SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For
the fiscal year ended December 31, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number: 000-18601
TRANSIT GROUP, INC.
(Name of small business issuer in its charter)
State of Florida 59-2576629
- ------------------------------- ----------------------------------
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
2859 Paces Ferry Road, Suite 1740, Atlanta, GA 30339
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number including area code: (770) 444-0240
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of Exchange on which registered
Common Stock NASDAQ SmallCap Market
Warrants NASDAQ SmallCap MArket
(two warrants entitle the holder to
purchase at a price of $7.50 per share,
one share of common stock)
Check whether issuer (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No __
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB.[ ]
Issuer's revenues for the year ended December 31, 1998: $177,552,961
The aggregate market value of the voting common stock held by the non-affiliates
of the registrant was $117,210,000 based on the closing sale price reported on
March 26, 1999.
There were 26,046,682 shares of the Company's common stock outstanding as of
March 26, 1999.
Transitional Small Business Disclosure Format (Check one): Yes No X
Documents Incorporated by Reference: Portions of the Proxy Statement for the
Registrant's 1999 Annual Meeting of Shareholders are incorporated by reference
into Part III.
<PAGE>
PART I
Item 1. BUSINESS
Introduction
Transit Group, Inc. ("TGI" or the "Company") is a holding company concentrating
on the acquisition, consolidation, and operation of short and long haul trucking
companies. The Company believes that many of these smaller companies would
benefit from an affiliation with a larger organization such as TGI in order to
realize certain operating efficiencies as well as realize the full value of
their company.
Forward-Looking Statement
This Annual Report on Form 10-K contains certain forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995, including or
related to our future results (including certain projections and business
trends).
These and other statements, which are not historical facts, are based largely on
current expectations and assumptions of management and are subject to a number
of risks and uncertainties that could cause actual results to differ materially
from those contemplated by such forward-looking statements. Assumptions related
to forward-looking statements include that we will continue to be competitive
and that our acquisition strategy will remain successful and that we will retain
key personnel and that competitive conditions within our markets will not change
materially or adversely.
Assumptions relating to forward-looking statements involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control. When
used in this Annual Report, the words "estimate," "project," "intend," and
"expect" and similar expressions are intended to identify forward-looking
statements. Although we believe that assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the results contemplated in the
forward-looking information will be realized. Management decisions are
subjective in many respects and susceptible to interpretations and periodic
revisions based on actual experience and business developments, the impact of
which may cause us to alter our business strategy or capital expenditure plans
which may, in turn, affect our results of operations. In light of the
significant uncertainties inherent in the forward-looking information included
herein, the inclusion of such information should not be regarded as our
representation that any strategy, objectives or other plans will be achieved.
The forward-looking statements contained in this Annual Report speak only as of
the date of this Annual Report, and we do not have any obligation to publicly
update or revise any of these forward-looking statements. Any forward looking
statements should be read in conjunction with the risk factors contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 10 herein.
Industry Overview
The trucking industry can be divided into four general categories: Package
Delivery, Less-than-Load, Household Goods, and Truckload ("TL"). The Company
operates in the TL segment of the trucking industry, which is highly fragmented
with over 300,000 companies.
Over the past several years the following trends have evolved in the TL segment:
- Shippers are limiting the number of carriers to larger more
efficient trucking companies who can provide a consistent level of
service at a competitive price.
- Companies are outsourcing their shipping needs to trucking
companies who can offer a full range of logistic services.
- The advent of just-in-time inventory systems has demanded
significant levels of technology to provide reliable time-definite
service.
The Company believes that its size, range of services offered and continued
growth will enable it to take advantage of these trends in the TL segment of the
trucking industry. Based on industry statistics, management believes that it is
the ninth largest truckload carrier in North America.
<PAGE>
History and Development
Transit Group, Inc. was incorporated on August 28, 1985 as General Parcel
Service, Inc., a Florida corporation engaged in the parcel delivery business.
The Company began operations in Jacksonville, Florida and expanded into Georgia,
North Carolina and South Carolina. Due to unprofitable operations, the Company
ceased parcel delivery in March 1997.
In January 1997, TGI was reorganized into a holding company structure and began
the acquisition of mid-size short and long haul trucking companies. The Company
acquired 11 companies during the period from July 1997 through December 1998 and
three additional companies during the first quarter of 1999.
Acquisitions
The Company is building a national trucking company by acquiring TL carriers,
which meet certain criteria. Initially, the Company's primary source of
acquisition candidates was brokers. Currently, the primary source of acquisition
candidates is through referrals.
The Company seeks to identify for acquisition trucking companies with the
following attributes:
- Profitable
- Revenues in excess of $10 million
- Strong market position
- Sound management with key personnel committed to the Company's
strategy
- Commitment to a high level of quality and service
The Company's expansion plans are dependent upon the availability of, among
other things, suitable acquisition candidates, adequate financing, qualified
personnel, and TGI's future operations and financial condition. When identified,
a potential candidate is evaluated on its ability to open new lanes and
geographic areas or its capacity to exploit existing markets, customers, and
lanes.
If it is determined that the candidate will be a "fit," certain financial
screens are utilized to further evaluate potential acquisitions. The Company has
sought to acquire companies principally on a multiple of pre-tax income and
EBITDA (earnings before interest, taxes, depreciation, and amortization.) If the
target passes these screens, the Company will perform its operational,
financial, legal, and environmental due diligence procedures. Depending upon the
complexity of the organization and time devoted to negotiating the purchase
price, it can take from three to six months to consummate an acquisition.
The Company has acquired the following 14 companies since July 1997.
Date
Company Acquired
- ----------------------------------- --------
Carolina Pacific Distributors, Inc. 07/11/97
Service Express, Inc. (1) 08/16/97
Capitol Warehouse, Inc. 08/16/97
Carroll Fulmer Group, Inc. (2) 08/30/97
Rainbow Trucking, Inc. (3) 12/30/97
Transportation Resources and Management, Inc. (4) 01/31/98
Certified Transport, Inc. (5) 05/05/98
KJ Transportation, Inc. 06/17/98
Network Transportation, Inc. 07/13/98
Diversified Trucking, Inc. 08/05/98
Northstar Transportation, Inc. 08/11/98
Priority Transportation, Inc. 01/19/99
Massengill Trucking Service, Inc. 03/03/99
KAT, Inc. 03/22/99
(1) In connection with the acquisition of Service Express, the Company
granted the selling shareholders the right, through August 15, 1998, to
require the Company to redeem $1.8 million of the shares that they
received. Through December 31, 1998, these shareholders sold certain
shares in a private transaction for a price of $0.4 million. In the
first quarter of 1999, the shareholders sold a portion of these shares
to a third party and the Company acquired the remaining shares for an
aggregate price of $1.4 million.
<PAGE>
(2) In connection with the acquisition of Carroll Fulmer, the Company
granted the selling shareholders the right to require that either the
Company redeem or a major shareholder of the Company acquire up to $6.0
million of stock at a price of $3.60 per share. These redemption rights
expire August 29, 2003. Through December 31, 1998, the Company has
redeemed $75,000 in stock from a selling shareholder and the
shareholders have sold shares in a private transaction for
approximately $2.25 million, thereby reducing the Company's remaining
obligation to approximately $3.675 million.
(3) The Company has made loans to certain selling shareholders in the
aggregate amount of $675,000, which are due on June 30, 1999. If the
average closing price per share of the Company's common stock for the
period June 23, 1999 through June 29, 1999 is less than $6.625 per
share, the notes shall be non-recourse to such extent and the debtor
shall not be personally liable for such deficiency, but the Company
shall be entitled to a return of a proportionate amount of the
Company's stock.
(4) A $0.2 million recourse loan, due April 30, 1999, was made to a
selling shareholder.
(5) A $0.4 million recourse loan, due November 4, 1999 was made to a
selling shareholder.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Operations
The Company's business operations are divided between the corporate office
located in Atlanta, Georgia and its operating divisions and locations. The
corporate office is responsible for the overall direction of the Company's
operations, information systems, finance, banking, human resources, and
financial reporting.
Carolina Pacific Distributors ("Carolina Pacific") - Founded in 1977 and
headquartered in High Point, North Carolina, Carolina Pacific provides dry van
and refrigerated transportation services between major markets in the Carolinas
and the West Coast. Carolina Pacific transports a variety of general
commodities, including textiles and tobacco, and serves as a carrier for the
produce industry.
Service Express ("Service Express") - Service Express, founded in 1963, is
headquartered in Tuscaloosa, Alabama. Service Express operates primarily in the
Southeastern United States and transports a variety of general commodities,
including paper, resins, magnetic tapes and chemicals.
Transit Leasing, formerly known as Capitol Warehouse ("Capitol Warehouse") -
Located in Louisville, Kentucky, Transit Leasing operated both a trucking
segment and a warehousing segment. During fiscal 1998 the trucking operations
were merged into those of Rainbow Trucking (see below) and the warehouse
component was phased out and terminated on March 15, 1999.
Carroll Fulmer Group ("Carroll Fulmer") - Carroll Fulmer is a general
commodities hauler headquartered in Groveland, Florida. Carroll Fulmer operates
primarily through 19 agent offices. Approximately 45% of its revenues are
generated through brokerage operations and the balance through owner/operators
and company owned equipment. Carroll Fulmer transports, among other items,
beverages, household goods and foodstuffs.
Rainbow Trucking Services, Inc. ("Rainbow") - Rainbow was founded in 1982 and is
headquartered in Louisville, Kentucky. During 1998, the trucking operations of
Capitol Warehouse, Hawks Enterprises and T.W. Transport, Inc. were merged into
Rainbow. Rainbow transports a wide range of general commodities, including
plastics, paper and glass throughout the United States.
Transportation Resources and Management ("TRM") - Founded in 1979, TRM is
headquartered in Fort Wayne, Indiana. TRM operates primarily in the Midwest
(Northern Indiana, Ohio, Illinois, Michigan) and transports a variety of general
commodities, including copper wire and carpet padding.
Certified Transport ("Certified") - Headquartered in Indianapolis, Indiana,
Certified began operations in 1991. Certified's lanes are primarily in the
Midwest and Canada. Certified maintains a logistics division in addition to its
trucking operation, which services the automotive, wrapping and air cargo
industries.
<PAGE>
KJ Transportation ("KJ") - KJ is located in Farmington, New York. KJ operates
several divisions including, a brokerage division, which generates approximately
29% of their revenue, and a trucking division, which can be divided between a
dry van and a refrigerated division. A maintenance division, which services the
equipment of certain Transit Group companies in addition to third parties and a
truck leasing operation, are conducted through J&L Truck Leasing of Farmington,
Inc. The trucking division operates throughout the U.S. with primary lanes from
the Northeast to the Southeast and from the Northeast to the West Coast. KJ
transports a variety of commodities with particular emphasis in the food and
beverage industries.
Network Transportation ("Network") - Network was the Company's first acquisition
outside the U.S. Network operates a fleet of dry van and refrigerated units and
services the food industry primarily in the Toronto - Montreal corridor with
limited service to the Northern U.S.
Diversified Trucking ("Diversified") - Diversified operates out of Opelika,
Alabama and is a carrier for the apparel, paper and consumer goods industries.
Northstar Transportation ("Northstar") - Northstar is headquartered in Dothan,
Alabama. Northstar services the food, paper, and industrial products industries.
Northstar is the third company acquired by the Company in Alabama.
Priority Transportation, Inc. ("Priority") - Priority, located in northeastern
Mississippi, was acquired in January 1999 and is a carrier for the consumer
electronics, paper, and paint industries. Priority also maintains warehouse and
cross dock facilities for its customers.
Massengill Trucking Service, Inc. ("Massengill") - Massengill was acquired in
March 1999. Organized in 1950, Massengill is a carrier for the furniture
industry, servicing the Midwest and Northeast.
KAT, Inc. ("KAT") - Headquartered in Chesterton, Indiana, KAT was acquired in
March 1999. Approximately 65% of its revenue is derived from its refrigerated
division. KAT's primary operational area is east/west from Denver, Colorado to
upstate New York. KAT is a carrier for the food industry.
Effective January 1, 1999, all of the subsidiaries acquired in 1997 and 1998,
with the exception of Rainbow, Carroll Fulmer & Co., Inc. (a former subsidiary
of Carroll Fulmer Group), J&L Truck Leasing of Farmington, Inc., and Network,
were merged into a newly formed wholly-owned subsidiary of Transit Group, Inc.,
named Transit Group Transportation, LLC ("TGT"). The Company anticipates that
the merger of these entities into one operating subsidiary will reduce legal,
accounting and permitting costs, as well as facilitate access to fleet
information, which may enhance revenue per mile and reduce deadhead miles.
Furthermore, the Company anticipates that Rainbow, Massengill, and KAT will be
merged into TGT in the second half of 1999. The operations of Priority,
purchased in January 1999, have been transferred to TGT.
Information Technology
Operations Software. The Company is in the process of converting its operations
to a single software platform. Approximately 50% of the operations were
converted during 1998, with completion for the remaining divisions scheduled for
the second half of 1999. Priority and KAT already utilize the same software and
will not require a major conversion.
It is anticipated that by the end of 1999 TGI's divisions will be operating
under a common billing, dispatch, settlement, and fleet monitoring system. The
Company believes a common operating system will further facilitate load
matching, enhance equipment utilization, and increase revenue per mile.
Communications. The Company is committed to installing satellite communications
and monitoring equipment throughout its fleet during 1999. During 1998, the
Company agreed to acquire 3,000 units from a leading communications software
vendor in the transportation industry over a three-year period. To date
approximately 88% of the Company's trucks are utilizing communication software.
Communication between dispatch and drivers is required by many national shipping
customers and is anticipated to maximize driver efficiency.
Web Site. A company-wide web site is currently being built for TGI. The site
will offer traditional information such as Company background, services offered,
and financial information. In addition, the site will allow customers, after
meeting certain security criteria, to interface with the Company's
communications software to determine the location and arrival time of their
shipment. The Company's web site will significantly enhance customer service by
allowing real-time access 24 hours a day to a customer's shipments.
<PAGE>
Corporate Services
The Company's operations, sales, marketing, dispatch, customer service, and
customer relations functions operate on a decentralized basis. The Company
periodically holds meetings for its various departments in order to share best
practices and explore business opportunities.
Accounting, legal, financial reporting, banking, fleet purchasing, fleet
maintenance, cash management, risk management, and human resource functions have
been and/or continue to be consolidated in the recently formed Corporate
Services Division of TGT. By consolidating these functions, the Company believes
it can reduce legal, accounting, tax, insurance and equipment costs.
Fleet Summary
The Company has a policy to trade-in power units on a 3-4 year cycle (400,000 -
500,000 miles) and trailers approximately every 8 years. A summary of TGI's
fleet is as follows (number of units):
December 31,
-----------------------------------------------
1998 1997
--------------------- -------------------
Company Trucks 1,401 434
Owner/Operators 566 291
--------------------- -------------------
Total Power Units 1,967 725
===================== ===================
Trailers 3,921 1,150
===================== ===================
Debt Conversion
In May 1997, the Company agreed to a debt-for-equity conversion that reduced the
Company's long-term debt. T. Wayne Davis, Chairman of the Board, and his
affiliates assumed approximately $4.7 million of the Company's debt in exchange
for 2.7 million shares of the Company's common stock. In May 1997, the Company
also received a capital infusion of approximately $1.2 million from Messrs.
Davis and Belyew in exchange for the issuance of an aggregate of 687,000 shares
of restricted common stock of the Company.
Discontinued Operations
In December 1997, the Company sold the parcel delivery business to a corporation
controlled by affiliates of the Company's Chairman. In this transaction, the
buyer assumed liabilities of approximately $4.0 million in excess of assets. To
compensate for the excess liabilities assumed by the buyer, the Company issued
876,569 shares of restricted common stock to the buyer.
Competition
The trucking industry is highly competitive and subject to pressures from major
business cycles. Management believes that competition in the trucking industry
is based primarily on service and efficiency, and to a lesser extent, prices.
The shipping requirements of "just-in-time" inventory systems demand
geographically diverse trucking companies with well-developed tracking and
dispatching information systems. The Company anticipates that the trucking
industry will continue to consolidate and remain extremely competitive for both
customers and qualified personnel. Management believes that TGI's current size
and anticipated growth will allow it to participate in the consolidating
trucking industry. However, there is significant disparity in the revenues and
financial resources of the largest trucking companies compared with those of the
Company, and there is no assurance that the Company can continue to maintain its
growth.
The Company competes with trucking companies located in the market areas served
by its divisions. Management believes that there is not a dominant competitor in
the trucking industry that competes directly with the Company.
<PAGE>
Potential Liability
Potential liability associated with accidents in the trucking industry is severe
and occurrences are unpredictable. The industry is also subject to substantial
workers' compensation expense. A material increase in the frequency or severity
of accidents, workers' compensation claims, or an unfavorable development of
existing claims can be expected to adversely affect the Company's operating
income. Management believes that the Company has insurance coverage sufficient
to cover most expected losses.
Marketing
The Company markets its services through its own sales force and a developed
network of brokers and agents operating throughout the United States.
Regulation
Prior to 1995, the Company was regulated by the Interstate Commerce Commission
("ICC"). Effective January 1, 1995, the ICC was eliminated and substantially all
of its key functions were transferred to the Department of Transportation
("DOT"). The DOT governs such activities as drug and alcohol testing, hours of
service, rates, insurance, reporting, and accounting systems.
The Company is also subject to the regulations promulgated by the Environmental
Protection Agency and similar state regulatory agencies regarding environmental
laws and regulations. These agencies address matters concerning the management
of hazardous wastes, the discharge of pollutants into the air, surface, and
underground waters, and the disposal of certain substances. Violation of certain
applicable laws and regulations could result in clean-up costs, property damage,
and other fines or penalties. Management believes that its operations are in
material compliance with current laws and regulations.
Employees
The Company and its subsidiaries employ approximately 2,000 employees, of which
approximately 1,400 are drivers, 130 work in various garage facilities, and 470
work in administrative and operational capacities at the divisional locations
and in the corporate office. None of the Company's employees are covered by
collective bargaining agreements, and the Company believes that its relationship
with its employees is satisfactory.
Item 2. PROPERTIES
The Company has operations at the following locations:
Lease/
Location Own
------------------------------------- --------------------
High Point, North Carolina Lease
Louisville, Kentucky Lease
Tuscaloosa, Alabama Lease
Groveland, Florida Own
Fort Wayne, Indiana Lease
Indianapolis, Indiana(1) Lease
Farmington, New York Lease
Mississauga, Canada Lease
Opelika, Alabama Lease
Dothan, Alabama Lease
Olive Branch, Mississippi(1) Lease
Hickory Flat, Mississippi Own
Chesterton, Indiana Lease
(1) Includes warehouse facilities.
The Company believes that its facilities are adequate and suitable for their
respective uses.
Item 3. LEGAL PROCEEDINGS
Neither the Company nor its subsidiaries or divisions is subject to any pending
legal proceedings other than routine litigation that is incidental to its
business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the NASDAQ SmallCap Market under the
trading symbol "TRGP." The Company's warrants are also traded on the NASDAQ
SmallCap Market, under the trading symbol "TRGPW." As of March 26, 1999, there
were 406 shareholders of record of the common stock and 13 warrant holders of
record, not including individuals and entities holding shares in street name.
The closing sale price for the Company's common stock on March 26, 1999, was
$4.50, and the closing price of the Company's warrants was $1.44.
The quarterly high and low closing bid prices of the Company's common stock are
shown below:
Market Price of Common Stock - TRGP
1999(1) 1998 1997
------------------ ------------------ ------------------
Quarter High Low High Low High Low
First $5.250 $4.000 $6.500 $5.000 $5.000 $2.750
Second ---- ---- 8.000 5.875 5.250 1.625
Third ---- ---- 7.875 3.250 7.625 5.000
Fourth ---- ---- 6.000 3.125 7.500 6.000
(1) For 1999 includes through March 26, 1999.
The quarterly high and low closing bid prices of the Company's warrants are
shown below:
Market Price of Warrants - TRGPW
1999(1) 1998 1997
------------------ ------------------ ------------------
Quarter High Low High Low High Low
First $1.625 $1.438 $2.500 $1.625 $1.125 $ .750
Second ---- ---- 1.750 1.500 1.375 .813
Third ---- ---- 1.688 1.563 1.875 1.375
Fourth ---- ---- 1.563 1.563 2.125 1.875
(1) For 1999 includes through March 26, 1999.
The Company has not declared any dividends and does not expect to pay cash
dividends in the foreseeable future. Future dividend policy will be determined
by the Company's Board of Directors based on the conditions then existing,
including the Company's financial condition, capital requirements, cash flow,
profitably, business outlook, general economic conditions, and other factors.
The Company's Board of Directors currently anticipates retaining earnings to
provide funds for the operation and expansion of the Company's business.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements, including the footnotes, and is qualified in its entirety
by the foregoing and other more detailed financial information appearing
elsewhere herein. Historical results of operations and the percentage
relationships among any amounts included in the Consolidated Statements of
Operations, and any trends which may appear to be inferable therefrom, should
not be taken as being necessarily indicative of trends in operations or results
of operations for any future periods.
Comments in this Management's Discussion and Analysis of Financial Condition and
Results of Operations regarding the Company's business which are not historical
facts are forward-looking statements that involve risks and uncertainties. Among
these risks are the Company is in a highly competitive business, has a history
of operating losses, and is pursuing a strategy that relies primarily 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. Any forward looking statements should be read in conjunction with
the risk factors contained on page 17 herein.
Results of Operations-Historical Results 1998 vs 1997. The Company discontinued
its general parcel and courier business effective June 30, 1997. Accordingly,
the Company had no revenues from continuing operations until July 11, 1997 with
the purchase of Carolina Pacific and such revenues continued to increase with
the acquisitions of four additional companies in 1997 and six companies in 1998.
<PAGE>
The following table sets forth items in the Consolidated Statement of Operations
for the year ended December 31, 1998 and 1997 as a percentage of operating
revenues.
Percentage of
Operating Revenues
December 31,
--------------------------------
1998 1997
--------------- -------------
Total revenues and other income 100.00% 100.00%
--------------- -------------
Purchased transportation 43.58 46.11
Salaries, wages and benefits 22.91 21.93
Fuel 7.28 7.65
Operating supplies and expenses 12.62 9.63
Insurance 1.60 2.49
Depreciation and amortization expense 4.23 4.73
General and administrative expense 2.77 3.41
--------------- -------------
Total expenses 94.99 95.95
--------------- -------------
Operating income 5.01 4.05
Interest expense 2.43 3.07
--------------- -------------
Income before income taxes 2.58 .98
Income taxes (benefit) (4.01) .21
--------------- -------------
Income from continuing operations 6.59% .77%
=============== =============
Total revenues and other income. Total revenue increased from $34.0 million in
1997 to $177.6 million, or 422.0%, for 1998. The increase is due primarily to
the acquisition of six companies in 1998 ($93.0 million) and a full year of
revenues for those companies acquired in 1997 ($50.6 million).
Purchased transportation. Purchased transportation increased from $15.7 million
in 1997 to $77.4 million, or 393.3%. Purchased transportation as a percentage of
total revenues and other income decreased from 46.11% in 1997 to 43.58% in 1998.
Changes in the fleet mix from brokerage and owner-operators to company owned
trucks as a result of the acquisitions resulted in the decline in purchase
transportation as a percentage of sales.
Salaries, wages and benefits. Salaries, wages and benefits increased from $7.5
million in 1997 to $40.7 million, or 445.2%, in 1998. Salaries, wages and
benefits as a percentage of total revenues and other income increased from
21.93% in 1997 to 22.91% in 1998. The increase as a percentage of total revenues
and other income is attributed to the change in revenue mix discussed in the
preceding paragraph as well as continued pressure on driver wages. Should driver
wages continue to increase as a result of the industry-wide driver shortage,
there can be no assurance that these costs can be passed along through increased
freight rates.
Fuel. Fuel increased from $2.6 million in 1997 to $12.9 million, or 397.7%, in
1998. Fuel as a percentage of total revenues and other income decreased from
7.65% in 1997 to 7.28% in 1998. Fuel costs as a percentage of total revenues
decreased as a result of lower fuel prices, the Company's ability to negotiate
more favorable fuel contracts and improved gas mileage from the purchase of new,
more efficient equipment. In the first quarter of 1999, fuel costs increased
over recent levels. Should fuel costs continue to increase, there can be no
assurance that these costs can be passed along to our customers.
Operating supplies and expenses. Operating supplies and expenses increased from
$3.3 million in 1997 to $22.4 million, or 584.2%, in 1998. Operating supplies
and expenses as a percentage of total revenues and other income increased from
9.63% in 1997 to 12.62% in 1998. The increase as a percentage of total revenues
and other income is attributed to the change in mix discussed above and the
increased use of leased equipment.
Insurance. Insurance expense increased from $.9 million in 1997 to $2.8 million,
or 236.1%, in 1998. Insurance expense as a percentage of total revenues and
other income decreased from 2.49% in 1997 to 1.60% in 1998. The decrease as a
percentage of total revenues and other income is due to the Company's ability to
negotiate more favorable insurance rates because of its larger, more diverse
insurance base.
<PAGE>
Depreciation and amortization expense. Depreciation and amortization expense
increased from $1.6 million in 1997 to $7.5 million, or 366.9%, in 1998.
Depreciation and amortization expense as a percentage of total revenues and
other income decreased from 4.73% in 1997 to 4.23% in 1998. The decrease as a
percentage of total revenues and other income is due to the increased use of
leased equipment.
General and administrative expense. General and administrative expense increased
from $1.2 million in 1997 to $4.9 million, or 323.5%, in 1998. General and
administrative expense as a percentage of total revenues and other income
decreased from 3.41% in 1997 to 2.77% in 1998. The decrease as a percentage of
total revenues and other income is related to the ongoing consolidation of
certain accounting, finance, and legal administrative functions.
Operating income. Operating income increased from $1.4 million in 1997 to $8.9
million, or 545.1%, in 1998. Operating income as a percentage of total revenues
and other income increased from 4.05% in 1997 to 5.01% in 1998 as a result of
the various factors noted above.
Interest expense. Interest expense increased from $1.0 million in 1997 to $4.3
million, or 312.4%, in 1998 as a result of increased borrowings to fund
acquisitions offset by more favorable interest rates and the increased use of
leased equipment.
Income taxes. Income taxes attributable to continuing operations decreased from
a provision of $70,665 in 1997 to a benefit of $7.1 million in 1998 as the
Company recognized the future value of net operating loss carryforwards.
Income (loss) to common shareholders. Income (loss) to common shareholders
increased from a loss of $12.0 million in 1997 to income of $11.7 million in
1998 because of the various factors noted above and the sale of the parcel
delivery business in 1997.
Income (loss) per diluted common share. Income (loss) per diluted common share
increased from a loss of $1.08 per diluted common share to income of $0.49 per
diluted common share because of the factors noted above.
Income (loss) per basic common share. Income (loss) per basic common share
increased from a loss of $1.08 per basic common share to income of $.52 per
basic common share because of the factors noted above.
Weighted average number of diluted common shares outstanding. The weighted
average number of diluted common shares outstanding increased as a result of the
shares issued for the various acquisitions by the Company.
Weighted average number of basic common shares outstanding. The weighted average
number of basic common shares outstanding increased as a result of the shares
issued for the various acquisitions by the Company.
Results of Operations - Unaudited Pro Forma 1998 vs 1997. Since July 1997, the
Company has acquired 14 truckload carriers. TGI has enabled these companies to
reduce certain costs particularly in the areas of insurance, interest and
leasing costs, fuel, and redundant overhead. The Company's strategy is to allow
the acquired companies to focus on marketing, customer service, and operations
while administrative and financial costs are centralized in the Corporate
Services Division of TGT.
The unaudited pro forma financial information reflects the operations of the 14
acquired companies as if they all had been acquired on January 1, 1997. The
following adjustments were made to the historical financial statements of
acquired companies prior to their acquisition by the Company:
- Reduced depreciation expense due to changes in depreciation
policies and estimated lives;
- Amortization of goodwill recorded in connection with the acquisitions;
- Additional interest costs for the cash portion of the acquisition
costs; and
- Interest costs of the acquired companies have been adjusted to reflect
the Company's financing costs.
No projected provision for cost reductions (such as insurance, overhead,
purchasing, and fuel) have been reflected in the historical financial statements
of the subsidiaries from January 1, 1997 through the date of acquisition.
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Combined Results of Operations
December 31, 1998 December 31, 1997
-------------------------------- ---------------------------------
$ % $ %
---------------- ------------ ----------------- ------------
(Dollars (Dollars
in thousands) in thousands)
<S> <C> <C> <C> <C>
Total revenue and other income $ 296,364 100.00% $ 296,228 100.00%
---------------- ------------ ----------------- ------------
Operating expenses 259,935 87.71 261,937 88.42
Depreciation and amortization 13,596 4.59 14,185 4.79
General and administrative expenses 7,512 2.53 8,501 2.87
---------------- ------------ ----------------- ------------
Total operating expenses 281,043 94.83 284,623 96.08
---------------- ------------ ----------------- ------------
Operating income 15,321 5.17 11,605 3.92
Interest expense 6,889 2.32 7,006 2.37
---------------- ------------ ----------------- ------------
Income before income taxes 8,432 2.85 4,599 1.55
Income taxes (benefit) (6,271) (2.11) 526 0.18
---------------- ------------ ----------------- ------------
Net income $ 14,703 4.96% $ 4,073 1.37%
================ ============ ================= ============
Income per basic common share $ .56 $ .16
================ =================
Income per diluted common share $ .53 $ .15
================ =================
Weighted average number of basic common
shares outstanding 26,381,209 25,791,743
================ =================
Weighted average number of diluted
common shares outstanding 27,636,140 27,147,982
================ =================
</TABLE>
Excluding the impact of the Rainbow/Capitol merger discussed below, comparable
unaudited pro forma revenues increased by approximately $4 million (1.5%) in
1998 compared to 1997.
The Company phased out the warehouse operations of Capitol Warehouse due to its
marginal profitability and merged its trucking operations into those of Rainbow
Trucking during fiscal 1998. The combined operations had a decrease in revenue
of $3.9 million in unaudited pro forma 1998 compared to unaudited pro forma
1997. Despite the revenue decline, these actions increased pre-tax earnings of
the Rainbow/Capitol operation by approximately $.4 million in unaudited pro
forma 1998 compared to 1997.
Operating expenses decreased from $261.9 million in unaudited pro forma 1997 to
$259.9 million in unaudited pro forma 1998. Operating expenses as a percent of
total revenues and other income decreased from 88.73% in 1997 to 87.71% in 1998.
This decline reflects the impact of certain synergies including reduced
insurance and fuel costs.
Depreciation and interest costs have declined both in terms of dollars and
percent of revenue as a result of the Company's lower cost of capital compared
to the acquired companies and emphasis on leasing rather than purchasing
equipment.
As a consequence of merging certain operations and improving certain cost
components, the Company's operating ratio has improved on a pro-forma basis from
96.1% in 1997 to 94.8% in 1998.
In 1998, the Company recorded a credit to income tax expense to recognize the
future value of net operating loss carryforwards in the amount of $7.5 million.
Liquidity and Capital Resources. The Company's acquisition strategy and
requirements for replacing its revenue equipment require significant capital
resources.
<PAGE>
In July 1997, an affiliate of the Company's Chairman loaned the Company $4
million to consummate the acquisition of Carolina Pacific Distributors, Inc.
During August, September and October of 1997, the affiliate loaned the Company
an additional $2.6 million to fund the continuing operations of the parcel
delivery and courier operations and fund certain expenses associated with the
acquisition of the truckload companies. Of the $6.6 million borrowed, $2.6
million was assumed by the purchaser of the parcel delivery and courier
operations, leaving a balance of $4 million. The Company repaid $0.5 million in
the fourth quarter of 1998 and $.5 million in the first quarter of 1999. The
loan amortizes at a rate of $1.0 million per year commencing April, 2000 bears
interest at a rate of 9.0% and matures in April, 2002. In March 1999, the
Company borrowed an additional $1 million from an affiliate of the Company's
Chairman, which bears interest at 10% per annum and is due on June 30, 1999.
In November 1998, the Company increased the capacity of its revolving line of
credit with AmSouth Bank from $20 million to $30 million. The facility bears
interest at a rate of 2.25% over LIBOR (5.06% at December 31, 1998) and is
secured by accounts receivable. The loan matures on April 1, 2000 at which time
it may be converted to a term facility with final maturity on April 1, 2001. The
revolving credit facility contains covenants which require, among other things,
net worth, leverage, and interest coverage ratios within specified levels and
contain other provisions and covenants customary in lending transactions of
these types. At December 31, 1998, $3.1 million was available under the credit
facility.
Concurrent with expanding its credit facility, the Company converted $5 million
of debt, which was due in 1999, to a term facility which amortizes over seven
years and has a final maturity in January 2002. The loan bears interest at the
rate of 2.50% over LIBOR and is cross-collateralized with the $30 million
facility discussed above.
Also in November 1998, the Company entered into a $50 million equipment lease
facility with a commercial lender. The facility is available to restructure the
financing of certain existing equipment and the remainder to support future
equipment leases. The terms of the leases will vary from 30-48 months for used
equipment, and up to 60 months for new equipment. Initial fundings under the
facility bore interest at rates between 5.50% and 6.00%. Interest rates on
future fundings will be subject to changes in the 3-year U.S. Treasury interest
rates. At the expiration of the lease, the Company may renew the lease, return
the equipment subject to the payment of a Terminal Rate Adjustment Clause or
purchase the equipment. At December 31, 1998 approximately $15 million was
available under this facility.
The Company has recognized a benefit of $7.5 million in the current years
financial statements for net operating losses because management believes it is
more likely than not that the benefits will be realized. The Company will be
limited to in the amount of net operating loss which can be offset against
taxable income in any given year because of significant changes in ownership.
Amounts in excess of these amounts will be taxed at the prevailing corporate
income tax rates.
In 1998, cash flow from operating activities was $8.4 million and capital
expenditures were $7.1 million for new trucks and trailers. There can be no
assurance that the Company can continue to finance its fleet through operations
or commercial lenders.
The Company believes that the amounts available from operating cash flows, funds
available under its credit facilities and its equipment lease facility will be
sufficient to meet the Company's expected operating needs and planned capital
expenditures for the foreseeable future.
Redemption Rights for Selling Shareholders in Acquisitions. In connection with
the acquisitions of Capitol Warehouse, Service Express, and Carroll Fulmer, the
Company granted the selling shareholders the right to require the Company to
redeem a portion of the shares which they received in exchange for selling their
businesses to the Company. The dollar amount of stock subject to mandatory
redemption by the Company aggregated approximately $8.1 million upon acquisition
of those companies.
At December 31, 1998, holders of redemption rights with respect to $3.7 million
of stock may require either the Company to redeem the stock or a major
shareholder of the Company to acquire the stock at a price of $3.60 per share.
Holders of redemption rights with respect to $1.4 million of stock at $3.875 per
share had the right to require the Company to redeem their shares, which was
guaranteed by a major shareholder. These shares were either sold by the
shareholder or acquired by the Company in the first quarter of 1999. The Company
utilized approximately $1.4 million available under its credit facility to
acquire these shares.
<PAGE>
To the extent such redemption rights are exercised, the Company will be required
to fund the cash required to meet its obligations under the redemption rights by
drawing on bank lines which may be available to its subsidiaries, or to call
upon a major shareholder to purchase the stock under such shareholder's
obligations and guarantees associated with the acquisition contracts.
New Accounting Pronouncements. In June 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards No. 130 ("SFAS
130"), "Reporting Comprehensive Income." SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. The provisions of SFAS 130 were adopted
during the current period. The Company has no items of other comprehensive
income at December 31, 1998.
In June 1997 the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The statement requires that the Company
report certain information if specific requirements are met about operating
segments of the Company including information about services, geographic areas
of operation and major customers. Management views the Company as operating in a
single segment.
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 1999. SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at fair value. Changes
in the fair value of derivatives are recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is designated as
part of a hedge transaction and, if it is, depending on the type of hedge
transaction. The accounting for this standard is not expected to have a material
impact on the Company's financial statements.
Year 2000. The Company is aware of the seriousness associated with the issues
related to the Year 2000 and its potential impact. In response to this
unprecedented event, management believes that it has identified, outlined and
set forth actions that will upgrade all information technology ("IT") and
non-information technology ("Non-IT") systems that are not Year 2000 compliant
with year 2000 compliant systems by no later than September 1999. Currently,
management estimates that the Company is 90% complete in its efforts to be Year
2000 compliant.
Due to the contractual relationships with current software and hardware vendors,
the majority of the costs associated with Year 2000 compliance have been covered
under the annual maintenance fees that the Company normally pays. Since the
majority of expenses are spread throughout the year, management has not
specifically itemized expenses related to the Year 2000. Management estimates
that the Company has spent approximately $200,000 to date on Year 2000
compliance and estimates spending an additional $100,000 towards Year 2000
compliance during the remainder of 1999.
During its review of the Company's Year 2000 compliance plan, management
realized that as important as internal systems are to its mission of Year 2000
compliance, customers, vendors and community resources (utilities, local
telephone company, etc), represent a significant portion of the business
processes as well. To that end, the Company is asking its critical partners to
provide to the Company in writing, their own Year 2000 progress plans. Although
management cannot guarantee the Company's compliance, it will continue to
monitor its progress during the remainder of 1999 and refine plans, as
information becomes available.
The Company has identified its billing, dispatch, settlement, and fleet
monitoring system as its mission critical internal system that could be affected
by the Year 2000. The Company plans to begin testing the Year 2000 compliant
version of this software in the second quarter of 1999.
The Company has developed a contingency plan that includes external vendor
readiness as well as the possibility of an internal system failure. If external
vendors are not Year 2000 compliant by September 1999, the Company will find
alternate sources to supply it with needed products and services if at all
possible. If internal systems were to fail, the Company will have a manual
system in place to provide the necessary business activities to its customers
until the Company can correct any such failure.
Although the possibility of failure exists, management believes that its Year
2000 efforts will be completed, and its systems tested in a production
environment in accordance with its plan by September 1999.
<PAGE>
Risk Factors
Accumulated Deficit and Recent Losses
The Company has incurred substantial operating losses and cash flow deficits
since inception. From September 1985 through December 31, 1998, the Company had
accumulated a deficit from operating losses of $18.4 million and has paid
dividends on its preferred stock of approximately $1.3 million. The Company has
previously funded its operations from (i) private placements of preferred stock
(which has been converted to common stock), (ii) its initial public offering of
November 2, 1989, and (iii) the sale of restricted and unrestricted common
shares. As a result of equity placements, dividends on preferred stock and
cumulative losses, shareholders' equity as of December 31, 1998, was $48.2
million. There can be no assurance that the Company can sustain consistently
profitable operations or raise additional external capital funding.
Competition
The trucking industry is extremely competitive and fragmented. Some of the
trucking companies with which the Company competes have greater financial
resources, own more revenue equipment and carry a larger volume of freight than
the Company. Medium- and long-haul truckload carriers and railroads also provide
competition. The Company also competes with other motor carriers for the
services of drivers.
Management of Growth
The Company completed the acquisition of 14 operating companies from June 30,
1997, through March 22, 1999, and may acquire additional companies in the near
future. The growth of the Company's business and expansion of operations has
placed a significant strain on the Company's administrative, operational and
financial resources. The Company's recent growth has also resulted in a
substantial increase in the number of its employees and the scope of its
operations. Management believes that it is successfully coordinating the
consolidation of its acquisitions. However, the Company's inability to
assimilate these newly acquired operations and support the growth of its
business would have a material adverse effect on its financial condition and
results of operations.
Shares Available for Resale
Some of the Company's presently outstanding Common Stock may be deemed
"restricted securities" and may be sold in compliance with Rule 144 adopted
under the 1933 Act. Sales under Rule 144 may have a depressive effect on the
market price of the Company's Common Stock.
No Intent to Pay Dividends
The Company has not paid any dividends on its Common Stock and intends to follow
a policy of retaining all of its earnings, if any, to finance the development
and expansion of its business.
Continued NASDAQ Listing; Liquidity
The Common Stock currently is listed on the NASDAQ SmallCap Market. There can be
no assurance that the Company will continue to meet the requirements to maintain
its NASDAQ listing. If the Company's Common Stock were no longer quoted on
NASDAQ, holders of Common Stock may have greater difficulty identifying
potential purchasers for their securities. This reduced liquidity could
adversely affect the market value of the Common Stock.
Volatility of Stock Price
The market price of the Common Stock may be significantly affected by factors
such as announcements of proposed acquisitions by the Company, as well as
variations in the Company's results of operations and market conditions. The
price may also be affected by market movements in prices of stocks in general.
There is no assurance that the current market price for the Common Stock will be
maintained.
Control by Principal Shareholders, Directors and Officers
T. Wayne Davis, Chairman of the Board of the Company, and his affiliates
currently own a significant number of shares of the voting stock of the Company.
As a result, he is able to influence or control substantially all matters
requiring approval of the Company's shareholders, including the election of
directors.
<PAGE>
Potential Liability
Potential liability associated with accidents in the trucking industry is severe
and occurrences are unpredictable. The industry is also subject to substantial
workers' compensation expense. A material increase in the frequency or severity
of accidents or workers' compensation claims or the unfavorable determination of
existing claims and pending litigation can be expected to adversely affect the
Company's operating income and financial condition. Management believes that the
Company has insurance coverage sufficient to cover most expected losses.
Item 7. FINANCIAL STATEMENTS
The information called for by this Item begins on page 29 of this Form 10-K.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On February 17, 1997, General Parcel Service, Inc. dismissed Grenadier, Collins,
Mencke & Howard, LLP and engaged PriceWaterhouseCoopers LLP to succeed as its
Independent Accountants. The change in Independent Accountants resulted from the
Registrant's announced plans to form an Atlanta based holding company and seek
to acquire other trucking companies. The auditor's reports for the previous two
fiscal years did not contain adverse opinions or disclaimers of opinion, nor
were they modified as to uncertainty, audit scope, or accounting principles. The
decision to change accountants had been approved by the Board of Directors.
There were no disagreements with Grenadier, Collins, Mencke & Howard, LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. The Company has previously filed a Form 8-K with
respect to this matter.
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The information regarding directors contained under the caption "Election of
Directors - Nominees" in the Company's Proxy Statement for the 1999 Annual
Meeting of Shareholders is incorporated herein by reference.
The information regarding executive officers contained under the caption:
"Election of Officers - Executive Officers" in the Company's Proxy Statement for
the 1999 Annual Meeting of Shareholders is incorporated herein by reference.
Item 10. EXECUTIVE COMPENSATION
The information contained under the caption "Election of Directors - Executive
Compensation" in the Company's Proxy Statement for the 1999 Annual Meeting of
Shareholders is incorporated herein by reference.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the caption "Voting Securities and Principal
Holders Thereof - Security Ownership of Certain Beneficial Owners" in the
Company's Proxy Statement for the 1999 Annual Meeting of Shareholders is
incorporated herein by reference.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the caption "Certain Transactions" in the
Company's Proxy Statement for the 1999 Annual Meeting of Shareholders is
incorporated herein by reference.
<PAGE>
PART IV
Item 13. EXHIBITS LIST AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601, Regulation S-B
3. Articles of Incorporation and By-Laws
3.1 Articles of Incorporation, as amended, (incorporated by
reference from Exhibit 3.1 to the Registrant's Form S-18,
Registration No. 33-30123A).
3.2 By Laws, as amended and restated, (incorporated by reference
from Exhibit 3.2 to Registrant's Form S-18, Registration No.
33-30123A).
3.3 Certificate of Amendment to the Articles of Incorporation of
General Parcel Service, Inc., dated May 14, 1992,
(incorporated by reference from Exhibit F to Registrant's 1992
Form 10-KSB).
3.4 Certificate of Amendment to the Articles of Incorporation of
General Parcel Service, Inc., dated December 29, 1993,
(incorporated by reference from Exhibit C to Registrant's 1992
Form 10-KSB).
3.5 Certificate of Amendment to the Articles of Incorporation of
General Parcel Service, Inc., dated March 5, 1996,
(incorporated by reference from Exhibit A to Registrant's Form
8-K, dated March 5, 1996).
3.6 Certificate of Amendment to the Articles of Incorporation of
General Parcel Service, Inc., dated September 30, 1996,
(incorporated by reference from Exhibit A to Registrant's Form
8-K, dated September 18, 1996).
3.7 Certificate of Amendment to the Articles of Incorporation of
General Parcel Service, Inc., dated December 20, 1996,
(incorporated by reference from Exhibit A to Registrant's Form
8-K, dated December 20, 1996).
4. Instruments defining the Rights of Security holders
4.1 Specimen Stock Certificate (incorporated by reference from
Exhibit 4.1 to Registrant's Form S-18, Registration No.
33-30123A).
4.2 Warrant granting stock purchase warrants to J. Ray Gatlin
(incorporated by reference from Exhibit 4.2 to the
Registrant's Form S-18, Registration No. 33-30123A).
4.3 Warrant granting stock purchase rights to T. Wayne Davis
(incorporated by reference from Exhibit 4.3 to Registrant's
Form S-18, Registration No. 33-30123A).
4.4 Warrant granting stock purchase rights to T. Wayne Davis
(incorporated by reference from Exhibit 4.4 to Registrant's
Form S-18, Registration No. 33-30123A).
4.5 Warrant granting stock purchase rights to Drue B. Linton
(incorporated by reference from Exhibit 4.5 to Registrant's
Form S-18, Registration No. 33-30123A).
4.6 Warrant granting stock purchase rights to Steven C. Koegler
(incorporated by reference from Exhibit 4.7 to Registrant's
Form S-18, Registration No. 33-30123A).
4.7 Warrant granting stock purchase rights to J. Ray Gatlin
(incorporated by reference from Exhibit 4.8 to Registrant's
Form S-18, Registration No. 33-30123A).
4.8 Form of Warrant issued (incorporated by reference from
Exhibit 4.9 to Registrant's Form S-18, Registration No.
33-30123A).
4.9 Form of Warrant between the Company and American Transtech,
Inc., as Warrant Agent (incorporated by reference from Exhibit
4.10 to Registrant's Form S-18, Registration No.
33-30123A).
4.10 Preferred Stock Purchase Agreement and specimen stock
certificate between the Company and T. Wayne Davis
(incorporated by reference from Exhibit Z to Registrant's 1993
Form 8-K).
10. Material Contracts
10.1 Incentive Stock Option Plan (incorporated by reference from
Exhibit 10.2 to Registrant's Form S-18, Registration No.
33-30123A).
10.2 Lease Agreements governing the Company's terminal in Columbia,
South Carolina and dated May 31, 1996 between the Company and
Angoria Columbia Enterprises (incorporated by reference from
Exhibit 10.1 to Registrant's June 30, 1996 10-QSB).
10.3 Assignment of Lease Agreement governing the Company's
terminal in Greensboro, North Carolina dated June 13, 1996
between the Company, ABF Freight System, Inc., Bob G.
Gibson and Defco Company (incorporated by reference from
Exhibit 10.2 to Registrant's June 30, 1996 10-QSB).
10.4 Lease Agreement governing the Company's terminal in
Charlotte, North Carolina dated July 30, 1996 between the
Company and Lincoln National Life Insurance Company
(incorporated by reference from Exhibit 10.7 to Registrant's
June 30, 1996 10-QSB).
10.5 Lease Agreement governing the Company's terminal in
Charleston, South Carolina dated July 9,1996 between the
Company and J.P. Gaillard, ET AL (incorporated by reference
from Exhibit 10.8 to Registrant's June 30, 1996 10-QSB).
10.6 Lease Agreement governing the Company's terminal in Tampa,
Florida dated November 30, 1994 and amended on January 26,
1996 and February 19, 1996 between the Company and Scott
Steel, Inc. (incorporated by reference from Exhibit 10.1
to Registrant's September 30, 1996 10-QSB).
10.7 Purchase Agreement governing purchase by GPS Acquisition Corp.
from transit Express of Charlotte, Inc. of certain assets,
dated February 6, 1995 (incorporated by reference from
Exhibit 10.5 to Registrant's 1995 10-KSB).
10.8 Resignation Agreement dated December 20, 1996 between the
Company, E. Hoke Smith, Jr., and T. Wayne Davis as
guarantor (incorporated by reference from Exhibit 10.31 to
Registrant's 1996 10-KSB).
10.9 Stock Purchase Agreement dated as of July 11, 1997 governing
the purchase by the Company of the stock of Carolina Pacific
Distributors, Inc. (incorporated by reference from Exhibit
2.1 to Registrant's Form 8-K dated July 11, 1997).
10.10 Agreement and Plan of Reorganization dated as of August 15,
1997 governing the merger of Service Express, Inc. and a
wholly-owned subsidiary of the Company (incorporated by
reference from Exhibit 2.1 to Registrant's Form 8-K dated
August 15, 1997).
10.11 Agreement and Plan of Reorganization dated as of August 15,
1997 governing the merger of Capitol Warehouse, Inc. and a
wholly-owned subsidiary of the Company (incorporated by
reference from Exhibit 2.2 to Registrant's Form 8-K dated
August 15, 1997.
10.12 Agreement and Plan of Reorganization dated as of August 29,
1997 under which Carroll Fulmer Group, Inc. was merged
with and into a wholly-owned subsidiary of the Company
(incorporated by referenc from Exhibit 2.1 to Registrant's
Form 8-K dated August 29, 1997).
10.13 Purchase Agreement dated as of December 30, 1997
governing purchase by Transit of the stock of Rainbow
Trucking Services, Inc.,Hawks Enterprises, Inc. and T.W.
Transport, Inc. (incorporated by reference from Exhibit 2.1 to
Registrant's Form 8-K dated December 30, 1997).
10.14 Purchase Agreement dated as of December 30, 1997 governing
purchase by Transit of the stock of Rainbow Trucking
Services, Inc., (incorporated by reference from Exhibit
2.1 to Registrant's Form 8-K dated December 30, 1997).
10.15 Purchase Agreement dated as of December 30, 1997 governing
purchase by Transit of the stock of Hawks Enterprises, Inc.
(incorporated by reference from Exhibit 2.2 to Registrant's
Form 8-K dated December 30, 1997).
10.16 Purchase Agreement dated as of December 30, 1997 governing
purchase by Transit of the stock of T. W. Transport, Inc.
(incorporated by reference from Exhibit 2.3 to Registrant's
Form 8-K dated December 30, 1997).
10.17 Advised Revolving Line of Credit Agreement dated December
18, 1997 between certain subsidiaries of the Company and
AmSouth Bank (incorporated by reference from Exhibit 99.1 to
Registrant's Form 8-K dated December 18, 1997).
10.18 Revolving Credit Note dated as of December 18, 1997,
by and among the Lender and the Co-Borrowers (incorporated
by reference from Exhibit 99.2 to Registrant's Form 8-K
dated December 18, 1997).
10.19 Security Agreement dated as of December 18, 1997, by and
among the Lender and the Co-Borrowers.
10.20 Joinder to Advised Revolving Line of Credit Agreement and
Joinder to Security Agreement dated as of January 14, 1998
by Rainbow Trucking Services, Inc.(incorporated by reference
from Exhibit 99.4 to Registrant's Form 8-K dated December
18, 1997).
10.21 Termination of Lease Agreements between Transit Leasing, Inc.
(formerly known as Capitol Warehouse, Inc.) and Jerry W.
and Anna Pennington dated February 9, 1999.
10.22 Agreement and Plan of Reorganization dated as of May 5, 1998
governing the merger of Certified Transport, Inc. and
Venture Logistics, Inc. and a wholly-owned subsidiary of the
Company (incorporated by reference from Exhibit 2.6 to
Registrant's Form 8-K dated May 5, 1998).
10.23 Agreement and Plan of Reorganization dated as of June
16, 1998 governing the merger of K. J. Transportation
with a wholly-owned subsidiary of the Company (incorporated
by reference from Exhibit 2.6 to Registrant's Form 8-K
dated June 17, 1998).
10.24 Promissory Note for $2,645,451.00 dated as of November 12,
1998, by and among General Electric Capital Corporation and
certain wholly-owned subsidiaries of the Company.
10.25 Master Lease Agreement dated as of November 12, 1998, by
and among General Electric Capital Corporation, Transit
Group, Inc. and certain wholly-owned subsidiaries of the
Company.
10.26 Corporate Guaranty dated as of November 12, 1998, by and
among General Electric Capital Corporation and certain
wholly-owned subsidiaries of the Company.
10.27 Master Security Agreement dated as of November 12, 1998,
by and among General Electric Capital Corporation and certain
wholly-owned subsidiaries of the Company.
10.28 Loan Agreement and Security Agreement for a $1.5 million
facility dated as of November 5, 1998, by and between
AmSouth Bank and the Company.
10.29 Unconditional guarantee for a $1.5 million facility dated as
of November 5, 1998, by and between AmSouth Bank and
certain wholly-owned subsidiaries of the Company
10.30 Promissory Note for $1.5 million dated as of November 5, 1998,
by and among AmSouth Bank and the Company.
10.31 Loan Agreement and Security Agreement for a $3.5 million
facility dated as of November 5, 1998, by and between
AmSouth Bank and the Company.
10.32 Unconditional guarantee for a $3.5 million facility dated
as of November 5, 1998, by and between AmSouth Bank and
certain wholly-owned subsidiaries of the Company.
10.33 Promissory Note for $3.5 million dated as of November 5, 1998,
by and among AmSouth Bank and the Company.
10.34 Advised Revolving Line of Credit Agreement dated as of
November 5, 1998, by and between AmSouth Bank and certain
wholly-owned subsidiaries of the Company.
10.35 Revolving Credit Note dated as of November 5, 1998 by and
among AmSouth Bank and certain wholly-owned subsidiaries
of the Company.
10.36 Unconditional Guarantee dated as of November 5, 1998,
between AmSouth Bank and the Company.
10.37 Security Agreement dated November 5, 1998, by and among
AmSouth Bank and certain wholly-owned subsidiaries of
the Company.
10.38 1998 Stock Incentive Plan of Transit Group, Inc.
(incorporated by reference from Exhibit 99.1 to Registrant's
December 11, 1998 S-8, Registration No. 333-68807).
10.39 1998 Employee Stock Purchase Plan of Transit Group, Inc.
