SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of Earliest Event Reported): December 18, 1997
TRANSIT GROUP, INC.
(Exact name of Registrant as specified in its charter)
Florida 33-30123-A 59-2576629
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
(770) 444-0240
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
On December 18, 1997, the Registrant, as Guarantor, and Carroll
Fulmer & Company, Inc., Carolina Pacific Distributors, Inc., Capitol Warehouse,
Inc. and Service Express, Inc. (collectively, the "Co-Borrowers") entered into
an Advised Revolving Line of Credit Agreement with AmSouth Bank (the "Lender")
for a revolver/term credit facility of up to $20 million. The credit facility
provides for LIBOR or prime-rate pricing options, is secured by accounts
receivable by the Co-Borrowers and expires in May 2000. The credit facility will
immediately be used to retire approximately $5 million outstanding in a line of
credit issued to one of the Registrant's operating subsidiaries. In addition,
the credit facility will support the Registrant's acquisition program and
working capital needs.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Advised Revolving Line of Credit Agreement dated as of
December 18, 1997, as amended by Amendment to Advised Revolving Line of Credit
Agreement dated as of January 14, 1998, by and among the Lender, the
Co-Borrowers and the Registrant.
99.2 Revolving Credit Note dated as of December 18, 1997, by
and among the Lender and the Co-Borrowers.
99.3 Security Agreement dated as of December 18, 1997, by and
among the Lender and the Co-Borrowers.
99.4 Joinder to Advised Revolving Line of Credit Agreement and
Joinder to Security Agreement dated as of January 14, 1998 by Rainbow Trucking
Services, Inc.
99.5 Press Release.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSIT GROUP, INC.
Date: February 10, 1998 /s/ Philip A. Belyew
--------------------
Philip A. Belyew
President and Chief Executive Officer
EXHIBIT 99.1
ADVISED REVOLVING LINE OF CREDIT AGREEMENT
BY AND BETWEEN
AMSOUTH BANK, a bank organized under the laws of Alabama
AND
CARROLL FULMER & COMPANY, INC. a Florida corporation
CAROLINA PACIFIC DISTRIBUTORS, INC., a North Carolina corporation
CAPITOL WAREHOUSE, INC., a Kentucky corporation
SERVICE EXPRESS, INC., an Alabama corporation
DATED AS OF DECEMBER 18, 1997
<PAGE>
ARTICLE I - DEFINITIONS...................................................1
Section 1.1. Capital Expenditures...............................1
Section 1.2. Capitalization.....................................2
Section 1.3. Current Assets.....................................2
Section 1.4. Current Liabilities................................2
Section 1.5. Debt...............................................2
Section 1.6. Event of Default...................................2
Section 1.7. Generally Accepted Accounting Principles...........2
Section 1.8. Interest Expense...................................3
Section 1.9. Liabilities........................................3
Section 1.10. LIBOR Reserve Requirement..........................3
Section 1.11. Loan Documents.....................................3
Section 1.12. Net Cash Flow. ....................................3
Section 1.13. Net Income Available for Debt Service..............3
Section 1.14. Net Income Available for Interest Payments.........3
Section 1.15. Net Worth..........................................4
Section 1.16. Permitted Contests.................................4
Section 1.17. Qualified Investments..............................4
Section 1.18. Receivables........................................4
Section 1.19. Reserve Adjusted LIBOR Rate........................5
Section 1.20. Tangible Net Worth.................................5
Section 1.21. Total Liabilities..................................5
ARTICLE II - AMOUNT AND TERMS OF LOAN.....................................6
Section 2.1. Amount.............................................6
Section 2.2. Note...............................................6
Section 2.3. Interest and Principal.............................6
Section 2.4. Increased Costs, Illegality, Etc...................6
Section 2.5. Funding Limitations................................7
ARTICLES III - SECURITY AND GUARANTY......................................8
Section 3.1. Security Interest..................................8
Section 3.2. Guaranty...........................................8
Section 3.3. Security Documents.................................8
Section 3.4. Filing and Recording...............................9
ARTICLE IV - BORROWER'S AND GUARANTOR'S REPRESENTATIONS AND
WARRANTIES.......................................................9
Section 4.1. Organization and Standing of Carroll Fulmer........9
Section 4.2. Organization and Standing of Carolina Pacific......9
Section 4.3. Organization and Standing of Capitol Warehouse....10
Section 4.4. Organization and Standing of Service Express......10
Section 4.5. Organization and Standing of Guarantor............10
Section 4.6. Corporate Power and Authority.....................10
<PAGE>
Section 4.7. Valid and Binding Obligations.....................10
Section 4.8. Consent or Filing.................................11
Section 4.9. Financial Condition of the Borrower...............11
Section 4.10. Litigation. ......................................11
Section 4.11. Disclosure and No Untrue Statements. .............11
Section 4.12. Title to Collateral...............................12
Section 4.13. Payment of Taxes. ................................12
Section 4.14. Agreement or Contract Restrictions. ..............12
Section 4.15. Patents, Trademarks, Etc. ........................12
Section 4.16. Investment Company Act; Regulation................12
Section 4.17. Labor Matters. ...................................13
Section 4.18. ERISA Requirement. ...............................13
Section 4.19. Compliance With Environmental Requirements. ......13
Section 4.20. Use of Credit. ...................................14
ARTICLE V - CONDITIONS PRECEDENT.........................................14
Section 5.1. Documents and Instruments.........................14
Section 5.2. Correctness of Warranties.........................15
Section 5.3. Certificates of Resolution........................15
Section 5.4. Expenses of Lender................................15
Section 5.5. Supporting Documents. ............................15
Section 5.6. Opinion of the Borrower's Counsel. ...............16
ARTICLE VI - BORROWER'S AND GUARANTOR'S AFFIRMATIVE COVENANTS............16
Section 6.1. Corporate Existence and Qualification.............16
Section 6.2. Financial Statements..............................17
Section 6.3. Executive Officer's Certificates..................17
Section 6.4. Taxes and Claims..................................17
Section 6.5. Pay Indebtedness to Lender and Perform
Other Covenants.................................18
Section 6.6. Litigation........................................18
Section 6.7. Right of Inspection; Discussions. ................18
Section 6.8. Notices. ........................................18
Section 6.9. ERISA Benefit Plans. .............................19
Section 6.10. Insurance.........................................19
Section 6.11. Main Bank of Account..............................20
Section 6.12. Net Worth Requirement.............................20
Section 6.13. Leverage Ratio....................................20
Section 6.14. Interest Coverage Ratio...........................20
Section 6.15. Lockbox and Accounts Receivable...................20
Section 6.16. Field Audits......................................23
Section 6.17. Collateral Reporting..............................23
Section 6.18. Observance of Laws. ..............................24
Section 6.19. Subsidiaries......................................24
Section 6.20. Capitalization Ratio..............................24
<PAGE>
ARTICLE VII - BORROWER'S NEGATIVE COVENANTS..............................24
Section 7.1. Type of Business..................................24
Section 7.2. Change in Ownership or Management.................24
Section 7.3. Acquisitions and Mergers..........................24
Section 7.4. Capital Expenditures..............................25
Section 7.5. Guaranty..........................................25
Section 7.6. Investment and Loans..............................25
Section 7.7. Disposition or Encumbrance of Receivables.........25
Section 7.8. Sale-Leasebacks...................................25
Section 7.9. Leases............................................25
Section 7.10. Liens.............................................26
Section 7.11. Take or Pay Contracts.............................26
Section 7.12. Other Special Covenants...........................27
ARTICLE VIII - EVENTS OF DEFAULT.........................................27
Section 8.1. Events............................................27
(a) Payment of Obligations to Lender. ................27
(b) Representation or Warranty. ......................27
(c) Covenants. .......................................27
(d) The Borrower's Liquidation; Dissolution;
Bankruptcy; Etc. ..............................27
(e) Order of Dissolution. ............................28
(f) Reports and Certificates. ........................28
(g) Judgments. .......................................28
(h) Liens Imposed by Law. ............................28
(i) Corporate Existence. .............................28
Section 8.2. Rights and Remedies Cumulative....................29
Section 8.3. Rights and Remedies Not Waived....................29
Section 8.4. Waiver of Default.................................29
ARTICLE IX - MISCELLANEOUS...............................................30
Section 9.1. Course of Dealing; Amendments; Waiver. ...........30
Section 9.2. Lien; Setoff By Lender............................30
Section 9.3. Liability of Lender to Third Parties..............30
Section 9.4. Waivers...........................................30
Section 9.5. Assignment and Participation......................31
Section 9.6. Funds Not Assignable..............................31
Section 9.7. Indemnity.........................................31
Section 9.8. Termination by the Borrower.......................32
Section 9.9. Arbitration. ....................................32
Section 9.10. Notices...........................................32
Section 9.11. Controlling Agreement.............................32
Section 9.12. Titles............................................32
Section 9.13. Venue and Jurisdiction. ..........................33
Section 9.14. Governing Law. ...................................33
<PAGE>
Section 9.15. Legal or Governmental Limitations. ...............33
Section 9.16. Counterparts. ....................................33
Section 9.17. Waiver of Trial By Jury...........................33
Section 9.18. Confidentiality...................................34
Section 9.19. Total Liability of Each Co-Borrower...............34
<PAGE>
ADVISED REVOLVING LINE OF CREDIT AGREEMENT
THIS AGREEMENT dated as of the 18th day of December, 1997, by and between
AMSOUTH BANK, a bank organized under the laws of Alabama, whose mailing address
is Post Office Box 588001, Orlando, Florida 32858 (the "Lender"), and CARROLL
FULMER & COMPANY, INC., a Florida corporation, whose address is P. O. Box 5000,
Groveland, Florida 34736-5000 ("Carroll Fulmer") and CAROLINA PACIFIC
DISTRIBUTORS, INC., a North Carolina corporation, whose address is 5625 Surrett
Drive Extension, Archdale, North Carolina 27263 ("Carolina Pacific") and CAPITOL
WAREHOUSE, INC., a Kentucky corporation, whose address is 403 W. Main Street,
Frankfurt, Kentucky 40601 ("Capitol Warehouse") and SERVICE EXPRESS, INC., an
Alabama corporation, whose address is P.O. Box 1009, Tuscaloosa, Alabama 35403
("Service Express") (Carroll Fulmer, Carolina Pacific, Capitol Warehouse and
Service Express are together hereinafter referred to as the "Borrower" and
individually referred to as a "Co-Borrower"; references applicable to Borrower
shall also be applicable to each Co-Borrower), and TRANSIT GROUP, INC., a
Florida corporation, whose address is Overlook III, 2859 Paces Ferry Road, Suite
1740, Atlanta, Georgia 30339 (the "Guarantor").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lender to lend to Borrower for
the purpose of supporting working capital needs and acquisitions; and
WHEREAS, the Guarantor will derive a benefit from such loan and
therefore has agreed to guarantee the debt of Borrower to Lender and enter into
this Agreement; and
WHEREAS, subject to the continued acceptability of the collateral
referred to herein and subject to the compliance by the Borrower and Guarantor
with all of the terms and conditions hereof, the Lender is willing to make such
loan on the terms and conditions and on the security hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises, conditions,
representations and warranties hereinafter set forth and for other good and
valuable consideration, the parties hereto have mutually agreed as follows:
ARTICLE I - DEFINITIONS
Section 1.1. Capital Expenditures.
Capital Expenditures means any expenditures for fixed assets or that is
properly chargeable to capital account in accordance with generally accepted
accounting principles.
<PAGE>
Section 1.2. Capitalization.
Capitalization means Net Worth plus Debt.
Section 1.3. Current Assets.
Current Assets means assets that, in accordance with generally accepted
accounting principles, are current assets; provided, however, that (1)
inventories shall be taken into account on the basis of cost or current market
value, whichever is lower, or, to the extent that such inventories are required
for delivery under then-existing contracts, the applicable contract price, (2)
current assets shall not include any intangible assets or any securities that
are not readily marketable, (3) securities included as current assets shall be
taken into account at the current market price thereof, and (4) current assets
shall not include any amounts due from or owed by any shareholder, partner,
member (as applicable) or affiliate of the Guarantor, the Co-Borrowers or any of
its Subsidiaries.
Section 1.4. Current Liabilities.
Current Liabilities means, as of the date of determination, all Debt
maturing on demand or within one year from, and that is not renewable at the
option of the obligor to a date later than one year after, the date as of which
such determination is made and all other items (including taxes accrued as
estimated) that, in accordance with generally accepted accounting principles,
would be included as current liabilities.
Section 1.5. Debt.
Debt of any person means (1) all indebtedness, whether or not
represented by bonds, debentures, notes or other securities, for the repayment
of borrowed money, (2) all deferred indebtedness for the payment of the purchase
price of property or assets purchased, except trade accounts payable, (3) all
capitalized lease obligations, (4) all indebtedness secured by any Lien on any
property of such person, whether or not indebtedness secured thereby has been
assumed, (5) all obligations with respect to any conditional sale contract or
title retention agreement, (6) all indebtedness and obligations arising under
acceptance facilities or in connection with surety or similar bonds, and the
outstanding amount of all letters of credit issued for the account of such
person, and (7) all obligations with respect to interest rate swap agreements.
Section 1.6. Event of Default.
"Event of Default" means any of the events specified in Section 8.1
hereof.
Section 1.7. Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in Opinions of the Financial Accounting Standards Board of
the American Institute of Certified
2
<PAGE>
Public Accountants or which have other substantial authoritative support and are
applicable in the circumstances as of the date of any report required herein or
as of the date of an application of such principles as required herein.
Section 1.8. Interest Expense.
Interest Expense means interest payable on Debt during the period in
question.
Section 1.9. Liabilities.
Liabilities means all Debt and all other items (including taxes accrued
as estimated) that, in accordance with generally accepted accounting principles,
would be included in determining total liabilities as shown on the liabilities
side of a balance sheet.
Section 1.10. LIBOR Reserve Requirement.
"LIBOR Reserve Requirement" means, for any day, the rate at which
reserves (including, without limitation, any marginal, supplemental, or
emergency reserves) are required to be maintained by member banks of the Federal
Reserve System on such day against Eurocurrency liabilities, expressed as a
decimal.
Section 1.11. Loan Documents.
"Loan Documents" means and includes the Note, this Agreement, the
corporate resolution, and any and all other documents executed in connection
with this loan accommodation.
Section 1.12. Net Cash Flow.
Net Cash Flow for any period means net income (or the net deficit, if
expenses and charges exceed revenues and other proper income credits) for such
period, plus amounts that have been deducted for (1) depreciation and (2)
amortization in determining net income for such period.
Section 1.13. Net Income Available for Debt Service.
Net Income Available for Debt Service for any period means net income
(or the net deficit, if expenses and charges exceed revenues and other proper
income credits) for such period, plus amounts that have been deducted for (1)
depreciation, (2) amortization and (3) Interest Expense in determining net
income for such period.
Section 1.14. Net Income Available for Interest Payments.
Net Income Available for Interest Payments means net income (or the net
deficit, if expenses and charges exceed revenues and other proper income
credits) for such period plus amounts that
3
<PAGE>
have been deducted for (1) Interest Expense, (2) income and profit taxes, and
(3) amortization of debt discount in determining net income for such period.
Section 1.15. Net Worth.
Net Worth means the sum of the amounts set forth on the balance sheet
as shareholders' equity (including the par or stated value of all outstanding
capital stock, retained earnings, additional paid-in capital, capital surplus
and earned surplus).
Section 1.16. Permitted Contests.
Permitted Contests means litigation or administrative proceedings
pursued by Borrower in good faith regarding taxes or construction liens.
Section 1.17. Qualified Investments.
Qualified Investments means:
(1) direct obligations of, or obligations the payment of which
is guaranteed by the United States of America ("Federal Securities"),
(2) an interest in any trust or fund that invests solely in
Federal Securities,
(3) a certificate of deposit issued by, or other
interest-bearing deposit with, any bank organized under the laws of the United
States of America or any state thereof, provided that (A) such bank has capital,
surplus and undivided profits of not less that $50,000,000, (B) such deposit is
insured by the Federal Deposit Insurance Corporation, or (C) such deposit is
collaterally secured by such bank by pledging Federal Securities having a market
value (exclusive of accrued interest) not less than the face amount of such
deposit (less the amount of such deposit insured by the Federal Deposit
Insurance Corporation), and
(4) a purchase agreement with respect to Federal Securities,
provided that the Federal Securities subject to such repurchase agreement are
held by or under the control of the Co-borrowers free and clear of third-party
Liens.
Section 1.18. Receivables.
"Receivables" means and includes all present and future accounts,
commissions, contract rights, lease payment, chattel paper, instruments,
documents, tax refunds payable to Borrower, license fees and proceeds,
royalties, insurance proceeds and general intangibles and all forms of
obligations owing, together with all documents or instruments of title
representing the same and rights in any merchandise or goods which the same
represent, together with all right, title, security and guarantees, with respect
to each of the Receivables, including any right of stoppage in transit,
4
<PAGE>
whether the same are now or hereafter owned. "Receivables" also specifically
include all rights of Borrower under any patent license agreement, technical
assistance contract, product supply contract, or similar agreement and includes
all trade names, trademarks, license agreements and all records pertaining to
the accounts, debtors, and collateral and all computer software pertaining to
the Receivables of Borrower.
