due or
become due from Tenant to Landlord, shall not preclude Landlord
from thereafter instituting and maintaining subsequent actions
or proceedings for the recovery of possession of the Leased
Premises or of any other monies that may be due or become due
from Tenant. Any entry or re-entry by Landlord shall not be
deemed to absolve or discharge Tenant from liability hereunder.
SECTION 11.4 INABILITY TO PERFORM. If Landlord is delayed or
prevented (directly or indirectly) from performing any of its
obligations under this Lease by reason of any cause whatsoever
beyond Landlord's control, the period of such delay or such
prevention shall be deemed added to the time herein provided for
the performance of any such obligation by Landlord.
SECTION 11.5 LANDLORD'S EXPENSES, ETC. (a) If Tenant shall at
any time be in default hereunder, and if Landlord shall deem it
necessary to engage an attorney to enforce Landlord's rights
hereunder, the determination of such necessity to be in the sole
discretion of Landlord, Tenant will reimburse Landlord for the
reasonable expenses incurred thereby, including but not limited
to court costs and attorneys' fees.
(b) It is further agreed that, in addition to all other payments
required pursuant to this Article M, Tenant shall compensate
Landlord for all losses, damages and expenses incurred by
Landlord in the event of any default by Tenant hereunder,
including without limitation (a) any increase in insurance
premiums caused by the vacancy of the Leased Premises, (b) all
expenses incurred by Landlord in any reletting of the leased
Premises (including among other expenses, repairs, remodeling,
replacements, advertisements and brokerage fees), (c) all
concessions granted to a new tenant upon reletting (including
among other things, concessions, reduced or abated rent and
renewal options), (d) all other losses, damages and expenses
incurred by Landlord as a direct or indirect result of any
default by Tenant (including losses, damages and expenses
resulting from any adverse effects of any such default upon (i)
Landlord's standing with its creditors or prospective lenders,
and/or (ii) Landlord's relationships with Landlord's other
tenants and its abilities to attract potential tenants to the
Property), and (e) a reasonable allowance for Landlord's
administrative efforts, salaries and overhead attributable
directly or indirectly to Tenant's default and/or Landlord's
pursuing its rights and remedies provided herein.
ARTICLE XII
OTHER PROVISIONS
SECTION 12.1 DEFINITION AND LIABILITY OF LANDLORD. The term
"Landlord" as used in this Lease means only the owner or,
mortgagee then in possession of the Building in which the Leased
Premises are located and/or the land thereunder (or the managing
agent of any such owner or mortgagee) so that in the event of
sale of any portion of the Property or an assignment of this
Lease by Landlord, or a demise of said Building, Landlord shall
be and hereby is entirely freed and relieved of all obligations
of Landlord subsequently accruing. Notwithstanding any other
provision, term or condition herein contained, it is
specifically understood and agreed that there shall be no
personal liability of Landlord (nor Landlord's agent,
if any) in respect to any of the covenants, conditions or
provisions of this Lease. In the event of a breach or default
by Landlord of any of its obligations under this Lease, Tenant
shall look solely to the equity of the Landlord in the Property
for the satisfaction of Tenant's remedies, which shall be
limited to the specific performance of Landlord's obligations
hereunder.
SECTION 12.2 RELATIONSHIP OF THE PARTIES. Nothing contained in
this Lease shall be deemed or construed as creating the
relationship of principal and agent or of partnership or joint
venture between the parties hereto, it being understood and
agreed that no provision contained herein nor any acts of the
parties hereto shall be deemed to create any relationship
between the parties other than that of landlord and tenant.
SECTION 12.3 SECURITY DEPOSIT. (a) Tenant has deposited with
Landlord as security for the performance by Tenant of the terms
of this Lease the sum set forth in Section 1.1 (g) hereof.
Landlord may use, retain or apply on Tenant's behalf (without
liability for interest) during the Term the whole or any part of
the security so deposited to the extent required for the payment
of any rent or other sum as to which Tenant may be in default
hereunder or for any sum which Landlord may expend by reason of
Tenant's default in respect of any of the terms of this Lease,
including but not limited to any deficiency or damage incurred
in reletting the LEASED Premises. The covenants in this Section
12.3 are personal covenants between Landlord and Tenant and not
covenants running with the land, and in no event will Landlord's
mortgagee(s) or any purchaser at a foreclosure sale or a sale in
lieu of foreclosure be liable to Tenant for the return of the
security deposit. After each application from Tenant's security
deposit, Tenant shall upon demand replenish said deposit to the
amount set forth in Section i.i (g).
(b) Provided Tenant shall comply with all the terms of this
Lease, such security shall be returned to Tenant upon
termination of this Lease and after surrender of possession of
the Leased Premises to Landlord. In the event of a sale of the
Property or assignment of this Lease by Landlord to any person
other than a mortgagee, Landlord shall have the right to
transfer the security to its vendee or assignee, subject to
Tenant's aforesaid rights upon termination, and thereupon
Landlord shall be released from any liability with respect to
the return of such security to Tenant, such vendee or assignee
to be solely responsible to Tenant therefor.
(c) Tenant shall not assign or encumber its interest in the
security deposit, and neither Landlord nor its successors or
assigns shall be bound by any attempted assignment or
encumbrance.
SECTION 12.4 INDEMNITY. Tenant agrees to indemnify and save
Landlord and any ground and/or underlying lessor(s) and
mortgagees of the Leased Premises harmless from and against any
and all claims and demands (except such as directly result from
the negligence of Landlord or any such ground or underlying
lessor(s) or mortgagees or their respective agents or employees)
for, or in connection with, any accident, injury or damage
whatsoever caused to any person or property arising, directly or
indirectly, out of the business conducted in or the use and/or
occupancy of the Leased Premises or occurring in, on or about
the Leased Premises or any part thereof, or arising directly or
indirectly, from any act or omission of Tenant or any
concessionaire or sub-tenant or their respective licensees,
servants, agents, employees or contractors, and from and against
any and all cost, expenses and liabilities incurred in
connection with any such claims and/or proceedings brought
thereon. The comprehensivegeneral liability coverage maintained by
Tenant pursuant to this Lease shall specifically insure the contractual
obligations ofTenant as set forth in this Section and as otherwise
may be provided in this Lease.
SECTION 12.5 DAMAGE TO PROPERTY OR PERSONS. Landlord shall not
be liable for any loss of or damage to property of Tenant or of
others located in the Leased Premises or upon the Property, by
theft or otherwise, nor for any loss or damage whatsoever to any
property which Tenant could remove at the end of the Term as
provided in Section 12.7 hereof Landlord shall not be liable for
any injury or damage to persons or property or to the interior
of the Leased Premises resulting from fire, explosion, falling
plaster, steam, gas, electricity, water, rain or snow or leaks
from any part of the Leased Premises or from the pipes,
appliances, or plumbing works or from the roof, street, or
subsurface or from any other place or by dampness or by any
other cause. Landlord shall not be liable for any such injury
or damage caused by other tenants or any person(s) either in the
Leased Premises or elsewhere upon the Property, or by occupants
of property adjacent to the Property, or by the public, or by
operations in the construction of any private, pubfic, or
quasi-pubfic work. Landlord shall not be liable for any latent
defect in construction.
SECTION 12.6 ASSIGNMENT OR SUBLETTING. (a) With respect to this
Lease, Tenant shall make no assignment or subletting, whether by
operation of law or otherwise, without the prior written consent
of Landlord. Any assignment or sublease by Tenant shall be only
for the purposes specified in Section 1.1 (e) hereof and for no
other purpose, and, notwithstanding any other provision herein
contained, in no event shall any assignment or sublease of the
Leased Premises release or relieve Tenant from any obligations
of this Lease. Tenant agrees to pay as additional rent
Landlord's reasonable attorneys fees incurred in connection with
review and/or preparation or modifications of any assignments or
subleases. In the event that any such assignment or sublease is
approved by Landlord, Tenant also agrees to pay to Landlord a
fee in the amount of Three Hundred Dollars ($300.00) to cover
Landlord's costs of changing its records to effect such
assignment or sublease. In the event Tenant shall assign its
interest in this Lease or sublet the Leased Premises for rentals
in excess of those rentals reserved hereunder, Tenant shall pay
all of such excess rent to Landlord as additional rent.
(b) Any permitted assignee of Tenant shall assume Tenant's
obligations hereunder and shall deliver to Landlord an
assignment and assumption in form satisfactory to Landlord at
least ten (10) days prior to the effective date of the
assignment.
(c) If the Tenant is a corporation (other than one whose shares
are regularly and publicly traded on a recognized stock
exchange), Tenant represents that the ownership and power to
vote a majority of its entire outstanding capital stock belongs
to and is vested in the officer or officers executing this
Lease. If there shall occur any change in the ownership of
and/or power to vote the majority of the outstanding capital
stock of Tenant, whether such change of ownership is by sale,
assignment, bequest, inheritance, operation of law or otherwise,
without the prior written consent of Landlord, then Landlord
shall have the option to terminate this Lp-ase upon thirty (30)
days notice to Tenant.
SECTION 12.7 SURRENDER OF PREMISES AND HOLDING OVER. (a) At the
expiration of the tenancy hereby created, Tenant shall surrender
the Leased Premises in good condition, reasonable wear and tear
excepted, and damage by unavoidable casualty excepted to
the extent that the same is covered by Landlord's fire insurance
policy with extended coverage endorsement, and Tenant shall
surrender all keys for the Leased Premises to Landlord at the
place then fixed for the payment of rent and shall inform
Landlord of all combinations on locks, safes, and vaults, if
any, in the Leased Premises. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other
termination of the Term of this Lease. If Tenant shall default
in so surrendering the Premises, Tenant's occupancy subsequent
to such expiration, whether or not with the consent or
acquiescence of Landlord, @@ be deemed to be that of a tenancy
at the will of Landlord and in no event from month to month or
from year to year, and it shall be subject to all the terms,
covenants, and conditions of this Lease applicable thereto,
except that Minimum Annual Rent shall be twice the amount
payable in the last year of the Term, and no extension or
renewal of this Lease shall be deemed to have occurred by such
holding over.
(b) Prior to the expiration or sooner termination of this Lease,
Tenant shall remove any and all trade fixtures, equipment and
other unattached items which Tenant may have installed, stored
or left in the Leased Premises or elsewhere in the Property,
including but not limited to counters, shelving, show cases,
chairs and unattached movable machinery owned or provided by
Tenant and which are susceptible of being moved without damage
to the Building. Tenant shall repair any damage to the Leased
Premises caused by its removal of such fixtures and movables.
In the event Tenant does not make such repairs, Tenant shall be
liable for and agrees to pay Landlord's costs and expenses in
making such repairs, together with a sum equal to twenty percent
(20%) of such costs and expenses to cover Landlord's overhead in
making such repairs for Tenant. Tenant shall not remove any
plumbing or electrical fixtures or equipment, heating or air
conditioning equipment, floor coverings (including but not
limited to wall to wall carpeting), or any other items which are
not easily movable without damage to the Leased Premises, all of
which shah be deemed to constitute a part of the freehold and/or
leasehold interest of Landlord, nor shall Tenant remove any
fixtures or machinery that were furnished or paid for by
Landlord (whether initially installed or replaced).
TheLeased",PremisesshaRbeleftinabroom-cleancondition. If Tenant
shall fail to remove its trade fixtures or other property as
allowed in this Section 12.7, such fixtures and other property
not removed by Tenant shall be deemed abandoned by Tenant and at
the option of Landlord shall become the property of Landlord, or
at Landlord's option may be removed by Landlord at Tenant's
expense plus twenty percent (20%) as hereinabove provided, or
placed in storage at Tenant's expense, or sold or otherwise
disposed of, in which event the proceeds of such sale or other
disposition shall belong to Landlord.
(c) Any injury to the Premises or the Property caused by moving
the property of Tenant or its employees, agents, contractors, or
invitees and all breakage done by Tenant, or the agents,
contractors, servants, employees or invitees of Tenant, as well
as any damages caused by the negligence of Tenant, or its
agents, contractors, servants, employees or invitees shall be
repaired as determined by the Landlord, without delay, at the
expense of the Tenant. At Tenant's expense, Landlord shall
have the right to replace, or require Tenant to replace, all
plate glass, including windows, in or upon the Premises or
Property which may be damaged or broken by Tenant or its
employees, agents, customers, contractors or invitees.
SECTION 12.8 LIEN OF LANDLORD FOR RENT, TAXES AND OTHER SUMS.
Landlord shall have, and Tenant hereby grants, subject to any
valid liens of record created in connection with financing
arrangements made by Tenant in the normal course of its
business, a security interest in any furnishings, equipment,
fixtures, inventory, and other personal property of any kind
belonging to Tenant, including after-acquired property, or the
equity of Tenant therein, at any time located within the Leased
Premises. The security interest is granted for the purpose
of securing the payment of rent, other charges, assessments,
penalties and damages herein covenanted to be paid by Tenant,
and for the purpose of securing the performance of all other
obligations of Tenant hereunder. Upon Tenant's default or
breach of any covenants of this Lease, Landlord shall have
(in addition to the rights and remedies provided to Landlord
hereunder) all remedies available under the
law of the State where the Leased Premises are located,
including but not limited to the right to take possession of the
above mentioned property and dispose of it by sale in a
commercially reasonable manner. Tenant hereby agrees to execute
and deliver from time to time Financing Statements at Landlord's
request for the purpose of serving notice to third parties of
the security interest herein granted. Tenant shall upon demand
reimburse Landlord for all filing and recording fees and taxes
incurred in connection with filing and recording such Financing
Statements.
SECTION 12.9 LIENS. Tenant shall discharge any lien filed
against the Property or any part thereof for work done or
materials furnished with respect to the Leased Premises or with
respect to Tenant's business or Tenant's use or occupancy of the
Leased Premises within ten (10) days after such lien is filed.
If Tenant fails to keep this covenant, in addition to any other
remedies available to Landlord under this Lease or otherwise,
Landlord may at its option discharge such lien, in which event
Tenant agrees to pay Landlord a sum equal to the amount of the
lien thus discharged plus Landlord's internal administrative
costs, attorneys fees, expenses and damages thereby caused
Landlord (which amount it is hereby agreed shall be no less than
One Thousand Dollars ($1,000.00) per lien so discharged).
SECTION 12.10 INTEREST. Whenever this Lease refers to
"Interest", same shall be computed at a rate equal to the Prime
Rate (as hereinafter defined) plus two percentage points. If,
however, payment of Interest at such rate by Tenant (or by the
tenant then in possession having succeeded to the Tenant's
interest under this Lease) should be unlawful, that is,
violative of usury statutes or otherwise, then Interest shall,
as against such party, be computed at the maximum contract rate
payable by such party under applicable law. 'Prime Rate" shall
mean the rate being charged at the time in question by Wachovia
Bank for short term (90 day) unsecured loans made to its
preferred customers in Greensboro, N.C.