(incorporated by reference from Exhibit 99.2 to Registrant's
December 11, 1998 S-8, Registration No. 333-68807).
10.40 Agreement and Plan of Merger dated December 23, 1998 by and
among certain wholly-owned subsidiaries of the Company.
10.41 Agreement and Plan of Merger dated December 23, 1998 by and
among certain wholly-owned subsidiaries of the Company.
10.42 Lease Agreement governing the Company's terminal in Olive
Branch, Mississippi dated January 19, 1999 between the
Company and Horvath & Horvath, LLC.
10.43 Lease Agreement governing the Company's terminal in
Chesterton, Indiana dated March 18, 1999 between the Company
and Ameling Properties, LLC.
11.1 Statement re: Computation of Per Share Earnings Pages 47-51
21. Subsidiaries of the Registrant Page 52
23.1 Consent of PriceWaterhouseCoopers LLP Page 53
27. Financial Data Schedule (for SEC purposes only)
(b) No reports on Form 8-K were filed in the fourth quarter of 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TRANSIT GROUP, INC.
BY: /s/ Philip A. Belyew
----------------------------------------
Philip A. Belyew, President,
Chief Executive Officer, and
Director
Date: March 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant in the
capabilities and on the date indicated.
Signature Title Date
/s/ T. Wayne Davis Chairman of the Board March 30, 1999
- --------------------- of Directors
T. Wayne Davis
/s/ Philip A. Belyew Director, President, and March 30, 1999
- --------------------- Chief Executive Officer
Philip A. Belyew
/s/ Carroll L. Fulmer Director March 30, 1999
- ---------------------
Carroll L. Fulmer
/s/ Derek E. Dewan Director March 30, 1999
- ---------------------
Derek E. Dewan
/s/ Robert R. Hermann Director March 30, 1999
- ---------------------
Robert R. Hermann
/s/ Wayne N. Nellums Chief Financial Officer March 30, 1999
- ---------------------
Wayne N. Nellums
/s/ Scott J. Tsanos Chief Accounting Officer March 30, 1999
- ---------------------
Scott J. Tsanos
<PAGE>
TRANSIT GROUP, INC.
1998 CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
Pages
-----
Report of Independent Accountants 28
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1998 and 1997 29
Consolidated Statements of Operations for the years ended 30
December 31, 1998 and 1997
Consolidated Statements of Changes in Total Non Redeemable
Preferred Stock, Common Stock and Other Stockholder's 31
Equity for the years ended December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended 32
December 31, 1998 and 1997
Notes to Consolidated Financial Statements 33-46
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
March 30, 1999
To the Board of Directors and Stockholders of
Transit Group, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in total non redeemable
preferred stock, common stock and other stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Transit
Group, Inc. and its subsidiaries at December 31, 1998 and 1997, and the results
of their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
<PAGE>
<TABLE>
<CAPTION>
TRANSIT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
------------
1998 1997
---- ----
Current assets:
<S> <C> <C>
Cash $ 2,019,715 $ 789,791
Accounts receivable (net of allowance of $706,000 and $173,000) 28,437,208 11,314,417
Other current assets 5,611,332 1,429,181
Deferred income taxes 1,103,220 -----
---------------- ----------------
Total current assets 37,171,475 13,533,389
---------------- ----------------
Noncurrent assets:
Property, equipment, and capitalized leases 42,818,024 30,045,866
Goodwill 50,061,862 30,706,028
Other assets 475,620 769,522
---------------- ----------------
Total noncurrent assets 93,355,506 61,521,416
---------------- ----------------
Total assets $ 130,526,981 $ 75,054,805
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current obligations under capital leases $ 1,518,187 $ 2,993,935
Current maturities of long-term debt 10,754,424 5,183,040
Accounts payable 6,169,561 3,401,662
Bank overdrafts 1,319,203 662,074
Accrued expenses and other current liabilities 10,028,776 5,487,791
Current portion of deferred income taxes ----- 582,548
Net current liabilities of discontinued operations 272,832 565,886
---------------- ----------------
Total current liabilities 30,062,983 18,876,936
---------------- ----------------
Noncurrent liabilities:
Long-term obligations under capital leases 2,429,245 8,026,808
Long-term debt 36,534,421 15,624,955
Note payable to affiliate of Chairman 3,500,000 4,000,000
Other liabilities 4,290,770 -----
Deferred income taxes 438,958 2,357,425
---------------- ----------------
Total noncurrent liabilities 47,193,394 30,009,188
---------------- ----------------
Total liabilities 77,256,377 48,886,124
---------------- ----------------
Commitments and contingencies (Note 15)
<PAGE>
Redeemable common stock 5,115,071 7,452,007
---------------- ----------------
Non redeemable preferred stock, common stock
and other stockholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized,
none outstanding ----- -----
Note receivable secured by stock (729,000) (675,000)
Common Stock, $.01 par value, 30,000,000 shares
authorized, 23,610,190 and 20,574,626 shares issued and outstanding 222,177 185,770
Additional paid-in capital 68,411,245 50,650,534
Accumulated deficit (19,748,889) (31,444,630)
---------------- ----------------
Total non redeemable preferred stock, common stock
and other stockholders' equity 48,155,533 18,716,674
---------------- ----------------
Total liabilities and stockholders' equity $ 130,526,981 $ 75,054,805
================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSIT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Revenues and other income:
Freight and transportation revenue $ 173,659,018 $ 33,266,454
Other income 3,893,943 745,195
---------------- ----------------
Total revenues and other income 177,552,961 34,011,649
---------------- ----------------
Operating expenses:
Purchased transportation 77,372,214 15,683,040
Salaries, wages and benefits 40,670,008 7,459,889
Fuel 12,931,732 2,598,163
Operating supplies and expenses 22,409,300 3,275,160
Insurance 2,844,739 846,340
Depreciation and amortization expense 7,518,485 1,610,172
General and administrative expense 4,914,383 1,160,414
---------------- ----------------
Total operating expenses 168,660,861 32,633,178
---------------- ----------------
Operating income 8,892,100 1,378,471
Interest expense 4,310,359 1,045,312
---------------- ----------------
Continuing operations:
Earnings from continuing operations
before income taxes 4,581,741 333,159
Income taxes (benefit) attributable to continuing operations (7,114,000) 70,665
---------------- ----------------
Income from continuing operations 11,695,741 262,494
Discontinued operations:
Loss from discontinued operations ----- (6,114,408)
Loss on disposal including provision
for operating losses through disposal date ----- (5,792,146)
Net income (loss) 11,695,741 (11,644,060)
---------------- ----------------
Preferred stock dividend requirement ----- (385,000)
---------------- ----------------
Income (loss) to common shareholders $ 11,695,741 $ (12,029,060)
================ ================
<PAGE>
Income (loss) per basic common share:
Continuing operations $ 0.52 $ (0.01)
Discontinued operations:
Loss from discontinued operations ----- (0.55)
Loss on disposal ----- (0.52)
---------------- ----------------
Net income (loss) per basic common share $ 0.52 $ (1.08)
================ ================
Weighted average number of basic
common shares outstanding 22,391,142 11,094,207
================ ================
Income (loss) per diluted common share:
Continuing operations $ 0.49 $ (0.01)
Discontinued operations:
Loss from discontinued operations ----- (0.55)
Loss on disposal ----- (0.52)
---------------- ----------------
Net income (loss) per diluted common share $ 0.49 $ (1.08)
================ ================
Weighted average number of diluted
common shares outstanding 23,646,073 11,094,207
================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSIT GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL
NON REDEEMABLE PREFERRED STOCK, COMMON STOCK
AND OTHER STOCKHOLDERS' EQUITY
Total
Preferred Common Note receivable Additional Accumulated stockholders'
stock stock secured by stock paid-in capital deficit equity
----- ----- ---------------- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1996 $ 4,200 $ 37,586 $ ----- $ 21,386,455 $ (19,415,570) $ 2,012,671
Dividends on preferred stock ----- ----- ----- ----- (385,000) (385,000)
Conversion of preferred stock (4,200) 43,239 ----- 345,961 ----- 385,000
Sale of common stock ----- 6,966 ----- 1,212,034 ----- 1,219,000
Stock issued in satisfaction of debt ----- 26,906 ----- 4,681,672 ----- 4,708,578
Stock issued for acquisitions ----- 82,033 ----- 26,370,743 ----- 26,452,776
Stock issued in connection with
sale of GPS ----- 8,766 ----- 4,023,450 ----- 4,032,216
Stock subject to redemption ----- (19,976) ----- (7,432,031) ----- (7,452,007)
Note secured by stock ----- ----- (675,000) ----- ----- (675,000)
Exercise of common stock options ----- 250 ----- 62,250 ----- 62,500
Net Loss ----- ----- ----- ----- (11,644,060) (11,644,060)
----------- ------------ ------------- -------------- --------------- --------------
Balance December 31, 1997 ----- 185,770 (675,000) 50,650,534 (31,444,630) 18,716,674
Stock retired ----- (257) ----- (108,526) ----- (108,783)
Exercise of stock options ----- 254 ----- 155,634 ----- 155,888
Accrued interest ----- ----- (54,000) ----- ----- (54,000)
Stock issued for acquisitions ----- 30,359 ----- 15,382,718 ----- 15,413,077
Stock subject to redemption ----- 6,051 ----- 2,330,885 ----- 2,336,936
Net income ----- ----- ----- ----- 11,695,741 11,695,741
----------- ------------ ------------- -------------- --------------- ---------------
Balance December 31, 1998 $ ----- $ 222,177 $ (729,000) $ 68,411,245 $ 19,748,889 $ 48,155,533
=========== ============ ============= ============== =============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSIT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 11,695,741 $ 262,494
Adjustments to reconcile net income to cash
provided by continuing operations:
Depreciation and amortization 7,518,485 1,610,172
Deferred income taxes (7,665,500) -----
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (2,797,210) 2,061,893
Decrease in other current assets 162,002 258,056
(Decrease) increase in accounts payable (2,498,049) 282,969
Increase (decrease) in accrued expenses 2,026,535 (42,182)
Increase in other long-term liabilities 21,526 208,361
Other 355,148 83,916
---------------- ----------------
Total adjustments (2,877,063) 4,463,185
---------------- ----------------
Net cash provided by continuing operations 8,818,678 4,725,679
Net cash used by discontinued operations (413,054) (4,584,102)
---------------- ----------------
Net cash provided by operating activities 8,405,624 141,577
---------------- ----------------
Cash flows from investing activities:
Business combinations, net of cash acquired (3,811,680) (3,882,630)
Proceeds from disposal of equipment 15,043,682 313,667
Collection of mortgage receivables ----- 619,180
Purchase of equipment (7,066,727) (145,788)
Other 82,195 -----
---------------- ----------------
Net cash provided (used) by investing activities 4,247,470 (3,095,571)
---------------- ----------------
<PAGE>
Cash flows from financing activities:
Proceeds from issuance of stock ----- 1,281,500
Dividends paid on preferred stock ----- (281,750)
Increase in short-term borrowings 606,072 1,937,900
Increase in revolving line of credit 3,863,757 -----
Increase in long-term debt 13,935,432 7,614,475
Repayment of long-term debt and
capital lease obligations (30,485,560) (5,193,886)
Increase (decrease) in bank overdraft 657,129 (1,620,909)
---------------- ----------------
Net cash provided (used) by financing activities (11,423,170) 3,737,330
---------------- ----------------
Increase in cash 1,229,924 783,336
Cash beginning of period 789,791 6,455
---------------- ----------------
Cash end of period $ 2,019,715 $ 789,791
================ ================
Supplemental cash flow data:
Cash paid for interest $ 3,916,542 $ 841,393
================ ================
Business combinations:
Fair value of assets acquired $ 57,055,000 $ 80,703,000
Fair value of liabilities assumed (37,141,000) (50,100,000)
Common stock issued 15,413,000 (26,453,000)
---------------- ----------------
Net cash payments $ 4,501,000 $ 4,150,000
================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
TRANSIT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: Organization and Basis of Presentation
Transit Group, Inc. ("Transit Group" or the "Company") is a Florida corporation
engaged, through subsidiaries, in the short and long haul transportation
services business. The Company formerly known as General Parcel Service, Inc.
("GPS") changed its name effective June 30, 1997.
In conjunction with the name change, the Company approved a plan to dispose of
all operations previously performed by GPS. The Company has accounted for this
disposal as a discontinued operation (See Note 4 to the Consolidated Financial
Statements).
NOTE 2: Summary of Significant Accounting Policies
Principles of Consolidation - The accompanying consolidated financial statements
include accounts of the Company and its wholly-owned subsidiaries. All material
inter-company accounts and balances have been eliminated.
Reclassifications - Certain prior year balances have been reclassified to
conform to the current year financial statement presentation.
Estimates - The process of preparing financial statements requires the use of
estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.
Revenue Recognition - Revenues and related expenses are recognized under a
method which approximates when freight is shipped. The Company believes that
alternative methods of revenue recognition would not result in a material
difference in annual revenues or earnings per share.
Cash - The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents. The
Company's cash management program utilizes zero balance accounts.
Concentrations of Credit Risk - Financial instruments which potentially subject
the Company to concentrations of credit risk consist primarily of trade accounts
receivable. No single customer accounted for a significant amount of the
Company's sales, and there were no significant accounts receivable from a single
customer. The Company reviews a customer's credit history before extending
credit and generally does not require collateral. The Company establishes an
allowance for doubtful accounts based upon factors surrounding the credit risk
of specific customers, historical trends, and other information. The Company's
historical experience in collection of accounts receivable falls within the
recorded allowances. Due to these factors, no additional credit risk beyond
amounts provided for collection losses is believed inherent in the Company's
trade accounts receivable.
Equipment - Equipment is stated at historical cost, except for equipment
obtained in connection with the Company's business acquisitions which is stated
at fair market value on the date of acquisition, net of accumulated depreciation
and amortization. Except for life extending repair costs (such as engine
overhauls), all equipment maintenance and repair costs are charged to operating
expense as incurred. The Company periodically reviews the value of its equipment
to determine if an impairment has occurred. The Company measures the potential
impairment of its equipment by the undiscounted value of expected future
operating cash flows in relation to the fair value of the equipment. Based on
its review the Company does not believe an impairment of its equipment has
occurred. Depreciation is provided using the straight-line method over the
estimated useful life of the asset. Leased equipment is amortized over varying
periods not in excess of the estimated useful life of the asset or lease term
depending on the type of capital lease. Gain or loss upon retirement or disposal
of equipment is recorded as income or expense. The ranges of depreciable lives
used for financial reporting purposes are:
Years
-----
Autos, trucks, trailers and life extending repairs 2 to 10
Office equipment and furniture 3 to 10
Terminal equipment 3 to 10
<PAGE>
Goodwill - Goodwill, representing the excess of cost over fair value of net
assets acquired in business combinations accounted for by the purchase method,
is amortized by the straight-line method over 40 years. The Company periodically
reviews the value of its goodwill to determine if an impairment has occurred.
The Company measures the potential impairment of recorded goodwill by the
undiscounted value of expected future operating cash flows in relation to its
net capital investment in the acquired business. Based on its review, the
Company does not believe that an impairment of its goodwill has occurred.
Amortization expense was $963,000 and $271,000 in 1998 and 1997, respectively.
Accumulated amortization was approximately $1,234,000 and $271,000 at December
31, 1998 and 1997, respectively.
Income Taxes - The Company applies Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes." Under SFAS 109, the deferred
tax liability or asset is determined based on the difference between the
financial statement and tax bases of assets and liabilities as measured by the
enacted tax rates which will be in effect when these differences reverse.
Foreign Currency Translation - Balance sheet accounts are translated at the
exchange rate in effect at each year-end and income accounts are translated at
the average rates of exchange prevailing during the year. Gains and losses
resulting from foreign currency transactions are currently included in income.
Comprehensive Income - In June 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive Income." SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The provisions
of SFAS 130 were adopted during the current period. The Company has no items of
other comprehensive income at December 31, 1998.
Business Segments - Segments are determined by the "management approach" as
described in SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," which the Company adopted in 1998. Management views the
Company as operating in a single segment.
New Accounting Standards - In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133 is
effective for all fiscal quarters of all fiscal years beginning after June 15,
1999. SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, depending on the type of hedge transaction. The accounting for
this standard is not expected to have a material impact on the Company's
financial statements.
Earnings Per Share ("EPS") - Basic EPS is calculated using the weighted average
number of outstanding common shares for the period,which were 11,094,207 in 1997
and 22,391,142 in 1998. Diluted EPS reflects the potential dilution that could
occur if securities were exercised or converted into common stock or resulted in
the issuance of common stock that would then share in earnings. Shares used in
the diluted EPS calculation were 23,646,073 in 1998.The difference between basic
and diluted shares represents the number of common shares issuable upon exercise
of diluted options.In 1997,options were not included in the computation of fully
diluted earnings per share because to do so would have been anti-dilutive.
NOTE 3: Business Combinations
In July 1997, the Company acquired Carolina Pacific, Inc., a privately held
North Carolina corporation, and the business and related assets operated by the
owners of Carolina Pacific. Carolina Pacific is a truckload carrier based in
High Point, North Carolina. Pursuant to the Stock Purchase Agreement executed at
closing, the Company purchased all of the outstanding capital stock of Carolina
Pacific and the business and related assets operated and owned by the
shareholders of Carolina Pacific for $3.7 million in cash, the issuance of
1,733,000 shares of common stock of the Company to the shareholders of Carolina
Pacific, and the assumption of approximately $0.6 million in debt.
In August 1997, the Company acquired Service Express, Inc., an Alabama
corporation with operations based in Tuscaloosa, Alabama. Pursuant to the
Agreement and Plan of Reorganization executed at closing, a wholly-owned Alabama
subsidiary of Transit Group was merged with and into Service Express in a
reverse triangular merger, with Service Express remaining as the surviving
corporation of the merger. Upon consummation of the merger, all of the
outstanding common stock of Service Express was converted into 903,226 shares of
Transit Group common stock. In connection with the acquisition of Service
Express, the Company granted the selling shareholders the right through August
15, 1998 to require the Company to redeem up to $1.8 million of shares of the
Company at $3.875 per share. Through December 31, 1998, selling shareholders had
sold $400,000 of stock to third parties.
<PAGE>
Also in August 1997, the Company acquired Capitol Warehouse, Inc., a Kentucky
corporation with operations based in Louisville, Kentucky. Pursuant to the
Agreement and Plan of Reorganization executed at closing, a wholly-owned
Kentucky subsidiary of Transit Group was merged with and into Capitol Warehouse
in a reverse triangular merger, with Capitol Warehouse remaining as the
surviving corporation of the merger. Upon consummation of the merger, all of the
outstanding common stock of Capitol Warehouse was converted into 641,283 shares
of Transit Group common stock. In connection with the acquisition of Capitol
Warehouse, the Company granted the selling shareholder the right to require the
Company to redeem up to $300,000 of the Company's stock at $6.75 per share. The
shareholders have exercised their redemption rights for all of these shares
which were purchased by third parties.
In August 1997, the Company consummated the acquisition of Carroll Fulmer Group,
Inc., a Florida corporation with operations based in Groveland, Florida.
Pursuant to the Agreement and Plan of Reorganization executed at closing,
Carroll Fulmer merged with and into Transit Group Sub., Inc. a wholly-owned
Florida subsidiary of Transit Group (the "Subsidiary"), in a forward triangular
merger, with the Subsidiary remaining as the surviving corporation of the
merger. Upon consummation of the merger, the Company executed a promissory note
in the amount of $2.25 million payable over 5 years, and all of the outstanding
common stock of Carroll Fulmer was converted into 4,166,666 shares of Transit
Group common stock, and the Subsidiary's name was changed to Carroll Fulmer
Group, Inc. In connection with the acquisition of Carroll Fulmer, the Company
granted the selling shareholders the right to require either the Company redeem
or a major shareholder of the Company acquire up to $6.0 million of stock at a
price of $3.60 per share. Of this $6.0 million, redemption rights in the amount
of $2.5 million are exercisable before August 29, 1998 when an additional $3.5
million become exercisable. All redemption rights expire August 29, 2003.
Through December 31, 1998, the Company has received notification that
shareholders have exercised their redemption rights with respect to
approximately $2.3 million. Of this amount, approximately $2.25 million of stock
has been purchased by third parties and $75,000 has been redeemed by the Company
thereby reducing the Company's obligation. The remaining $3.7 million will be
either sold to third parties, redeemed by the Company or acquired by a major
shareholder.
In December 1997, the Company acquired the net assets of Rainbow Trucking
Services, Inc., a Kentucky corporation engaged in the full load, long-haul
trucking business. Upon consummation of this acquisition all of the common stock
of Rainbow Trucking (and two affiliate companies) was converted into 679,246
shares of Transit Group common stock. The Company made loans to the selling
shareholders in the amount of $675,000. Such loans are due on June 30, 1999. If
the average closing price per share of common stock of the Company for the
period June 25, 1999 through June 29, 1999 is less than $6.625 per share, the
notes shall be non-recourse to such extent and the debtor shall not be
personally liable for such deficiency, but the Company shall be entitled to a
return of a proportionate amount of the Company's stock.
In January 1998, the Company acquired Transportation Resources & Management,Inc.
("TRM"), an Indiana corporation with operations based in Fort Wayne, Indiana.
Pursuant to the Reorganization Agreement executed at closing, the Company
purchased all the outstanding capital stock of TRM and the business and related
assets operated and owned by the shareholders of TRM for $.2 million in cash and
365,957 shares of the Company's common stock.
In May 1998, the Company acquired Certified Transport and Venture Logistics,
Inc., Indiana corporations with headquarters in Indianapolis. The Company
purchased all of the outstanding capital stock of Certified and Venture for
$800,000 in cash and 1,072,165 shares of the Company's common stock.
In June 1998, the Company consummated the acquisition of KJ Transportation,
Inc., a New York corporation with operations based in Farmington, New York.
Pursuant to the Agreement and Plan of Reorganization executed at closing, KJ
merged with and into Transit Group Subsidiary, Inc. in a forward triangular
merger with the Subsidiary remaining as the surviving corporation of the merger.
Upon consummation of the merger all of the outstanding stock of KJ was converted
into 878,688 shares of the Company's stock and a cash payment in the amount of
$3.0 million. Simultaneously with the acquisition of KJ, the company acquired
all of the outstanding stock of J&L Leasing of Farmington, Inc. for $.5 million.
In July 1998, the Company purchased all of the issued and outstanding stock of
two Canadian numbered companies which together own 100% of the outstanding stock
of Network Transport, Ltd. a Toronto, Canada based trucking company. The Company
made a cash payment of $.25 million and issued 191,491 shares of the Company's
common stock in exchange for all of the issued and outstanding shares of the two
numbered companies.
<PAGE>
In August 1998, the Company issued 178,519 of its common shares in exchange for
all of the issued and outstanding shares of Diversified Trucking Corporation, an
Opelika, Alabama based trucking company.
Also in August 1998, the Company acquired all of the issued and outstanding
shares of Dothan, Alabama based Northstar Transportation, Inc. in exchange for
349,091 of Transit Group common stock.
In connection with its acquisitions, the Company accrued $4.2 million for the
consolidation and elimination of redundant administrative functions. The accrual
is intended to cover severance costs of employees terminated in conjunction with
its consolidation plan. The amount charged to the accrual through December 31,
1998 is not considered significant.
See Note 13 for the Unaudited Pro Forma results of the acquisitions discussed
above.
NOTE 4: Discontinued Operations
During the second quarter of 1997, the Company approved a plan to dispose of its
parcel delivery and courier operations. After negotiations with a third party
failed, the Company executed a contract for the sale of the parcel delivery
business to a company controlled by Transit Group's Chairman. The sale contract
became effective on September 30, 1997. Under the contract, the buyer assumed
certain net liabilities related to the parcel delivery operations and received
shares of the Company's common stock in exchange.
Revenues attributable to the discontinued business were $14.7 million for the
year ended December 31, 1997.
The loss from discontinued operations has been reflected in accordance with
Accounting Principles Board No. 30 "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual, and Infrequently Occurring Events and Transactions" as a disposal of a
segment. The December 31, 1997 consolidated balance sheet and the consolidated
statements of operations and cash flows for the year then ended have been
restated to separately reflect the financial position, results of operations,
and cash flows of the discontinued parcel delivery and courier businesses. Net
liabilities of discontinued operations were $.3 million and $.6 million at
December 31, 1998 and 1997, respectively.
NOTE 5: Stock
At December 31, 1996, the Company had accrued preferred stock dividends included
in accounts payable of $281,750. In the second quarter of 1997 the holders of
the Company's outstanding preferred stock elected to convert their preferred
stock and accrued dividends of $385,000 to common stock. The Company issued
4,323,922 shares of common stock upon the conversion.
NOTE 6: Income Taxes
<TABLE>
<CAPTION>
The (benefit) provision for income taxes consisted of the following:
Years ended December 31,
------------------------------------------
1998 1997
------------------ ------------------
<S> <C> <C>
Current:
Federal $ 145,000 $ ----
Foreign 12,500 ----
State 394,000 43,174
------------------ ------------------
Total current 551,500 43,174
------------------ ------------------
Deferred:
Federal (7,190,000) ----
Foreign ---- ----
State (475,500) 27,491
------------------ ------------------
Total deferred (7,665,500) 27,491
------------------ ------------------
(Benefit) provision for income taxes $ (7,114,000) $ 70,665
================== ==================
</TABLE>
<PAGE>
The components of the net deferred tax liability are as follows:
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------------
1998 1997
-------------------- -------------------
<S> <C> <C>
Depreciation $ 7,024,361 $ 3,762,133
Net operating loss (10,289,978) (12,903,391)
Estimated expenses deductible in
future tax periods (1,191,655) (601,929)
Other 832,585 (220,231)
-------------------- -------------------
Net deferred tax asset (3,624,687) (9,963,418)
Valuation allowance 2,960,425 12,903,391
-------------------- -------------------
Net deferred income tax liability $ (664,262) $ 2,939,973
==================== ===================
</TABLE>
The difference between the provision for income taxes attributable to continuing
operations and the amounts that would be expected using the Federal statutory
income tax rate of 34% is explained below.
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------------
1998 1997
---------------------- --------------------
<S> <C> <C>
Tax at federal statutory rate - continuing operations $ 1,557,793 $ 113,274
Tax at federal statutory rate - discontinued operations ---- (4,048,228)
Change in deferred tax asset valuation allowance (9,710,399) 3,710,431
Nondeductible expenses 1,079,896 226,217
State taxes, net (53,790) 46,639
Other 12,500 22,332
---------------------- --------------------
Net (benefit) provision for income taxes $ (7,114,000) $ 70,665
====================== ====================
</TABLE>
At December 31, 1998, the Company has $27,401,275 of federal net operating loss
carryforwards potentially available to offset taxable income which expire during
the years 2007 to 2012. The Company has recognized $7,504,000 in benefits for
these net operating losses in the current year's financial statements because
management believes it is more likely than not that the benefits will be
realized. The Company will be limited in the amount of net operating loss which
can be offset against taxable income in any given year because of significant
changes in ownership. Certain pre-acquisition losses of acquired companies will
be unusable because of the change of ownership provisions and a valuation
allowance remains for those losses. To the extent these losses are utilized, any
benefit will be used to reduce goodwill as the losses were incurred by acquired
subsidiaries. Tax loss carryforwards at December 31, 1998 expire as follows:
Year of Expiration Federal State
------------------ ------- -----
2002 ---- 21,848
2003 ---- 651,378
2004 ---- 481,704
2005 ---- 2,696,980
2006 ---- 2,125,475
2007 807,966 1,562,086
2008 1,554,837 1,069,463
2009 1,656,995 1,119,038
2010 4,583,462 2,796,533
2011 7,838,682 4,895,973
2012 10,959,333 7,671,533
----------------- -----------------
$ 27,401,275 $ 25,092,011
================= =================
<PAGE>
NOTE 7: Property, Equipment, and Capitalized Leases
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1998 1997
------------------- ------------------
<S> <C> <C>
Property and equipment:
Land $ 728,000 $ 477,264
Building 2,814,809 2,786,376
Revenue equipment 38,077,860 17,762,556
Other 6,013,229 2,261,990
------------------- ------------------
Total 47,633,898 23,288,186
Less accumulated depreciation 7,361,949 3,096,115
------------------- ------------------
40,271,949 20,192,071
------------------- ------------------
Capitalized leases:
Revenue equipment 3,433,674 10,132,651
Other 380,564 ----
------------------- ------------------
Total 3,814,238 10,132,651
Less accumulated amortization 1,268,163 278,856
------------------- ------------------
2,546,075 9,853,795
------------------- ------------------
$ 42,818,024 $ 30,045,866
=================== ==================
</TABLE>
Depreciation and amortization expense related to property, equipment, and
capitalized leases was $6.6 and $1.3 million for the years ended December 31,
1998 and 1997, respectively.
NOTE 8: Long-Term Debt
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------
1998 1997
----------------------- -----------------------
<S> <C> <C>
Notes payable to commercial lenders,
secured primarily by revenue equipment;
interest rates from 5.7% to 12%; payable
in monthly installments through 2003 $ 23,609,150 $ 14,053,703
Notes payable to bank, secured by land
and building with a net book value of
$3.4 million; interest rates from 6.9%
to 12%; payable in monthly installments
through 2015 1,523,667 1,446,991
Note payable to affiliate of the Chairman,
unsecured; 9% interest; $.5 million
due April 1999 and $1 million due each year
thereafter 3,500,000 4,000,000
Note payable to bank, cross collateralized to
credit facility; interest at 2.50% over LIBOR
(5.06% at December 31, 1998); payable monthly
with final maturity in 2002 5,000,000 ----
Credit facility secured by accounts
receivable; interest rate at 2.25% over LIBOR;
interest paid monthly; final maturity 2000 17,156,028 5,307,301
----------------------- -----------------------
50,788,845 24,807,995
Less current portion 10,754,424 5,183,040
----------------------- -----------------------
$ 40,034,421 $ 19,624,955
======================= =======================
</TABLE>
<PAGE>
The revolving credit facility contains covenants which require, among other
things, net worth, leverage, and interest coverage ratios within specified
levels and contain other provisions and covenants customary in lending
transactions of these types. At December 31, 1998 $3.1 million was available
under the credit facility.
Long-term debt matures as follows:
<TABLE>
<CAPTION>
Years Ended Long-term
December 31, Debt
------------------------------------------------- ------------------
<S> <C>
1999 $ 10,754,424
2000 25,372,461
2001 9,901,586
2002 3,127,406
2003 464,504
Thereafter 1,168,464
------------------
Total long-term debt 50,788,845
Less current portion 10,754,424
------------------
Long-term portion of long-term debt $ 40,034,421
==================
</TABLE>
NOTE 9: Capitalized Leases
The Company has entered into certain lease agreements, which have been accounted
for as capitalized leases. Substantially all of the capitalized leases are for
vehicles. The present value of such commitments for the capitalized leases are
as follows:
<TABLE>
<CAPTION>
Capitalized
Years Ended Lease
December 31, Obligations
----------------------------------------------------- -----------------
<S> <C>
1999 $ 1,518,187
2000 942,505
2001 953,670
2002 533,070
2003 ----
-----------------
Total minimum obligations 3,947,432
Less current portion 1,518,187
-----------------
Long-term capitalized lease obligations $ 2,429,245
=================
</TABLE>
The present values of minimum future obligations shown above are calculated
based on an interest rate of 8% which was determined in connection with the
acquisition of the respective companies and approximates the Company's
incremental borrowing rate. Interest expense on obligations outstanding under
capitalized leases was approximately $302,000 and $335,000 for the years ended
December 31, 1998 and 1997, respectively.
NOTE 10: Operating Leases
In November 1998, the Company entered into a $50 million equipment lease
facility with a commercial lender. The facility is available to restructure the
financing of certain existing equipment and the remainder to support future
equipment leases. The terms of the leases will vary from 30-48 months for used
equipment, and up to 60 months for new equipment. Initial fundings under the
facility bore interest at rates between 5.50% and 6.00%. Interest rates on
future fundings will be subject to changes in the 3-year U.S. Treasury interest
rates. At the expiration of the lease, the Company may renew the lease, return
the equipment subject to the payment of a Terminal Rate Adjustment Clause or
purchase the equipment. At December 31, 1998 approximately $15 million was
available under this facility.
<PAGE>
The Company also leases terminal and office facilities under non-cancelable
operating lease agreements. Lease terms range from one to five years and provide
that the Company will pay real estate taxes, maintenance, insurance and certain
other expenses. At December 31, 1998 future minimum payments under
non-cancelable operating leases having an initial or remaining term of more than
one year were:
Operating
Years Ended
Years ended Lease
Years Ended Years Ended
December 31, Obligations
------------------------------- ---------------------
1999 $ 13,647,149
2000 11,225,062
2001 9,385,851
2002 7,416,477
2003 4,179,335
---------------------
Total $ 45,853,874
=====================
Total rent expense under all operating leases was $6,748,000 and $215,000 for
the years ended December 31, 1998 and 1997, respectively. The Company believes
that upon expiration of these leases it will be able to negotiate new leases on
acceptable terms although lease costs may increase.
NOTE 11: Fair Values of Financial Instruments
Disclosure of fair value information about certain financial instruments,
whether or not recognized in the balance sheet for which it is practicable to
estimate that value, is required by SFAS No. 107, "Disclosure about Fair Value
of Financial Instruments." Substantially all of the Company's assets and
liabilities were obtained as a result of the Company's 11 acquisitions through
December 31, 1998. In connection with accounting for those acquisitions, the
assets acquired and liabilities assumed were recorded at fair market value. The
Company believes that the fair market value of the assets and liabilities has
not changed significantly since the date of acquisition.
NOTE 12: Stock Options and Warrants
The Company has granted options and warrants to acquire its common stock at
various times under various plans, contracts, and employment agreements that
approximated or exceeded fair market value at the date of issue. Options and
warrants which vest over various periods (to a maximum of 4 years), may be
exercised over periods ranging up to ten years and generally expire in five to
ten years.
The 1998 Stock Option Plan provides that the Board of Directors or its delegate
may grant stock options, stock appreciation rights ("SARs"), or restricted stock
awards, to selected employees, directors, and independent contractors. The
maximum aggregate number of shares of common stock that may be issued under the
Plan is 2,000,000, plus 1% of the total issued and outstanding shares as of
December 31 of the year the Plan is in effect.
A summary of outstanding options and warrants is as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------------------
1998 1997
----------------------------------- ------------------------------------
Weighted-Avg. Weighted-Avg.
Shares Exercise Price Shares Exercise Price
------ -------------- ------ --------------
<S> <C> <C> <C> <C>
Outstanding beginning of
Year 2,754,158 $ 3.19 1,290,225 $ 3.14
Granted during the year 807,000 5.81 1,488,933 3.22
Exercised (49,900) 4.54 (25,000) 2.50
Forfeited or expired (98,200) 6.01 ---- ----
-------------- ---------------
Outstanding at end of year 3,413,058 $ 3.69 2,754,158 $ 3.19
============== ===============
Exercisable at end of year 2,394,787 1,763,105
============== ===============
</TABLE>
<PAGE>
Options and warrants outstanding at December 31, 1998 were exercisable at prices
ranging from $1.43 to $6.88. All stock options and warrants are
non-compensatory. Options and warrants outstanding at year end may be summarized
as follows:
<TABLE>
<CAPTION>
Range of Number Weighted -Average
Exercise Price Outstanding Exercise Price
-------------------------- ------------------------- ---------------------------
<S> <C> <C>
$1.43 -$1.99 36,250 $1.44
2.00 - 2.99 1,695,151 2.25
3.00 - 3.99 363,500 3.50
4.00 - 4.99 453,157 4.24
5.00 - 5.99 113,500 5.17
6.00 - 6.99 751,600 6.36
</TABLE>
Additionally, in conjunction with the initial public offering, the Company
issued 690,000 warrants. Two warrants entitle the holder thereof to purchase at
a price of $7.50 per share, one share of common stock at any time until November
16, 2000. The warrants are subject to redemption by the Company at $.05 per
warrant at any time on 30 days' written notice, provided that the average
closing bid price of the common stock on NASDAQ is at least $8.50 for ten
consecutive trading days ending five days prior to the date of the notice of
redemption.
The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation".
In accordance with the provisions of SFAS 123, the Company applies Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related Interpretations in accounting for its stock option and warrant grants.
If the Company had elected to recognize compensation expense based upon the fair
value at the grant dates for awards under this plan consistent with the
methodology prescribed by SFAS 123, the Company's results of operations would be
as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------- -------------------
<S> <C> <C> <C>
Net income (loss): As reported $ 11,695,741 $ (11,644,060)
Unaudited pro forma $ 10,873,470 $ (12,984,054)
Net income (loss) per share: As reported - basic .52 (1.08)
Unaudited pro forma
basic .49 (1.21)
As reported - diluted .49 (1.08)
Unaudited pro forma
diluted .46 (1.21)
</TABLE>
The fair value of each option and warrant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1998 and 1997, respectively; expected volatility
of 1.02% and risk-free interest rates of 4.28% and 5.48%, respectively. An
expected option term of 5 years for both periods was developed based on
historical grant information. Because the Company has not paid dividends and
anticipates retaining earnings to provide funds for the operation and expansion
of the Company in the future, no dividends were assumed in the Black-Scholes
option pricing model.
Because the Company's stock options and warrants have characteristics
significantly different from those of traded options and warrants, and because
changes in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options and warrants.
<PAGE>
NOTE 13: Subsequent Events
In January 1999, the Company acquired Priority Transportation, Inc. an Olive
Branch, Mississippi based truckload carrier. Total consideration for all of the
outstanding shares of Priority was approximately $4.75 million which was funded
by the issuance of approximately 804,000 shares of Transit Group common stock,
the payment of $750,000 cash, and a $495,000 payment on a promissory note.
The Company acquired Massengill Trucking Service, Inc. in March 1999. Massengill
was a privately held truckload carrier based in Hickory Flat, Mississippi. The
acquisition was valued at $6.3 million which was funded by the issuance of
approximately 970,000 shares of Transit Group common stock, a cash payment of
$1.1 million at closing, and approximately $850,000 over a five year period.
Also in March 1999, the Company acquired Chesterton, Indiana based KAT, Inc. for
consideration of approximately $4.2 million, which was comprised of
approximately 812,000 shares of Transit Group common stock and $725,000 in cash.
The business combinations described above and in Note 3 of Notes to Consolidated
Financial Statements will be accounted for under the purchase method of
accounting. Accordingly, the operating results of the acquired companies have
been included in the Company's consolidated financial statements since their
respective dates of acquisition. Assets acquired and liabilities assumed were
recorded at fair market value.
The unaudited pro forma financial information reflects the operations of the 5
companies acquired in 1997, the 6 companies acquired in 1998, and the 3
companies acquired in 1999 as if they all had been acquired on January 1, 1997.
The following adjustments were made to the historical financial statements of
acquired companies prior to their acquisition by the Company:
- Reduced depreciation expense due to changes in depreciation
policies and estimated lives;
- Amortization of goodwill recorded in connection with the acquisitions;
- Additional interest costs for the cash portion of the acquisition
costs; and
- Interest costs of the acquired companies have been adjusted to reflect
the Company's financing costs.
No projected provision for cost reductions (such as insurance, overhead,
purchasing, and fuel) have been reflected in the historical financial statements
of the subsidiaries from January 1, 1997 through the date of acquisition.
<TABLE>
<CAPTION>
Unaudited Pro Forma Combined Results of Operations
December 31
----------------------------------------
1998 1997
------------------ ------------------
<S> <C> <C>
Revenue $ 296,364,000 $ 296,228,000
================== ==================
Net income $ 14,703,000 $ 4,073,000
================== ==================
Income per basic common share $ .56 $ .16
================== ==================
Income per diluted common share $ .53 $ .15
================== ==================
Weighted average number of basic common
shares outstanding 26,381,209 25,791,743
================== ==================
Weighted average number of diluted
common shares outstanding 27,636,140 27,147,982
================== ==================
</TABLE>
<PAGE>
NOTE 14: Related Party Transactions
The Company leases certain facilities from several of the former owners of the
businesses acquired. During 1998 and 1997, rental payments under operating
leases to related parties aggregated $73,000 and $194,000, respectively.
Payments to related parties under capitalized leases totaled $1.6 million and
$785,000 in 1998 and 1997, respectively.
The terms of the leases with related parties is, in the opinion of the Company,
no less favorable to the Company than could be obtained from unrelated third
parties.
NOTE 15: Commitments and Contingencies
In connection with the acquisitions of Capitol Warehouse, Service Express, and
Carroll Fulmer, the Company granted the selling shareholders the right to
require the Company to redeem a portion of the shares which they received in
exchange for selling their businesses to the Company. The dollar amount of stock
subject to mandatory redemption by the Company aggregated approximately $8.1
million. The redemption rights expire in the amounts of $2.1 million at August
15, 1998 and $6.0 million at August 29, 2003.
Holders of redemption rights with respect to $6.0 million of stock may require
either the Company to redeem the stock or a major shareholder of the Company to
acquire the stock at a price of $3.60 per share. Through December 31, 1998, the
Company has received notification that shareholders have exercised their
redemption rights with respect to approximately $2.3 million. Of this amount,
approximately $2.25 million has been purchased by third parties and $75,000 has
been redeemed by the Company, thereby reducing the Company's obligation. To the
extent such redemption rights are exercised, the Company will be required to
fund the cash required to meet its obligations under the redemption rights, by
drawing on bank lines which may be available to its subsidiaries, or to call
upon a major shareholder to purchase the stock under such shareholder's
obligations and guarantees associated with the acquisition contracts.
In connection with the sale of the Company's parcel delivery and courier
operations, the Company issued certain warranties regarding the value of certain
assets and liabilities transferred to the purchasers of the businesses and
remains contingently liable on certain real and personal property leases. To
provide for possible liabilities, which would arise under the warranties on
lease agreements, the Company has recorded a liability of approximately $273,000
and $566,000 at December 31, 1998 and 1997, respectively.
The Company is a party to various other legal actions which are ordinary and
incidental to its business. While the outcomes of legal actions cannot be
predicted with certainty, the Company believes the outcome of any of these
proceedings, or all of them combined, will not have a material adverse effect on
its consolidated financial position or results of operations.
Exhibit 10.19
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 (ACapitol 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 ADebtor@) 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 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.
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
<PAGE>
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 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.
(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 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.
(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
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
ADebtor@
AMSOUTH BANK, a bank organized under the laws of
Alabama
By: /s/ Anthony Stiffler
Anthony Stiffler,
Vice President
"Secured Party"
Exhibit 10.21
TERMINATION OF LEASE AGREEMENTS
This Termination of Lease Agreements, (ATermination Agreement@) is
made and entered into as of the 9th day of February, 1999, by and between Jerry
W. Pennington and Anna Pennington, husband and wife, each a Kentucky resident,
(the ALessors@), and Transit Leasing, Inc., an Indiana corporation, f/k/a
Capitol Warehouse, Inc., a Kentucky corporation, (the ALessee@).
W I T N E S S E T H
WHEREAS, the Lessors and Lessee are parties to the Lease Agreements
(as defined below) and mutually desire to terminate and cancel each of the
Lease Agreements effective as of the date hereof.
NOW THEREFORE, for and in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The Lessors and Lessee are parties to the following Lease Agreements
(the ALeases@), each dated August 15, 1997:
(1) That certain Lease of property located in Jefferson County,
Kentucky for the premises described on the attached Exhibit
A; and
(2) That certain Lease of property located in Shelby County, Kentucky for the
premises described on the attached Exhibit B.
2. The Leases are hereby canceled and terminated effective as of the date
hereof. It is agreed that Lessor shall not be required to refund to
Lessee any portion of the rental amount paid by Lessee under the
Leases for the month of February, 1999, notwithstanding the
termination of the Leases on the date hereof. It is further agreed
that on and after the date hereof, Lessee shall have no further
obligation to Lessor under either of the Leases, notwithstanding any
prepayment penalty or other provision of the Leases. Lessors further
acknowledge that they have inspected and accept the premises and have
no claims against Lessee or any of its affiliates in connection
herewith.
IN WITNESS WHEREOF, each of the undersigned have executed this
Termination Agreement as of the date set forth above.
LESSORS:
LESSEE:
_/s/ Jerry W. Pennington____ Transit Leasing, Inc., f/k/a
Jerry W. Pennington Capitol Warehouse, Inc.
_/s/ Anna Pennington______ By:
__/s/__________________
Anna Pennington
Exhibit 10.24
PROMISSORY NOTE
November 12, 1998
6070 Collette Road
Farmington, New York 14424
FOR VALUE RECEIVED, KJ TRANSPORTATION, INC. and J&L TRUCK LEASING OF
FARMINGTON, INC. (collectively, "Maker") jointly and severally promise to pay
to the order of GENERAL ELECTRIC CAPITAL CORPORATION or any subsequent holder
hereof (each, a "Payee") at its office located at One Lincoln Centre, 5400 LBJ
Freeway, Suite 525, Dallas, Texas 75240 or at such other place as Payee or the
holder hereof may designate, the principal sum of Two Million Six-Hundred
Forty-Five Thousand Four-Hundred Fifty-One Dollars ($2,645,451.00), with
interest thereon, from the date hereof through and including the dates of
payment, at the floating per annum simple interest rate ("Contract Rate")
calculated as hereinafter set forth. The Contract Rate shall be adjusted once
each calendar quarter, and such adjustment shall be effective during the
adjustment period ("Adjustment Period") as hereinafter defined. Each Adjustment
Period shall commence at the close of business on the last day of a calendar
quarter and shall continue through the same day of the next succeeding calendar
quarter. The Contract Rate for each Adjustment Period shall be equal to the sum
of (i) Two and One Hundredths Percent (2.50%) per annum, plus (ii) a variable
per annum interest rate, which shall be the Libor Rate. ALibor Rate@ shall
mean, with respect to any adjustment period occurring during the term of this
Promissory Note, an interest rate per annum equal to the average of the London
interbank offered rates for United States dollar deposits based on quotations
at five major banks for ninety (90) day maturities, to the extent the rates
offered by these banks is published in the AMoney Rates@ column of the Eastern
Edition of The Wall Street Journal (provided, however, that with respect to the
first Adjustment Period, it shall be determined as of the seventh Business Day
next preceding the first day of such first Adjustment Period).
Subject to the other provisions hereof, the principal of this Note is payable
in lawful money of the United States in eight (8) consecutive quarterly
installments of Two Hundred Twenty Thousand Four Hundred Fifty-Four Dollars and
25/100 ($220,454.25) each plus interest at the Contract Rate ("Periodic
Installment") and a final installment which shall be in the amount of Eight
Hundred Eight-One Thousand Eight-Hundred Seventeen Dollars ($881,817.00), plus
any remaining outstanding unpaid principal and interest. The first Periodic
Installment shall be due and payable on March 1, 1999, and the following
Periodic Installments and the final installment shall be due and payable on the
same day of each succeeding period (each Payment Date). The number of Periodic
Installments, and their due dates, will not change with fluctuations in the
Contract Rate.
All payments shall be applied first to interest and then to principal. Each
payment may, at the option of the Payee, be calculated and applied on an
assumption that such payment would be made on its due date. The acceptance by
Payee of any payment which is less than payment in full of all amounts due and
owing at such time shall not constitute a waiver of Payee's right to receive
payment in full at such time or at any prior or subsequent time. Interest shall
be calculated on the basis of a 360 day year.
The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.
This Note is secured by a Master Security Agreement dated as of November 12,
1998, between Maker and Payee (the "Security Agreement").
Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
the applicable due date, the Maker agrees to pay, in addition to the amount of
each such installment or other sum, a late payment charge of five percent (5%)
of said installment or other sum, but not exceeding any lawful maximum. If (i)
Maker fails to make payment of any amount due hereunder within ten (10) days
after the same becomes due and payable; or (ii) Maker is in default under or
fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or the
Security Agreement, at the election of Payee, shall immediately become due and
payable, with interest thereon at the lesser of twelve percent (12%) per annum
or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).
The Maker may prepay in full, but not in part, its entire indebtedness
hereunder on any installment payment date, without premium or penalty.
It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law or permitted by
virtue of any license held by payee. If any such excess interest is contracted
for, charged or received under this Note or any Security Agreement, or in the
event that all of the principal balance shall be prepaid, so that under any of
such circumstances the amount of interest contracted for, charged or received
under this Note or the Security Agreement on the principal balance shall exceed
the maximum amount of interest permitted by applicable law or permitted by
virtue of any license held by payee, then in such event (a) the provisions of
this paragraph shall govern and control, (b) neither Maker nor any other person
or entity now or hereafter liable for the payment hereof shall be obligated to
pay the amount of such interest to the extent that it is in excess of the
maximum amount of interest permitted by applicable law, (c) any such excess
which may have been collected shall be either applied as a credit against the
then unpaid principal balance or refunded to Maker, at the option of the Payee,
and (d) the effective rate of interest shall be automatically reduced to the
maximum lawful contract rate allowed under applicable law as now or hereafter
construed by the courts having jurisdiction thereof. It is further agreed that
without limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received under this Note or the Security Agreement
which are made for the purpose of determining whether such rate exceeds the
maximum lawful contract rate, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the indebtedness evidenced
hereby, all interest at any time contracted for, charged or received from Maker
or otherwise by Payee in connection with such indebtedness; provided, however,
that if any applicable state law is amended or the law of the United States of
America preempts any applicable state law, so that it becomes lawful for the
Payee to receive a greater interest per annum rate than is presently allowed,
the Maker agrees that, on the effective date of such amendment or preemption,
as the case may be, the lawful maximum hereunder shall be increased to the
maximum interest per annum rate allowed by the amended state law or the law of
the United States of America.
The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "Obligor") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all
substitutions or releases of, security or of any party primarily or secondarily
liable on this Note or any Security Agreement or any term and provision of
either, which may be made, granted or consented to by Payee, and agree that
suit may be brought and maintained against any one or more of them, at the
election of Payee without joinder of any other as a party thereto, and that
Payee shall not be required first to foreclose, proceed against, or exhaust any
security hereof in order to enforce payment of this Note. The Maker and each
Obligor hereby waive presentment, demand for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, and all other notices in
connection herewith, as well as filing of suit (if permitted by law) and
diligence in collecting this Note or enforcing any of the security hereof, and
agree to pay (if permitted by law) all expenses incurred in collection,
including Payee's actual reasonable attorneys' fees.
THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY
RELATED TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
This Note and the Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supersedes all
prior understandings, agreements and representations, express or implied.
No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.
Any provision in this Note or the Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or
altered to conform thereto.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL, IN ALL RESPECTS, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. The parties agree that any action or proceeding arising out of or
relating to this Note shall be commenced in any state or Federal court located
in New York County, City of New York, State of New York, and that such courts
shall have exclusive jurisdiction to hear and determine any claims or disputes
between or among any of the parties hereto or thereto relating to the
transaction contemplated by this Note, and any investigation, litigation or
proceeding related to or arising out of any such matters; provided, however,
that the parties hereto acknowledge that any appeals from those courts may be
heard by a court located outside of such jurisdiction. Each party hereto
expressly submits and consents in advance to such jurisdiction in any action or
suit commenced in any such court, and hereby waives any objection which such
party may have based upon lack of personal jurisdiction, improper venue or
inconvenient form. The parties further agree that a summons and complaint
commencing an action or proceeding in any such court shall be properly served
and shall confer personal jurisdiction if served personally or by certified
mail to it at its address set forth herein, or as it may provide in writing
from time to time, or as otherwise provided under the laws of the State of New
York.
KJ TRANSPORTATION, INC.
(Witness)
/s/ Philip A. Belyew
(Print name) Name: Philip A. Belyew
Title:Chairman
Federal tax identification
number: 16-1271560
J&L TRUCK LEASING OF
FARMINGTON, INC.
/s/ Philip A. Belyew
Name:Philip A. Belyew
Title:Chairman
Federal tax identification
number: 16-1302929
Exhibit 10.25
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT (the "Lease") is made as of the 12th day
of November, 1998, by and between GENERAL ELECTRIC CAPITAL CORPORATION, its
successors and assigns ("Lessor"), and TRANSIT GROUP, INC., CAROLINA-PACIFIC
DISTRIBUTORS, INC., CERTIFIED TRANSPORT, INC., RAINBOW TRUCKING SERVICES, INC.,
TRANSIT LEASING, INC. f/k/a CAPITOL WAREHOUSE INC., TRANSPORTATION RESOURCES
AND MANAGEMENT, INC., CARROLL FULMER & CO., INC., KJ TRANSPORTATION, INC.,
SERVICE EXPRESS, INC., DIVERSIFIED TRUCKING CORP., J&L TRUCK LEASING OF
FARMINGTON, INC. and NORTHSTAR TRANSPORTATION, INC., their successors and
permitted assigns (collectively, ALessee").
Concurrently with execution of this Lease, certain of the parties are
executing that certain Master Security Agreement dated as of the date hereof
(the ASecurity Agreement@), in connection with which Lessor shall make certain
loans (the ALoans@). The aggregate amount of such Loans and the aggregate
Capitalized Lessor=s Cost of the Equipment to be acquired and leased pursuant
to this Lease, in accordance with the terms of the Security Agreement and of
this Lease, shall be $50,000,000.00.
The parties agree that Lessee shall lease from Lessor the property
(the "Equipment") described in the Schedule(s) to be executed pursuant hereto
(collectively, the "Schedule"), subject to the terms set forth herein and in
the Schedule. Certain definitions and construction of certain of the terms used
herein are provided in Section 21 hereof.
Each Schedule shall incorporate by reference the terms and conditions
of this Master Lease Agreement. Each Schedule, incorporating by reference the
terms and conditions of this Master Lease Agreement, shall constitute a
separate instrument of lease.
1. TERM. The term of lease with respect to any item of the Equipment
shall consist of the term set forth in the Schedule relating thereto; provided,
however, that this Lease shall be effective from and after the date of
execution hereof.