Section 1.19. Reserve Adjusted LIBOR Rate.
"Reserve Adjusted LIBOR Rate" means, for any "Interest Period" (as
defined in the Note), an interest rate per annum obtained by dividing (i) the
rate quoted on the Telerate page 3750 as of 11:00 a.m. London time, on the day
that is two London banking days prior to the first day of the Interest Period,
in an amount substantially equal to the "LIBOR-Based Rate" (as defined in the
Note) and with a term substantially equal to such Interest Period, by (ii) an
amount equal to 1 minus the LIBOR Reserve Requirement for such Interest Period.
In the event the rate quoted by Telerate is discontinued or the rate otherwise
cannot be identified, the Lender shall determine the LIBOR-Based Rate on the
basis of quotes by major banks in the London interbank Eurodollar market for
dollar deposits in an amount substantially equal to and for a term substantially
equal to the Interest Period selected.
Section 1.20. Tangible Net Worth.
Tangible Net Worth means the sum of the amounts set forth on the
balance sheet as shareholders' equity (including the par or stated value of all
outstanding capital stock, retained earnings, additional paid-in capital,
capital surplus and earned surplus), less the sum of (1) any amount of any
write-up of assets, (2) goodwill, (3) patents, trademarks, copyrights, leasehold
improvements not recoverable at the expiration of a lease, and deferred charges
(including unamortized debt, discount and expense, organization expenses,
experimental and developmental expenses, but excluding prepaid expenses), (4)
any amounts at which shares of capital stock of such person appear on the asset
side of the balance sheet and (A) any amounts due from or owed by any
shareholder or affiliate.
Section 1.21. Total Liabilities.
Total Liabilities means all Debt and all other items (including taxes
accrued as estimated) that, in accordance with generally accepted accounting
principles, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet.
5
<PAGE>
ARTICLE II - AMOUNT AND TERMS OF LOAN
Section 2.1. Amount.
The Lender agrees, on the terms and conditions of this Agreement, to
lend to Borrower in an aggregate principal amount not to exceed TWENTY MILLION
DOLLARS ($20,000,000.00) (hereinafter sometimes referred to as the "Loan" or
"Line of Credit").
Section 2.2. Note.
The obligation to repay the loan is evidenced by a revolving credit
note in the principal sum of TWENTY MILLION DOLLARS ($20,000,000.00) (the "Note"
or "Revolving Credit Note"). Under the Loan, the Borrower may, subject to the
terms, conditions herein set forth and subject to the approval of an officer of
Lender, borrow from Lender, at such time and in such amounts not exceeding the
total amount of TWENTY MILLION DOLLARS ($20,000,000.00).
Section 2.3. Interest and Principal.
The interest on and principal of the Note shall be paid in accordance
with the terms and conditions more particularly set forth in the Note.
Section 2.4. Increased Costs, Illegality, Etc.
(a) If either (i) the introduction of or any change in any law
or regulation or in the interpretation or administration of any law or
regulation by any court or administrative or governmental authority charged with
the interpretation or administration thereof from the date hereof or (ii) the
compliance with any guideline enacted after the date hereof or request from any
such governmental authority, including, without limitation, any central bank
(whether or not having the force of law), which is not caused by an act or
omission of Lender, including without limitation, its failure to maintain
adequate capital, (x) subjects Lender or any corporation controlling Lender to
any tax of any kind whatsoever with respect to this Agreement, or changes the
basis of taxation of payments to Lender of principal, commissions, fees,
interest, or any other amount payable hereunder (except for (A) taxes on or
measured by the overall net income of Lender or branch, office, or agency
through which Lender is acting for purposes of this Agreement or (B) changes in
the rate of such taxes); (y) imposes, modifies, or holds applicable any reserve,
special deposit, compulsory loan, or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, advances or loans by,
or other credit or commitment therefor extended by, or any other acquisition of
funds by, any office of Lender which are not otherwise included in any
determination of the Reserve Adjusted LIBOR Rate or other interest payable
hereunder; or (z) imposes on Lender or the corporation controlling Lender any
other condition, and as a result there shall be any increase in the cost to
Lender of agreeing to make or making, funding, or maintaining advances by an
amount deemed by Lender to be material, then the Borrower shall from time to
time, upon demand by Lender, pay directly to Lender additional amounts
sufficient to compensate Lender for such increased
6
<PAGE>
cost. A certificate as to the amount of such increased cost, submitted to the
Borrower by Lender, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If Lender determines that compliance with any law or
regulation or with any guideline or request from any central bank or other
governmental authority subsequent to the date hereof (whether or not having the
force of law) concerning capital adequacy or otherwise has or would have the
effect of reducing the rate of return on the capital of Lender or the
corporation controlling Lender as a consequence of, or with reference to, the
facilities hereunder, by an amount deemed by Lender to be material, the Borrower
shall from time to time, upon demand by Lender, pay to Lender additional amounts
sufficient to compensate Lender or such other corporation for such reduction. A
certificate as to such amounts, submitted to the Borrower by Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(c) In the event the LIBOR Reserve Requirement increases
subsequent to the date hereof, the interest rate applicable to the Note shall be
the Reserve Adjusted LIBOR Rate.
Section 2.5. Funding Limitations.
Until May 1, 1999, the maximum principal amount that may be outstanding
from time to time under the Line of Credit shall not exceed the lesser of the
following: (a) TWENTY MILLION DOLLARS ($20,000,000.00); or (b) eighty-five
percent (85%) of the Co-Borrower's eligible Receivables. After May 1, 1999, the
maximum principal amount that may be outstanding from time to time under the
Line of Credit shall not exceed the lesser of the following: (a) TWENTY MILLION
DOLLARS ($20,000,000.00); or (b) fifty percent (50%) of the Co-Borrower's
eligible accounts receivable. Eligible accounts receivable shall not include any
ineligible accounts receivable including those receivables described below. For
purposes of determining the funding limitations, each Co-Borrower's borrowing
base of eligible accounts receivable shall be determined separately and funding
eligibility will be determined separately and accounts receivable from one
Co-Borrower may not be used to calculate the borrowing base for another
Co-Borrower. The monies disbursed under the Line of Credit will be disbursed
based on such Co-Borrower's borrowing base and disbursements may be made based
on verbal or written request to Lender in Lender's sole discretion.
The Lender shall have the right, in the good faith exercise of its sole
discretion, to deem any specific accounts receivable ineligible for the purpose
of calculating the maximum principal amount that may be outstanding from time to
time under the Note, including but not limited to the following types of
Receivables: (1) invoices aged ninety (90) days or more past invoice date; (2)
accounts that have over thirty-five percent (35%) of the total balance aged
ninety (90) days or more past invoice date; (3) Receivables due from any
government agency to the extent that such Receivables exceed 15% of each
Co-Borrower's eligible accounts receivable; and (4) credit balances aged ninety
(90) days or more past invoice date; (5) accounts owed by foreign corporations
which are not fully insured under the current credit insurance policy; (6)
accounts owed by or due from affiliates, related parties, stockholders, or
employees; (7) accounts that could be subject to the right of offset, including
but not limited to contra accounts; (8) invoices issued for services rendered
prior to the actual rendering of the services (i.e., pre-billed invoices); (9)
post dated invoices; (10) any Receivables due
7
<PAGE>
from any entity to the extent that such Receivables exceed 15% of the Borrowers'
eligible Receivables; and (11) any Receivables resulting from any transaction
not in the ordinary course of business. Lender shall have no obligation to fund
if an Event of Default exists.
ARTICLES III - SECURITY AND GUARANTY
As security for the full and timely payment of the principal and
interest under the Note and for any and all other indebtedness or liability of
the Borrower to the Lender, whether now existing or hereafter arising (all of
which indebtedness is hereby referred to as "Indebtedness"), the Borrower grants
and/or agrees to the following:
Section 3.1. Security Interest.
The Borrower hereby grants the Lender and shall cause to be granted to
the Lender a first prior and exclusive lien and security interest in and a
continuing first lien upon the following property (all of which is herein
referred to collectively as the "Collateral"):
(a) All "Receivables", as defined in Section 1.18 hereof, of Borrower;
and
(b) All proceeds, products and accessions of and to all of the
foregoing.
Section 3.2. Guaranty.
The Borrower shall cause to be duly executed and delivered to the
Lender the unlimited guaranty of the Guarantor, whereby the Guarantor guarantees
the Borrower's obligations under the Note, this Agreement and the Security
Documents as hereinafter defined. The Guarantor, by its execution of this
Agreement, agrees that any and all loans, indebtedness or other liability of the
Borrower to the Guarantor shall at all times be subordinate to the indebtedness
of the Borrower to the Lender.
Section 3.3. Security Documents.
The Borrower, in order to describe the terms and conditions under which
the Collateral will be held by the Lender, shall execute and deliver to the
Lender, in form and substance satisfactory to the Lender, any and all security
agreements, financing statements, and any other documents relating to any
security as the Lender shall require from time to time (all herein together with
the Note and this Agreement referred to collectively as the "Security
Documents"). Concurrent with the execution of the Note, the Borrower shall
deliver to the Lender executed Security Documents covering the items described
in Sections 3.1 and 3.2 in form and substance satisfactory to the Lender.
8
<PAGE>
Section 3.4. Filing and Recording.
The Borrower shall, at its cost and expense, cause all instruments and
documents given as security pursuant to this Agreement to be duly recorded
and/or filed in all places necessary, in the opinion of the Lender, to perfect
and protect the security interest of the Lender in the property covered thereby.
The Borrower hereby authorizes the Lender to file any financing statement in
respect of any security interest created pursuant to this Agreement which may at
any time be required or which, in the opinion of the Lender, may at any time be
desirable, although the same may have been executed only by the Lender, or, at
the option of the Lender, to sign such financing statement on behalf of the
Borrower and file the same, and the Borrower hereby irrevocably designates the
Lender, its agents, representatives and designees as agents and
attorneys-in-fact for the Borrower for this purpose. In the event that any
recording or refiling thereof (or the filing of any statements of continuation
or assignment of any financing statement) is required to protect and preserve
security interest, the Borrower shall, at its cost and expense, cause the same
to be re-recorded and/or refiled at the time and in the manner requested by the
Lender.
ARTICLE IV - BORROWER'S AND GUARANTOR'S REPRESENTATIONS AND
WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower and
Guarantor make the following representations and warranties which shall be
deemed to be continuous representations and warranties so long as any credit
hereunder remains available or any indebtedness of the Borrower to the Lender
remains unpaid:
Section 4.1. Organization and Standing of Carroll Fulmer.
Carroll Fulmer is a corporation duly organized and existing under the
laws of the State of Florida and is duly qualified to do business in the State
of Florida and in each jurisdiction where the failure to be so qualified would
have a material adverse effect on Borrower. To the best of Carroll Fulmer's
knowledge and belief, it is in material compliance with all applicable laws and
regulations governing the conduct of its business and governing consummation of
the transactions and its principal place of business is located in the State of
Florida.
Section 4.2. Organization and Standing of Carolina Pacific.
Carolina Pacific is a corporation duly organized and existing under the
laws of the State of North Carolina and is duly qualified to do business in the
State of North Carolina and in each jurisdiction where the failure to be so
qualified would have a material adverse effect on Borrower. To the best of
Carolina Pacific's knowledge and belief, it is in material compliance with all
applicable laws and regulations governing the conduct of its business and
governing consummation of the transactions and its principal place of business
is located in the State of North Carolina.
9
<PAGE>
Section 4.3. Organization and Standing of Capitol Warehouse.
Capitol Warehouse is a corporation duly organized and existing under
the laws of the State of Kentucky and is duly qualified to do business in the
State of Kentucky and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of Capitol
Warehouse's knowledge and belief, it is in material compliance with all
applicable laws and regulations governing the conduct of its business and
governing consummation of the transactions and its principal place of business
is located in the State of Kentucky.
Section 4.4. Organization and Standing of Service Express.
Service Express is a corporation duly organized and existing under the
laws of the State of Alabama and is duly qualified to do business in the State
of Alabama and in each jurisdiction where the failure to be so qualified would
have a material adverse effect on Borrower. To the best of Service Express'
knowledge and belief, it is in material compliance with all applicable laws and
regulations governing the conduct of its business and governing consummation of
the transactions and its principal place of business is located in the State of
Alabama.
Section 4.5. Organization and Standing of Guarantor.
The Guarantor is a corporation duly organized and existing under the
laws of the State of Florida and is duly qualified to do business in each
jurisdiction in which the conduct of its business requires such qualification,
including the State of Florida. To the best of the Guarantor's knowledge and
belief, it is in compliance with all applicable laws and regulations governing
the conduct of its business and governing consummation of the transactions
contemplated hereby.
Section 4.6. Corporate Power and Authority.
The execution, delivery and performance of this Agreement and any
Security Documents by the Borrower and Guarantor are within its corporate powers
and have been duly authorized by all necessary corporate and shareholder action,
are not in contravention of law or the terms of their respective Articles of
Incorporation or By-Laws or any amendment thereto, or any indenture, agreement
or undertaking to which they are a party or by which they are bound, except such
obligations which will be fully satisfied at the initial funding hereunder.
Section 4.7. Valid and Binding Obligations.
This Agreement, the Note, the Security Documents and any other
documents required hereunder, when executed and delivered by Borrower and
Guarantor will constitute the legal, valid and binding respective obligations of
the Borrower and Guarantor, subject to applicable bankruptcy and insolvency laws
and laws affecting creditors' rights and the enforcement thereof generally.
10
<PAGE>
Section 4.8. Consent or Filing.
No consent, approval or authorization of, or registration, declaration
or filing with any court, any governmental body or authority or other person or
entity is required in connection with the valid execution, delivery or
performance of this Agreement or any document required by this Agreement or in
connection with any of the transactions contemplated thereby, except the filing
of the financing statements contemplated hereunder.
Section 4.9. Financial Condition of the Borrower.
(a) The financial statements of the Borrower, a copy of which has been
furnished to the Lender, are materially correct, complete, and fairly present
the financial condition of the Borrower as at the date of the financial
statements and fairly present the results of the operations of the Borrower for
the period covered thereby.
(b) The Borrower has no material direct or contingent liabilities,
liabilities for taxes, long-term leases, or unusual forward or long-term
commitments as of the date of the Agreement which are not disclosed by, provided
for, or reserved against in the financial statements or referred to in notes
thereto, and at such date there are no material unrealized or anticipated losses
from any unfavorable commitments of the Borrower. The financial statements
furnished to the Lender have been prepared in accordance with Generally Accepted
Accounting Principles applied on a consistent basis maintained throughout the
period involved. There has been no material adverse change in the business,
properties or condition, financial or otherwise, of the Borrower since the date
of such financial statements.
Section 4.10. Litigation.
There is no suit or proceeding at law or in equity (including
proceedings, by or before any court, arbitrator, governmental or administrative
commission, board or bureau, or other administrative agency) pending, or to the
knowledge of the Borrower or Guarantor threatened, by or against or involving
the Borrower or Guarantor or against any of its properties, or existence which,
if adversely determined, would have a material adverse effect on the property,
assets, or business or on the condition, financial or otherwise, of the
Borrower.
Section 4.11. Disclosure and No Untrue Statements.
No representation or warranty made by the Borrower in the Loan
Documents or which will be made by the Borrower from time to time pursuant to
Officer's Certificates (a) contains or will contain any material
misrepresentation or material untrue statement of fact; or (b) omits or will
omit to state any material fact necessary to make the statements therein not
misleading, unless otherwise disclosed in writing to the Lender. There is no
fact known to the Borrower or any of its executive financial officers which
materially and adversely affects the business, assets, properties, or condition,
financial or otherwise, of the Borrower.
11
<PAGE>
Section 4.12. Title to Collateral.
The Borrower has good and marketable title to, and is the holder of all
of the interests in, all of the Collateral given as security to the Lender, free
and clear of all pledges, liens, security interests or other encumbrances. The
Borrower and Guarantor will warrant and defend the Collateral against the claims
and demands of all persons.
Section 4.13. Payment of Taxes.
The Borrower has filed or caused to be filed all federal, state, and
local tax returns which are required to be filed by it and has paid or caused to
be paid all taxes as shown on said returns or on any assessment received by it,
to the extent that such taxes have become due, except as otherwise permitted by
the provisions hereof, and no controversy in respect of additional income taxes
which could have a material adverse effect on the Borrower is pending, or, to
the knowledge of the Borrower, threatened, unless adequate reserve has been made
therefor. The Borrower has set up reserves which are believed by its officers to
be adequate for the payment of all taxes for which a notice of assessment has
been received and for the payment of such taxes for the years that have not been
audited by the respective tax authorities.
Section 4.14. Agreement or Contract Restrictions.