SECTION 12.11 LATE PAYMENTS. Should Tenant fail to pay when due
any installment of Minimum Annual Rent, or any other sum payable
to Landlord under the terms of this Lease, then Interest shall
accrue from and after the date on which any such sum shall be
due and payable, and such Interest together with a L-ate Charge
of fifty dollars ($50.00) or five percent (5%) of the Minimum
Annual Rent due for that calendar month, whichever is greater,
to cover the extra expense involved in handling such
delinquency, shall be paid by Tenant to Landlord at the time of
payment of the delinquents sum.
SECTION 12.12 CONSENTS. With respect to any provision of this
Lease which either provides or is held to provide that L-andlord
shall not unreasonably withhold or unreasonably delay any
consent or approval Tenant shall not be entitled to make any
claim for, and Tenant hereby expressly waives, any claim for
damages, it being understood and agreed that Tenant's sole
remedy therefor shall be an action for specific performance.
SECTION 12.13 WAIVER OF RIGHT OF REDEMPTION. Tenant hereby
expressly waives any and all rights of redemption conferred by
statute or otherwise.
SECTION 12.14 NOTICES. Whenever notice shall or may be given to
either of the parties by the other, each such notice shall be by
registered or certified mail with return receipt requested, at
the respective addresses of the parties as contained herein or
to such other address as either party may from time to time
designate in writing to the other. Any notice under this Lease
shall be deemed to have been given at the time it is placed in
the U.S. mails with sufficient postage prepaid in the aforesaid
manner.
SECTION 12.15 BROKER. Tenant warrants and represents that no
broker was involved on its behalf in negotiating or consummating
this Lease, and Tenant agrees to indemnify and hold Landlord
harmless from and against any and all claims for brokerage
commissions arising out of any communications or negotiations
had by Tenant with any broker or agent regarding the Leased
Premises or any other premises and/or the consummation of this
Lease or any other proposed transaction.
SECTION 12.16 SHORT FORM LEASE. Tenant agrees not to record
this Lease without the express written consent of Landlord and
further agrees to execute, acknowledge and deliver at any time
after the date of this Lease, at the request of Landlord, a
short form lease suitable for recording.
SECTION 12.17 ENTIRE AND BINDING AGREEMENT. This Lease contains
all of the agreements between the parties hereto, and it may not
be modified in any manner other than by agreement in writing
signed by all the parties hereto or their successors in
interest. The terms, covenants, and conditions contained herein
shall inure to the benefit of and be binding upon Landlord and
Tenant and their respective successors and assigns, except as
may be otherwise expressly provided in this Lease. Tenant
acknowledges that neither Landlord, any agent of Landlord, nor
any broker has made any representations to or agreements with
Tenant respecting the Property which are not contained in this
Lease.
SECTION 12.18 PROVISIONS SEVERABLE. If any term or provision of
this Lease or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Lease shall be valid
and be enforced to the fullest extent permitted by law.
SECTION 12.19 INTERPRETATION/GOVERNING LAW. The captions
contained herein are for convenience and reference only and
shall not be deemed as part of this Lease or construed as in any
manner limiting or amplifying the terms and provisions of this
Lease to which they relate. Underlined language shall have the
same meaning as if not underlined, the underlining being only
for convenience of the parties. Whenever herein used, the
singular shall also apply to the plural and vice versa, and
words of any gender shall also apply to each other gender, as
the context shall reasonably require. This Lease shall be
governed by the laws of the State of North Carolina, and the
venue for any legal action filed in connection herewith shall be
the county in which the Leased Premises are located.
SECTION 12.20 TENANT'S FINANCIAL INFORMATION. As often as is
requested by Landlord (but not more frequently than twice in any
calendar year), Tenant shall supply to Landlord and/or Landlord's
lenders or prospective lenders, current financial statements and
such other information as reasonably necessary to ascertain
the continued creditworthiness of Tenant for fulfillment of
its obligations hereunder.
SECTION 12.21 IRREVOCABLE OFFER. In consideration of Landlord's
administrative expense in considering this Lease and the terms
of Tenant's proposed tenancy hereunder, Landlord's reservation
of the Leased Premises pending such consideration, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Tenant's submission to Landlord
of this Lease, duly executed by Tenant, shall constitute
Tenant's irrevocable offer to continue for fifteen (15) days
from and after receipt by Landlord of the said Lease duly
executed by Tenant or until Landlord shall deliver to Tenant
written notice of rejection of Tenant's offer, whichever shall
first occur. If within said fifteen (15) day period Landlord
shall neither return the Lease duly executed by Landlord nor so
advise Tenant of Landlord's rejection of Tenant's offer, then
after said fifteen (L5) day period Tenant shall be free to
revoke its offer, provided, however, Tenant's offer shall
continue until (a) revoked by Tenant in writing or (b) accepted
or rejected by Landlord.
SECTION 12.22 LEASE EXTENSION The Tenant shall have the right,
to be exercised as hereinafter provided, to extend the Term of
this Lease for two (2) successive periods of one (1) year each
upon the following terms and conditions:
(1) That at the time of the exercise of such right the Tenant
shall not have been at any time during the then expired Term of
the Lease in default in the performance of any of the terms,
covenants, or conditions herein contained;
(2) That each extension shall be upon the same terms,
covenants, and conditions as in this Lease provided, except that:
(a)There shall be no further privilege of extension for
the Term of this Lease beyond the periods referred to above.
(b) During the first extension period the Minimum Annual Rent
payable by Tenant to Landlord shall be the amount set forth on
the first page of this Lease plus that percentage of said amount
as is equal to the percent of increase, if any, in the Consumer
Price Index for All Urban Consumers (CPI-W), (198284 = 100)
published by the Bureau of Labor Statistics, U.S. Department of
Labor, from the date of commencement of the Term of this Lease
to the date of the commencement of the extension period.
(c) During any succeeding extension period the Minimum Annual
Rent payable by Tenant to Landlord shall be the Minimum Annual
Rental rate payable during the preceding extension period plus
that percentage of said amount as is equal to the percent of
increases, if any, in the said Index as of the date of the
beginning of such succeeding extension period over the said
Index as of the commencement of the preceding extension period.
(3) The Tenant shall exercise its right to any extension of the
Term of this Lease by notifying the Landlord of the Tenant's
election to exercise such right at least one hundred-eighty
(180) days before the expiration of the Term of this Lease or
extension thereof then in effect. On the giving of such notice,
this Lease shall be deemed extended for the specified period,
subject to the foregoing, without execution of any further
instrument.
(4) If the above-referenced Consumer Price Index is
discontinued, there shall be substituted therefor for the
purposes herein provided a comparable (in the reasonable
judgment of Landlord) standard of measurement of fluctuation in
consumer prices then being utilized by the U.S. Government.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed
this Lease as of the day and year first above written, each
acknowledging receipt of an executed copy hereof.
ATTEST LANDLOARD: KOURY CORPORATION
/s/ Ronald W Mach /s/Jerry S. Koury
Assistant Secretary Chairman
(CORPORATE SEAL)
ATTEST: TENANT: GENERAL PARCEL SERVICE, INC.
/s/ Joy L. Webb /s/ E. Hoke Smith, Jr.
Asst Secretary President
(CORPORATE SEAL)
<PAGE>
NORTH CAROLINA
GUILFORD COUNTY
1, Judy Whittington Fommer ,. a Notary Public of said county
and state, do hereby certify that Ronald W. Mach personally appeared
before me this day and acknowledged that he is the Assistant Secretary
of KOURY CORPORATION and that by authority duly given and as the act of
the corporation the foregoing Lease Agreement was signed in its
corporate name by its Chairman, . sealed with its corporate seal
and attested by him as its Assistant Secretary.
WITNESS my hand and notarial seal this 5TH day of January, 1996.
/s/ Judy Whittington Fonner
Notary Public
My Commission Expires: 10-5-99
STATE OF Florida
COUNTY OF Duval
I, Joy L. Webb, a Notary Public of said county and state, do
hereby certify that E. Hoke Smith, Jr. personally came before me
this day and acknowledged that he is the President of GENERAL
PARCEL SERVICE, INC. and that by authority duly given and as an
act of the corporation, the foregoing Lease Agreement was signed
in its name by its President/C.E.O. , sealed with its corporate
seal and attested by him/her as its (Assistant) Secretary.
WITNESS my hand and notarial seal this. 21st day of Dec., 1995
JOY L. WEBB
My Commission Expires:
11-29-97
NOTARY PUBLIC, STATE OF FLORIDA
My Commission Expires Nov. 29, 1997
Commission No. CC332860
<PAGE>
EXHIBIT "B" - AS IS OFFICE/ INDUSTRIAL LEASE
WITH LIMITED WORK TO BE PERFORMED BY LANDLORD
SECTION 1.1 LANDLORD'S WORK.
(a) Landlord agrees to perform the following items of work
related to the Leased Premises:
(1) Repaint. and thoroughly clean the office area of the
Premises.
(2) Service existing HVAC system in order to ensure same is in
good working order.
(b) Tenant acknowledges that it is familiar with the physical
condition of the Leased Premises and finds same suitable for
Tenant's purposes excepting only such items of construction to
be performed by Landlord in accordance with Section I.I(a)
above. Tenant further acknowledges (i) that Landlord has not
made and does not hereby make any representations regarding the
physical condition of the Leased Premises or the Property, and
(ii) that there are no warranties, either express or implied,
regarding the condition of the Leased Premises and/or the
Property. Accordingly, Tenant hereby accepts the Leased
Premises in their 'as is" condition subject only to Landlord's
work to be performed in accordance with Section 1.1(a) above.
(c) For the purpose of construing Landlords obligations under
Sections 5.2, 8.1 and 8.2 of the Lease, the Landlord's work
referred to in said Sections shall be deemed to refer to the
Leased Premises in the condition existing upon the Lease
Commencement Date.
SECTION 1.2 TENANT IMPROVEMENTS. (a) In the event that Tenant
plans to improve, renovate or alter the Leased Premises, Tenant
shall prepare at Tenant's sole cost and present to Landlord for
Landlord's approval complete plans and specifications for work
to be done to alter the Leased Premises in accordance with
Tenant's requirements. If deemed reasonably necessary by
Landlord (or if required by any governmental authorities),
Tenant's plans and specifications shall be prepared and sealed
by an architect or engineer duly licensed in the State in which
the Property is located.
(b) No construction work shall be commenced by Tenant until
Tenant receives prior written approval of the final plans and
specifications from Landlord. Approval of Tenant's plans and
specifications by Landlord or Landlord's Architect does not relieve
Tenant of the responsibility to comply with the requirement of applicable
codes and regulations. AU changes after final approval are
subject to Landlord's prior written consent.
(c) Tenant shall obtain all necessary permits and approvals from
any governmental authority or agency which are required for the
performance of the work shown on the approved plans and
specifications and Tenant's occupancy of the Leased Premises.
Tenant shall obtain all necessary permits, approvals, meters and
hook-ups from the appropriate utility companies, and Tenant
shall pay all fees, charges and deposits required in connection
therewith.
(d) Nothing contained in this Lease or this Exhibit shall be
deemed in any way as constituting the consent or request of
Landlord, express or implied, by inference or otherwise, to any
contractor, subcontractor, laborer, mechanic or materialman, for
the performance of any labor or the furnishing of any materials
for any work within or alteration or repair of the Leased
Premises or any part thereof nor as giving Tenant a right, power
or authority to take any action that would give rise to the
filing of any mechanics' or materialmen's lien or claim against
the Leased Premises, Tenant's interest therein, or the Property.
(e) Tenant shall bear all expense and liability for any work
related to the Leased Premises performed by or at the direction
of Tenant, and Tenant shall indemnify and hold harmless Landlord
from any expense, liability, claim, or cause of action related
thereto, including but not limited to any attorneys fees
incurred in connection therewith. All such work shall be
performed in a good workmanlike manner utilizing the highest
prevailing standards applicable to such work.
(f) Anything in this Exhibit to the contrary notwithstanding, all
roof penetrations and roof restoration, as well as the
installation of all structural supports shall be performed at
Tenant's expense by such roofing contractor as Landlord may
designate. Upon completion of said roofing work, the roofing
contractor shall furnish a letter addressed to Landlord stating
that the work done in accordance with Tenant's approved plans
and specifications has not affected the roof bond or guaranty
for the Property roof.
(g) Tenant's general contractor (the 'Contractor") shall be
subject to Landlord's prior written approval, which approval may
be withheld in Landlord's sole discretion. Tenant and the
Contractor shall comply with all requirements set forth herein.
Prior to the commencement of any work within the Leased
Premises, Tenant and the Contractor shall enter into a
construction contract which shall be subject to Landlord's prior
written approval.
(h) The Contractor will perform the work and furnish the
materials required therefor on the sole credit of Tenant; no
lien for labor or materials will be filed or claimed by the
Contractor against the Leased Premises or the Property of which
the Premises are a part, and the Contractor will immediately
discharge any such lien filed or claims by any person or entity
that furnishes labor or materials to the Leased Premises.
(i) If reasonably requested by Landlord, the Contractor shall
furnish the following satisfactory in form and substance to
Landlord prior to commencement of the work: (A) a payment bond
and a performance bond in the amount of the contract issued by a
bonding company acceptable to Landlord licensed in the state where the
Property is located wherein Landlord is named a co-obligee, or a
guaranty of such construction in the form and executed by such
persons as Landlord may require; (B) a lien waiver executed by
the Contractor, lien waivers executed by all subcontractors, and
lien waivers executed by all materialmen who will furnish
materials in excess of Three Hundred Dollars ($300.00) in the
aggregate, and (C) a letter executed by the Contractor which
provides in substance that the Contractor will not permit its
workmen and subcontractors to create any disharmony or interfere
with any workmen, contractors and subcontractors working in the
Premises, that either Landlord or Tenant shall have the right to
suspend work under said contract on twenty-four (24) hours
notice until any such condition ceases, and that either Landlord
or Tenant shall have the right to terminate said contract
without liability if any such condition continues for three (3)
days. Landlord's request for performance of any or all of the
foregoing items shall be deemed reasonable in all events if any
contract for such work provides or anticipates a total contract
amount equal to or exceeding the sum of Three Thousand and
no/100 Dollars ($3,000.00).
(j) The Contractor shall furnish Tenant and Landlord with
certificates of insurance setting forth the following coverages
in reasonable amounts: (A) workmen's compensation; (B) bodily
injury, including death; (C) property-, (D) motor vehicle
liability and property damage; and (E) Builder's Risk Insurance.
(k) The Contractor shall at all times keep the Leased Premises
and adjacent areas free from accumulation of waste, materials or
rubbish caused by its operations. The Contractor shall be
responsible for initiating, maintaining and supervising all
safety precautions and programs in connection with the work and
shall take all necessary precautions for the safety of, and
shall provide all necessary protection to prevent damage, injury
or loss to (A) all employees and workmen at the Leased Premises
and other persons who may be affected thereby, including without
limitation licensees and invitees of the Property and other
tenants in the Property, (B) all the work and other materials
and equipment to be incorporated therein, and (C) other property
at the site or adjacent thereto. Such precautions shall
include, but shall not be limited to, the furnishing of guard
rails, barricades and the securing of the Leased Premises.