2. RENT. (a) Lessee shall pay Lessor the rental installments in the
aggregate amounts specified in the Schedule, without prior notice or demand,
and all other amounts payable pursuant to this Lease (such installments and
other amounts, the "rent"). Each Schedule constitutes a non-cancelable net
lease, and Lessee's obligation to pay rent, and to otherwise perform its
obligations under this Lease, each such Schedule and all of the other documents
and agreements entered in connection herewith (collectively, the "Lease
Documents"), are and shall be absolute and unconditional and shall not be
affected by any right of setoff, counterclaim, recoupment, deduction, defense
or other right which Lessee may have against Lessor, the manufacturer or vendor
of the Equipment (the "Suppliers"), or anyone else, for any reason whatsoever.
Rental installments are payable as and when specified in the Schedule by wire
transfer of immediately available funds to: Bankers Trust New York, New York,
New York 10006, Account No. 50-202-962, ABA No. 021-001-033, or to such other
account as Lessor may direct in writing; and payments of rent shall be
effective upon receipt. Timeliness of Lessee's payment and its other
performance under the Lease Documents is of the essence. If any rent is not
paid within ten (10) days of its due date, Lessee agrees to pay a late charge
of five cents ($.05) per dollar on, and in addition to, the amount of such rent
but not exceeding the lawful maximum, if any.
(b) If, solely as a result of Congressional enactment of any
law (including, without limitation, any modification of, or amendment or
addition to, the Internal Revenue Code of 1986, as amended, (ACode@)), the
maximum effective corporate income tax rate (exclusive of any minimum tax rate)
for calendar-year taxpayers (AEffective Rate@) is higher than thirty-five
percent (35%) for any year during the lease term, then Lessor shall have the
right to increase such rent payments by requiring payment of a single
additional sum calculated so as to preserve Lessor=s Net Economic Return (as
such term is hereinafter defined). The additional sum shall be equal to the
product of (i) the Effective Rate (expressed as a decimal) for such year less
.35 (or, in the event that any adjustment has been made hereunder for any
previous year, the Effective Rate (expressed as a decimal) used in calculating
the next previous adjustment) times (ii) the adjusted Termination Value
(defined below), divided by (iii) the difference between the new Effective Tax
Rate (expressed as a decimal) and one (1). The adjusted Termination Value shall
be the Termination Value (calculated as of the first rent due in the year for
which the adjustment is being made) minus the Tax Benefits that would be
allowable under Section 168 of the Code (as of the first day of the year for
which such adjustment is being made and all future years of the lease term).
The Termination Values and Tax Benefits are defined on the Schedule. Lessee
shall pay to Lessor the full amount of the additional rent payment on the later
of (i) receipt of notice or (ii) the first day of the year for which such
adjustment is being made. Lessee's obligations under this Section 2(b) shall
survive any expiration or termination of this Lease.
3. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and
warrants that: (a) Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation. (b)
Carolina-Pacific Distributors, Inc., Certified Transport, Inc., Rainbow
Trucking Services, Inc., Transit Leasing, Inc. f/k/a Capitol Warehouse Inc.,
Transportation Resources and Management, Inc., Carroll Fulmer & Co., Inc., KJ
Transportation, Inc., Service Express, Inc., Diversified Trucking Corp., J&L
Truck Leasing of Farmington, Inc. and Northstar Transportation, Inc. are each a
wholly-owned subsidiary (directly or indirectly) of Transit Group, Inc. (c) The
sale of those items of the Equipment described on the schedule attached to each
Bill of Sale (collectively, the ABill of Sale@) executed by Lessee pursuant
hereto and delivered to Lessor, and the execution, delivery and performance of
the Lease Documents: (1) have been duly authorized by all necessary corporate
action on the part of Lessee; (2) do not require the approval of any
stockholder, trustee or holder of any obligations of Lessee except such as have
been duly obtained; and (3) do not and will not contravene any law,
governmental rule, regulation or order now binding on Lessee, or the charter or
by-laws of Lessee, or contravene the provisions of, or constitute a default
under, or result in the creation of any lien or encumbrance upon the property
of Lessee under, any indenture, mortgage, contract or other agreement to which
Lessee is a party or by which it or its property is bound which has not been
waived. (d) Each of the Lease Documents, when entered into, will constitute
legal, valid and binding obligations of Lessee, jointly and severally
enforceable against each Lessee, in accordance with the terms thereof. Subject
to the release of existing lien rights, the Bill of Sale transfers to Lessor
good and marketable title to the Equipment described on the schedule attached
thereto. Other than the recording of certificates of title with respect to
motor vehicles, no filing or recordation must be made, no notice must be given,
and no other action must be taken with respect to any state or local
jurisdiction, or any person, except such as have been duly made, given or
taken, in order to preserve to Lessor all the rights transferred by the Bill of
Sale. (e) There are no pending actions or proceedings to which Lessee is a
party, and there are no other pending or threatened actions or proceedings of
which Lessee has knowledge, before any court, arbitrator or administrative
agency, which, either individually or in the aggregate, would have a Material
Adverse Effect. As used herein, AMaterial Adverse Effect@ shall mean (1) a
materially adverse effect on the business, condition (financial or otherwise),
operations, performance or properties of the Lessees taken as a whole, or (2) a
material impairment of the ability of any Lessee to perform its obligations
under or to remain in compliance with the Lease Documents. Further, Lessee is
not in default under any obligation for borrowed money, for the deferred
purchase price of property or any lease agreement which, either individually or
in the aggregate, would have the same such effect. (f) The audited consolidated
financial statements of Lessee (copies of which have been furnished to Lessor)
have been prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), and fairly present Lessee's consolidated
financial condition and the results of its consolidated operations as of the
date of and for the period covered by such statements, and since the date of
such statements there has been no material adverse change in such conditions or
operations. (g) The address stated below the signature of Lessee is the chief
place of business and chief executive office of Lessee; and Lessee does not
conduct business under a trade, assumed or fictitious name. (h) Lessee has
reviewed the areas within its business and operations which could be adversely
affected by, and has developed or is developing a program to address on a
timely basis, the AYear 2000 Problem@ (that is, the risk that computer
applications used by Lessee may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date on or
after December 31, 1999). Based on such review and program, Lessee believes
that the AYear 2000 Problem@ will not have a Material Adverse Effect. From time
to time, at the request of Lessor, Lessee shall provide to Lessor such updated
information or documentation as is requested regarding the status of its
efforts to address the Year 2000 Problem.
4. COVENANTS OF LESSEE. Lessee covenants and agrees as follows: (a)
Lessee will furnish Lessor (1) within ninety (90) days after the end of each
fiscal year of Lessee, a consolidated balance sheet of Lessee as at the end of
such year, and the related consolidated statement of income and consolidated
statement of cash flows of Lessee for such fiscal year, prepared in accordance
with GAAP, all in reasonable detail and certified by independent certified
public accountants of recognized standing selected by Lessee (which shall be a
"Big 6" accounting firm); (2) within ninety (90) days after the end of each
fiscal year of Lessee, a consolidating balance sheet of Lessee as at the end of
such year, and the related consolidating statement of income and consolidating
income of cash flows of Lessee for such fiscal year, prepared in accordance
with GAAP; (3) within thirty (30) days after the end of each fiscal year of
Lessee, Lessee=s Board approved operating plan for the next fiscal year; (4)
within forty-five (45) days after the end of each quarter, an unaudited balance
sheet of Lessee as at the end of such quarter, and the related statement of
income and statement of cash flows of Lessee for such quarter, prepared in
accordance with GAAP, except for the absence of footnotes and year-end
adjustments; (5) within forty-five (45) days after the end of each quarter, an
unaudited consolidating balance sheet of Lessee as at the end of such quarter,
and the related consolidating statement of income and consolidating statement
of cash flows of Lessee for such quarter, prepared in accordance with GAAP,
except for the absence of footnotes and year-end adjustments; and (6) within
ten (10) days after the date on which they are filed, all regular periodic
reports, forms and other filings required to be made by Lessee to the
Securities and Exchange Commission, if any; and (7) contemporaneously with the
furnishing of the financial statements required pursuant to Clauses (1) and (3)
above, a duly completed compliance certificate dated the date of such financial
statements and signed by the chief financial officer of Lessee, containing a
computation of the financial ratio set forth in Section 4(e) hereof and to the
effect that such officer has not become aware of any default or Event of
Default that has occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it. (b) Lessee will
promptly execute and deliver to Lessor such further documents, instruments and
assurances and take such further action as Lessor from time to time may
reasonably request in order to carry out the intent and purpose of this Lease
and to establish and protect the rights and remedies created or intended to be
created in favor of Lessor under the Lease Documents. (c) Lessee shall provide
written notice to Lessor: (1) thirty (30) days after any contemplated change in
the name or address of the chief executive office of Lessee; (2) promptly upon
the occurrence of any Default (as hereinafter defined) or event which, with the
lapse of time or the giving of notice, or both, would become a Default (a
"default"; except as used in Sections 15 and 16); and (3) promptly upon Lessee
becoming aware of any alleged material violation of applicable law relating to
the Equipment or this Lease. (d) Lessee shall pay to Lessor, monthly, in
arrears, upon demand, a non-utilization fee calculated as the following
specified percentage of the difference between $25,000,000 (which amount shall
be subject to adjustment to reflect (A) any termination of Lessor=s commitment
pursuant to the next sentence, or (B) any reallocation requested by Lessee
pursuant to Section 5(e)(B) hereof) and the aggregate Capitalized Lessor=s Cost
of all Equipment comprised of new tractors and trailers leased hereunder as of
the date of determination times 0.25 percent with respect to the period
commencing on the date on which Lessor initially funds the Capitalized Lessor=s
Cost of any unit of the Equipment and continuing for ninety (90) days
thereafter; and 0.50 percent thereafter. By written notice to Lessor, Lessee
may terminate that portion of Lessor=s commitment to acquire and lease new
tractors and trailers hereunder as has not then been funded or as to which
Lessor has not then incurred contractual liability. (e) At all times during the
term of this Lease, Lessee shall maintain a Fixed Charge Coverage Ratio of not
less than 1.1:1.0, determined as of the last day of each fiscal quarter
calculated on a rolling four (4) - quarter basis. As used herein, AFixed Charge
Coverage Ratio@ shall mean the ratio of (X) Lessee=s consolidated earnings
before income taxes, depreciation and amortization, minus non-financed capital
expenditures, minus cash taxes paid by Lessee on a consolidated basis, divided
by (Y) principal payments on indebtedness plus cash interest expense of Lessee
on a consolidated basis. All calculations hereunder shall be made in accordance
with GAAP.
5. CONDITIONS PRECEDENT. Lessor's obligations under each Schedule,
including its obligation to purchase and lease any Equipment to be leased
thereunder, are conditioned upon Lessor's determination that all of the
following have been satisfied: (a) Lessor having received the following, in
form and substance reasonably satisfactory to Lessor: (1) evidence as to due
compliance with the insurance provisions hereof; (2) Uniform Commercial Code
financing statements and all other filings and recordings as reasonably
required by Lessor; (3) certificate of Lessee's Secretary certifying: (i)
resolutions of Lessee's Board of Directors duly authorizing the sale and
leasing of the Equipment hereunder and the execution, delivery and performance
of the Lease Documents, and (ii) the incumbency and signature of the officers
of Lessee authorized to execute such documents; (4) an opinion of counsel for
Lessee; (5) the only manually executed original of the Equipment Schedule and
executed originals of all other Lease Documents; (6) all purchase documents
pertaining to the Equipment (collectively, the "Supply Contract"), together
with photocopies of the manufacturers' statements of origin with respect to
each item of the Equipment and of the applications for certificates of title
and lien notation applications, required to cause each certificate of title
issued with respect to an item of the Equipment to show the registered owner as
Lessor; (7) such general and collateral releases from prior lenders and/or
lessors with respect to the Equipment as Lessor reasonably may require; (8)
such access to Lessees= management and auditors as Lessor reasonably may
require; (9) substantiation with respect to each item of the Equipment,
including complete descriptions of the Equipment including make (manufacturer),
model number(s), serial number(s), age, original cost breakdown (including
Ahard@ and Asoft@ cost), equipment specifications, and to the extent available
or obtainable (with respect to used tractors and trailers) copies of original
purchase orders and invoices; (10) an appraisal in form and substance, and by
an independent appraiser, reasonably satisfactory to Lessor and Lessee,
substantiating the Equipment=s remaining economic useful life, all requisite
fair market values, and orderly liquidation values, at selected points
throughout the term (such appraisal to be provided by Lessee at its expense);
(11) such consents with respect to the transaction contemplated by this Lease
from Amsouth Bank as reasonably may be required with respect to that certain
Advised Revolving Line of Credit Agreement dated as of December 18, 1997,
between Amsouth Bank and Carroll Fulmer & Company, Inc., Carolina-Pacific
Distributors, Inc., Capitol Warehouse, Inc. and Services Express, Inc.; and
(12) such other documents, agreements, instruments, certificates, opinions,
assurances, as Lessor reasonably may require. (b) All representations and
warranties provided in favor of Lessor in any of the Lease Documents shall be
true and correct in all material respects on the effective date of such
Schedule with the same effect as though made as of such date (Lessee's
execution and delivery of the Schedule shall constitute an acknowledgment of
the same). (c) There shall be no default or Default under the Schedule or any
other Lease Documents. The Equipment shall have been delivered to and accepted
by Lessee, and shall be in the condition and repair required hereby; and on the
effective date of the Schedule, Lessor shall have received good title to the
Equipment to be leased thereunder, free and clear of any lien, claim or
encumbrance of any kind. (d) There shall have been (1) since the date of
Lessees= most recent audited financial statements, no material adverse change,
individually or in the aggregate, in the business, financial or other condition
of the Lessees taken as a whole, or the Equipment, or in the prospects or
projections of the Lessees taken as a whole; (2) no litigation commenced which,
if successful, would have a Material Adverse Effect on the Lessees taken as a
whole, or which would challenge the transactions contemplated by this Lease;
(3) since the date of Lessees= most recent audited financial statements, no
material increase in the liabilities, liquidated or contingent, of the Lessees
taken as a whole, or a material decrease in the assets of any Lessee or the
Lessees taken as a whole; and (4) since the date of execution of this Lease, no
change in lease syndication, financial or capital market conditions generally
that in Lessor=s judgment would materially impair syndication of the
transaction contemplated by this Lease. (e) Notwithstanding anything to the
contrary set forth herein, upon completion of all fundings hereunder, the
maximum aggregate Capitalized Lessor=s Cost of all of the Equipment comprised
of trailers shall not exceed: (1) forty (40) percent of the aggregate
Capitalized Lessor=s Cost of all Equipment comprised of used tractors and
trailers funded by Lessor hereunder; and (2) forty (40) percent of the
aggregate Capitalized Lessor=s Cost of all Equipment comprised of new tractors
and trailers funded by Lessor hereunder; unless (A), at such time, Lessor has
then successfully syndicated any such excess amount, or (B) Lessee notifies
Lessor of Lessee=s desire to reallocate an amount up to $10,000,000 from
Lessor=s commitment to acquire and lease used tractors and trailers to Lessor=s
commitment to acquire and lease new tractors and trailers, in which case such
percentages shall be revised.
6. DELIVERY; INSPECTION AND ACCEPTANCE BY LESSEE. Upon delivery,
Lessee shall inspect and, to the extent the Equipment conforms in all material
respects to the condition required by the applicable Supply Contract, accept
the Equipment and shall execute and deliver to Lessor a Schedule containing a
complete description of the item of Equipment accepted; whereupon, as between
Lessor and Lessee, the same shall be deemed to have been finally accepted by
Lessee pursuant to this Lease. All expenses incurred in connection with
Lessor's purchase of the Equipment (including shipment, delivery and
installation) shall be the responsibility of Lessee and shall be paid upon
demand. If Lessee shall, for reasonable cause, refuse to accept delivery of any
item of the Equipment, Lessee will be assigned all rights and shall assume all
obligations as purchaser of the Equipment.
7. USE AND MAINTENANCE. (a) Lessee shall: (1) use the Equipment solely
in the Continental United States and Canada (provided, however, that use of any
item of the Equipment outside the Continental United States shall not exceed
fifty (50) percent of the total use of such item of the Equipment during any
calendar year), and in the conduct of its business, for the purpose for which
the Equipment was designed, in a careful and proper manner, and shall not
permanently discontinue use of the Equipment; (2) operate, maintain, service
and repair the Equipment, and maintain all records and other materials relating
thereto, (i) in substantial compliance with (A) the Supplier's recommendations
and all maintenance and operating manuals or service agreements, whenever
furnished or entered into, including any subsequent amendments or replacements
thereof, issued by the Supplier or service provider, (B) the requirements of
all applicable insurance policies, (C) the Supply Contract, so as to preserve
all of Lessee's and Lessor's rights thereunder, including all rights to any
warranties, indemnities or other rights or remedies, (D) all material
applicable laws, and (E) the prudent practice of other similar companies in the
same business as Lessee, but in any event, to no lesser standard than that
employed by Lessee for comparable equipment owned or leased by it (provided
that such maintenance program shall be subject to review by Lessor and must be
reasonably satisfactory to Lessor); and (ii) without limiting the foregoing, so
as to cause the Equipment to be in good repair and operating condition and in
at least the same condition as when delivered to Lessee hereunder, except for
ordinary wear and tear resulting despite Lessee's full compliance with the
terms hereof; (3) notify Lessor within thirty (30) days after the change of the
location of the principal garage of any Equipment as specified in the Schedule
and promptly notify Lessor in writing if any unit of Equipment fails to return
to the specified location of the principal garage of such unit for a period of
ninety (90) consecutive days; (4) not attach or incorporate the Equipment to or
in any other item of equipment in such a manner that the Equipment may be
deemed to have become an accession to or a part of such other item of
equipment; (5) cause each principal item of the Equipment to be continually
marked, in a plain and distinct manner, with the name of Lessor followed by the
words "Owner and Lessor," or other appropriate words designated by Lessor on
labels furnished by Lessor; (6) promptly notify Lessor of any malfunction of
the hubodometer or odometer of any unit of Equipment; and (7) allow only
qualified, properly licensed personnel selected, employed and/or controlled by
Lessee to operate the Equipment. (b) Within a reasonable time, Lessee will
replace any parts of the Equipment which become worn out, lost, destroyed,
damaged beyond repair or otherwise permanently rendered unfit for use, by new
or reconditioned replacement parts which are free and clear of all liens,
encumbrances or rights of others and have a value, utility and remaining useful
life at least equal to the parts replaced. Any modification or addition to the
Equipment which is required by law shall be made by Lessee, at its expense.
Title to all parts, improvements and additions to the Equipment immediately
shall vest in Lessor, without cost or expense to Lessor or any further action
by any other person, and such parts, improvements and additions shall be deemed
incorporated in the Equipment and subject to the terms of this Lease as if
originally leased hereunder, if such parts are required by law or are otherwise
essential to the operation of the Equipment or cannot be detached from the
Equipment without materially interfering with the operation of the Equipment or
adversely affecting the value, utility and remaining useful life which the
Equipment would have had without the addition thereof. Lessee shall not make
any material alterations (other than repairs) to the Equipment without the
prior written consent of Lessor. (c) Upon two (2) business days= notice, Lessee
shall afford Lessor access to the premises where the Equipment is located for
the purpose of inspecting such Equipment and all applicable maintenance or
other records at any reasonable time during normal business hours; provided,
however, if a default or Default shall have occurred and then be continuing, no
notice of any inspection by Lessor shall be required.
8. DISCLAIMER OF WARRANTIES. LESSOR IS NOT A SELLER, SUPPLIER OR
MANUFACTURER (AS SUCH TERMS ARE DEFINED OR USED, AS THE CASE MAY BE, IN THE
UNIFORM COMMERCIAL CODE), OR DEALER, NOR A SELLER'S OR A DEALER'S AGENT. THE
EQUIPMENT IS LEASED HEREUNDER "AS IS", AND LESSOR HAS NOT MADE, AND HEREBY
DISCLAIMS LIABILITY FOR, AND LESSEE HEREBY WAIVES ALL RIGHTS AGAINST LESSOR
RELATING TO, ANY AND ALL WARRANTIES, REPRESENTATIONS OR OBLIGATIONS OF ANY KIND
WITH RESPECT TO THE EQUIPMENT, EITHER EXPRESS OR IMPLIED, ARISING BY APPLICABLE
LAW OR OTHERWISE, INCLUDING ANY OF THE SAME RELATING TO OR ARISING IN OR UNDER
(a) MERCHANTABILITY OR FITNESS FOR PARTICULAR USE OR PURPOSE, (b) COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE OR (c) TORT (WHETHER OR NOT
ARISING FROM THE ACTUAL, IMPLIED OR IMPUTED NEGLIGENCE OF LESSOR OR STRICT
LIABILITY) OR THE UNIFORM COMMERCIAL CODE (INCLUDING ARTICLE 2A, AS HEREINAFTER
DEFINED; AND, WITHOUT LIMITING THE FOREGOING, INCLUDING, (i) ANY WARRANTIES
CONTAINED IN " 2A-210, 2A-211, 2A-212 AND 2A-213, (ii) ANY RIGHT TO DEEM LESSOR
IN DEFAULT PURSUANT THERETO, AND (iii) ALL OF LESSEE'S RIGHTS AND REMEDIES
UNDER " 2A-508 THROUGH 2A-521) OR OTHER APPLICABLE LAW WITH RESPECT TO THE
EQUIPMENT, INCLUDING ITS TITLE OR FREEDOM FROM LIENS, FREEDOM FROM TRADEMARK,
PATENT OR COPYRIGHT INFRINGEMENT, FREEDOM FROM LATENT DEFECTS (WHETHER OR NOT
DISCOVERABLE), CONDITION, MANUFACTURE, DESIGN, SERVICING OR COMPLIANCE WITH
APPLICABLE LAW; it being agreed that all such risks, as between Lessor and
Lessee, are to be borne by Lessee; and Lessor's agreement to enter into this
Lease and any Schedule is in reliance upon the freedom from and complete
negation of liability or responsibility for the matters waived and disclaimed
herein. Lessor is not responsible for any direct, indirect, incidental or
consequential damage to or losses resulting from the installation, operation or
use of the Equipment or any products manufactured thereby. All assignable
warranties made by the Supplier to Lessor are hereby assigned to Lessee for and
during the term of this Lease and Lessee agrees to resolve all such claims
directly with the Supplier. Provided that no default or Default has occurred
and is then continuing, Lessor fully shall cooperate with Lessee with respect
to the resolution of such claims, in good faith and by appropriate proceedings
at Lessee's expense. Any such claim shall not affect in any manner the
unconditional obligation of Lessee to make rent payments hereunder.
9. FEES AND TAXES. If permitted by law, Lessee shall report and pay
promptly all taxes, fees and assessments due, imposed, assessed or levied
against any Equipment (or the purchase, ownership, delivery, leasing,
possession, use or operation thereof), this Lease (or any rents or receipts
hereunder), any Schedule, Lessor or Lessee by any governmental entity or taxing
authority during or related to the term of this Lease arising out of or related
to the Equipment, this Lease, any rent or receipts hereunder, or any Schedule,
including, without limitation, all license and registration fees, and all
sales, use, personal property, excise, stamp or other similar taxes, imposts,
duties and charges, together with any penalties, fines or interest thereon
(collectively ATaxes@). Lessee shall have no liability for Taxes (i) imposed by
the United States of America or any state or political subdivision thereof
which are on or measured by the net income of Lessor except as provided in
Sections 2(b) and 14(c), (ii) imposed by the United States of America or any
state or political subdivision thereof which are based upon, measured by or
with respect to gross income or receipts (unless such taxes are imposed in lieu
of a sales tax or personal property tax for which Lessee would otherwise be
required to indemnify Lessor hereunder), items of tax preference or minimum
tax, excess profits, capital, franchises, net worth, capital gains, profits or
conduct of business or other similar Taxes (including, without limitation, a
valued added tax in the nature of an income tax), (iii) that are penalties,
fines or interest caused by any act or omission of Lessor (unless such act or
omission of Lessor was caused by an act or omission of Lessee), (iv) caused by
the willful misconduct or gross negligence of Lessor or the breach by Lessor of
any provision of this Lease or any Schedule (unless such breach by Lessor was
caused by an act or omission of Lessee), (v) arising out of, relating to or
measured by acts, omissions, events or periods of time which occur after the
expiration or early termination of this Lease (unless such accrued during the
term of this Lease or relate to the period prior to the expiration or early
termination of this Lease), or (vi) that become payable by reason of any
voluntary or involuntary transfer or disposition by Lessor of any interest in
any Equipment, the Lease or any Schedule (unless such transfer or disposition
occurs after a Default hereunder or is in connection with the sale of the
Equipment to Lessee or its affiliates). Lessee shall promptly reimburse Lessor
for any Taxes charged to or assessed against Lessor, unless Lessee is
contesting in good faith any such Taxes and such contest will not result in a
material risk of sale, forfeiture or loss of, or the creation of any lien on,
any Equipment. Lessee shall show Lessor as the owner of the Equipment on all
tax reports or returns, and send Lessor a copy of each report or return and
evidence of Lessee's payment of Taxes upon request.
10. INTENT, TITLE AND LIENS. (a) The parties intend and agree that the
Equipment shall remain personal property. (b) It is the express intention of
the parties hereto that (1) each Schedule, incorporating by reference the terms
of this Lease, constitutes a true "lease" and a "finance lease" as such terms
are defined in the Uniform Commercial Code Article 2A - Leases ("Article 2A")
(whether or not Article 2A is then in effect in the State) and not a sale or
retention of security interest; and (2) title to the Equipment shall at all
times remain in Lessor, and Lessee shall acquire no ownership, property,
rights, equity, or interest other than a leasehold interest, solely as Lessee
subject to the terms and conditions hereof. If, notwithstanding the express
intent of the parties, a court of competent jurisdiction determines that any
Schedule is not a true lease, but is rather a sale and extension of credit, a
lease intended for security, a loan secured by the Equipment specified in such
Schedule, or other similar arrangement, the parties agree that in such event:
(i) (A) in order to secure the prompt payment and performance as and when due
of all of Lessee's obligations (both now existing and hereafter arising) under
each such Schedule, Lessee shall be deemed to have granted, and it hereby
grants, to Lessor a first priority security interest in the following (whether
now existing or hereafter created): the Equipment leased pursuant to such
Schedule and all replacements, substitutions, accessions, and proceeds (cash
and non-cash; but without power of sale), including the proceeds of all
insurance policies, thereof, and (B) Lessee agrees that with respect to the
Equipment, in addition to all of the other rights and remedies available to
Lessor hereunder upon the occurrence of a Default, Lessor shall have all of the
rights and remedies of a first priority secured party under the UCC; and (ii)
(A) the principal amount of any such obligation shall be an amount equal to the
aggregate Capitalized Lessor=s Cost of all Equipment, (B) the term of any such
obligation shall be the same as the term specified for such Equipment in the
related Schedule, (C) the payments under any such obligation shall be the
regular installments of rent specified in the Schedule for such Equipment, and
(D) any such obligation shall be at an interest rate that is equal to the
lesser of the maximum lawful rate permitted by applicable law or the effective
interest rate calculated on the basis of the foregoing principal amount, term
and payments as if the principal amount were fully amortized over the term of
the obligation. For purposes of this sub-part (b), this Lease, the Schedule, or
a photocopy of either thereof may be filed as a financing statement under the
UCC. (c) Lessee may not dispose of any of the Equipment except to the extent
expressly provided herein, notwithstanding the fact that proceeds constitute a
part of the Equipment. (d) Lessee further agrees to maintain the Equipment free
from all claims, liens, attachments, rights of others and legal processes
("Liens") of creditors of Lessee or any other persons, other than Liens for
fees, taxes, levies, duties or other governmental charges of any kind, Liens
created by actions of the Lessor, Liens of mechanics, materialmen, laborers,
employees or suppliers and similar Liens arising by operation of law incurred
by Lessee in the ordinary course of business for sums that are not yet
delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof (provided,
however, that such proceedings do not involve any substantial danger (as
determined in Lessor's sole reasonable discretion) of the sale, forfeiture or
loss of the Equipment or any interest therein). Lessee will defend, at its own
expense, Lessor's title to the Equipment from such claims, Liens or legal
processes. Lessee shall also notify Lessor immediately upon receipt of notice
of any Lien affecting the Equipment in whole or in part.
11. INSURANCE. Each Lessee shall obtain and maintain all-risk
insurance coverage with respect to that portion of the Equipment operated by
such Lessee insuring against, among other things: collision and comprehensive
coverage, including loss or damage due to fire and the risks normally included
in extended coverage, malicious mischief and vandalism, for not less than the
greater of the full replacement value or the Stipulated Loss Value (as defined
in Section 12 hereof); and public liability coverage, including both personal
injury and property damage with a combined single limit per occurrence of not
less than the amount specified in the Schedule, with a reasonable deductible.
All said insurance shall be in form (including all endorsements required by
Lessor) and amount and with companies reasonably satisfactory to Lessor. All
insurance for loss or damage shall provide that losses, if any, shall be
payable to Lessor as loss payee and Lessee shall utilize its best efforts to
have all checks relating to any such losses delivered promptly to Lessor.
Lessor shall be named as an additional insured with respect to all such
liability insurance. Lessee shall pay the premiums therefor and deliver to
Lessor evidence satisfactory to Lessor of such insurance coverage. Lessee shall
cause to be provided to Lessor, not less than fifteen (15) days prior to the
scheduled expiration or lapse of such insurance coverage, evidence satisfactory
to Lessor of renewal or replacement coverage. Each insurer shall agree, by
endorsement upon the policy or policies issued by it or by independent
instrument furnished to Lessor, that (a) it will give Lessor thirty (30) days'
prior written notice of the effective date of any material alteration or
cancellation of such policy; and (b) insurance as to the interest of any named
additional insured or loss payee other than Lessee shall not be invalidated by
any actions, inactions, breach of warranty or conditions or negligence of
Lessee or any person other than Lessor with respect to such policy or policies.
The proceeds of such insurance payable as a result of loss of or damage to the
Equipment shall be applied as required by the provisions of Section 12 hereof.
12. LOSS AND DAMAGE. Lessee assumes the risk of direct and
consequential loss and damage to the Equipment from all causes. Except as
provided in this Section for discharge upon payment of Stipulated Loss Value,
no loss or damage to the Equipment or any part thereof shall release or impair
any obligations of Lessee under this Lease. Lessee agrees that Lessor shall not
incur any liability to Lessee for any loss of business, loss of profits,
expenses, or any other Claims resulting to Lessee by reason of any failure of
or delay in delivery or any delay caused by any non-performance, defective
performance, or breakdown of the Equipment, nor shall Lessor at any time be
responsible for personal injury or the loss or destruction of any other
property resulting from the Equipment. In the event of loss or damage to any
item of Equipment which does not constitute a Total Loss (as hereinafter
defined), Lessee shall, at its sole cost and expense, promptly repair and
restore such item of the Equipment to the condition required by this Lease.
Provided that no default or Default has occurred and is continuing, upon
receipt of evidence reasonably satisfactory to Lessor of completion of such
repairs, Lessor will apply any net insurance proceeds received by Lessor on
account of such loss to the cost of repairs. Upon the occurrence of the actual
or constructive total loss of any item of the Equipment, or the loss,
disappearance, theft or destruction of any item of the Equipment or damage to
any item of the Equipment to such extent as shall make repair thereof
uneconomical or shall render any item of the Equipment permanently unfit for
normal use for any reason whatsoever, or the condemnation, confiscation,
requisition, seizure, forfeiture or other taking of title to or use of any item
of the Equipment or the imposition of any Lien thereon by any governmental
authority (as established to the reasonable satisfaction of Lessor; any such
occurrence being herein referred to as a "Total Loss"), during the term of this
Lease, Lessee shall give prompt notice thereof to Lessor. Within five (5) days
after the receipt of the insurance proceeds or ninety (90) days after the
occurrence of a Total Loss, Lessee shall pay to Lessor the rent due on that
date plus the Stipulated Loss Value of the item or items of the Equipment with
respect to which the Total Loss has occurred and any other sums due hereunder
with respect to that Equipment (less any insurance proceeds or condemnation
award actually paid). Upon making such payment, this Lease and the obligation
to make future rental payments shall terminate solely with respect to the
Equipment or items thereof so paid for. Lessor shall deliver to Lessee a bill
of sale transferring and assigning to Lessee without recourse or warranty, all
of Lessor's right, title and interest in and to such Equipment. Lessor shall
not be required to make and may specifically disclaim any representation or
warranty as to the condition of the Equipment or any other matters. As used in
this Lease, "Stipulated Loss Value" shall mean the product of the Capitalized
Lessor=s Cost (designated on the appropriate Schedule) of the Equipment and the
applicable percentage factor set forth on the Schedule of Stipulated Loss
Values attached to the Schedule. Stipulated Loss Value shall be determined as
of the next date on which a payment of rent is or would be due after a Total
Loss or other termination of an Schedule, after payment of any rent due on such
date, and the applicable percentage factor shall be that which is set forth
with respect to such rent payment. After payment of the final payment of rent
due under the original term of this Lease and during any renewal term thereof,
Stipulated Loss Value shall be determined as of the date of termination of such
Schedule (absent any renewal thereof) or, if during a renewal term, on the next
date on which a payment of rent is or would be due after a Total Loss or other
termination of such renewal term, after payment of any rent due on such date,
and the applicable percentage factor shall be the last percentage factor set
forth on the Schedule of Stipulated Loss Values attached to such Schedule.
13. REDELIVERY. Upon the expiration or earlier termination of the term
of any Schedule (or of any holdover with respect to an item of Equipment, if
applicable), Lessee shall, at its own expense, return the Equipment to Lessor
within ten (10) days (a) in the same condition as when delivered to Lessee
hereunder, ordinary wear and tear resulting from proper use thereof excepted,
(b) in such operating condition as is capable of performing its originally
intended use, (c) having been used, operated, serviced and repaired in
accordance with, and otherwise complying with, Section 7 hereof, (d) free and
clear of all Liens whatsoever except Liens resulting from claims against Lessor
not relating to the ownership of such Equipment, and (e) satisfying the
following conditions (as applicable):
(1) With respect to each item of the Equipment comprised of an
over-the-road tractor:
(i) Tires: All tires shall be of the same type, tread and design as on
the Basic Term Commencement Date, have a minimum remaining depth of 10/32
inches and shall not be out of round or demonstrate any uneven wear pattern.
All front tires shall be original casings with no cross lugs. Rear tires may be
either original casings or first time recapped casings.
(ii) Mileage: Average annual mileage shall not exceed 125,000 miles.
Should mileage exceed this limit, Lessee agrees to pay a mileage surcharge of
four cents ($0.04) per mile for each excess mile. All mileage determinations
shall be based upon hubodometer readings or, in the absence thereof, by
odometer readings.
(iii) Mechanical Power Train: (A) Each unit of Equipment shall have
passed a dynamometer test, road test and oil analysis, each conducted not more
than sixty (60) days prior to the return of the Equipment, the test results
shall have been provided to Lessor not more than two (2) weeks after each test
has been conducted and not less than two (2) weeks prior to the return of the
Equipment and the tests and test results shall have been reasonably acceptable
to Lessor, (B) there shall be no cracked cylinder heads or engine blocks, (C)
the engine output shall be at least ninety (90) percent of its horsepower
without excess blow-by, exhaust system leakage or oil leakage, (D) the
transmission and rear axles shall be capable of pulling loads to their full
rated capacity, (E) there shall be no transmission, drive axle or wheel hub oil
leaks, and (vi) there shall be no slipping or grabbing clutch.
(iv) General Condition: With respect to each unit, no glass shall be
materially broken, chipped or cracked, no upholstery shall have any material
cut, tear or burn, there shall be no unrepaired material damage to exterior or
interior materials that exceeds $250 and all decals, numbers, customer
identification, glue and adhesives shall have been removed from the Equipment
without damage to paint or the Equipment. Cooling and lubrication systems shall
not be contaminated and there shall be no leaking between systems, no battery
shall have any dead cell, cracked case or be inoperative, all brake linings
shall have at least 10/32 inches remaining wear and no brake drum shall be
cracked.
(v) Documents and Records: Upon return of the Equipment, each unit
shall meet applicable ICC requirements and, if applicable, have a state
inspection certificate valid for at least ninety (90) days, shall have passed
applicable DOT inspections and shall have a current DOT certificate, shall have
proof of payment of any applicable ad valorem tax, shall have all tax receipts
including Federal Highway Use Tax Form 2290 and Schedule I, and shall have a
copy of the vehicle maintenance packet.
(2) With respect to each item of the Equipment comprised of an
over-the-road trailer:
(i) Specifications. Upon return, each unit of Equipment must meet all
of the manufacturer=s specifications for performance under full-rated loads.
(ii) Trailer: Upon surrender of the Equipment at lease maturity,
Lessee shall remove all decals, numbers, customer identification, glue and
adhesives from the Equipment without damage to the Equipment. Equipment shall
have no unrepaired physical damage and shall show no signs of abuse, either
internal or external. All repairs shall have been performed to acceptable
industry standards. Trailers shall be clean and show no signs of cargo
contamination.
(iii) (A) Body: There shall be no damaged, bent or unsecured frame
members, cross-members, top or bottom rails, nose rails or rear header. Rear
doors shall be operational and be able to close and lock securely. Enclosed
trailers shall be water tight. There shall be no broken floor boards or gouges
in the floor to exceed one-quarter inch (.25"). Landing gears shall not be bent
and shall be operational in both high and low gears. If so equipped, the bogie
shall slide freely and lock into all positions. All equipment originally
supplied with the trailer shall be secured and freely operational, including
manifest box, hazard placards, etc. If so equipped, there shall be no damaged
plywood liners, scuff liners, cargo securing devices or body vents.
(B) FRP Bodies Only: There shall be no de-lamination,
blistering or exposed wood on the FRP panels of the trailer.
(C) Refrigeration: If so equipped, refrigeration units shall
be fully functional and able to perform within the manufacturer=s
specifications, including (but not limited to) cooling capacity, operating
temperature and oil pressure. There shall be no excessive oil blow-by and no
cross-contamination of systems (i.e. oil in cooling system, etc.) Refrigerants
must be fully charged with no leaks. Units shall cycle properly. All electrical
systems must be fully operational.
(iv) Tires: Tires shall be of matched generic type, tread and design
as originally supplied and have at least 10/32 inches remaining tread depth.
First time recapped casings are acceptable for tires. Tires will not be out of
round or have excessive wear caused by improper inflation or alignment. There
shall be no cuts or gouges in tread or sidewalls.
(v) Cargo Tanks/Overflow/Holding/Storage Tanks: Lessee shall be
responsible for removing all cargo/fluids from tanks in accordance with
prevailing waste disposal laws and regulations. Sumps and tanks must be clean
and dry.
(vi) Hydraulic Equipment: All hydraulic pumps, cylinders and hoses
must be fully operational at rated capacity with no leaks.
(vii) Brakes: Brakes linings shall have at least fifty (50) percent
remaining wear. Brake drums shall not be cracked, damaged or exceed
manufacturer=s recommended wear limits. There shall be no air leaks in the
braking system.
(viii) Documents and Records: Upon return of the Equipment, each unit
shall meet applicable ICC requirements and, if applicable, have a state
inspection certificate valid for at least one hundred twenty (120) days.
(3) With respect to each item of the Equipment:
(i) Roadworthy: Each unit shall be clean and in good appearance and in
roadworthy condition, and all original equipment or substantial equivalent
thereof shall be intact and in proper working condition, free of physical
damage and mechanical problems.
(ii) Inspections:
(A) Not more than ninety (90) days prior to return of the
Equipment, during regular working hours, Lessee must make the Equipment
available to Lessor or Lessor=s agent so walk-around appraisals can be
conducted.
(B) Testing and appraisal with necessary reconditioning to
meet acceptable surrender conditions are to be provided to Lessor two (2) weeks
prior to turn-in.
Lessee shall return the Equipment by delivering it to such places
within the Continental United States as Lessor reasonably shall specify. In
addition to Lessor's other rights and remedies hereunder, if the Equipment is
not returned in a timely fashion, or if repairs are necessary to place any
items of Equipment in the condition required in this Section, Lessee shall
continue to pay to Lessor per diem rent at the last prevailing lease rate under
the applicable Schedule with respect to such items of Equipment, for the period
of delay in redelivery, or for the period of time reasonably necessary to
accomplish such repairs together with the cost of such repairs, as applicable.
Lessor's acceptance of such rent on account of such delay or repair does not
constitute a renewal of the term of the related Schedule or a waiver of
Lessor's right to prompt return of the Equipment in proper condition.
14. INDEMNITY. (a) Lessee assumes and agrees to indemnify, defend and
keep harmless Lessor, and any assignee of Lessor's rights, obligations, title
or interests under any Schedule, its agents and employees ("Indemnitees"), from
and against any and all Claims (as hereinafter defined) (other than such as may
directly and proximately result from a breach of the Lease Documents or
material violation of applicable law by Lessor, or the gross negligence or
willful misconduct of, such Indemnitees), by paying (on an after-tax basis) or
otherwise discharging same, when and as such Claims shall become due, including
Claims arising on account of (1) any Lease Document, or (2) the Equipment, or
any part thereof, including the ordering, acquisition, delivery, installation
or rejection of the Equipment, the possession, maintenance, use, condition,
ownership or operation of any item of Equipment, and by whomsoever owned, used
or operated, during the term of any Schedule with respect to that item of
Equipment, the existence of latent and other defects (whether or not
discoverable by Lessor or Lessee) any claim in tort for negligence (other than
Lessor=s negligence) or strict liability, and any claim for patent, trademark
or copyright infringement, or the loss, damage, destruction, removal, return,
surrender, sale or other disposition of the Equipment, or any item thereof, or
for whatever other reason whatsoever (other than the items excluded herein). It
is the express intention of both Lessor and Lessee, that the indemnity provided
for in this Section includes Claims for which the Indemnitees are strictly
liable. Lessor shall give Lessee prompt notice of any Claim hereby indemnified
against and Lessee shall be entitled to control the defense and any settlement
thereof, so long as no default or Default has occurred and is then continuing;
provided, however, that Lessor shall have the right to approve defense counsel
selected by Lessee which approval will not be unreasonably withheld. For the
purposes of this Lease, the term "Claims" shall mean all claims, allegations,
harms, judgments, good faith settlements entered into, suits, actions, debts,
obligations, damages (whether incidental, consequential or direct), demands
(for compensation, indemnification, reimbursement or otherwise), losses,
penalties, fines, liabilities (including strict liability), charges that Lessor
has incurred or for which it is responsible, in the nature of interest, Liens,
and costs (including attorneys' fees and disbursements and any other legal or
non-legal expenses of investigation or defense of any Claim, whether or not
such Claim is ultimately defeated or enforcing the rights, remedies or
indemnities provided for hereunder, or otherwise available at law or equity to
Lessor), of whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable, by or against any person.
(b) Lessee hereby represents, warrants and covenants that (i)
on the Lease Commencement Date for any unit of Equipment, such unit will
qualify for all of the items of deduction) (specified in Section C of the
applicable Schedule (ATax Benefits@) in the hands of Lessor, and (ii) at no
time during the term of this Lease will Lessee take or omit to take, nor will
it permit any sublessee or assignee to take or omit to take, any action
(whether or not such act or omission is otherwise permitted by Lessor or by
this Lease), which will result in the disqualification of any Equipment for, or
recapture of, all or any portion of such Tax Benefits other than any action
that is required by the terms of this Lease.
(c) If (1) nationally recognized independent tax counsel
selected and compensated by Lessor shall determine that there is no reasonable
basis for Lessor to claim on its Federal income tax return all or any portion
of the Tax Benefits with respect to any Equipment, or (2) any Tax Benefit
claimed on the Federal income tax return of Lessor is disallowed or adjusted or
required to be recaptured by the Internal Revenue Service, or (3) Lessor shall
become liable for additional tax as a result of Lessee having added an
attachment or made an alteration to the Equipment, including (without
limitation) any such attachment or alteration which would increase the
productivity or capability of the Equipment so as to violate the provisions of
Rev. Proc. 75-21, 1975-1 C.B. 715, or Rev. Proc. 79-48, 1979-2 C.B. 529 (as
either or both may hereafter be modified or superseded), or (4) Lessor shall be
entitled to claim a lesser credit for foreign taxes against its Federal income
tax liability than that to which Lessor would have been entitled if each item
of income, gain, loss and deduction with respect to the Equipment had been
treated as income from sources within the United States pursuant to Section 861
of the Code (any determination, disallowance, adjustment or recapture being a
ALoss@), then Lessee shall pay to Lessor, as an indemnity and as additional
rent, an amount that shall cause Lessor's after-tax economic yields and cash
flows to equal the Net Economic Return that would have been realized by Lessor
if such Loss had not occurred. Such amount shall be payable upon demand
accompanied by a statement describing in reasonable detail such Loss and the
computation of such amount. Within ten (10) days following Lessee=s receipt of
such computations, Lessee may request that a ABig 6@ accounting firm (the
AAccounting Firm@) verify that such computations are mathematically accurate
and are based on the same assumptions, including tax assumptions, as were used
by Lessor in pricing this transaction. The Accounting Firm shall be requested
to make its determination within twenty-five (25) days, which determination
shall be binding and conclusive upon Lessor and Lessee. Lessor shall provide to
the Accounting Firm on a confidential basis all information (including access
to any computer programs used by Lessor with respect to this transaction and
the determination of the Tax Benefit) reasonably necessary for such
determination. All fees and expenses payable to the Accounting Firm shall be
borne by Lessee unless such determination shall disclose an error made by
Lessor in favor of Lessor exceeding $50,000 in the aggregate, in which case
such fees and expenses shall be paid by Lessor. The economic yields and cash
flows shall be computed on the same assumptions, including tax rates as were
used by Lessor in originally evaluating the transaction (ANet Economic
Return@). If an adjustment has been made under Section 2(b) then the Effective
Rate used in the next preceding adjustment shall be substituted.
(d) Notwithstanding anything to the contrary in this Lease,
Lessee shall not be required to indemnify Lessor for any Loss that occurs as a
result of one or more of the following: (i) the failure of Lessor to claim in a
timely and proper manner any of the Tax Benefits (other than by reason of any
act or omission of Lessee which is not required of Lessee pursuant to this
Lease); (ii) a voluntary or involuntary disposition by Lessor of all or any
part of its interest in this Lease or any Equipment (unless such disposition
occurs after a Default hereunder); (iii) any event as a result of which Lessee
has paid Stipulated Loss Value or Termination Value to or for the benefit of
Lessor; (iv) the failure by Lessor to timely contest (in accordance with the
provisions of Section 14(e) hereof) a claim by the Internal Revenue Service (a
AClaim@) that, if sustained, would result in a Loss (other than by reason of
any act or omission of Lessee which is not required of Lessee pursuant to this
Lease); (v) the failure of Lessor to have sufficient taxable income for Federal
income tax purposes against which to benefit from the Tax Benefits; (vi)
application of the provisions of Section 55 through 59A of the Code to Lessor;
(vii) the failure of this Lease to be treated as a Atrue lease@ or Lessor to be
considered the owner of the Equipment for Federal income tax purposes (other
than by reason of any act or omission of Lessee which is not required of Lessee
pursuant to this Lease); (viii) any amendment to or change in the
interpretation of the Code or regulations issued thereunder enacted, issued or
promulgated after the effective date of this Lease; (ix) the application of the
Amid-quarter convention@ (within the meaning of Section 168(d)(4)(C) of the
Code) to Lessor; (x) the status of Lessor for Federal income tax purposes - for
example, Lessor=s status as a Atax-exempt entity@ within the meaning of Section
168(h)(2) of the Code, an S corporation, a partnership, a utility, an insurance
company or a person that is not a AUnited States person@ within the meaning of
Section 7701(a)(30) of the Code; (xi) the gross negligence or willful
misconduct of Lessor or the breach by Lessor of any provision of this Lease
(unless such act or omission of Lessor was caused by an act or omission of
Lessee which is not required of Lessee pursuant to this Lease); or (xii) any
amendment to this Lease or any Schedule unless Lessee has given its prior
written consent to such amendment.
(e) Within thirty (30) days of its receipt of a Claim, Lessor
shall notify Lessee in writing of such Claim. Upon written request of Lessee
made within fifteen (15) days of receipt by Lessee of notice from Lessor of a
Claim, Lessor shall contest in good faith (and shall not settle without
Lessee=s written consent) such Claim; provided, however, that: (i) Lessor shall
not be obligated to contest such Claim unless, within sixty (60) days of
receipt by Lessee of notice from Lessor of such Claim, Lessee furnished Lessor,
at Lessee=s expense, with an opinion of independent tax counsel selected by
Lessee and reasonably acceptable to Lessor that there is a reasonable basis for
contesting such Claim; (ii) Lessor shall not be obligated to take any action to
contest such Claim unless Lessee reimburses Lessor on demand for all reasonable
costs and expenses that Lessor incurs in connection with contesting such Claim;
(iii) Lessor shall not be obligated to pursue an appeal from any adverse
decision of any court with respect to such Claim unless Lessee shall have
timely (A) furnished Lessor, at Lessee=s expense, an opinion of independent tax
counsel selected by Lessee and reasonably acceptable to Lessor to the effect
that there is a meritorious basis for contesting such adverse decision and (B)
posted any bond or other security required by law for pursuing such appeal
(which appeal, in no event, shall be required to be made to the United States
Supreme Court); (iv) Lessor shall not be obligated to contest or continue to
contest such Claim if a Default under this Lease has occurred and is
continuing; and (v) Lessor may at any time terminate the contest of such Claim,
in which case Lessee shall have no further obligation to indemnify Lessor
hereunder with respect to such Claim.
(f) If Lessor receives a refund or credit of all or a part of
any amount paid by Lessee with respect to a Loss, Lessor shall pay to Lessee an
amount equal to the sum of the amount of such refund or credit received by
Lessor, plus any interest attributable to any such refund or credit actually
received by Lessor.
(g) In calculating the amount of any indemnity payable by
Lessee with respect to a Loss, Lessor shall take into account any credit,
deduction or other tax benefit realized by Lessor that would not have been
realized by Lessor had such Loss not occurred.
(h) All references to Lessor in this Section 14 include
Lessor and the consolidated taxpayer group of which Lessor is a member. All of
Lessor's rights, privileges and indemnities contained in this Section 14 shall
survive the expiration or other termination of this Lease. The rights,
privileges and indemnities contained herein are expressly made for the benefit
of, and shall be enforceable by Lessor, its successors and assigns.
15. DEFAULT. (a) A default shall be deemed to have occurred hereunder
and under an Schedule ("Default") if (1) Lessee shall fail to make any payment
of rent hereunder or under an Schedule within ten (10) days after the same
shall have become due; or (2) Lessee shall fail to obtain and maintain the
insurance required herein; or (3) Lessee shall fail to perform or observe any
other covenant, condition or agreement to be performed or observed by it under
any Lease Document and such failure shall continue unremedied for a period of
thirty (30) days after the earlier of (i) actual knowledge thereof by any
officer of Transit Group, Inc., or (ii) written notice thereof to Lessee by
Lessor; or (4) Lessee shall (i) be generally not paying its debts as they
become due; or (ii) take action for the purpose of invoking the protection of
any bankruptcy or insolvency law, or any such law is invoked against or with
respect to Lessee or its property, and any such petition filed against Lessee
is not dismissed within sixty (60) days; or (5) Lessee shall make or permit any
unauthorized Lien against, or assignment or transfer of, this Lease, a
Schedule, the Equipment, or any interest therein; or (6) any material
certificate, statement, representation, warranty or audit contained herein or
furnished with respect hereto by or on behalf of Lessee proving to have been
false at the time as of which the facts therein set forth were stated or
certified, or having omitted any substantial contingent or unliquidated
liability or Claim against Lessee; or (7) Lessee shall be in default under any
material obligation for borrowed money, for the deferred purchase price of
property or any lease agreement, and the applicable grace period with respect
thereto shall have expired, which in any case would have a Material Adverse
Effect; or (8) Lessee shall have terminated its corporate existence,
consolidated with, merged into, or conveyed or leased substantially all of its
assets as an entirety to any person other than another Lessee (such actions
being referred to as an "Event"), unless not less than thirty (30) days prior
to such Event: (i) such person executes and delivers to Lessor an agreement
satisfactory in form and substance to Lessor, in its sole discretion,
containing such person's effective assumption, and its agreement to pay,
perform, comply with and otherwise be liable for, in a due and punctual manner,
all of Lessee's obligations having previously arisen, or then or thereafter
arising, under any and all of the Lease Documents; and (ii) Lessor is satisfied
as to the creditworthiness of such person, and as to such person's conformance
to the other standard criteria then used by Lessor for such purposes; or (9)
Carolina-Pacific Distributors, Inc., Certified Transport, Inc., Rainbow
Trucking Services, Inc., Transit Leasing, Inc. f/k/a Capitol Warehouse Inc.,
Transportation Resources and Management, Inc., Carroll Fulmer & Co., Inc., KJ
Transportation, Inc., Service Express, Inc., Diversified Trucking Corp., J&L
Truck Leasing of Farmington, Inc. and Northstar Transportation, Inc., or any of
them, cease to be a wholly-owned subsidiary of Transit Group, Inc. unless
merged into another Lessee; or (10) as a result of or in connection with a
change in the ownership of fifty-one (51) percent or more of the capital stock
of Transit Group, Inc., the ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth of Transit Group, Inc. equals or exceeds twice
the ratio of Consolidated Total Liabilities to Consolidated Tangible Net Worth
of Transit Group, Inc. as of the date of this Lease, without the prior written
consent of Lessor. As used herein, AConsolidated Tangible Net Worth@ shall
mean, on a consolidated basis of Transit Group, Inc. and its subsidiaries, the
excess of all assets (including the sum of the par or stated value of all
outstanding capital stock, surplus and undivided profits, less any amounts
attributable to goodwill, patents, copyrights, mailing lists, catalogues,
trademarks, bond discount and underwriting expenses, organization expense and
other intangibles) over all liabilities, as determined and computed in
accordance with GAAP; and AConsolidated Total Liabilities@ shall mean, on a
consolidated basis of Transit Group, Inc. and its subsidiaries, such
liabilities which, in accordance with GAAP, would be included on the liability
side of a consolidated balance sheet. (b) The occurrence of a Default with
respect to any Schedule shall, at the sole discretion of Lessor, constitute a
Default with respect to any or all Schedules to which it is then a party.