The Borrower is not a party to, nor is it bound by, any agreement,
contract, or instrument or subject to any charter or other corporate or
partnership restriction which materially adversely affects the business,
properties, assets, operations, or financial condition of the Borrower except as
disclosed in the financial statements and notes thereto described in Section 6.2
hereof. The Borrower is not in material default in the performance, observance,
or fulfillment of any obligations, covenants, or conditions contained in any
agreement or instrument to which it is a party, which would have a material
adverse affect on Borrower performing hereunder.
Section 4.15. Patents, Trademarks, Etc.
The Borrower owns, possesses, or has the right to use all necessary
patents, patent rights, licenses, trademarks, trademark rights, trade names,
trade name rights, and copyrights to conduct its business as now conducted,
without known conflict with any patent, patent right, license, trademark,
trademark right, trade name, trade name right, or copyright of any other person
or entity.
Section 4.16. Investment Company Act; Regulation.
(a) The Borrower is not an "investment company," an "affiliated
person" of any investment company," or a company "controlled" by an "investment
company," and the Borrower is not an "investment advisor" or an "affiliated
person" of an "investment advisor" (as each of the quoted terms is defined or
used in the Investment Company Act of 1940, as amended).
(b) The Borrower is not subject to regulation under any state or local
public utilities code or
12
<PAGE>
federal, state, or local statute or regulation limiting the ability of the
Borrower to incur indebtedness for money borrowed.
Section 4.17. Labor Matters.
There are no strikes or other labor disputes against the Borrower or
Guarantor pending or, to the Borrower's or Guarantor's knowledge, threatened. To
the knowledge of Borrower, hours worked by and payment made to employees of the
Borrower have not been in violation of the Fair Labor Standards Act or any other
applicable law dealing with such matters. All material payments due from the
Borrower on account of employee health and welfare insurance have been paid or
accrued as a liability on its books.
Section 4.18. ERISA Requirement.
Except as previously disclosed to Lender in writing, the Borrower does
not have in force any written or oral bonus plan, stock option plan, employee
welfare, pension or profit sharing plan, or any other employee benefit
arrangement or understanding. In addition, the Borrower and any predecessor of
the Borrower is not now or was not formerly during the five year period
immediately preceding the effective date of this Agreement a participating
employer in any multi employer or "multiple employer" plans within the meaning
of Sections 4001 (1)(a)(3), 4063, and 4064 of ERISA. Each employee benefit plan
subject to the requirements of ERISA complies in all material respects with all
of the requirements of ERISA and those plans which are subject to being
"qualified" under Sections 401 (a) and 501 (a) of the Internal Revenue Code of
1986, as amended from time to time, have since their adoption been "qualified"
and have received favorable determination letters from the Internal Revenue
Service so holding. There is no matter known to Borrower which would adversely
affect the qualified tax exempt status of any such trust or plan, and except as
previously disclosed to the Lender, there are no deficiencies or liabilities for
any such plan or trust. No employee benefit plan sponsored by the Borrower has
engaged in a nonexempt "prohibited transaction" as defined in ERISA.
Section 4.19. Compliance With Environmental Requirements.
The Borrower warrants and represents to the Lender that to the best of
Borrower's knowledge, the real property owned by Borrower is now and at all
times hereafter will continue to be in full compliance with all federal, state
and local environmental laws and regulations as they now exist or are hereafter
enacted and/or amended, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, and the Hazardous and Solid Waste Amendments of 1984, as amended. The
Borrower shall indemnify and hold the Lender harmless from and against any and
all damages, penalties, fines, claims, liens, suits, liabilities, costs
(including cleanup costs), judgments and expenses (including attorneys',
consultants' or experts' fees and expenses) of every kind and nature suffered by
or asserted against the Lender as a direct or indirect result of any warranty or
representation made by the Borrower in this paragraph being false or untrue
13
<PAGE>
in any material respect or any requirement under any law, regulation or
ordinance, whether local, state or federal, which requires the elimination or
removal of any hazardous materials, substances, wastes or other environmentally
regulated substances. The Borrower's obligations hereunder shall not be limited
to any extent by the term of the indebtedness secured hereby, and, as to any act
or occurrence prior to payment in full and satisfaction of the indebtedness
which gives rise to liability hereunder, shall continue, survive and remain in
full force and effect notwithstanding payment in full and satisfaction of the
indebtedness.
Section 4.20. Use of Credit.
The Loan shall be used exclusively for the purpose of supporting
working capital needs and acquisitions. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying "margin
stock" (within the meaning of Regulation U, Regulation X or Regulation G of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any advance hereunder will be used to purchase or carry any "margin stock,"
to extend credit to others for the purpose of purchasing or carrying any "margin
stock," or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation U, Regulation X, or Regulation
G. Neither the Borrower nor any person acting on behalf of the Borrower has
taken or will take any action which might cause the Note or any other Loan
Documents, including this Agreement, to violate Regulation U, Regulation X, or
Regulation G or any other regulation of the Board of Governors of the Federal
Reserve system or violate Section 8 of the Securities Exchange Act of 1934 or
any rule or regulation thereunder, in each case as now in effect as the same may
hereinafter be in effect. The Borrower owns no "margin stock" except for that
described in the financial statements referred to in Section 6.2 hereof and, as
of the date hereof, the aggregate value of all "margin stock" owned by the
Borrower does not exceed twenty-five percent (25%) of the value of all of the
Borrower's assets. In connection with the Loan, the Borrower will upon request
of the Lender deliver to the Lender a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said Regulation.
ARTICLE V - CONDITIONS PRECEDENT
The effectiveness of this Agreement and the obligations of the Lender
to consummate any of the transactions contemplated hereby shall be subject to
the satisfaction of the following conditions precedent, at or prior to the time
of the funding of the loan or any part thereof:
Section 5.1. Documents and Instruments.
The Lender shall have received all the instruments, documents and
property contemplated to be delivered by the Borrower hereunder, and the same
shall be in full force and effect.
14
<PAGE>
Section 5.2. Correctness of Warranties.
All representations and warranties contained herein or otherwise made
to the Lender in connection herewith shall be true and correct.
Section 5.3. Certificates of Resolution.
The Board of Directors of the Borrower and Guarantor and, if
shareholder approval is deemed necessary by any party, the shareholders of the
Borrower and Guarantor, shall have passed specific resolutions authorizing the
execution and delivery of all documents and the taking of all actions called for
by this Agreement, and the Borrower and Guarantor shall have furnished to the
Lender copies of such resolutions, certified by its Secretary.
Section 5.4. Expenses of Lender.
The Borrower promises to reimburse the Lender promptly for all
reasonable out-of-pocket expenses of every nature which the Lender may incur in
connection with this Agreement and the Note, the making of any loans provided
for herein or the collection of the Borrower's indebtedness, including, but not
limited to, any filing fees and documentary stamps. Such expenses shall be paid
at closing or in a reasonable time thereafter upon receipt of written invoices.
The Borrower shall also pay reasonable postclosing expenses incurred by the
Lender on behalf of the Borrower, including, but not limited to, preparation of
documents to terminate the loan and release the security therefor. Furthermore,
the Borrower shall be liable for post-closing collection expenses, including,
but not limited to, the collection of obligations of the Borrower hereunder,
including reasonable attorneys' fees, including appellate proceedings,
post-judgment proceedings and bankruptcy proceedings. In the event the Borrower
fails to pay such expenses within a reasonable time, the Lender may either (a)
disburse to itself under the terms of the Note any sums payable to Lender and
such disbursement shall be considered with like effect as if same had been made
to Borrower, or (b) pay such expenses on the Borrower's behalf and charge the
Borrower's account.
Section 5.5. Supporting Documents.
On or prior to the closing date, the Lender shall have received the
following documents satisfactory in form and substance to the Lender and counsel
for the Lender and, as requested by the Lender, certified by appropriate
corporate or governmental authorities:
(a) a certificate of good standing of each Borrower certified
by the Secretary of State, or other appropriate governmental authority, of the
state of incorporation;
(b) a copy of the articles of incorporation of each Borrower
certified by an appropriate officer of the Borrower that the copy is complete
and that the articles of incorporation have not been amended, annulled,
rescinded, or revoked;
15
<PAGE>
(c) a copy of the bylaws of each Borrower in effect on the
date of this Agreement, accompanied by a certificate from an appropriate officer
of the Borrower that the copy is true and complete, and that the bylaws have not
been amended, annulled, rescinded, or revoked since the date of the bylaws or
the last amendment reflected in the copy, if any;
(d) a copy of resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery, and performance of the Loan
Documents and the borrowing thereunder, and specifying the officer or officers
of the Borrower authorized to execute the Loan Documents, accompanied by a
certificate from an appropriate officer that the resolutions are true and
complete, were duly adopted at a duly called meeting in which a quorum was
present and acting throughout, or were duly adopted by written action, and have
not been amended, annulled, rescinded, or revoked in any respect and remain in
full force and effect on the date of the certificate;
(e) an incumbency certificate containing the names and titles
of all duly elected officers and directors of the Borrower as of the date of
this Agreement, accompanied by a certificate from an appropriate officer that
the information is true and complete;
(f) such additional supporting documents as the Lender may
request.
Section 5.6. Opinion of the Borrower's Counsel.
On or prior to the closing date, and to the extent required by the
Lender at the time of any borrowing hereunder, the Lender shall have received
the favorable opinion of counsel for Borrower indicating that the execution,
delivery and performance of this Agreement by the Borrower are within its
corporate powers and authorized, in form and substance satisfactory to the
Lender.
ARTICLE VI - BORROWER'S AND GUARANTOR'S AFFIRMATIVE COVENANTS
The Borrower and Guarantor, jointly and severally, covenant and agree
that until the Note, together with interest and all other indebtedness to the
Lender under the terms of this Agreement, is paid in full, unless specifically
waived by the Lender in writing:
Section 6.1. Corporate Existence and Qualification.
The Borrower and Guarantor will do, or cause to be done, all things
necessary to preserve, renew and keep in full force and effect its corporate
existence, its material rights, licenses and permits and comply in all material
respects with all laws applicable to it, operate its business in a proper and
reasonable businesslike manner and substantially as presently operated or
proposed to be operated; and at all times maintain, preserve and protect all
franchises and trade names and preserve all property used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition, and from time to time make, or cause to be made, all needful and
proper repairs, renewals, replacements, betterments and improvements thereto,
all as reasonably
16
<PAGE>
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 6.2. Financial Statements.
Borrower and Guarantor will each keep their books of account in
accordance with generally accepted accounting practices applied on a consistent
basis and will furnish to Lender the following:
(a) Monthly financial statements of each Co-Borrower and Guarantor and
subsidiaries including, at a minimum, a balance sheet, an income and expense
statement and a year-to-date financial statement presenting individual as well
as consolidating and consolidated financial information on each Co-Borrower and
Guarantor and its subsidiaries, submitted within forty-five (45) days of the end
of each month prepared by and certified as such by the chief financial officer
of the applicable Co-Borrower and Guarantor stating "the undersigned hereby
certifies that the attached financial information is true and correct" in all
material respects, subject to audit adjustments; and containing information
required by Lender, including monthly accounts receivable agings for each
Co-Borrower aged by invoice date as of the end of each month, accounts payable
agings for each Co-Borrower as of the end of each month, daily updated accounts
receivable balances for each Co-Borrower and customer address listings as Lender
may request from time to time; and
(b) Annual financial statements of each Co-Borrower and Guarantor
including, at a minimum, a balance sheet and an income and expense statement
presenting individual as well as consolidating and consolidated financial
information on the Borrower and Guarantor and its subsidiaries, submitted within
ninety (90) days from the end of each fiscal year end, prepared by and certified
as such by an independent certified public accountant acceptable to Lender which
may be satisfied by delivery of Guarantor's Annual Report on Form 10-K as filed
with the Securities and Exchange Commission.
The Borrower and Guarantor also, with reasonable promptness, shall furnish to
the Lender such other data as the Lender may reasonably request.
Section 6.3. Executive Officer's Certificates.
The financial statements of Borrower, called for by Section 6.2(a) and
(b), shall be accompanied by a certificate of one of the principal executive
officers of Guarantor stating that there exists no Event of Default as defined
in this Agreement and no event which, with the giving of notice or passage of
time, or both, would constitute such an Event of Default, or, if this is not the
case, that one or more specified events of default or above-specified events
have occurred.
Section 6.4. Taxes and Claims.
The Borrower and Guarantor shall properly pay and discharge: all taxes,
17
<PAGE>
assessments and governmental charges upon or against any of them or their assets
prior to the date on which penalties attach thereto, unless and to the extent
that such taxes are being diligently contested in good faith and by appropriate
proceedings and appropriate reserves therefor have been established.
Section 6.5. Pay Indebtedness to Lender and Perform Other Covenants.
The Borrower shall: (a) make full and timely payments of the principal
of and interest on the Note and all other indebtedness of the Borrower to the
Lender, whether now existing or hereafter arising; and (b) duly comply with all
the terms and covenants contained in each of the instruments and documents given
to the Lender pursuant to this Agreement or of the times and places and in the
manner set forth herein.
Section 6.6. Litigation.
The Borrower and Guarantor will promptly notify the Lender upon the
commencement of any action, suit, claim, counterclaim or proceeding against or
known investigation of the Borrower (except when the alleged liability is fully
covered by insurance): (a) the result of which could materially adversely affect
the business of the Borrower; or (b) which questions the validity of this
Agreement or any other document executed in connection herewith or any action
taken or to be taken pursuant to any of the foregoing.
Section 6.7. Right of Inspection; Discussions.
The Borrower will permit any person designated by the Lender, at the
Borrower's expense, to visit and inspect any of the property, books, records,
papers, and financial reports of the Borrower, including the making of any
copies thereof and abstracts therefrom, and to discuss its affairs, finances,
and accounts with its principal officers, all at such reasonable times and as
often as the Lender may reasonably request. The Borrower will also permit the
Lender, or its designated representative, to audit its financial and business
records. Without limiting the foregoing in any way, the Borrower also agrees to
allow the Lender and/or certified public accountants satisfactory to the Lender
to review the Borrower's financial statements, books, and records.
Section 6.8. Notices.
The Borrower will promptly give notice to the Lender of:
(a) the occurrence of any default or Event of Default (or
event which would constitute a default or Event of Default but for the
requirement that notice be given or time elapse or both) hereunder in which case
such notice shall specify the nature thereof, the period of existence thereof,
and the action that the Borrower proposes to take with respect thereto;
18
<PAGE>
(b) the occurrence of any material casualty to any property of
the Borrower or any other force majeure (including, without limitation, any
strike or other labor disturbance) materially affecting the operation or value
of the Borrower (specifying whether or not such casualty or force majeure is
covered by insurance); and
(c) the commencement or any material change in the nature or
status of any material litigation, dispute, investigation, of proceeding that
may involve a claim for damages, injunctive relief, enforcement, or other relief
pending, being instituted, or threatened by, against or involving the Borrower,
or any attachment, levy, execution, or other process being instituted by or
against any assets of the Borrower, or any other adverse change which might
materially impair the conduct of the Borrower's business or might materially
affect financially or otherwise its business, operations, assets, properties,
prospects, or condition.
Section 6.9. ERISA Benefit Plans.
The Borrower will comply with all requirements of ERISA applicable to
it and will not materially increase its liabilities under or violate the terms
of any present or future benefit plans maintained by it without the prior
approval of the Lender. The Borrower will furnish to the Lender as soon as
possible and in any event within 10 days after the Borrower or a duly appointed
administrator of a plan (as defined in ERISA) knows or has reason to know that
any reportable event, funding deficiency, or prohibited transaction (as defined
in ERISA) with respect to any plan has occurred, a statement of the chief
financial officer of the Borrower describing in reasonable detail such
reportable event, funding deficiency, or prohibited transaction and any action
which Borrower proposes to take with respect thereof, together with a copy of
the notice of such event given to the Pension Benefit Guaranty Corporation or
the Internal Revenue Service or a statement that said notice will be filed with
the annual report of the United States Department of Labor with respect to such
plan if such filing has been authorized.
Section 6.10. Insurance.
(a) The Borrower shall at all times maintain hazard, public liability
insurance and Workers Compensation policies insuring against all claims for
personal or bodily injury, death or property damage occurring upon, in or about
any property of the Borrower in amounts not less than $2,000,000.00 (with a
maximum deductible of $1,000.00) for injury or damage to any one person and
$2,000,000.00 (with a maximum deductible of $1,000.00) for injury or damage from
any one accident and $100,000.00 for property damage. Such insurance coverage
shall be in form and with existing carriers at current levels.
(b) The Borrower shall furnish to Lender evidence that such insurance
is in effect, upon request, at no cost to Lender, including, but not limited to,
such originals or copies as the Lender may request of policies, certificates of
insurance, riders and endorsements relating to such insurance and proof of
premium payments. The Lender shall be under no duty to examine such certificates
or to advise the Borrower in case the insurance is not in compliance herewith.
All such policies shall
19
<PAGE>
name Lender as an additional insured.