(1) Notwithstanding the foregoing, Landlord shall have the
right, but not the obligation, to waive any requirements imposed
upon Tenant or Tenant's Contractor under this Exhibit B
respecting any construction work performed for Tenant by Koury
Corporation as Tenant's contractor.
<PAGE>
Exhibit 10.4
------------
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into as of the 10th day
of February, 1995, by and between TRANSIT EXPRESS OF CHARLOTTE,
INC., a North Carolina corporation (hereinafter called
"Lessor"), and GPS ACQUISITION CORP., a Florida corporation
(hereinafter called "Lessee's);
W I T N E S S E T H:
In consideration of the covenants and agreements herein
contained, the Lessor does hereby demise and lease unto Lessee
for lawful commercial use as terminal/of f ice/warehouse (which
Lessee hereby hires and rents from Lessor) that certain realty
and improvements thereon located at 421 West Tremont Street,
Charlotte, Mecklenburg County, North Carolina 28203, said realty
being more fully described on Exhibit A attached hereto.
TO HAVE AND TO HOLD said property unto said Lessee, together
with all rights and privileges thereunto belonging, and subject
to the rights of other tenants, upon the following terms and
conditions:
1. Premises. The "premises" or "demised premises" shall mean the
building and improvements located on the real estate described
on Exhibit A, and the appurtenances thereunto belonging.
2. Term. The initial term of this lease shall be for three (3)
years beginning February 10, 1995, and ending at midnight,
February 9, 1998.
3. Option to Renew. Lessee, at its option, shall have one
option to extend the term of this lease for an additional period
of three (3) years and on the same terms and conditions, except
as to the rental. Lessee may exercise this option only by
giving Lessor written notice of such exercise, delivered either
personally or by certified mail at least ninety (90) days prior
to the expiration of the original term.
4. Rental.
4.1 Lessee shall pay a minimum annual rental of Thirty-Eight
Thousand Four Hundred and No/100 Dollars ($38,400.00) during the
term of this lease in equal monthly installments of Three
Thousand Two Hundred and No/100 Dollars ($3,200.00), in advance
on or before the first day of each month, commencing February
10, 1995, and a Three Thousand Two Hundred and No/100 Dollars
($3,200.00) security deposit for the last payment of the term.
4.2 If the option to renew is exercised, the minimum annual
rental during each of the years of the renewal term, payable
monthly shall be the greater of that during the initial period
or increased by any increase in the Cost of Living between the
base year 1995 and 2000, as determined by the United States and
City Average Price Index published by the U. S. Department of
Labor, Bureau of Labor Statistics, based on all items, with 1967
equaling 100.
4.3 Any such Cost of Living adjustment will be made by first
determining the current index number as of December 31, 2000, by
averaging the monthly indices for 2000 and the base index number
for 1995 by averaging the monthly indices for 1995. The current
index number for 2000 will be divided by the base index number
for 1995. Such result will then be multiplied by the aforesaid
minimum annual rent. This product will then be added to the
previous minimum annual rent to determine the new minimum annual
rent, payable monthly, for the renewal period.
4.4 Rental payments shall be made payable to Lessor at its
address set forth in Paragraph 20.
4.5 Lessee shall pay Lessor a late charge after written notice
of four percent (4%) of any monthly rent or other monetary
payment not received by the Lessor within fifteen (15) days of
its due date, in addition to interest.
5. Commission. Lessor shall hold harmless and indemnify Lessee
from the payment of any real estate commission arising out of
this lease. Lessee represents that it has not dealt with a
broker in connection with this transaction.
6. Lessee Expense.
6.1 The Lessee shall also assume and pay as additional rental as
such costs are incurred or become payable the following expenses
related to the demised premises:
(a) All city, county or other ad valorem taxes or assessments
levied upon Lessee's personal property located or installed on
the premises, plus the tax on the realty comprising the demised
premises;
(b) All utility charges of every kind, including water, gas,
electricity and telephone;
(c) All premiums for fire, casualty, workers' compensation and
liability insurance required to be maintained by the Lessee
hereunder, including the cost of fire and - extended coverage
insurance on the demised building; and,
(d) All maintenance and repairs hereinafter required of Lessee
to comply with Paragraph 9 hereof; and Lessee shall make all
repairs as may be necessary to keep the improvements on the
demised premises in compliance with applicable codes.
7. Improvements.
7.1 Lessee accepts the premises "as is."
7.2 Lessee may make, at its expense, alterations or improvements
to the interior of the premises as previously approved by
Lessor. Lessee may, at its own expense, make further
alterations or improvements to the interior of the premises,
providing that the prior written approval of Lessor shall first
be obtained as to any change, alteration or addition to or which
substantially affects any of the structural portion of the
building, or any of the heating, plumbing, mechanical and
electrical systems (which consent may be withheld). All such
improvements, whether made by Lessor or Lessee, shall belong to
Lessor upon the termination of this lease.
8. Fixtures and Personal Property.
8.1 It is understood that the building is being leased equipped
with certain fixtures attached to the lease premises now owned
by Lessor. Detachable equipment owned by Lessee may be
installed in the premises. Further equipment and trade fixtures
may be added at the expense of Lessee, which shall remain the
property of Lessee. But any replacement of Lessor's property
shall belong to Lessor and may not be removed.
8.2 Upon the termination of this lease and from time to time,,
provided Lessee is not in default, Lessee shall have the right
to remove from the leased premises any of Lessee's property
stored or placed on the leased premises. Lessee, at its own
costs, shall repair any damage resulting to the premises from
the removal of Lessee's personal property; however, Lessee shall
not remove any of Lessor's property at any time.
8.3 If Lessee fails to remove any of its property within thirty
(30) days after the termination or expiration of this lease, the
same shall be deemed conclusively abandoned; Lessor shall have
the right at its option either to retain said property as its
own or to take possession of such property and sell it in any
commercially reasonable fashion. Lessor shall retain from the
sales proceeds all of its reasonable expenses in connection with
such sale (shall charge any resulting damage and the costs of
removal to Lessee) and shall promptly remit the balance, if any,
to Lessee.
8.4 Lessee shall make no claim against any fixtures or other personal
property installed in, attached to or made a part of the buildings as
part of the original or subsequent construction (including without
limitation, all plumbing, heating, and air conditioning equipment,
basic wiring, or replacements thereof).
9. Repairs.
9.1 Lessee shall accept said improvements in their "as is"
condition. The risk of casualty loss prior to commencement of
the term is on Lessor.
9.2 Except for repairs necessitated by or resulting from the
negligence of Lessee, its agents, contractors and invitees, or
by the failure of the Lessee to provide ordinary maintenance
(the cost of any such repairs or replacements to be borne by
Lessee), Lessor shall be responsible for and maintain the
exterior and structural portion of the improvements (including
foundation, building floors, supporting walls, roof and the roof
drainage system) , and shall replace as necessary all major
components of the mechanical, utility and electrical systems
(providing the necessity therefor was not caused by Lessee or
its agents due to its lack of ordinary care and maintenance).
9.3 Lessee shall, at its own expenses, make all other repairs
and maintenance not herein assumed by Lessor as required to keep
the premises in a first-class tenantable condition, including
but not limited to, any sign erected identifying Lessee's
business, janitorial and custodial care, all ordinary and
preventive maintenance required to keep any machinery, plumbing,
mechanical and electrical equipment in the premises fully
operable, and all other charges or expenses which may arise or
grow out of the occupancy of the demised premises. Lessee shall
then return the premises at the expiration or termination of
this lease broom clean, and in as good condition as the same
were at the beginning of the initial term, except as to any
loss, damage or deterioration by fire, other casualty, the
elements, acts of God, or by ordinary wear and tear.
9.4 Without limitation, the aforesaid obligations of Lessee
shall include keeping in good order and repair the paving and
yards, doors, locks, windows, mechanical equipment, the heating,
air conditioning, wiring and above-ground plumbing systems, and
any other equipment or fixtures in or affixed to the building.
9.5 Should either party hereto fail to make any such repairs
herein required of it after reasonable notice, the other party
may make same for the account of such defaulting party.
10. Fire or Casualty.
10.1 In case of fire or other casualty, Lessee shall give
immediate notice to Lessor.
10.2 In the event the premises are partially destroyed or
damaged by fire or other casualty but are not destroyed or
damaged by fire or other casualty but are not thereby rendered
untenantable by Lessee, then this lease shall continue; and
Lessor (from available insurance proceeds) shall promptly repair
the same to substantially the same condition in which such
improvements were before such damage, in which event the rent
shall abate only proportionately with the actual floor area that
Lessee is unable reasonably to use in its business based upon the
total square feet of building area during the time it is being
repaired; providing, that if such repairs have not been commenced
within thirty (30) days from the date of such damage and the work
thereafter proceeding with reasonable diligence, Lessee may
either make such repairs and charge the expense as a credit
against rental or cancel this lease by serving ten (10) days'
written notice upon Lessor.
10.3 In the event the premises are damaged or destroyed by f ire
or other casualty to such an extent as to render the premises
untenantable by Lessee, then this lease shall terminate at the
option of either party upon written notice to the other and the
rent hereunder shall abate as of the date of said loss.
10.4 A loss of up to fifty percent (50%) of either the off ice
or the warehouse areas of the building shall be deemed a partial
loss, and fifty percent (50%) or over of either area shall be
deemed a total loss, it being understood that Lessee shall have
the right to terminate this lease if it becomes unable to
conduct its normal operations from the demised premises other
than temporarily, providing such casualty loss is not the result
of the gross negligence or intentional act of Lessee or its
agents or invitees, in which event there will be no abatement.
11. Insurance and Indemnification.
11.1 Lessee shall obtain and maintain in effect fire and
extended coverage insurance on the demised premises to the
extent of full replacement cost. The premiums therefor shall be
paid by Lessee.
11.2 Lessee does hereby agree to hold Lessor harmless and
indemnify it against loss or expenses as to any and all claims,
demands, suits or causes of action or judgments which may be
entered therein, brought for damages or alleged damages
resulting from any injury to persons or property or from loss of
life sustained in, on or about the demised premises and
appurtenances thereto resulting from or in any way with Lessee's
occupancy. Lessee shall also indemnify Lessor from any
expenses or payment, including reasonable legal expenses,
incurred in connection with defending any such action or claim.
Lessor shall likewise indemnify and hold Lessee harmless with
respect to any claim resulting from the occupancy of Lessor.
11.3 Lessee shall obtain, pay all premiums for and maintain in
effect (a) a policy of fire and extended coverage insurance
insuring Lessee's property and interests to the extent desired
by Lessee; (b) a policy of workers' compensation insurance
insuring Lessee for the statutory limits; and (c) a policy of
comprehensive general public liability insurance for the mutual
protection of Lessor and Lessee against all claims arising out
of or from the use of the demised premises with limits of not
less than Five Hundred Thousand and No/100 Dollars/One Million
and No/100 Dollars ($500,000.00/$1,000,000.00) in respect of
bodily injury and One Hundred Thousand and No/100 Dollars
($100,000.00) for property damage, with said policy or
endorsement thereof naming Lessor as co-insured.
11.4 If Lessee shall fail to deliver to Lessor policies or
certificates of such insurance, Lessor may cause such insurance
to be issued and the bills for the premiums and the amount
thereof shall be charged to Lessee and be deemed additional rent
due by it.
12. Insurance Proceeds.
12.1 If there is any loss covered under insurance maintained
under Paragraph 11 on the demised premises, the proceeds thereof
shall be used to make any repairs or replacements which either
party may otherwise hereunder be obligated to make. if there is
a loss whereby the lease is terminated or the property not
restored, the insurance proceeds collectible shall belong solely
to Lessor.
12.2 The parties hereby waive any and all rights of subrogation
and of recovery against each other, their respective officers,
agents and employees, for loss occurring to their respective
properties located in or about the demised premises and will
cooperate to cause a waiver of subrogation endorsement to be
added to the fire and extended coverage insurance maintained by
either party insuring said premises, any part thereof or
contents therein.
13. Default.
13.1 In the event that Lessee shall fail to carry out or perform
any covenant herein agreed to by it (and further fails to make
good or remedy such default after written notice within five (5)
days of non-payment and thirty (30) days for other matters);
or if Lessee should petition to be or be declared bankrupt or
insolvent or make any conveyance or a general assignment for the
benef it of creditors; or if a receiver be appointed for it,
then in any one of such events, Lessor may, in addition to its
other rights and remedies, immediately or at any time thereafter
(unless cured), without further notice or demand:
(a) Re-enter the premises immediately, and remove all of
Lessee's personnel and property therefrom. Lessor may store the
property in a public warehouse or at another place of its
choosing at Lessee's expenses or for Lessee's account;
(b) After re-entry, terminate the lease on giving ten (10) days'
written notice of such termination to Lessee. Otherwise, entry
will not terminate the lease; and,
(c) May relet the premises or any part thereof, for such term,
without terminating the lease, at such highest possible rent and
on such terms as it may choose. Lessor may make reasonable
alterations to return the building to its original state and any
needed repairs to the premises necessary to cure any default of
Lessee.
13.2 Lessee shall be liable to Lessor, in addition to its other
liability for breach of the lease, for all expenses of the
reletting, and of such repairs made, which Lessor may incur. In
addition, Lessee shall be liable to Lessor for the difference
between the rent received by Lessor under the reletting and rent
installments that are due for the same period under this lease.
13.3 At its option, Lessor may apply any rent received from
reletting the premises as follows:
(a) To reduce Lessee's indebtedness to Lessor under the lease,
not including indebtedness for rent;
(b) To expenses of the reletting and such alterations and
repairs made;
(c) To rent due under this lease; and,
(d) To payment of future rent under this lease as it becomes due.
14. Condemnation. If the demised premises shall be taken under
the power of eminent domain, this lease shall terminate as of
the earlier date either when possession shall be so taken or
when Lessee is required to cease operation thereat. The taking
of any part of the building shall be deemed taking of the entire
premises. If only a portion of the parking area is taken, and
such does not substantially interfere with Lessee's operations,
this lease shall continue. The entire award for both leasehold
and reversion received in any condemnation shall belong to
Lessor; but Lessee shall be entitled to claim and to receive any
award separately allocated for its relocation costs or personal
property belonging to the Lessee.
15. Non-Assignment.
15.1 Lessee may assign or sublet any part of the demised
premises without the prior written consent of the Lessor, which
consent will not be withheld ,
15.2 The consent of Lessor to any assignment or subletting,
accepting rental, or any other act of Lessor shall not
constitute a waiver of the constitute a waiver of the necessity
for such consent to any subsequent assignment or subletting.
15.3 No act of Lessor, except an express statement in writing
shall constitute a waiver by Lessor of the necessity for any
required consent to an assignment or subletting, or release
Lessee from any of the obligations herein imposed on Lessee.
16. Quiet Enjoyment.
16.1 Lessor covenants that Lessee (upon the payment of the
rental herein reserved and its compliance with all the other
terms and conditions herein imposed upon the
Lessee) shall hold and enjoy the demised premises during the
term of this lease free from the adverse claims of any and all
persons.