Notwithstanding anything set forth herein, Lessor may exercise all rights and
remedies hereunder independently with respect to each Schedule.
16. REMEDIES. (a) After a Default, at the request of Lessor, Lessee
shall comply with the provisions of Section 10(a). Lessee hereby authorizes
Lessor to peacefully enter any premises where any Equipment may be and take
possession of the Equipment. Lessee shall immediately pay to Lessor without
further demand as liquidated damages for loss of a bargain and not as a
penalty, the Stipulated Loss Value of the Equipment (calculated as of the rent
date next preceding the declaration of default), and all rents and other sums
then due under this Lease and all Schedules. Lessor may cancel this Lease as to
any or all of the Equipment. A cancellation shall occur only upon written
notice by Lessor to Lessee and only as to the units of Equipment specified in
any such notice. Lessor may, but shall not be required to, sell Equipment at
private or public sale, in bulk or in parcels, with or without notice, and
without having the Equipment present at the place of sale. Lessor may also, but
shall not be required to, lease, otherwise dispose of or keep idle all or part
of the Equipment. The proceeds of sale, lease or other disposition, if any,
shall be applied in the following order of priorities: (1) to pay all of
Lessor's costs, charges and expenses incurred in taking, removing, holding,
repairing and selling, leasing or otherwise disposing of Equipment; then, (2)
to the extent not previously paid by Lessee, to pay Lessor all sums due from
Lessee under this Lease; then (3) to reimburse to Lessee any sums previously
paid by Lessee as liquidated damages; and (4) any surplus shall be retained by
Lessor. Lessee shall immediately pay any deficiency in Clauses (1) and (2)
above.
(b) The foregoing remedies are cumulative, and any or all
thereof may be exercised instead of or in addition to each other or any
remedies at law, in equity, or under statute. Lessee waives notice of sale or
other disposition (and the time and place thereof), and the manner and place of
any advertising. Lessee shall pay Lessor's actual attorney's fees incurred in
connection with the enforcement, assertion, defense or preservation of Lessor's
rights and remedies under this Lease, or if prohibited by law, such lesser sum
as may be permitted. Waiver of any default shall not be a waiver of any other
or subsequent default.
(c) Any default under the terms of this or any other
agreement between Lessor and Lessee may be declared by Lessor a default under
this and any such other agreement.
17. ASSIGNMENT. (a) WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (WHICH
SHALL NOT UNREASONABLY BE WITHHELD), LESSEE WILL NOT ASSIGN, TRANSFER OR
ENCUMBER ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR UNDER ANY Schedule, OR
ITS LEASEHOLD INTEREST, SUBLET THE EQUIPMENT OR OTHERWISE PERMIT THE EQUIPMENT
TO BE OPERATED OR USED BY, OR TO COME INTO OR REMAIN IN THE POSSESSION OF,
ANYONE BUT LESSEE. No assignment or sublease, whether authorized in this
Section or in violation of the terms hereof, shall relieve Lessee of its
obligations, and Lessee shall remain primarily liable, hereunder and under each
Schedule. Any unpermitted assignment, transfer, encumbrance, delegation or
sublease by Lessee shall be void ab initio.
(b) Lessor may assign any or all of its rights, obligations,
title and interest hereunder, or the right to enter into any Schedule, or may
resell (through syndication, assignment, participation or placements) an
interest in any or all of the Equipment, this Lease or any Schedule. Lessee
agrees that it will pay all rent and other amounts payable under each Schedule
to the ALessor@ named therein; provided, however, if Lessee receives written
notice of an assignment from Lessor, Lessee will pay all rent and other amounts
payable under any assigned Schedule to such assignee or as instructed by Lessor
and such assignee. Each Schedule, incorporating by reference the terms and
conditions of this Lease, constitutes a separate instrument of lease, and the
ALessor@ named therein or its assignee shall have all rights as ALessor@
thereunder separately exercisable by such named Lessor or assignee as the case
may be, exclusively and independently of Lessor or any assignee with respect to
other Schedules executed pursuant hereto. Lessee agrees to confirm in writing
receipt of any notice of assignment, syndication, participation or placement,
as reasonably may be requested by Lessor or any such assignee or participant
(collectively, the AAssignee@). Lessee hereby waives and agrees not to assert
against any such Assignee any defense, setoff, recoupment, claim or
counterclaim which Lessee has or may at any time hereafter have against Lessor
or any person other than such Assignee, for any reason whatsoever. Lessee will
provide reasonable assistance to Lessor in whatever manner necessary in order
to permit Lessor to complete any resale, syndication, assignment, participation
or placement of the transaction contemplated by this Lease, including (but not
limited to) (1) prompt assistance in the preparation of an information
memorandum and the verification of the completeness and accuracy of the
information contained therein; (2) preparation of offering materials and
projections by Lessees and their advisors taking into account the transaction
contemplated by this Lease; (3) provide Lessor with all information reasonably
deemed necessary by Lessor to successfully complete the syndication; (4)
confirmation as to the accuracy and completeness of such offering materials,
information and projections; (5) participation of each and all Lessees= senior
management in meetings and conference calls with potential investors at such
times and places as Lessor reasonably may request; and (6) using Lessees=
reasonable best efforts insure that the syndication efforts benefit from
Lessees= existing lending relationships. Lessee agrees that any such assignment
shall not materially change Lessee's duties or obligations under the Lease or
any Schedule nor materially increase Lessee's risks or burdens. Upon such
assignment and except as may otherwise be provided therein all references in
this Lease to Lessor shall include such assignee.
(c) Subject always to the foregoing, this Lease and each
Schedule inure to the benefit of, and are binding upon, the successors and
assigns of the parties hereto and thereto, as the case may be.
18. END OF LEASE OPTIONS. Each of the Schedules is designated as a
Series A Schedule, a Series B Schedule. Upon the expiration of the term of each
Schedule, Lessee shall return, or purchase, or renew the term with respect to,
all (but not less than all) of the Equipment leased under all Schedules of a
particular Series executed hereunder upon the following terms and conditions.
(a) Renewal. If Lessee shall not have exercised its option to
return the Equipment or its purchase option pursuant to this Section, Lessee
shall have the option (subject to Lessor=s credit approval of Lessee at the
time of such exercise of the option), upon the expiration of the Basic Term of
each Schedule of a particular Series to be executed under this Lease, to renew
the Lease with respect to all, but not less than all, of the Equipment leased
under all Schedules of that Series executed hereunder for the Renewal Term at a
periodic rent based on the Fair Market Rental Value. As used herein, ARenewal
Term@ shall mean that period as may be mutually agreed upon in negotiations
between Lessor and Lessee, subject to the remaining economic useful life of the
Equipment; and AFair Market Rental Value@ shall be deemed to be an amount equal
to the rental obtainable in an arm=s length transaction between a willing and
informed Lessor and a willing and informed Lessee under no compulsion to lease
(and assuming that, as of the date of determination, the Equipment is in at
least the condition required by Section 13 of the Lease). If the parties are
unable to agree on the Fair Market Rental Value of the Equipment, then Lessor
and Lessee shall, at Lessee=s expense, obtain appraisal values from three
independent appraisers (one to be selected by Lessor, one by Lessee, and the
other by the two selected by Lessor and Lessee; each of whom must be associated
with a professional organization of equipment or personal property appraisers,
such as the American Society of Appraisers) and the average Fair Market Rental
Value as determined by such appraisers shall be binding on the parties hereto.
(b) Purchase. If Lessee shall not have exercised its option
to renew this Lease or its option to return the Equipment pursuant to this
Section, Lessee shall have the option, upon the expiration of the term of each
Schedule, to purchase all (but not less than all) of the Equipment described on
all Schedules of a particular Series executed hereunder upon the following
terms and conditions: If Lessee desires to exercise this option with respect to
the Equipment, Lessee shall pay to Lessor on the last day of the term with
respect to each individual Schedule of that Series, in addition to the
scheduled rent (if any) then due on such date and all other sums then due
hereunder, in cash the purchase price for the Equipment so purchased,
determined as hereinafter provided. The purchase price of the Equipment shall
be an amount equal to the Fixed Purchase Price of such Equipment (as specified
in the Schedule) plus all taxes and charges upon sale and all other reasonable
and documented expenses incurred by Lessor in connection with such sale,
including, without limitation, any such expenses incurred based on a notice
from Lessee to Lessor that Lessee intended to return any such items of
Equipment. Upon satisfaction of the conditions specified in this Paragraph,
Lessor will transfer, on an AS IS, WHERE IS BASIS, without recourse or
warranty, express or implied, of any kind whatsoever (AAS IS BASIS@) , all of
Lessor's interest in and to such Equipment. Lessor shall not be required to
make and may specifically disclaim any representation or warranty as to the
condition of such Equipment and other matters (except that Lessor shall warrant
that it has conveyed whatever interest it received in the Equipment free and
clear of any lien or encumbrance created by Lessor).
(c) Return. Unless Lessee shall have exercised its option to
renew this Lease or its purchase option pursuant to this Section, upon the
expiration of the term of each Schedule, Lessee shall return all (but not less
than all) of the Equipment described on all Schedules of a particular Series
executed hereunder, to Lessor upon the following terms and conditions: Lessee
shall (i) pay to Lessor on the last day of the term with respect to each
individual Schedule of that Series, in addition to the scheduled rent then due
on such date (if any) and all other sums then due hereunder, a terminal rental
adjustment amount equal to the Fixed Purchase Price of such Equipment, and (ii)
return the Equipment to Lessor in accordance with the provisions of Section 13
of the Lease. Thereafter, upon return of all of the Equipment described on all
Schedules of that Series executed hereunder, Lessor and Lessee shall arrange
for the commercially reasonable sale of such Equipment. Upon satisfaction of
the conditions specified in this Paragraph, Lessor will transfer, on an AS IS
BASIS, all of Lessor's interest in and to such Equipment. Lessor shall not be
required to make and may specifically disclaim any representation or warranty
as the condition of such Equipment and other matters (except that Lessor shall
warrant that it has conveyed whatever interest it received in such Equipment
free and clear of any liens or encumbrances created by Lessor). Upon the sale
of such Equipment the sales proceeds with respect to the Equipment sold will be
paid to, and held and applied by, Lessor as follows: Lessor shall promptly
thereafter pay to Lessee an amount equal to the Residual Risk Amount (as
specified in the Schedule) of such Equipment (less all reasonable costs,
expenses and fees, including storage, reasonable and necessary maintenance and
other remarketing fees incurred in connection with the sale of such Equipment)
plus all net proceeds, if any, of such sale in excess of the Residual Risk
Amount of such Equipment and applicable taxes, if any.
(d) Notice of Election. Lessee shall give Lessor written
notice of its election of the options specified in this Section not less than
one hundred thirty-five (135) days nor more than three hundred sixty-five (365)
days before the expiration of the Basic Term or any Renewal Term of the first
Schedule of a particular Series to be executed under this Lease. Such election
shall be effective with respect to all Equipment described on all Schedules of
that Series executed hereunder. If Lessee fails timely to provide such notice,
without further action Lessee automatically shall be deemed to have elected (1)
to renew the term of this Lease pursuant to Paragraph (a) of this Section if a
Renewal Term is then available hereunder, or (2) to purchase the Equipment
pursuant to Paragraph (b) of this Section if a Renewal Term is not then
available hereunder.
19. JOINT AND SEVERAL OBLIGATIONS. The obligations of Transit Group,
Inc., Carolina-Pacific Distributors, Inc., Certified Transport, Inc., Rainbow
Trucking Services, Inc., Transit Leasing, Inc. f/k/a Capitol Warehouse Inc.,
Transportation Resources and Management, Inc., Carroll Fulmer & Co., Inc., KJ
Transportation, Inc., Service Express, Inc., Diversified Trucking Corp., J&L
Truck Leasing of Farmington, Inc. and Northstar Transportation, Inc. are joint
and several. Each reference to the term ALessee@ shall be deemed to refer to
each of Transit Group, Inc., Carolina-Pacific Distributors, Inc., Certified
Transport, Inc., Rainbow Trucking Services, Inc., Transit Leasing, Inc. f/k/a
Capitol Warehouse Inc., Transportation Resources and Management, Inc., Carroll
Fulmer & Co., Inc., KJ Transportation, Inc., Service Express, Inc., Diversified
Trucking Corp., J&L Truck Leasing of Farmington, Inc. and Northstar
Transportation, Inc.; each representation and warranty made by Lessee shall be
deemed to have been made by each such party; each covenant and undertaking on
the part of Lessee shall be deemed individually applicable with respect to each
such party; and each event constituting a Default under this Lease shall be
determined with respect to each such party. A separate action or actions may be
brought and prosecuted against any such party whether an action is brought
against any other party or whether any other party is joined in any such action
or actions. Each such party waives any right to require Lessor to: (a) proceed
against any other party; (b) proceed against or exhaust any security held from
any other party; or (c) pursue any other remedy in Lessor's power whatsoever.
Each of Carolina-Pacific Distributors, Inc., Certified Transport, Inc., Rainbow
Trucking Services, Inc., Transit Leasing, Inc. f/k/a Capitol Warehouse Inc.,
Transportation Resources and Management, Inc., Carroll Fulmer & Co., Inc., KJ
Transportation, Inc., Service Express, Inc., Diversified Trucking Corp., J&L
Truck Leasing of Farmington, Inc. and Northstar Transportation, Inc. hereby
appoints Transit Group, Inc. as its agent for the limited purpose of executing
any and all documents required to be executed pursuant to this Lease, for the
purpose of receiving notices required hereunder, and for the purpose of giving
any consent required to be given on the part of Lessee hereunder. In
furtherance of the foregoing, the parties acknowledge and agree that: notices
hereunder required to be provided to Lessee shall be effective if provided to
Transit Group, Inc.; any consent on the part of Lessee hereunder shall be
effective when provided by Transit Group, Inc. and Lessor shall be entitled to
rely upon any notice or consent given by Transit Group, Inc. as being notice or
consent given by Lessee hereunder.
In the event any obligation of Lessee under this Lease is deemed to be
an agreement by any individual Lessee to answer for the debt or default of
another individual Lessee (including each other) or as a hypothecation of
property as security therefor, each Lessee represents and warrants that: (x) no
representation has been made to it as to the creditworthiness of any other
obligor, and (y) it has established adequate means of obtaining from each other
obligor on a continuing basis, financial or other information pertaining to
each other obligor's financial condition. Each Lessee expressly waives
diligence, demand, presentment, protest and notice of every kind and nature
whatsoever, consents to the taking by Lessor of any additional security for the
obligations secured hereby, or the alteration or release in any manner of any
security now or hereafter held in connection with any obligations now or
hereafter secured by this Lease, and consents that Lessor and any obligor may
deal with each other in connection with said obligations or otherwise, or alter
any contracts now or hereafter existing between them, in any manner whatsoever,
including without limitation the renewal, extension, acceleration, changes in
time for payment, and increases or decreases in any rent, rate of interest or
other amounts owing, all without in any way altering the liability of each
Lessee, or affecting any security for such obligations. Should any default be
made in the payment of any such obligations or in the terms or conditions of
any security held, Lessor is hereby expressly given the right, at its option,
to proceed in the enforcement of this Lease independently of any other remedy
or security it may at any time hold in connection with such obligations secured
and it shall not be necessary for Lessor to proceed upon or against and/or
exhaust any other security or remedy before proceeding to enforce its rights
against any Lessee. Each Lessee further waives any right of subrogation,
reimbursement, exoneration, contribution, indemnification, setoff or other
recourse in respect of sums paid to Lessor by any Lessee.
20. MISCELLANEOUS. (a) This Lease, the Riders annexed hereto and each
Schedule constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and shall not be rescinded, amended or
modified in any manner except by a document in writing executed by both
parties. (b) Any provision of this Lease which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. (c) The representations, warranties and covenants of
Lessee herein shall be deemed to be continuing and to survive the execution and
delivery of this Lease, each Schedule and any other Lease Documents. Each
execution by Lessee of a Schedule shall be deemed a reaffirmation and warranty
that there shall have been no material adverse change in the business or
financial condition of Lessee from the date of execution hereof. With respect
to each Schedule, the obligations of Lessee under Sections 7, 8, 9, 10, 13 and
14 hereof, together with any of Lessee's obligations under the other provisions
of this Lease (as incorporated therein) which have accrued but not been fully
satisfied, performed or complied with prior to the cancellation or termination
of such Schedule, shall survive the cancellation or termination thereof to the
extent necessary for the full and complete performance of such obligations. (d)
Lessor represents and covenants to Lessee that Lessor has full authority to
enter into this Lease and any other Lease Documents to which it may become a
party, and so long as no default or Default occurs with respect to a Schedule,
neither Lessor nor any person authorized by Lessor shall interfere with
Lessee's right to peaceably and quietly possess and use the Equipment during
the term thereof, subject to the terms and provisions hereof. (e) All expenses
incurred by Lessor in connection with (1) the filing or recording of real
property waivers and Uniform Commercial Code statements, (2) lien search
reports and copies of filings with respect to Lessee and/or the Equipment, and
(3) the negotiation, documentation and closing of the transaction contemplated
by this Lease (including, without limitation, expenses of counsel, due
diligence, independent appraisal, environmental audits and field audits), and
the enforcement of Lessor=s rights hereunder, shall be for the account of
Lessee and shall be payable by Lessee upon demand. (f) Any rent or other amount
not paid to Lessor when due hereunder shall bear interest, from the due date
until paid, at the lesser of twelve (12) percent per annum or the maximum rate
allowed by law (the ALate Charge Rate@). (g) If Lessee fails to perform any of
its obligations hereunder with respect to a Schedule, Lessor shall have the
right, but shall not be obligated, to effect such performance, and the amount
of any out of pocket and other reasonable expenses of Lessor incurred in
connection with such performance, together with interest thereon at the Late
Charge Rate, shall be payable by Lessee upon demand. Lessor's effecting such
compliance shall not be a waiver of Lessee's default. (h) Lessee irrevocably
appoints Lessor as Lessee's attorney-in-fact (which power shall be deemed
coupled with an interest) to execute, endorse and deliver any UCC statements
and any documents and checks or drafts relating to or received in payment for
any loss or damage under the policies of insurance required by the provisions
of Section 11 hereof, but only to the extent that the same relates to the
Equipment. (i) LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH LESSEE AND/OR LESSOR MAY BE PARTIES ARISING OUT OF OR IN
ANY WAY PERTAINING TO THIS LEASE. LESSEE AUTHORIZES LESSOR TO FILE THIS
PROVISION WITH THE CLERK OR JUDGE OF ANY COURT HEARING ANY SUCH CLAIM. IT IS
HEREBY AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS LEASE. THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE PARTIES AND THE PARTIES HEREBY
ACKNOWLEDGE THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR
NULLIFY ITS EFFECT. LESSOR AND LESSEE FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED IN THE SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. (j) All notices
(excluding billings and communications in the ordinary course of business)
hereunder shall be in writing, personally delivered, delivered by overnight
courier service, sent by facsimile transmission (with confirmation of receipt),
or sent by certified mail, return receipt requested, addressed to the other
party at its respective address stated below the signature of such party or at
such other address as such party shall from time to time designate in writing
to the other party; and shall be effective from the date of receipt. (k) This
Lease and all of the other Lease Documents shall not be effective unless and
until accepted by execution by an officer of Lessor. THIS LEASE AND ALL OF THE
OTHER LEASE DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER, SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
THE CONFLICT OF LAWS PRINCIPLES OF THE STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT. The parties agree that any action or proceeding arising out of or
relating to this Lease shall be commenced in any state or Federal court located
in New York County, City of New York, State of New York, and that such courts
shall have exclusive jurisdiction to hear and determine any claims or disputes
between or among any of the parties hereto relating to the transaction
contemplated by this Lease, and any investigation, litigation or proceeding
related to or arising out of any such matters; provided, however, that the
parties hereto acknowledge that any appeals from those courts may be heard by a
court located outside of such jurisdiction. Each party hereto expressly submits
and consents in advance to such jurisdiction in any action or suit commenced in
any such court, and hereby waives any objection which such party may have based
upon lack of personal jurisdiction, improper venue or inconvenient forum. The
parties further agree that a summons and complaint commencing an action or
proceeding in any such court shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to it at its address
hereinbelow set forth, or as it may provide in writing from time to time, or as
otherwise provided under the laws of the State of New York. (l) This Lease and
all of the other Lease Documents may be executed in any number of counterparts
and by different parties hereto or thereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together consist of but one and the same instrument;
provided, however, that to the extent that this Lease and/or the Schedule would
constitute chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest herein
or therein may be created through the transfer or possession of this Lease in
and of itself without the transfer or possession of the original of such
Schedule and incorporating the Lease by reference; and no security interest in
this Lease and a Schedule may be created by the transfer or possession of any
counterpart of such Schedule other than the original thereof.
21. DEFINITIONS AND RULES OF CONSTRUCTION. (a) The following terms
when used in this Lease or in any of the Schedules have the following meanings:
(1) "applicable law" or "law": any law, rule, regulation, ordinance, order,
code, common law, interpretation, judgment, directive, decree, treaty,
injunction, writ, determination, award, permit or similar norm or decision of
any governmental authority; (2) "business day": any day, other than a Saturday,
Sunday, or legal holiday for commercial banks under the laws of the State; (3)
"UCC" or "Uniform Commercial Code": the Uniform Commercial Code as in effect in
the State or in any other applicable jurisdiction; and any reference to an
article (including Article 2A) or section thereof shall mean the corresponding
article or section (however termed) of any such other applicable version of the
Uniform Commercial Code; (4) "governmental authority": any federal, state,
county, municipal, regional or other governmental authority, agency, board,
body, instrumentality or court, in each case, whether domestic or foreign; and
(5) "person": any individual, corporation, partnership, joint venture, or other
legal entity or a governmental authority, whether employed, hired, affiliated,
owned, contracted with, or otherwise related or unrelated to Lessee or Lessor.
(b) The following terms when used herein or in any of the Schedules shall be
construed as follows: "herein," "hereof," "hereunder," etc.: in, of, under,
etc. this Lease or such other Lease Document in which such term appears (and
not merely in, of, under, etc. the section or provision where the reference
occurs); "including": containing, embracing or involving all of the enumerated
items, but not limited to such items unless such term is followed by the words
"and limited to," or similar words; and "or": at least one, but not necessarily
only one, of the alternatives enumerated. Any defined term used in the singular
preceded by "any" indicates any number of the members of the relevant class.
Any Lease Document or other agreement or instrument referred to herein means
such agreement or instrument as supplemented and amended from time to time. Any
reference to Lessor or Lessee shall include their permitted successors and
assigns. Any reference to a law shall also mean such law as amended, superseded
or replaced from time to time. Unless otherwise expressly provided herein to
the contrary, all actions that Lessee takes or is required to take under any
Lease Document shall be taken at Lessee's sole cost and expense, and all such
costs and expenses shall constitute Claims and be covered by Section 14 hereof.
To the extent Lessor is required to give its consent or approval with respect
to any matter, the reasonableness of Lessor's withholding of such consent shall
be determined based on the then existing circumstances; provided, that Lessor's
withholding of its consent shall be deemed reasonable for all purposes if (i)
the taking of the action that is the subject of such request, might reasonably
be expected to result (in Lessor's good faith discretion), in (A) a material
impairment of Lessor's rights, title or interests hereunder or under any
Schedule or other Lease Document, or to the Equipment, or (B) expose Lessor to
any Claims, or (ii) to the extent Lessee fails to provide promptly to Lessor
any filings, certificates, opinions or indemnities specified by Lessor to
Lessee in writing.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Master Lease
Agreement to be duly executed as of the day and year first above set forth.
GENERAL ELECTRIC CAPITAL CORPORATIONTRANSIT GROUP, INC.
Lessor Lessee
By: /s/ John E. Hanley By: /s/ Philip A. Belyew
Name: John E. Hanley Name: Philip A. Belyew
Title: Senior Risk Manager Title: CEO
One Lincoln Centre 2859 Paces Ferry Road
5400 LBJ Freeway Suite 1740
Suite 525 Atlanta, Georgia 30339
Dallas, Texas 75240 Facsimile: (770) 444-0246
Facsimile: (972) 419-3289
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
CAROLINA-PACIFIC DISTRIBUTORS, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
5265 Surrett Drive
Archdale, North Carolina 27263
Facsimile: (336)434-4310
CERTIFIED TRANSPORT, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
2415 W. Thompson Road
Indianapolis, Indiana 46217
Facsimile: (317)780-6434
RAINBOW TRUCKING SERVICES, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
2425 Ralph Avenue
Louisville, Kentucky 40216
Facsimile: (502)448-8992
TRANSPORTATION RESOURCES
AND MANAGEMENT, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
5003 US 30 West
Suite 1
Fort Wayne, Indiana 46898
Facsimile: (219)471-0833
CARROLL FULMER & CO., INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
8340 American Way
Groveland, Florida 34736
Facsimile: (352)429-1010
KJ TRANSPORTATION, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
6070 Collette Road
Farmington, New York 14425
Facsimile: (716)924-9959
SERVICE EXPRESS, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
504 Bear Creek Cut Off Road
Tuscaloosa, Alabama 35403
Facsimile: (205)345-6900
DIVERSIFIED TRUCKING CORP.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
309 Williamson Avenue
Opelika, AL 36804-7313
Facsimile: (334-)742-0592
NORTHSTAR TRANSPORTATION, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
410 Twitchell Road
Dothan, Alabama 36303
Facsimile: (334)712-2499
TRANSIT LEASING, INC. f/k/a
CAPITOL WAREHOUSE INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
Facsimile:(770)444-0246
J&L TRUCK LEASING OF FARMINGTON, INC.
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
Facsimile:(716)924-9959
Exhibit 10.26
CORPORATE GUARANTY
Date: November 12, 1998
General Electric Capital Corporation
One Lincoln Centre
5400 LBJ Freeway
Suite 525
Dallas, Texas 75240
To induce you to enter into, purchase or otherwise acquire, now or at
any time hereafter, any promissory notes, security agreements, and/or any other
documents or instruments evidencing or relating to, any lease, loan, extension
of credit or other financial accommodation (collectively "Account Documents"
and each an "Account Document") to KJ Transportation, Inc. and J&L Truck
Leasing of Farmington, Inc., each a corporation organized and existing under
the laws of the State of New York (collectively, "Customer"), but without in
any way binding you to do so the undersigned, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
does hereby guarantee to you, your successors and assigns, the due regular and
punctual payment of any sum or sums of money which the Customer may owe to you
now or at any time hereafter whether evidenced by an Account Document, on open
account or otherwise, and whether it represents principal, interest, rent, late
charges, indemnities, an original balance, an accelerated balance, liquidated
damages, a balance reduced by partial payment, a deficiency after sale or other
disposition of any leased equipment, collateral or security, or any other type
of sum of any kind whatsoever that the Customer may owe to you now or at any
time hereafter, and does hereby further guarantee to you, your successors and
assigns, the due, regular and punctual performance of any other duty or
obligation of any kind or character whatsoever that the Customer may owe to you
now or at any time hereafter (all such payment and performance obligations
being collectively referred to as "Obligations"). Undersigned does hereby
further guarantee to pay upon demand all losses, costs, attorneys' fees and
expenses which may be suffered by you by reason of Customer's default or
default of the undersigned.
This Guaranty is a guaranty of prompt payment and performance (and not
merely a guaranty of collection). Nothing herein shall require you to first
seek or exhaust any remedy against the Customer, its successors and assigns, or
any other person obligated with respect to the Obligations, or to first
foreclose, exhaust or otherwise proceed against any leased equipment,
collateral or security which may be given in connection with the Obligations.
It is agreed that you may, upon any breach or default of the Customer, or at
any time thereafter, make demand upon the undersigned and receive payment and
performance of the Obligations, with or without notice or demand for payment or
performance by the Customer, its successors or assigns, or any other person.
Suit may be brought and maintained against the undersigned at your election,
without joinder of the Customer or any other person as parties thereto. The
obligations of each signatory to this Guaranty shall be joint and several.
The undersigned agrees that its obligations under this Guaranty shall
be primary, absolute, continuing and unconditional, irrespective of and
unaffected by any of the following actions or circumstances (regardless of any
notice to or consent of the undersigned): (a) the genuineness, validity,
regularity and enforceability of the Account Documents or any other document;
(b) any extension, renewal, amendment, change, waiver or other modification of
the Account Documents or any other document; (c) the absence of, or delay in,
any action to enforce the Account Documents, this Guaranty or any other
documents; (d) your failure or delay in obtaining any other guaranty of the
Obligations (including without limitation, your failure to obtain the signature
of any other guarantor hereunder); (e) the release of, extension of time for
payment or performance by or any other indulgence granted to the Customer or
any other person with respect to the Obligations by operation of law or
otherwise; (f) the existence, value, condition, loss, subordination or release
(with or without substitution) of or failure to have title to or perfect and
maintain a security interest in, or the time, place and manner of any sale or
other disposition of any leased equipment, collateral or security given in
connection with the Obligations, or any other impairment (whether intentional
or negligent, by operation of law or otherwise) of the rights of the
undersigned; (g) the Customer's voluntary or involuntary bankruptcy, assignment
for the benefit of creditors, reorganization, or similar proceedings affecting
the Customer or any of its assets; or (h) any other action or circumstances
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor.
This Guaranty may be terminated upon delivery to you (at your address
shown above) of a written termination notice from the undersigned. However, as
to all Obligations (whether matured, unmatured, absolute, contingent or
otherwise) incurred by the Customer prior to your receipt of such written
termination notice (and regardless of any subsequent amendment, extension or
other modification which may be made with respect to such Obligations), this
Guaranty shall nevertheless continue and remain undischarged until all such
Obligations are indefeasibly paid and performed in full.
The undersigned agrees that this Guaranty shall remain in full force
and effect or be reinstated (as the case may be) if at any time payment or
performance of any of the Obligations (or any part thereof) is rescinded,
reduced or must otherwise be restored or returned by you, all as though such
payment or performance had not been made. If, by reason of any bankruptcy,
insolvency or similar laws affecting the rights of creditors, you shall be
prohibited from exercising any of your rights or remedies against the Customer
or any other person or against any property, then, as between you and the
undersigned, such prohibition shall be of no force and effect, and you shall
have the right to make demand upon, and receive payment from, the undersigned
of all amounts and other sums that would be due to you upon a default with
respect to the Obligations.
Notice of acceptance of this Guaranty and of any default by the
Customer or any other person is hereby waived. Presentment, protest, demand,
and notice of protest, demand and dishonor of any of the Obligations, and the
exercise of possessory, collection or other remedies for the Obligations, are
hereby waived. The undersigned warrants that it has adequate means to obtain
from the Customer on a continuing basis financial data and other information
regarding the Customer and is not relying upon you to provide any such data or
other information. Without limiting the foregoing, notice of adverse change in
the Customer's financial condition or of any other fact which might materially
increase the risk of the undersigned is also waived. All settlements,
compromises, accounts stated and agreed balances made in good faith between the
Customer, its successors or assigns, and you shall be binding upon and shall
not affect the liability of the undersigned.
Payment of all amounts now or hereafter owed to the undersigned by the
Customer or any other obligor for any of the Obligations is hereby subordinated
in right of payment to the indefeasible payment in full to you of all
Obligations and is hereby assigned to you as security therefor. The undersigned
hereby irrevocably and unconditionally waives and relinquishes all statutory,
contractual, common law, equitable and all other claims against the Customer
and any other obligor for any of the Obligations, any collateral therefor, or
any other assets of the Customer or any such other obligor, for subrogation,
reimbursement, exoneration, contribution, indemnification, setoff or other
recourse in respect of sums paid of payable to you by the undersigned
hereunder, and the undersigned hereby further irrevocably and unconditionally
waives and relinquishes any and all other benefits which it might otherwise
directly or indirectly receive or be entitled to receive by reason of any
amounts paid by, or collected or due from, it, the Customer or any other
obligor for any of the Obligations, or realized from any of their respective
assets.
THE UNDERSIGNED HEREBY UNCONDITIONALLY WAIVES ITS RIGHT TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, ANY OF THE
RELATED DOCUMENTS, ANY DEALINGS BETWEEN US RELATING TO THE SUBJECT MATTER
HEREOF OR THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
US. The scope of this waiver is intended to be all encompassing of any and all
disputes that may be filed in any court (including, without limitation,
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE
OBLIGATIONS GUARANTEED HEREBY, OR ANY RELATED DOCUMENTS. In the event of
litigation this Guaranty may be filed as a written consent to a trial by the
court.
As used in this Guaranty, the word "person" shall include any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, or any government or any political
subdivision thereof.
This Guaranty is intended by the parties as a final expression of the
guaranty of the undersigned and is also intended as a complete and exclusive
statement of the terms thereof. No course of dealing, course of performance or
trade usage, nor any paid evidence of any kind, shall be used to supplement or
modify any of the terms hereof. Nor are there any conditions to the full
effectiveness of this Guaranty. This Guaranty and each of its provisions may
only be waived, modified, varied, released, terminated or surrendered, in whole
or in part, by a duly authorized written instrument signed by you. No failure
by you to exercise your rights hereunder shall give rise to any estoppel
against you, or excuse the undersigned from performing hereunder. Your waiver
of any right to demand performance hereunder shall not be a waiver of any
subsequent or other right to demand performance hereunder.
This Guaranty shall bind the undersigned's successors and assigns and
the benefits thereof shall extend to and include your successors and assigns.
In the event of default hereunder, you may at any time inspect undersigned's
records, or at your option, undersigned shall furnish you with a current
independent audit report.
If any provisions of this Guaranty are in conflict with any applicable
statute, rule or law, then such provisions shall be deemed null and void to the
extent that they may conflict therewith, but without invalidating any other
provisions hereof.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL, IN ALL RESPECTS, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. The parties agree that any action or proceeding arising out of or
relating to this Guaranty shall be commenced in any state or Federal court
located in New York County, City of New York, State of New York, and that such
courts shall have exclusive jurisdiction to hear and determine any claims or
disputes between or among any of the parties hereto or thereto relating to the
transaction contemplated by this Guaranty, and any investigation, litigation or
proceeding related to or arising out of any such matters; provided, however,
that the parties hereto acknowledge that any appeals from those courts may be
heard by a court located outside of such jurisdiction. Each party hereto
expressly submits and consents in advance to such jurisdiction in any action or
suit commenced in any such court, and hereby waives any objection which such
party may have based upon lack of personal jurisdiction, improper venue or
inconvenient form. The parties further agree that a summons and complaint
commencing an action or proceeding in any such court shall be properly served
and shall confer personal jurisdiction if served personally or by certified
mail to it at its address set forth herein, or as it may provide in writing
from time to time, or as otherwise provided under the laws of the State of New
York.
Each signatory on behalf of a corporate guarantor warrants that he had
authority to sign on behalf of such corporation and by so signing, to bind said
guarantor corporation hereunder.
<PAGE>
IN WITNESS WHEREOF, this Corporate Guaranty is executed the day and
year above written.
TRANSIT GROUP, INC.
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
Facsimile: (770) 444-0246
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
CAROLINA-PACIFIC DISTRIBUTORS, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
5265 Surrett Drive
Archdale, North Carolina 27263
Facsimile: (336)434-4310
CERTIFIED TRANSPORT, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
2415 W. Thompson Road
Indianapolis, Indiana 46217
Facsimile: (317)780-6434
RAINBOW TRUCKING SERVICES, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
2425 Ralph Avenue
Louisville, Kentucky 40216
Facsimile: (502)448-8992
TRANSPORTATION RESOURCES
AND MANAGEMENT, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
5003 US 30 West
Suite 1
Fort Wayne, Indiana 46898
Facsimile: (219)471-0833
CARROLL FULMER & CO., INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
8340 American Way
Groveland, Florida 34736
Facsimile: (352)429-1010
KJ TRANSPORTATION, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
6070 Collette Road
Farmington, New York 14425
Facsimile: (716)924-9959
SERVICE EXPRESS, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
504 Bear Creek Cut Off Road
Tuscaloosa, Alabama 35403
Facsimile: (205)345-6900
DIVERSIFIED TRUCKING CORP.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
309 Williamson Avenue
Opelika, AL 36804-7313
Facsimile: (334-)742-0592
NORTHSTAR TRANSPORTATION, INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
410 Twitchell Road
Dothan, Alabama 36303
Facsimile: (334)712-2499
TRANSIT LEASING, INC. f/k/a
CAPITOL WAREHOUSE INC.
Lessee
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
Facsimile:(770)444-0246
J&L TRUCK LEASING OF FARMINGTON, INC.
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
Facsimile:(716)924-9959
<PAGE>
CERTIFIED RESOLUTION
The undersigned hereby certifies that he/she is Secretary of each of
Transit Group, Inc., Carolina-Pacific Distributors, Inc., Certified Transport,
Inc., Rainbow Trucking Services, Inc., Transportation Resources and Management,
Inc., Carroll Fulmer & Co., Inc., Service Express, Inc., Diversified Trucking
Corp., Northstar Transportation, Inc., and Transit Leasing, Inc. f/k/a Capitol
Warehouse Inc.; that the following resolution was passed by unanimous consent
of the Board of Directors of said corporations, that said resolution has not
since been revoked or amended, and that the form of guaranty referred to
therein is the form shown attached hereto:
"RESOLVED, that it is to the benefit of this corporation that it
execute a guaranty of the obligations of KJ Transportation, Inc. and J&L Truck
Leasing of Farmington, Inc. to General Electric Capital Corporation ("GE
Capital") and that the benefit to be received by this corporation from such
guaranty is reasonably worth the obligations thereby guaranteed, and further
that such guaranty shall be substantially in the form annexed to these minutes,
and further that the Philip A. Belyew (title of officer) of this corporation is
authorized to execute such guaranty on behalf of this corporation."
WITNESS my hand on this 12th day of November, 1998.
(SEAL)
/s/ Wayne N. Nellums
Wayne N. Nellums
Secretary
CERTIFICATION AND REPRESENTATION BY SIGNING OFFICER
The undersigned being the CEO of each of the corporations which
executed the guaranty attached hereto, hereby certifies and represents to
General Electric Capital Corporation that the undersigned executed the guaranty
for and on behalf of said corporations and that in so executing said instrument
the undersigned was duly authorized to do so in his/her named capacity as
officer and by so executing to hereby bind said guarantor corporations to the
terms of said instrument as therein set forth.
/s/ Philip A. Belyew
Dated: November 12, 1998 Philip A. Belyew(L.S.)
Exhibit 10.27
MASTER SECURITY AGREEMENT
THIS MASTER SECURITY AGREEMENT (the AAgreement@) is made as of the
12th day of November, 1998, by and among GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation with an address at One Lincoln Centre, 5400 LBJ Freeway,
Suite 525, Dallas, Texas 75240 (together with is successors and assigns, if
any, ASecured Party@), and KJ TRANSPORTATION, INC., a corporation organized and
existing under the laws of the State of New York with its chief executive
offices located at 6070 Collette Road, Farmington, New York 14424 (AKJT@), and
J&L TRUCKING LEASING OF FARMINGTON, INC., a corporation organized and existing
under the laws of the State of New York with its chief executive offices
located at 6070 Collette Road, Farmington, New York 14224 (J&L), jointly and
severally (together with KJT being collectively referred to as ADebtor@).
In consideration of the promises herein contained and of certain other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Debtor and Secured Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST.
Debtor hereby gives, grants and assigns to Secured Party, its
successors and assigns forever, a security interest in and against any and all
property listed on any collateral schedule now or hereafter annexed hereto or
made a part hereof (ACollateral Schedule@), and in and against any and all
additions, attachments, accessories and accessions thereto, any and all
substitutions, replacements or exchanges therefor, and any and all insurance
and/or other proceeds thereof (all of the foregoing being hereinafter
individually and collectively referred to as the ACollateral@). The foregoing
security interest is given to secure the payment and performance of any and all
debts, obligations and liabilities of any kind, nature or description
whatsoever (whether primary, secondary, direct, contingent, sole, joint or
several, or otherwise, and whether due or to become due) of Debtor to Secured
Party, now existing or hereafter arising, including but not limited to the
payment and performance of certain Promissory Notes from time to time
identified on any Collateral Schedule (collectively ANotes@ and each a ANote@),
and any renewals, extensions and modifications of such debts, obligations and
liabilities (all of the foregoing being hereinafter referred to as the
AIndebtedness@). Notwithstanding the foregoing, and notwithstanding anything to
the contrary contained elsewhere in this Agreement, to the extent that Secured
Party asserts a purchase money security interest in any items of Collateral
(APMSI Collateral@): (i) the PMSI Collateral shall secure only that portion of
the Indebtedness which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral (the APMSI
Indebtedness@), and (ii) no other Collateral shall secure the PMSI
Indebtedness.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.
Debtor hereby represents, warrants and covenants as of the date hereof
and as of the date of execution of each Collateral Schedule hereto that:
(a) Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the first paragraph of this
Agreement, has its chief executive offices at the location set forth in such
paragraph, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;
(b) Debtor has adequate power and capacity to enter into, and to
perform its obligations, under this Agreement, each Note and any other
documents evidencing, or given in connection with, any of the Indebtedness (all
of the foregoing, together with any guaranty executed in connection herewith,
being hereinafter referred to as the ADebt Documents@);
(c) This Agreement and the other Debt Documents have been duly
authorized, executed and delivered by Debtor and constitute legal, valid and
binding agreements, jointly and severally enforceable against Debtor under all
applicable laws in accordance with their terms, except to the extent that the
enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws;
(d) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into,
or performance by, Debtor of any of the Debt Documents, except such as may have
already been obtained;
(e) Except as specified on Schedule A attached hereto, the entry into,
and performance by, Debtor of the Debt Documents will not (i) violate any of
the organizational documents of Debtor or any judgment, order, law or
regulation applicable to Debtor, or (ii) result in any breach of, constitute a
default under, or result in the creation of any lien, claim or encumbrance on
any of Debtor's property (except for liens in favor of Secured Party) pursuant
to, any indenture mortgage, deed of trust, bank loan, credit agreement, or
other agreement or instrument to which Debtor is a party;
(f) Except as specified on Schedule A attached hereto, there are no
suits or proceedings pending or threatened in court or before any commission,
board or other administrative agency against or affecting Debtor which could,
in the aggregate, have a Material Adverse Effect. As used herein, AMaterial
Adverse Effect@ shall mean (1) a materially adverse effect on the business,
condition (financial or otherwise), operations, performance or properties of
Debtor or Guarantor (as hereinafter defined), taken as a whole, or (2) a
material impairment of the ability of Debtor or Guarantor, taken as a whole, to
perform its obligations under or to remain in compliance with the Debt
Documents. Further, Debtor is not in default under any obligation for borrowed
money, for the deferred purchase price of property or any lease agreement
which, either individually or in the aggregate, would have the same such
effect;
(g) All financial statements delivered to Secured Party in connection
with the Indebtedness have been prepared in accordance with generally accepted
accounting principles consistently applied (AGAAP@), and since the date of the
most recent financial statement, there has been no material adverse change;
(h) The Collateral is not, and will not be, used by Debtor
for personal, family or household purposes;
(i) The Collateral is, and will remain, in good condition
and repair and Debtor will not be negligent in the care and use thereof;
(j) Debtor is, and will remain, the sole and lawful owner of the
Collateral, and has the sole right and lawful authority to grant the security
interest described in this Agreement;
(k) Debtor is, and will remain, in possession of the Collateral except
as and to the extent that any item of the Collateral is rented on a short-term
lease (that is, for a lease with a term of less than thirty (30) days; a
AShort-term Lease@) entered into in the ordinary course of business of Debtor;
(l) The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of every kind, nature and description, except for (i)
liens in favor of Secured Party, (ii) liens for taxes not yet due or for taxes
being contested in good faith and which do not involve, in the reasonable
judgment of Secured Party, any risk of the sale, forfeiture or loss of any of
the Collateral, and (iii) inchoate materialmen's, mechanic's, repairmen's and
similar liens arising by operation of law in the normal course of business for
amounts which are not delinquent (all of such permitted liens being hereinafter
referred to as APermitted Liens@);
(m) Debtor has reviewed the areas within its business and operations
which could be adversely affected by, and has developed or is developing a
program to address on a timely basis, the AYear 2000 Problem@ (that is, the
risk that computer applications used by Debtor may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date on or after December 31, 1999). Based on such review and program,
Debtor believes that the AYear 2000 Problem@ will not have a Material Adverse
Effect. From time to time, at the request of Secured Party, Debtor shall
provide to Secured Party such updated information or documentation as is
requested regarding the status of its efforts to address the Year 2000 Problem;
and
(n) So long as any Indebtedness remains outstanding, Transit Group,
Inc. and its subsidiaries shall maintain a Fixed Charge Coverage Ratio of not
less than 1.1:1.0, determined as of the last day of each fiscal quarter
calculated on a rolling four (4) quarter basis. As used herein, AFixed Charge
Coverage Ratio@ shall mean the ratio of (X) the consolidated earnings before
income taxes, depreciation and amortization of Transit Group, Inc. and its
subsidiaries, minus non-financed capital expenditures, minus cash taxes paid by
Transit Group, Inc. and its subsidiaries on a consolidated basis, divided by
(Y) principal payments on indebtedness plus cash interest expense of Transit
Group, Inc. and its subsidiaries on a consolidated basis. All calculations
hereunder shall be made in accordance with GAAP.
3. COLLATERAL.
(a) Until the declaration of any default hereunder, Debtor shall
remain in possession of the Collateral, except to the extent that the
Collateral is then subject to a Short-term Lease entered into in the ordinary
course of business of Debtor; provided, however, that Secured Party shall have
the right to possess (i) any chattel paper or instrument that constitutes a
part of the Collateral, and (ii) any other Collateral which because of its
nature may require that Secured Party's security interest therein be perfected
by possession. Secured Party, its successors and assigns, and their respective
agents, shall have the right to examine and inspect any of the Collateral at
any time during normal business hours. Upon any request from Secured Party,
Debtor shall provide Secured Party with notice of the then current location of
the Collateral.
(b) Debtor shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good condition and working order, (iii)
use and maintain the Collateral only in compliance with all material applicable
laws, (iv) keep all of the Collateral free and clear of all liens, claims and
encumbrances (except for Permitted Liens), and (v) allow only qualified,
properly licensed personnel selected, employed and controlled by Debtor to
operate any motor vehicle comprising a portion of the Collateral (except to the
extent that any such motor vehicle is then subject to a Short-term Lease
entered into in the ordinary course of business of Debtor).
(c) Debtor shall not, without the prior written consent of Secured
Party, (i) part with possession of any of the Collateral (except to Secured
Party or for maintenance and repair), (ii) remove any of the Collateral from
the continental United States and Canada, or (iii) sell, rent, lease, mortgage,
grant a security interest in or otherwise transfer or encumber (except for
Permitted Liens) any of the Collateral; except, in each case, to the extent
that the Collateral is subject to a Short-term Lease entered into in the
ordinary course of business of Debtor.
(d) Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral, on the use thereof, or on this Agreement or any of the other Debt
Documents. At its option, Secured Party may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and may pay for the maintenance, insurance and preservation of the Collateral
or to effect compliance with the terms of this Agreement or any of the other
Debt Documents. Debtor shall reimburse Secured Party, on demand, for any and
all costs and expenses incurred by Secured Party in connection therewith and
agrees that such reimbursement obligation shall be secured hereby.
(e) Debtor shall, at all times, keep accurate and complete records of
the Collateral, and upon two (2) business days= (as hereinafter defined) notice
Secured Party, its successors and assigns, and their respective agents, shall
have the right to examine, inspect, and make extracts from all of Debtor's
books and records relating to the Collateral at any time during normal business
hours.
(f) If agreed by the parties, Secured Party may, but shall in no event
be obligated to, accept substitutions and exchanges of property for property,
and additions to the property, constituting all or any part of the Collateral.
Such substitutions, exchanges and additions shall be accomplished at any time
and from time to time, by the substitution of a revised Collateral Schedule for
the Collateral Schedule now or hereafter annexed. Any property which may be
substituted, exchanged or added as aforesaid shall constitute a portion of the
Collateral and shall be subject to the security interest granted herein.
Additions to, reductions or exchanges of, or substitutions for, the Collateral,
payments on account of any obligation or liability secured hereby, increases in
the obligations and liabilities secured hereby, or the creation of additional
obligations and liabilities secured hereby, may from time to time be made or
occur without affecting the provisions of this Agreement or the provisions of
any obligation or liability which this Agreement secures.
(g) Any third person at any time and from time to time holding all or
any portion of the Collateral shall be deemed to, and shall, hold the
Collateral as the agent of, and as pledge holder for, Secured Party. At any
time and from time to time, Secured Party may give notice to any third person
holding all or any portion of the Collateral that such third person is holding
the Collateral as the agent of, and as pledge holder for, the Secured Party.
4. INSURANCE.
The Collateral shall at all times be held at Debtor's risk, and Debtor
shall keep it insured against loss or damage by fire and extended coverage
perils, theft, burglary, and for any or all Collateral which are vehicles, for
risk of loss by collision, and where requested by Secured Party, against other
risks as required thereby, for the full replacement value thereof, with
companies, in amounts and under policies reasonably acceptable to Secured
Party. Debtor shall, if Secured Party so requires, deliver to Secured Party
policies or certificates of insurance evidencing such coverage. Each policy
shall name Secured Party as loss payee thereunder, shall provide for coverage
to Secured Party regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance, and shall
provide for thirty (30) days written notice to Secured Party of the
cancellation or material modification thereof. Debtor hereby appoints Secured
Party as its attorney in fact to make proof of loss, claim for insurance and
adjustments with insurers, and to execute or endorse all documents, checks or
drafts in connection with payments made as a result of any such insurance
policies. Proceeds of insurance shall be applied, at the option of Secured
Party, to repair or replace the Collateral or to reduce any of the Indebtedness
secured hereby.
5. REPORTS.
(a) Debtor shall promptly notify Secured Party within thirty (30) days
after (i) any change in the name of Debtor, (ii) any relocation of its chief
executive offices, (iii) any change in the location of the principal garage of
any motor vehicle comprising a portion of the Collateral in the event that any
such motor vehicle fails to return to the originally specified principal garage
location for a period of ninety (90) consecutive days, (iv) any of the
Collateral being lost, stolen, missing, destroyed, materially damaged or worn
out, (v) any lien, claim or encumbrance attaching or being made against any of
the Collateral other than Permitted Liens, or (vi) any malfunction of the
hubodometer or odometer of any motor vehicle comprising a portion of the
Collateral.
(b) Debtor will furnish Secured Party (1) within ninety (90)
days after the end of each fiscal year of Debtor, a
consolidated balance sheet of Transit Group, Inc. and its
subsidiaries as at the end of such year, and the related
consolidated statement of income and consolidated statement
of cash flows of Debtor for such fiscal year, prepared
in accordance with GAAP, all in reasonable detail and
certified by independent certified public accountants of
recognized standing selected by Transit Group, Inc. (which
shall be a "Big 6" accounting firm); (2) within ninety (90)
days after the end of each fiscal year of Transit Group, Inc.
and its subsidiaries, a consolidating balance sheet of
Transit Group, Inc. and its subsidiaries as at the end of
such year, and the related consolidating statement of
income and consolidating income of cash flows of Transit
Group, Inc. and its subsidiaries for such fiscal year,
prepared in accordance with GAAP; (3) within thirty (30)
days after the end of each fiscal year of Debtor, Transit
Group, Inc.=s Board approved operating plan for the next
fiscal year; (4) within forty-five (45) days after the end
of each quarter, an unaudited balance sheet of Transit
Group, Inc. and its subsidiaries as at the end of such
quarter, and the related statement of income and
statement of cash flows of Transit Group, Inc. and its
subsidiaries for such quarter, prepared in accordance
with GAAP, except for the absence of footnotes and year-end
adjustments; (5)within forty-five (45) days after the end
of each quarter, a consolidating balance sheet of
Transit Group, Inc. and its subsidiaries as at the end
of such quarter, and the related consolidating statement
of income and consolidating statement of cash flows of
Debtor for such quarter, prepared in accordance with GAAP,
except for the absence of footnotes and year-end
adjustments; and (6) within ten (10) days after the date on
which they are filed, all regular periodic reports, forms
and other filings required to be made by Transit Group,
Inc. to the Securities and Exchange Commission, if any;
and (7) contemporaneously with the furnishing of the
financial statements required pursuant to Clauses (1)
and (3) above, a duly completed compliance certificate
dated the date of such financial statements and signed
by the chief financial officer of Transit Group, Inc.,
containing a computation of the financial ratio set
forth in Section 2(m) hereof and to the effect that such
officer has not become aware of any default or Event of
Default that has occurred and is continuing or, if there is
any such event,describing it and the steps, if any, being
taken to cure it. Upon two (2) business days=notice,
Secured Party may at any reasonable time examine the
books and records of Debtor and make copies thereof.
6. FURTHER ASSURANCES.
(a) Debtor shall, upon request of Secured Party, furnish to Secured
Party such further information, execute and deliver to Secured Party such
documents and instruments (including, without limitation, Uniform Commercial
Code financing statements) and do such other acts and things, as Secured Party
may at any time reasonably request relating to the perfection or protection of
the security interest created by this Agreement or for the purpose of carrying
out the intent of this Agreement. Without limiting the foregoing, Debtor shall
cooperate and do all acts deemed necessary or advisable by Secured Party to
continue in Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any subordinations,
releases, landlord, lessor, or mortgagee waivers, and similar documents as may
be from time to time requested by, and which are in form and substance
satisfactory to, Secured Party.
(b) Debtor hereby grants to Secured Party the power to sign Debtor's
name and generally to act on behalf of Debtor to execute and file applications
for title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral. Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain such certificate showing the lien hereof with respect to the Collateral
and promptly deliver same to Secured Party.