(c) The Borrower shall maintain existing credit insurance with existing
carrier at the current level of $5,000,000 and shall provide at closing a binder
from the existing carrier committing to issue credit insurance for Borrower at
the level of $10,000,000 effective January 1, 1998. Thereafter and throughout
the term of this Loan, Borrower will maintain such insurance with the Lender
being named as Loss Payee for such insurance and shall furnish to Lender
evidence of same and deliver said policy to Lender on or before January 15,
1998.
Section 6.11. Main Bank of Account.
During the term of this Agreement and so long as the Borrower is
obligated to the Lender under the Note, AMSOUTH BANK, a bank organized under the
laws of Alabama, shall be the primary bank of account for the Borrower and
Guarantor other than Capitol Warehouse and Carolina Pacific. Failure of the
Borrower or Guarantor to comply with this provision shall constitute a default
under the terms of this Agreement, entitling the Lender to all remedies of
default hereunder.
Section 6.12. Net Worth Requirement.
The Guarantor shall maintain a Net Worth of not less than TWENTY-FOUR
MILLION DOLLARS ($24,000,000.00) by the end of the 1998 fiscal year. The
Tangible Net Worth must not be less than a negative ($11,000,000) at the end of
the 1998 fiscal year end and a negative ($11,000,000) plus 25% of the net income
at the end of the 1999 fiscal year and all subsequent years and at all times
thereafter.
Section 6.13. Leverage Ratio.
The Guarantor shall not permit its ratio of Total Debt to Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) to be greater
than 3.50:1.0 for the 1998 fiscal year end and 3.0:1.0 at all times thereafter.
Section 6.14. Interest Coverage Ratio.
The Guarantor shall not permit its ratio of Earnings Before Interest,
Taxes and Amortization to Interest Expense for the 1998 fiscal year end to be
less than 1.50:1.0 and less than 2.0:1.0 for the fiscal year end 1999 and at all
times thereafter.
Section 6.15. Lockbox and Accounts Receivable.
The Borrower shall utilize Lender's lockbox service located at Post
Office Box 628062, Orlando, Florida 32862-8062, or such other place as the
Lender may designate in writing, in the collection of its accounts receivable
and may be charged a reasonable fee. Lockbox remittances, and collection
inadvertently remitted directly to the Borrower, and all other cash collections
including
20
<PAGE>
but not limited to collections from governmental agencies will be deposited into
a bank-owned collection account, where they will be held for one business day
prior to being used to paydown the Line of Credit. Should transfer from
collection account to paydown Line of Credit create an uncollected funds
position in collection account, interest charges for the uncollected funds will
be charged to account analysis. In no case, will bank incur loss on transfer of
funds from collection account to Line of Credit. All proceeds from Collateral
including collections of Receivables shall be applied directly to reduce
outstanding indebtedness on the Line of Credit.
(a) At any time, and from time to time, upon Lender's written request,
at the Borrower's expense, Borrower will promptly execute and deliver such
further agreements and documents and take such further action as Lender shall
reasonably deem necessary or desirable in obtaining the full benefits of this
Agreement and of the rights and powers herein granted.
(b) If any of Borrower's Receivables shall arise out of contracts with
the United States of America or any state thereof or any political subdivision,
department, agency or instrumentality of such federal or state government,
Borrower will, if requested by Lender, in addition to the requirements and
conditions set forth above, execute any instruments and take any action required
by Lender in order that all monies due or to become due under such contracts
shall be assigned to Lender and notice thereof given to such federal government
under the Federal Assignment of Claims Act, or in the case of a state statute or
local ordinance analogous to said Claims Act, to such state government, or the
appropriate political subdivision, and Lender is hereby expressly authorized as
Borrower's agent to execute any such instruments and to take any such action.
(c) Lender shall have the right to endorse Borrower's name on any and
all checks, drafts, or other forms of payment received whenever necessary to
collect the same, and Borrower will confirm Lender's title thereto by executing
such instruments as Lender may from time to time require. At Lender's request,
Borrower shall give notice of Lender's security interest in Receivables to
Borrower's debtors in such form and at such times as Lender may require, and
Lender may give such notice to Borrower's debtors at any time or times and
collect the Receivables in Lender's name. In the event that any expenses are
incurred by Lender in collecting Receivables, including the cost of maintaining
any lockbox and any reasonable legal fees, such shall be an obligation of
Borrower's as is herein defined.
(d) Borrower agrees to repay and remain liable for the repayment of all
loans and advances made to or for the Borrower's account and for all other
obligations. It is expressly agreed that any credits given as herein provided
shall be conditioned upon final payment to Lender in cash or solvent credits of
the item giving rise thereto and regarding any item that is not so paid, the
amount of any credit given shall be reversed, whether or not the item is
returned.
(e) As of the close of each calendar month, Lender shall render to
Borrower an accounting to Borrower as to the amount which Lender shall have
advanced to Borrower and as to the amount received for Borrower's account, and
each account rendered shall be deemed acceptable to and binding upon us unless
Borrower submits to Lender in writing notice of any exception thereto
21
<PAGE>
within ninety (90) days after the date thereof.
(f) Borrower will not issue or grant any discount, credit or allowance
as to Borrower's Receivables other than that which is usual and normal in the
course of business unless such is shown on Borrower's invoice and reported to
Lender as a deduction from the Receivables against which Lender shall make an
advance.
(g) Borrower shall immediately advise Lender of any disputes or claims
as to the Receivables which Borrower believes to be substantial, and adjust them
promptly at Borrower's expense.
(h) Upon the happening of any Event of Default as hereinabove provided,
then and in any such events, Lender shall have the following rights, in addition
to Lender's rights and remedies under this Agreement and at law all of which
shall be exercised in a commercially reasonable manner: (i) Lender shall have
the right to incur reasonable attorneys' fees and legal expenses and any other
necessary expenditures in the taking of possession, sale and/or preservation of
the Collateral, which Borrower does hereby agree to pay, together with interest
thereon from the date of such expenditures; (ii) Lender shall then and at all
times thereafter have the right, without notice to Borrower, to collect,
litigate, extend the time of payment of, compromise, settle for cash, credit or
otherwise, and upon any terms or conditions, all or any part of the Receivables
and thereby discharge and/or release the debtor and all others who may be liable
for the payment of such Receivables or any part thereof; (iii) Lender may sell
the Collateral, including Receivables or any in which Lender may then have a
security interest, in bulk or in separate lots, at either public or private
sale, without advertisement which is hereby waived, and upon sending notice to
Borrower ten (10) days prior to such sale or other disposition, at such prices
and upon such terms and conditions as Lender may determine and Lender is hereby
authorized to be a bidder and purchaser at any such public sale and/or sales.
(i) Borrower shall be entitled to credit only for the actual amount of
the cash received by Lender as a result of its exercise of such rights, less all
Lender's costs and expenses including collection and legal expenses, storage,
processing, transportation and sale. If there be a surplus remaining after
applying the net proceeds of any such collection of Receivables and/or sales of
the Collateral to Borrower's obligations, Lender shall remit such surplus to
Borrower and if there be a deficiency, Borrower shall remain liable to Lender
therefor. The rights herein granted to Lender shall be in addition to and not in
lieu of all other rights to which Lender is entitled under this Agreement or any
supplement or amendment hereto, or at law; and resort to security shall not be
required at any time.
(j) Borrower hereby constitutes any person whom Lender may designate as
Borrower's attorney-in-fact with power to send request for verification of
account to any debtor of Borrower and, (a) to receive, open and dispose of all
mail addressed to Borrower; (b) to endorse Borrower's name on any notes
acceptances, checks, drafts, money orders or other evidences of payment or
collateral that may come into Lender's possession; (c) in the event of default
by Borrower hereunder to sign
22
<PAGE>
Borrower's name on any invoices relating to any Receivables, or drafts against
debtors, assignments and verifications of accounts and notices to debtors; and
(d) in the event of default by Borrower hereunder to do all other acts and
things necessary to carry out this Agreement. All acts of such attorney-in-fact
or designee shall not be liable for any acts of commission or omission nor for
any error of judgment or mistake of fact or law other than gross negligence or
willful misconduct. This power, being coupled with an interest, is irrevocable
while any obligation shall remain unpaid.
(k) Borrower hereby irrevocably authorizes and directs any and all
accountants at any time acting for Borrower to give Lender any information it
may from time to time request concerning the financial affairs of Borrower and
to furnish Lender with copies of any and all statements, documents, records,
paper, etc. in their possession pertaining thereto. Borrower will maintain at
its own cost and expense complete records with respect to the Receivables,
including but not limited to records of payment received and all credits granted
with respect thereto, all adjustments thereof, and all other dealings affecting
any of the Receivables. Borrower agrees that Lender has a separate security
interest in all of the books and records pertaining to the Collateral and
Borrower does hereby assign the same to Lender. Following an Event of Default,
Borrower will deliver any such books and records to Lender or its representative
at any time upon Lender's demand at Borrower's cost. During any periodic audits,
Lender may inspect and make extracts from all of Borrower's books and records
upon its premises.
(l) Borrower further agrees from time to time at Lender's request to
deliver to Lender any or all original or other documents which form any part of
the Receivables including but not limited to all original contracts, orders,
invoices, bills of lading, and shipping receipts and Lender shall succeed to all
rights, remedies, securities and liens which Borrower may have with respect to
the Receivables, including guaranties of Receivables or other contracts of
suretyship with respect thereto, and Borrower shall deliver to Lender separate
written instruments confirming Lender's security interest in (or assignments of)
any of the same.
Section 6.16. Field Audits.
Borrower agrees to quarterly asset based examinations of the Borrower's
books, records and operations, at Borrower's expense, by the Lender or a
representative of the Lender and reserves the right to require a satisfactory
field examination prior to funding (other than the initial funding hereunder).
The Lender also may conduct periodic verifications of accounts receivable
balances by both written and telephone communication methods.
Section 6.17. Collateral Reporting.
The Borrower shall provide the Lender with the following: (1) an
updated accounts receivable balance submitted on a daily basis in form and
substance acceptable to Lender; (2) an accounts receivable aging each month aged
by invoice date, as of the end of each month within ten (10) days after the end
of the month; (3) a customer address list the Lender will from time to time
require; and (4) an accounts payable aging each month, as of the end of each
month within twenty
23
<PAGE>
(20) days after the end of the month; and (5) any other information that the
Lender may from time to time require.
Section 6.18. Observance of Laws.
The Borrower will conform to and duly observe in all material respects
all laws, regulations, and other valid requirements of any governmental
authority with respect to the conduct of its business, including but not limited
to, applicable ERISA, environmental and transportation laws.
Section 6.19. Subsidiaries.
The Borrower and Guarantor shall cause each of its subsidiaries to
observe and perform each covenant and agreement. All computations required in
connection with such financial covenants shall be made for the Guarantor and its
subsidiaries on a combined or consolidated basis, after elimination of
intercompany items.
Section 6.20. Capitalization Ratio.
The Guarantor and its subsidiaries on a consolidated basis shall not
permit its ratio of Debt to Capitalization to exceed 65.0%.
ARTICLE VII - BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees from the date hereof and until payment in
full of the principal of and interest on the Note, and all other indebtedness to
the Lender under this Agreement, unless the Lender shall otherwise consent in
writing, which will not be unreasonably withheld or delayed, it will not, either
directly or indirectly:
Section 7.1. Type of Business.
Engage in any business not authorized by Borrower's Articles of
Incorporation or by applicable law.
Section 7.2. Change in Ownership or Management.
The Guarantor shall not, either directly or indirectly, permit any
change in its Senior management or in the management of its business, without
the prior written consent of the Lender.
Section 7.3. Acquisitions and Mergers.
The Borrower shall not merge or consolidate or transfer substantially
all of their assets (other than in a reorganization or other transaction in
which no change in control occurs and such organizations remain in the
24
<PAGE>
transportation business) without the prior written approval of the Lender.
Section 7.4. Capital Expenditures.
The Guarantor and its subsidiaries may not make Capital Expenditures,
excluding expenditures for rolling stock, in an aggregate amount per fiscal year
in excess of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00), without the prior
written consent of the Lender.
Section 7.5. Guaranty.
The Guarantor and its subsidiaries will not guarantee or otherwise in
any way become responsible for obligations of any other person or entity,
whether by agreement to purchase the indebtedness of any other person, or
agreement for the furnishing to funds to any other person through the purchase
of goods, supply of services (or by way of stock purchase, contribution, advance
or loan) for the purpose of paying or discharging the indebtedness of any other
person, or otherwise, except those approved in writing by Lender.
Section 7.6. Investment and Loans.
The Borrower and Guarantor will not, directly or indirectly, acquire,
purchase or otherwise make any investment in or make any loans to acquire any
interest whatsoever in, any other person in an amount in excess of $1,000,000 in
cash per acquisition or an aggregate amount of $5,000,000 in cash; except (1)
Qualified Investments, or (2) the stock of any existing subsidiaries disclosed
to the Lender in writing in the Loan application, or (3) acquisitions solely for
stock of the Guarantor, or (4) upon obtaining written consent of Lender,
provided in each case that all such organizations are in the transportation
business.
Section 7.7. Disposition or Encumbrance of Receivables.
The Borrower will not sell, assign or discount, or grant or permit any
lien on any of its accounts or notes receivables, other than the discount of
such notes in the ordinary course of the Borrower's business.
Section 7.8. Sale-Leasebacks.
Other than rolling stock, the Borrower will not sell or transfer any
property and lease it back for the same use, provided however, Borrower shall
not have off balance sheet transactions exceeding ONE MILLION DOLLARS
($1,000,000.00) in the aggregate each year.
Section 7.9. Leases.
The Borrower will not enter into any future lease (other than
capitalized leases that are otherwise permitted under this commitment or leases
for rolling stock), as lessee, if such lease (a) has an unexpired term
(including renewals at the option of the lessee) of more than seven years, (b)
25
<PAGE>
provides for aggregate rental payments during any fiscal year in excess of
$100,000, or (c) if the rental payments thereunder, together with all other such
leases, would provide for aggregate rental payments during any fiscal year in
excess of $500,000, without prior written approval of the Lender.
Section 7.10. Liens.
The Borrower will not permit any lien on any of its properties or
assets, whether now owned or hereafter acquired, other than any liens mutually
agreed upon prior to closing or outside the normal course of business and those
listed below:
(a) liens in favor of Lender;
(b) existing liens identified in the Co-Borrower's application
for this Loan, including any liens relating to the restructuring of existing
fixed asset and/or vehicle financing with another financial institution;
(c) deposits under workmen's compensation, unemployment
insurance and Social Security laws;
(d) liens imposed by law, such as carriers', warehousemen's or
mechanics' and materialmen's liens, incurred in good faith in the ordinary
course of business and that are not delinquent or that are subject to Permitted
Contests;
(e) any lien arising out of any litigation, legal proceeding
or judgement that is subject to a Permitted Contest, and any pledges or deposits
to secure, or in lieu of, any surety, stay or appeal bond with respect to any
such litigation, legal proceeding or judgement;
(f) liens for taxes, assessments or other governmental charges
or levies that are not delinquent or that are subject to Permitted Contests;
(g) liens created after the Loan closing to secure the
acquisition cost of vehicles and fixed assets for use in the ordinary course of
business, provided that (1) any such lien is confined to the fixed assets so
acquired; and (2) the indebtedness secured by such lien does not exceed the
purchase price or fair market value, whichever is less, of the fixed assets so
acquired at the time of their acquisition; and
(h) liens created by loans to shareholders secured by the
shareholders restricted stock, so long as each Co-Borrower and Guarantor are in
compliance with all financial covenants.
Section 7.11. Take or Pay Contracts.
The Borrower will not enter into any take or pay contract.
26
<PAGE>
Section 7.12. Other Special Covenants.
The Borrower and Guarantor will not allow any modifications involving
the inclusion of Receivables of additional subsidiaries to be made to eligible
receivables in the event additional acquisitions are made, without the prior
written approval of Lender.
ARTICLE VIII - EVENTS OF DEFAULT
Section 8.1. Events.
In the event:
(a) Payment of Obligations to Lender.
The Borrower or Guarantor fails to make payment of any
principal, interest, or other amount due on any indebtedness owed the Lender
hereunder within ten (10) days of the due date thereof without further notice or
demand, or fails to make any other payment to the Lender as contemplated
hereunder either by the terms hereof or otherwise; or
(b) Representation or Warranty.
Any representation or warranty made or deemed made by the
Borrower or Guarantor herein or in any writing furnished in connection with or
pursuant to the loan application and loan commitment for the Loan or in
connection with or pursuant to any certificate delivered under the Loan
Documents shall be false in any material adverse respect on the date when made
or when deemed made; or
(c) Covenants.
The Borrower or Guarantor defaults in the performance or
observance of or breaches any agreement, covenant, term, or condition binding on
it contained in the Loan Documents for a period of thirty (30) days after
written demand (provided no written demand shall be required for breach of
Borrower's obligations to notify Lender of events of defaults set forth herein
which require Borrower to notify Lender of same); or
(d) The Borrower's Liquidation; Dissolution; Bankruptcy; Etc.