16.2 Lessor or its authorized representative may enter the
demised premises at all reasonable times during regular working
hours for the purpose of making inspections, performing any work
required, and exhibiting the premises to or for lease, sale,
mortgage or financing.
17. Holding Over. If Lessee remains in possession after the
expiration of the agreed term or any agreed extension thereof,
without effectively exercising an option to renew or the
execution of a new lease, Lessee shall not thereby acquire any
right, title or interest in or to the leased premises, and shall
be deemed a Lessee by sufferance during such holding over on a
month-to-month basis. But in such event, Lessee shall be
subject to all the conditions, provisions and obligations of
this lease insofar as the same shall then be applicable, except
that there shall be an automatic increase in the minimum monthly
rent of ten percent (10%.).
18. Miscellaneous. Interest shall accrue on any monetary sum
required to be paid herein by Lessee after its due date at the
prime rate then prevailing plus two percent (2%). If Lessor
deems it necessary to file an action or proceeding to enforce
any covenant or for breach of any covenant herein and prevails,
Lessee shall pay the reasonable attorney's fees for Lessor's
counsel, if it is found that Lessee did not act in good faith or
with reasonable diligence in the dispute, the amount of such
fees to be fixed by the court or arbiter.
19. Subordination. This lease and all leasehold rights hereunder
shall be, become and remain subordinate to the lien of any bona
fide mortgage or deed of trust now or hereafter imposed upon all
or any part of the demised premises. Upon reasonable requests,
Lessee shall execute and deliver to Lessor any instrument
reasonably requested by Lessor consenting to the full
subordination of this lease to any such mortgage or deed of
trust upon the condition that its rights hereunder shall not be
disturbed by any foreclosure or otherwise so long as Lessee is
not in default, and Lessor will request for Lessee a
non-disturbance and attornment agreement from any mortgage.
20. Notice. Notice to the parties hereto shall be in writing and
effective if given either hand-delivered or by certified mail,
return receipt requested, as follows (until changed by notice):
To Lessor: Transit Express of Charlotte, Inc.
Attention:
Mr. Stephen L. Lit
1043 Palmyra Drive
Tega Cay, SC 29715
cc: Louis A. Bledsoe, Jr., P.A.
Attorneys at Law
Post Office Box 36779
Charlotte, NC 28236-6779
To Lessee: General Parcel Service, Inc.
Attention:
E. Hoke Smith, Jr.
8923 Western Way
Jacksonville, FL 32256
21. Entire Agreement. The covenants and agreements herein
contained are binding on the parties hereto, their successors ,
assigns and legal representatives. This lease embodies all of
the understandings and agreements of the parties, and the terms
hereof shall not be changed or varied except by written
instrument signed by both parties.
22. Recordation. Upon the request of either party, a short form
lease shall be executed and recorded.
23. Mortgagee's Rights. Lessee agrees that this Lease Agreement
shall be subject to any deed of trust or mortgage now on said
leased premises, and to all advances already made, or which may
be hereaf ter made, on account of said mortgages or deeds of
trust to the extent of debts and charges secured thereby. In
the event of a foreclosure pursuant to any deed of trust or
mortgage, Lessee agrees to attorn to the purchaser pursuant to
any foreclosure sale, and at the option of such purchaser,
Lessee shall thereafter remain bound pursuant to the terms of
this Lease Agreement as if a new and identical Lease Agreement
between such purchaser, as Lessor, and Lessee, as tenant, had
been entered into for the remainder of the term thereof.
24. Option to Purchase.
A. Lessee is hereby granted the option to purchase the leased
property for the purchase price of Three Hundred Seventy-Five
Thousand and No/100 Dollars ($375,000.00) upon the following
terms and conditions:
1. Payment in cash or certified check in full at closing; and,
2 . Property is being sold and purchased in "as is" condition
with Lessee assuming all costs of inspections or investigations,
including any environmental, health or other such costs or any
costs required by any governmental authorities in connection
therewith.
B. The exercise of the option shall be effective:
1. Upon the first service of written notice thereof sent to
Lessor by depositing the same in the United States mail, posted
registered return receipt requested, for delivery to Lessor
addressed to Lessor at the address recited in Paragraph 20, or
to such other address as the Lessor may instruct the Lessee
during the future; and,
2. Simultaneously with said service of notice, the tender to
Lessor, or its successor, of Twenty-Five Thousand and No/100
Dollars ($25,000.00) cash or certified check as earnest money;
and,
3 . The notice above is given to Lessor no later than three
hundred sixty-five (365) days before the end of the first three
(3) year term of the lease; and,
4. The closing will take place at any time thereafter mutually
agreeable to the Lessor and Lessee, but no later than February
9, 1998.
IN WITNESS WHEREOF, the parties have caused this Lease Agreement
to be executed in duplicate originals pursuant to authority duly
given, as of the day and year first above written.
TRANSIT EXPRESS OF CHARLOTTE, INC.,
Lessor
[CORPORATE SEAL]
By: /s/ Stephen L. Lit
(Stephen L. Lit, President)
ATTEST:
/s/ Geriiane P. Lit
( Secretary)
GPS ACQUISITION CORP.,
Lessee
By: /s/ E. Hoke Smith, Jr.
(E. Hoke Smith, Jr., President)
[CORPORATE SEAL]
ATTEST:
/s/ Beverly A. Brooks
(Secretary)
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I, a Notary Public in and for said County and State, do hereby
certify that Gerianne P. Lit personally came before me this day
and acknowledged that she is Secretary of TRANSIT EXPRESS OF
CHARLOTTE, INC., a North Carolina corporation, and that by
authority duly given and as the act of the corporation, the
foregoing Lease Agreement was signed in its name by its
president, sealed with its corporate seal and attested by her as
its secretary.
WITNESS my hand and official notarial stamp or seal on this
10th day of February, 1995.
/s/ Linda L. Lisnect
Notary Public
My commission expires: 7/6/99.
STATE OF FLORIDA
COUNTY OF DUVAL
I, a Notary Public in and for said County and State, do hereby
certify that Beverly A. Brooks personally came before me this
day and acknowledged that she is Secretary of GPS ACQUISITION
CORP., a Florida corporation, and that by authority duly given
and as the act of the corporation, the foregoing Lease Agreement
was signed in its name by its president, sealed with its
corporate seal and attested by her as its secretary.
WITNESS my hand and official notarial stamp or seal on this the
10th day of February, 1995.
/s/ JOY L. WEBB
NOTARY PUBLIC, STATE OF FLORIDA
<PAGE>
GUARANTEE OF LEASE AGREEMENT
In consideration of the execution by the parties of the
foregoing Lease Agreement dated February 10, 1995, by and
between TRANSIT EXPRESS OF CHARLOTTE, INC., a North Carolina
corporation, as Lessor, and GPS ACQUISITION CORP., a Florida
corporation, as Lessee, the undersigned does hereby guarantee
and, upon any default by Lessee, agrees to perform each and
every obligation of Lessee under said Lease Agreement or any
renewal or extension thereof.
GENERAL PARCEL SERVICE, INC.
By: /s/ E. Hoke Smith, Jr.
<PAGE>
Exhibit 10.5
------------
PURCHASE AGREEMENT
(Transit Express of Charlotte, Inc.)
Table of Contents
Article 1. Assets Purchased
Article 2. Purchase Price
Article 3. Representations And Warranties
Article 4. Covenants
Article 5. Conditions To The Purchase
Article 6. Competition; Confidentiality
Article 7. Survival And Indemnity
Article 8. Termination And Abandonment
Article 9. Miscellaneous
ASSET PURCHASE AGREEMENT
(Transit Express of Charlotte, Inc.)
PURCHASE AGREEMENT, dated as of February 6,1995 (the
"Agreement") by and between Transit Express of Charlotte, Inc.,
a North Carolina corporation ("Seller" or "TE") and Stephen Lit
and Gerianne Lit (each individually a "Shareholder" and,
collectively, the "Shareholders"), and GPS Acquisition Corp., a
North Carolina corporation (the "Purchaser") and General Parcel
Service, Inc., a Florida corporation, (the "Guarantor").
Preliminary Statement. Seller wishes to sell to Purchaser, and
Purchaser wishes to buy from Seller, all of the assets owned or
used by Seller in its parcel delivery business (the "Business")
on the terms hereof. The Shareholders own all of the issued and
outstanding capital stock of Seller, have approved the
execution, delivery and performance of this Agreement by Seller
and join in this Agreement for the purposes set forth herein.
ACCORDINGLY, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
do hereby agree as follows:
Article1 Assets Purchased.
1.1 Subject to the terms, conditions, restrictions and
limitations hereinafter set forth, Seller agrees to sell to
Purchaser free and clear of all mortgages, security interests,
liens, encumbrances and charges of any kind, and Purchaser
agrees to purchase from Seller, the following assets and the
Business as a going concern:
1.1.1 All of Seller's furniture, fixtures, plant and office
machinery, spare parts, replacements, tools, motor vehicles and
other rolling stock and equipment including without limitation,
the personal property listed on Schedule 1.1.1 hereto and
initialed by the parties;
1.1.2 All of Seller's right, title and interest in and to the
corporate name Transit Express of Charlotte, Inc., the trade
name "Transit Express" or any similar derivation thereof, the
logo set forth on Schedule 1.1.2 hereto, the phrase "One Call
Ships It All", and any trademarks, copyrights, trade names or
other intellectual property rights of Seller. In this regard,
Seller, upon request of Purchaser, will take the necessary and
prompt action required to change its corporate name, at
Purchaser's expense, and shall assist Purchaser in the transfer
of Seller's telephone numbers, including, but not limited to any
existing 800 number to Purchaser at Purchaser's request;
1.1.3 All of Seller's accounts receivable reflected
on the Financial Statements of Seller or otherwise disclosed by
Seller to Purchaser as of February 3, 1995 and all accounts
receivable since February 3, 1995 through and including the
Closing Date (the "Accounts Receivable"). Any Accounts
Receivable paid to Seller after the Closing Date shall be paid
over to Purchaser immediately;
1.1.4 All of Seller's licenses and permits of whatever kind
and nature capable of being transferred to Purchaser;
1.1.5 All of Seller's patents, trademarks, slogans, trade
secrets, and processes, if any;
1.1.6 All prepaid expenses of Seller;
1.1.7 All of Seller's catalogs, and books and records relating
to the Business, provided however, that Seller shall retain its
corporate books and records, check books, canceled checks and
other records not related to the on going operation of the
Business with Purchaser retaining copies of such retained books
and records as Purchaser may request, at Purchaser's expense;
1.1.8 All of Seller's right, title and interest in and to
Seller's customer lists, customers and patronage;
1.1.9 All computer hardware and software;
1.1.10 All other assets of Seller used or useful in the
Business.
1.2 All of the foregoing assets shall be referred to herein
collectively as the "Assets".
1.3 Closing Date. The closing of the sale and purchase of the
Assets (the "Closing") shall take place at the offices of Louis
A. Bledsoe, Jr., P.A., 1057 East Morehead Street, Charlotte,
North Carolina 28204, at 9:00 a.m. local time on February 10,
1995, or at such other date, time and place as is mutually
agreed among the parties or, if all of the conditions to the
obligations of the parties set forth in Article 4 have not been
satisfied or waived by February 10, 1995, and there is no
agreement among the parties, on the day which is two business
days following the date on which all such conditions have been
satisfied or waived (such date and time of closing being herein
called the "Closing Date".
Article 2 Purchase Price
2.1 The total purchase price to be paid by Purchaser shall
be as set forth in this Article 2 and shall be paid in the
following manner:
2.1.1 $75,000 in cash shall be paid to Seller at Closing.
2.1.2 Assumption by Purchaser of the "Assumed Liabilities" as
defined in Section 2.5.2 hereof
2.2 Post-Closinig Adjustment.
2.2.1 Regarding-Accounts Receivable. Seller and the
Shareholders have made representations in Section 3.1.5 hereof
regarding the amount and collectibility of the Accounts
Receivable. Within 15 days after the end of the 90 day period
following the Closing Date, Purchaser shall advise Seller in
writing of the amount of Accounts Receivable that have been
collected, setting forth in reasonable detail the payor, the
applicable account number (if any), the amount paid and any
uncollected Accounts Receivable as of such date (the "Post
Closing Notice"). If the amount of collected Accounts
Receivable shown in the Post Closing Notice is less than the
Represented Collectibility Amount (as defined in Section 3.1.5
hereof) (such shortfall being referred to as the "Deficiency
Amount"), Seller shall pay the Deficiency Amount within ten days
of receipt of the Post Closing Notice. In the event that Seller
does not timely pay the Deficiency Amount, the then remaining
balance due to each Shareholder pursuant to the Noncompetition
Payments provided for in Section 6.1 ("Noncompetition Payments")
shall be proportionately reduced by an amount equal to the
Deficiency Amount and the monthly payments adjusted accordingly.
The provisions of this Section shall be self effectuating and
adjustment of the principal amount of the Noncompetition
Payments shall be made with no further action on the part of
Seller and the Purchaser. Purchaser shall use reasonable
commercial efforts in the collection of the Accounts Receivable
after the Closing Date.
2.2.2 Regarding Accounts Payable. Seller and the Shareholders
have made representations in Section 3.1.5 regarding the amount,
due dates, and other material terms of the Accounts Payable. If
Purchaser, through no fault of its own, is required to pay an
Accounts Payable amount in excess of the amount represented as
due (an "Excess Payment") or on a date earlier than the
represented due date (an "Early Payment"), then Purchaser shall
be entitled to reimbursement of the Purchase Price or reduction
of the then remaining balance of the Noncompetition Payments in
the manner provided in this Section 2.2.2. Within thirty (30)
days after each anniversary following the Closing Date, so long
as any Accounts Payable are due, Purchaser shall determine
whether an Excess Payment or an Early Payment has been made in
the preceding year and provide to Seller its calculations
regarding same, substantiating such calculations in reasonable
detail. If there have been one or more Excess Payments in such
year, the then remaining balance of the Noncompetition Payments
shall be automatically reduced by such amounts and the monthly
payments adjusted accordingly if the Noncompetition Payments are
still outstanding. If the Noncompetition Payments are not
outstanding, Seller and the Shareholders shall reimburse the
amount of the Excess Payments to Purchaser within thirty (30)
days of such notice. If there have been one or more Early
Payments in such year (other than voluntary prepayments by
Purchaser), the then remaining balance of the Noncompetition
Payments shall be reduced by an amount equal to the interest
that would be earned (at 10% per annum) on the amount of such
Early Payment between the date paid and the date represented by
Seller as actually due (the "Calculated Amount"), and the
remaining monthly payments shall be adjusted accordingly, if the
Noncompetition Payments are still outstanding. If the
Noncompetition Payments are not outstanding, Seller and the
Shareholders shall reimburse the Calculated Amount to Purchaser
within thirty (30) days of such notice.
2.3 Taxes. Taxes assessed or levied against the Assets
shall be prorated between Seller and Purchaser as of the Closing
Date on the basis of the most recent tax bills. An appropriate
adjustment, if necessary, shall be made when the true bill for
such taxes is received by Seller or Purchaser. 'Me party
receiving such tax bill promptly shall provide the other party
with a copy of such tax bill.