(c) Debtor assumes and agrees to indemnify, defend and keep harmless
Secured Party, and any assignee of Secured Party's rights, obligations, title
or interests under any Note, its agents and employees ("Indemnitees"), from and
against any and all Claims (as hereinafter defined) (other than such as may
directly and proximately result from a breach of the Debt Documents or material
violation of applicable law by Secured Party, or the gross negligence or
willful misconduct of, such Indemnitees), by paying (on an after-tax basis) or
otherwise discharging same, when and as such Claims shall become due, including
Claims arising on account of (1) any Debt Document, or (2) the Collateral, or
any part thereof, including the ordering, acquisition, delivery, installation
or rejection of the Collateral, the possession, maintenance, use, condition,
ownership or operation of any item of Collateral, and by whomsoever owned, used
or operated, during the term of any Note with respect to that item of
Collateral, the existence of latent and other defects (whether or not
discoverable by Secured Party or Debtor) any claim in tort for negligence
(other than Secured Party=s negligence) or strict liability, and any claim for
patent, trademark or copyright infringement, or the loss, damage, destruction,
removal, return, surrender, sale or other disposition of the Collateral, or any
item thereof, or for whatever other reason whatsoever (other than the items
excluded herein). It is the express intention of both Secured Party and Debtor,
that the indemnity provided for in this Section includes Claims for which the
Indemnitees are strictly liable. Secured Party shall give Debtor prompt notice
of any Claim hereby indemnified against and Debtor shall be entitled to control
the defense and any settlement thereof, so long as no default or Default has
occurred and is then continuing; provided, however, that Secured Party shall
have the right to approve defense counsel selected by Debtor which approval
will not be unreasonably withheld. For the purposes of this Debt, the term
"Claims" shall mean all claims, allegations, harms, judgments, good faith
settlements entered into, suits, actions, debts, obligations, damages (whether
incidental, consequential or direct), demands (for compensation,
indemnification, reimbursement or otherwise), losses, penalties, fines,
liabilities (including strict liability), charges that Secured Party has
incurred or for which it is responsible, in the nature of interest, Liens, and
costs (including attorneys' fees and disbursements and any other legal or
non-legal expenses of investigation or defense of any Claim, whether or not
such Claim is ultimately defeated or enforcing the rights, remedies or
indemnities provided for hereunder, or otherwise available at law or equity to
Secured Party), of whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable, by or against any person.
7. EVENTS OF DEFAULT.
Debtor shall be in default under this Agreement and each of the other
Debt Documents upon the occurrence of any of the following AEvent(s) of
Default@:
(a) Debtor fails to pay any installment or other amount due or coming
due under any of the Debt Documents within ten (10) days after its due date;
(b) Any attempt by Debtor, without the prior written consent of
Secured Party, to sell, rent, or lease (except for Short-term Leases entered
into in the ordinary course of business of Debtor) mortgage, grant a security
interest in, or otherwise transfer or encumber (except for Permitted Liens) any
of the Collateral;
(c) Debtor fails to procure, or maintain in effect at all times, any
of the insurance on the Collateral in accordance with Section 4 of this
Agreement;
(d) Debtor breaches any of its other obligations under any of the Debt
Documents and fails to cure the same within thirty (30) days after the earlier
of (1) actual knowledge thereof by any officer of Transit Group, Inc., or (2)
written notice thereof to Debtor by Secured Party;
(e) Any warranty, representation or statement made by Debtor in any of
the Debt Documents or otherwise in connection with any of the Indebtedness
shall be false or misleading in any material respect at the time as of which
the facts therein set forth were stated or certified, or having omitted any
substantial contingent or unliquidated liability or Claim against Debtor;
(f) Any of the Collateral being subjected to, or being threatened
with, attachment, execution, levy, seizure or confiscation in any legal
proceeding or otherwise (unless such attachment, execution, levy, seizure or
confiscation is then being contested in good faith by negotiations or by
appropriate proceedings which suspend the execution thereof and such
proceedings do not involve any substantial danger (as determined in Secured
Party=s sole reasonable discretion) of the sale, forfeiture or loss of the
Collateral);
(g) Any Default or Event of Default (as such terms are defined
therein) by Debtor under any other agreement between Debtor and Secured Party;
(h) Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively AGuarantor@) shall (1) be generally not paying its
debts as they become due; or (2) take action for the purpose of invoking the
protection of any bankruptcy or insolvency law, or any such law is invoked
against or with respect to Debtor or Guarantor or its property, and any such
petition filed against Debtor or Guarantor is not dismissed within sixty (60)
days;
(i) Debtor shall be in default under any material obligation for
borrowed money, for the deferred purchase price of property or any lease
agreement, and the applicable grace period with respect thereto shall have
expired, which in any case would have a Material Adverse Effect;
(j) Any dissolution, termination of existence, merger or consolidation
of Debtor or any Guarantor (such action being referred to as an AEvent@),
unless not less than thirty (30) days prior to such Event: (x) such person is
organized and existing under the laws of the United States or any state, and
executes and delivers to Secured Party an agreement containing an effective
assumption by such person of the due and punctual performance of this
Agreement; and (y) Secured Party is reasonably satisfied as to the credit
worthiness of such person;
(k) Debtor ceases to a wholly-owned subsidiary of Transit Group,
Inc. unless merged into another subsidiary of Transit Group, Inc.; or
(l) As a result of or in connection with a change in the ownership of
fifty-one (51) percent or more of the capital stock of Transit Group, Inc., the
ratio of Consolidated Total Liabilities to Consolidated Tangible Net Worth of
Transit Group, Inc. equals or exceeds twice the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth of Transit Group, Inc. as of the
date of this Agreement, without the prior written consent of Secured Party. As
used herein, AConsolidated Tangible Net Worth@ shall mean, on a consolidated
basis of Transit Group, Inc. and it subsidiaries, the excess of all assets
(including the sum of the par or stated value of all outstanding capital stock,
surplus and undivided profits, less any amounts attributable to goodwill,
patents, copyrights, mailing lists, catalogues, trademarks, bond discount and
underwriting expenses, organization expense and other intangibles) over all
liabilities, as determined and computed in accordance with GAAP; and
AConsolidated Total Liabilities@ shall mean, on a consolidated basis of Transit
Group, Inc. and its subsidiaries, such liabilities which, in accordance with
GAAP, would be included on the liability side of a consolidated balance sheet.
8. REMEDIES ON DEFAULT.
(a) Upon the occurrence of an Event of Default under this Agreement,
the Secured Party, at its option, may declare any or all of the Indebtedness,
including without limitation the Notes, to be immediately due and payable,
without demand or notice to Debtor or any Guarantor. The obligations and
liabilities accelerated thereby shall bear interest (both before and after any
judgment) until paid in full at the lower of twelve percent (12%) per annum or
the maximum rate not prohibited by applicable law.
(b) Upon such declaration of default, Secured Party shall have all of
the rights and remedies of a Secured Party under the Uniform Commercial Code,
and under any other applicable law. Without limiting the foregoing, Secured
Party shall have the right to (i) notify any account debtor of Debtor or any
obligor on any instrument which constitutes part of the Collateral to make
payment to the Secured Party, (ii) with or without legal process, enter any
premises where the Collateral may be and take possession and/or remove said
Collateral from said premises, (iii) sell the Collateral at public or private
sale, in whole or in part, and have the right to bid and purchase at said sale,
and/or (iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds therefrom to the obligations then in default. If requested by
Secured Party, Debtor shall promptly assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties. Secured Party may also render any or
all of the Collateral unusable at the Debtor's premises and may dispose of such
Collateral on such premises without liability for rent or costs. Any notice
which Secured Party is required to give to Debtor under the Uniform Commercial
Code of the time and place of any public sale or the time after which any
private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given to the
last known address of Debtor at least five (5) business days prior to such
action.
(c) Proceeds from any sale or lease or other disposition shall be
applied: first, to all costs of repossession, storage, and disposition
including without limitation attorneys', appraisers', and auctioneers' fees;
second, to discharge the obligations then in default; third, to discharge any
other Indebtedness of Debtor to Secured Party, whether as obligor, endorser,
guarantor, surety or indemnitor; fourth, to expenses incurred in paying or
settling liens and claims against the Collateral; and lastly, to Debtor, if
there exists any surplus.
Debtor shall remain fully liable for any deficiency.
(d) In the event this Agreement, any Note or any other Debt Documents
are placed in the hands of an attorney for collection of money due or to become
due or to obtain performance of any provision hereof, Debtor agrees to pay all
reasonable attorneys' fees incurred by Secured Party, and further agrees that
payment of such fees is secured hereunder.
(e) Secured Party's rights and remedies hereunder or otherwise arising
are cumulative and may be exercised singularly or concurrently. Neither the
failure nor any delay on the part of the Secured Party to exercise any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. Secured Party shall not be deemed to have waived any of its rights
hereunder or under any other agreement, instrument or paper signed by Debtor
unless such waiver be in writing and signed by Secured Party. A waiver on any
one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.
(f) DEBTOR HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE
INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED
PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
9. MISCELLANEOUS.
(a) This Agreement, any Collateral Schedules, any Note and/or any of
the other Debt Documents may be assigned, in whole or in part, by Secured Party
without notice to Debtor, and Debtor hereby waives any defense, counterclaim or
cross-complaint by Debtor against any assignee, agreeing that Secured Party
shall be solely responsible therefor. Debtor agrees that if Debtor receives
written notice of an assignment from Secured Party, Debtor shall pay all
payments and other amounts due under the assigned Note and Collateral Schedule
to such assignee or as instructed by Secured Party. Debtor further agrees to
confirm in writing receipt of the notice of assignment as may be reasonably
requested by Assignee.
(b) All notices to be given in connection with this Agreement shall be
in writing, shall be addressed to the parties at their respective addresses set
forth hereinabove (unless and until a different address may be specified in a
written notice to the other party), and shall be deemed given (i) on the date
of receipt if delivered in hand or by facsimile transmission, (ii) on the next
business day after being sent by express mail, and (iii) on the fourth business
day after being sent by regular, registered or certified mail. As used herein,
the term Abusiness day@ shall mean and include any day other than Saturdays,
Sundays, or other days on which commercial banks in New York, New York are
required or authorized to be closed.
(c) Secured Party may correct patent errors herein and fill in all
blanks herein or in any Collateral Schedule consistent with the agreement of
the parties.
(d) Time is of the essence hereof. This Agreement shall be binding,
jointly and severally, upon all parties described as the ADebtor@ and their
respective heirs, executors, representatives, successors and assigns, and shall
inure to the benefit of Secured Party, its successors and assigns.
(e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior understandings (whether written, verbal or implied) with
respect thereto. This Agreement and its Collateral Schedules shall not be
changed or terminated orally or by course of conduct, but only by a writing
signed by both parties hereto. Section headings contained in this Agreement
have been included for convenience only, and shall not affect the construction
or interpretation hereof.
(f) This Agreement shall continue in full force and effect until all
of the Indebtedness has been indefeasibly paid in full to Secured Party. The
surrender, upon payment or otherwise, of any Note or any of the other documents
evidencing any of the Indebtedness shall not affect the right of Secured Party
to retain the Collateral for such other Indebtedness as may then exist or as it
may be reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated in the event that Secured Party is ever required to
return or restore the payment of all or any portion of the Indebtedness (all as
though such payment had never been made).
(g) THIS AGREEMENT AND THE OTHER DEBT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, IN ALL RESPECTS, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE COLLATERAL. The parties agree that any action or proceeding
arising out of or relating to the Debt Documents shall be commenced in any
state or Federal court located in New York County, City of New York, State of
New York, and that such courts shall have exclusive jurisdiction to hear and
determine any claims or disputes between or among any of the parties hereto or
thereto relating to the transaction contemplated by this Agreement, and any
investigation, litigation or proceeding related to or arising out of any such
matters; provided, however, that the parties hereto acknowledge that any
appeals from those courts may be heard by a court located outside of such
jurisdiction. Each party hereto expressly submits and consents in advance to
such jurisdiction in any action or suit commenced in any such court, and hereby
waives any objection which such party may have based upon lack of personal
jurisdiction, improper venue or inconvenient form. The parties further agree
that a summons and complaint commencing an action or proceeding in any such
court shall be properly served and shall confer personal jurisdiction if served
personally or by certified mail to it at its address set forth herein, or as it
may provide in writing from time to time, or as otherwise provided under the
laws of the State of New York.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Master Security Agreement in one or more
counterparts, each of which shall be deemed to be an original, as of the day
and year first aforesaid.
SECURED PARTY: DEBTOR:
GENERAL ELECTRIC CAPITAL KJ TRANSPORTATION, INC.
CORPORATION
By: /s/ John E. Hanley By: /s/ Philip A. Belyew
Name: John E. Hanley Name: Philip A. Belyew
Title: Senior Riask Manager Title:CEO
J&L TRUCK LEASING OF FARMINGTON, INC.
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: CEO
Exhibit 10.28
LOAN AGREEMENT AND SECURITY AGREEMENT
$1,500,000.00 Facility
Dated as of November 5, 1998
by and between
AMSOUTH BANK
and
TRANSIT GROUP, INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS....................................................2
Section 1.1. Capital Expenditures............................2
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................................3
Section 1.7. Generally Accepted Accounting Principles........3
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...........4
Section 1.14. Net Income Available for Interest Payments......4
Section 1.15. Net Worth.......................................4
Section 1.16. Permitted Contests..............................4
Section 1.17. Qualified Investments...........................4
Section 1.18. Receivables.....................................5
Section 1.19. Reserve Adjusted LIBOR Rate.....................5
Section 1.20. Tangible Net Worth..............................5
Section 1.21. Total Liabilities...............................6
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
ARTICLES III - SECURITY AND GUARANTY.......................................7
Section 3.1. Security Interest...............................7
Section 3.2. Guaranty........................................8
Section 3.3. Security Documents..............................8
Section 3.4. Filing and Recording............................8
ARTICLE IV - BORROWER'S AND GUARANTOR=S REPRESENTATIONS AND WARRANTIES.....8
Section 4.1. Organization and Standing of Borrower...........9
Section 4.2. Organization and Standing of Carroll Fulmer.....9
Section 4.3. Organization and Standing of Carolina Pacific...9
Section 4.4. Organization and Standing of Transit Leasing....9
Section 4.5. Organization and Standing of Service Express....9
Section 4.6. Organization and Standing of Rainbow Trucking...10
Section 4.7. Organization and Standing of Transportation
Resources.......................................10
Section 4.8. Organization and Standing of Venture Logistics..10
Section 4.9. Organization and Standing of Certified Transport10
Section 4.10. Organization and Standing of K.J. Transportation10
Section 4.11. Organization and Standing of Diversified
Trucking........................................11
Section 4.12. Organization and Standing of Northstar
Transportation..................................11
Section 4.13. Corporate Power and Authority...................11
Section 4.14. Valid and Binding Obligations...................11
Section 4.15. Consent or Filing...............................11
Section 4.16. Financial Condition of the Borrower.............12
Section 4.17. Litigation. ....................................12
Section 4.18. Disclosure and No Untrue Statements. ...........12
Section 4.19. Title to Collateral.............................12
Section 4.20. Payment of Taxes. ..............................13
Section 4.21. Agreement or Contract Restrictions. ............13
Section 4.22. Patents, Trademarks, Etc. ......................13
Section 4.23. Investment Company Act; Regulation..............13
Section 4.24. Labor Matters. .................................13
Section 4.25. ERISA Requirement. .............................14
Section 4.26. Compliance With Environmental Requirements. ....14
Section 4.27. Use of Credit. .................................15
ARTICLE V - CONDITIONS PRECEDENT...........................................15
Section 5.1. Documents and Instruments.......................15
Section 5.2. Correctness of Warranties.......................15
Section 5.3. Certificates of Resolution......................15
Section 5.4. Expenses of Lender..............................16
Section 5.5. Supporting Documents. ..........................16
Section 5.6. Opinion of the Borrower's Counsel. .............17
ARTICLE VI - BORROWER'S AND GUARANTOR=S AFFIRMATIVE COVENANTS..............17
Section 6.1. Corporate Existence and Qualification...........17
Section 6.2. Financial Statements............................17
Section 6.3. Executive Officer's Certificates................18
Section 6.4. Taxes and Claims................................18
Section 6.5. Pay Indebtedness to Lender and Perform Other
Covenants.......................................18
Section 6.6. Litigation......................................18
Section 6.7. Right of Inspection; Discussions. ..............19
Section 6.8. Notices. ......................................19
Section 6.9. ERISA Benefit Plans. ...........................19
Section 6.10. Insurance.......................................20
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.........................21
Section 6.15. Collateral Reporting............................21
Section 6.16. Observance of Laws. ............................21
Section 6.17. Subsidiaries....................................21
Section 6.18. Capitalization Ratio............................21
ARTICLE VII - BORROWER'S NEGATIVE COVENANTS................................21
Section 7.1. Type of Business................................22
Section 7.2. Change in Ownership or Management...............22
Section 7.3. Acquisitions and Mergers........................22
Section 7.4. Capital Expenditures............................22
Section 7.5. Guaranty........................................22
Section 7.6. Investment and Loans............................22
Section 7.7. Disposition or Encumbrance of Receivables.......22
Section 7.8. Sale-Leasebacks.................................23
Section 7.9. Leases..........................................23
Section 7.10. Liens...........................................23
Section 7.11. Take or Pay Contracts...........................24
Section 7.12. Other Special Covenants.........................24
ARTICLE VIII - EVENTS OF DEFAULT...........................................24
Section 8.1. Events..........................................24
(a) Payment of Obligations to Lender. ..............24
(b) Representation or Warranty. ....................24
(c) Covenants. .....................................24
(d) The Borrower's Liquidation; Dissolution;
Bankruptcy; Etc. ...............................25
(e) Order of Dissolution. ..........................25
(f) Reports and Certificates. ......................25
(g) Judgments. .....................................25
(h) Liens Imposed by Law. ..........................25
(i) Corporate Existence. ...........................26
(j) ................................................26
Section 8.2. Rights and Remedies Cumulative..................26
Section 8.3. Rights and Remedies Not Waived..................26
Section 8.4. Waiver of Default...............................27
ARTICLE IX - MISCELLANEOUS.................................................27
Section 9.1. Course of Dealing; Amendments; Waiver. .........27
Section 9.2. Lien; Setoff By Lender..........................27
Section 9.3. Liability of Lender to Third Parties............27
Section 9.4. Waivers.........................................27
Section 9.5. Assignment and Participation....................28
Section 9.6. Funds Not Assignable............................28
Section 9.7. Indemnity.......................................28
Section 9.8. Termination by the Borrower.....................29
Section 9.9. Arbitration. ..................................29
Section 9.10. Notices.........................................29
Section 9.11. Controlling Agreement...........................29
Section 9.12. Titles..........................................30
Section 9.13. Venue and Jurisdiction. ........................30
Section 9.14. Governing Law. .................................30
Section 9.15. Legal or Governmental Limitations. .............30
Section 9.16. Counterparts. ..................................30
Section 9.17. Addition of Subsidiaries........................30
Section 9.18. Waiver of Trial By Jury.........................31
Section 9.19. Confidentiality.................................31
<PAGE>
LOAN AGREEMENT
AND
SECURITY AGREEMENT
THIS AGREEMENT dated as of the 5th day of November,
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 TRANSIT GROUP,
INC., a Florida corporation, whose address is Overlook III, 2859 Paces Ferry
Road, Suite 1740, Atlanta, Georgia 30339 (the ABorrower@) and CARROLL FULMER &
COMPANY, INC., a Florida corporation, whose address is P. O. Box 5000,
Groveland, Florida 34736-5000 (ACarroll Fulmer@) and CAROLINA PACIFIC
DISTRIBUTORS, INC., a North Carolina corporation, whose address is 5625 Surrett
Drive Extension, Archdale, North Carolina 27263 (ACarolina Pacific@) and
TRANSIT LEASING, INC., an Indiana corporation f/k/a CAPITOL WAREHOUSE, INC., a
Kentucky corporation, whose address is 403 W. Main Street, Frankfurt, Kentucky
40601 (ATransit Leasing@) and SERVICE EXPRESS, INC., an Alabama corporation,
whose address is P.O. Box 1009, Tuscaloosa, Alabama 35403 (AService Express@)
and RAINBOW TRUCKING SERVICES, INC., an Indiana corporation, whose address is
724 Mechanic Street, Jeffersonville, Indiana 47130 (ARainbow Trucking@) and
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an Indiana corporation, whose
address is 5003 US Highway 10 W, Suite 1, Fort Wayne, Indiana 46898
(ATransportation Resources@) and VENTURE LOGISTICS, LLC., an Indiana limited
liability company, whose address is 2415 W. Thompson Road, Indianapolis,
Indiana 46217 (AVenture Logistics@) and CERTIFIED TRANSPORT, LLC., an Indiana
limited liability company, whose address is 2415 W. Thompson Road,
Indianapolis, Indiana 46217 (ACertified Transport@) and K.J. TRANSPORTATION,
INC., a New York corporation, whose address is 6070 Collett Road, Farmington,
New York 14425 (AK.J. Transportation@) and DIVERSIFIED TRUCKING CORP., an
Alabama corporation, whose address is 309 Williamson Avenue, Opelika, Alabama
36804 (ADiversified Trucking@) and NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation, whose address is 410 Twitchell Road, Dothan, Alabama 36303
(ANorthstar Transportation@) and any and all other subsidiaries of Transit
Group, Inc., a Florida corporation (together herein referred to as the
ASubsidiaries@or individually as the ASubsidiary@) which subsequently enter
into a Joinder to Loan Agreement and Security Agreement (Carroll Fulmer,
Carolina Pacific, Transit Leasing, Service Express, Rainbow Trucking,
Transportation Resources, Venture Logistics, Certified Transport, K.J.
Transportation, Diversified Trucking, Northstar Transportation and Subsidiaries
are together hereinafter referred to as the "Guarantor" and individually
referred to as a ACo-Guarantor@; references applicable to Guarantor shall also
be applicable to each Co-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 refinancing the existing term loan used to finance a portion of
the acquisition of Certified Transport, LLC an Indiana limited liability
company, and Venture Logistics, LLC, an Indiana limited liability company; and
WHEREAS, this Agreement modifies and restates that certain Loan
Agreement and Security Agreement dated as of April 28, 1998 by and between
Lender, Borrower and Guarantor; and
WHEREAS, each Co-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.
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, or
member (as applicable) or affiliate of the Guarantor, the Borrower 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.
AEvent 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 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 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 (AFederal 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 Borrower 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, cash,
deposits, accounts, 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,
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 AInterest 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 ALIBOR-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.
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 ONE MILLION
FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) (hereinafter sometimes referred
to as the ALoan@)
Section 2.2. Note.
The obligation to repay the loan is evidenced by a promissory note in
the principal sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00)
(the "Note"). Under the Loan, the Borrower may, subject to the terms,
conditions herein set forth, borrow from Lender, at such time and in such
amounts not exceeding the total amount of ONE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($1,500,000.00).
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 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.
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 AIndebtedness@), each Co-Guarantor
grants and/or agrees to the following:
Section 3.1. Security Interest.
Each Co-Guarantor 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 each
Co-Guarantor as their interest may appear; 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 each Co-Guarantor, whereby each Co-Guarantor
guarantees the Borrower's obligations under the Note, this Agreement and the
Security Documents as hereinafter defined. Each Co-Guarantor, by its execution
of this Agreement, agrees that any and all loans, indebtedness or other
liability of the Borrower to the Co-Guarantor shall at all times be subordinate
to the indebtedness of the Borrower to the Lender.
Section 3.3. Security Documents.
Each Co-Guarantor, 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").
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 Borrower.
The Borrower 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 Borrower=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 4.2. 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 4.3. 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.
Section 4.4. Organization and Standing of Transit Leasing.
Transit Leasing is a corporation duly organized and existing under the
laws of the State of Indiana and is duly qualified to do business in the State
of Indiana and in each jurisdiction where the failure to be so qualified would
have a material adverse effect on Borrower. To the best of Transit Leasing=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
Indiana.
Section 4.5. 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 4.6. Organization and Standing of Rainbow Trucking.
Rainbow Trucking is a corporation duly organized and existing under
the laws of the State of Indiana and is duly qualified to do business in the
State of Indiana and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of Rainbow
Trucking=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 Indiana.
Section 4.7. Organization and Standing of Transportation Resources.
Transportation Resources is a corporation duly organized and existing
under the laws of the State of Indiana and is duly qualified to do business in
the State of Indiana and in each jurisdiction where the failure to be so
qualified would have a material adverse effect on Borrower. To the best of
Transportation Resources= 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 Indiana.
Section 4.8. Organization and Standing of Venture Logistics.
Venture Logistics is a limited liability company duly organized and
existing under the laws of the State of Indiana and is duly qualified to do
business in the State of Indiana and in each jurisdiction where the failure to
be so qualified would have a material adverse effect on Borrower. To the best
of Venture Logistics= 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 Indiana.
Section 4.9. Organization and Standing of Certified Transport.
Certified Transport is a limited liability company duly organized and
existing under the laws of the State of Indiana and is duly qualified to do
business in the State of Indiana and in each jurisdiction where the failure to
be so qualified would have a material adverse effect on Borrower. To the best
of Certified Transport=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 Indiana.
Section 4.10. Organization and Standing of K.J. Transportation.
K.J. Transportation is a corporation duly organized and existing under
the laws of the State of New York and is duly qualified to do business in the
State of New York and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of K.J.
Transportation=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 New York.
Section 4.11. Organization and Standing of Diversified Trucking.
Diversified Trucking 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
Diversified Trucking=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 Alabama.
Section 4.12. Organization and Standing of Northstar Transportation.
Northstar Transporation 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
Northstar Transportation=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 Alabama.
Section 4.13. 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, shareholder or
member action, are not in contravention of law or the terms of their respective
Articles of Incorporation, By-Laws or Operational Agreement 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 funding hereunder.
Section 4.14. 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.
Section 4.15. 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 4.16. 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 4.17. 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 4.18. 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.
Section 4.19. Title to Collateral.
The Borrower and Guarantor have good and marketable title to, and are
the holders 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 4.20. 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 4.21. 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 4.22. 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 4.23. 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 federal, state, or local statute or regulation
limiting the ability of the Borrower to incur indebtedness for money borrowed.
Section 4.24. 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 4.25. 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 4.26. 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 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 4.27. Use of Credit.
The Loan shall be used exclusively for the purpose of financing
certain 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.
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 or member approval is deemed necessary by any party, the
shareholders and members 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 or Member.
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 Borrower certified by
the Secretary of State, or other appropriate governmental authority, of the
state of incorporation;
(b) 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 resolution is true and
complete, was duly adopted at a duly called meeting in which a quorum was
present and acting throughout, or was duly adopted by written action, and has
not been amended, annulled, rescinded, or revoked in any respect and remain in
full force and effect on the date of the certificate;
(c) 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; and
(d) 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 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) Quarterly financial statements of the Borrower and each
Co-guarantor and other 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 the Borrower and each Co-Guarantor and its subsidiaries,
submitted within forty-five (45) days of the end of each fiscal quarter of the
Borrower and each Co-Guarantor prepared by and certified as such by the chief
financial officer of the applicable Borrower and Co-Guarantor stating Athe
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; and
(b) Annual financial statements of the Borrower and each Co-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; and
(c) Monthly accounts receivable agings for each Co-Guarantor aged by
invoice date as of the end of each month, accounts payable agings for each
Co-Guarantor as of the end of each month, daily updated accounts receivable
balances for each Co-Guarantor and customer address listings as Lender may
request from time to time.
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 and each Co-Guarantor, called for
by Section 6.2(a) and (b), shall be accompanied by a certificate of one of the
principal executive officers of Borrower and each Co-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, 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;
(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 name Lender as an additional
insured.
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.
Failure of the Borrower 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 Borrower shall maintain a Net Worth of not less than THIRTY-SEVEN
MILLION DOLLARS ($37,000,000.00) by the end of the 1998 fiscal year. The
Tangible Net Worth must not be less than a negative ($3,000,000) at the end of
the 1998 fiscal year end and a negative ($3,000,000) 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 Borrower shall not permit its ratio of Total Debt to Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) to be greater
than 3.50:1.00 for the 1998 fiscal year end and 3.00:1.00 for the 1999 fiscal
year end at all times thereafter.
Section 6.14. Interest Coverage Ratio.
The Borrower 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 1.50:1.00 and less than 2.00:1.00 for the fiscal year end 1999 and at
all times thereafter.
Section 6.15. 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 (20) days after the end of the month; and (5) any
other information that the Lender may from time to time require.
Section 6.16. 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 6.17. 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 6.18. Capitalization Ratio.
The Borrower and its subsidiaries on a consolidated basis shall not
permit its ratio of Funded Debt to Capitalization to exceed 65.0% at any time.
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 Borrower 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
transportation business) without the prior written approval of the Lender.
Section 7.4. Capital Expenditures.
The Borrower and its subsidiaries may not make Capital Expenditures,
excluding expenditures for rolling stock, in an aggregate amount per fiscal
year in excess of ONE MILLION DOLLARS ($1,000,000.00), without the prior
written consent of the Lender.
Section 7.5. Guaranty.
The Borrower 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) 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.
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)
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 and those listed below:
(a) liens in favor of Lender;
(b) existing liens identified in the 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 the Borrower and each Co-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.
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 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; or
(j) Cross-Default.
The default by Borrower or Guarantor in any terms or
conditions of any obligation of Borrower or Guarantor owed to Lender; in
addition, the default by the Borrower or Guarantor of any of the terms or
conditions of the Note or Loan Documents shall constitute a default of those
other obligations of Borrower or Guarantor owed to Lender, and all credit
accommodations related thereto;
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.
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 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 Borrower without the Lender=s
prior written consent. At any time, either before or after the closing of this
Loan, the Lender may grant one or more participations in this Loan to
participants of its choice. Any such participant may exercise rights of setoff
and banker=s lien against the Borrower with respect to its participation as if
it had made a direct loan to the Borrower. The Lender may divulge to any such
participant any information the Lender may obtain with respect to the 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.
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 Borrower and the Lender
specifically acknowledge and agree that this commitment involves a Atransaction
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.
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. Addition of Subsidiaries.
Additional Subsidiaries may join in this credit accommodation by:
a. executing and delivering to Lender with the
consent of Lender a Joinder to Loan
Agreement and Security Agreement in the form
attached hereto as Exhibit AA@; and
b. a Continuing and Unconditional Guaranty executed
by the Subsidiary in the form attached hereto as
Exhibit AB@; and
c. executing and delivering to Lender a UCC-1Financing
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.
No modifications involving the inclusion of Receivables of any
additional Subsidiaries will be made to eligible Receivables without the prior
written consent of the Lender and without each additional Subsidiary executing
and delivering to Lender all documents listed above.
Section 9.18. 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.
Section 9.19. Confidentiality.
Lender acknowledges that Borrower 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.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
AMSOUTH BANK, a bank organized under
the laws of Alabama
By: /s/ Anthony Stiffler
Anthony Stiffler,
Vice President
"Lender"
TRANSIT GROUP, INC., a Florida corporation
By: /s/ Philip A.Belyew
Philip A. Belyew,
President and Chief Executive Officer
ABorrower@
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
TRANSIT LEASING, INC., an Indiana corporation f/k/a
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
RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation
By: /s/ Philip A.Belyew
Philip A. Belyew,
Chairman of the Board
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an
Indiana corporation
By: /s/Philip A.Belyew
Philip A. Belyew,
Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited
liability company
By: /s/ Philip A.Belyew
Philip A. Belyew,
Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited
liability company
By: /s/Philip A.Belyew
Philip A. Belyew,
Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Philip A.Belyew
Philip A. Belyew,
Chairman of the Board
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Philip A.Belyew
Philip A. Belyew,
Chairman of the Board
NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Guarantor"
Exhibit 10.29
CONTINUING AND
UNCONDITIONAL GUARANTY
This Continuing and Unconditional Guaranty (the "Guaranty") is
executed as of the 5th day of November, 1998, by CARROLL FULMER & COMPANY,
INC., a Florida corporation, whose address is P. O. Box 5000, Groveland,
Florida 34736-5000 (ACarroll Fulmer@) and CAROLINA PACIFIC DISTRIBUTORS, INC.,
a North Carolina corporation, whose address is 5625 Surrett Drive Extension,
Archdale, North Carolina 27263 (ACarolina Pacific@) and TRANSIT LEASING, INC.,
an Indiana corporation f/k/a CAPITOL WAREHOUSE, INC., a Kentucky corporation,
whose address is 403 W. Main Street, Frankfurt, Kentucky 40601 (ATransit
Leasing@) and SERVICE EXPRESS, INC., an Alabama corporation, whose address is
P.O. Box 1009, Tuscaloosa, Alabama 35403 (AService Express@) and RAINBOW
TRUCKING SERVICES, INC., an Indiana corporation, whose address is 724 Mechanic
Street, Jeffersonville, Indiana 47130 (ARainbow Trucking@) and TRANSPORTATION
RESOURCES AND MANAGEMENT, INC., an Indiana corporation, whose address is 5003
US Highway 10 W, Suite 1, Fort Wayne, Indiana 46898 (ATransportation
Resources@) and VENTURE LOGISTICS, LLC., an Indiana limited liability company,
whose address is 2415 W. Thompson Road, Indianapolis, Indiana 46217 (AVenture
Logistics@) and CERTIFIED TRANSPORT, LLC., an Indiana limited liability
company, whose address is 2415 W. Thompson Road, Indianapolis, Indiana 46217
(ACertified Transport@) and K.J. TRANSPORTATION, INC., a New York corporation,
whose address is 6070 Collett Road, Farmington, New York 14425 (AK.J.
Transportation@) and DIVERSIFIED TRUCKING CORP., an Alabama corporation, whose
address is 309 Williamson Avenue, Opelika, Alabama 36804 (ADiversified
Trucking@) and NORTHSTAR TRANSPORTATION, INC., an Alabama corporation, whose
address is 410 Twitchell Road, Dothan, Alabama 36303 (ANorthstar
Transportation@) (Carroll Fulmer, Carolina Pacific, Transit Leasing, Service
Express, Rainbow Trucking, Transportation Resources, Venture Logistics,
Certified Transport, K.J. Transportation, Diversified Trucking, and Northstar
Transportation are together hereinafter referred to as the "Guarantor@ and
individually as the ACo-Guarantor@; references applicable to Guarantor shall
also be applicable to each Co-Guarantor), in favor of AMSOUTH BANK, a bank
organized under the laws of Alabama, whose mailing address is Post Office Box
588001, Orlando, Florida 32858 (the "Lender").
R E C I T A L S:
1. To induce the Lender to extend credit to TRANSIT GROUP, INC., a
Florida corporation (the "Borrower"), Guarantor has agreed to give to Lender
Guarantor's continuing and unconditional guarantee of the payment of
indebtedness and the performance of all obligations of the Borrower to the
Lender resulting from the extension(s) of credit by the Lender to the Borrower.
2. The Guarantor expects to derive advantage from the credit
accommodation(s) extended to the Borrower.
3. The Lender in reliance upon this Guaranty has or will extend credit
to the Borrower.
4. The term "Indebtedness" as used herein shall mean all payment
obligations of Borrower to Lender, direct or contingent, whether now or
hereafter due or arising, including without limitation all principal and
interest, all costs of collection, including reasonable attorney's fees,
whether incurred in connection with collection, trial, appeal or otherwise, all
other amounts which Borrower is obligated to pay Lender under any agreement
evidencing, relating to or securing the Indebtedness or any part thereof, and
including any documentary stamp tax (including interest and penalties, if any)
determined to be due in connection with any instruments evidencing the
Indebtedness. The term "Indebtedness" also includes amounts advanced by Lender
pursuant to requests for advances made on behalf of Borrower, even if, at the
time of any such advance, Borrower has been dissolved, liquidated or its
existence has been terminated, by operation of law or otherwise, if Lender does
not have actual knowledge of such termination of existence prior to making the
advance.
5. The term "Obligations" as used herein shall mean all other
obligations of Borrower to Lender, direct or contingent, whether now or
hereafter due or arising, including but not limited to the obligation to
perform all covenants, conditions, promises and agreements of or pursuant to
any loan document executed in connection with the Indebtedness.
6. The term "Liabilities" as used herein shall mean the Indebtedness
and the Obligations.
7. The term "Collateral" as used herein shall mean any funds,
guarantees, agreements or other property or rights or interests of any nature
whatsoever, or the proceeds thereof, which may have been, are or hereafter may
be, mortgaged, pledged, assigned, transferred, or delivered directly or
indirectly by or on behalf of the Borrower or Guarantor or any other party to
Lender or to the holder of instruments evidencing the Indebtedness of the
Borrower or which may have been, are, or hereafter may be held by any party as
Trustee or otherwise, as security, whether immediate or underlying, for the
performance of this Guaranty or the payment of the Liabilities or any of them
or any security therefor.
8. The term "Loan Documents" as used herein shall mean all loan
documents evidencing the Liabilities or constituting the Collateral or executed
in connection therewith.
NOW, THEREFORE, in consideration of the extension(s) of credit from
time to time extended by the Lender to the Borrower and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
1. The foregoing recitals are herein incorporated as covenants
and agreements.
2. Guarantor, jointly and severally hereby absolutely, irrevocably and
unconditionally guarantees to Lender that the Borrower will promptly pay and
discharge the Indebtedness in full when due, whether at maturity or earlier by
reason of acceleration or otherwise, or, if permitted by the Loan Documents,
when payment thereof shall be demanded by Lender, and, in the case of one or
more extensions of time of payment or renewals of the Liabilities that the same
will be promptly paid or performed when due, according to each such extension
or renewal, whether at maturity or earlier by reason of acceleration or
otherwise, and will promptly perform and observe all of the Obligations to be
performed or observed by the Borrower.
3. The obligations hereunder shall be continuing and irrevocable. All
liability hereunder shall continue notwithstanding the incapacity, lack of
authority, death, or disability of the undersigned. The failure of any other
person to sign this Guaranty or any counterpart of this Guaranty shall not
release or affect the liability of Guarantor.
4. This is a guarantee of payment, and not of collection, and a
guarantee of performance. In case the Borrower shall fail to pay all or any
part of the Indebtedness when due, whether by acceleration or otherwise,
according to the terms of any promissory note or other payment agreement,
Guarantor, immediately upon the written demand of Lender, shall pay to Lender
the amount due and unpaid by the Borrower as if that amount constituted the
direct and primary obligation of Guarantor. Lender shall not be required, prior
to any such demand on, or payment by Guarantor, to make any demand upon or
pursue or exhaust any of its rights or remedies against the Borrower or others
with respect to the payment of any of the Indebtedness or the performance of
any of the Obligations, or to pursue or exhaust any of its rights or remedies
with respect to any part of the Collateral. Guarantor shall have no right of
subrogation whatsoever with respect to the Indebtedness or the Collateral
unless and until Lender shall have received full payment of all the
Indebtedness.
5. The obligations of Guarantor hereunder, and the rights of Lender in
the Collateral, shall not be released, discharged, or in any way affected by
reason of the fact that a valid lien in any of the Collateral may not be
conveyed to, or created in favor of Lender; nor by reason of the fact that any
of the Collateral may be subject to equities or defenses or claims in favor of
others or may be inferior in priority to the claims of others or may be invalid
or defective in any way; nor by reason of the fact that the value of any of the
Collateral, or the financial condition of the Borrower or any obligor or
guarantor with respect to any of the Collateral, may not have been correctly
estimated or may have changed or may hereafter change; nor by reason of any
deterioration, waste or loss by fire, theft or otherwise of any of the
Collateral unless such deterioration, waste or loss be caused by the willful
act or willful failure to act by Lender.
6. The Lender is hereby given a lien for the amount of the liability
and indebtedness, whether or not due and payable, created by this Guaranty upon
all property and securities now or hereafter in the possession or custody of
the Lender by or for the account of Guarantor or in which Guarantor may have
any interest (all remittances and property to be deemed in the possession or
custody of the Lender as soon as put in transit to it by mail or carrier) and
also upon the balance of any deposit accounts of any or all of Guarantor with
the Lender existing from time to time, and the Lender is hereby authorized and
empowered at its option to appropriate any and all thereof and apply any and
all thereof and the proceeds thereof to the payment and extinguishment of the
liability and indebtedness hereby created at any time after such liability and
indebtedness becomes payable. Guarantor agrees to pay any deficiency remaining
after the Lender realizes on any security (whether furnished by Borrower,
Guarantor or a third party) but the Lender shall not be required to first
proceed against any such security. Lender's right of setoff contained herein
shall not apply to any account if it clearly appears that Guarantors rights in
the account are solely as a fiduciary for another or to any account, by its
nature and applicable law (for example an IRA or other tax deferred retirement
account), must be exempt from the claims of creditors.
7. Guarantor waives all notice of acceptance of this Guaranty and any
notice of the incurring by the Borrower, at any time, of any of the
Liabilities, and waives any and all presentment, demand, protest or notice of
protest, demand or dishonor, non-payment, maturity or other default with
respect to any of the Liabilities and any obligations of any party at any time
comprised in the collateral. The undersigned hereby grants to Lender full
power, in its uncontrolled discretion and without notice to Guarantor, to deal
in any manner with the Liabilities and the Collateral, including, but without
limiting the generality of the foregoing, the following powers:
A. To modify or otherwise change any terms of all or any part of the
Liabilities or the rate of interest thereon, to grant any extension or
extensions or renewal or renewals thereof and any other indulgence with respect
thereto, and to effect any release, compromise or settlement with respect
thereto;
B. To enter into any agreement of forbearance with respect to
all or any part of the Liabilities,or with respect to all or any part of the
Collateral, and to change the terms of any such agreement;
C. To forbear from calling for additional Collateral to secure
any of the Liabilities or to secure any obligation comprised in the Collateral;
D. To consent to the substitution, exchange, release or sale of all or
any part of the Collateral, whether or not the Collateral, if any, received by
Lender upon any such substitution, exchange, release or sale shall be of the
same or of a different character or value than the Collateral surrendered by
Lender;
E. To release any maker or guarantor of any promissory
note or other agreement evidencing the Indebtedness;
F. To modify the terms of any Loan Document;
G. In the event of the non-payment when due, whether by acceleration
or otherwise, of any of the Indebtedness, or in the event of default in the
performance of any of the Obligations, to realize on the Collateral or any part
thereof, as a whole or in such parcels or subdivided interests as Lender may
elect, at any public or private sale or sales, for cash or on credit or for
future delivery, without demand, advertisement or notice of the time or place
of sale or any adjournment thereof except as may be required by law (the
undersigned hereby waiving any such demand, advertisement, and notice to the
extent permitted by law), or by foreclosure or otherwise, or to forbear from
realizing thereon, or as Lender in its uncontrolled discretion may deem proper,
and to purchase all or any part of the Collateral for its own account at any
such sale or foreclosure, to the extent permitted by law.
The obligations of Guarantor to the Lender hereunder shall
not be released, discharged, reduced, diminished or in any way affected, nor
shall Guarantor have any rights or recourse against Lender, by reason of any
action Lender may take or omit to take under the foregoing powers.
8. Lender may assign this Guaranty or any of its rights and powers
hereunder, with all or any of the obligations hereby guaranteed, and may assign
and/or deliver to any such assignee any of the security herefor and, in the
event of such assignment, the assignee hereof or of such rights and powers of
such security, if any of such security be so assigned and/or delivered, shall
have the same rights and remedies as if originally named herein in place of
Lender, and Lender shall be thereafter fully discharged from all responsibility
with respect to any such security so assigned and/or delivered.
9. Guarantor warrants to Lender that it has disclosed to Lender in
writing all known defaults of any of its personal or business obligations and
those business entities in which it is a principal and of any and all actions
and proceedings pending or threatened against it or its business entities and
will advise Lender of any such defaults that may occur in the future. Guarantor
further warrants to Lender that nothing exists to impair the immediate taking
effect of this Guaranty and the effectiveness of this Guaranty.
10. Guarantor agrees to provide all financial statements, tax returns
and other financial data of the Guarantor and any business entity in which it
is a principal as required of the Borrower in the Loan Documents.
11. No act or omission of any kind by the Lender shall affect or
impair this Guaranty and the Lender shall have no duties to Guarantor.
Guarantor hereby agrees that its obligations hereunder shall be absolute and
primary and shall be complete and binding as to Guarantor upon this Guaranty
being executed and subject to no conditions precedent or otherwise. This
Guaranty contains the full agreement of Guarantor and is not subject to any
oral conditions. Guarantor further acknowledges that all conditions precedent
to delivery of this Guaranty to Lender have occurred and said delivery is
unconditional.
12. In the event that for any reason whatsoever Borrower is now or
hereafter becomes indebted to Guarantor, Guarantor agrees that the amount of
such indebtedness and all interest thereon shall at all times be subordinate as
to lien, time of payment and in all other respects to the Loan Documents, and
that Guarantor shall not be entitled to enforce or receive payment thereof
until all sums then due and owing to Lender shall have been paid. Nothing
herein contained is intended or shall be construed to give to Guarantor any
right of subrogation in or under the Loan Documents, or any right to
participate in any way therein, or in the right, title and interest of Lender
in and to the collateral covered by the Loan Documents, notwithstanding any
payments made by Guarantor under this Guaranty, all such rights of subrogation
and participation being hereby expressly waived until the Liabilities and
Obligations are paid and performed in full.
13. Notwithstanding anything in this Guaranty to the contrary, if a
bankruptcy petition is filed by or against the Borrower or Guarantor or any
co-guarantor, and the Borrower or Guarantor or any co-guarantor have made
payments to the Lender during any preference period as established by any
bankruptcy or other similar laws, this Guaranty shall not be terminated, unless
and until a final nonappealable decision of a court of competent jurisdiction
has been entered determining that the Lender shall be entitled to retain all
such monies paid it by the Borrower or Guarantor or any co-guarantor during
such preference period. The obligations of Guarantor under this Guaranty shall
include the obligations to reimburse Lender for any preferential payments
received by Lender during such period which Lender has been required to return
or repay. The undersigned also hereby waive(s) any claim, right or remedy which
the undersigned may now have or hereafter acquire against the Borrower that
arises hereunder and/or from the performance by any guarantor hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, indemnification, or participation in any claim,
right or remedy of Lender against the Borrower or any security which Lender now
has or hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise, until the
Obligations and Liabilities are paid and performed in full.
14. The undersigned expressly agree(s) that this Guaranty is governed
by the laws of the State of Florida, and the United States of America,
whichever the context may require or permit and that proper venue for any
action which may be brought under this Guaranty in addition to any other venue
permitted by law shall be Orange County, Florida. Should Lender institute any
action under this Guaranty, the undersigned hereby submit(s) himself, herself
or themselves to the jurisdiction of any court sitting in Florida.
15. Any written notice, demand or request that is required to be made
hereunder, shall be served in person, or by registered or certified mail,
return receipt requested, 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; provided,
however, the address of the undersigned must be located within the continental
United States of America. 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 because of
insufficient address or because the party has moved or otherwise, other than
for insufficient postage, 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 by the sender.
16. In the event that the definition of the term "Guarantor" includes
more than one person or entity, the covenants and agreements of Guarantor
contained herein shall be deemed to be the joint and several covenants and
agreements of each person and/or entity named in the definition of the term
"Guarantor".
17. This instrument shall inure to the benefit of Lender and Lender's
successors and assigns, and shall bind Guarantor, and Guarantor's heirs,
personal representatives, successors and assigns.
18. Guarantor hereby, and the Lender by its acceptance of this
Guaranty, knowingly, voluntarily and intentionally waive the right either may
have to a trial by jury in respect of any litigation arising out of, under, or
in connection with this Guaranty 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 this Guaranty, the extension of credit to the
Borrower, or otherwise. This provision is a material inducement for the Lender
extending credit to the Borrower.
IN WITNESS WHEREOF, Guarantor has executed this instrument as of the
5th day of November, 1998, at Atlanta, Georgia.
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
TRANSIT LEASING, INC., an Indiana corporation f/k/a
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
RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an
Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Guarantor"
Exhibit 10.30
PROMISSORY NOTE
$1,500,000.00
Atlanta, Georgia
As of November 5, 1998
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
ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00), 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 AInterest Period@), interest shall
accrue at a variable 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 (the AStated Rate@ or the ALIBOR-Based Rate@). The
pplicable 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.
(b) Interest on this Note, as calculated above, shall be payable
monthly in arrears on the 1st day of each month, commencing
with December 1, 1998 and continuing on the 1st day of each
month thereafter, including the month of October, 2001.
(c) Principal on this Note shall be payable in monthly
installments on the 1st day of each month, equal to the
principal component of level monthly payments that would
amortize over a period of seven (7) years, commencing with
January 1, 1999 and continuing on the 1st day of each month
thereafter, including the month of October, 2001.
(d) The entire unpaid principal balance, together with any
accrued interest, shall be due and payable on the earlier of
the following: (a) a closing of a public equity or debt
offering by the Maker; or (b) November 5, 2001 (the "Maturity
Date").
Modified and Restated Promissory Note. This Promissory Note modifies
and restates the indebtedness represented by that certain Promissory Note dated
as of April 28, 1998, in the original principal amount of ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000.00) ("Note").
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 the loan documents executed in
connection with therewith (the ALoan Documents@), 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 the Loan Documents 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 (as defined in the Loan
Documents) 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 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 (as defined in
the Advised Line of Credit Agreement) increases subsequent to the date hereof,
the interest rate applicable to this Note shall be the Reserve Adjusted LIBOR
Rate (as defined in the Loan Documents).
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.
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 the Loan Documents executed on even date herewith. This Note and the
Loan Documents as may be now or hereafter executed in connection therewith
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.
(f) The default by Maker or any Guarantor in any terms or
conditions of any obligation of Maker or any Guarantor owed to Payee.
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 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 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.
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 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.
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.
IN WITNESS WHEREOF, Maker has executed and delivered this instrument
this day and year first above written.
TRANSIT GROUP, INC., a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Exhibit 10.31
LOAN AGREEMENT AND SECURITY AGREEMENT
$3,500,000.00 Facility
Dated as of November 5, 1998
by and between
AMSOUTH BANK
and
TRANSIT GROUP, INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.....................................................2
Section 1.1. Capital Expenditures.............................2
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.................................3
Section 1.7. Generally Accepted Accounting Principles.........3
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............4
Section 1.14. Net Income Available for Interest Payments.......4
Section 1.15. Net Worth........................................4
Section 1.16. Permitted Contests...............................4
Section 1.17. Qualified Investments............................4
Section 1.18. Receivables......................................5
Section 1.19. Reserve Adjusted LIBOR Rate......................5
Section 1.20. Tangible Net Worth...............................5
Section 1.21. Total Liabilities................................6
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
ARTICLES III - SECURITY AND GUARANTY........................................7
Section 3.1. Security Interest................................7
Section 3.2. Guaranty.........................................8
Section 3.3. Security Documents...............................8
Section 3.4. Filing and Recording.............................8
ARTICLE IV - BORROWER'S AND GUARANTOR=S REPRESENTATIONS AND WARRANTIES......8
Section 4.1. Organization and Standing of Borrower............9
Section 4.2. Organization and Standing of Carroll Fulmer......9
Section 4.3. Organization and Standing of Carolina Pacific....9
Section 4.4. Organization and Standing of Capitol Warehouse...9
Section 4.5. Organization and Standing of Service Express.....9
Section 4.6. Organization and Standing of Rainbow Trucking....10
Section 4.7. Organization and Standing of Transportation
Resources........................................10
Section 4.8. Organization and Standing of Venture Logistics...10
Section 4.9. Organization and Standing of Certified Transport.10
Section 4.10. Organization and Standing of K.J. Transportation.10
Section 4.11. Organization and Standing of Diversified
Trucking.........................................11
Section 4.12. Organization and Standing of Northstar
Transportation...................................11
Section 4.13. Corporate Power and Authority....................11
Section 4.14. Valid and Binding Obligations....................11
Section 4.15. Consent or Filing................................11
Section 4.16. Financial Condition of the Borrower..............12
Section 4.17. Litigation. .....................................12
Section 4.18. Disclosure and No Untrue Statements. ............12
Section 4.19. Title to Collateral..............................12
Section 4.20. Payment of Taxes. ...............................13
Section 4.21. Agreement or Contract Restrictions. .............13
Section 4.22. Patents, Trademarks, Etc. .......................13
Section 4.23. Investment Company Act; Regulation...............13
Section 4.24. Labor Matters. ..................................13
Section 4.25. ERISA Requirement. ..............................14
Section 4.26. Compliance With Environmental Requirements. .....14
Section 4.27. Use of Credit. ..................................15
ARTICLE V - CONDITIONS PRECEDENT............................................15
Section 5.1. Documents and Instruments........................15
Section 5.2. Correctness of Warranties........................15
Section 5.3. Certificates of Resolution.......................15
Section 5.4. Expenses of Lender...............................16
Section 5.5. Supporting Documents. ...........................16
Section 5.6. Opinion of the Borrower's Counsel. ..............17
ARTICLE VI - BORROWER'S AND GUARANTOR=S AFFIRMATIVE COVENANTS...............17
Section 6.1. Corporate Existence and Qualification............17
Section 6.2. Financial Statements.............................17
Section 6.3. Executive Officer's Certificates.................18
Section 6.4. Taxes and Claims.................................18
Section 6.5. Pay Indebtedness to Lender and Perform Other
Covenants........................................18
Section 6.6. Litigation.......................................18
Section 6.7. Right of Inspection; Discussions. ...............19
Section 6.8. Notices. .......................................19
Section 6.9. ERISA Benefit Plans. ............................19
Section 6.10. Insurance........................................20
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..........................21
Section 6.15. Collateral Reporting.............................21
Section 6.16. Observance of Laws. .............................21
Section 6.17. Subsidiaries.....................................21
Section 6.18. Capitalization Ratio.............................21
ARTICLE VII - BORROWER'S NEGATIVE COVENANTS.................................21
Section 7.1. Type of Business.................................22
Section 7.2. Change in Ownership or Management................22
Section 7.3. Acquisitions and Mergers.........................22
Section 7.4. Capital Expenditures.............................22
Section 7.5. Guaranty.........................................22
Section 7.6. Investment and Loans.............................22
Section 7.7. Disposition or Encumbrance of Receivables........22
Section 7.8. Sale-Leasebacks..................................23
Section 7.9. Leases...........................................23
Section 7.10. Liens............................................23
Section 7.11. Take or Pay Contracts............................24
Section 7.12. Other Special Covenants..........................24
ARTICLE VIII - EVENTS OF DEFAULT............................................24
Section 8.1. Events...........................................24
(a) Payment of Obligations to Lender. ...............24
(b) Representation or Warranty. .....................24
(c) Covenants. ......................................24
(d) The Borrower's Liquidation; Dissolution;
Bankruptcy; Etc. ................................25
(e) Order of Dissolution. ...........................25
(f) Reports and Certificates. .......................25
(g) Judgments. ......................................25
(h) Liens Imposed by Law. ...........................25
(i) Corporate Existence. ............................25
(j) .................................................26
Section 8.2. Rights and Remedies Cumulative...................26
Section 8.3. Rights and Remedies Not Waived...................26
Section 8.4. Waiver of Default................................27
ARTICLE IX - MISCELLANEOUS..................................................27
Section 9.1. Course of Dealing; Amendments; Waiver. ..........27
Section 9.2. Lien; Setoff By Lender...........................27
Section 9.3. Liability of Lender to Third Parties.............27
Section 9.4. Waivers..........................................27
Section 9.5. Assignment and Participation.....................28
Section 9.6. Funds Not Assignable.............................28
Section 9.7. Indemnity........................................28
Section 9.8. Termination by the Borrower......................29
Section 9.9. Arbitration. ...................................29
Section 9.10. Notices..........................................29
Section 9.11. Controlling Agreement............................29
Section 9.12. Titles...........................................30
Section 9.13. Venue and Jurisdiction. .........................30
Section 9.14. Governing Law. ..................................30
Section 9.15. Legal or Governmental Limitations. ..............30
Section 9.16. Counterparts. ...................................30
Section 9.17. Addition of Subsidiaries.........................30
Section 9.18. Waiver of Trial By Jury..........................31
Section 9.19. Confidentiality..................................31
<PAGE>
LOAN AGREEMENT
AND
SECURITY AGREEMENT
THIS AGREEMENT dated as of the 5th day of November, 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
TRANSIT GROUP, INC., a Florida corporation, whose address is Overlook III, 2859
Paces Ferry Road, Suite 1740, Atlanta, Georgia 30339 (the ABorrower@) and
CARROLL FULMER & COMPANY, INC., a Florida corporation, whose address is P. O.