Any liquidation or dissolution of the Borrower or Guarantor,
suspension of the business of the Borrower, or the filing or commencement by the
Borrower of a voluntary petition, case, proceeding, or other action seeking
reorganization, arrangement, readjustment of its debts, or any other relief
under any existing or future law of any jurisdiction, domestic or foreign, state
or federal, relating to bankruptcy, insolvency, reorganization or relief of
debtors, or any other action
27
<PAGE>
of the Borrower indicating its consent to, approval of, or acquiescence in, any
such petition, case, proceeding, or other action seeking to have an order for
relief entered with respect to it or its debts; the application by the Borrower
for, or the appointment, by consent or acquiescence of, a receiver, trustee,
custodian, or other similar official for the Borrower or for all or a
substantial part of its property; the making by the Borrower of an assignment
for the benefit of creditors; or the inability of the Borrower or the admission
by the Borrower in writing of its inability to pay its debts as they mature; or
(e) Order of Dissolution.
Any order is entered in any proceedings against the Borrower
or Guarantor decreeing the dissolution or split-up of the Borrower or Guarantor,
and such order remains in effect for more than sixty (60) days; or
(f) Reports and Certificates.
Any report, certificate or financial statement delivered to
the Lender by the Borrower is at any time false or misleading in any material
adverse respect; or
(g) Judgments.
The rendition of a final uninsured judgment against the
Borrower for the payment of damages or money in excess of Five Hundred Thousand
Dollars ($500,000.00) if the same is not discharged, bonded off or transferred
to other security or if a writ of execution or similar process is issued with
respect thereto and is not stayed within the time allowed by law for filing
notice of appeal of the final judgment; or
(h) Liens Imposed by Law.
The violation of any law or any act or omission by the
Borrower that results in the imposition of a lien by operation of law on any of
its property, if the lien is not discharged, bonded off or transferred to other
security within sixty (60) days after it has attached and if the lien relates to
a claim for the payment of damages or money in excess of Five Hundred Thousand
Dollars ($500,000.00); or
(i) Corporate Existence.
Any act or omission (formal or informal) of the Borrower or
Guarantor or its officers, directors, shareholders, or partners leading to, or
resulting in, the termination, invalidation (partial or total), revocation,
suspension, interruption, or unenforceability of its existence, or the transfer
or disposition (whether by sale, lease, or otherwise) to any person of all or a
substantial part of its property.
28
<PAGE>
THEN:
In any of the above mentioned events, any holder of the Note executed
pursuant hereto with notice to Borrower may, at such holder's option, declare
the said Note to be fully due and payable and the same shall thereupon all
immediately become due and payable in their aggregate amounts and Lender, in
addition to any other remedy permitted by law, may, at its option, proceed to
protect and enforce its rights by an action at law or in equity or by any other
appropriate proceedings, whether for the specific performance of any covenant or
agreement contained in this Agreement, or in aid of the exercise of any power
granted in this Agreement, or proceed to enforce the payment of the Note or to
enforce any other legal, or equitable rights of Lender, including but not
limited to, the rights of Lender pursuant to the Florida Statutes and other
applicable law. The events of default and remedies after default set forth in
this Section 8.1 are intended to be in addition to the provisions in the Note
under the captions "Events of Default" and "Remedies After Default".
Section 8.2. Rights and Remedies Cumulative.
No right or remedy herein conferred upon the Lender is intended to be
exclusive of any other right or remedy contained herein, in the Note, Loan
Documents or in any instrument or document delivered in connection with or
pursuant to this Agreement, and every such right or remedy shall be cumulative
and shall be in addition to every other such right or remedy contained herein
and therein or now or hereafter existing at law or in equity or by statute or
otherwise.
Section 8.3. Rights and Remedies Not Waived.
No course of dealing between the Borrower and the Lender or any failure
or delay on the part of the Lender in exercising any rights or remedies
hereunder shall operate as a waiver of any rights or remedies of the Lender and
no single or partial exercise of any rights or remedies hereunder shall operate
as a waiver or preclude the exercise of any other rights or remedies hereunder.
Section 8.4. Waiver of Default.
The Lender at any time may waive any default or any Event of Default
which shall have occurred and any of its consequences, in which case the parties
hereto shall be restored to their former positions and rights and obligations
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon, and no such waiver shall
be effective unless it is in a written document executed by a duly authorized
officer and then only to the extent specifically recited therein.
29
<PAGE>
ARTICLE IX - MISCELLANEOUS
Section 9.1. Course of Dealing; Amendments; Waiver.
No course of dealing between the parties hereto shall be effective to
amend, modify, or change any provision of this Agreement or any other Loan
Document. No amendment or waiver of any provision of this Agreement or any other
Loan Document, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by Lender,
unless otherwise specifically provided, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 9.2. Lien; Setoff By Lender.
The Borrower hereby grants to the Lender a continuing lien for all
indebtedness and other liabilities of the Borrower to the Lender upon any and
all moneys, securities, and other property of the Borrower and the proceeds
thereof, now or hereafter held or received by or in transit to, the Lender from
or for the Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general or special)
and credits of the Borrower with, and any and all claims of the Borrower against
the Lender at any time existing. Upon the occurrence of any Event of Default,
the Lender is hereby authorized at any time and from time to time, without
notice to the Borrower, to setoff, appropriate, and apply any or all items
hereinabove referred to against all indebtedness and other liabilities of the
Borrower to the Lender, whether under this Agreement or otherwise, and whether
now existing or hereafter arising.
Section 9.3. Liability of Lender to Third Parties.
The Lender shall in no event be responsible or liable to any person
other than the Borrower and Guarantor for its disbursement of or failure to
disburse the funds or any part thereof, and others shall not have any claim or
right against the Lender under this Agreement or the Lender's administration
thereof.
Section 9.4. Waivers.
Except as provided herein, the Borrower waives presentment, demand,
protest, notice of default, nonpayment, partial payments and all other notices
and formalities relating to this Agreement other than notices specifically
required hereunder. The Borrower consents to and waives notice of the granting
of indulgences or extensions of time of payment, the taking or releasing of
security, the addition or release of persons primarily or secondarily liable on
or with respect to liabilities of the Borrower to the Lender, all in such manner
and at such time or times as the Lender may deem advisable. No act or omission
of the Lender shall in any way impair or affect any of the indebtedness or
liabilities of the Borrower to the Lender or rights of the Lender in any
security. No delay by the Lender to exercise any right, power or remedy
hereunder or under any security agreement, and no indulgence given to the
Borrower in case of any default, shall impair any such
30
<PAGE>
right, power or remedy or be construed as having created a course of dealing or
performance contrary to the specific provisions of this Agreement or as a waiver
of any default by the Borrower or any acquiescence therein or as a violation of
any of the terms or provisions of this Agreement. The Lender shall have the
right at all times to enforce the provisions of this Agreement and all other
documents executed in connection herewith in strict accordance with their terms,
notwithstanding any course of dealing or performance by the Lender in refraining
from so doing at any time and notwithstanding any custom in the banking trade.
No course of dealing between the Borrower and the Lender shall operate as a
waiver of any of the Lender's rights.
Section 9.5. Assignment and Participation.
This Loan may not be assigned by the Co-Borrowers without the Lender's
prior written consent. At any time, the Lender may grant one or more
participations of 49% or less in this Loan to participants of its choice. Any
such participant may exercise rights of setoff and banker's lien against the
Co-Borrower with respect to its participation as if it had made a direct loan to
the Co-Borrower. The Lender may divulge to any such participant any information
the Lender may obtain with respect to the Co-Borrower, the Guarantor or any
Collateral in connection with this Loan. Notwithstanding the foregoing, Lender
may sell any or all of the Loan if said Loan is in default.
Section 9.6. Funds Not Assignable.
The proceeds of the loan shall not be assigned by the Borrower nor
subject to the process of any court upon legal action by or against the Borrower
or by or against anyone claiming under or through Borrower, and for the purpose
of this Agreement, the funds shall remain and be considered the money and
property of the Lender until the Borrower is entitled to have them disbursed as
provided herein. Nothing herein contained shall be considered as in anyway
modifying, or subordinating the obligations previously given or to be given by
the Borrower as security for the loan and such obligations shall be and remain
in full force and effect, this Agreement being intended only as additional
security for the loan and to insure its use for the purposes intended by the
Lender and Borrower.
Section 9.7. Indemnity.
The Borrower agrees to indemnify and hold the Lender harmless from and
against all damages, claims, actions, causes of action, losses, costs, expenses,
liability, penalties and interest (including attorney's fees and expenses)
directly or indirectly resulting from, occurring in connection with or arising
out of (a) any inaccurate representation or warranty made by or on behalf of
Borrower to Lender in connection with this Loan; (b) any breach by the Borrower
of any of its obligations under this Loan or the Loan Documents; or (c) this
Loan and the transactions contemplated by this Loan. This Section 9.7 shall
survive the execution and delivery of the Loan Documents, the closing of this
Loan and the payment of this Loan in full.
31
<PAGE>
Section 9.8. Termination by the Borrower.
The Borrower may terminate this Agreement in its entirety by giving at
least ten (10) days prior notice of its intention so to do and by payment in
full of all obligations hereunder outstanding on the date specified for
termination.
Section 9.9. Arbitration.
Any controversy, claim, dispute or disagreement arising out of this
commitment or the Loan will be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Judgement
on any award rendered by the arbitrator(s) in any such arbitration may be
entered in any court having jurisdiction thereof. The Co-Borrowers and the
Lender specifically acknowledge and agree that this commitment involves a
"transaction involving commerce" under the Federal Arbitration Act. Any
arbitration shall take place in Orlando, Florida at the Lender's election.
Section 9.10. Notices.
Any written notice, demand or request that is required to be made in
any of the Loan Documents shall be served in person, or by registered or
certified mail, return receipt requested, or by express mail or similar carrier
service, addressed to the party to be served at the address set forth in the
first paragraph hereof. The addresses stated herein may be changed as to the
applicable party by providing the other party with notice of such address change
in the manner provided in this paragraph. In the event that written notice,
demand or request is made as provided in this paragraph, then in the event that
such notice is returned to the sender by the United States postal system or the
courier service because of insufficient address or because the party has moved
or otherwise, other than for insufficient postage or payment to the courier,
such writing shall be deemed to have been received by the party to whom it was
addressed on the date that such writing was initially placed in the United
States postal system or deposited with the courier service with the postage or
cost thereof prepaid in full by the sender.
Section 9.11. Controlling Agreement.
In the event any provision of this Agreement is inconsistent with any
provision of any other document, whether heretofore executed, required or
executed pursuant to this Agreement or otherwise, the provisions of this
Agreement shall be controlling.
Section 9.12. Titles.
Titles to the sections of this Agreement are solely for the convenience
of the parties hereto and are not an aid in the interpretation of this Agreement
or any part thereof.
32
<PAGE>
Section 9.13. Venue and Jurisdiction.
In any litigation in connection with or to enforce this Agreement or
any of the other Loan Documents, the Borrower irrevocably consents to and
confers personal jurisdiction on the courts of the State of Florida located in
Orange County or the United States courts located within the Middle District of
the State of Florida, expressly waives any objections as to venue in any of such
courts, and agrees that service of process may be made on the Borrower by
mailing a copy of the summons and complaint by registered or certified mail,
return receipt requested, to the address set forth herein below the name of the
Borrower on the signature page hereto (or otherwise expressly provided in
writing). Nothing contained herein shall, however, prevent the Lender from
bringing any action or exercising any rights within any other court in Florida
or from obtaining personal jurisdiction by any other means available by
applicable law.
Section 9.14. Governing Law.
The validity, interpretation, and enforcement of this Agreement, of the
rights and obligations of the parties hereto, and of the other documents
delivered in connection herewith shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Florida, excluding
those laws relating to the resolution of conflicts between laws of different
jurisdictions.
Section 9.15. Legal or Governmental Limitations.
Anything contained in this Agreement to the contrary notwithstanding,
the Lender shall not be obligated to extend credit or make any loans to the
Borrower in an amount in violation of any limitations or prohibitions provided
by any applicable statute or regulation.
Section 9.16. Counterparts.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument.
Section 9.17. Waiver of Trial By Jury.
The Borrower, the Guarantor and the Lender knowingly, voluntarily and
intentionally waive the right any of them may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under or in connection with
the Loan Documents and any agreement contemplated to be executed in conjunction
therewith, or any course of conduct, course of dealing, statements (whether
verbal or written) or actions of any party. This provision is a material
inducement for the Lender entering into the loan evidenced by the Loan
Documents.
33
<PAGE>
Section 9.18. Confidentiality.
Lender acknowledges that Guarantor is a Reporting Company under the
Exchange Act of 1934, as amended, and agrees to keep confidential and not to use
in any manner other than in connection with this Agreement, any nonpublic
information obtained by the Lender in connection herewith.
Section 9.19. Total Liability of Each Co-Borrower.
Notwithstanding anything to the contrary in the Loan Documents, the
total liability of each Co-Borrower under the Loan Documents shall not exceed
the amount disbursed to or on behalf of such Co-Borrower together with interest
costs and attorney fees. Nothing contained in this paragraph shall limit the
liability of the Guarantor pursuant to the Guaranty.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered AMSOUTH BANK, a bank organized under
in the presence of: the laws of Alabama
By: /s/ Anthony Stiffler
Anthony Stiffler,
Vice President
"Lender"
CARROLL FULMER & COMPANY, INC.,
a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC.,
a North Carolina corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
34
<PAGE>
CAPITOL WAREHOUSE, INC.,
a Kentucky corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
SERVICE EXPRESS, INC.,
an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Borrower"
TRANSIT GROUP, INC.,
a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
President and Chief Executive Officer
"Guarantor"
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Anthony Stiffler as Vice President of AmSouth Bank, a bank
organized under the laws of Alabama, on behalf of the bank. He is personally
known to me or has produced _______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
35
<PAGE>
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Carroll Fulmer
& Company, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Carolina
Pacific Distributors, Inc., a North Carolina corporation, on behalf of the
corporation. He is personally known to me or has produced
_______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Capitol
Warehouse, Inc., a Kentucky corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
36
<PAGE>
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Service
Express, Inc., an Alabama corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as President and Chief Executive Officer of
Transit Group, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
37
<PAGE>
AMENDMENT TO ADVISED REVOLVING LINE OF CREDIT AGREEMENT
THIS AGREEMENT dated as of the 14th day of January, 1998, by and
between AMSOUTH BANK, a bank organized under the laws of Alabama, whose mailing
address is Post Office Box 588001, Orlando, Florida 32858 (the "Lender"), and
CARROLL FULMER & COMPANY, INC., a Florida corporation, whose address is P. O.
Box 5000, Groveland, Florida 34736-5000 ("Carroll Fulmer") and CAROLINA PACIFIC
DISTRIBUTORS, INC., a North Carolina corporation, whose address is 5625 Surrett
Drive Extension, Archdale, North Carolina 27263 ("Carolina Pacific") and CAPITOL
WAREHOUSE, INC., a Kentucky corporation, whose address is 403 W. Main Street,
Frankfurt, Kentucky 40601 ("Capitol Warehouse") and SERVICE EXPRESS, INC., an
Alabama corporation, whose address is P.O. Box 1009, Tuscaloosa, Alabama 35403
("Service Express") (Carroll Fulmer, Carolina Pacific, Capitol Warehouse and
Service Express are together hereinafter referred to as the "Borrower" and
individually referred to as a "Co-Borrower"; references applicable to Borrower
shall also be applicable to each Co-Borrower), and TRANSIT GROUP, INC., a
Florida corporation, whose address is Overlook III, 2859 Paces Ferry Road, Suite
1740, Atlanta, Georgia 30339 (the "Guarantor").
W I T N E S S E T H:
WHEREAS, the Lender, the Borrower and Guarantor entered into an Advised
Revolving Line of Credit Agreement dated as of December 18, 1997 (the "Loan
Agreement"), which Loan Agreement provides that the Borrower may borrow from
Lender and repay and reborrow a principal amount not to exceed TWENTY MILLION
DOLLARS ($20,000,000.00); and
WHEREAS, the Lender, the Borrower and the Guarantor desire to modify
the terms and conditions of the Loan Agreement in the manner hereinafter set
forth to permit other subsidiaries of Transit Group, Inc. to join in the Loan
Agreement from time to time and be bound by its terms; and
WHEREAS, the loan arrangement made pursuant to the Loan Agreement is
evidenced by a Revolving Credit Note in the principal sum of TWENTY MILLION
DOLLARS ($20,000,000.00) (the "Note") as may be amended or restated from time to
time; and
WHEREAS, the Guarantor hereby confirms its guaranty of payment of the
indebtedness of Borrower to Lender in accordance with the guaranty executed by
Guarantor.