2.4 Utilities, All utility charges, including gas, oil,
electricity, sewer and water, pertaining to the Assets or the
Business shall be prorated between Seller and Purchaser as of
the Closing Date, except to the extent such charges are included
in the Accounts Payable. Accordingly, any invoices received
after the Closing Date for utility charges that have accrued up
to and including the Closing Date shall be for Seller's account.
2.5 Retained and Assumed Liabilities.-
2.5.1 Notwithstanding that any obligations or liabilities of
Seller are set forth or otherwise referenced in any one or more
of the Schedules hereto, except as expressly provided in Section
2.5.2, Purchaser does not and will not assume, pay, perform or
discharge (or cause to be paid, performed or discharged), and
Seller and the Shareholders covenant and agree that they shall
retain and be responsible for all obligations and liabilities of
Seller in any manner caused by, resulting from or relating to
events occurring or actions taken or failed to be taken by
Seller with respect to or relating to the operation of the
Assets and the Business at any time prior to and including the
Closing Date (the "Retained Liabilities").
2.5.2 On the terms and subject to the conditions set forth in
this Agreement, and in further consideration of the transfer of
the Assets as contemplated hereby, Purchaser shall perform or
discharge (or cause to be paid, performed or discharged) on a
timely basis (i) only those obligations expressly set forth and
described on Schedule 2.5.2 hereto (the "Accounts Payable") and
(ii) all obligations and liabilities in any manner caused by,
resulting from or relating to events occurring, or actions taken
or failed to be taken by Purchaser with respect to or relating
to the operation of the Assets and the Business at any time
after the Closing Date, (i) and (ii) being collectively referred
to as (the "Assumed Liabilities"). The Assumed Liabilities
shall be guaranteed by Guarantor.
2.6 Closing Deliveries.
2.6.1 Closing Deliveries By Seller. At the Closing, Seller
shall deliver, or cause to be delivered, at its cost and expense
the following to Purchaser:
2.6.1.1 The Lease attached hereto as Exhibit A the "Lease")
signed by Seller.
2.6.1.2 Bills of sale acceptable to Purchaser in the reasonable
exercise of its discretion, transferring to Purchaser Seller's
interest in the Assets and the Business.
2.6.1.3 Assignment and assumption agreements acceptable to
Purchaser in the reasonable exercise of its discretion assigning
to Purchaser on the same terms that presently exist, all of
Seller's rights in and interest under those leases and contracts
listed on Schedule 2.6.1.3 hereto or entered into after the date
hereof in accordance with the terms hereol Seller and Purchaser
understand and agree that certain of the "Assumed Liabilities"
are loans currently outstanding with Centura Bank. In the event
that such loans are not assumable in their current form without
material modification to the principal amount and/or the payment
terms, then Purchaser, in its sole discretion, may terminate
this Agreement. In the event of such termination, Section 8.1
shall apply.
2.6.1.4 Certificates of title for motor vehicles and other
certificated equipment.
2.6.1.5 The opinions, certificates, agreements and other
documents required to be delivered pursuant to Section 2.5.1.
2.6.1.6 Such other documents as Purchaser reasonably may
require in order to effect the transactions contemplated herein.
2.6.2 Closing Deliveries By Purchaser. At the Closing,
Purchaser shall deliver the following to Seller:
2.6.2.1 The cash portion of the purchase price by commercial
bank check;
2.6.2.2 Assignment and assumption agreements acceptable to
Sellers in the reasonable exercise of its discretion, pursuant
to which Purchaser assumes (i) the Assumed Liabilities and [(ii)
Seller's obligations on the same terms that presently exist
under those leases and contracts listed in Schedule 2.6.1.3
hereto or entered into after the date hereof in accordance with
the terms hereof (excluding those contracts or leases that
Purchaser does not assume pursuant to Section 2.5.1 hereto);
2.6.2.3 The Lease, signed by Purchaser;
2.6.2.4 The opinions, certificates and other documents
required to be delivered pursuant to Section 5.2
Article 3. Representations And Warranties.
3.1 Representations And Warranties Of Sellers. The Seller
and the Shareholders, jointly and severally (except to the
extent expressly set forth below as the several representation,
warranty or agreement of a party), represent and warrant to, and
agree with, the Purchaser as follows:
3.1.1 Organization And Qualification Of TE. TE is a corporation
duly organized, validly existing and in good standing under the
laws of the State of North Carolina and has all requisite power
and authority to own or lease and operate its properties and
assets and to carry on its business as, and in the places where,
such properties and assets are now owned or leased and operated
and such business is now being conducted. TE is not required to
be qualified as a foreign corporation in any jurisdiction.
3.1.2 Capitalization Of TE. The authorized capital stock of TE
consists of 100,000 shares of Common Stock, $1.00 par value, of
which 816 shares of Common Stock are issued and outstanding.
All of the issued and outstanding shares of capital stock of TE
are validly issued in compliance with all applicable laws, fully
paid and nonassessable and free of preemptive rights. There are
no outstanding options, warrants, convertible securities or
other rights, agreements, arrangements or commitments obligating
any Shareholder or TE to issue or sell any shares of capital
stock of TE.
3.1.3 Title To Stock. Each Shareholder severally represents,
warrants and agrees that (i) he owns, or as of the Closing Date
will own, of record and beneficially, his Shares free and clear
of any lien, pledge, security interest, liability, charge or
other encumbrance or claim of third parties (a "Lien").
3.1.4 Other Interests. TE does not own any equity or debt
interest or any form of proprietary interest in any entity, or
any obligation, right or option to acquire any such interest,
except for the Accounts Receivable. None of the Sellers owns,
directly or indirectly, an interest in any entity that is a
competitor, customer or supplier of TE or that otherwise has
business dealings with TE except as set forth on Schedule 3.1.4.
3.1.5 Financial Statements. The financial statements of TE for
the fiscal years ended December 31, 1994 and December 31, 1993
and for the short period ended February 3, 1995, which are
attached as Appendix A (the "Financial Statements") have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis and fairly present in
all material respects the financial condition of TE as at the
dates thereof and the results of the operation and cash flows
for the periods then ended. The Financial Statements have been
prepared from the books and records of TE, which accurately and
fairly reflect the transactions and dispositions of the assets
of TE. Except as set forth on Schedule 3.1.5, since December
31, 1994, with respect to TE in the current fiscal year as
compared to the comparable period in the prior fiscal year, (i)
there has not been any material adverse change in the business,
operations, prospects, financial condition, assets or
liabilities (contingent or otherwise) of TE, and (ii) TE has not
engaged in any transaction of a kind that would be prohibited
without the consent of the Purchaser pursuant to Section 3.1.1.
The Financial Statements and Schedule 3.1.5 set forth all
material liabilities or obligations of TE, contingent or
absolute. The Accounts Payable set forth on Schedule 2.5.2
hereof accurately set forth the amount, due date, obligee and
other material terms of the obligations set forth thereon.
Seller has provided Purchaser with the respective notes,
agreements, invoices and other documents containing the terms of
the Accounts Payable.
The Accounts Receivable reflected on the Financial Statements of
TE as of December 31, 1994, and all Accounts Receivable since
December 31, 1994 arose from bona fide transactions in the
ordinary course of business with unaffiliated persons or
entities. No Account Receivable of TE has been assigned or
pledged to any other person or entity, except as set forth on
Schedule 3.1.5. and all Accounts Receivable will be collectible
at their face amount, less an amount of such accounts that shall
not be collectible, which amount shall not exceed $2,000.00 in
the aggregate. The amount of collectible Accounts Receivable
net of any uncollectible account as of the Closing Date shall
not be less than $110,000.00 (the "Represented Collectibility
Amount") and shall be collectible within 90 days of the Closing
Date.
3.1.6 Authority Relative To Agreement: Non-Contravention. The
execution, delivery and performance of this Agreement by Seller
has been approved by all requisite corporate action, including
Shareholder approval. Seller and each Shareholder have all
requisite power and authority to enter into this Agreement and
to perform their respective obligations hereunder. This
Agreement has been duly executed and delivered by Seller and the
Shareholders. In addition, the Agreement constitutes the legal,
valid and binding obligation of Seller and the Shareholders
enforceable in accordance with its respective terms and (B) does
not (with notice or lapse of time or both) result in any
violation of or default under any mortgage, agreement or other
instrument or any permit, judgment, order, law or regulation
applicable to Seller, any Shareholder or his or its respective
properties.
3.1.7 Consents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any federal,
state, local or foreign governmental or regulatory authority or
any other person is required to be made or obtained in
connection with the execution and delivery of this Agreement or
the documents or transactions contemplated hereby by the Seller
or the Shareholders.
3.1.8 Corporate Documents. True, correct and complete copies of
the Articles of Incorporation and By-Laws of Seller have been
delivered to the Purchaser. The corporate minute books of
Seller contain the minutes of all the meetings of the directors
(and any committee thereof) and the stockholders of the Seller
that have been held.
3.1.9 Certain Tax Matters. All federal and state income tax
Returns required to be filed on or before the Closing Date by or
on behalf of Seller have been timely filed through the date
hereof or will be timely filed on or before the Closing Date in
accordance with all applicable laws, all amounts shown as due on
such Returns have been paid, and all such Returns accurately
state the amount of Taxes Seller is required to pay and are
correct and complete in all respects. Except as set forth in
Schedule 3.1.9. there is no action, suit, proceeding,
investigation, audit or claim that relates in any way to Taxes
now pending against, nor has any claim for additional Tax or
assessment been asserted by any taxing authority relating to
Seller or any income, property or operations of Seller. There
are no agreements for the extension of the time for the
assessments of any Taxes of Seller or with respect to any
income, properties or operations of Seller. There are no liens
for Taxes upon the assets of Seller except inchoate liens for
current taxes not yet due.
Seller has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations. Seller (a) has not been a
member of an affiliated group filing a consolidated federal
income Return nor (b) has any liability for Taxes of any person
or entity under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise. The term "Tax", when used
in this Agreement, means any and all taxes (including, without
limitation income, gross income, gross receipts, sales, rental,
use, unemployment, social security, insurance, occupation,
environmental, transfer, minimum, alternative minimum,
estimated, value-added, property (tangible and intangible),
excise, franchise, capital, doing business and stamp taxes),
payments required to be made under Section 7519 of the Code,
licenses, levies, imposts, duties, recording charges or fees,
charges assessments or withholdings of any nature whatsoever,
together with any and all assessments, penalties, fines,
additions to tax and interest thereon. "Return" means any
return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof
3.1.10 No Default, Permits. (i) The Business is being conducted
in compliance with applicable permits, judgments, orders, laws
and regulations of all governmental bodies; (ii) TE is not in
default under and, to the knowledge of TE and the Shareholders,
no other party is in material default under, the terms of any
contract, agreement, understanding, lease or commitment to which
TE is a party or to which its assets or properties are subject;
and (iii) TE possesses all material franchises, permits,
licenses, certificates, approvals and other authorizations
necessary to own or lease and operate its properties and to
conduct its business in the manner in which and in the
jurisdictions and places where such business is now conducted.
3.1.11 Litigation. Except as set forth on Schedule 3.1.11, (i)
there are no pending or, to the knowledge of the Seller and the
Shareholders, threatened, claims, actions, proceedings or
investigations against or affecting TE or its properties and to
knowledge of the Seller there is no basis for any such claim,
action, proceeding or 3.1.11, are all orders, judgments,
settlements, investigation. Set forth on Schedule 3.1.11, are
all orders, judgments, settlements, decrees or injunctions entered
within the last five years affecting TE or its properties.
3.1.12 Certain Agreements. TE is not a party to any agreement,
contract, lease, understanding or commitment the benefits of
which are contingent upon, the terms of which will be altered
by, the expense of which will be increased by, under which the
obligations of TE are accelerated by, or pursuant to which the
rights or obligations of the parties thereto will be calculated
on the basis of, any of the transactions contemplated by this
Agreement, except as set forth on Schedule 3.1.12.
3.1.13 Labor Controversies. TE is not now, nor has been at any
time in the prior five years, a party to any collective
bargaining agreement. There are no labor controversies pending,
or to the knowledge of any Shareholder or Seller, threatened
against TE and there have been no labor controversies at any
time in the prior five years.
3.1.14 ERISA And Other Employee Benefit And Employment Matters.
3.1.14.1 TE does not currently maintain nor has it ever
maintained an "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")).
3.1.14.2 Schedule 3.1.14 lists each "employee welfare benefit
plan" (as defined in Section 3(l) of ERISA) that TE maintains,
contributes to, or is required to contribute to on behalf of any
employee or former employee, including any multi-employer
welfare plan (such employee welfare benefit plans are
hereinafter collectively referred to as the "Welfare Benefit
Plans"), and sets forth the amount of any liability of TE for
any payments past due with respect to each Welfare Benefit Plan
as of the Closing Date. No voluntary employees' beneficiary
association or other funding arrangement (other than insurance
contracts) are being utilized to fund or implement any Welfare
Benefit Plan. TE has not made either written or oral
representations to any employee or former employee promising or
guaranteeing any employer payment or funding for the
continuation of benefits or coverage under any Welfare Benefit
Plan for any period of time beyond the end of the current plan
year (except to the extent required under Code Section 4980B).
3.1.14.3 Schedule 3.1.14 lists each deferred compensation plan,
bonus plan, stock option plan, employee stock purchase plan and
any other employee benefit plan, arrangement or commitment
(whether written or oral) not required under Section 3.1.14.1 or
Section 3.1.14.2 to be listed in Schedule 3.1.14 (other than
normal policies concerning holidays, vacations and salary
continuation during short absences for illness or other reasons)
maintained by TE for any employee (all such plans, agreements,
arrangements, and commitments are hereinafter collectively
referred to as the "Employee Benefit Plans").
3.1.14.4 TE does not maintain, nor has ever maintained,
contributed to, or had any employees participating in any
"defined benefit plan" (as defined in Section 3(35) of ERISA).
As used herein "Affiliate" means any organization which is a
member of a controlled group of organizations within the meaning
of Code Sections 414(b), (c), (m), or (o) of which TE is a
member.
3.1.14.5 The Welfare Benefit Plans and the Employee Benefit
Plans are legally valid and binding and in full force and
effect. All such plans comply currently, and have complied in
the past, both as to form and operation, with the provisions of
all laws, rules and regulations governing or applying to such
plans, including but not limited to ERISA, the Code, the
Americans with Disabilities Act, and the Age Discrimination in
Employment Act. All reports and filings required by any
governmental agency with respect to each such plan have been
timely and completely filed. On and after January 1, 1975, none
of the following has engaged in any transaction in violation of
Section 406(a) or (b) of ERISA that would subject TE or
Purchaser to any taxes, penalties, or other liabilities
resulting from such transaction: either TE, any Affiliate, or
any plan fiduciary of the Welfare Benefit Plans or Employee
Benefit Plans. None of the Welfare Benefit Plans or Employee
Benefit Plans is being audited or investigated by any
governmental agency. With respect to such plans, there are no
actions, suits or claims (other than routine claims
for benefits in the ordinary course) pending or threatened and
there are no facts which could give rise to any such actions,
suits or claims. A true, correct and complete copy of all
relevant documents (including plan documents, insurance
contracts, summary plan descriptions and Forms 5500) for each
item listed on Schedule 3.1.14 has been delivered to Purchaser.