Box 5000, Groveland, Florida 34736-5000 (ACarroll Fulmer@) and CAROLINA PACIFIC
DISTRIBUTORS, INC., a North Carolina corporation, whose address is 5625 Surrett
Drive Extension, Archdale, North Carolina 27263 (ACarolina Pacific@) and
TRANSIT LEASING, INC., an Indiana corporation f/k/a CAPITOL WAREHOUSE, INC., a
Kentucky corporation, whose address is 403 W. Main Street, Frankfurt, Kentucky
40601 (ATransit Leasing@) and SERVICE EXPRESS, INC., an Alabama corporation,
whose address is P.O. Box 1009, Tuscaloosa, Alabama 35403 (AService Express@)
and RAINBOW TRUCKING SERVICES, INC., an Indiana corporation, whose address is
724 Mechanic Street, Jeffersonville, Indiana 47130 (ARainbow Trucking@) and
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an Indiana corporation, whose
address is 5003 US Highway 10 W, Suite 1, Fort Wayne, Indiana 46898
(ATransportation Resources@) and VENTURE LOGISTICS, LLC., an Indiana limited
liability company, whose address is 2415 W. Thompson Road, Indianapolis,
Indiana 46217 (AVenture Logistics@) and CERTIFIED TRANSPORT, LLC., an Indiana
limited liability company, whose address is 2415 W. Thompson Road,
Indianapolis, Indiana 46217 (ACertified Transport@) and K.J. TRANSPORTATION,
INC., a New York corporation, whose address is 6070 Collett Road, Farmington,
New York 14425 (AK.J. Transportation@) and DIVERSIFIED TRUCKING CORP., an
Alabama corporation, whose address is 309 Williamson Avenue, Opelika, Alabama
36804 (ADiversified Trucking@) and NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation, whose address is 410 Twitchell Road, Dothan, Alabama 36303
(ANorthstar Transportation@) and any and all other subsidiaries of Transit
Group, Inc., a Florida corporation (together herein referred to as the
ASubsidiaries@or individually as the ASubsidiary@) which subsequently enter
into a Joinder to Loan Agreement and Security Agreement (Carroll Fulmer,
Carolina Pacific, Transit Leasing, Service Express, Rainbow Trucking,
Transportation Resources, Venture Logistics, Certified Transport, K.J.
Transportation, Diversified Trucking, Northstar Transportation and Subsidiaries
are together hereinafter referred to as the "Guarantor" and individually
referred to as a ACo-Guarantor@; references applicable to Guarantor shall also
be applicable to each Co-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 refinancing the existing term loan which was used to
finance a portion of the acquisition of K.J. Transportation, Inc., a New
York corporation; and
WHEREAS, this Agreement modifies and restates that certain Loan
Agreement and Security Agreement dated as of May 29, 1998 by and between
Lender, Borrower and Guarantor; and
WHEREAS, each Co-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.
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, or
member (as applicable) or affiliate of the Guarantor, the Borrower 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.
AEvent 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 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 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 (AFederal 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 Borrower 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, cash, deposits, accounts, 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,
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 AInterest 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 ALIBOR-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.
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 THREE MILLION
FIVE HUNDRED THOUSAND DOLLARS ($3,500,000.00) (hereinafter sometimes referred
to as the ALoan@)
Section 2.2. Note.
The obligation to repay the loan is evidenced by a promissory note in
the principal sum of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS
($3,500,000.00) (the "Note"). Under the Loan, the Borrower may, subject to the
terms, conditions herein set forth, borrow from Lender, at such time and in
such amounts not exceeding the total amount of THREE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($3,500,000.00).
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 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.
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 AIndebtedness@), each Co-Guarantor
grants and/or agrees to the following:
Section 3.1. Security Interest.
Each Co-Guarantor 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") to secure payment of the Note and
any and all other indebtedness or liability of the Borrower or Co-Guarantor to
the Lender:
(a) All "Receivables", as defined in Section 1.18 hereof, of each
Co-Guarantor as their interest may appear; 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 each Co-Guarantor, whereby each Co-Guarantor
guarantees the Borrower's obligations under the Note, this Agreement and the
Security Documents as hereinafter defined. Each Co-Guarantor, by its execution
of this Agreement, agrees that payment of any and all loans, indebtedness or
other liability of the Borrower to the Co-Guarantor shall at all times be
guaranteed by Guarantor and be subordinate to the indebtedness of the Borrower
to the Lender.
Section 3.3. Security Documents.
Each Co-Guarantor, 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").
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 Borrower.
The Borrower 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 Borrower=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 4.2. 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 4.3. 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.
Section 4.4. Organization and Standing of Transit Leasing.
Transit Leasing is a corporation duly organized and existing under the
laws of the State of Indiana and is duly qualified to do business in the State
of Indiana and in each jurisdiction where the failure to be so qualified would
have a material adverse effect on Borrower. To the best of Transit Leasing=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
Indiana.
Section 4.5. 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 4.6. Organization and Standing of Rainbow Trucking.
Rainbow Trucking is a corporation duly organized and existing under
the laws of the State of Indiana and is duly qualified to do business in the
State of Indiana and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of Rainbow
Trucking=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 Indiana.
Section 4.7. Organization and Standing of Transportation Resources.
Transportation Resources is a corporation duly organized and existing
under the laws of the State of Indiana and is duly qualified to do business in
the State of Indiana and in each jurisdiction where the failure to be so
qualified would have a material adverse effect on Borrower. To the best of
Transportation Resources= 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 Indiana.
Section 4.8. Organization and Standing of Venture Logistics.
Venture Logistics is a limited liability company duly organized and
existing under the laws of the State of Indiana and is duly qualified to do
business in the State of Indiana and in each jurisdiction where the failure to
be so qualified would have a material adverse effect on Borrower. To the best
of Venture Logistics= 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 Indiana.
Section 4.9. Organization and Standing of Certified Transport.
Certified Transport is a limited liability company duly organized and
existing under the laws of the State of Indiana and is duly qualified to do
business in the State of Indiana and in each jurisdiction where the failure to
be so qualified would have a material adverse effect on Borrower. To the best
of Certified Transport=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 Indiana.
Section 4.10. Organization and Standing of K.J. Transportation.
K.J. Transportation is a corporation duly organized and existing under
the laws of the State of New York and is duly qualified to do business in the
State of New York and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of K.J.
Transportation=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 New York.
Section 4.11. Organization and Standing of Diversified Trucking.
Diversified Trucking 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
Diversified Trucking=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 Alabama.
Section 4.12. Organization and Standing of Northstar Transportation.
Northstar Transporation 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
Northstar Transportation=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 Alabama.
Section 4.13. 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, shareholder or
member action, are not in contravention of law or the terms of their respective
Articles of Incorporation, By-Laws or Operational Agreement 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 funding hereunder.
Section 4.14. 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.
Section 4.15. 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 4.16. 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 4.17. 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 4.18. 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.
Section 4.19. Title to Collateral.
The Borrower and Guarantor have good and marketable title to, and are
the holders 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 4.20. 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 4.21. 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 4.22. 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 4.23. 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 federal, state, or local statute or regulation
limiting the ability of the Borrower to incur indebtedness for money borrowed.
Section 4.24. 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 4.25. 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 4.26. 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 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 4.27. Use of Credit.
The Loan shall be used exclusively for the purpose of financing
certain 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.
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 or member approval is deemed necessary by any party, the
shareholders and members 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 or Member.
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 Borrower certified by
the Secretary of State, or other appropriate governmental authority, of the
state of incorporation;
(b) 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 resolution is true and
complete, was duly adopted at a duly called meeting in which a quorum was
present and acting throughout, or was duly adopted by written action, and has
not been amended, annulled, rescinded, or revoked in any respect and remain in
full force and effect on the date of the certificate;
(c) 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; and
(d) 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 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) Quarterly financial statements of the Borrower and each
Co-guarantor and other 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 the Borrower and each Co-Guarantor and its subsidiaries,
submitted within forty-five (45) days of the end of each fiscal quarter of the
Borrower and each Co-Guarantor prepared by and certified as such by the chief
financial officer of the applicable Borrower and Co-Guarantor stating Athe
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; and
(b) Annual financial statements of the Borrower and each Co-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; and
(c) Monthly accounts receivable agings for each Co-Guarantor aged by
invoice date as of the end of each month, accounts payable agings for each
Co-Guarantor as of the end of each month, daily updated accounts receivable
balances for each Co-Guarantor and customer address listings as Lender may
request from time to time.
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 and each Co-Guarantor, called for
by Section 6.2(a) and (b), shall be accompanied by a certificate of one of the
principal executive officers of Borrower and each Co-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, 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;
(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 name Lender as an additional
insured.
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.
Failure of the Borrower 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 Borrower shall maintain a Net Worth of not less than THIRTY-SEVEN
MILLION DOLLARS ($37,000,000.00) by the end of the 1998 fiscal year. The
Tangible Net Worth must not be less than a negative ($3,000,000) at the end of
the 1998 fiscal year end and a negative ($3,000,000) 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 Borrower shall not permit its ratio of Total Debt to Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) to be greater
than 3.50:1.00 for the 1998 fiscal year end and 3.00:1.00 for the 1999 fiscal
year end and at all times thereafter.
Section 6.14. Interest Coverage Ratio.
The Borrower 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 1.50:1.00 and less than 2.00:1.00 for the fiscal year end 1999 and at
all times thereafter.
Section 6.15. 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 (20) days after the end of the month; and (5) any
other information that the Lender may from time to time require.
Section 6.16. 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 6.17. 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 6.18. Capitalization Ratio.
The Borrower and its subsidiaries on a consolidated basis shall not
permit its ratio of Funded Debt to Capitalization to exceed 65.0% at any time.
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 Borrower 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
transportation business) without the prior written approval of the Lender.
Section 7.4. Capital Expenditures.
The Borrower and its subsidiaries may not make Capital Expenditures,
excluding expenditures for rolling stock, in an aggregate amount per fiscal
year in excess of ONE MILLION DOLLARS ($1,000,000.00), without the prior
written consent of the Lender.
Section 7.5. Guaranty.
The Borrower 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) 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.
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)
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 and those listed below:
(a) liens in favor of Lender;
(b) existing liens identified in the 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 the Borrower and each Co-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.
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 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; or
(j) Cross-Default.
The default by Borrower or Guarantor in any terms or
conditions of any obligation of Borrower or Guarantor owed to Lender; in
addition, the default by the Borrower or Guarantor of any of the terms or
conditions of the Note or Loan Documents shall constitute a default of those
other obligations of Borrower or Guarantor owed to Lender, and all credit
accommodations related thereto;
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.
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 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 Borrower without the Lender=s
prior written consent. At any time, either before or after the closing of this
Loan, the Lender may grant one or more participations in this Loan to
participants of its choice. Any such participant may exercise rights of setoff
and banker=s lien against the Borrower with respect to its participation as if
it had made a direct loan to the Borrower. The Lender may divulge to any such
participant any information the Lender may obtain with respect to the 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.
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 Borrower and the Lender
specifically acknowledge and agree that this commitment involves a Atransaction
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.
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. Addition of Subsidiaries.
Additional Subsidiaries may join in this credit accommodation by:
a. executing and delivering to Lender with the
consent of Lender a Joinder to Loan Agreement
and Security Agreement in the form attached hereto
as Exhibit AA@; and
b. a Continuing and Unconditional Guaranty executed
by the Subsidiary in the form attached hereto as
Exhibit AB@; and
c. executing and delivering to Lender a UCC-1Financing
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.
No modifications involving the inclusion of Receivables of any
additional Subsidiaries will be made to eligible Receivables without the prior
written consent of the Lender and without each additional Subsidiary executing
and delivering to Lender all documents listed above.
Section 9.18. 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.
Section 9.19. Confidentiality.
Lender acknowledges that Borrower 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.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
AMSOUTH BANK, a bank organized under
the laws of Alabama
By: /s/ Anthony Stiffler
Anthony Stiffler,
........ Vice President
"Lender"
TRANSIT GROUP, INC., a Florida corporation
By: /s/ Philip A. Belyew
........ Philip A. Belyew,
President and Chief Executive Officer
ABorrower@
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
TRANSIT LEASING, INC., an Indiana corporation f/k/a
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
RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an
Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Guarantor"
President and Chief Executive Officer
Exhibit 10.32
CONTINUING AND
UNCONDITIONAL GUARANTY
This Continuing and Unconditional Guaranty (the "Guaranty") is
executed as of the 5th day of November, 1998, by CARROLL FULMER & COMPANY,
INC., a Florida corporation, whose address is P. O. Box 5000, Groveland,
Florida 34736-5000 (ACarroll Fulmer@) and CAROLINA PACIFIC DISTRIBUTORS, INC.,
a North Carolina corporation, whose address is 5625 Surrett Drive Extension,
Archdale, North Carolina 27263 (ACarolina Pacific@) and TRANSIT LEASING, INC.,
an Indiana corporation f/k/a CAPITOL WAREHOUSE, INC., a Kentucky corporation,
whose address is 403 W. Main Street, Frankfurt, Kentucky 40601 (ATransit
Leasing@) and SERVICE EXPRESS, INC., an Alabama corporation, whose address is
P.O. Box 1009, Tuscaloosa, Alabama 35403 (AService Express@) and RAINBOW
TRUCKING SERVICES, INC., an Indiana corporation, whose address is 724 Mechanic
Street, Jeffersonville, Indiana 47130 (ARainbow Trucking@) and TRANSPORTATION
RESOURCES AND MANAGEMENT, INC., an Indiana corporation, whose address is 5003
US Highway 10 W, Suite 1, Fort Wayne, Indiana 46898 (ATransportation
Resources@) and VENTURE LOGISTICS, LLC., an Indiana limited liability company,
whose address is 2415 W. Thompson Road, Indianapolis, Indiana 46217 (AVenture
Logistics@) and CERTIFIED TRANSPORT, LLC., an Indiana limited liability
company, whose address is 2415 W. Thompson Road, Indianapolis, Indiana 46217
(ACertified Transport@) and K.J. TRANSPORTATION, INC., a New York corporation,
whose address is 6070 Collett Road, Farmington, New York 14425 (AK.J.
Transportation@) and DIVERSIFIED TRUCKING CORP., an Alabama corporation, whose
address is 309 Williamson Avenue, Opelika, Alabama 36804 (ADiversified
Trucking@) and NORTHSTAR TRANSPORTATION, INC., an Alabama corporation, whose
address is 410 Twitchell Road, Dothan, Alabama 36303 (ANorthstar
Transportation@) (Carroll Fulmer, Carolina Pacific, Transit Leasing, Service
Express, Rainbow Trucking, Transportation Resources, Venture Logistics,
Certified Transport, K.J. Transportation, Diversified Trucking, and Northstar
Transportation are together hereinafter referred to as the "Guarantor@ and
individually as the ACo-Guarantor@; references applicable to Guarantor shall
also be applicable to each Co-Guarantor), in favor of AMSOUTH BANK, a bank
organized under the laws of Alabama, whose mailing address is Post Office Box
588001, Orlando, Florida 32858 (the "Lender").
R E C I T A L S:
A. To induce the Lender to extend credit to TRANSIT GROUP, INC., a
Florida corporation (the "Borrower"), Guarantor has agreed to give to Lender
Guarantor's continuing and unconditional guarantee of the payment of
indebtedness and the performance of all obligations of the Borrower to the
Lender resulting from the extension(s) of credit by the Lender to the Borrower.
B. The Guarantor expects to derive advantage from the credit
accommodation(s) extended to the Borrower.
C. The Lender in reliance upon this Guaranty has or will extend
credit to the Borrower.
D. The term "Indebtedness" as used herein shall mean all payment
obligations of Borrower to Lender, direct or contingent, whether now or
hereafter due or arising, including without limitation all principal and
interest, all costs of collection, including reasonable attorney's fees,
whether incurred in connection with collection, trial, appeal or otherwise, all
other amounts which Borrower is obligated to pay Lender under any agreement
evidencing, relating to or securing the Indebtedness or any part thereof, and
including any documentary stamp tax (including interest and penalties, if any)
determined to be due in connection with any instruments evidencing the
Indebtedness. The term "Indebtedness" also includes amounts advanced by Lender
pursuant to requests for advances made on behalf of Borrower, even if, at the
time of any such advance, Borrower has been dissolved, liquidated or its
existence has been terminated, by operation of law or otherwise, if Lender does
not have actual knowledge of such termination of existence prior to making the
advance.
E. The term "Obligations" as used herein shall mean all other
obligations of Borrower to Lender, direct or contingent, whether now or
hereafter due or arising, including but not limited to the obligation to
perform all covenants, conditions, promises and agreements of or pursuant to
any loan document executed in connection with the Indebtedness.
F. The term "Liabilities" as used herein shall mean the
Indebtedness and the Obligations.
G. The term "Collateral" as used herein shall mean any funds,
guarantees, agreements or other property or rights or interests of any nature
whatsoever, or the proceeds thereof, which may have been, are or hereafter may
be, mortgaged, pledged, assigned, transferred, or delivered directly or
indirectly by or on behalf of the Borrower or Guarantor or any other party to
Lender or to the holder of instruments evidencing the Indebtedness of the
Borrower or which may have been, are, or hereafter may be held by any party as
Trustee or otherwise, as security, whether immediate or underlying, for the
performance of this Guaranty or the payment of the Liabilities or any of them
or any security therefor.
H. The term "Loan Documents" as used herein shall mean all loan
documents evidencing the Liabilities or constituting the Collateral or executed
in connection therewith.
NOW, THEREFORE, in consideration of the extension(s) of credit from
time to time extended by the Lender to the Borrower and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
1. The foregoing recitals are herein incorporated as covenants and
agreements.
2. Guarantor, jointly and severally hereby absolutely, irrevocably and
unconditionally guarantees to Lender that the Borrower will promptly pay and
discharge the Indebtedness in full when due, whether at maturity or earlier by
reason of acceleration or otherwise, or, if permitted by the Loan Documents,
when payment thereof shall be demanded by Lender, and, in the case of one or
more extensions of time of payment or renewals of the Liabilities that the same
will be promptly paid or performed when due, according to each such extension
or renewal, whether at maturity or earlier by reason of acceleration or
otherwise, and will promptly perform and observe all of the Obligations to be
performed or observed by the Borrower.
3. The obligations hereunder shall be continuing and irrevocable. All
liability hereunder shall continue notwithstanding the incapacity, lack of
authority, death, or disability of the undersigned. The failure of any other
person to sign this Guaranty or any counterpart of this Guaranty shall not
release or affect the liability of Guarantor.
4. This is a guarantee of payment, and not of collection, and a
guarantee of performance. In case the Borrower shall fail to pay all or any
part of the Indebtedness when due, whether by acceleration or otherwise,
according to the terms of any promissory note or other payment agreement,
Guarantor, immediately upon the written demand of Lender, shall pay to Lender
the amount due and unpaid by the Borrower as if that amount constituted the
direct and primary obligation of Guarantor. Lender shall not be required, prior
to any such demand on, or payment by Guarantor, to make any demand upon or
pursue or exhaust any of its rights or remedies against the Borrower or others
with respect to the payment of any of the Indebtedness or the performance of
any of the Obligations, or to pursue or exhaust any of its rights or remedies
with respect to any part of the Collateral. Guarantor shall have no right of
subrogation whatsoever with respect to the Indebtedness or the Collateral
unless and until Lender shall have received full payment of all the
Indebtedness.
5. The obligations of Guarantor hereunder, and the rights of Lender in
the Collateral, shall not be released, discharged, or in any way affected by
reason of the fact that a valid lien in any of the Collateral may not be
conveyed to, or created in favor of Lender; nor by reason of the fact that any
of the Collateral may be subject to equities or defenses or claims in favor of
others or may be inferior in priority to the claims of others or may be invalid
or defective in any way; nor by reason of the fact that the value of any of the
Collateral, or the financial condition of the Borrower or any obligor or
guarantor with respect to any of the Collateral, may not have been correctly
estimated or may have changed or may hereafter change; nor by reason of any
deterioration, waste or loss by fire, theft or otherwise of any of the
Collateral unless such deterioration, waste or loss be caused by the willful
act or willful failure to act by Lender.
6. The Lender is hereby given a lien for the amount of the liability
and indebtedness, whether or not due and payable, created by this Guaranty upon
all property and securities now or hereafter in the possession or custody of
the Lender by or for the account of Guarantor or in which Guarantor may have
any interest (all remittances and property to be deemed in the possession or
custody of the Lender as soon as put in transit to it by mail or carrier) and
also upon the balance of any deposit accounts of any or all of Guarantor with
the Lender existing from time to time, and the Lender is hereby authorized and
empowered at its option to appropriate any and all thereof and apply any and
all thereof and the proceeds thereof to the payment and extinguishment of the
liability and indebtedness hereby created at any time after such liability and
indebtedness becomes payable. Guarantor agrees to pay any deficiency remaining
after the Lender realizes on any security (whether furnished by Borrower,
Guarantor or a third party) but the Lender shall not be required to first
proceed against any such security. Lender's right of setoff contained herein
shall not apply to any account if it clearly appears that Guarantors rights in
the account are solely as a fiduciary for another or to any account, by its
nature and applicable law (for example an IRA or other tax deferred retirement
account), must be exempt from the claims of creditors.
7. Guarantor waives all notice of acceptance of this Guaranty and any
notice of the incurring by the Borrower, at any time, of any of the
Liabilities, and waives any and all presentment, demand, protest or notice of
protest, demand or dishonor, non-payment, maturity or other default with
respect to any of the Liabilities and any obligations of any party at any time
comprised in the collateral. The undersigned hereby grants to Lender full
power, in its uncontrolled discretion and without notice to Guarantor, to deal
in any manner with the Liabilities and the Collateral, including, but without
limiting the generality of the foregoing, the following powers:
A. To modify or otherwise change any terms of all or any part of the
Liabilities or the rate of interest thereon, to grant any extension or
extensions or renewal or renewals thereof and any other indulgence with respect
thereto, and to effect any release, compromise or settlement with respect
thereto;
B. To enter into any agreement of forbearance with respect to
all or any part of the Liabilities,or with respect to all or any part of the
Collateral, and to change the terms of any such agreement;
C. To forbear from calling for additional Collateral to secure
any of the Liabilities or to secure any obligation comprised in the Collateral;
D. To consent to the substitution, exchange, release or sale of all or
any part of the Collateral, whether or not the Collateral, if any, received by
Lender upon any such substitution, exchange, release or sale shall be of the
same or of a different character or value than the Collateral surrendered by
Lender;
E. To release any maker or guarantor of any promissory note
or other agreement evidencing the Indebtedness;
F. To modify the terms of any Loan Document;
G. In the event of the non-payment when due, whether by acceleration
or otherwise, of any of the Indebtedness, or in the event of default in the
performance of any of the Obligations, to realize on the Collateral or any part
thereof, as a whole or in such parcels or subdivided interests as Lender may
elect, at any public or private sale or sales, for cash or on credit or for
future delivery, without demand, advertisement or notice of the time or place
of sale or any adjournment thereof except as may be required by law (the
undersigned hereby waiving any such demand, advertisement, and notice to the
extent permitted by law), or by foreclosure or otherwise, or to forbear from
realizing thereon, or as Lender in its uncontrolled discretion may deem proper,
and to purchase all or any part of the Collateral for its own account at any
such sale or foreclosure, to the extent permitted by law.
The obligations of Guarantor to the Lender hereunder shall
not be released, discharged, reduced, diminished or in any way affected, nor
shall Guarantor have any rights or recourse against Lender, by reason of any
action Lender may take or omit to take under the foregoing powers.
8. Lender may assign this Guaranty or any of its rights and powers
hereunder, with all or any of the obligations hereby guaranteed, and may assign
and/or deliver to any such assignee any of the security herefor and, in the
event of such assignment, the assignee hereof or of such rights and powers of
such security, if any of such security be so assigned and/or delivered, shall
have the same rights and remedies as if originally named herein in place of
Lender, and Lender shall be thereafter fully discharged from all responsibility
with respect to any such security so assigned and/or delivered.
9. Guarantor warrants to Lender that it has disclosed to Lender in
writing all known defaults of any of its personal or business obligations and
those business entities in which it is a principal and of any and all actions
and proceedings pending or threatened against it or its business entities and
will advise Lender of any such defaults that may occur in the future. Guarantor
further warrants to Lender that nothing exists to impair the immediate taking
effect of this Guaranty and the effectiveness of this Guaranty.
10. Guarantor agrees to provide all financial statements, tax returns
and other financial data of the Guarantor and any business entity in which it
is a principal as required of the Borrower in the Loan Documents.
11. No act or omission of any kind by the Lender shall affect or
impair this Guaranty and the Lender shall have no duties to Guarantor.
Guarantor hereby agrees that its obligations hereunder shall be absolute and
primary and shall be complete and binding as to Guarantor upon this Guaranty
being executed and subject to no conditions precedent or otherwise. This
Guaranty contains the full agreement of Guarantor and is not subject to any
oral conditions. Guarantor further acknowledges that all conditions precedent
to delivery of this Guaranty to Lender have occurred and said delivery is
unconditional.
12. In the event that for any reason whatsoever Borrower is now or
hereafter becomes indebted to Guarantor, Guarantor agrees that the amount of
such indebtedness and all interest thereon shall at all times be subordinate as
to lien, time of payment and in all other respects to the Loan Documents, and
that Guarantor shall not be entitled to enforce or receive payment thereof
until all sums then due and owing to Lender shall have been paid. Nothing
herein contained is intended or shall be construed to give to Guarantor any
right of subrogation in or under the Loan Documents, or any right to
participate in any way therein, or in the right, title and interest of Lender
in and to the collateral covered by the Loan Documents, notwithstanding any
payments made by Guarantor under this Guaranty, all such rights of subrogation
and participation being hereby expressly waived until the Liabilities and
Obligations are paid and performed in full.
13. Notwithstanding anything in this Guaranty to the contrary, if a
bankruptcy petition is filed by or against the Borrower or Guarantor or any
co-guarantor, and the Borrower or Guarantor or any co-guarantor have made
payments to the Lender during any preference period as established by any
bankruptcy or other similar laws, this Guaranty shall not be terminated, unless
and until a final nonappealable decision of a court of competent jurisdiction
has been entered determining that the Lender shall be entitled to retain all
such monies paid it by the Borrower or Guarantor or any co-guarantor during
such preference period. The obligations of Guarantor under this Guaranty shall
include the obligations to reimburse Lender for any preferential payments
received by Lender during such period which Lender has been required to return
or repay. The undersigned also hereby waive(s) any claim, right or remedy which
the undersigned may now have or hereafter acquire against the Borrower that
arises hereunder and/or from the performance by any guarantor hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, indemnification, or participation in any claim,
right or remedy of Lender against the Borrower or any security which Lender now
has or hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise, until the
Obligations and Liabilities are paid and performed in full.
14. The undersigned expressly agree(s) that this Guaranty is governed
by the laws of the State of Florida, and the United States of America,
whichever the context may require or permit and that proper venue for any
action which may be brought under this Guaranty in addition to any other venue
permitted by law shall be Orange County, Florida. Should Lender institute any
action under this Guaranty, the undersigned hereby submit(s) himself, herself
or themselves to the jurisdiction of any court sitting in Florida.
15. Any written notice, demand or request that is required to be made
hereunder, shall be served in person, or by registered or certified mail,
return receipt requested, 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; provided,
however, the address of the undersigned must be located within the continental
United States of America. 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 because of
insufficient address or because the party has moved or otherwise, other than
for insufficient postage, 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 by the sender.
16. In the event that the definition of the term "Guarantor" includes
more than one person or entity, the covenants and agreements of Guarantor
contained herein shall be deemed to be the joint and several covenants and
agreements of each person and/or entity named in the definition of the term
"Guarantor".
17. This instrument shall inure to the benefit of Lender and Lender's
successors and assigns, and shall bind Guarantor, and Guarantor's heirs,
personal representatives, successors and assigns.
18. Guarantor hereby, and the Lender by its acceptance of this
Guaranty, knowingly, voluntarily and intentionally waive the right either may
have to a trial by jury in respect of any litigation arising out of, under, or
in connection with this Guaranty 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 this Guaranty, the extension of credit to the
Borrower, or otherwise. This provision is a material inducement for the Lender
extending credit to the Borrower.
IN WITNESS WHEREOF, Guarantor has executed this instrument as of the
5th day of November, 1998, at Atlanta, Georgia.
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
TRANSIT LEASING, INC., an Indiana corporation f/k/a
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
RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an
Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Guarantor"
Exhibit 10.33
PROMISSORY NOTE
$3,500,000.00
Atlanta, Georgia
As of November 5th, 1998
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
THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000.00), 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 AInterestPeriod@), interest shall
accrue at a variable 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 (the AStated Rate@ or the ALIBOR-BasedRate@).
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.
(b) Interest on this Note, as calculated above, shall be payable
monthly in arrears on the 1st day of each month, commencing
with December 1, 1998 and continuing on the 1st day of each
month thereafter, including the month of October, 2001.
(c) Principal on this Note shall be payable in monthly
installments on the 1st day of each month, equal to the
principal component of level monthly payments that would
amortize over a period of seven (7) years, commencing with
January 1, 1999 and continuing on the 1st day of each month
thereafter, including the month of October, 2001.
(d) The entire unpaid principal balance, together with any
accrued interest, shall be due and payable on the earlier of
the following: (a) a closing of a public equity or debt
offering by the Maker; or (b) November 5, 2001 (the "Maturity
Date").
Modified and Restated Promissory Note. This Promissory Note modifies
and restates the indebtedness represented by that certain Promissory Note dated
as of May 29, 1998, in the original principal amount of THREE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($3,500,000.00) ("Note").
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 the loan documents executed in
connection with therewith (the ALoan Documents@), 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 the Loan Documents 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 (as defined in the Loan
Documents) 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 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 (as defined in
the Advised Line of Credit Agreement) increases subsequent to the date hereof,
the interest rate applicable to this Note shall be the Reserve Adjusted LIBOR
Rate (as defined in the Loan Documents).
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.
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 the Loan Documents executed on even date herewith. This Note and the
Loan Documents as may be now or hereafter executed in connection therewith
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.
(f) The default by Maker or any Guarantor in any terms or
conditions of any obligation of Maker or any Guarantor owed to Payee.
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 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 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.
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 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.
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.
IN WITNESS WHEREOF, Maker has executed and delivered this instrument
this day and year first above written.
TRANSIT GROUP, INC., a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
President and Chief Executive Officer
Exhibit 10.34
ADVISED REVOLVING LINE OF CREDIT AGREEMENT
$30,000,000.00 Facility
Dated as of November 5, 1998
by and between
AMSOUTH BANK
and
CARROLL FULMER & COMPANY
CAROLINA PACIFIC DISTRIBUTORS, INC.
TRANSIT LEASING, INC.
SERVICE EXPRESS, INC.
RAINBOW TRUCKING SERVICES, INC.
TRANSPORTATION RESOURCES AND MANAGEMENT, INC.
VENTURE LOGISTICS, LLC.
CERTIFIED TRANSPORT, LLC.
K.J. TRANSPORTATION, INC.
DIVERSIFIED TRUCKING CORP.
NORTHSTAR TRANSPORTATION, INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.....................................................2
Section 1.1. Capital Expenditures.............................2
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.................................3
Section 1.7. Generally Accepted Accounting Principles.........3
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............4
Section 1.14. Net Income Available for Interest Payments.......4
Section 1.15. Net Worth........................................4
Section 1.16. Permitted Contests...............................4
Section 1.17. Qualified Investments............................4
Section 1.18. Receivables......................................5
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 Transit Leasing.....10
Section 4.4. Organization and Standing of Service Express.....10
Section 4.5. Organization and Standing of Rainbow Trucking....10
Section 4.6. Organization and Standing of Transportation
Resources........................................10
Section 4.7. Organization and Standing of Venture Logistics...10
Section 4.8. Organization and Standing of Certified Transport.11
Section 4.9. Organization and Standing of K.J. Transportation.11
Section 4.10. Organization and Standing of Diversified
Trucking.........................................11
Section 4.11. Organization and Standing of Northstar
Transportation...................................11
Section 4.12. Organization and Standing of Guarantor...........11
Section 4.13. Corporate Power and Authority....................12
Section 4.14. Valid and Binding Obligations....................12
Section 4.15. Consent or Filing................................12
Section 4.16. Financial Condition of the Borrower..............12
Section 4.17. Litigation. .....................................13
Section 4.18. Disclosure and No Untrue Statements. ............13
Section 4.19. Title to Collateral..............................13
Section 4.20. Payment of Taxes. ...............................13
Section 4.21. Agreement or Contract Restrictions. .............13
Section 4.22. Patents, Trademarks, Etc. .......................14
Section 4.23. Investment Company Act; Regulation...............14
Section 4.24. Labor Matters. ..................................14
Section 4.25. ERISA Requirement. ..............................14
Section 4.26. Compliance With Environmental Requirements. .....15
Section 4.27. Use of Credit. ..................................15
ARTICLE V - CONDITIONS PRECEDENT............................................16
Section 5.1. Documents and Instruments........................16
Section 5.2. Correctness of Warranties........................16
Section 5.3. Certificates of Resolution.......................16
Section 5.4. Expenses of Lender...............................16
Section 5.5. Supporting Documents. ...........................17
Section 5.6. Opinion of the Borrower's Counsel. ..............17
ARTICLE VI - BORROWER'S AND GUARANTOR=S AFFIRMATIVE COVENANTS...............17
Section 6.1. Corporate Existence and Qualification............17
Section 6.2. Financial Statements.............................18
Section 6.3. Executive Officer's Certificates.................18
Section 6.4. Taxes and Claims.................................19
Section 6.5. Pay Indebtedness to Lender and Perform Other
Covenants........................................19
Section 6.6. Litigation.......................................19
Section 6.7. Right of Inspection; Discussions. ...............19
Section 6.8. Notices. .......................................19
Section 6.9. ERISA Benefit Plans. ............................20
Section 6.10. Insurance........................................20
Section 6.11. Main Bank of Account.............................21
Section 6.12. Net Worth Requirement............................21
Section 6.13. Leverage Ratio...................................21
Section 6.14. Interest Coverage Ratio..........................21
Section 6.15. Lockbox and Accounts Receivable..................21
Section 6.16. Field Audits.....................................24
Section 6.17. Collateral Reporting.............................24
Section 6.18. Observance of Laws. .............................24
Section 6.19. Subsidiaries.....................................25
Section 6.20. Capitalization Ratio.............................25
ARTICLE VII - BORROWER'S NEGATIVE COVENANTS.................................25
Section 7.1. Type of Business.................................25
Section 7.2. Change in Ownership or Management................25
Section 7.3. Acquisitions and Mergers.........................25
Section 7.4. Capital Expenditures.............................25
Section 7.5. Guaranty.........................................26
Section 7.6. Investment and Loans.............................26
Section 7.7. Disposition or Encumbrance of Receivables........26
Section 7.8. Sale-Leasebacks..................................26
Section 7.9. Leases...........................................26
Section 7.10. Liens............................................26
Section 7.11. Take or Pay Contracts............................27
Section 7.12. Other Special Covenants..........................27
ARTICLE VIII - EVENTS OF DEFAULT............................................28
Section 8.1. Events...........................................28
(a) Payment of Obligations to Lender. ...............28
(b) Representation or Warranty. .....................28
(c) Covenants. ......................................28
(d) The Borrower's Liquidation; Dissolution;
Bankruptcy; Etc. ................................28
(e) Order of Dissolution. ...........................29
(f) Reports and Certificates. .......................29
(g) Judgments. ......................................29
(h) Liens Imposed by Law. ...........................29
(i) Corporate Existence. ............................29
(j) .................................................29
Section 8.2. Rights and Remedies Cumulative...................30
Section 8.3. Rights and Remedies Not Waived...................30
Section 8.4. Waiver of Default................................30
ARTICLE IX - MISCELLANEOUS..................................................30
Section 9.1. Course of Dealing; Amendments; Waiver. ..........30
Section 9.2. Lien; Setoff By Lender...........................31
Section 9.3. Liability of Lender to Third Parties.............31
Section 9.4. Waivers..........................................31
Section 9.5. Assignment and Participation.....................32
Section 9.6. Funds Not Assignable.............................32
Section 9.7. Indemnity........................................32
Section 9.8. Termination by the Borrower......................32
Section 9.9. Arbitration. ...................................32
Section 9.10. Notices..........................................33
Section 9.11. Controlling Agreement............................33
Section 9.12. Titles...........................................33
Section 9.13. Venue and Jurisdiction. .........................33
Section 9.14. Governing Law. ..................................34
Section 9.15. Legal or Governmental Limitations. ..............34
Section 9.16. Counterparts. ...................................34
Section 9.17. Addition of Subsidiaries.........................34
Section 9.18. Waiver of Trial By Jury..........................35
Section 9.19. Confidentiality..................................35
<PAGE>
ADVISED REVOLVING LINE OF CREDIT AGREEMENT
THIS AGREEMENT dated as of the 5th day of November, 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 (ACarroll Fulmer@) and CAROLINA PACIFIC
DISTRIBUTORS, INC., a North Carolina corporation, whose address is 5625 Surrett
Drive Extension, Archdale, North Carolina 27263 (ACarolina Pacific@) and
TRANSIT LEASING, INC., an Indiana corporation f/k/a CAPITOL WAREHOUSE, INC., a
Kentucky corporation, whose address is 403 W. Main Street, Frankfurt, Kentucky
40601 (ATransit Leasing@) and SERVICE EXPRESS, INC., an Alabama corporation,
whose address is P.O. Box 1009, Tuscaloosa, Alabama 35403 (AService Express@)
and RAINBOW TRUCKING SERVICES, INC., an Indiana corporation, whose address is
724 Mechanic Street, Jeffersonville, Indiana 47130 (ARainbow Trucking@) and
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an Indiana corporation, whose
address is 5003 US Highway 10 W, Suite 1, Fort Wayne, Indiana 46898
(ATransportation Resources@) and VENTURE LOGISTICS, LLC., an Indiana limited
liability company, whose address is 2415 W. Thompson Road, Indianapolis,
Indiana 46217 (AVenture Logistics@) and CERTIFIED TRANSPORT, LLC., an Indiana
limited liability company, whose address is 2415 W. Thompson Road,
Indianapolis, Indiana 46217 (ACertified Transport@) and K.J. TRANSPORTATION,
INC., a New York corporation, whose address is 6070 Collett Road, Farmington,
New York 14425 (AK.J. Transportation@) and DIVERSIFIED TRUCKING CORP., an
Alabama corporation, whose address is 309 Williamson Avenue, Opelika, Alabama
36804 (ADiversified Trucking@) and NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation, whose address is 410 Twitchell Road, Dothan, Alabama 36303
(ANorthstar Transportation@) and any and all other subsidiaries of Transit
Group, Inc., a Florida corporation (together herein referred to as the
ASubsidiaries@or individually as the ASubsidiary@) which subsequently enter
into a Joinder to Advised Revolving Line of Credit Agreement and Joinder to
Security Agreement (Carroll Fulmer, Carolina Pacific, Transit Leasing, Service
Express, Rainbow Trucking, Transportation Resources, Venture Logistics,
Certified Transport, K.J. Transportation, Diversified Trucking, Northstar
Transportation and Subsidiaries are together hereinafter referred to as the
"Borrower" and individually referred to as a ACo-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 AGuarantor@).
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, this Agreement modifies and restates that certain Advised
Revolving Line of Credit Agreement dated as of December 18, 1997 by and between
Lender, Borrower and Guarantor; 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.
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.
AEvent 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 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 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 (AFederal 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, cash,
deposits, accounts, documents, and 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,
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 AInterest 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 ALIBOR-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.
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 THIRTY MILLION
DOLLARS ($30,000,000.00) (hereinafter sometimes referred to as the ALoan@ or
ALine of Credit@).
Section 2.2. Note.
The obligation to repay the loan is evidenced by a revolving credit
note in the principal sum of THIRTY MILLION DOLLARS ($30,000,000.00) (the
"Note" or ARevolving 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 THIRTY MILLION DOLLARS ($30,000,000.00).
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 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, 2000, 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) THIRTY MILLION DOLLARS ($30,000,000.00); or (b)
eighty-five percent (85%) of the Co-Borrower=s Eligible Receivables. After May
1, 2000, 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)
THIRTY MILLION DOLLARS ($30,000,000.00); or (b) fifty percent (50%) of the
Co-Borrower=s Eligible Receivables. Eligible Receivables shall not include any
Ineligible Receivables including, but not limited to, those Receivables
described below. For purposes of determining the funding limitations, each
Co-Borrower=s borrowing base of Eligible Receivables 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 Receivables 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 the
Borrowers= aggregate Eligible Receivables; 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 from any entity to the extent
that such Receivables exceed 15% of the Borrowers= aggregate 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 AIndebtedness@), 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.
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.
Section 4.3. Organization and Standing of Transit Leasing.
Transit Leasing is a corporation duly organized and existing under the
laws of the State of Indiana and is duly qualified to do business in the State
of Indiana and in each jurisdiction where the failure to be so qualified would
have a material adverse effect on Borrower. To the best of Transit Leasing=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
Indiana.
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 Rainbow Trucking.
Rainbow Trucking is a corporation duly organized and existing under
the laws of the State of Indiana and is duly qualified to do business in the
State of Indiana and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of Rainbow
Trucking=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 Indiana.
Section 4.6. Organization and Standing of Transportation
Resources.
Transportation Resources is a corporation duly organized and existing
under the laws of the State of Indiana and is duly qualified to do business in
the State of Indiana and in each jurisdiction where the failure to be so
qualified would have a material adverse effect on Borrower. To the best of
Transportation Resources= 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 Indiana.
Section 4.7. Organization and Standing of Venture Logistics.
Venture Logistics is a limited liability company duly organized and
existing under the laws of the State of Indiana and is duly qualified to do
business in the State of Indiana and in each jurisdiction where the failure to
be so qualified would have a material adverse effect on Borrower. To the best
of Venture Logistics= 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 Indiana.
Section 4.8. Organization and Standing of Certified Transport.
Certified Transport is a limited liability company duly organized and
existing under the laws of the State of Indiana and is duly qualified to do
business in the State of Indiana and in each jurisdiction where the failure to
be so qualified would have a material adverse effect on Borrower. To the best
of Certified Transport=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 Indiana.
Section 4.9. Organization and Standing of K.J. Transportation.
K.J. Transportation is a corporation duly organized and existing under
the laws of the State of New York and is duly qualified to do business in the
State of New York and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of K.J.
Transportation=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 New York.
Section 4.10. Organization and Standing of Diversified Trucking.
Diversified Trucking 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
Diversified Trucking=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 Alabama.
Section 4.11. Organization and Standing of Northstar
Transportation.
Northstar Transporation 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
Northstar Transportation=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 Alabama.
Section 4.12. 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 4.13. 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 4.14. 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.
Section 4.15. 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 4.16. 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 4.17. 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 4.18. 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.
Section 4.19. 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 4.20. 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 4.21. 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 4.22. 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 4.23. 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 federal, state, or local statute or regulation
limiting the ability of the Borrower to incur indebtedness for money borrowed.
Section 4.24. 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 4.25. 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 4.26. 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 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 4.27. 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.
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 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;
(c) 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;
(d) 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 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) Quarterly 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 fiscal quarter of each Co-Borrower and Guarantor
prepared by and certified as such by the chief financial officer of the
applicable Co-Borrower and Guarantor stating Athe 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; 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; and
(c) 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, all in form and substance satisfactory to Lender.
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 and Guarantor, called for by
Section 6.2(a) and (b), shall be accompanied by a certificate of one of the
principal executive officers of each Co-Borrower and 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, 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;
(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 name Lender as an additional
insured.
(c) The Borrower shall maintain existing credit insurance with
existing carrier at a minimum level of $10,000,000 and shall provide at closing
a binder from the existing carrier with the Lender being named as Loss Payee
for such insurance.
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 Transit Leasing 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 THIRTY-SEVEN
MILLION DOLLARS ($37,000,000.00) by the end of the 1998 fiscal year. The
Tangible Net Worth must not be less than a negative ($3,000,000) at the end of
the 1998 fiscal year end and a negative ($3,000,000) 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 3.50:1.00 for the 1998 fiscal year end and 3.00:1.00 for the 1999 fiscal
year end and 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 1.50:1.00 and less than 2.00:1.00 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 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 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 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 (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 Funded Debt to Capitalization to exceed 65.0% at any time.
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
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 ONE MILLION DOLLARS ($1,000,000.00), 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) 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.
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)
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 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.
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 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; or
(j) Cross-Default.
The default by Borrower or Guarantor in any terms or
conditions of any obligation of Borrower or Guarantor owed to Lender; in
addition, the default by the Borrower or Guarantor of any of the terms or
conditions of the Note or Loan Documents shall constitute a default of those
other obligations of Borrower or Guarantor owed to Lender, and all credit
accommodations related thereto;
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.
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 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, either before or after the closing of this
Loan, 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.
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 the
commitment or this 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
Atransaction 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.
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. Addition of Subsidiaries.
Additional Subsidiaries may join in this credit accommodation by:
a. executing and delivering to Lender with the consent
of Lender a Joinder to Advised Revolving Line of
Credit Agreement and Joinder to Security Agreement
in the form attached hereto as Exhibit AA@; and
b. executing and delivering to Lender an Allonge in
the form attached hereto as ExhibitAB@ whereas the
Subsidiary becomes a Maker on the Note; and
c. executing and delivering to Lender a UCC-1Financing
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.
No modifications involving the inclusion of Receivables of any
Additional Subsidiaries will be made to Eligible Receivables without the prior
written consent of the Lender and without each Additional Subsidiary executing
and delivering to Lender all documents listed above.
Section 9.18. 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 and this provision is in addition to and does not supercede the
parties agreement for arbitration contained herein.
Section 9.19. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
AMSOUTH BANK, a bank organized under
the laws of Alabama
By: /s/ Anthony Siffler
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
TRANSIT LEASING, INC., an Indiana corporation f/k/a
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
RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an
Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited
liability company
By: /s/ Philip A. Belyew
Philip A. Belyew,
Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
<PAGE>
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
NORTHSTAR TRANSPORTATION, 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"
Exhibit 10.35
THE CREDIT ACCOMMODATION MADE PURSUANT
TO THIS NOTE REPRESENTS A LINE OF CREDIT
REVOLVING CREDIT NOTE
$30,000,000.00
Atlanta, Georgia
As of November 5th, 1998
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
THIRTY MILLION DOLLARS ($30,000,000.00), 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) Prior to and until May 1, 2000, a variable rate
equal to the Payee=s prime rate, and on May 1, 2000
and thereafter a variable 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 and until May 1, 2000, a rate of two
hundred twenty-five basis points (2.25%) over the
average offered rate in the London interbank market
for deposits in U.S. dollars for a thirty (30) day
period, and on May 1, 2000 and thereafter a rate of
two hundred seventy-five basis points (2.75%) over
the average offered rate in the London interbank
market for deposits in U.S. dollars for a thirty
(30) day period. The rate shall be fixed for such
month effective as of the beginning of such month.
The rates set forth in this subparagraph (a)(2)
shall be referred to as the ALIBOR-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.
Unless Maker selects a different rate option and notifies
Payee, Maker shall be deemed to have selected the Prime-Based
Rate Option. 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 December 1, 1999 and continuing on the 1st day of each
month thereafter.
(c) The entire unpaid principal balance, together with any accrued
interest, shall be due and payable on or before April 1, 2000
(the "Maturity Date") unless prior to April 1, 2000 Maker pays
to Payee a term out fee equal to 1% of the outstanding balance
of the Note as of April, 1, 2000, at which point the revolver
portion of this loan will terminate and commencing May 1, 2000
and continuing on the first day of each month including April 1,
2001, a principal payment equal to one-twelfth (1/12) of the
principal balance outstanding as of April 1, 2000 together with
accrued interest will be due and payable with the remaining
unpaid principal and interest due in full on April 1, 2001.
Modified and Restated Promissory Note. This Revolving Credit Note
modifies and restates the indebtedness represented by that certain Revolving
Credit Note dated as of December 18, 1997, in the original principal amount of
TWENTY MILLION DOLLARS ($20,000,000.00) ("Note").
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 the loan documents executed in connection therewith
(the "Loan Documents"), 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 the Loan
Documents 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 (as defined in the Loan
Documents) 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 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 (as defined in the
Loan Documents) increases subsequent to the date hereof, the
interest rate applicable to this Note shall be the Reserve
Adjusted LIBOR Rate (as defined in the Loan Documents).
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.
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 the Loan Documents executed on even date herewith. This Note and the
Loan Documents as may be now or hereafter executed in connection therewith
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 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 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.
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 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.
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.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
<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
TRANSIT LEASING, INC., an Indiana corporation f/k/a 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
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE>
RAINBOW TRUCKING SERVICES, INC., an Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an Indiana
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited liability company
By: /s/ Philip A. Belyew
Philip A. Belyew, Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited liability
company
By: /s/ Philip A. Belyew
Philip A. Belyew, Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
[SIGNAUTRES CONTINUE ON FOLLOWING PAGE]
<PAGE>
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
NORTHSTAR TRANSPORTATION, INC., an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
"Maker"
Exhibit 10.36
CONTINUING AND
UNCONDITIONAL GUARANTY
This Continuing and Unconditional Guaranty (the "Guaranty") is
executed as of the 5th day of November, 1998, by TRANSIT GROUP, INC., a Florida
corporation, whose mailing address is Overlook III, 2859 Paces Ferry Road,
Suite 1740, Atlanta, Georgia 30339 (the "Guarantor") in favor of AMSOUTH BANK,
a bank organized under the laws of Alabama, whose mailing address is Post
Office Box 588001, Orlando, Florida 32858 (the "Lender").
R E C I T A L S:
A. To induce the Lender to extend credit to CARROLL FULMER & COMPANY,
INC., a Florida corporation, and CAROLINA PACIFIC DISTRIBUTORS, INC., a North
Carolina corporation, and TRANSIT LEASING, INC., an Indiana corporation f/k/a
CAPITOL WAREHOUSE, INC., a Kentucky corporation, and SERVICE EXPRESS, INC., an
Alabama corporation, and RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation, and TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an Indiana
corporation, and VENTURE LOGISTICS, LLC., an Indiana limited liability company,
and CERTIFIED TRANSPORT, LLC., an Indiana limited liability company, and K.J.
TRANSPORTATION, INC., a New York corporation, and DIVERSIFIED TRUCKING CORP.,
an Alabama corporation, and NORTHSTAR TRANSPORTATION, INC., an Alabama
corporation and any and all other subsidiaries of Transit Group, Inc., a
Florida corporation, which subsequently enter into a Joinder to Advised
Revolving Line of Credit Agreement and Joinder to Security Agreement
(individually or together herein referred to as the "Borrower"), Guarantor has
agreed to give to Lender Guarantor's continuing and unconditional guarantee of
the payment of indebtedness and the performance of all obligations of the
Borrower to the Lender resulting from the extension(s) of credit by the Lender
to the Borrower.
B. The Guarantor expects to derive advantage from the credit
accommodation(s) extended to the Borrower.
C. The Lender in reliance upon this Guaranty has or will extend
credit to the Borrower.
D. The term "Indebtedness" as used herein shall mean all payment
obligations of Borrower to Lender, direct or contingent, whether now or
hereafter due or arising, including without limitation all principal and
interest, all costs of collection, including reasonable attorney's fees,
whether incurred in connection with collection, trial, appeal or otherwise, all
other amounts which Borrower is obligated to pay Lender under any agreement
evidencing, relating to or securing the Indebtedness or any part thereof, and
including any documentary stamp tax (including interest and penalties, if any)
determined to be due in connection with any instruments evidencing the
Indebtedness. The term "Indebtedness" also includes amounts advanced by Lender
pursuant to requests for advances made on behalf of Borrower, even if, at the
time of any such advance, Borrower has been dissolved, liquidated or its
existence has been terminated, by operation of law or otherwise, if Lender does
not have actual knowledge of such termination of existence prior to making the
advance.
E. The term "Obligations" as used herein shall mean all other
obligations of Borrower to Lender, direct or contingent, whether now or
hereafter due or arising, including but not limited to the obligation to
perform all covenants, conditions, promises and agreements of or pursuant to
any loan document executed in connection with the Indebtedness.
F. The term "Liabilities" as used herein shall mean the
Indebtedness and the Obligations.