NOW, THEREFORE, in consideration of the mutual promises, conditions,
representations and warranties hereinafter set forth and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto have mutually agreed as follows:
1
<PAGE>
1. The definitions of "Borrower" and "Co-Borrower" are hereby amended
and are restated in their entireties as follows:
CARROLL FULMER & COMPANY, INC., a Florida corporation
("Carroll Fulmer"), and CAROLINA PACIFIC DISTRIBUTORS, INC., a
North Carolina corporation ("Carolina Pacific"), and CAPITOL
WAREHOUSE, INC., a Kentucky corporation ("Capitol Warehouse"),
SERVICE EXPRESS, INC., an Alabama corporation ("Service
Express"), RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation ("Rainbow Trucking") and any and all other
subsidiaries of Transit Group, Inc., a Florida corporation
(together herein referred to as the "Subsidiaries"or
individually as the "Subsidiary") which subsequently enter
into a Joinder to Advised Revolving Line of Credit Agreement
and Joinder to Security Agreement (Carroll Fulmer, Carolina
Pacific, Capitol Warehouse, Service Express, Rainbow Trucking
and Subsidiaries are together hereinafter referred to as the
"Borrower" and individually referred to as a "Co-Borrower";
references applicable to Borrower shall also be applicable to
each Co-Borrower).
2. Section 8.1 Events, subparagraph (i), of the Advised Revolving Line
of Credit Agreement is hereby amended and restated in its entirety as follows:
"(i) Corporate Existence.
Any act or omission (formal or informal) of the Borrower or
Guarantor or its officers, directors, shareholders, or partners leading to, or
resulting in, the termination, invalidation (partial or total), revocation,
suspension, interruption, or unenforceability of its existence, or the transfer
or disposition (whether by sale, lease, or otherwise) to any person of all or a
substantial part of its property; or"
3. The Advised Revolving Line of Credit Agreement is hereby amended by
adding Section 8.1 Events subparagraph (j) in its entirety as follows:
"(j) Execution of Guaranty; Opinion of Counsel.
The Board of Directors of the Guarantor fails to pass a
resolution authorizing the execution by Guarantor of a Continuing and
Unconditional Guaranty in the form attached hereto as Exhibit "A" (the "New
Guaranty") which shall replace and supersede the Continuing and Unconditional
Guaranty dated as of December 18, 1997, and deliver the New Guaranty duly
executed by Guarantor and a certified copy of such resolution to Lender on or
before March 15, 1998, accompanied by a favorable opinion of counsel for
Guarantor indicating that the corporate resolution has been properly executed by
the Guarantor and the execution and delivery of such corporate resolution are
within its corporate powers and authorized, in form and substance satisfactory
to the Lender."
2
<PAGE>
4. Subsidiaries may join in this credit accommodation by:
a. executing and delivering to Lender with the consent
of Lender the Joinder to Advised Revolving Line of
Credit Agreement and Joinder to Security Agreement in
the form attached hereto as Exhibit "B"; and
b. executing and delivering to Lender an Allonge in the
form attached hereto as Exhibit "C" whereas the
Subsidiary becomes a Maker on the Note; and
c. executing and delivering to Lender a UCC-1 Financing
Statement perfecting the pledge of the Subsidiary's
Collateral as security for the Note; and
d. executing and delivering to Lender a tax indemnity
agreement, out-of-state closing affidavit, corporate
borrowing resolution, certification certificate and
other documents or affidavits as may be required by
Lender; and
e. delivering to Lender an opinion of Subsidiary's
counsel in form and content satisfactory to Lender.
5. Nothing herein invalidates or shall impair or release any covenant,
condition, agreement or stipulation in the Loan Agreement, and the same, except
as herein modified, shall continue in full force and effect and the Borrower
further covenants and agrees to perform and comply with each and every of the
covenants, agreements, conditions and stipulations of the Loan Agreement which
are not inconsistent herewith.
6. The Guarantor joins in the execution of this Amendment to Advised
Revolving Line of Credit Agreement ("Amendment") to specifically consent to the
terms and conditions hereof and to reconfirm its guaranty of Borrower's
obligations under the Loan Agreement and Note.
7. Except as herein amended, the Loan Agreement is confirmed in its
entirety.
8. In the case of conflict between the provisions of the Loan
Agreement, on the one hand, and this Amendment, on the other hand, the
provisions of this Amendment shall prevail.
9. This Amendment may be executed in any number of counterparts and by
the parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same Amendment.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered AMSOUTH BANK, a bank organized under
in the presence of: the laws of Alabama
By: /s/ Anthony Stiffler
Anthony Stiffler,
Vice President
"Lender"
CARROLL FULMER & COMPANY, INC.,
a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC.,
a North Carolina corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
CAPITOL WAREHOUSE, INC.,
a Kentucky corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
4
<PAGE>
SERVICE EXPRESS, INC.,
an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Borrower"
TRANSIT GROUP, INC.,
a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
President and Chief Executive Officer
"Guarantor"
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Anthony Stiffler as Vice President of AmSouth Bank, a bank
organized under the laws of Alabama, on behalf of the bank. He is personally
known to me or has produced _______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
5
<PAGE>
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Philip A. Belyew, as Chairman of the Board of Carroll Fulmer &
Company, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Philip A. Belyew, as Chairman of the Board of Carolina Pacific
Distributors, Inc., a North Carolina corporation, on behalf of the corporation.
He is personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Philip A. Belyew, as Chairman of the Board of Capitol
Warehouse, Inc., a Kentucky corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
6
<PAGE>
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Philip A. Belyew, as Chairman of the Board of Service Express,
Inc., an Alabama corporation, on behalf of the corporation. He is personally
known to me or has produced _______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Philip A. Belyew, as President and Chief Executive Officer of
Transit Group, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
7
EXHIBIT 99.2
THE CREDIT ACCOMMODATION MADE PURSUANT TO THIS NOTE
REPRESENTS A LINE OF CREDIT
REVOLVING CREDIT NOTE
$20,000,000.00
Atlanta, Georgia
As of December 18, 1997
THE UNDERSIGNED, ("Maker"), promises to pay to the order of AMSOUTH
BANK, a bank organized under the laws of Alabama ("Payee"), whose mailing
address is Post Office Box 588001, Orlando, Florida 32858, the principal sum of
TWENTY MILLION DOLLARS ($20,000,000.00), or so much thereof as may be advanced
and outstanding from time to time, with interest on the unpaid principal from
the date of each such advance at the following rate and payable in the following
manner:
Interest Rate.
(a) Effective on the first day of every month, and effective
through such month (the "Interest Period"), Maker may select
one of the following interest rates for such month (the
"Stated Rate"):
(1) A variable rate equal to the Payee's prime rate
through May 1, 1999 and a rate equal to the Payee's
prime rate plus fifty basis points (0.50%) thereafter
(the "Prime-Based Rate"). This interest rate will be
adjusted with each change in the Payee's prime rate.
The Payee's prime rate is merely an index rate and is
subject to change at the Lender's discretion and is
not a rate charged to a particular category of
borrowers; or
(2) Prior to May 1, 1999, a fixed rate of two hundred
fifty basis points (2.50%) over the average offered
rate in the London interbank market for deposits in
U.S. dollars for a thirty (30) day period. On and
after May 1, 1999 a fixed rate of three hundred basis
points (3.00%) over the average offered rate in the
London interbank market for deposits in U.S. dollars
for a thirty (30) day period. The rates set forth in
this subparagraph (a)(2) shall be referred to as the
"LIBOR-Based Rate"). The applicable LIBOR-Based Rate
for the next month shall be determined based on such
rate in effect two business days prior to the first
day of the month and the Lender will determine the
actual rate for the term selected by reference to an
information reporting service customarily relied upon
by the Lender for reporting of rates offered for such
deposits.
1
<PAGE>
The Interest Rate from the date of this Note until January 1,
1998 shall be at the LIBOR-Based Rate.
Unless Maker selects a different rate option and notifies
Payee, Maker shall be deemed to have selected the same type
rate option as applicable for the prior month. Maker shall
notify Payee two business days' prior to the first of the
following month should Maker elect to convert to a different
interest rate option for such month.
Prior to the selection by Maker of any such rate option, Payee
will, upon request, advise the Maker of the interest rate that
will be effective if such option is selected.
(b) Interest on this Note, as calculated above, shall be payable
monthly in arrears on the 1st day of each month, commencing
with January 1, 1998 and continuing on the 1st day of each
month thereafter, including the month of April, 1999.
(c) The entire unpaid principal balance, together with any accrued
interest, shall be due and payable on or before May 1, 1999
(the "Maturity Date") unless prior to May 1, 1999 Maker pays
to Payee a term out fee of TWO HUNDRED THOUSAND DOLLARS
($200,000.00) at which point the revolver portion of this loan
will terminate and commencing June 1, 1999 and continuing on
the first day of each month including April 1, 2000, a
principal payment equal to one-twelvth (1/12) of the principal
balance outstanding as of May 1, 1999 together with accrued
interest will be due and payable with the remaining unpaid
principal and interest due in full on May 1, 2000.
Increased Costs, Illegality, Etc. (a) If either (i) the introduction of
or any change in any law or regulation or in the interpretation or
administration of any law or regulation by any court or administrative or
governmental authority charged with the interpretation or administration thereof
from the date hereof or (ii) the compliance with any guideline enacted after the
date hereof or request from any such governmental authority, including, without
limitation, any central bank (whether or not having the force of law), which is
not caused by an act or omission of Payee, including without limitation, its
failure to maintain adequate control, (x) subjects Payee or any corporation
controlling Payee to any tax enacted after the date hereof of any kind
whatsoever with respect to this Agreement, or changes the basis of taxation of
payments to Payee of principal, commissions, fees, interest, or any other amount
payable hereunder (except for (A) taxes on or measured by the overall net income
of Payee or branch, office, or agency through which Payee is acting for purposes
of this Agreement or (B) changes in the rate of such taxes); (y) imposes,
modifies, or holds applicable any reserve, special deposit, compulsory loan, or
similar requirement against assets held by, or deposits or other liabilities in
or for the account of, advances or loans by, or other credit or commitment
therefor extended by, or any other acquisition of funds by, any office of Payee
which are not otherwise included in any determination of the Reserve Adjusted
LIBOR Rate or other interest payable hereunder; or (z) imposes on Lender
controlling Lender any other condition, and as a result there shall be any
increase in the cost to Lender of agreeing to make or making, funding, or
maintaining
2
<PAGE>
advances by an amount deemed by Lender to be material, then the Borrower shall
from time to time, upon demand by Payee, pay directly to Payee additional
amounts sufficient to compensate Payee for such increased cost. A certificate as
to the amount of such increased cost, submitted to the Borrower by Payee, shall
be conclusive and binding for all purposes, absent manifest error.
(b) If Payee determines that compliance with any law or
regulation or with any guideline or request from any central bank or other
governmental authority subsequent to the date hereof (whether or not having the
force of law) concerning capital adequacy or otherwise has or would have the
effect of reducing the rate of return on the capital of Payee or the corporation
controlling Payee as a consequence of, or with reference to, the facilities
hereunder, by an amount deemed by Payee to be material, the Borrower shall from
time to time, upon demand by Payee, pay to Payee additional amounts sufficient
to compensate Payee or such other corporation for such reduction. A certificate
as to such amounts, submitted to the Borrower by Payee, shall be conclusive and
binding for all purposes, absent manifest error.
(c) In the event the LIBOR Reserve Requirement increases
subsequent to the date hereof, the interest rate applicable to this Note shall
be the Reserve Adjusted LIBOR Rate.
Default Rate. After the occurrence of an Event of Default, as
hereinafter defined, or after the Maturity Date, this Note and all sums due
hereunder shall bear interest at the Stated Rate plus five percent (5%) per
annum ("Penalty Rate") (but in no event at a rate which is higher than the
maximum rate permitted by law) from the date of default until paid.
Interest Basis. Interest shall be calculated on the basis of a three
hundred sixty (360) day year for actual days elapsed.
Interest Parity. This loan evidenced by this Note is being made
pursuant to the rate provisions of Chapters 665 and 687 of the Florida Statutes.
Late Charge. If any payment hereunder (other than the final payment) is
not made within fifteen (15) days after it is due, the Maker shall pay to Payee
a late charge equal to five percent (5%) of the late payment.
Prepayment. The Maker shall have the privilege of prepaying this Note
in part or in full, without penalty, at any time, and any prepayment shall be
applied to the installment or installments of principal last maturing. No
partial prepayment shall excuse or defer Maker's subsequent payment obligations.
Application of Payments. All payments made on the indebtedness
evidenced by this Note shall be applied first to repayment of monies paid or
advanced by Payee on behalf of the Maker in accordance with the terms of the
Loan Documents securing this Note, and thereafter shall be applied to payment of
accrued interest, and lastly to payment of principal.
3
<PAGE>
Place and Manner of Payment. All payments of interest and principal are
payable at the office of Payee, or at such other place as the holder may
designate in writing, in lawful money of the United States of America.
Security. This Note is secured by Receivables as more particularly
defined in loan documents ("Loan Documents") executed on even date herewith.
This Note and other loan documents as may be now or hereafter executed in
connection therewith ("Loan Document(s)") shall together evidence the debt and
constitute the security for the Note.
Events of Default. Maker shall be in default in this Note upon the
occurrence of any of the following events, circumstances or conditions (each an
"Event of Default"):
(a) Maker's failure to make any payment of any sum due
hereunder within ten (10) days of the due date thereof without further notice or
demand, or to make any other payment due by the Maker to the Payee under any
other promissory note or under any security agreement or other written
obligation of any kind now existing or hereinafter created.
(b) The existence of a default or breach of any of the terms
of this Note or any other Loan Document that is not cured within any applicable
grace and/or cure period.
(c) Maker's continued failure to perform any other obligation
imposed upon Maker by the Loan Documents.
(d) Any written representation, statement or warranty of Maker
or any co-signer, endorser, surety or guarantor of the Note, contained in the
Note or any other Loan Document, or in any certificate delivered pursuant
hereto, or in any other instrument or statement made or furnished in connection
herewith, proves to be incorrect or misleading in any material respect as of the
time when the same shall have been made, including, without limitation, any and
all financial statements furnished by Maker to Payee as an inducement to Payee's
making the loan evidenced by the Note or pursuant to any provision of the Loan
Documents which in any such case would have a material adverse effect on Maker.
(e) The dissolution or insolvency of, the appointment of a
receiver by or on the behalf of, the assignment for the benefit of creditors by
or on behalf of, the voluntary or involuntary termination of existence by, or
the commencement under any present or future federal or state insolvency,
bankruptcy, reorganization, composition or debtor relief law by Maker or any
maker, co-signer, endorser, surety or two or more guarantors of the Note or
other obligation.
Remedies after Default. At the option of Payee, all or any part of the
principal and accrued interest on the Note, and all other obligations of the
Maker to the Payee shall become immediately due and payable without additional
notice or demand, upon the occurrence of an Event of Default or at any time
thereafter. Payee may exercise all rights and remedies provided by law, equity,
this Note or any other Loan Document or any other obligation of the Maker to the
Payee. All rights and
4
<PAGE>
remedies as set forth in the Loan Documents are cumulative and concurrent and
may be pursued in a commercially reasonable manner, singly, successively or
together, at the sole discretion of Payee, and may be exercised as often as
occasion therefore shall arise. Such remedies are not exclusive, and Payee is
entitled to all remedies provided at law or equity, whether or not expressly set
forth therein. No act, or omission or commission or waiver of Payee, including
specifically any failure to exercise any right, remedy or recourse, shall be
effective unless set forth in a written document executed by Payee and then only
to the extent specifically recited therein. A waiver or release with reference
to one event shall not be construed as continuing, as a bar to, or as a waiver
or release of, any subsequent right, remedy or recourse as to any subsequent
event.
Right of Set-off. Neither the Maker, any co-signer, endorser, surety
nor guarantor shall have any right of set-off against the Payee under this Note
or under any Loan Document executed in connection with the loan evidenced by
this Note. In addition to the remedies provided for herein, the Maker, each
co-signer, endorser, surety or guarantor grants to the Payee a security interest
in any funds or other assets from time to time on deposit with or in possession
of the Payee, and the Payee may, at any time set-off the indebtedness evidenced
by this Note against any such funds or other assets, including but not limited
to, all money owed by Payee to Maker, each co-signer, endorser, surety or
guarantor whether or not due. Maker, each co-signer, endorser, surety or
guarantor acknowledge and agree that Payee may exercise its right of set-off to
pay all or any part of the outstanding principal balance and accrued interest
owed on this Note or on any other obligation of the Maker to the Payee against
any obligation Payee may have, now or hereafter, to pay money to Maker, each
co-signer, endorser, surety or guarantor. This right of set-off includes, but is
not limited to, the following:
(a) Any deposit, account balance, securities account balance
or certificate of deposit balance Maker has with Payee whether special, general,
time, savings, checking or NOW account; and
(b) Any money owing to Maker on an item presented to Payee or
in Payee's possession for collection or exchange; and
(c) Any repurchase agreement or any other non-deposit
obligation or any credit in favor of Maker.