3.1.14.6 As of the Closing Date there will be no material
liabilities, absolute or contingent, of TE or any employee,
officer, director or any person which may have indemnity rights
or contribution rights or other recourse against TE with respect
to the Welfare Benefit Plan or any Employee Benefit Plan, except
for (A) liabilities which are fully funded by the set aside in
trust or irrevocable dedication for that purpose of assets the
fair market value of which exceeds the liabilities to which they
are dedicated or set aside and (B) liabilities which have been
fully accrued on the Financial Statements.
3.1.14.7 Except as set forth on Schedule 3.1.14, as of a time
immediately after the Closing Date, TE may terminate any Welfare
Benefit Plan or any Employee Benefit Plan without any liability
to employees, former employees, beneficiaries, or any other
party or person except to the extent such liabilities have been
accrued or funded as described in the preceding paragraph or as
set forth on Schedule 3.1.14.
3.1.14.8 The consummation of the transactions contemplated by
this Agreement will not accelerate the time of payment or
vesting or increase the amount of compensation due to any
director, officer, employee, former director, former officer or
former employee of TE.
3.1.15 Compliance With Environmental Laws.
3.1.15.1 TE and its respective predecessors have complied with
all laws (including rules and regulations thereunder) of
federal, state, local and foreign governments (and all agencies
thereof) concerning the environment, public health and safety,
and employee health and safety, and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand,
or notice has been filed or commenced against any of them
alleging any failure to comply with any such law or regulation.
3.1.15.2 TE has no Liability (and there is no Basis related to
the past or present operations, properties, or facilities of TE
and its respective predecessors for any present or future
charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against TE giving rise to any
Liability whatsoever) under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Federal Water
Pollution Control Act of 1972, the Clean Air Act of 1970, the
Safe Drinking Water Act of 1974, the Toxic Substances Control
Act of 1976, the Refuse Act of 1899, or the Emergency Planning
and Community Right-to-Know Act of 1986 (each as amended), or
any other law (or rule or regulation thereunder) of any federal,
state, local, or foreign government (or agency thereof),
concerning release or threatened release of hazardous
substances, public health and safety, or pollution or protection
of the environment.
3.1.15.3 TE has no Liability (and TE and its respective
predecessors have not handled or disposed of any substance,
arranged for the disposal of any substance, or owned or operated
any property or facility in any manner that could form the Basis
for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand [under the
common law or pursuant to any statute] against TE giving rise to
any Liability) for damage to any site, location, or body of
water (surface or subsurface) or for illness or personal injury,
except to the extent of an underground gasoline storage tank and
related gas pump located at 412 West Tremont Avenue, Charlotte,
North Carolina.
3.1.15.4 TE has no Liability (and there is no Basis for any
present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against TE giving rise
to any Liability) under the Occupational Safety and Health Act,
as amended, or any other law (or rule or regulation thereunder)
of any federal, state, local, or foreign government (or agency
thereof) concerning employee health and safety.
3.1.15.5 TE has no Liability (and TE has not exposed any
employee to any substance or condition that could form the Basis
for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand [under the
common law or pursuant to statute] against TE giving rise to any
Liability) for any illness of or personal injury to any
employee.
3.1.15.6 TE has obtained and been in compliance with all of the
terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables which are contained in all federal, state, local and
foreign laws (including rules, regulations, codes, plans,
judgments, orders, decrees, stipulations, injunctions, and
charges thereunder) relating to public health and safety, worker
health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
3.1.15.7 All properties and equipment used in the business of
TE have been free of asbestos, PCB'S, methylene cbloride,
trichloroethylene, 1,2 transdichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
3.1.15.8 No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste ever has been buried,
stored, spilled, leaked, discharged, emitted, or released on any
real property that TE owns or has ever owned or that TE leases
or ever has leased.
3.1.15.9 For purposes of this Agreement, "Basis" means any past
or present fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the
basis for any specified consequence.
3.1.15.10 For purposes of this Agreement "Liability "means any
liability (whether known or unknown, whether absolute or contingent,
whether liquidated or unliquidated, and whether due or to become
due), including any liability for taxes.
3.1.16 Physical Condition Of Facilities. The physical
facilities of TE to be leased by Purchaser under the Lease are
in good repair and have been maintained in accordance with
customary maintenance practices and are in a state of repair
(normal wear and tear excepted) adequate for the normal use of
such facilities in the ordinary conduct of the business of TE as
now conducted.
3.1.17 Proprietary Information. Set forth on Schedule 3.1.17
are all copyrights, trademarks, trade names, patents, technology,
know-how, processes and similar intellectual property rights
(the "Intellectual Property") TE owns or is licensed to use.
All royalties, honoraria or other fees with respect to the use
of any Intellectual Property by TE have been paid in full. To
the knowledge of the Seller and Shareholders use of any
Intellectual Property by TE does not infringe on the rights of
any person, and the Seller and Shareholders have no knowledge of
any infringing use of the Intellectual Property of TE any person
or entity. All assets, mailing lists and customer lists that
have been represented to the Purchaser as proprietary in nature,
each of which is set forth on Schedule 3.1.17, are proprietary
in nature. Proper and adequate steps have been taken to ensure
their continued proprietary nature and nothing material has
transpired that would compromise or call into question their
proprietary nature.
3.1.18 Title To Properties: Absence Of Liens And Encumbrances.
Set forth on Schedule 3.1.18 is a list of (i) all real property
owned by TE, and (ii) all leases of real or personal property
under which TE is the lessee (the "Listed Assets"). The Assets,
including the Listed Assets, constitute all assets necessary to
conduct the business of TE as conducted on the Closing Date.
Except as set forth on Schedule , TE has good and marketable
title to all its properties and assets, real, personal and
mixed, (including the Assets) used in its business, free and
clear of any Liens. All leases under which TE is the lessee of
any real or personal property that are material to the conduct
of the Business are, to the best of Seller's and the
Shareholders' knowledge, valid and binding on the lessors
thereunder in accordance with their respective terms and TE is
not in breach thereof.
3.1.19 Properties, Contracts And Other Data. Set forth on
Schedule 3.1.19 are the following.
3.1.19.1 The twenty largest customers (measured in terms of
gross receipts) of TE in each of the last two fiscal years;
3.1.19.2 Any rate schedules used by TE during the last two
fiscal years and at present
3.1.19.3 All current trade-out arrangements between TE and any
party; and
3.1.19.4 Any arrangements or agreements of TE with competitors.
3.1.20 Insurance. Set forth on Schedule 3.1.20 is a list of all
insurance policies of TE, all of which are in full force and
effect and shall continue in full force and effect in accordance
with their terms after the consummation of the transactions
contemplated by this Agreement until the date set forth in
Schedule 3.1.20.
3.1.21 No Omissions. No representation, warranty or statement
made by a Seller or any Shareholder in or pursuant to this
Agreement, any schedule, exhibit or appendix or any other
information delivered to the Purchaser in connection with the
transactions contemplated by this Agreement contains or will
contain any untrue statement of material fact or omits or will
omit to state any material fact necessary to make such
representation, warranty, statement, schedule, exhibit, appendix
or information not misleading.
3.1.22 Inquiry. Without limitation of any representation,
warranty or covenant set forth in this Agreement or any Other
Agreement, Seller and each Shareholder represent and warrant
that to the extent that any of the matters addressed in any
representation or warranty are not within his or its personal
knowledge, he or it has made reasonable, good faith inquiry with
respect to such matter of persons upon whom Seller or such
Shareholder reasonably and in good faith believes he or it and
the Purchaser are justified in relying.
3.2 Representations And Warranties Of The Purchaser. The
Purchaser represents and warrants to, and agrees with, Seller as follows:
3.2.1 Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Florida and has all
requisite power and corporate authority to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby.
3.2.2 Authority Relative To Agreement, Non-Contravention. The
execution and delivery of this Agreement by the Purchaser and
the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized by the Purchaser.
This Agreement has been duly executed and delivered by the
Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms. The execution, delivery and
performance of this Agreement will not (A) conflict with any
provision of the Certificate of Incorporation or By-laws of the
Purchaser or (B) result in any violation of or
default under any mortgage, agreement or other instrument,
order, law or regulation applicable to the Purchaser or its
properties, if such violation or default would, when taken
together with all such other violations or defaults, affect
materially and adversely the ability of the Purchaser to
consummate the transactions contemplated hereby.
3.2.3 Consents. No consent, approval, order or authorization
of, or registration, declaration or filing with, any federal,
state, local or foreign governmental or regulatory authority is
required to be made or obtained by the Purchaser in connection
with the execution and delivery of this Agreement by the
Purchaser or the consummation by the Purchaser of the
transactions contemplated hereby.
3.2.4 Financial Statements. Prior to the date hereof, the
Purchaser has furnished to the Sellers a copy of the Purchaser's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993. The financial statements of the Purchaser set forth
therein have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and fairly
present in all material respects the financial condition of the
Purchaser as at the dates thereof and the results of its
operations and its cash flows for the periods then ended. Since
December 31, 1993 there has been no change in the financial
condition of the Purchaser which would affect materially and
adversely the ability of the Purchaser to perform its
obligations under this Agreement.
Article 4. Covenants.
4.1 Covenants of Sellers. The Seller and Shareholders,
jointly and severally, covenant and agree with the Purchaser as
set forth in this Section 4.1:
4.1.1 Conduct of TE's Business. Except as set forth on Schedule
4.1.1, between the date hereof and the Closing Date, TE and the
Shareholders shall use their best efforts to cause the TE to
comply with the following, unless the Purchaser shall otherwise
consent in writing:
4.1.1.1 The business of TE shall be conducted only in, and TE
shall not take any action except in, the ordinary course of
business consistent with past practice.
4.1.1.2 TE shall not directly or indirectly do any of the
following: (A) issue, sell, pledge, dispose of or encumber (1)
any capital stock or (2) except inventory and other minor assets
in the ordinary course of business, any assets of TE; (B) amend
or propose to amend its Articles of Incorporation or By-Laws;
(C) split, combine or reclassify any outstanding shares of any
class of its capital stock; (D) declare, set aside or pay any
dividend payable in cash, stock, property or otherwise make or
authorize any other payment on or in respect of any class of its
capital stock; (E) redeem, purchase, acquire or offer to acquire
any shares of any class of its capital stock; or (F) enter into
any contract, agreement, commitment or arrangement with respect
to any of the matters set forth in this Section 4.1.1.2.
4.1.1.3 TE shall not (A) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof; (B) create,
incur, assume, guarantee or become liable for any indebtedness
for borrowed money (including capital leases) or issue any debt
securities; (C) enter into or modify any material contract,
lease, agreement or commitment; (D) terminate, modify, assign,
waive, release or relinquish any material contract rights or
amend any material rights or claims; (E) except in the ordinary
course of business, pay, discharge or satisfy claims,
liabilities or obligations (absolute, accrued, contingent or
otherwise); (F) cancel any debts or waive any claims or rights;
or (G) make any capital expenditure or commitment, except
capital expenditures that, individually, do not exceed $5,000.
4.1.1.4 TE shall not grant any increase in the salary or other
compensation to, or grant any bonus to, or enter into any
employment agreement or make any loan to or enter into any
contract, arrangement or transaction of any other nature with,
any director, officer or employee of TE including the
Shareholders.
4.1.1.5 TE shall not take any action to institute any new
severance or termination pay practices with respect to any
director, officer or employee of TE, including the Shareholders,
or to increase the benefits payable under its severance or
termination pay practices.
4.1.1.6 TE shall not adopt or amend, in any respect, except as
may be required by applicable law, any collective bargaining,
bonus, profit sharing, compensation, stock option, restricted
stock, pension retirement, deferred compensation, employment or
other employee benefit plan, agreement, trust, fund, plan or
arrangement for the benefit or welfare of any director, officer
or employee of TE, including the Shareholders.
4.1.1.7 TE shall not enter into any contract with any
Shareholder or an affiliate of any Shareholder providing for the
provision of goods or services or otherwise.
4.1.1.8 TE shall, to the extent not prohibited by the foregoing
provisions of this Section 4.1.1, utilize its best efforts to
maintain its relationships with its suppliers and customers.
4.1.2 Other Agreements. Subject to the terms and conditions
herein provided, Seller and Shareholders agree to utilize their
best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
4.1.3 Notification Of Certain Matters. Seller and Shareholders
shall give prompt notice to the Purchaser of (i) the occurrence,
or failure to occur, of any event that Seller or Shareholders
believe would be reasonably likely to cause any of its
representations or warranties contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the
Closing Date, and (ii) any failure of Seller or Shareholders to
comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder.
4.1.4 Access To Information. Seller and Shareholders shall
cause TE and its officers, directors, employees and agents,
including attorneys and accountants to, afford, from the date
hereof to the Closing Date, the officers, employees and agents
of the Purchaser reasonable access to the officers, employees,
agents, properties, books, records and work papers of TE, and
shall furnish the Purchaser all financial, operating and other
data and information as the Purchaser, through its officers,
employees or agents, may reasonably request.
4.2 Covenants Of The Purchaser. The Purchaser covenants and
agrees with the Seller as set forth in this Section 4.2:
4.2.1 Other Agreements. Subject to the terms and conditions
herein provided, the Purchaser agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions
contemplated by this Agreement.
4.2.2 Notification Of Certain Matters. The Purchaser shall give
prompt notice to the Seller of (i) the occurrence, or failure to
occur, of any event which the Purchaser believes would be
reasonably likely to cause any of its representations or
warranties contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date,
and (ii) any material failure of the Purchaser or any officer,
director, employee or agent thereof to comply with or satisfy
any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
4.2.3 Refinanced obligations. The Purchaser agrees to use its
reasonable efforts to assume the Refinanced Obligations (as
defined in Section 5.2.4 without recourse to the Seller or the
Shareholders). In the event Purchaser is unable to accomplish
such assumption, Purchaser shall indemnify and hold Seller and
the Shareholders harmless from any and all liabilities resulting
from the Seller's or Shareholders' obligations under guaranty in
respect of the Refinanced Obligations pursuant to Section 7.3
hereof
Article 5. Conditions To The Purchase.
5.1 Conditions To The Purchase Relating To The Purchaser. The
obligation of the Purchaser to purchase the Assets and the
Business from the Seller in accordance with Article 1 is, at its
option, subject to the satisfaction, on or before the Closing
Date, of each of the following conditions:
5.1.1 Compliance By Seller And Shareholders. The Seller and the
Shareholders shall have complied in all material respects with
each of their respective covenants and agreements contained
herein, and except as affected by any action contemplated by or
permitted under this Agreement, each of the representations and
warranties of the Seller and the Shareholders contained in Section
3.1 shall be true and correct in all respects at and as of the Closing
Date as if made at and as of the Closing Date, and the Purchaser shall
have received a certificate from the Seller and the Shareholders to
such effect.