G. The term "Collateral" as used herein shall mean any funds,
guarantees, agreements or other property or rights or interests of any nature
whatsoever, or the proceeds thereof, which may have been, are or hereafter may
be, mortgaged, pledged, assigned, transferred, or delivered directly or
indirectly by or on behalf of the Borrower or Guarantor or any other party to
Lender or to the holder of instruments evidencing the Indebtedness of the
Borrower or which may have been, are, or hereafter may be held by any party as
Trustee or otherwise, as security, whether immediate or underlying, for the
performance of this Guaranty or the payment of the Liabilities or any of them
or any security therefor.
H. The term "Loan Documents" as used herein shall mean all loan
documents evidencing the Liabilities or constituting the Collateral or executed
in connection therewith.
NOW, THEREFORE, in consideration of the extension(s) of credit from
time to time extended by the Lender to the Borrower and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
1. The foregoing recitals are herein incorporated as covenants and
agreements.
2. Guarantor, jointly and severally hereby absolutely, irrevocably and
unconditionally guarantees to Lender that the Borrower will promptly pay and
discharge the Indebtedness in full when due, whether at maturity or earlier by
reason of acceleration or otherwise, or, if permitted by the Loan Documents,
when payment thereof shall be demanded by Lender, and, in the case of one or
more extensions of time of payment or renewals of the Liabilities that the same
will be promptly paid or performed when due, according to each such extension
or renewal, whether at maturity or earlier by reason of acceleration or
otherwise, and will promptly perform and observe all of the Obligations to be
performed or observed by the Borrower.
3. The obligations hereunder shall be continuing and irrevocable. All
liability hereunder shall continue notwithstanding the incapacity, lack of
authority, death, or disability of the undersigned. The failure of any other
person to sign this Guaranty or any counterpart of this Guaranty shall not
release or affect the liability of Guarantor.
4. This is a guarantee of payment, and not of collection, and a
guarantee of performance. In case the Borrower shall fail to pay all or any
part of the Indebtedness when due, whether by acceleration or otherwise,
according to the terms of any promissory note or other payment agreement,
Guarantor, immediately upon the written demand of Lender, shall pay to Lender
the amount due and unpaid by the Borrower as if that amount constituted the
direct and primary obligation of Guarantor. Lender shall not be required, prior
to any such demand on, or payment by Guarantor, to make any demand upon or
pursue or exhaust any of its rights or remedies against the Borrower or others
with respect to the payment of any of the Indebtedness or the performance of
any of the Obligations, or to pursue or exhaust any of its rights or remedies
with respect to any part of the Collateral. Guarantor shall have no right of
subrogation whatsoever with respect to the Indebtedness or the Collateral
unless and until Lender shall have received full payment of all the
Indebtedness.
5. The obligations of Guarantor hereunder, and the rights of Lender in
the Collateral, shall not be released, discharged, or in any way affected by
reason of the fact that a valid lien in any of the Collateral may not be
conveyed to, or created in favor of Lender; nor by reason of the fact that any
of the Collateral may be subject to equities or defenses or claims in favor of
others or may be inferior in priority to the claims of others or may be invalid
or defective in any way; nor by reason of the fact that the value of any of the
Collateral, or the financial condition of the Borrower or any obligor or
guarantor with respect to any of the Collateral, may not have been correctly
estimated or may have changed or may hereafter change; nor by reason of any
deterioration, waste or loss by fire, theft or otherwise of any of the
Collateral unless such deterioration, waste or loss be caused by the willful
act or willful failure to act by Lender.
6. The Lender is hereby given a lien for the amount of the liability
and indebtedness, whether or not due and payable, created by this Guaranty upon
all property and securities now or hereafter in the possession or custody of
the Lender by or for the account of Guarantor or in which Guarantor may have
any interest (all remittances and property to be deemed in the possession or
custody of the Lender as soon as put in transit to it by mail or carrier) and
also upon the balance of any deposit accounts of any or all of Guarantor with
the Lender existing from time to time, and the Lender is hereby authorized and
empowered at its option to appropriate any and all thereof and apply any and
all thereof and the proceeds thereof to the payment and extinguishment of the
liability and indebtedness hereby created at any time after such liability and
indebtedness becomes payable. Guarantor agrees to pay any deficiency remaining
after the Lender realizes on any security (whether furnished by Borrower,
Guarantor or a third party) but the Lender shall not be required to first
proceed against any such security. Lender's right of setoff contained herein
shall not apply to any account if it clearly appears that Guarantors rights in
the account are solely as a fiduciary for another or to any account, by its
nature and applicable law (for example an IRA or other tax deferred retirement
account), must be exempt from the claims of creditors.
7. Guarantor waives all notice of acceptance of this Guaranty and any
notice of the incurring by the Borrower, at any time, of any of the
Liabilities, and waives any and all presentment, demand, protest or notice of
protest, demand or dishonor, non-payment, maturity or other default with
respect to any of the Liabilities and any obligations of any party at any time
comprised in the collateral. The undersigned hereby grants to Lender full
power, in its uncontrolled discretion and without notice to Guarantor, to deal
in any manner with the Liabilities and the Collateral, including, but without
limiting the generality of the foregoing, the following powers:
A. To modify or otherwise change any terms of all or any part of the
Liabilities or the rate of interest thereon, to grant any extension or
extensions or renewal or renewals thereof and any other indulgence with respect
thereto, and to effect any release, compromise or settlement with respect
thereto;
B. To enter into any agreement of forbearance with respect to
all or any part of the Liabilities,or with respect to all or any part of the
Collateral, and to change the terms of any such agreement;
C. To forbear from calling for additional Collateral to secure
any of the Liabilities or to secure any obligation comprised in the
Collateral;
D. To consent to the substitution, exchange, release or sale of all or
any part of the Collateral, whether or not the Collateral, if any, received by
Lender upon any such substitution, exchange, release or sale shall be of the
same or of a different character or value than the Collateral surrendered by
Lender;
E. To release any maker or guarantor of any promissory
note or other agreement evidencing the Indebtedness;
F. To modify the terms of any Loan Document;
G. In the event of the non-payment when due, whether by acceleration
or otherwise, of any of the Indebtedness, or in the event of default in the
performance of any of the Obligations, to realize on the Collateral or any part
thereof, as a whole or in such parcels or subdivided interests as Lender may
elect, at any public or private sale or sales, for cash or on credit or for
future delivery, without demand, advertisement or notice of the time or place
of sale or any adjournment thereof except as may be required by law (the
undersigned hereby waiving any such demand, advertisement, and notice to the
extent permitted by law), or by foreclosure or otherwise, or to forbear from
realizing thereon, or as Lender in its uncontrolled discretion may deem proper,
and to purchase all or any part of the Collateral for its own account at any
such sale or foreclosure, to the extent permitted by law.
The obligations of Guarantor to the Lender hereunder shall
not be released, discharged, reduced, diminished or in any way affected, nor
shall Guarantor have any rights or recourse against Lender, by reason of any
action Lender may take or omit to take under the foregoing powers.
8. Lender may assign this Guaranty or any of its rights and powers
hereunder, with all or any of the obligations hereby guaranteed, and may assign
and/or deliver to any such assignee any of the security herefor and, in the
event of such assignment, the assignee hereof or of such rights and powers of
such security, if any of such security be so assigned and/or delivered, shall
have the same rights and remedies as if originally named herein in place of
Lender, and Lender shall be thereafter fully discharged from all responsibility
with respect to any such security so assigned and/or delivered.
9. Guarantor warrants to Lender that it has disclosed to Lender in
writing all known defaults of any of its personal or business obligations and
those business entities in which it is a principal and of any and all actions
and proceedings pending or threatened against it or its business entities and
will advise Lender of any such defaults that may occur in the future. Guarantor
further warrants to Lender that nothing exists to impair the immediate taking
effect of this Guaranty and the effectiveness of this Guaranty.
10. Guarantor agrees to provide all financial statements, tax returns
and other financial data of the Guarantor and any business entity in which it
is a principal as required of the Borrower in the Loan Documents.
11. No act or omission of any kind by the Lender shall affect or
impair this Guaranty and the Lender shall have no duties to Guarantor.
Guarantor hereby agrees that its obligations hereunder shall be absolute and
primary and shall be complete and binding as to Guarantor upon this Guaranty
being executed and subject to no conditions precedent or otherwise. This
Guaranty contains the full agreement of Guarantor and is not subject to any
oral conditions. Guarantor further acknowledges that all conditions precedent
to delivery of this Guaranty to Lender have occurred and said delivery is
unconditional.
12. In the event that for any reason whatsoever Borrower is now or
hereafter becomes indebted to Guarantor, Guarantor agrees that the amount of
such indebtedness and all interest thereon shall at all times be subordinate as
to lien, time of payment and in all other respects to the Loan Documents, and
that Guarantor shall not be entitled to enforce or receive payment thereof
until all sums then due and owing to Lender shall have been paid. Nothing
herein contained is intended or shall be construed to give to Guarantor any
right of subrogation in or under the Loan Documents, or any right to
participate in any way therein, or in the right, title and interest of Lender
in and to the collateral covered by the Loan Documents, notwithstanding any
payments made by Guarantor under this Guaranty, all such rights of subrogation
and participation being hereby expressly waived until the Liabilities and
Obligations are paid and performed in full.
13. Notwithstanding anything in this Guaranty to the contrary, if a
bankruptcy petition is filed by or against the Borrower or Guarantor or any
co-guarantor, and the Borrower or Guarantor or any co-guarantor have made
payments to the Lender during any preference period as established by any
bankruptcy or other similar laws, this Guaranty shall not be terminated, unless
and until a final nonappealable decision of a court of competent jurisdiction
has been entered determining that the Lender shall be entitled to retain all
such monies paid it by the Borrower or Guarantor or any co-guarantor during
such preference period. The obligations of Guarantor under this Guaranty shall
include the obligations to reimburse Lender for any preferential payments
received by Lender during such period which Lender has been required to return
or repay. The undersigned also hereby waive(s) any claim, right or remedy which
the undersigned may now have or hereafter acquire against the Borrower that
arises hereunder and/or from the performance by any guarantor hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, indemnification, or participation in any claim,
right or remedy of Lender against the Borrower or any security which Lender now
has or hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise, until the
Obligations and Liabilities are paid and performed in full.
14. The undersigned expressly agree(s) that this Guaranty is governed
by the laws of the State of Florida, and the United States of America,
whichever the context may require or permit and that proper venue for any
action which may be brought under this Guaranty in addition to any other venue
permitted by law shall be Orange County, Florida. Should Lender institute any
action under this Guaranty, the undersigned hereby submit(s) himself, herself
or themselves to the jurisdiction of any court sitting in Florida.
15. Any written notice, demand or request that is required to be made
hereunder, shall be served in person, or by registered or certified mail,
return receipt requested, 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; provided,
however, the address of the undersigned must be located within the continental
United States of America. 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 because of
insufficient address or because the party has moved or otherwise, other than
for insufficient postage, 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 by the sender.
16. In the event that the definition of the term "Guarantor" includes
more than one person or entity, the covenants and agreements of Guarantor
contained herein shall be deemed to be the joint and several covenants and
agreements of each person and/or entity named in the definition of the term
"Guarantor".
17. This instrument shall inure to the benefit of Lender and Lender's
successors and assigns, and shall bind Guarantor, and Guarantor's heirs,
personal representatives, successors and assigns.
18. Guarantor hereby, and the Lender by its acceptance of this
Guaranty, knowingly, voluntarily and intentionally waive the right either may
have to a trial by jury in respect of any litigation arising out of, under, or
in connection with this Guaranty 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 this Guaranty, the extension of credit to the
Borrower, or otherwise. This provision is a material inducement for the Lender
extending credit to the Borrower.
IN WITNESS WHEREOF, Guarantor has executed this instrument as of the
5th day of November, 1998, at Atlanta, Georgia.
Signed, sealed and delivered
in the presence of:
TRANSIT GROUP, INC., a
Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, President and
Chief Executive Officer
Exhibit 10.37
SECURITY AGREEMENT
THIS AGREEMENT, entered into as of the 5th day of November, 1998, 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 5625 Surrett Drive Extension, Archdale, North Carolina 27263
("Carolina Pacific") and TRANSIT LEASING, INC., an Indiana corporation f/k/a
CAPITOL WAREHOUSE, INC., a Kentucky corporation, whose address is 403 W. Main
Street, Frankfurt, Kentucky 40601 ("Transit Leasing") and SERVICE EXPRESS,
INC., an Alabama corporation, whose address is P.O. Box 1009, Tuscaloosa,
Alabama 35403 ("Service Express") and RAINBOW TRUCKING SERVICES, INC., an
Indiana corporation, whose address is 724 Mechanic Street, Jeffersonville,
Indiana 47130 ("Rainbow Trucking") and TRANSPORTATION RESOURCES AND MANAGEMENT,
INC., an Indiana corporation, whose address is 5003 US Highway 10 W, Suite 1,
Fort Wayne, Indiana 46898 ("Transportation Resources") and VENTURE LOGISTICS,
LLC., an Indiana limited liability company, whose address is 2415 W. Thompson
Road, Indianapolis, Indiana 46217 ("Venture Logistics") and CERTIFIED
TRANSPORT, LLC., an Indiana limited liability company, whose address is 2415 W.
Thompson Road, Indianapolis, Indiana 46217 ("Certified Transport") and K.J.
TRANSPORTATION, INC., a New York corporation, whose address is 6070 Collett
Road, Farmington, New York 14425 ("K.J. Transportation") and DIVERSIFIED
TRUCKING CORP., an Alabama corporation, whose address is 309 Williamson Avenue,
Opelika, Alabama 36804 ("Diversified Trucking") and NORTHSTAR TRANSPORTATION,
INC., an Alabama corporation, whose address is 410 Twitchell Road, Dothan,
Alabama 36303 ("Northstar Transportation") (Carroll Fulmer, Carolina Pacific,
Transit Leasing, Service Express, Rainbow Trucking, Transportation Resources,
Venture Logistics, Certified Transport, K.J. Transportation, Diversified
Trucking, Northstar Transportation and Subsidiaries 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 Debtor's receivables, including, but not limited to, all
present and future accounts, commissions, contract rights, lease
payment, chattel paper, instruments, cash, deposits, accounts,
documents, tax refunds payable to Debtor, 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 Debtor 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
Debtor (together herein referred to as the "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 or guaranteed by 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 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.
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 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.
(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
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.
(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.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered in the presence of:
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
TRANSIT LEASING, INC., an Indiana corporation f/k/a 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
RAINBOW TRUCKING SERVICES, INC., an Indiana corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE>
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an Indiana
corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited liability company
By: /s/ Philip A. Belyew
Philip A. Belyew, Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited liability
company
By: /s/ Philip A. Belyew
Philip A. Belyew, Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
NORTHSTAR TRANSPORTATION, INC., an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew, Chairman of the Board
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE>
RAINBOW TRUCKING SERVICES, INC., an Indiana 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"
Exhibit 10.40
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made this 23 day of
December, 1998 between and among TRANSPORTATION RESOURCES AND MANAGEMENT, INC.,
a corporation organized and existing under the laws of the State of Indiana
(hereinafter referred to as ATRM@), TRANSIT LEASING, INC., a corporation
organized and existing under the laws of the State of Indiana (hereinafter
referred to as ATLI@), CERTIFIED TRANSPORT, INC., a corporation organized and
existing under the laws of the State of Indiana (hereinafter referred to as
ACTI@), FREIGHT MOVERS, INC., a corporation organized and existing under the
laws of the State of Indiana (hereinafter referred to as AFMI@), DIVERSIFIED
TRUCKING CORP., a corporation organized and existing under the laws of the
State of Alabama (hereinafter referred to as ADTC@), NORTHSTAR TRANSPORTATION,
INC. , a corporation organized and existing under the laws of the State of
Alabama (hereinafter referred to as ANTI@), SERVICE EXPRESS, INC., a
corporation organized and existing under the laws of the State of Alabama
(hereinafter referred to as ASEI@), GPS ACQUISITION CORP., a corporation
organized and existing under the laws of the State of North Carolina
(hereinafter referred to as AGPS@), CAROLINA-PACIFIC DISTRIBUTORS, INC., a
corporation organized and existing under the laws of the State of North
Carolina (hereinafter referred to as ACPD@), and TRANSIT GROUP MERGER SUB,
INC., a corporation organized and existing under the laws of the State of
Delaware (hereinafter referred to as ATransit@) (collectively TRM, TLI, CTI,
FMI, DTC, NTI, SEI, GPS, CPD and Transit are referred to herein as the
ACorporations@), pursuant to the provisions of Section 23-1-40-1(b) of the
Indiana Code, Section 10-2B-11.01 of the Code of Alabama, Section 55-11-01 of
the North Carolina Business Corporation Act and Section 252 of the Delaware
General Corporation Law (the ACorporate Laws@).
WHEREAS, the Board of Directors of each of the Corporations
deem it advisable and generally to the advantage and welfare of the respective
Corporations and their respective shareholders that the Corporations merge
pursuant to the applicable Corporate Laws with Transit being the survivor
corporation.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained and of the mutual benefits hereby provided,
the sufficiency of which is hereby acknowledged, it is agreed by, between and
among the parties hereto as follows:
1. Merger. TRM, TLI, CTI, FMI, DTC, NTI, SEI, GPS, and CPD will be merged at
the Effective Time with and into Transit and Transit shall be the surviving
corporation (the AMerger@). The stock of each of the Corporations shall be
converted as follows:
1.1 Conversion of TRM Common Stock. The 100 shares of common stock of
TRM, $.01 par value (the ATRM Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
common stock of Transit ("Transit Common Stock"), as the surviving corporation,
that is to be issued and outstanding immediately after the Merger.
1.2 Conversion of TLI Common Stock. The 300 shares of common stock of
TLI, $.01 par value (the ATLI Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
Transit Common Stock, as the surviving corporation, that is to be issued and
outstanding immediately after the Merger.
1.3 Conversion of CTI Common Stock. The 100 shares of common stock of
CTI, $.01 par value (the ACTI Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
Transit Common Stock, as the surviving corporation, that is to be issued and
outstanding immediately after the Merger.
1.4 Conversion of FMI Common Stock. The 100 shares of common stock of
FMI, $.01 par value (the AFMI Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
Transit Common Stock, as the surviving corporation, that is to be issued and
outstanding immediately after the Merger.
1.5 Conversion of DTC Common Stock. The 100 shares of common stock of
DTC, $.01 par value (the ADTC Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
Transit Common Stock, as the surviving corporation, that is to be issued and
outstanding immediately after the Merger.
1.6 Conversion of NTI Common Stock. The 100 shares of common stock of
NTI, $.01 par value (the ANTI Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
Transit Common Stock, as the surviving corporation, that is to be issued and
outstanding immediately after the Merger.
1.7 Conversion of SEI Common Stock. The 100 shares of common stock of
SEI, $.01 par value (the ASEI Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
Transit Common Stock, as the surviving corporation, that is to be issued and
outstanding immediately after the Merger.
1.8 Conversion of GPS Common Stock. The 10,000 shares of common stock
of GPS, $.01 par value (the AGPS Common Stock@), that are issued and
outstanding immediately prior to the Merger will be converted into and become
one share of Transit Common Stock, as the surviving corporation, that is to be
issued and outstanding immediately after the Merger.
1.9 Conversion of CPD Common Stock. The 100 shares of common stock of
CPD, $.01 par value (the ACPD Common Stock@), that are issued and outstanding
immediately prior to the Merger will be converted into and become one share of
Transit Common Stock, as the surviving corporation, that is to be issued and
outstanding immediately after the Merger.
1.10 Transit Common Stock. Each share of Transit Common Stock
outstanding immediately prior to the Merger will remain outstanding following
the Merger.
1.11 Fractional Shares. No fractional shares of Transit
Common Stock will be issued in connection with the Merger.
2. Effect of Merger. At the conclusion of the Merger (a) the separate existence
of TRM, TLI, CTI, FMI, DTC, NTI, SEI, GPS, and CPD will cease and TRM, TLI,
CTI, FMI, DTC, NTI, SEI, GPS and CPD will be merged with and into Transit and
Transit will be the surviving corporation pursuant to the terms of the Articles
of Merger; (b) the Articles of Incorporation and Bylaws of Transit will be the
Articles of Incorporation and Bylaws of the surviving corporation; (c) each
share of TRM, TLI, CTI, FMI, DTC, NTI, SEI, GPS and CPD Common Stock
outstanding immediately prior to the Merger will be converted as provided
above; (d) the directors of Transit in effect at the time of the Merger will be
the directors of Transit as the surviving corporation, and the officers of
Transit will be the officers of Transit as the surviving corporation; (e) each
share of Transit Common Stock outstanding immediately prior to the Merger will
remain outstanding following the Merger; and (f) the Merger will have all of
the effects provided by applicable law.
3. Effective Time. The Merger will be effective January 1, 1999 at
12:01 a.m. (the AEffective Time@).
4. Rights and Liabilities of Transit. At and after the Merger, Transit shall
succeed to and possess, without further act or deed, all of the rights,
privileges, powers, and franchises, and all of the property, real, personal and
mixed of, and all debts due to, TRM, TLI, CTI, FMI, DTC, NTI, SEI, GPS, or CPD
on whatever account; all property, rights, privileges, powers and franchises
and all and every other interest shall be as effectually the property of
Transit as they were of the respective parties hereto, and the title to any
real estate vested by deed or otherwise in TRM, TLI, CTI, FMI, DTC, NTI, SEI,
GPS, and CPD shall not revert or be in any way impaired by reason of the
Merger; all rights of creditors and all liens upon any property of any of the
parties hereto shall be preserved unimpaired, and all debts, liabilities, and
duties of the respective parties hereto shall thenceforth attach to Transit and
may be enforced against it to the same extent as if such debts, liabilities,
and duties had been incurred or contracted by it.
5. Service of Process on Transit. Transit agrees that it may be served with
process in the States of Alabama, North Carolina and Indiana in any proceeding
for enforcement of any obligation of TRM, TLI, CTI, FMI, DTC, NTI, SEI, GPS, or
CPD as well as for the enforcement of any obligation of Transit arising from
the Merger, including any suit or other proceeding to enforce the right of any
shareholder as determined in appraisal proceedings pursuant to the provisions
of the applicable Business Corporation Law.
6. Termination. This Agreement and Plan of Merger may be terminated and
abandoned by action of the Board of Directors of any of the Corporations at any
time prior to the effective date of the Merger, whether before or after
approval by the shareholders of the parties hereto.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement and Plan of Merger this 23 day of December, 1998.
TRANSPORTATION RESOURCES AND MANAGEMENT, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
TRANSIT LEASING, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
CERTIFIED TRANSPORT, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
FREIGHT MOVERS, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
DIVERSIFIED TRUCKING CORP.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
NORTHSTAR TRANSPORTATION, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
SERVICE EXPRESS, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
GPS ACQUISITION CORP.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, President/CEO
CAROLINA-PACIFIC DISTRIBUTORS, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
TRANSIT GROUP MERGER SUB, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman/President
CERTIFICATE OF THE SECRETARY
OF
TRANSIT GROUP MERGER SUB, INC.
(a Delaware Corporation)
I, Wayne N. Nellums, the Secretary of Transit Group Merger Sub, Inc.,
hereby certify that the Agreement and Plan of Merger to which this certificate
is attached, after having been first duly signed on behalf of the corporation
by the Chairman and President under the corporate seal of said corporation, was
duly approved and adopted by the stockholders by unanimous consent in lieu of a
meeting.
WITNESS my hand and seal of said Wayne N. Nellums this 23 day of
December,1998.
(SEAL)
/s/ Wayne N. Nellums
WAYNE N. NELLUMS, Secretary
Exhibit 10.41
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made this 23 day of
December, 1998 between CERTIFIED TRANSPORT, LLC, a limited liability company
organized and existing under the laws of the State of Indiana (hereinafter
referred to as ACTL@), VENTURE LOGISTICS, LLC, a limited liability company
organized and existing under the laws of the State of Indiana (hereinafter
referred to as AVLL@), CARROLL FULMER GROUP, INC., a corporation organized and
existing under the laws of the State of Florida (hereinafter referred to as
ACFG@), CARROLL FULMER PAYROLL, INC., a corporation organized and existing
under the laws of the State of Florida (hereinafter referred to as ACFP@),
CARROLL FULMER LOGISTICS, INC., a corporation organized and existing under the
laws of the State of Florida (hereinafter referred to as ACFL@), K. J.
TRANSPORTATION, INC., a corporation organized and existing under the laws of
the State of New York (hereinafter AKJT@), TRANSIT GROUP MERGER SUB, INC., a
corporation organized and existing under the laws of the State of Delaware
(hereinafter referred to as ATGMS@) and TRANSIT GROUP TRANSPORTATION, LLC, a
limited liability company organized and existing under the laws of the State of
Delaware (hereinafter referred to as Transit@) (collectively CTL, VLL, CFG,
CFP, CFL, KJT, TGMS and Transit are referred to herein as the ACompanies@),
pursuant to the provisions of Section 607.1108 of the Florida Code, Section
23-18-7-1 of the Code of Indiana, Section 901 of the New York Business
Corporation Act, and Section 18-209 of the Delaware Limited Liability Company
Act (the ACorporate Laws@).
WHEREAS, the Board of Directors of each of the Companies
deems it advisable and generally to the advantage and welfare of the respective
Companies and their respective shareholders that the Companies merge pursuant
to the applicable Corporate Laws, with Transit being the surviving limited
liability company.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained and of the mutual benefits hereby provided,
the sufficiency of which is hereby acknowledged, it is agreed by and between
the parties hereto as follows:
1. Merger. CTL, VLL, CFG, CFP, CFL, KJT and TGMS will be merged with and into
Transit, and Transit shall be the surviving limited liability company (the
AMerger@). The stock and/or membership interest of each of the Companies shall
be converted as follows:
1.1 Conversion of CTL Interest. The entire membership interest of CTL
(the ACTL Membership Interest@) shall be converted into and become an
additional one percent (1%) membership interest in Transit, as the surviving
entity.
1.2 Conversion of VLL Interest. The entire membership interest of VLL
(the "VLL Membership Interest") shall be converted into and become an
additional one percent (1%) membership interest in Transit, as the surviving
entity.
1.3 Conversion of CFG Common Stock. The 100 shares of common stock of
CFG, $.01 par value (the ACFG Common Stock@), that are issued and outstanding
immediately prior to the Merger shall be converted into and become an
additional one percent (1%) membership interest in Transit, as the surviving
entity.
1.4 Conversion of CFP Common Stock. The 250 shares of common stock of
CFP, $1.00 par value (the ACFP Common Stock@), that are issued and outstanding
immediately prior to the Merger shall be converted into and become an
additional one percent (1%) membership interest in Transit, as the surviving
entity.
1.5 Conversion of CFL Common Stock. The 1000 shares of common stock of
CFL, $1.00 par value (the ACFL Common Stock@), that are issued and outstanding
immediately prior to the Merger shall be converted into and become an
additional one percent (1%) membership interest in Transit, as the surviving
entity.
1.6 Conversion of KJT Common Stock. The 100 shares of common stock of
KJT, $.01 par value (the AKJT Common Stock@), that are issued and outstanding
immediately prior to the Merger shall be converted into and become an
additional one percent (1%) membership interest in Transit, as the surviving
entity.
1.7 Conversion of TGMS Common Stock. The 108 shares of common stock of
TGMS, $.01 par value (the ATGMS Common Stock@), that are issued and outstanding
immediately prior to the Merger shall be converted into and become an
additional one percent (1%) membership interest in Transit, as the surviving
entity.
1.8 Transit Membership Interests. The membership interest of Transit
immediately prior to the Merger will remain following the Merger. Immediately
prior to the Merger, one member of Transit (the AMember@) owned 100% of the
membership interests of Transit and all of the stock and membership interests
of the Companies, and therefore, immediately following the Merger and the
conversion of the equity of the Companies into additional membership interests
in Transit, the Member will continue to own 100% of the membership interest of
Transit.
2. Effect of Merger. At the conclusion of the Merger (a) the separate existence
of CTL, VLL, CFG, CFP, CFL, KJT and TGMS will cease and will be merged with and
into Transit, and Transit will be the surviving entity pursuant to the terms of
the Certificate of Merger; (b) the Certificate of Formation and Operating
Agreement of Transit will be the Certificate of Formation and Operating
Agreement of the surviving entity; (c) each membership Interest of CTL and VLL
and each share of CFG, CFP, CFL, KJT and TGMS Common Stock outstanding
immediately prior to the Merger will be converted as provided above; (d) the
members of Transit in effect at the time of the Merger will be the members of
Transit as the surviving entity, and the managers of Transit will be the
managers of Transit as the surviving entity; (e) the membership interest of
Transit immediately prior to the Merger will remain following the Merger; and
(f) the Merger will have all of the effects provided by applicable law.
3. Effective Time. The Merger will be effective January 1, 1999 at 12:02 a.m.
4. Managers of Transit. Transit shall be managed by managers whose names and
business addresses are as follows:
Philip A. Belyew Wayne N. Nellums
Suite 1740, 2859 Paces Ferry Road Suite 1740, 2859 Paces Ferry Road
Atlanta, GA 30339 Atlanta, GA 30339
N. Mark DiLuzio
Suite 1740, 2859 Paces Ferry Road
Atlanta, GA 30339
5. Rights and Liabilities of Transit. At and after the Merger, without further
act or deed, all of the rights, privileges and powers, and all of the property,
real, personal and mixed of, and all debts due to CTL, VLL, CFG, CFP, CFL, KJT
and TGMS, as well as all of the things and causes of action belonging to each
of CTL, VLL, CFG, CFP, CFL, KJT and TGMS shall be the property of Transit as
they were the property of each of CTL, VLL, CFG, CFP, CFL, KJT and TGMS, and
the title to any real estate vested by deed or otherwise in CTL, VLL, CFG, CFP,
CFL, KJT and TGMS shall not revert or be in any way impaired by reason of the
Merger; all rights of creditors and all liens upon any property of any of the
parties hereto shall be preserved unimpaired, and all debts, liabilities, and
duties of the respective parties hereto shall thenceforth attach to Transit and
may be enforced against it to the same extent as if such debts, liabilities,
and duties had been incurred or contracted by it.
6. Service of Process on Transit. Transit agrees that it may be served with
process in the States of Indiana, Florida and New York in any proceeding for
enforcement of any obligation of CTL, VLL, CFG, CFP, CFL, KJT and TGMS as well
as for the enforcement of any obligation of Transit arising from the Merger,
including any suit or other proceeding to enforce the right of any shareholder
as determined in appraisal proceedings pursuant to the provisions of the
applicable Corporate Laws.
7. Termination. This Agreement and Plan of Merger may be terminated and
abandoned by action of the Board of Directors or Managers, as applicable, of
any of the Companies at any time prior to the effective date of the Merger,
whether before or after approval by the shareholders or members of the parties
hereto.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement and Plan of Merger this 23 day of December, 1998.
CERTIFIED TRANSPORT, LLC
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Manager
{Signatures Continue on Following Page}
VENTURE LOGISTICS, LLC
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Manager
CARROLL FULMER GROUP, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
CARROLL FULMER PAYROLL, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
CARROLL FULMER LOGISTICS, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
K. J. TRANSPORTATION, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman
TRANSIT GROUP TRANSPORTATION, LLC
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Manager
TRANSIT GROUP MERGER SUB, INC.
By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman/President
Exhibit 10.42
LEASE
THIS LEASE, entered into as of the 19 day of January, 1999, by and
between HORVATH & HORVATH, LLC, its successors and assigns, ("Lessor"), and
TRANSIT GROUP TRANSPORTATION, LLC ("Lessee").
ARTICLE I.
Premises
Section 1. The following exhibits are incorporated herein and made a
part of this Lease:
Exhibit "A-1" Legal Description
Section 2. Lessor does hereby lease unto the Lessee, and the Lessee
does hereby take as lessee, the following described real property situated in
DeSoto County, Mississippi, to-wit:
The parcel known as 7585 Priority Lane, Olive Branch, Mississippi, a
legal description which is shown on the attached Exhibit "A-1".
together with rights, easements and appurtenances thereto belonging,
hereinafter called the "Premises," subject nevertheless to: (1) any state of
facts an accurate survey may show; (2) rights and easements, if any, in favor
of any public utility company, including, but not limited to, gas, electric,
water, telephone, and sewer easements; (3) present and future valid zoning
laws, ordinances, resolutions and regulations of any governmental authority
having or asserting jurisdiction, and all present and future ordinances,
statutes, laws, regulations, and order of all boards, bureaus, departments,
agencies, commissions or bodies or any municipal, county, state or federal
sovereigns, now or hereafter acquiring or asserting jurisdiction over the
leased property; (4) the effect of all present and future municipal, state or
federal laws, orders and regulations relating to Lessee, sublessees, or
occupants of the Premises, their rights and rentals to be charged for the use
of the leased property or any portion thereof; (5) liens and encumbrances of
record; (6) the provisions, restrictions, reservations, and easements provided
in this Lease; and (7) Restrictive Covenants, if any, applicable to the
subdivision in which the Premises is located.
ARTICLE II.
Term/Renewal
Section 1. This Lease shall be effective as of the date hereof (the
"Commencement Date") and shall be in effect throughout the "Lease Term" as
hereinafter defined.
Section 2. The Lease Term of this Lease shall be for a period of five
(5) years commencing on January 19, 1999, and ending on January 18, 2004.
Section 3. Upon giving six (6) months prior written notice to Lessor,
Lessee shall have the option to elect early termination of this Lease;
provided, however, that Lessee shall pay to Lessor an Early Termination Fee.
The amount of the Early Termination Fee shall be a sum equal to $3,250 per
month for the period from the effective date of such early termination until
January 18, 2004, prorated for the 18-day period from January 1, 2004 through
January 18, 2004. The Early Termination Fee will be due and payable each month
in the same manner as the Base Rent payments.
ARTICLE III.
Rental
Section 1. Lessee shall pay as base rent ("Base Rent" in accordance
with the following schedule:
1/19/99 to 1/18/2004 $7,250.00 per month, prorated for any
partial month based upon the number of days within the Lease
Term.
Base Rent shall be payable in monthly installments in advance on the
first (1st) day of each and every calendar month during the Lease Term. If Base
Rent, Additional Rent, or any other payment owed to Lessor by Lessee is not
paid within five (5) days after Lessee has received written notice of Lessor=s
failure to receive such payment, Lessee shall pay to Lessor upon demand a late
payment fee of five percent (5%) of the delinquent obligation.
This Lease is a net-net-net lease (with Lessee to pay, in addition to
Base Rent, all taxes, insurance, ordinary maintenance (as provided in Article
VII), janitor expenses, utilities, pest control, any tax assessments,
assessments pursuant to the subdivision Restrictive Covenants, window cleaning,
grounds maintenance, interior and exterior lighting, interior painting, window
and door repairs and refinishing, as additional rent [the "Additional Rent"],
except Structural Repairs [as hereinafter defined]), and all rentals and other
expenses owing hereunder by Lessee shall be paid in all events and without
notice or demand, and without counterclaim, set off, deduction, defense,
abatement, suspension, deferment or diminution of any kind. It is the express
intent and understanding that at no time throughout the term of this Lease
shall the rentals provided for herein be reduced by any taxes, assessments,
charges, insurance premiums and expenses, utilities, maintenance charges and
expenses, or other costs or expenses owing hereunder by Lessee related to the
building, and that rentals shall be absolutely net-net-net to Lessor.
ARTICLE IV.
Building and Improvements
Section 1. The buildings, structures, parking areas, drives and
other improvements on the Premises are hereinafter sometimes jointly called
the AImprovements.@
Section 2. Lessor shall be responsible for keeping the structure of
the Improvements in good repair which shall include paving the parking lot,
roof repair, repair to the structure of the buildings, replacement and repair
of plumbing in excess of $500 and replacement and repair of heating and cooling
systems, but not repairs caused by the negligence of Lessee (AStructural
Repairs@). Lessee may, upon obtaining Lessor's prior written approval of all
plans and specifications and proposed contractors, which approval shall not be
unreasonably withheld, erect fencing on the Premises, and such fencing shall
become a part of the Improvements. In addition, Lessee may, upon obtaining
Lessor's prior written approval of all plans and specifications and proposed
contractors, construct Lessee's tenant improvements, if any (the ATenant
Improvements@), at its sole cost and expense. Lessee agrees to construct and
maintain said Tenant Improvements in accordance with the following conditions:
(a) Lessee agrees that the Tenant Improvements, as well as any
alterations or repairs to or in and about the Premises or any Improvements
thereon made by Lessee shall be in compliance with the applicable laws and
ordinances.
(b) Lessee agrees that the Tenant Improvements shall, at Lessee's sole
cost and expense, be removed from the Premises at the expiration of this Lease
and the Premises restored to their original condition and appearance,
reasonable wear and tear excepted, unless Lessor and Lessee agree otherwise.
Section 3. Lessee shall be entitled to terminate this Lease if any
Structural Repairs necessary for Lessee=s operations on the Premises are not
completed by Lessor within a reasonable period of time (not to exceed 180 days)
after written notice from Lessee to Lessor.
ARTICLE V.
Use of Premises
Section 1. The Premises shall be used solely for the operation of a
trucking terminal and distribution facility with related offices, all in
accordance with all applicable law.
Section 2. All utilization of the Premises shall be subject to the
terms and conditions of this Lease.
Section 3. Lessee shall not use or permit to be used any part of the
Improvements on the Premises for any disorderly or illegal purposes or for any
dangerous, noxious or offensive trade or business and will not cause, maintain
or allow any nuisance in, at or on the Premises or Improvements. Lessee agrees
and covenants that Lessee will take appropriate measures to prevent and will
not engage in or knowingly permit any illegal activities at the Premises, and
that Lessee will comply with all laws, ordinances, regulations and requirements
of any governmental body or authority relating to the Premises including,
without limitation, all laws, ordinances, regulations and requirements
pertaining to health and life safety, construction of Improvements on the
Premises, zoning and land use. Lessee hereby represents and warrants that no
portion of the Premises or Improvements has been or will be funded with the
proceeds of any illegal activity. Lessee shall not commit or permit to be
committed any waste upon the Premises or Improvements.
ARTICLE VI.
Taxes
Section 1. This Lease shall be a "net-net-net" Lease to Lessor. Lessee
shall pay, on or before the last day when payment can be made without interest
or penalty, all taxes levied upon and assessed against the Premises and
Improvements which are due and payable during the Lease Term. Paid tax receipts
or other evidence of such payment shall be sent by Lessee to Lessor prior to
any such taxes becoming delinquent or subject to any penalties or interest.
Taxes assessed covering a fractional year at the commencement or termination of
this Lease shall be prorated between the parties provided that if any such
taxes are assessed only for the portion of the year during which Lessee is
entitled to possession of the Premises, then Lessee shall pay all such taxes
for such portion of the year. Lessor shall ensure that all bills which Lessor
receives, if any, for taxes and any other government charges which are to be
paid by Lessee are sent or forwarded to Lessee within sufficient time to permit
timely control thereof and/or remittance in the normal course of business,
provided that Lessee shall contact all taxing authorities and request copies of
all tax statements to be sent directly to Lessee.
Section 2. Special tax assessments, if any, lawfully applicable to the
Premises shall be paid by Lessee. Those installments which were due and payable
before the commencement of the original term of the Lease or which are due and
payable after the termination of the Lease shall be the sole responsibility and
expense of the Lessor. Lessor shall give to Lessee timely notice of, and any
opportunity to participate in, all hearings and negotiations regarding special
tax assessments affecting the Premises.
Section 3. Lessee shall have the right in its name, or the name of
Lessor if required, to contest or review by administrative or legal proceedings
all or any part of any tax or special assessment which Lessee is required to
pay hereunder. Lessor shall cooperate, but without incurring any monetary cost
or expense, in such reasonable ways as may be necessary to further any such
procedure by Lessee. The party contesting any tax, assessment charge or lien of
any kind so long as the matter shall remain undetermined by final judgment
shall not be considered in default hereunder for the nonpayment thereof;
provided, however, that neither party may under these provisions permit the
Premises or Improvements situated thereon to be sold or forfeited, and failure
by the contesting party to do what is necessary to prevent any such sale or
forfeiture within ten (10) days from the publication or receipt of notice of
sale or forfeiture shall be deemed to be a default hereunder; and provided
further, that Lessee, at the request of Lessor, shall furnish assurance
reasonably satisfactory to Lessor that Lessee will indemnify the Lessor against
any loss or liability by reason of such contest. Lessor and Lessee shall each
give to the other timely notice of, and an opportunity to participate in, all
hearings and negotiations regarding such taxes and assessments.
<PAGE>
Section 4. Any sales tax, rental tax, gross receipts, or other tax or
charge (except for state or federal tax on net income or any inheritance or
estate tax), which may at any time during the term of this Lease become due
from Lessor on account of receipt of or right to receive rental payments under
the terms of this Lease, shall be payable by Lessee or its successor in
interest.
ARTICLE VII.
Maintenance
Section 1. Lessee, at Lessee's expense, shall keep the Premises and
Improvements in good and satisfactory order and repair, replacing all broken
glass with glass of the same size and quality of that broken, shall keep the
Premises, Improvements and all things connected therewith, including adjacent
sidewalks, driveways, ramps, parking areas, and private roadways in a clean and
healthy condition and in good repair, and Lessor shall maintain the structure
of the Improvements and the related Structural Repairs, in each case consistent
with standards in DeSoto County, Mississippi, for comparable trucking
terminals, distribution facilities, and related offices, and in accordance with
the laws and ordinances of each municipal, county, state, and federal
jurisdiction and the direction of the public officers having jurisdiction over
the Premises or the Improvements, during the term of this Lease, at their own
expense, respectively. On the termination of this Lease, in any way, Lessee
will yield up the Premises and the Improvements to Lessor in good condition and
repair, loss by fire or other casualty and ordinary wear and tear excepted.
Neither Lessor nor Lessee shall, during the term of this Lease or thereafter,
be required to make any repairs, replacements, or capital improvements to the
Premises and Improvements which are not specifically provided for herein.
Section 2. If the Premises, Improvements, and the other items above
mentioned are not kept in repair by Lessee or Lessor, as hereinabove agreed,
the other party may give the defaulting party not less than thirty (30) days'
notice (however, if the repairs complained of require immediate attention, then
reasonable notice shall be given as the circumstances demand) demanding that
such party make the required repairs. If the defaulting party does not promptly
undertake to make such repairs, the other party may at the expiration of thirty
(30) days after such notice, or at the expiration of such reasonable notice if
such repairs are urgent, as the case may be, have the repairs made and charge
the cost thereof to the defaulting party.
ARTICLE VIII.
Utilities
Section 1. Lessee shall pay all charges for steam, gas, electricity,
lights, water, heat, power and other services used in and for the Premises and
Improvements and shall indemnify and hold Lessor harmless against any liability
on such account. Lessor shall grant to the utility boards and agencies
reasonable easements and permits to allow the construction of such service to
Lessee.
ARTICLE IX.
Insurance
Section 1. During the term of this Lease, the Lessee agrees to keep,
at its expense, the Improvements located on the Premises, insured on the
so-called "all risk" form, with endorsements (including loss of rents) as
reasonably required by Lessor, in an amount not less than that currently
maintained on the Premises by Lessor. All such policies shall be in companies
mutually acceptable to Lessor and Lessee, and shall name the Lessor and Lessee
as insureds as their respective interests may appear. Notwithstanding the
foregoing provisions, such policy may contain a lender's loss payable
endorsement in favor of any persons, firms or corporations who may have a
mortgage lien on the Premises. Prior to Lessee's taking possession of the
Premises and throughout the term of the Lease, Lessee agrees to furnish
evidence to Lessor from time to time that the required insurance is in full
force. Notwithstanding the foregoing provisions, Lessor shall bear the expense
of builder's risk insurance with respect to construction to be performed by
Lessor's contractor, and Lessee shall bear the expense of builder's risk
insurance with respect to construction to be performed by Lessee's contractor.
Section 2. Lessee shall, during the entire term hereof, keep in full
force and effect a policy of public liability insurance with respect to the
Premises and the business operated by Lessee in which both Lessor and Lessee
shall be named as parties covered thereby in which the limits of liability
shall not be less than the greater of (a) $5,000,000.00, or (b) the limits
customarily maintained for similar businesses. Lessee shall furnish Lessor with
a certificate or certificates of insurance or other acceptable evidence that
such insurance is in full force at all times during the term hereof.
Section 3. All insurance provided for in this Article or other
Articles of this Lease shall be effected under valid and enforceable policies
issued by insurers of recognized responsibility authorized to issue such
insurance in the State of Mississippi. Not less than thirty (30) days prior to
the expiration dates of the policies theretofore furnished pursuant to this
Article IX, originals of the renewal policies for such insurance shall be
delivered by Lessee to Lessor, except that the Lessee may, in lieu of
delivering the originals of the policies, deliver to Lessor certificates of
insurance. Within thirty (30) days after the premium of each such policy shall
become due and payable, and the amount thereof determined, Lessor shall be
furnished by Lessee with evidence satisfactory to Lessor of such payment by
Lessee.
Section 4. In the event of a loss payable under said insurance
policies, the proceeds thereof, with the consent of and subject to the rights
of any lender or lenders who may from time to time hold loans for which the
Premises are security, shall be used in the following manner:
(a) In the event that loss results from damage which Lessee is
obligated to repair under the provisions of Article X hereof, the proceeds
shall be used to pay the cost of such repairs.
(b) In the event that loss results from total or substantial
destruction of the Improvements and Lessee rebuilds said Improvements under the
provisions of Article X hereof, then such proceeds shall be used for such
rebuilding, with any balance remaining being paid to Lessee (subject to any
rights of lenders as provided in Article X).
(c) In the event loss results from total destruction of the
Improvements and Lessee cannot rebuild within 180 days pursuant to Section 1 of
Article X herein, then the proceeds from such loss will first be used to pay in
full any loan for which the Premises are security and the balance, if any,
shall be paid to Lessor, and Lessee shall have the right to immediately
terminate this Lease without penalty.
Section 5. To the extent permitted without invalidating the policies
of insurance required pursuant to this Lease, Lessor and Lessee each hereby
release and waive all right of recovery against each other, irrespective of any
carelessness or negligence, for any loss or damage sustained to the property of
the other, to the extent such loss or damage is covered under the terms and
provisions of any policy of insurance in force at the time of such loss, and
Lessor and Lessee, to the extent permitted as aforesaid, each agree to assign
any subrogation rights against the other to any insurer. This release and
waiver of subrogation shall extend to such losses and amounts thereof as are
covered by insurance as provided herein, and shall not release Lessee from its
undertaking to provide insurance as provided in this Lease. It is intended that
the provisions of this paragraph of this Lease be construed consistently to
give the parties the fullest benefit of any available insurance proceeds and
protection. Each party agrees, to the extent the same may be required, to
notify its insurance carriers of the pertinent provisions of this Lease
respecting insurance, indemnity, and subrogation.
ARTICLE X.
Destruction
Section 1. In the event that the Improvements or any part thereof are
partially or totally destroyed by fire or other casualty so that repair can be
completed within 180 days (so as to not render the Improvements unfit for the
purpose for which they were constructed) at any time or times during the term
of this Lease, Lessor shall have the option to elect (i) to rebuild the
Premises, but only to the extent of any insurance proceeds available therefor;
or (ii) to require Lessee to commence the work of repair or replacement with
due diligence and carry the work of repair or replacement through to completion
without undue interruption or delay, other than interruptions or delays beyond
the control of Lessee. In such event, Lessee shall be entitled to receive the
proceeds of the insurance, hereinbefore required under Article IX hereof, to
pay for the cost of such repairs or replacements.
Section 2. In the event that the lender or lenders holding loans
secured by said Premises at the time of said total or substantial destruction
shall refuse to consent to the use of said proceeds for rebuilding but shall
require the same to be applied to the payment of their loan, then and in that
event, the proceeds shall be collected and remitted to Lessor and the lender as
their respective interests may appear and this Lease shall terminate.
ARTICLE XI.
Covenant to Hold Harmless
Section 1. Lessor shall not be liable to Lessee or to any other person
in or about the Premises for any loss, damage or injury sustained by them,
unless caused by Lessor's gross negligence or willful misconduct.
Section 2. Lessee covenants and agrees to pay all costs and expenses
and assume all liabilities of any kind or nature arising out of or in any way
connected with Lessee's (or any affiliate of Lessee) use of the Premises or
Improvements, unless caused by Lessor's gross negligence or willful misconduct,
and covenants and agrees that it will indemnify, defend and hold harmless
Lessor from all liability, loss, cost, damage, expenses and judgments and
injury to persons or property arising therefrom, unless caused by Lessor's
gross negligence or willful misconduct. Except as set forth in Article XV,
Lessee shall not give cause for the filing of any liens against the Premises,
except for liens which arise because of bona fide disputes between the Lessee
and any contractor or subcontractor, in which case said liens shall be bonded,
and in any event Lessee agrees that any lien claims will be satisfied prior to
execution of any judgment.
Section 3. Lessor agrees to indemnify, defend and save Lessee harmless
against and from any and all claims, loss, liability, damage, cost or injury
arising from or out of any acts of gross negligence or willful misconduct of
Lessor, or any of its agents, contractors, servants, employees, licensees or
sublicensees.
ARTICLE XII.
Eminent Domain
Section 1. If the whole or any part of the Premises shall be taken by
public authority or any entity entitled to exercise the power of eminent
domain, then the term of this Lease shall cease on the part so taken from the
date possession of that part shall be taken by the condemnor and the rent shall
be paid up by Lessee to that date. All proceeds received for the Premises and
Improvements shall, as between Lessor and Lessee, belong solely to Lessor. All
proceeds received for the Tenant Improvements and Lessee's moving expenses
shall, as between Lessor and Lessee, belong solely to Lessee. Each party
reserves the right to contest any award made by the condemning authority
applicable to a taking of such party's interest. If the portion taken by any
public authority or other entity entitled to exercise the power of eminent
domain or the sum of the portions in the case of additional taking is such as
to make Lessee's operations on the Premises economically nonfeasible in
Lessor's reasonable judgment, then from the day that Lessee first receives
notice of the intention of the public authority or other entity entitled to
exercise the power of eminent domain, then Lessee thereafter shall have the
right for a period of ninety (90) days to terminate this Lease by serving
written notice upon the Lessor within said ninety (90) day period. In the event
Lessee does not exercise said right to terminate this Lease within said ninety
(90) day period, or if said taking is such as not to entitle Lessee to
terminate this Lease, then this Lease shall continue and Lessee shall continue
in the possession of the remainder of the Premises under the terms herein
provided, and there shall be no reduction in rental. In the event that Lessee
elects the limited option to terminate this Lease in accordance with the
provisions of this Article XII, and the condemning agency thereafter abandons
its intention to exercise its right of eminent domain, then the Lessee shall
have thirty (30) days from and after the date Lessee receives written notice
from Lessor or from said condemning agency (whichever first occurs) of the
abandonment of such intention in which Lessee can rescind its exercise of
option to terminate provided that Lessee is not in default under the terms of
said Lease.
Section 2. If at the time of payment of any condemnation award, the
Lessee or its successor is indebted to Lessor or its successor for rent or for
any other sum due pursuant to the terms of this Lease, then said sum shall be
paid to Lessor from any sum otherwise due to Lessee or its successor from said
condemnation award.
ARTICLE XIII.
Warranty and Quiet Enjoyment
Section 1. Subject to the exceptions set forth in Article I, the
Lessor covenants and warrants that Lessor has a good and fee simple title to
the Premises legally described in Article I and that Lessor has full right and
lawful authority to enter into this Lease for the full term hereof, and that
Lessee, on paying the rent and performing all of the other terms, conditions
and provisions of this Lease to be performed by the Lessee, shall peaceably and
quietly have, hold and enjoy the Premises without hindrance by Lessor for the
full term of this Lease, subject to the provisions herein contained. Lessor
shall have the right at all reasonable times to inspect the Premises and the
Improvements including inspection by Lessor's agents and designees.
ARTICLE XIV.
Assignment and Subletting
Section 1. Lessor shall have the right to sell, transfer, convey or
assign, in whole or in part, its right, title and interest in the Premises. In
the event of any such sale, other transfer or exchange of the Premises by
Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby
entirely freed and relieved of all liability and obligation under or deriving
from this Lease, provided that such purchaser or assignee shall expressly
assume said covenants and obligations of Lessor hereunder and shall have a
financial net worth at least equal to that of Lessor.
Section 2. Lessee shall not assign this Lease or sublet all or any
part of the Leased Premises without the prior written consent of Lessor, which
will not be unreasonably withheld. Lessor shall have the option, upon receipt
from Lessee of written request for Lessor's consent to subletting or
assignment, to cancel this Lease as of the date the requested subletting or
assignment is to be effective. The option shall be exercised, if at all, within
fifteen (15) days following Lessor's receipt of written notice, by written
notice to Lessee of Lessor's intention to exercise the option. Lessor shall
not, however, be deemed to consent to assignment or sublease by virtue of not
responding to the request by Lessee hereunder within such fifteen (15) day
period. In the event of any assignment or subletting, Lessee shall be and is
hereby entirely freed and relieved of all liability and obligation under or
deriving from this Lease, provided that such assignee shall expressly assume
said covenants and obligations of Lessee hereunder and shall have a financial
net worth at least equal to that of Lessee.
ARTICLE XV.
Mortgages
Section 1. Lessee accepts this Lease subject and subordinate to any
recorded mortgage or deed of trust presently existing or hereafter placed upon
the Premises, and to any renewals, modifications and extensions thereof. The
foregoing provisions shall be self-operative and no further instrument of
subordination shall be required for the purpose. Anything in the foregoing to
the contrary notwithstanding, in the event of a foreclosure under any such
mortgage or deed of trust, this Lease shall continue in full force and effect
and Lessee shall attorn to the purchaser at such foreclosure sale, as Lessor.
Any such mortgage or deed of trust may at any time, at the instance of the
holder of the note secured thereby, be subordinated to this Lease, such
subordination to be accomplished by the execution by such holder of an
instrument of subordination and recording of the same in the recording office
where such mortgage or deed of trust is recorded; provided, however,
notwithstanding that this Lease may be (or may be made to be) superior to such
mortgage or deed of trust, the provisions of the mortgage or deed of trust
governing the rights of the mortgagee with respect to condemnation or insurance
proceeds shall be prior and superior to and shall prevail over any contrary
provisions contained in this Lease with respect to the payment or usage
thereof.