If any such money is also owned by some other person who has not agreed to pay
this Note (such as another depositor on a joint account), Payee's right of
set-off will extend to the amount which could be withdrawn or paid directly to
Maker on Maker's request, endorsement or instruction alone. In addition, (where
Maker may obtain payment from Payee only with the endorsement or consent of
someone who has not agreed to pay this Note), Payee's right of set-off will
extend to Maker's interest in the obligation. Payee's right of set-off will not
apply to any account if it clearly appears that Maker's rights in the account
are solely as a fiduciary for another or to any account, which by its nature and
applicable law (for example an IRA or other tax deferred retirement account),
must be exempt from the claims of creditors. Maker hereby appoints Payee as its
attorney-in-fact and authorizes Payee to redeem or obtain payment on any
certificate of deposit in which Maker has an
5
<PAGE>
interest in order to exercise Payee's right of set-off. Such authorization
applies to any certificate of deposit even if not matured. Maker further
authorizes Payee to assess and withhold any early withdrawal penalty without
liability against Payee in the event such penalty is applicable as a result of
Payee's set-off against a certificate of deposit prior to its maturity.
Payee's right of set-off may be exercised upon an Event of
Default:
(a) With immediate notification to Maker of such setoff; and
(b) Without regard to the existence or value of any collateral
securing this Note; and
(c) Without regard to the number or creditworthiness of any
other persons who have agreed to pay this Note.
Payee will not be liable for dishonor of a check or other request for payment
where there is insufficient funds in the account (or other obligation) to pay
such request because of Payee's exercise of its right of set-off. Maker agrees
to indemnify and hold Payee harmless from any person's claims, arising as the
result of Payee's right of set-off and the costs and expenses, including without
limitation, attorneys' fees.
Collection Expenses. All parties liable for the payment of the Note
agree to pay the Payee all costs incurred by the Payee, whether or not an action
be brought, in collecting the sums due under the Note, enforcing the performance
and/or protecting its rights under the Loan Documents and in realizing on any of
the security for the Note. Such costs and expenses shall include, but are not
limited to, filing fees, costs of publication, deposition fees, stenographer
fees, witness fees and other court and related costs. Sums advanced by the Payee
for the payment of collection costs and expenses shall accrue interest at the
Penalty Rate, from the time they are advanced or paid by the Payee, and shall be
due and payable upon payment by Payee without notice or demand and shall be
secured by the lien of the Loan Documents.
Attorneys' Fees. All parties liable for the payment of the Note agree
to pay the Payee reasonable attorneys' fees incurred by the Payee, whether or
not an action be brought, in collecting the sums due under the Note, enforcing
the performance and/or protecting its rights under the Loan Documents and in
realizing on any of the security for the Note. Such reasonable attorneys' fees
shall include, but not be limited to, fees for attorneys, paralegals, legal
assistants, and expenses incurred in any and all judicial, bankruptcy,
reorganization, administrative, receivership, or other proceedings effecting
creditor's rights and involving a claim under the Note or any Loan Document,
which such proceedings may arise before or after entry of a final judgment. Such
fees shall be paid regardless whether suit is brought and shall include all
reasonable fees incurred by Payee at all trial and appellate levels including
bankruptcy court. Sums advanced by the Payee for the payment of attorneys' fees
shall be due and payable upon payment by Payee without notice or demand and
shall be secured by the lien of the Loan Documents.
6
<PAGE>
Waiver and Consent. By the making, signing, endorsement or guaranty of
this Note:
(a) Maker and each co-signor, endorser, surety or guarantor
waive protest, presentment for payment, notice of dishonor, notice of intent to
accelerate and notice of acceleration;
(b) Each co-signer, endorser, surety or guarantor consents to
any renewals or extensions of time for payment on this Note;
(c) Maker and each co-signor, endorser, surety or guarantor
consents to Payee's release of any co-signer, endorser, surety or guarantor;
(d) Maker and each co-signor, endorser, surety or guarantor
waive and consent to the release, substitution or impairment of any collateral
securing this Note;
(e) Each co-signer, endorser, surety or guarantor consents to
any modification of the terms of this Note or any other Loan Document;
(f) Maker and each co-signor, endorser, surety or guarantor
consent to any and all sales, repurchases and participations of this Note to or
by any person or entity in any amounts and waive notice of such sales,
repurchases and participations of this Note;
(g) Maker and each co-signor, endorser, surety or guarantor
consent to Payee's right of set-off as well as any participating bank's right of
set-off;
(h) Maker and each co-signor, endorser, surety or guarantor
waive the right of exemption under the Constitution and the laws of the State of
Florida; and
(i) Maker and each co-signor, endorser, surety or guarantor
promise to pay all collection costs, including reasonable attorneys' fees,
whether incurred in connection with collection, trial, appeal or otherwise.
Usury Limitation. The parties agree and intend to comply with the
applicable usury law, and notwithstanding anything contained herein or in any of
the Loan Documents, or other document related to the loan evidenced by this
Note, the effective rate of interest to be paid on this Note (including all
costs, charges and fees which are characterized as interest under applicable
law) shall not exceed the maximum contract rate of interest permitted under
applicable law, as it exists from time to time. Payee agrees not to knowingly
collect or charge interest (whether denominated as fees, interest or other
charges) which will render the interest rate hereunder usurious, and if any
payment of interest or fees by Maker to Payee would render this Note usurious,
Maker agrees to give Payee written notice of such fact with or in advance of
such payment. If Payee should receive any payment which constitutes interest
under applicable law in excess of the maximum lawful contract rate permitted
under applicable law (whether denominated as interest, fees or other charges),
the amount
7
<PAGE>
of interest received in excess of the maximum lawful rate shall automatically be
applied to reduce the principal balance, regardless of how such sum is
characterized or recorded by the parties.
Joint and Several. The obligations of this Note shall be joint and
several. The Maker and all endorsers and all persons liable or to become liable
on this Note consent to any and all renewals and extensions of the time of
payment hereof and further agree that at any time the terms of the payment
hereof may be modified without affecting the liability of any party to this Note
or any person liable or to become liable with respect to any indebtedness
evidenced thereby.
No Obligation to Extend. Except as provided in this Note, on or before
the Maturity Date, Maker must repay the entire principal balance of this Note
and unpaid interest then due. The Payee shall be under no obligation to
refinance the Note at maturity. Maker will therefore be required to make payment
out of other assets Maker may own, or Maker will have to find a lender willing
to lend the money at prevailing market rates, which may be considerably higher
than the interest rate on this Note.
Disclaimer of Relationship. The Maker and all co-signers, endorsers,
sureties and guarantors, if any, to this obligation acknowledge that:
(a) The relationship between the Payee, Maker and any
co-signer, endorser, surety or guarantor is one of creditor and debtor and not
one of partner or joint venturer;
(b) There exists no confidential or fiduciary relationship
between Payee and Maker and any co-signer, endorser, surety or guarantor
imposing a duty of disclosure upon the Payee; and
(c) The Maker and any co-signer, endorser, surety or guarantor
have not relied on any representation of the Payee regarding the merits of the
use of proceeds of the loan.
Maker and any co-signer, endorser, surety or guarantor waive any and all claims
and causes of action which exist now or may exist in the future arising out of
any breach or alleged breach of a duty on the part of the Payee to disclose any
facts material to this loan transaction and the use of the proceeds.
Place of Execution; Choice of Law and Venue. This Note is executed and
delivered in the State of Georgia, and shall be governed by the Laws of the
State of Florida, and the United States of America, whichever the context may
require or permit. The Maker and all guarantors, if any, to this obligation
expressly agree that proper venue for any action which may be brought under this
Note in addition to any other venue permitted by law shall be Orange County,
Florida. Should Payee institute any action under this Note, the Maker and all
guarantors, if any, hereby submit themselves to the jurisdiction of any court
sitting in Florida.
8
<PAGE>
Severability. If any provision of this Note shall be held unenforceable
or void, then such provision shall be deemed severable from the remaining
provisions and shall in no way affect the enforceability of the remaining
provisions nor the validity of this Note.
Maker and Payee Defined. The term "Maker" includes each and every
person or entity signing this Note and any co-signers, guarantors, their
successors and assigns. The term "Payee" shall include the Payee and any
transferee and assignee of Payee or other holder of this Note.
Captions and Pronouns. The captions and headings of the various
sections of this Note are for convenience only, and are not to be construed as
confining or limiting in any way the scope or intent of the provisions hereof.
Whenever the context requires or permits, the singular shall include the plural,
the plural shall include the singular, and the masculine, feminine and neuter
shall be freely interchangeable.
Receipt of Copy. By signing this Note, Maker acknowledges that it was
read by Maker prior to execution and a copy was received by Maker.
Time of the Essence. Time is of the essence with respect to each
provision in this Note where a time or date for performance is stated. All time
periods or dates for performance stated in this Note are material provisions of
this Note.
Waiver of Trial by Jury. The Maker hereby, and the Payee by its
acceptance of this Note, knowingly, voluntarily and intentionally waive the
right either may have to a trial by jury in respect to any litigation arising
out of, under, or in connection with this Note and all Loan Documents and other
agreements executed or contemplated to be executed in connection herewith, or
arising out of, under, or in connection with any course of conduct, course of
dealing, statements (whether verbal or written) or action of either party,
whether in connection with the making of the loan, collection of the loan, or
otherwise. This provision is a material inducement for the Payee making the loan
evidenced by this Note.
Total Liability of Maker. Notwithstanding anything to the contrary in
the Loan Documents, the total liability of each Maker under the Loan Documents
shall not exceed the amount disbursed to or on behalf of such Maker, together
with interest costs and attorney fees.
9
<PAGE>
IN WITNESS WHEREOF, Maker has executed and delivered this instrument
this day and year first above written.
CARROLL FULMER & COMPANY, INC.,
a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC.,
a North Carolina corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
CAPITOL WAREHOUSE, INC.,
a Kentucky corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
SERVICE EXPRESS, INC.,
an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Maker"
10
<PAGE>
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Carroll Fulmer
& Company, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Carolina
Pacific Distributors, Inc., a North Carolina corporation, on behalf of the
corporation. He is personally known to me or has produced
_______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
11
<PAGE>
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Capitol
Warehouse, Inc., a Kentucky corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Philip A. Belyew, as Chairman of the Board of Service
Express, Inc., an Alabama corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
12
<PAGE>
ALLONGE
THIS ALLONGE, made the day and year set forth below, is attached to
and made a part of that certain revolving credit note (the "Note") dated as of
December 18, 1997 in the original principal amount of TWENTY MILLION DOLLARS
($20,000,000.00) made by CARROLL FULMER & COMPANY, INC., a Florida corporation,
whose address is P. O. Box 5000, Groveland, Florida 34736-5000 ("Carroll
Fulmer") and CAROLINA PACIFIC DISTRIBUTORS, INC., a North Carolina corporation,
whose address is 5625 Surrett Drive Extension, Archdale, North Carolina 27263
("Carolina Pacific") and CAPITOL WAREHOUSE, INC., a Kentucky corporation, whose
address is 403 W. Main Street, Frankfurt, Kentucky 40601 ("Capitol Warehouse")
and SERVICE EXPRESS, INC., an Alabama corporation, whose address is P. O. Box
1009, Tuscaloosa, Alabama 35403 ("Service Express") (Carroll Fulmer, Carolina
Pacific, Capitol Warehouse and Service Express are together hereinafter referred
to as the "Maker"), in favor of AMSOUTH BANK, a bank organized under the laws of
Alabama, whose address is Post Office Box 588001, Orlando, Florida 32858 (the
"Payee").
1. Maker is hereby re-defined to include the undersigned together
with Carroll Fulmer, Carolina Pacific, Capitol Warehouse, Service Express and
together with all subsidiaries of Transit Group, Inc., a Florida corporation,
which subsequently enter into an Allonge to the Note.
2. Except as modified in this Allonge, all other terms of the Note
shall remain in full force and effect. The undersigned hereby covenants,
reaffirms and ratifies its obligation to repay the Note to the Payee in
accordance with the terms of the original Note, as modified or restated.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Allonge as of the 14th day of January, 1998.
Signed, sealed and delivered RAINBOW TRUCKING SERVICE, INC.,
in the presence of: an Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
EXHIBIT 99.3
SECURITY AGREEMENT
THIS AGREEMENT, entered into as of the 18th day of December, 1997, by
and between CARROLL FULMER & COMPANY, INC., a Florida corporation, whose address
is P. O. Box 5000, Groveland, Florida 34736-5000, ("Carroll Fulmer") and
CAROLINA PACIFIC DISTRIBUTORS, INC., a North Carolina corporation, whose address
is 517 Townsend Avenue, High Point, North Carolina 27263 ("Carolina Pacific")
and CAPITOL WAREHOUSE, INC., a Kentucky corporation, whose address is 403 W.
Main Street, Frankfurt, Kentucky 40601 ("Capitol Warehouse") and SERVICE
EXPRESS, INC., an Alabama corporation, whose address is P.O. Box 1009,
Tuscaloosa, Alabama 35403 ("Service Express") (Carroll Fulmer, Carolina Pacific,
Capitol Warehouse and Service Express are together hereinafter referred to as
the "Debtor") and AMSOUTH BANK, a bank organized under the laws of Alabama
("Secured Party"), whose address is Post Office Box 588001, Orlando, Florida
32858.
1. Security Interest. In consideration of and as an inducement for
Secured Party's extending credit to Debtor, Debtor hereby gives Secured Party a
continuing and unconditional security interest (the "Security Interest") in the
assets described below, wherever located, and in all parts, accessories,
attachments, additions, replacements, accessions, substitutions, increases,
profits, proceeds (including insurance proceeds) and products thereof in any
form, together with all records relating thereto (the "Collateral"):
All of the Debtors' receivables, including, but not limited to, all
present and future accounts, commissions, contract rights, lease
payment, chattel paper, instruments, documents, tax refunds payable to
Debtors, license fees and proceeds, royalties, insurance proceeds and
general intangibles and all forms of obligations owing, together with
all documents or instruments of title representing the same and rights
in any merchandise or goods which the same represent, together with all
right, title, security and guarantees, with respect to each of the
receivables, including any right of stoppage in transit, whether the
same are now or hereafter owned, and shall include all rights of
Debtors under any patent license agreement, technical assistance
contract, product supply contract, or similar agreement and includes
all trade names, tradmarks, license agreements and all records
pertaining to the accounts, debtors, and collateral and all computer
software relating to the Receivables of Debtors ("Receivables").
The Collateral also includes other assets of the same class or classes
hereafter owned or acquired by Debtor, and Secured Party shall have a security
interest in all such after-acquired property and all parts, accessories,
attachments, additions, replacements, accessions, substitutions, increases,
profits, proceeds and products thereof in any form.
2. Indebtedness Secured. The borrowing relationship between Debtor and
Secured Party is to be a continuing one and is intended to cover numerous types
of extensions of credit, loans, overdraft payments or advances made directly or
indirectly to Debtor, including but not limited to those made under the
Revolving Credit Note. Accordingly, this Agreement and the Security Interest
created by it secures payment of all obligations of any kind owing by Debtor to
Secured Party
1
<PAGE>
whether now existing or hereafter incurred, direct or indirect, arising from
loans, guaranties, endorsements or otherwise, whether related or unrelated to
the purpose of the original extension of credit, whether of the same or a
different class as the primary obligation, and whether the obligations are from
time to time reduced and thereafter increased; including, without limitation,
any sums advanced and any expenses or obligations incurred by Secured Party
pursuant to this Agreement or any other agreement concerning, evidencing or
securing obligations of Debtor to Secured Party, and any liabilities of Debtor
to Secured Party arising from any sources whatsoever (the "Indebtedness").
3. Revolving Loans. Until such time as Debtor receives notice to the
contrary from Secured Party, Debtor may obtain revolving loans, such loans to be
evidenced by a revolving credit note (the "Revolving Credit Note"). The
outstanding principal balance under the Revolving Credit Note may fluctuate up
and down from time to time, but shall not exceed in aggregate principal amount
outstanding at any one time the aggregate face amount of the Revolving Credit
Note.
4. Warranties of Debtor. Debtor warrants and so long as this Agreement
continues in force shall be deemed continuously to warrant that:
(a) Debtor is the owner of its respective Collateral free
of all security interests or other encumbrances;
(b) Debtor is authorized to enter into the Security
Agreement;
(c) The respective Collateral owned by the Debtor
(including Debtor's books and records) is located at
the applicable address of the Debtor first written
above.
(d) Each instrument, account, and chattel paper
constituting the Collateral arises from goods sold or
services rendered by Debtor, is genuine and
enforceable in accordance with its terms against the
party obligated to pay the same ("Account Debtor"),
and no Account Debtor has any defense, setoff, claim
or counterclaim against Debtor;
(e) The amount represented by Debtor to Secured Party as
owing by each Account Debtor or by all Account
Debtors is the correct amount actually and
unconditionally owing by such Account Debtor(s),
except for normal cash discounts as shown on
invoices, contracts or other documents delivered to
Secured Party;
(f) All Receivables are posted currently to Debtor's
books and records; and
(g) Debtor holds in full force and effect all permits,
licenses and franchises necessary for it to carry on
its operations in conformity with all applicable laws
and regulations.