5.1.2 Opinion Of Counsel. The Purchaser shall have received an
opinion, dated the Closing Date, of Louis A. Bledsoe, Jr., Esq.,
counsel to the Sellers, substantially to the effect set out in
Exhibit B and such other matters as may be reasonably requested
by the Purchaser.
5.1.3 Litigation. On the Closing Date, there shall be (i) no
judgment, decree, injunction, ruling or order of any court,
governmental department, commission, agency or instrumentality
outstanding against the Purchaser, Seller or any Shareholder
that prohibits or restricts consummation of the purchase by the
Purchaser of the Assets and Business in accordance with Article
1 hereof or (ii) any action, suit or proceeding instituted by
any governmental department, commission, agency or
instrumentality against the Purchaser, Seller or any Shareholder
that seeks damages or to prohibit or restrict the purchase by
the Purchaser of the Assets and Business.
5.1.4 Other Agreements. The respective parties shall have
executed and delivered the Lease as provided in Section 2.6.1.1
and the Employment Agreement referred to in Section 5.1.8 (the
"Other Agreements"), and such agreements shall constitute the
valid and binding obligations of the respective parties in
accordance with their respective terms.
5.1.5 No Adverse Change. On the Closing Date there shall have
been in the reasonable opinion of the Purchaser no material adverse
change in the Business, operations, prospects or financial condition of
(i) TE since December 31, 1994, or (ii) TE in the current fiscal
year as compared to the comparable period in the prior fiscal
year.
5.1.6 Other Transactions. Shareholders shall have, and shall
have caused each of their affiliates to, transfer to Seller all
properties or assets held in any of their names and that are
necessary or useful in the operation of the Business of the
Seller.
5.1.7 Consents. All approvals of applications to public
authorities, and all approvals of any private persons (including
persons having contractual relations with TE) the granting of
which is necessary for the consummation of the transactions
contemplated hereby or the preventing of any termination of any
material right, privilege, license, agreement of, or any
material loss or disadvantage to TE upon consummation of the
transactions contemplated hereby shall have been obtained on
terms reasonably satisfactory to the Purchaser.
5.1.8 Employment Agreements. Purchaser and Stephen Lit shall
have entered into the Employment Agreement attached hereto as
Exhibit C (the "Lit Employment Agreement") and Purchaser and
those employees listed on Schedule 5.1.8 shall have entered into
employment agreements or arrangements reasonably satisfactory to
Purchaser in its discretion.
5.2 Conditions To The Purchase Relating To Sellers. The
obligation of the Sellers to consummate the sale of the Assets
and Business to the Purchaser in accordance with Article I
hereof is, at their option, subject to the satisfaction, on or
before the Closing Date, of each of the following conditions:
5.2.1 Compliance. The Purchaser shall have complied in all
material respects with each of its covenants and agreements
contained herein and, except as affected by any action
contemplated by or permitted under this Agreement, each of the
representations and warranties of the Purchaser contained in
Section 3.2 shall be true and correct in all material respects
at and as of the Closing Date as if made at and as of the
Closing Date and the Seller shall have received a certificate of
an officer of the Purchaser to such effect.
5.2.2 Opinion Of Counsel. The Seller shall have received an
opinion, dated the Closing Date, of Walker & Koegler, P.A.,
counsel to the Purchaser, substantially to the effect set out in
Exhibit D and such other matters as may be reasonably requested
by the Seller.
5.2.3 Litigation. On the Closing Date, there shall be (i) no
judgment, decree, injunction, ruling or order of any court,
governmental department, commission, agency or instrumentality
outstanding against the Purchaser, Seller or any Shareholder
which prohibits or restricts consummation of the purchase by the
Purchaser of the Assets and Business in accordance with Article
1 hereof or (ii) any action, suit or proceeding instituted by
any governmental department, commission, agency or
instrumentality against the Purchaser, a Seller or any
Shareholder which seeks damages or to prohibit or restrict the
purchase by the Purchaser of the Assets and Business.
5.2.4 Certain Liabilities Of TE. The Purchaser shall have used
reasonable efforts to assume without recourse to the
Shareholders, the liabilities of TE set forth on Schedule 5.2.4
(the "Refinanced Obligations") and shall have provided the
Seller with evidence reasonably satisfactory to the Seller of
such efforts.
Article 6 Competition; Confidentiality.
6.1 Competition. In consideration of the additional payment
made to each Shareholder as set forth on Schedule 6.1, for the
period set forth on Schedule 6.1 following the Closing, each
Shareholder agrees that, without the written permission of the
Purchaser, he shall not, nor shall he permit TE to engage
(whether as owner, partner, stockholder, investor, employee,
adviser, consultant or otherwise) in any business that is
similar to or in competition with the business conducted by TE
or its successors, including, but not limited to any parcel
delivery business or any business that solicits or delivers
parcels or packages (a "Competing Business"), in the States of
Florida, Georgia, South Carolina and North Carolina (the
"Non-Compete Area") except to the extent of up to five percent
(5%) of a class of securities of any publicly traded company.
Without limiting the generality of the foregoing, each
Shareholder agrees that during the period this Section 6.1 is in
effect, he will not, without the prior express written consent
of the Purchaser, solicit or attempt to solicit within the
Non-Compete Area any Competing Business from any person or entity
that TE or its successors called upon, solicited or conducted business
with as of the Closing Date, any persons or entities that have been
advertisers or customers of TE or any successors of either, or
recruit or hire any person who was or is an employee of TE or
its successor and who is subsequently employed by the Purchaser
after the Closing Date. In the event of the violation of this
Section 6.1, the Purchaser shall be entitled, in addition to any
other remedies provided by law or equity, to obtain the specific
performance of this covenant and other equitable relief without
the posting of any bond therefor. Should a Shareholder violate
this Section 6.1, the period of time for this provision shall
automatically be extended for the period of time from which such
party began such violation until he permanently ceases such
violation. The Shareholders each acknowledge that this Section
6.1 is necessary to protect the interests of the Purchaser and
TE and that the restrictions contained herein are reasonable in
light of the consideration and other value the Shareholders have
accepted pursuant to this Agreement and that Shareholders'
agreement to the terms of this Section 6.1 is a material
inducement to the closing by Purchaser of the transactions
contemplated by this Agreement. If any provision of this
covenant is invalid in whole or in part, it shall be curtailed,
whether as to time, area covered or otherwise as and to the
extent required for its validity under the applicable law and as
so curtailed, shall be enforceable. The obligation of the
Purchaser to make the payments provided by this Section 6.1
shall be subject to right of offset or counterclaim. The
payments provided for on Schedule 6.1 shall be guaranteed by
Guarantor.
6.2 Confidential Information.
6.2.1 Each Shareholder acknowledges that he has had access to
TE's confidential information (including, but not limited to,
records regarding sales, price and cost information, marketing
plans, customer names, customer lists, sales techniques,
manufacturing or distribution plans or procedures, and other
material relating to the business of TE), proprietary, or trade
secret information (collectively referred to herein as
"Confidential Information"), and agrees not to use such
information other than for the sole benefit of TE or to disclose
such Confidential Information to any person who is not an
officer of TE at the time of such disclosure, without the prior
written consent of TE and, prior to the Closing Date, the
Purchaser. Each Shareholder further acknowledges that this
covenant to maintain Confidential Information is necessary to
protect the goodwill and proprietary interests of TE and that
the restriction against his disclosure of Confidential
Information is reasonable in light of the consideration and
other value the Seller has accepted pursuant to this Agreement.
Each Shareholder agrees on request of TE immediately to
surrender to the TE all Confidential Information and all copies
thereof, in such Shareholder's possession or control as well as
all other papers, documents, electronic media or property of TE
coming into his or its possession.
6.2.2 Purchaser acknowledges that it has had access to TE's
confidential information (including, but not limited to, records
regarding sales, price and cost information, marketing plans,
customer names, customer lists, sales techniques, manufacturing
or distribution plans or procedures, and other material relating
to the business of TE), proprietary, or trade secret information
(collectively referred to herein as "Seller's Confidential
Information"), and agrees that, if the transactions contemplated
by this Agreement are not consummated, it shall not use such
information to the detriment of TE or disclose such Confidential
Information to any person who is not an officer of TE at the time
of such disclosure, without the prior written consent of TE.
Purchaser agrees on request of TE immediately to surrender to TE all
Seller's Confidential Information and all copies thereof, in Purchaser's
possession or control as well as all other papers, documents,
electronic media or property of TE coming into its possession.
Article 7. Survival And Indemnity.
7.1 Survival Of Representations And Warranties. The
representations, warranties and covenants of the Shareholders
and Seller included or provided herein and in the Other
Agreements, or in any schedule, certificate or other document
delivered pursuant thereto shall survive the Closing Date for a
period of two years. The representations, warranties and
covenants of the Purchaser included or provided herein and in
any Other Agreements to which it is a party, or in any schedule,
appendix, certificate or other document delivered pursuant to
thereto shall survive the Closing Date for a period of two years.
7.2 Indemnification By Seller And Shareholders. The Seller and
Shareholders, jointly and severally (except to the extent
expressly set forth below as the several obligation of a
Shareholder), hereby agree to indemnify, defend and hold
harmless the Purchaser and its directors, officers, affiliates,
employees, agents and representatives and its successors, from
and against all demands, claims, actions or causes of action,
assessments, Taxes (other than Taxes included as Assumed
Liabilities) losses, damages, liabilities, costs and expenses,
including without limitation interest, penalties and reasonable
attorney's fees and expenses and costs of investigation (a
"Claim"), asserted against, imposed upon or incurred by any of
the foregoing, as such Claim is incurred, by reason of or
resulting from (a) a breach, or alleged breach, by a Shareholder
or Seller of the representations, warranties or covenants of any
Shareholder or Seller referred to in Section 7.1; (b) any
lawsuit, obligation or liability relating to the Retained
Liabilities, or TE or out of transactions or circumstances
occurring or existing prior to the Closing Date that is not
expressly assumed by Purchaser under this Agreement; and (c)
without limiting the foregoing, any of the pending or threatened
proceedings or litigation set forth on Schedule 3.1.9 or
Schedule 3.1.11.
7.3 Indemnification By The Purchaser. The Purchaser hereby
agrees to indemnify, defend and hold harmless the Sellers and
their respective successors from and against all Claims asserted
against, imposed upon or incurred by any of the foregoing, as
such Claim is incurred, by reason of or resulting from (a) a
breach, or alleged breach, by the Purchaser of the
representations, warranties or covenants of the Purchaser
referred to in Section 7.1; (b) the Refinanced Obligations
(other than a Claim arising out of circumstances occurring or
existing prior to the Closing Date), (c) the Assumed
Liabilities, and (d) any Claim arising after Closing which
solely and directly results from events or circumstances
occurring after Closing.
7.4 Conditions Of Indemnification. The obligations and
liabilities of the indemnifying party to an indemnitee under
Section 7.2 or Section 7.3 with respect to a Claim resulting
from the assertion of liability by third parties shall be
subject to the following terms and conditions:
<PAGE>
7.4.1 Promptly after receipt of notice of commencement of any
action or the assertion in writing of any claim by a third
party, the indemnitee shall give the indemnifying party written
notice thereof together with a copy of such claim, process or
other legal pleading; provided, however that the failure to so
notify the indemnifying party will not relieve the indemnifying
party from any liability it may have otherwise than on the
account of the provisions of this Article 7 or if the failure to
give such notice within such time should not have been
prejudicial to the indemnifying party.
7.4.2 The indemnifying party shall have the right to undertake
the defense of the indemnitee by representatives of its own
choosing reasonably satisfactory to the indemnitee; provided,
however, that if in the reasonable opinion of counsel to the
indemnitee there exists a conflict of interest that would make
such representation inappropriate in the reasonable judgment of
the indemnitee, the indemnitee shall be entitled to retain its
own counsel at the expense of the indemnifying party. After
notice to the indemnitee from the indemnifying party of its
election to assume the defense, conduct or settlement thereof,
the indemnifying party shall not be liable to the indemnitee for
any legal or other expenses subsequently incurred by the
indemnitee in connection with the defense, conduct or settlement
thereof; provided, however, that the indemnifying party shall
consider the advice of the indemnitee as to the defense of such
claims and the indemnitee shall have the right to participate,
at its own expense, in such defense. The indemnifying party
shall not, without the prior written consent of the indemnitee,
settle or compromise any claim or consent to the entry of any
judgment which restricts the actions of any indemnitee or that
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the indemnitee a release from all
liability in respect of such claim.
7.4.3 In the event that the indemnifying party, by the fifteenth
day after receipt of notice of any such claim (or, if earlier,
by the tenth day preceding the day on which an answer or other
pleading must be served in order to prevent judgment by default
in favor of the person asserting such claim), does not elect to
defend against such claim, the indemnitee will have the right to
undertake the defense, compromise or settlement of such claim on
behalf of and for the account, expense and risk of the
indemnifying party.
7.4.4 Purchaser shall have the option of recouping all or any
part of its losses (in lieu of seeking any cash indemnification
therefor to which it is entitled under this Article 7, by
notifying Seller that the Purchaser is reducing the amount
outstanding under its obligations pursuant to Section 6.1 hereof
Any such reduction shall affect the timing and amount of
payments required under such obligation by recalculating the
outstanding balance and amortizing such balance over the
remaining term.
7.4.5 In connection with any such indemnifications the
indemnitee will cooperate with all reasonable requests of the
indemnifying party.
7.5 Limitations On Liability Of Shareholders.
7.5.1 Notwithstanding anything to the contrary contained in this
Agreement, an individual Shareholder shall not be liable under
the indemnification provisions of Article 7 to the extent that
the breach of a warranty or covenant or the falsity of a
representation upon which such liability would be based is
expressly stated in this Agreement to be the several warranty,
covenant or representation of another Shareholder or Seller.
7.5.2 The Purchaser, the Shareholders and the Seller each agree
that this Article 7 shall be the exclusive remedy of the parties
for any Claim. Notwithstanding anything to the contrary
contained in this Agreement, in the event that a Shareholder or
Seller becomes liable to an indemnified party hereunder, in no
event shall the aggregate liability of all Shareholders and
Seller under this Article 7 exceed the total purchase price of
the Assets and Business, including employment compensation and
non competition compensation, provided, however, that the
foregoing limitation shall not limit the Shareholders' and
Seller's indemnification obligations to the extent that the
Claim is pursuant to Section 7.2(b), Section 7.2(c) or arises
out of or relates to a breach of the representations, warranties
or covenants set forth in Section 3.1.2, Section 3.1.3, Section
3.1.9, Section 3.1.5, Section 9.16 or any payment by Seller to a
Shareholder or any affiliate thereof in violation of this
Agreement.