2
<PAGE>
5. Covenants of Debtor. So long as this Agreement has not been
terminated as provided hereafter, Debtor: (a) will defend the Collateral against
the claims of all other persons; will keep the Collateral free from all security
interests or other encumbrances, except the Security Interest; and will not
assign, deliver, sell, transfer, lease or otherwise dispose of any of the
Collateral or any interest therein without the prior written consent of Secured
Party, except that prior to an Event of Default, Debtor may sell inventory in
the ordinary course of Debtor's business; (b) will keep the Collateral,
including Debtor's books and records, at the address specified above until
Secured Party is notified in writing of any change in its location within the
State but Debtor will not remove the Collateral from the State nor change the
location of Debtor's chief executive office without the written consent of
Secured Party; will notify Secured Party promptly in writing of any change in
Debtor's address, name or identity from that specified above; and will permit
Secured Party or its agents to inspect the Collateral; (c) will keep the
Collateral in good condition and repair and will not use the Collateral in
violation of any provisions of this Agreement, any applicable statute,
regulation or ordinance or any policy of insurance insuring the Collateral; (d)
will execute and deliver to Secured Party such financing statements and other
documents, pay all costs including costs of title searches and filing financing
statements and other documents in any public offices requested by Secured Party,
and take such other action Secured Party may deem advisable to perfect the
Security Interest created by this Agreement, including without limitation
placing notations on Debtor's books of account to disclose the Security Interest
in the Receivables; (e) will pay all taxes, assessments and other charges of
every nature which may be levied or assessed against the Collateral; (f) will
immediately upon receipt deliver to Secured Party, properly endorsed or
assigned, all instruments and chattel paper constituting Collateral, and any
security for or guaranty of any of the Collateral; (g) will post all Receivables
to Debtor's books and records immediately upon the creation thereof; (h) will
not do business under any name or style other than that indicated on the first
page thereof; and (i) if any certificate of title may be issued with respect to
any of the Collateral, will cause Secured Party's interest under this Agreement
to be noted on the certificate and will deliver the original certificate to
Secured Party.
6. Records, Reports and Documents. Debtor shall segregate its books and
records relating to the Collateral from all of Debtor's other books and records
in a manner satisfactory to Secured Party; and shall promptly deliver to Secured
Party upon request all invoices, original documents of title, contracts, chattel
paper, instruments and any other writings relating thereto, and all other
evidence of the performance of contracts, shipment or delivery of merchandise,
or the rendering of services; and Debtor will promptly deliver to Secured Party
at Secured Party's request such other information with respect to any of the
Collateral as Secured Party may in its sole discretion deem to be necessary or
desirable to evidence, confirm or protect Secured Party's interest in the
Collateral. Secured Party, or its representatives, at any time from time to
time, shall have the right, and Debtor will permit, or will instruct any third
party having possession or maintaining any of the following to permit, Secured
Party or its representatives: (a) to examine, check, make copies of or extracts
from, any of Debtor's books, records and files (including, without limitation,
orders and original correspondence); (b) to verify the Collateral or any portion
thereof or the Debtor's compliance with the provisions of this Agreement. Debtor
agrees to immediately notify Secured Party of a default in payment by, or the
insolvency or bankruptcy of, any Account Debtor from whom an account receivable
is included as an eligible receivable by Lender, or of the occurrence of any
3
<PAGE>
event which would adversely affect the value of any Collateral. Debtor further
agrees to furnish to Secured Party at Debtor's own cost and expense, at such
intervals as Secured Party may establish from time to time, copies of reports,
financial data and analysis satisfactory to Secured Party.
7. Default. (a) Any of the following shall constitute in event of
default ("Event of Default"): (i) the occurrence of any event of default under
that certain Advised Revolving Line of Credit Agreement or Revolving Credit Note
of even date herewith between Debtor or Secured Party; (ii) any attachment or
levy against the Collateral or any other occurrence which inhibits Secured
Party's free access to the Collateral.
(b) Upon the happening of any Event of Default, Secured
Party's rights with respect to the Collateral shall be those of a secured party
under the Uniform Commercial Code and any other applicable law in effect from
time to time. Secured Party shall also have any additional rights granted herein
and in any other agreement now or hereafter in effect between Debtor and Secured
Party. If requested by Secured Party, Debtor will assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party.
(c) Debtor agrees that any notice by Secured Party of the sale
or disposition of the Collateral or any other intended action hereunder, whether
required by the Uniform Commercial Code or otherwise, shall constitute
reasonable notice to Debtor if the notice is mailed by regular or certified
mail, postage prepaid, at least ten days before the action to Debtor's address
as specified in this Agreement or to any other address which Debtor has
specified in writing to Secured Party as the address to which notices shall be
given to Debtor. Debtor shall be liable for any deficiencies in the event the
proceeds of disposition of the Collateral do not satisfy the Indebtedness in
full.
8. Miscellaneous. (a) Debtor authorizes Secured Party at Debtor's
expense to file any financing statements relating to the Collateral (without
Debtor's signature thereon) which Secured Party deems appropriate and Debtor
appoints Secured Party as Debtor's attorney-in-fact to execute any such
financing statements in Debtor's name and to perform all other acts which
Secured Party deems appropriate to perfect and to continue perfection of the
Security Interest.
(b) Debtor agrees that in addition to the other rights of
Secured Party hereunder, Secured Party shall have a security interest in any
deposit accounts of Debtor with Lender, and in any securities or other property
of Debtor in the possession of Secured Party or any of its affiliates, and
Secured Party may apply or set off the same against the Indebtedness in such
manner as Secured Party in its sole discretion shall determine.
(c) Debtor hereby irrevocably consents to any act by Secured
Party or its agents in entering upon any premises for the purposes of either (i)
inspecting the Collateral or (ii) taking possession of the Collateral after any
Event of Default; and Debtor hereby waives its right to assert against Secured
Party or its agents any claim based upon trespass or any similar cause of action
for entering upon any premises where the Collateral may be located.
4
<PAGE>
(d) Debtor agrees that Secured Party assumes no liability or
responsibility for the correctness, genuineness or validity of any instruments,
documents or chattel paper which may be released or endorsed to Debtor by
Secured Party, all of which shall automatically be deemed to be without recourse
to Secured Party, nor for the existence, quantity, quality, condition, value or
delivery of any goods represented thereby, and Debtor agrees to indemnify and
hold Secured Party harmless with respect to any claims or liabilities arising in
connection therewith.
(e) Debtor authorizes Secured Party to collect and apply
against the Indebtedness any refund of insurance premiums or any insurance
proceeds payable on account of the loss or damage to any of the Collateral and
appoints Secured Party as Debtor's attorney-in-fact to endorse any check or
draft representing such proceeds or refunds.
(f) Upon Debtor's failure to perform any of its duties
hereunder, Secured Party may, but it shall not be obligated to, perform any of
such duties and Debtor shall forthwith upon demand reimburse Secured Party for
any expenses incurred by Secured Party in so doing. Secured Party may at its
option treat the payment of such expenses as advances under the Revolving Credit
Note.
(g) No delay or omission by Secured Party in exercising any
right hereunder or with respect to any Indebtedness shall operate as a waiver of
that or any other right, and no single or partial exercise of any right shall
preclude Secured Party from any other or further exercise of the right or the
exercise of any other right or remedy. Secured party may cure any Event of
Default by Debtor in any reasonable manner without waiving the Event of Default
so cured and without waiving any other prior or subsequent Event of Default by
Debtor. All rights and remedies of Secured Party under this Agreement and under
the Uniform Commercial Code shall be deemed cumulative.
(h) Secured Party shall exercise reasonable care in the
custody and preservation of the Collateral to the extent required by law and it
shall be deemed to have exercised reasonable care if it takes such action for
that purpose as Debtor shall reasonably request in writing; however, no omission
to do any act not requested by Debtor shall be deemed a failure to exercise
reasonable care and no omission to comply with any requests by Debtor shall of
itself be deemed a failure to exercise reasonable care. Secured Party shall have
no obligation to take and Debtor shall have the sole responsibility for taking
any steps to preserve rights against all prior parties to any instrument or
chattel paper in Secured Party's possession as Collateral or as proceeds of the
Collateral. Debtor waives notice of dishonor and protest of any instrument
constituting Collateral at any time held by Secured Party on which Debtor is in
any way liable and waives notice of any other action taken by Secured Party.
(i) Debtor authorizes Secured Party without affecting
Debtor's obligations hereunder from time to time (i) to take from any party and
hold collateral (other than the Collateral) for the payment of the Indebtedness
or any part thereof, and to exchange, enforce or release such collateral or any
part thereof, (ii) to accept and hold the endorsement or guaranty of payment of
the Indebtedness or any part thereof and to release or substitute any such
endorser or guarantor or any party who has given any security interest in any
collateral as security for the payment of the Indebtedness or any part thereof
of any party in any way obligated to pay the Indebtedness or any part
5
<PAGE>
thereof; and (iii) upon the occurrence of any Event of Default to direct the
manner of the disposition of the Collateral and any other collateral and the
enforcement of any endorsements or guaranties relating to the Indebtedness or
any part thereof as Secured Party in its sole discretion may determine.
(j) Upon an Event of Default by Debtor, Secured Party may
demand, collect and sue for all proceeds (either in Debtor's name or Secured
Party's name at the latter's option), with the right to enforce, compromise,
settle or discharge any proceeds. Furthermore, Debtor appoints Secured Party or
any other person designated by Secured Party as Debtor's attorney-in-fact, with
power: (i) to endorse Debtor's name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into Secured
Party's possession; (ii) to sign Debtor's name on any invoice or bill of lading
relating to any Receivables, on drafts against Account Debtors, on schedules and
assignments of Receivables, on notices of assignment, financing statements and
other public records, on verifications of accounts, and on notices to Account
Debtors; (iii) to receive, open and dispose of all mail addressed to Debtor that
may come into Secured Party's possession pursuant to the lockbox arrangement;
(iv) to send requests for verification of Receivables to Account Debtors; and
(v) to do all things necessary to carry out this Agreement. Neither the Secured
Party nor its designee will be liable for any acts or omissions nor for any
error of judgment or mistake of fact or law in the exercise of the power granted
hereby. This power, being coupled with an interest, is irrevocable so long as
any Receivables assigned to Secured Party or in which Secured Party has a
Security Interest remain unpaid or until the Indebtedness has been paid in full.
(k) Debtor agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay and hold Secured Party harmless
against liability for the payment of all out-of pocket expenses arising in
connection with this transaction, including any state documentary stamp taxes or
other taxes (together with interest and penalties, if any) which may be
determined to be payable with respect to the execution and delivery of any
documents contemplated hereby, and the reasonable fees and expenses of counsel
for Secured Party. If an Event of Default shall occur, Debtor shall also pay all
of Secured Party's costs of collection, including repossession, storage and
disposition costs, employee travel expenses, court costs and reasonable
attorney's fees, whether incurred in connection with collection, trial, appeal
or otherwise.
(l) The rights and benefits of Secured Party under this
Agreement shall, if Secured Party agrees, inure to any party acquiring an
interest in the Indebtedness or any part thereof.
(m) The terms "Secured Party" and "Debtor" as used in this
Agreement include the successors or assigns of those parties.
(n) If more than one Debtor executes this Agreement, the term
"Debtor" includes each of the Debtors as well as all of them, and their
obligations under this Agreement shall be joint and several.
(o) This Agreement may not be modified or amended nor shall
any provision of it be waived except in writing signed by Debtor and by an
authorized officer of Secured Party.
6
<PAGE>
(p) This Agreement shall be construed under the Florida
Uniform Commercial Code and any other applicable laws in effect from time to
time.
(q) Unless otherwise specified in this Agreement,
communication provided for herein shall be delivered or sent by first class
mail, postage prepaid, to the respective addresses set forth on the first page
hereof, or to such other address as either party shall notify the other in
writing, and shall be deemed effective when deposited in the United States
mails.
(r) Debtor has not, within the five-year period immediately
preceding the execution hereof, done business under any name or style other than
that designated in the first page of this Agreement.
9. WAIVER. IF AN EVENT OF DEFAULT SHOULD OCCUR, DEBTOR WAIVES ANY RIGHT
DEBTOR MAY HAVE TO NOTICE AND A HEARING BEFORE SECURED PARTY TAKES POSSESSION OF
THE COLLATERAL BY SELF-HELP, REPLEVIN, ATTACHMENT, SETOFF OR OTHERWISE.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered CARROLL FULMER & COMPANY, INC.,
in the presence of: a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC.
a North Carolina corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
7
<PAGE>
CAPITOL WAREHOUSE, INC.,
a Kentucky corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
SERVICE EXPRESS, INC.,
an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Debtor"
AMSOUTH BANK, a bank organized under
the laws of Alabama
By: /s/ Anthony Stiffler
Anthony Stiffler,
Vice President
"Secured Party"
8
EXHIBIT 99.4
JOINDER TO ADVISED REVOLVING LINE OF CREDIT AGREEMENT
AND
JOINDER TO SECURITY AGREEMENT
The undersigned, a subsidiary of Transit Group, Inc., a Florida
corporation, hereby joins in that certain Advised Revolving Line of Credit
Agreement dated as of December 18, 1997 (the "Loan Agreement") by and between
AmSouth Bank, a bank organized under the laws of Alabama ("Lender"), Borrower
and the Guarantor (each as defined in the Loan Agreement), and agrees to be
bound by all of the terms of the Loan Agreement, together with any amendments,
modifications and restatements thereof, which terms are applicable to the
undersigned.
The undersigned further joins in that certain Security Agreement
dated as of December 18, 1997 (the "Security Agreement") by and between Lender,
Borrower and the Guarantor (each as defined in the Loan Agreement), and agrees
to be bound by all of the terms of the Security Agreement, together with any
amendments, modifications and restatements thereof, which terms are applicable
to the undersigned.
The undersigned further warrants that it is a corporation duly
organized and existing under the laws of the State of Indiana and is duly
qualified to do business in the States of Indiana, Kentucky and in each
jurisdiction where the failure to be so qualified would have a material adverse
effect on Borrower. To the best of the undersigned's knowledge and belief, it is
in material compliance with all applicable laws and regulations governing the
conduct of its business and governing consummation of the transactions and its
principal place of business is located in the State of Kentucky.
Dated as of the 14th day of January, 1998.
Signed, sealed and delivered RAINBOW TRUCKING SERVICES, INC.,
in the presence of: an Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
EXHIBIT 99.5
TRANSIT GROUP OBTAINS $20 MILLION CREDIT FACILITY
December 19, 1997 12:26 PM EST
ATLANTA--(BUSINESS WIRE)-- Dec. 19, 1997 -- Transit Group, Inc. (Nasdaq Small
Cap: TRGP) today announced that it has finalized a $20 million revolver/term
credit facility with Birmingham, Alabama-based AmSouth Bank N.A. The new credit
facility, which provides Transit Group with LIBOR or prime-rate pricing options
and is secured by accounts receivable, expires in May 2000.
"We are pleased to establish this relationship with AmSouth, which we believe
signifies growing recognition of our consolidation strategy in the trucking
industry" said Transit Group's President and Chief Executive Officer, Philip A.
Belyew. "This new facility will provide important support to our acquisition
program going forward, substantially increasing our capacity to fund future
transactions. In addition, this facility will augment our working capital needs
as we continue to expand."
Belyew noted that the Company's new credit facility would be used immediately to
retire approximately $5 million outstanding under a line of credit issued for
one of Transit Group's operating subsidiaries. No charges or penalties will be
incurred in this early repayment of the Company's subsidiary debt.
During 1997 and since Transit Group began to implement its consolidation
strategy, the Company has acquired four trucking companies across the Southeast,
including Carroll Fulmer Group, Inc. in Groveland, Florida; Carolina Pacific
Distributors in Highpoint, North Carolina; Capitol Warehouse in Louisville,
Kentucky; and Service Express in Tuscaloosa, Alabama. These acquisitions
represent total annual revenues in excess of $100 million. In addition, the
Company recently announced that it has entered into an agreement to acquire
Rainbow Trucking in Louisville, Kentucky, which has annual revenues of
approximately $12.5 million. This acquisition, which is subject to due diligence
and other conditions, is expected to close by year's end.
Comments in this news release regarding the Company's business which are not
historical facts are forward looking statements that involve risks and
uncertainties. Among these risks are that the Company is in a highly competitive
business, has history of operating losses, and is pursuing a growth strategy
that relies in part on the completion of acquisitions of companies in the
trucking industry. There can be no assurance that in its highly competitive
business environment, the Company will successfully improve its operating
profitability or consummate such acquisitions.
Transit Group, headquartered in Atlanta, Georgia, is a holding company in the
business of acquiring and consolidating short- and long-haul trucking companies,
particularly truckload carriers based in the southeastern United States.
Trucking companies that operate as part of Transit Group are located in Alabama,
Florida, Kentucky and North Carolina, and comprise a fleet of more than 400
trucks and 1,000 trailers, serving customers nationwide.