7.5.3 Notwithstanding anything to the contrary contained in this
Agreement, neither the Purchaser nor Seller shall be entitled to
any indemnification pursuant to this Article 7 (i) with respect
to a Claim in an amount less than $250.00, unless and until, and
only to the extent that, the aggregate amount of all Claims of
the Purchaser exceed the amount of One Thousand Dollars
($1,000.00) and (ii) with respect to a Claim or series of
related Claims in an amount of $250.00 or greater, for the full
amount of such Claim or series of related Claims; provided,
however, that the Seller and Shareholders shall be liable for
the full amount of any and all Claims pursuant to Section
7.2(h), Section 7.2(c) or the breach of covenants contained in
Section 3.1.5 9.1, or Section 9.2 or any payment by Seller to a
Shareholder or any affiliate thereof in violation of this
Agreement, notwithstanding that the amount of any such Claim or
the aggregate amount of Claims theretofore made by the Purchaser
are less than $1,000.00.
Article 8. Termination And Abandonment.
8.1 Termination And Abandonment. This Agreement may be
terminated at any time prior to the Closing Date (a) by mutual
consent of the Purchaser and the Seller, (b) by the Purchaser,
if the conditions set forth in Section 5.1 shall not have been
complied with or performed in any respect and such noncompliance
or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Seller on or
before February 28, 1995 (c) by the Seller, if the conditions
set forth in Section 5.2 shall not have been complied with or
performed in any respect and such noncompliance or
nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Purchaser on or
before February 28, 1995.
8.2 Effect Of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1 above, this Agreement
shall thereafter become void and have no effect, and no party
hereto shall have any liability to any other parties hereto or
their stockholders or directors or officers in respect thereof,
except insofar as such liability may be attributable to willful
breach hereof. Sections 6.2.2, 9.19 9.2 and 9.17 hereof shall
survive the termination of this Agreement.
Article 9. Miscellaneous.
9.1 Brokers.
9.1.1 The Seller and Shareholders, jointly and severally,
represent and warrant that no person or entity is entitled to
any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon
arrangements made by or on behalf of any of the Seller.
9.1.2 The Purchaser represents and warrants that no person or
entity is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the
Purchaser.
9.2 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby
(including legal, accounting, investment advisory and other such
costs) shall be paid by the party incurring such expenses;
provided, however, that all documentary, transfer or other Taxes
payable in connection with the transfer of the Assets and
Business shall be paid by the Seller (or, at the Purchaser's
option, the Sellers shall reimburse the Purchaser therefor).
9.3 Bulk Sales Law Waiver. Seller and Purchaser agree to waive
compliance with the North Carolina Bulk Sales Law. Seller and
Purchaser agree further, any transferee liability imposed upon
Purchaser because of this waiver shall entitle Purchaser to an
immediate right of indemnification by Seller hereunder in accordance
with Section 7.2 above. In connection with the bulk transfer contemplated
hereby, Purchaser shall not be responsible for any sales or use
taxes assessed as part of such bulk transfer. Any such taxes
shall be Seller's sole responsibility.
9.4 Notices. Any notices or other communications required or
permitted hereunder shall be given in writing and shall be
sufficiently given if sent by registered or certified mail or by
overnight courier, postage prepaid, addressed as follows:
If to Purchaser:
Mr. E. Hoke Smith, Jr.
GPS Acquisition Corp.
8923 Western Way, Suite 22
Jacksonville, Florida 32256
Facsimile Number: 904-363-0599
with a copy by mail to:
Steven C. Koegler, Esq.
Walker & Koegler, P.A.
Post Office Box 550587
Jacksonville, Florida 32255-0587
Facsimile Number 904-281-0400
or if by overnight courier:
4655 Salisbury Road, Suite 390
Jacksonville, Florida 32256-0959
if to Seller or Shareholders:
Stephen L. Lit and Gerianne P. Lit,
Transit Express of Charlotte, Inc.
412 West Tremont Avenue
Charlotte, North Carolina 28203
with a copy to:
Louis A. Bledsoe, Jr., Esq.
1057 East Morehead Street
Charlotte, North Carolina 28204
Facsimile Number 704-372-1862
or such other address as shall be furnished in writing by any
party to the others prior to the giving of the applicable notice
or communication.
9.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
9.6 Headings. The headings herein are for convenience of
reference only, do not constitute a part of this Agreement, and
shall not be deemed to limit or affect any of the provisions
hereof.
9.7 Amendment And Modification. This Agreement may be
amended, modified or supplemented only by written agreement of
all parties hereto.
9.8 Waiver Of Compliance, Consents. Any failure of the
Purchaser on the one hand, or the Seller or Shareholders on the
other hand, to comply with any obligation, covenant, agreement
or condition herein may be waived by the Purchaser or the Seller
or Shareholders, respectively, only by a written instrument
signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by
or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 9.8.
9.9 Investigations. The respective representations and
warranties of the Purchaser and the Seller or Shareholders
contained herein and in the Other Agreements or in any
certificate, schedule, appendix or other document delivered
pursuant thereto shall not be deemed waived or otherwise
affected by any investigation made by any party hereto.
9.10 Prior Agreements. This Agreement and the Other
Agreements constitute the entire agreement of the parties and
supersedes all prior agreements and understandings, both written
and oral, and all contemporaneous oral agreements and
understandings among the parties with respect to the subject matter hereof.
9.11 Beneficiaries And Successors. This Agreement does not, and
is not intended to, confer upon any person or entity other than
the parties hereto and their respective permitted successors and
assigns any rights or remedies hereunder except as expressly set
forth in this Agreement. This Agreement shall not be assigned
except with the prior written consent of the parties hereto.
All covenants and agreements contained in this Agreement by or
on behalf of the parties hereto will bind or inure to the
benefit of the respective personal representatives, successors
and assigns of such parties.
9.12 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the
laws of the State of Florida.
9.13 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or any breach thereof, including,
without limitation, any claim that said Agreement, or any part
thereof, is invalid, illegal or otherwise voidable or void, or
the enforcement of any right or obligation which by its nature
survives the expiration or termination hereof, shall be
submitted to arbitration before and in accordance with the
Commercial Rules of Arbitration of the American
Arbitration Association and judgment upon the award may be
entered in any court having jurisdiction thereof; provided,
however, that this clause shall not be construed to limit
Purchaser from bringing any action in any court of competent
jurisdiction for injunctive or other provisional relief as
Company deems to be necessary or appropriate to protect its
trademarks, trade names, service marks logotypes, insignia,
trade dress and designs, or to enjoin or restrain TE or a
Shareholder from otherwise causing immediate and irreparable
harm to Purchaser in violation of its obligations under Section
6 hereof. Such arbitration shall take place in Jacksonville,
Florida. This arbitration provision shall be deemed to be
self-executing, and in the event that either party fails to
appear at any properly noticed arbitration proceeding, an award
may be entered against such party notwithstanding said failure
to appear.
9.14 Consent To Jurisdiction. Seller, Shareholders and the
Purchaser hereby irrevocably submit to the jurisdiction of any
Florida State or Federal court sitting in the Middle District of
Florida over any suit, action, counterclaim or proceeding
(collectively, "Proceeding") arising out of or relating to this
Agreement and the Other Agreements whether sounding in tort,
contract or otherwise. Seller, Shareholders and Purchaser
waive, to the fullest extent enforceable by law, any objection
which it may now or hereafter have to the laying of the venue of
any such Proceeding and any claim that any such Proceeding
brought in such a court has been brought in an inconvenient
forum.
9.15 Attorneys' Fees. In the event attorneys' fees or other
costs (including, but not limited to, costs of investigation)
are incurred to secure performance of any of the obligations
provided herein or to establish damages for breach thereof or
to obtain any other appropriate relief, whether by way of prosecution
or defense, the prevailing party shall be entitled to recover such
attorneys' fees or other costs.
9.16 Tax Returns. TE shall cause to be prepared and timely
filed, in accordance with applicable law, all appropriate
Returns that are required to be filed by TE after the Closing
Date that (i) are required to include, or be based on, the
income, gain or operations of TE through the Closing Date, or
(ii) relate to taxable periods ending on or before the Closing
Date.
9.17 No Disclosure. The Purchaser, Shareholders and each Seller
shall keep this Agreement and each Other Agreement confidential and
shall not disclose or cause to be disclosed such agreements or any
of the terms or provisions of the same to any person or
entity, except (a) to the parties respective counsel or other
agents who agree for the benefit of the Purchaser to hold such
information confidential or (b) as may be required by any
statute, court or administrative order or decree or governmental
ruling or regulation, including, without limitation, the
Securities Exchange Act of 1934 and the regulations thereunder
and Internal Revenue Service auditors or as may be requested by
the Internal Revenue Service.
[The remainder of this page left blank intentionally.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
PURCHASER: GPS Acquisition Corp.
a North Carolina Corporation
By: /s/ E. Hoke Smith, Jr.
E. Hoke Smith, Jr.
President
SHAREHOLDERS:
/s/ Stephen Lit
Stephen Lit
/s/ Gerianne Lit
Gerianne Lit
SELLER: Transit Express Of Charlotte, Inc.
a North Carolina Corporation
By: /s/ Stephen Lit
Authorized Officer
GUARANTOR: General Parcel Service, Inc.
a Florida Corporation
By: /s/ E. Hoke Smith, Jr.
President
<PAGE>
STATE OF NORTH CAROLINA Exhibit 10.6
COUNTY OF MECKLENBURG ------------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, made and entered into as of the 10th
day of February, 1995, by and between GPS ACQUISITION CORP., a
Florida corporation ("Debtor"), and STEPHEN L. LIT and wife,
GERIANNE P. LIT, ("Secured Party");
W I T N E S S E T H:
WHEREAS, the Debtor is indebted and liable to the Secured Party
for the principal sum of Five Hundred Ninety-Five Thousand and
No/100 Dollars ($590,000.00) in accordance with a Non
Competition Agreement (the "Agreement") contained in Section 6.
1 of that certain Purchase Agreement dated February 6, 1995,
between Transit Express of Charlotte, Inc. and GPS Acquisition
Corp. (the "Purchase Agreement"); and,
WHEREAS, the Secured Party and the Debtor may adjust the
principal amount of the Agreement as set forth in the
Purchase Agreement; and,
WHEREAS, the Secured Party is unwilling to complete the Purchase
Agreement unless the Debtor secures its indebtedness by granting
the Secured Party a security interest in all of the Collateral
(as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and promises herein contained, the parties
hereto agree as follows:
1. Grant of Security Interest. As collateral security for the
payment of the indebtedness, the Debtor hereby grants and
conveys to the Secured Party a security interest in and to all
of the Debtor's assets listed on Schedule 1.1.1 of the Purchase
Agreement, which security interest shall be a second lien
against such assets, subject only to a first lien in favor of an
institutional lender in the approximate principal amount of One
Hundred Ninety-Five Thousand Five Hundred and No/100 Dollars
($195,500.00) (all the foregoing collectively and all proceeds
therefrom referred to as the "Collateral") . The security
interest granted herein also shall cover the proceeds, as such
term is defined by the Uniform Commercial Code, as in effect
from time to time, in the State of North Carolina, of any
Collateral and the insurance proceeds of any Collateral.
2. Financing Statements. At the time of execution of this
Security Agreement, the Debtor shall have furnished the Secured
Party with properly executed financing statements as prescribed
by the Uniform Commercial Code as presently in effect in North
Carolina, prepared and approved by the Secured Party, in order
that the Secured Party shall have a duly perfected security
interest in the Collateral. The Debtor covenants and agrees to
execute, as reasonably required by the Secured Party, any
additional financing statements or other documents to effect the
same. Secured Party agrees that if the security interest of the
lender in the amount of approximately one Hundred Ninety-Five
Thousand Five Hundred and No/100 Dollars ($195,500.00) has not
been perfected prior to the filing of financing statements
securing Secured Party's interest, Secured Party shall
subordinate its interest to the lender in an amount not to
exceed One Hundred Ninety-Five Thousand Five Hundred and No/100
Dollars ($195,500.00) and warrants that it shall sign any
additional financing statements or other documents to effect
such subordination.
3. Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default ("Event of
Default"):
a. The failure of the Debtor to pay any amount when due to the
Secured Party (including any applicable grace periods under the
terms of the indebtedness and subject to any appropriate
setoffs);
b. The adjudication of the Debtor as bankrupt or insolvent, or
the admission by the Debtor in writing of his inability to pay
his debts as they mature, or the making by the Debtor of a
general assignment for the benefit of the creditors; or,
C. The appointment of any receiver, trustee or similar officer
for the Debtor on all or a substantial part of his property, or
if the appointment of such receiver, trustee or similar off icer
is without the application of or consent of the Debtor, such
appointment shall continue undischarged for a period of sixty
days.
4. Secured Party Rights and Remedies Upon Default. Upon the
occurrence of any Event of Default, Secured Party shall give
written notice of the Event of Default to Debtor. Debtor shall
have thirty days from receipt of such notice to cure such
default. In the event Debtor does not cure the default within
the thirty-day period after receipt of notice, the indebtedness
shall, at the option of Secured Party, immediately become due
and payable, without notice, and the Secured Party shall have
all of the rights and remedies of a secured party under the
Uniform Commercial Code of the State of North Carolina, and
under any other applicable law.
The proceeds realized from any sale or disposition of the
Collateral shall be used to satisfy the following items, and in
the order herein listed:
(i) The expenses of preparing the sale and selling of the
Collateral, including Secured Party's reasonable attorney's fees
and both legal and other expenses incurred in connection
therewith;
(ii) The expenses of satisfying any liens, security interests,
attachments or encumbrances superior to the secured interest
herein created; and,
(iii) The indebtedness (including interest after default).
Any surplus which shall remain shall be paid to the Debtor or as
otherwise provided by law or as a court of competent
jurisdiction shall direct, and any deficiency shall be paid by
the Debtor.
5. Waiver. Neither the failure nor any delay on the part of the
Secured Party to exercise any right, power of privilege
hereunder shall operate as a waiver thereof, now shall any
single or partial exercise of any such right, power or privilege
preclude any other or further exercise of any other right, power
or privilege of the Secured Party.
6. General. The descriptive section headings herein have been
inserted f or convenience only and shall not be deemed to limit
or otherwise offset the construction of any provisions hereof.
This Security Agreement shall be constructed and its performance
governed in accordance with the laws of the State of North
Carolina, including to the extent applicable, the Uniform
Commercial Code of that State.
7. Notice. Except as otherwise provided herein, all
notices, requests and demands to or upon a party hereto to be
effective shall be in writing (and, if sent by mail, shall be
sent by certified or registered mail, return receipt requested),
addressed as follows:
a. If to the Secured Party:
Stephen L. Lit and Wife, Gerianne P. Lit
c/o Louis A. Bledsoe, Jr.
Attorney at Law
P. 0. Box 36779
Charlotte, NC 28236-6779
b. If to the Debtor:
General Parcel Service, Inc.
c/o Steven C. Koegler
Attorney at Law
P. 0. Box 550587
Jacksonville, FL 32255-5087
or to such other address as each party may designate for itself
by like notice given in accordance with this Section 7.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed by authority duly given as of the
day and year first above written.
GPS ACQUISITION CORP., Debtor
By: /s/ E. Hoke Smith, President
E. Hoke Smith-, Jr., President
/s/ Stephen L. Lit
(Stephen L. Lit, Secured Party)
/s/ Gerianne P. Lit
(Gerianne P. Lit, Secured Party)
<PAGE>