ARTICLE XVI.
Rights of Landlord to Cure Defaults Generally
Section 1. If the Lessee fails to perform any of the terms and
conditions of this Lease which in any manner adversely affects Lessor, then
Lessor may, at its option, proceed to cure said default by payment of money or
doing such other acts as may be necessary to cure the same and any sums so paid
or expenses so incurred shall be promptly paid by Lessee with the next rental
payment after thirty (30) days' written notice from Lessor.
Section 2. Any and all sums paid or advanced, or reasonable expenses
incurred for and on behalf of Lessee provided for in Section 1 above and any
and all rental payments which are delinquent more than thirty (30) days shall
draw interest at the (a) "prime" rate charged by First Mississippi Bank
National Association, or its successors, plus four percent (4%), or (b) maximum
rate permitted by applicable law, whichever is less.
ARTICLE XVII.
Default
Section 1. In the event that a voluntary petition in bankruptcy is
filed on behalf of Lessee, or in the event Lessee be declared a bankrupt, or of
an assignment by Lessee for the benefit of creditors, Lessor may at its option
declare this Lease terminated and upon the making of such election to
terminate, all interest and rights of Lessee to possession of the leased
Premises and Improvements shall terminate. Should Lessor not elect to exercise
its right to terminate this Lease, the Lessor may accept rent from any such
receiver or other officer in possession of the Premises for the term of such
occupation without impairing or affecting in any way the rights of Lessor
against Lessee under this Lease.
Section 2. In case default be made by Lessee at any time in the due
payment of any sum payable by Lessee under the provisions hereof and such
default shall continue for a period of fifteen (15) days after written demand
by Lessor to Lessee or if default shall be made by Lessee in the due observance
and performance of any other covenant, condition or stipulation herein agreed
by Lessee to be by it observed or performed, and such default shall continue
for a period of thirty (30) days after written notice by Lessor to Lessee,
detailing the particulars of such default and requiring Lessee to make good the
same, then Lessor at any time thereafter, shall have the full right, at its
election, to exercise any of the following rights and remedies; provided that
if such default is not reasonably curable within such 30-day period, Lessor
shall not be permitted to exercise any of its rights or remedies if Lessee
commences to cure said default within such 30-day period and diligently pursues
the same to completion:
(a) To enter upon the Premises and again have, repossess and
enjoy the same as if this Lease had not been made, and all terms,
conditions, covenants and obligations of this Lease on the part of
Lessors to be performed shall cease and terminate, without prejudice,
however, to the right of Lessor to recover from Lessee all Rent
accrued hereunder as of the date of such entry by Lessor;
(b) To pursue all other rights and remedies to which Lessor
may be entitled hereunder, at law or in equity; and
(c) No waiver of breach of any of the covenants of this Lease
shall be construed to be a waiver of any succeeding breach of the same
on any other covenant.
Section 3. Notwithstanding any termination of this Lease, the Lessee
shall continue to be liable to Lessor for the payment of any unpaid assessment,
tax, lien, mortgage, utility charge, or any other payment required to be made
by Lessee to the date of said cancellation.
ARTICLE XVIII.
Termination
Section 1. Any building and improvements and fixtures placed upon the
leased Premises by the Lessee shall be and remain the property of the Lessee so
long as this Lease shall remain in effect. Upon termination of this Lease, by
expiration of time, by agreement or by default of the Lessee, any improvements
and fixtures, shall be left in place and become the property of the Lessor, its
successors and assigns, together with all rights therein of the Lessee, its
successors and assigns. To make this provision self executing, Lessee covenants
and agrees that, upon termination of this Lease, title to all improvements and
fixtures belonging to Lessee shall pass to Lessor, its successors and assigns
forthwith and without the necessity of any further conveyance or assignment.
Lessee agrees to execute any conveyance or assignment if necessary to complete
such transfer if requested by Lessor to do so.
ARTICLE XIX.
Notices
Section 1. It is mutually agreed that any notice given by the Lessor
to the Lessee shall be given either by (1) delivering the same to the Lessee by
personal delivery or by overnight delivery or courier service, or (2) by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Lessee at the following address:
TO: Transit Group Transportation, LLC
President
Overlook III, Suite 1740
2859 Paces Ferry Road
Atlanta, Georgia 30339
COPY TO: Sharon McBrayer
Womble, Carlyle, Sandridge & Rice, PLLC
1275 Peachtree Street, N.E., Suite 700
Atlanta, Georgia 30309
and also, that any notice to be given by the Lessee to the Lessor shall be
given either by (1) delivering the same to the Lessor by personal delivery or
by overnight delivery or courier service, or (2) by registered or certified
mail, return receipt requested, postage prepaid, addressed to the Lessor at the
following address:
TO: Dan Horvath
3300 Pointe South Cove
Memphis, Tennessee 38125
COPY TO: Boyd L. Rhodes, Jr.
Baker, Donelson, Bearman
& Caldwell
2000 First Tennessee Building
Memphis, Tennessee 38103
Any assignee of Lessee or assignee of an assignee shall furnish its name and
address to Lessor in writing and upon failure to do so then notice to Lessee as
above provided will be deemed notice to assignee.
Notice sent by either Lessor or Lessee by certified mail which is
refused shall be effective upon attempted delivery.
Section 2. All parties shall give the others reasonably prompt notice
of any change of address, and until such notice any party may rely on the most
recent addresses furnished. Neither Lessee nor Lessor shall designate more than
two (2) addresses to receive notices.
ARTICLE XX.
Merger
Section 1. This Lease shall merge and terminate any prior negotiation
and agreements between the parties hereto regarding the Premises and
Improvements.
ARTICLE XXI.
Memorandum Lease
Section 1. The parties agree that this Lease shall not be recorded,
but that at the election of Lessee or Lessor, a memorandum of this Lease may be
executed and may be recorded in DeSoto County, Mississippi or in some other
appropriate governmental office.
ARTICLE XXII.
Waiver
Section 1. None of the covenants, terms or conditions of this Lease
shall be in any manner altered, waived, modified, changed or abandoned except
by the written agreement of Lessor and Lessee duly signed and delivered. One or
more waivers of any covenant or condition by any party shall not be construed
as a waiver of a subsequent breach of the same or any other covenant or
condition by said party. The consent or approval by the Lessor to or of any act
by Lessee requiring Lessor's consent or approval shall not be deemed to waive
or render unnecessary Lessor's consent or approval to or of any subsequent
similar act by Lessee.
ARTICLE XXIII.
Certificate
Section 1. Lessee shall, without charge, at any time and from time to
time within ten (10) days after written request by Lessor, deliver to Lessor a
written instrument, certifying whether Lessor has or has not, as the case may
be, made any default in the performance by Lessor of all agreements, terms,
covenants and conditions on Lessor's part to be performed and if it does know
any default, specifying same.
ARTICLE XXIV.
Holding Over
Section 1. In the event of holding over by Lessee after the expiration
or termination of this Lease, the holdover Lessee shall be as a tenant at will
and all of the terms and provisions of this Lease shall be applicable during
that period, except that Lessee shall pay Lessor as rental for the period of
such holdover an amount equal to one hundred twenty-five percent (125%) of the
Base Rent plus one hundred percent (100%) of the Additional Rent which would
have been payable by Lessee had the holdover period been a part of the Lease
Term. Lessee agrees to vacate and deliver the Premises to Lessor upon not less
than thirty (30) days' written notice from Lessor to vacate; and during any
holdover period, Lessee shall be entitled to terminate the holdover tenancy
(and thereby terminate its obligations hereunder for Base Rent and Additional
Rent) by giving Lessor at least ninety (90) days' prior written notice of its
intent to vacate the Premises. The rental payable during the holdover period
shall be payable to Lessor in the same time and manner as provided during the
Lease Term. No holding over by Lessee, whether with or without consent of
Lessor, shall operate to extend the Lease Term unless the parties shall agree
otherwise in writing.
ARTICLE XXV.
Confirmation
Section 1. Lessor agrees, upon the request of Lessee, to execute and
deliver to Lessee, a letter of confirmation confirming that Lessee has a
leasehold interest in the Premises pursuant to the terms of this Lease and
certifying whether Lessee is or is not, as the case may be, in default
hereunder and if Lessor does know of any default, specifying same.
ARTICLE XXVI.
Force Majeure
Section 1. Neither party shall be required to perform any covenant or
obligation in this Lease, or be liable in damages to the other, so long as the
performance or non-performance of the covenant or obligation is delayed, caused
by or prevented by Force Majeure.
ARTICLE XXVII.
Entire Agreement
Section 1. This Lease contains the entire agreement between the
parties hereto and no term or provisions hereof may be changed, waived,
discharged or terminated unless the same be in writing, executed by both
parties hereto.
ARTICLE XXVIII.
Partial Invalidity
Section 1. If any provision of the Lease or the application thereof to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the circumstances other than those as to which it is invalid or unenforceable,
shall be enforced to the fullest extent permitted by law.
ARTICLE XXIX.
Applicable Law
Section 1. This Lease shall be construed and enforced in accordance
with the laws of the State of Mississippi.
ARTICLE XXX.
Article Headings
Section 1. The article headings contained herein are inserted only for
convenience of reference and are in no way to be construed as a part of this
Lease or as a limitation on the scope of the particular Articles to which they
refer.
ARTICLE XXXI.
Binding on Transferees, Grantees, Etc.
Section 1. This Lease shall be binding upon the transferees, grantees
and successors in interest of the Lessor and Lessee, or any assignees or
sublessees of Lessee herein. Nothing herein, however, shall be construed to
allow Lessee to assign or sublet contrary to the provisions and conditions set
forth in this Lease. Lessor is hereby granted the right to assign its rights
under this Lease in accordance with the terms hereof.
ARTICLE XXXII.
Relationship of Parties
Section 1. The relationship of the parties hereto is that of Lessor
and Lessee and it is expressly understood and agreed that Lessor does not in
any way nor for any purpose become a partner of Lessee or a joint venturer with
Lessee in the conduct of Lessee's business or otherwise.
ARTICLE XXXIII.
Time of the Essence
Section 1. Time is expressly declared to be of the essence in this
Lease.
ARTICLE XXXIV.
Quitclaim
Section 1. At the expiration or earlier termination of this Lease, as
in this Lease provided, Lessee shall execute, acknowledge and deliver to Lessor
within ten (10) days after written demand from Lessor to Lessee, any quitclaim
deed or other document required by any reputable title company to remove the
cloud of this Lease from the real property subject to this Lease.
ARTICLE XXXV.
Provisions of Law Deemed Included
Section 1. Each and every provision and clause required by law or
regulation to be included in this Lease shall be deemed to be included herein,
and this Lease shall be read, construed and enforced as though the same were
included herein. If, through mistake, inadvertence or otherwise, any such
provision or clause is not included herein or is incorrectly included herein,
then upon application of either party hereto, this Lease shall forthwith be
amended to include the same or to correct the inclusions of the same.
ARTICLE XXXVI.
Election of Remedies Not Exclusive
Section 1. It is mutually agreed by the Lessor and Lessee that the
various rights, powers, options, elections, privileges and remedies of Lessee
and Lessor shall be cumulative and no one of them shall be exclusive or
exclusive of rights and privileges granted to either party by statute.
ARTICLE XXXVII.
Attorney's Fees
Section 1. In the event it is necessary for either party to employ an
attorney to enforce the terms of this Lease, or file an action to enforce any
terms, conditions or rights under this Lease, or to defend any action or
arbitration, then the prevailing party in any such action shall be entitled to
recover from the other, all reasonable attorney's fees, costs and expenses as
may be fixed by the court, and such attorney's fees, costs and expenses may be
made a part of any award or judgment entered.
ARTICLE XXXVIII.
No Broker or Commission
Section 1. No broker or agent has been involved or participated in
this transaction, and no commission or other fee shall be paid to any agent or
broker with respect to this Lease or the transaction contemplated hereby.
[EXECUTION SET FORTH ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties have hereto set their hands on the
date and year in this Lease first written.
LESSOR:
HORVATH & HORVATH, LLC
By: /s/ Dan Horvath_____________________
Title: Chief Manager_______________________
LESSEE:
TRANSIT GROUP TRANSPORTATION, LLC
By: /s/ Philip A. Belyew________________
Philip A. Belyew, President
EXHIBIT "A-1"
PROPERTY DESCRIPTION
PROPERTY IN DESOTO COUNTY, MISSISSIPPI:
Lot 5, Olive Branch Industrial Park, Section AA@, Fourth Revision,
situated in Section 26, Township 1, South, Range 6 West, DeSoto
County, Mississippi as per plat recorded in Plat Book 37, Page 52,
Chancery Clerk=s Office, DeSoto County, Mississippi.
EXHIBIT 10.43
LEASE AGREEMENT
This Lease Agreement, made and entered into as of the 18th day of
March, 1999, by and between Ameling Properties, LLC, hereinafter called
ALandlord@, and KAT, Inc., an Indiana corporation, hereinafter called ATenant@.
ARTICLE 1
REPRESENTATIONS OF TENANT
Tenant makes the following representations and warranties as of the
execution date for the benefit of and reliance on by Landlord:
A. Tenant is a corporation duly organized and validly existing in good
standing under the laws of the State of Indiana and is authorized to transact
business in the state of Indiana.
B. The execution, delivery and performance of this Lease are within
the corporate powers of Tenant, have been duly authorized, and are not in
contravention of law or the terms of the Tenant=s Articles of Incorporation or
Bylaws, or any undertaking to which Tenant is a party or by which it is bound.
C. This Lease is a valid and binding obligation of Tenant in
accordance with its terms.
D. The Tenant intends to use and occupy the Property in its
over-the-road trucking at all times during the Lease Term and does not know of
any reason why the Property will not be so used by it in the absence of
supervening circumstances not now anticipated by it or beyond its control
except as provided herein. Tenant will not use, or suffer or permit any person
to use, the Property or any part thereof for any purpose in violation of the
Laws of the United States or of the State of Indiana, or of the ordinances or
rules of any governing power which shall have the right to make laws, rules, or
regulations, or for any purpose not authorized.
ARTICLE 2
LANDLORD=S COVENANTS OF WARRANTY
Landlord makes the following covenants and warrants as of the
execution date for the benefit of and reliance on by Tenant:
A. There are no existing or unexpired leases, conveyances,
agreements, options, mortgages or liens of any kind or description affecting
Landlord=s interest in the Property;
B. Landlord has full right and power to enter this Lease;
C. There are no restrictions or stipulations or planning or zoning
ordinances, laws, regulations, or restrictions now in effect with respect to
the Property that would interfere with or restrict Tenant=s intended use of the
Property; and
D. At all times prior to expiration or other termination of this Lease
when Tenant is not in default hereunder, its peaceable and quiet possession and
enjoyment of the Property shall not be disturbed.
ARTICLE 3
LEASE OF PREMISES AND LEASE PAYMENTS
Section 3.1. Lease of Premises. Landlord, of and in consideration of the rents,
covenants and agreements hereinafter set forth, does hereby lease to Tenant,
and Tenant does hereby take and rent from the Landlord, the real property
located at 116 East, 1100 North, Chesterton, Indiana 46304, and more
particularly described in Exhibit AA@, attached hereto and made a part hereof,
to have and to hold the same, together with the buildings and other
improvements now or hereafter located thereon and all rights, privileges,
powers, easements, tenements, and appurtenances to the same belonging or in
anywise appertaining thereto, (all the aforesaid being herein referred to
collectively as the AProperty@ or ALeased Premises@) for and during the term
hereinafter provided.
Section 3.2. Use of Premises. The Leased Premises shall be used and occupied by
Tenant, subject to the conditions herein contained, in connection with its
over-the-road trucking operations. In no event shall the Leased Premises be
used or occupied by the Tenant in any manner contrary to law, zoning
regulations, or recorded restrictions, if any. Tenant shall not leave the
Leased Premises vacant or unoccupied at any time during the Term of this Lease
without the prior written permission of the Landlord.
Section 3.3. Lease Term. The term of this Lease shall commence on March 12,
1999, and end on April 30, 2014, both dates inclusive unless earlier terminated
in accordance herewith (the ATerm@). Either party may, however, terminate this
Lease upon six (6) months written notice to the other after March 1, 2001;
provided that, in the event of such termination by Tenant, Landlord shall be
entitled to the continuation of the payment of Rents as if such termination had
occurred effective on the third (3rd) anniversary of the date of this Lease
Agreement. If by mutual consent of the parties, Tenant takes possession of the
Leased Premises after the commencement date, then during such post term period
Tenant shall on the first day of such possession pay the rent as herein
established on a pro-rata per diem basis and such occupancy shall be under all
the terms and conditions of this Lease, but such post term occupancy shall not
affect the lease Term as herein otherwise established. Subject to the
availability of the Leased Premises, Tenant shall have the right prior to the
commencement date to enter upon the Leased Premises at reasonable times for the
purpose of preparing the Leased Premises for their intended use and inspecting
and testing the same.
ARTICLE 4
RENTAL
Section 4.1. Base Annual Rental. Tenant shall, without deduction, abatement or
set off of any nature whatsoever, pay to Landlord as fixed rent (hereinafter
referred to as the ABase Annual Rental@) for the Leased Premises the sum of One
Hundred Sixty-Six Thousand Dollars ($166,000.00) per annum payable in equal
monthly installments of Thirteen Thousand Eight Hundred Thirty-Three and 33/100
Dollars ($13,833.33) on the first of each month during the first year of the
Term.
Said rental payments shall be made without demand on the first day of
each and every month throughout the Term, if exercised, of this Lease. Rent for
any partial month of the term of this Lease shall be prorated. The rent shall
be payable at 902 Crabapple Lane, Valparaiso, Indiana 46383 , or at such other
place as Landlord may from time to time designate in writing.
Section 4.2. CPI Adjustments. The Base Annual Rent paid by Tenant shall be
adjusted upward, but never downward, effective as of March 1, 2000, and on the
same day of each year thereafter during the Term to reflect the increase, if
any, in the Consumer Price index ( All Cities, All Urban Consumers, All Items,
1982-1984=100) (subsequently referred to as ACPI-U@) or its successor price
index , as published by the United States Bureau of Labor Statistics. This
adjustment shall computed by adding to the Base Annual Rent an amount
determined as follows: i) the CPI-U index number for the second month preceding
March of 1999 (AInitial Index Number@) shall be subtracted from the CPI-U index
number for the second month immediately preceding the effective date of the
increase; ii) the resulting amount shall be divided by the Initial Index Number
and reduced to a decimal equivalent; iii) the resulting decimal shall be
multiplied by the Base Annual Rent. The Base Annual Rent, as adjusted, shall be
paid in equal monthly installments as provided in Paragraph 4.1, above.
Section 4.3. Late Payment Charges. Rent is due on the first day of
the month and shall be delinquent if not paid by the fifth calendar day of
the month. A five percent (5%) late charge shall be added to the rent due
for each delinquent rent payment.
ARTICLE 5
OBLIGATIONS OF TENANT
Section 5.1. Taxes. Tenant shall pay as additional rent, any and all amounts
expended by Landlord for real estate taxes, assessments, and charges, as well
as all sewer charges levied, assessed or payable with respect to the land,
buildings and improvements comprising the Leased Premises. Such additional rent
by reason of said taxes and sewer charges shall be payable by Tenant upon
presentation to Tenant of copies of tax and sewer charges.
Section 5.2. Utilities. Tenant shall pay for all utility services to the Leased
Premises including, but not limited to, electricity service for lighting,
business machines and business equipment, and utility service to provide
heating, ventilating and air conditioning. Tenant shall supply all replacement
light bulbs. If any such utility service shall not be separately metered to
Tenant, Tenant shall pay its proportionate part of such utility service, based
upon square footage of any buildings occupied by Tenant and a pro rata portion
of common areas, upon presentation of a bill therefor by the Landlord, and the
amount thereof shall be deemed additional rent hereunder. Landlord represents
and warrants that all utilities, including but not limited to, water, gas,
sewer, telephone and electricity are provided to the Leased Premises in the
quantities required by Tenant without any additional action or payment by
Tenant.
ARTICLE 6
MAINTENANCE AND ADDITIONS
Section 6.1. Maintenance and Repairs. Landlord shall at its cost and expense,
except as provided below, keep in good repair the foundation, structural
members, exterior of the outside walls, roof, gutters and down spouts of the
buildings comprising a part of the Leased Premises, and shall also at its cost
and expense maintain and keep in good repair the outside lighting, and all
mechanical equipment serving the Leased Premises (including maintaining,
keeping in repair and replacing, when necessary, all HVAC and hot water heating
equipment).
Tenant shall be responsible for all interior cleaning and all interior
and exterior window washing. Tenant covenants and agrees not to do or suffer
any waste to the Leased Premises and at its cost and expense to maintain and
keep in good repair all parts of the Leased Premises even though not
specifically enumerated above, including but not limited to, all of the
interior of the Leased Premises, all glass and exterior doors, all landscaping,
and the parking lot (including sweeping, snow removal and striping)
If Tenant does not make the necessary repairs, replacements, or
maintenance as herein provided, Landlord at its option, and after giving Tenant
thirty (30) days written notice, shall have the right to do the same and all
amounts so expended by the Landlord shall be deemed additional rent, to be due
and owing at the time the next rental payment is due following the date that
such repairs, replacements, or maintenance have been done by the Landlord.
Section 6.2. Additions - Mechanic=s Liens. Any alteration, addition or
improvement made by Tenant and any fixtures installed by Tenant (including
wall-to-wall carpeting and wall paneling) shall become the property of Landlord
upon the expiration or other sooner termination of this Lease unless removed
pursuant to Section 11.1 of this Lease. No structural alterations shall be made
without first obtaining the written consent and approval of Landlord as to the
proposed plans and specifications, which consent and approval Landlord agrees
will not be unreasonably withheld and further provided that any alterations or
improvements shall be done expeditiously and in good and workmanlike manner. If
Landlord refuses to consent to such alterations, and the failure to make an
alteration would impact or impair Tenant=s use of the Leased Premises in any
manner, Tenant may terminate the Lease without further liability.
Tenant shall not permit any mechanic=s lien to be filed against the
fee of the Leased Premises or against the Tenant=s leasehold interest in the
Leased Premises by reason of work, labor, services or materials supplied or
claimed to have been supplied to the Tenant or anyone holding the Leased
Premises through or under the Tenant, whether prior to, during, or subsequent
to the Term hereof. If any such mechanic=s lien shall at any time be filed
against the Leased Premises and Tenant shall fail to remove same within thirty
(30) days thereafter, it shall constitute a default under the provisions of
Article 12 of this Lease.
ARTICLE 7
DAMAGE TO PREMISES
Section 7.1. Destruction to Premises. If the Leased Premises are at any time
during the Term of this Lease damaged or destroyed in whole or in part by fire
or any other peril so as to render the Leased Premises untenable for sixty (60)
days, the Landlord or Tenant may, at the option of either, terminate this
Lease. Notwithstanding anything herein to the contrary, if the amount of
insurance proceeds collected by Landlord as a result of such whole or partial
damage of destruction are not sufficient to complete any restoration or
rebuilding of the Leased Premises, Landlord may, at its option, terminate this
Lease. Notice of termination by either party to this Lease shall be served upon
the other party pursuant to Section 14.1 hereof.
Landlord shall notify Tenant in writing of its opinion as to the
number of days the Leased Premises will be wholly untenable within ten (10)
days after such damage or destruction. If the Tenant does not agree with the
opinion of the Landlord as to the number of days the Leased Premises will be
wholly untenable, Tenant may demand within three (3) days after such
notification that the fact be determined by arbitration. Landlord and Tenant
shall each choose an arbitrator within five (5) days after such demand by
Tenant. The two arbitrators so chosen, before entering on the discharge of
their duties, shall elect a third, and the decision of any two of such
arbitrators shall be conclusive and binding upon both parties hereto.
If it is determined by arbitration or by agreement between the
Landlord and the Tenant that the Leased Premises are not wholly untenable for
sixty (60) days, then the Landlord shall repair or restore the Leased Premises
to substantially the same condition as existed prior to such damage or
destruction, at Landlord=s own expense, with all reasonable speed and
promptness, and in such case as just and proportionate part of the rental shall
be abated until the Leased Premises have been repaired or restored. In
determining what constitutes reasonable speed and promptness, consideration
shall be given to delays caused by strike, adjustment of insurance, and other
causes beyond the Landlord=s control, and this Lease shall not be terminable by
Tenant if the Leased Premises are not made tenable sixty (60) days after such
damage or destructions provided Landlord has been repairing or restoring, and
continues to repair or restore, the Leased Premises with such reasonable speed
and promptness. If neither party so elects to terminate the Lease, then
Landlord will be obligated to repair and reconstruct the Leased Premises within
the time and in the manner as stated above. If Landlord does not repair and
replace the Leased Premises within one hundred eighty (180) days of the
casualty for any reason, notwithstanding anything to the contrary, Tenant may
terminate this Lease without further liability.
ARTICLE 8
INDEMNIFICATION AND RELEASE
Section 8.1. Indemnification. Except for claims arising out of acts or
omissions caused by the intentional, reckless or negligent acts or omissions of
Landlord or its representatives, employees or agents, Tenant shall indemnify
and hold Landlord harmless against all claims, demands, actions, causes of
actions, settlements, expenses and any other liabilities, including reasonable
attorneys= fees, arising from or related to (a) failure of Tenant to perform
any covenant, promise or term to be performed by Tenant under this Lease; (b)
any accident, injury or damage which shall happen on or about the Leased
Premises during the Term caused in whole or in part by Tenant=s intentional,
reckless or negligent act or omission or resulting from the condition,
maintenance or operation by Tenant of the Leased Premises; (c) failure to
comply with the valid and enforceable requirements of any government authority
for which Tenant can be held liable and for which Landlord is not responsible
under this Lease; (d) any mechanic=s lien or security agreement filed against
the Leased Premises or any equipment or material therein; and (e) any
intentional, reckless or negligent act or omission of Tenant or its
representatives, employees, or agents. Except for claims arising out of acts or
omissions caused by the intentional, reckless or negligent acts or omissions of
Tenant or its representatives, employees or agents, Landlord shall indemnify
and hold Tenant harmless against all claims, demands, actions, causes of
action, settlements, expenses and any other liabilities, including reasonable
attorneys= fees arising from or related to (a) failure of Landlord to perform
any covenant, promise or term to be performed by Landlord under this Lease; (b)
failure to comply with the valid and enforceable requirements of any
governmental authority for which Landlord is liable under the Lease; and (c)
any intentional, reckless or negligent act or omission of Landlord or its
representatives, employees or agents.
Section 8.2. Mutual Release. Notwithstanding anything herein to the contrary,
Landlord and Tenant and all parties claiming under them hereby mutually release
and discharge the other from all claims and liabilities arising from or caused
by any hazard covered by insurance on the Leased Premises, or covered by
insurance in connection with property on or activities conducted at the
building or Leased Premises, regardless of the cause of the damage or loss.
This release shall apply only to the extent that such loss or damage is covered
by insurance and only so long as the applicable insurance policies contain a
clause to the effect that this release shall not affect the right of the
insured to recover under such policies.
ARTICLE 9
CONDEMNATION, ACCESS, USAGE
Section 9.1. Condemnation. (a) If the entire Leased Premises ( or so much
thereof so as to leave the remaining portion unfit for use by Tenant in its
sole discretion) shall be taken for any public or any quasi-public use under
any statute or by right of eminent domain, or by purchase under threat of
condemnation, then the Lease shall automatically terminate as of the date that
Leased Premises shall be so taken.
(b) If any part of the Leased Premises shall be so taken and this
Lease shall not be terminated under the provisions of subparagraph (a) above,
then Landlord or Tenant shall have the option to terminate this Lease upon
thirty (30) days notice to the other if continued operation of the remaining
Leased Premises is, in either=s opinion, no longer economical or feasible.
(c) In any event, all compensation awarded or paid upon such total or
partial taking shall belong to and be the property of the Landlord (or Tenant
if it has exercised the option described in Section 3.4 above and the parties
later actually close on the sale) without any participation by the Tenant
unless any structures, improvements or other property constructed by Tenant is
taken, in which case Tenant shall be entitled to that portion of the
compensation attributable to such structures, improvements or property;
provided, however, that nothing contained herein shall be construed to preclude
Tenant from prosecuting any claim directly against the condemning authority in
such condemnation proceeding for depreciation of, damage to, or the value or
cost of removal of trade fixtures, furniture, and other personal property
belonging to Tenant; provided, however, that no such claim shall diminish or
otherwise adversely affect Landlord=s award.
Section 9.2. Access. Landlord, and its duly authorized agents, employees and
contractors shall have access to the Leased Premises at all reasonable times
for the purpose of inspecting the same, or for exhibiting the same for sale,
lease or financing during the last year of the Term.
Section 9.3. Usage. Tenant shall take reasonable efforts to minimize any noise,
smoke or odor escaping from the Leased Premises, and shall endeavor to occupy
the same in such manner so as not to constitute a public or private nuisance.
No signs, fixture, advertisement or notice shall be displayed, inscribed,
painted or affixed by Tenant on any part of the outside of any building
comprising a part of the Leased Premises without the prior written consent of
Landlord.
ARTICLE 10
ASSIGNMENT
Section 10.1. Tenant. Tenant may assign or sublet the Leased Premises or any
part thereof subject to prior written consent of Landlord of said subletting or
assignment, which consent shall not be unreasonably withheld, but such
assignment or subletting shall not release the Tenant from the further
performance by the Tenant of the covenants in this Lease unless Landlord
expressly releases Tenant in writing. In any event, Tenant shall remain
primarily liable on this Lease for the entire Term thereof and shall in no wise
be released from the full and complete performance of all the terms,
conditions, covenants and agreements herein contained unless Landlord expressly
releases Tenant in writing.
Section 10.2. Landlord. The term ALandlord@ as used in this Lease means only
the owner for the time being in fee of the Leased Premises, or the owner of the
leasehold estate created by an underlying lease, or the mortgagee of the fee or
of such underlying lease in possession for the time being of the Leased
Premises, so that in the event of any sale of the Leased Premises or of any
transfer or assignment or other conveyance of such underlying lease and the
leasehold estate thereby created, the seller, transferor, or assignor shall be
entirely relieved of all further obligations of the Landlord herein. It shall
be deemed without further agreement between the parties or their successors in
interest, or between the parties and any such purchaser, transferee, or
assignee, that such purchaser, transferee, or assignee has agreed to carry out
all obligations of the Landlord hereunder. Tenant shall not be released from
liability under this lease unless their successors, assigns or transferees, or
personal representatives agree to be fully liable under this lease.
Section 10.3. Permitted Subleases and Assignments. Notwithstanding the
provisions of Section 10.1 or any other Section of this Lease, Tenant may
sublet any or all of the Leased Premises to any affiliate of Tenant without
Landlord=s consent or other restriction. Tenant shall remain primarily liable
under this Lease notwithstanding any subletting authorized by this Section.
ARTICLE 11
EXPIRATION
Section 11.1 Expiration. At the expiration of the Term, Tenant shall surrender
the Leased Premises in as good condition as they were at the beginning of the
term reasonable wear and tear excepted and subject to any improvement or
additions constructed by Tenant. Notwithstanding any provision of law or any
judicial decision to the contrary, no notice shall be required to terminate by
limitation the Term of this Lease as herein provided, and the Term of this
Lease shall expire on the termination date herein mentioned without notice
being required from either party. In the event that Tenant or any party holding
under Tenant shall hold over the Leased Premises beyond the expiration of the
Term of this Lease, whether by limitation or forfeiture, Tenant or such other
party shall pay one hundred twenty (120) percent of the rent hereunder during
such hold over period; provided, however, that if Tenant or such other party
shall remain in possession of the Leased Premises beyond the expiration of the
Term of this Lease with the express consent of the Landlord, then such
possession shall be as a month-to-month tenancy at the same rent as the last
month of the Term and the provisions of this Lease other than those in regard
to the term hereof shall be applicable. At the time of termination of this
Lease, or any extension thereof, if Tenant is not in default on any obligation
or covenant under this Lease, Tenant may remove its office supplies, office
furniture, fixtures, equipment, and all other personal property from the Leased
Premises, and shall promptly repair any damage caused by such removal, but all
items shall be removed and all repairs completed on or before the last day of
said Term or extension thereof. In any event, the obligation of Tenant to
repair the Leased Premises and pay all amounts owing to Landlord shall survive
the termination of this Lease.
ARTICLE 12
DEFAULT
Section 12.1. Events of Default. The occurrence of any of the following
events shall constitute an AEvent of Default:@
A. Failure by Tenant to pay the lease payments in the amounts and at
the times provided in this Lease for a period of ten (10) days after written
notice specifying such failure and requesting that it be remedied, given to
Tenant by Landlord.
B. Any material breach by Tenant of any representation, warranty, or
covenant made in this Lease or failure by Tenant to perform any obligation or
observe any covenant or condition on its part to be performed or observed
pursuant to this Lease for a period of thirty (30) days after written notice
specifying such failure and requesting that it be remedied, given to Tenant by
Landlord; provided, however, that if said Default shall be such that it cannot
be corrected within such period, it shall not constitute an Event of Default,
if the Default is correctable without material adverse effect to the Leased
Premises and corrective action is instituted by Tenant within such period and
diligently pursued until the Default is corrected.
C. The dissolution or liquidation of Tenant; or failure by Tenant
promptly to lift any execution, garnishment, or attachment of such consequence
as will impair its respective ability to carry out its obligations under this
Lease; or the filing by Tenant of a petition in bankruptcy; or if Tenant makes
an assignment for the benefit of creditors, or consents to the appointment of a
trustee or receiver for the Tenant or for the greater part of its properties;
or a trustee or receiver is appointed for the Tenant or for a greater part of
its properties without its consent and is not discharged within thirty (30)
days; or bankruptcy, reorganization, or liquidation proceedings are commenced
by or against the Tenant, and if commenced against the Tenant is consented to
by it and if Tenant fails to move to dismiss the action within thirty (30) days
and diligently pursues dismissal.
D. The term ADefault@ shall mean default or failure by the Tenant in
the performance or observance of any of the covenants, conditions, or
agreements on its part contained in this Lease, exclusive of any period of
grace required to constitute an Event of Default.
Section 12.2. Remedies Upon Event of Default. Whenever any Event of Default
shall have occurred and be continuing, the Landlord shall have the right to (i)
take immediate possession of the Leased Premises, and the possession of and
estate of the Tenant under this Lease shall terminate forthwith, or (ii)
re-enter and take possession of the Leased Premises without terminating this
Lease and relet the Leased Premises for the account of the Tenant, holding
Tenant liable for the difference between the rent and other amounts payable by
any sublessee in such subleasing and the lease payments and other amounts
payable by Tenant under this Lease; provided, however, that until Landlord has
entered into a firm agreement for the subleasing of the Property, Tenant may at
any time pay all accrued lease payments (except accelerated lease payments) and
fully cure all defaults, whereupon Tenant shall be restored to its use,
occupancy, and possession of the Leased Premises as if no default had occurred;
or (iii) take whatever action at law or in equity as may be necessary to
collect the lease payments then due and thereafter to become due or to enforce
performance and observance of any obligation, agreement, or covenant of Tenant
under this Lease. Landlord shall act reasonably in exercising its remedies upon
an Event of Default and shall have the duty to mitigate its damages.
Notwithstanding the foregoing, if an Event of Default shall occur prior to the
third anniversary of the date of this Lease Agreement, Tenant shall be
responsible for lease payments as provided above through such third
anniversary. If an Event of Default occurs after such third anniversary, Tenant
shall be responsible for lease payments hereunder for a six (6) month period
following such Event of Default.
Section 12.3. Payment of Attorneys= Fees and Other Expenses. Upon an Event of
Default by Tenant, Tenant shall pay to Landlord upon demand therefor all costs
and expenses, including reasonable attorneys= fees, lawfully incurred in
obtaining possession of the Leased Premises, or in enforcing the performance or
observance of any obligation or condition by Tenant under this Lease.
Section 12.4. Waivers and Limitation on Waivers. In the event any Default by
Tenant under this Lease should be waived by Landlord, such waiver shall be
limited to the particular Default so waived and shall not be deemed to waive
any other Default hereunder nor be deemed a waiver of the same Default on
another occasion.
No delay or omission to exercise any right occurring upon any Event of
Default shall impair any such right or shall be construed to be a waiver
thereof, but any such right may be exercised from time to time as often as may
be deemed expedient. In order to exercise any remedy reserved to Landlord in
this Lease, it shall not be necessary to give any notice other than such notice
as may be herein expressly required or required by law.
Section 12.5. Landlord=s Reimbursement. It is mutually covenanted and agreed by
and between the parties hereto that in case Landlord or its successors shall,
without fault upon their part, be made a party to any litigation commenced by
or against Tenant, arising out of the use or occupancy of the Leased Premises,
Tenant shall pay all costs and attorneys= fees necessarily incurred by the
Landlord in connection with such litigation.
Section 12.6. Surrender of Property. In the event of the forfeiture of this
Lease and the termination of the tenancy under this Lease by reason of any
Event of Default upon the part of Tenant, then and in such event, upon such
termination, the Tenant hereby covenants and agrees to peaceably give
possession of the Leased Premises and relinquish any and all rights thereto.
Section 12.7. Accelerated Rent. Upon an Event of Default, in addition to all
other rights and remedies available to Landlord, Landlord may accelerate all
rent payments due hereunder and the same shall be due immediately. In the event
that such Event of Default shall occur prior to the third anniversary of the
date of this Lease Agreement, Landlord may only accelerate and demand those
payments due hereunder through March I, 2001.
Section 12.8. Remedies Cumulative. It is mutually covenanted and agreed that
the various rights, powers, privileges, elections, and remedies of the Landlord
contained in this Lease shall be construed as cumulative, and the exercise of
any one of them shall not preclude the exercise by the Landlord of any other
rights or privileges that may be allowed by law.
Section 12.9. Tenant=s Remedies. Upon breach or default of Landlord of any of
its promises, covenants, representations or warranties, Tenant, in addition to
all other rights and remedies available to it by law, may terminate this Lease
without further liability. Additionally, Landlord shall pay to Tenant upon
demand therefor all costs and expenses, including reasonable attorneys= fees,
incurred by Tenant in enforcing its rights under this Lease.
ARTICLE 13
ENVIRONMENTAL ISSUES
Section 13.1. Environmental Liability. Tenant shall be responsible for and
indemnify and hold Landlord, its directors, officers, employees and agents
harmless from all claims, demands, actions, causes of action, settlements,
expenses and any other liabilities, including, reasonable attorneys= fees,
arising from or related to the Release of a Hazardous Substance by Tenant , or
any of its employees, agents, contractors or invitees on, near or affecting the
Leases Premises or other environmental defect or injury on, near or affecting
the Leased Premises which is caused by Tenant or any of its employees, agents,
contractors, or invitees during the Term.
Landlord shall be responsible for and indemnify Tenant , its
directors, officers, employees, and agents harmless from all claims, demands,
actions, causes of action, settlements, expenses and any other liabilities,
including reasonable attorneys= fees, arising from or related to the Release of
a Hazardous Substance on, near or affecting the Leased Premises or other
environmental defect or injury on, near or affecting the Leased Premises prior
to the Term.
Section 13.2. Tenant=s Obligations. Tenant shall not cause or permit any
Hazardous Substances to be used, stored, generated, or disposed of on or in the
Leased Premises by Tenant, its agents, employees, contractors, licensees or
invitees without first obtaining Landlord=s written consent; provided that,
Tenant may use, store, handle, and transport Hazardous Substances in the normal
course of Tenant's operations, if Tenant uses, stores, handles and transports
such Hazardous Substances in compliance with all federal, state and local laws,
rules and regulations.
Section 13.3. Hazardous Substances. As used herein, AHazardous Substances@
means any substance which is toxic, ignitable, reactive, or corrosive and which
is regulated by any local government, the State of Indiana, or United States
Government. AHazardous Substance@ also includes any and all material or
substances that are deemed as Ahazardous waste@, Aextremely hazardous waste@ or
a Ahazardous substance@ pursuant to state, federal or local governmental law.
AHazardous Substance@ also includes asbestos, polychlorobiphonyls (APCB=s@) and
petroleum.
Section 13.4. Release. As used herein, ARelease@ means any spilling, leaking,
pumping, pouring emitting, emptying, discharging, injecting, escaping, leaving,
dumping or disposing of Hazardous Substance (x) into the environment or (y)
into or on the soil, subsoil, air, groundwater, surface water, or sediment.
ARTICLE 14
MISCELLANEOUS
Section 14.1. Notice. Any notice under this Lease shall be in writing and shall
be deemed to be duly given if delivered personally or mailed by registered or
certified mail, addressed to Landlord at the address at which it receives rent
and addressed to Tenant at the Leased Premises, or such other address as may be
provided by one party to the other.
Section 14.2. Headings. (a) It is agreed that the headings as to the
contents of particular paragraphs of this Lease are inserted only as a
matter of convenience and for reference, and in no way are or are intended
to be part of this Lease, or any way to define, limit or describe the
scope or intent of the particular paragraph to which they refer.
(b) Where in this instrument pronouns or words indicating the singular
number appear, such words shall be considered as masculine, feminine or neuter
pronouns or words indicating the plural number where the context indicates the
propriety of such use.
Section 14.3. Entire Agreement. Landlord and Tenant agree that this Lease and
its Exhibits contain the entire agreement between them and shall not be
modified in any matter except by an instrument in writing signed by each of
them.
Section 14.4. Binding Effect. This Lease shall inure to the benefit of and be
binding upon Landlord and Tenant and their respective heirs, executors,
administrators, successors and such assigns and sublessee as may be permitted
hereunder. Each individual executing this Lease on behalf of a corporation
represents and warrants that (I) he or she has been authorized to do so by the
Board of Directors of such corporation and (ii) that the corporation has been
duly authorized by the Board of Directors to enter this Lease.
Section 14.5. Tenant Insurance. Tenant shall maintain during the Term , at its
sole cost and expense and as additional rent, insurance for fire, casualty,
hazard and extended coverage with responsible companies acceptable to Landlord
on the Leased Premises in an amount representing the full replacement value of
the improvements on the Leased Premises and in sufficient amounts to prevent
Landlord or Tenant from becoming a co-insurer within the terms of the
applicable policies; and in any event in an amount equal to the amount
currently maintained on the Leased Premises.
Said fire, casualty, hazard and extended coverage policies shall be
issued in the name of Tenant, with Landlord as a named insured, with the loss,
if any, payable to Landlord=s mortgagee, or if none, to Landlord and Tenant.
The proceeds of any insurance shall be used to rebuild, repair and restore the
Leased Premises as provided in this Lease unless prohibited by any mortgage.
Tenant shall also, at its sole cost and expense, as additional rental,
during the full term of this Lease maintain comprehensive general liability
insurance with responsible companies acceptable to Landlord protecting both
Landlord (as an additional insured) and Tenant against any and all claims for
personal injury, loss of life or damage to property sustained or claimed to
have been sustained in, on or about the Leased Premises or the adjoining
sidewalks, streets or alleyways. Tenant shall maintain all such insurance in
current coverage amounts through the current policy term. Following the
expiration or earlier termination of the current policies, any renewal or
replacement policies shall afford protection to the limit of not less than Five
Hundred Thousand Dollars ($500,000) in respect to the injury or death of a
single person, and to the limit of not less than One Million Dollars
($1,000,000) in respect to any one accident, and to the limit in respect to
property damage of Three Million Dollars ($3,000,000) .
Tenant shall furnish Landlord with duplicate originals or copies
certified by the insurance companies, or certificates of all insurance policies
required to be maintained under this paragraph and shall procure renewals of
all such insurance policies at least ten (10) days before the expiration
thereof. Such policies shall provide the Tenant and Landlord shall receive at
least ten (10) days prior written notice of the cancellation of the policy or
policies. In the event Tenant does not acquire the insurance policies required
herein, Landlord shall have the right to acquire said policies and charge the
costs therefor as additional rent.
Section 14.6. Confirmation. Tenant shall, at any time and from time to time, on
ten (10) days prior written notice by Landlord, execute, acknowledge, and
deliver to Landlord a written statement certifying that this Lease continues
unmodified and in full force and effect (or if there have been modifications,
that this Lease continues in full force and effect as modified and stating the
modifications), and the dates to which the minimum and the additional rent have
been paid, and stating whether Landlord is in default in performing any
covenant to this Lease, and, should Landlord be in default, specifying each and
every such default and any other matters relating to this Lease, it being
intended that any such statement delivered pursuant to this paragraph may be
relied on by Landlord or any prospective purchaser or mortgagee of the fee or
any assignee of any mortgagee on the fee of the Leased Premises.
Section 14.7. Survival. If any term, covenant, condition or provision of this
Lease is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions hereof shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
hereby.
Section 14.8. Memorandum. Landlord and Tenant agree if Landlord
so desires to execute, deliver and record with the Hamilton County
Recorder a memorandum of lease reflecting the terms and conditions of this
Lease and the option contained herein.
Section 14.9 Attornment. Tenant leases the Leased Premises subject to any
mortgages now or hereafter placed upon the real estate of which the Leased
Premises are a part and agrees to cooperate with Landlord in any attempts
Landlord may make from time to time to obtain financing secured by the real
estate and improvements thereon of which the Premises are a part. Tenant shall
attorn to and subject and subordinate its interest in the Lease and Leased
Premises to any of Landlord=s mortgagees, transferees, successors or assigns.
Section 14.10. Applicable Law. This Lease shall be deemed to have been
made in the State of Indiana and shall be construed according to the laws of
Indiana, without reference to its choice of law rules.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
the day and year first above mentioned.
ALANDLORD@
Ameling Properties, LLC
/s/ JohnI. Ameling___________________
John I. Ameling, Member
ATENANT@
KAT, Inc.
By:/s/ JohnI. Ameling_______________
President ,
<PAGE>
GUARANTY
FOR VALUABLE CONSIDERATION, the undersigned hereby guarantees to
Ameling Properties, LLC, (the ALandlord@) the full and prompt payment and
performance by KAT, Inc., (the ATenant@) of each and every obligation as set
forth in the attached Lease dated March 18, 1999 between Tenant and Landlord
including, without limitation, the payment of all costs and expenses (including
attorneys fees) reasonably incurred by Landlord in the enforcement of its
rights under the Lease and/or this Guaranty. The undersigned waives notice of
default and consents to such extensions and other modifications of the Lease as
may be agreed upon from time to time between Landlord and Tenant.
Dated: March 21, 1999
TRANSIT GROUP, INC.
By:/s/ Philip A. Belyew_________
Philip A. Belyew, President
Attest:
By:___________________________
Title:__________________________
Exhibit 11.1 Statement regarding computation of earnings per share.
The Company computes earnings per share in accordance with FAS No. 128, Earnings
Per Share. For the year ended December 31, 1997, the Company was required to pay
dividends on its outstanding convertible preferred stock. Such preferred stock
was converted into common stock on June 30, 1997. The preferred dividend
requirements for the period in which the preferred stock was outstanding have
been added to the loss from continuing operations for the period to arrive at
net loss available to common stockholders in calculating basic earnings per
share.
The Company has stock options and warrants outstanding which were not included
in the computation of fully diluted earnings per share for December 31, 1997
because to do so would have been anti-dilutive for periods presented.
Computations of basic and diluted earnings per share are set forth below:
<TABLE>
<CAPTION>
Income for EPS Computation
Years ended December 31,
-----------------------
1998 1997
---- ----
<S> <C> <C>
Income (loss) from continuing operations $ 11,695,741 $ 262,494
Preferred stock dividend requirement ---- (385,000)
----------------- -----------------
Income (loss) available to 11,695,741 (122,506)
common
shareholders
Discontinued operations:
Loss from operations ---- (6,114,408)
Loss on disposal ---- (5,792,146)
----------------- -----------------
Net income (loss) available to common shareholders $ 11,695,741 $ (12,029,060)
================= =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Weighted-average shares for 1998 is calculated as follows:
Dates Shares Fraction Weighted
Outstanding Outstanding of Period Average Shares
----------- ----------- --------- --------------
<S> <C> <C> <C>
January 1 - January 29 20,574,626 29/365 1,634,696
Issuance of common stock on January 30 365,957
------------------
January 30 - April 2 20,940,583 63/365 3,614,402
Retirement of common stock on April 3 (20,833)
------------------
April 3 - May 4 20,919,750 32/365 1,834,060
Issuance of common stock on May 5 1,072,165
------------------
May 5 - June 16 21,991,915 43/365 2,590,828
Issuance of common stock on June 17 878,688
------------------
June 17 - July 5 22,870,603 19/365 1,190,525
Exercise of options on July 6 15,500
------------------
July 6-July 12 22,886,103 7/365 438,912
Issuance of common stock on July 13 191,491
------------------
July 13-July 22 23,077,594 10/365 632,263
Exercise of options on July 23 9,900
------------------
July 23-August 4 23,087,494 13/365 822,294
Issuance of common stock on August 5 178,519
------------------
August 5-August 10 23,266,013 6/365 382,455
Issuance of common stock on August 11 349,091
------------------
August 11-September 30 23,615,104 51/365 3,299,645
Retirement of common stock on October 1 (4,914)
------------------
October 1-December 31 23,610,190 92/365 5,951,062
================== ---------------------
Weighted average shares 22,391,142
=====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Weighted-average shares for 1997 is calculated as follows:
Dates Shares Fraction Weighted
Outstanding Outstanding of Period Average Shares
----------- ----------- --------- --------------
<S> <C> <C> <C>
January 1-May 2, 1997 3,758,671 121/365 1,246,025
Issuance of common stock on May 2 3,387,187
-------------------
May 3-June 29 7,145,858 59/365 1,155,084
Conversion of preferred stock on June 30 4,323,922
-------------------
June 30-July 9 11,469,780 10/365 314,241
Exercise of stock warrant on July 10 25,000
-------------------
July 10 11,494,780 1/365 31,493
Issuance of common stock on July 11 1,733,000
-------------------
July 11-August 14 13,227,780 36/365 1,304,658
Issuance of common stock on August 15 1,544,509
-------------------
August 15-August 28 14,772,289 13/365 526,136
Issuance of common stock on August 29 4,166,666
-------------------
August 29-September 10 18,938,955 13/365 674,538
Issuance of common stock on September 11 79,856
-------------------
September 11-December 30 19,018,811 110/365 5,731,696
Issuance of common stock on December 30 679,246
-------------------
December 30 19,698,057 1/365 53,967
Issuance of common stock on December 31 876,569
-------------------
December 31 20,574,626 1/365 56,369
=================== --------------------
Weighted average shares 11,094,207
====================
</TABLE>
<PAGE>
The basic EPS computation is as follows:
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------
1998 1997
---- ----
<S> <C> <C>
Income (loss) per common share - basic:
Continuing operations $ 0.52 $ (0.01)
Discontinued operations:
Loss from operations ----- (0.55)
Estimated loss on disposal ----- (0.52)
--------------- ---------------
Total $ 0.52 $ (1.08)
=============== ===============
Weighted average number of common
Shares outstanding-diluted 22,391,142 11,094,207
=============== ===============
</TABLE>
The diluted EPS computation is as follows:
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------
1998 1997
---- ----
<S> <C> <C>
Income (loss) from continuing operations $ 11,695,741 $ 262,494
Preferred stock dividend requirement ---- (385,000)
------------------ -----------------
Income available to common shareholders 11,695,741 (122,506)
Discontinued operations:
Loss from operations ---- (6,114,408)
Loss on disposal ---- (5,792,146)
------------------ -----------------
Net income (loss) available
to common shareholders $ 11,695,741 $ (12,029,060)
================== =================
Weighted average shares: 22,391,142 11,094,207
Plus: Incremental shares from assumed
Warrants and Options 1,254,931 ----
------------------ -----------------
Adjusted weighted average shares 23,646,073 11,094,207
================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------
1998 1997
---- ----
<S> <C> <C>
Income (loss) per common share - diluted:
Continuing operations $ 0.49 $ (0.01)
Discontinued operations:
Loss from operations ---- (0.55)
Estimated loss on disposal ---- (0.52)
--------------- ---------------
Total $ 0.49 $ (1.08)
=============== ===============
Weighted average number of common
shares outstanding-diluted 23,646,073 11,094,207
=============== ===============
</TABLE>
The equation for computing (basic and diluted) EPS is:
Income available to common stockholders
---------------------------------------------------
Weighted-average shares
The incremental shares from assumed exercise of options and warrants are not
included in computing the diluted per-share amounts for 1997 and 1996 because
the net income available to shareholders from continuing operations was a loss,
not income.
Exhibit 21 List of Subsidiary Corporations of Transit Group, Inc. as of
Deceber 31, 1998
<TABLE>
<CAPTION>
Jurisdiction of % of Voting
Name Incorporation Securities Owned
---- ------------- ----------------
<S> <C> <C>
Transit Group, Inc. Florida 100
Subsidiaries:
Transit Group Transportation LLC Delaware 100
GPS Acquisition Company North Carolina 100
Carolina Pacific Distributors, Inc. North Carolina 100
Service Express, Inc. Alabama 100
Transit Leasing, Inc. Indiana 100
Carroll Fulmer Group, Inc. Florida 100
Rainbow Trucking Services, Inc. Kentucky 100
Transportation Resources &
Management, Inc. Indiana 100
Certified Transport, Inc. Indiana 100
Venture Logistics, Inc. Indiana 100
KJ Transportation, Inc. New York 100
J&L Leasing of Farmington, Inc. New York 100
Network Transport, Ltd. Canada 100
Diversified Trucking, Inc. Alabama 100
Northstar Transportation, Inc. Alabama 100
</TABLE>
Exhibit 23 .1 Consent of PriceWaterhouseCoopers LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
March 30, 1999
To the Board of Directors and Stockholders
of Transit Group, Inc.
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File Numbers 333-48939 and 333-6880) of Transit Group,
Inc. of our report dated March 30, 1999 appearing on page 53 of this Form
10-KSB.
/s/ PriceWaterhouseCoopers LLP
- ------------------------------
PriceWaterhouseCoopers LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary
financial information extracted from
the consolidated Statements of
Operations and Balance Sheets and is
qualified in its entirety by
reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-START> JAN-1-1997
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,019,715
<SECURITIES> 0
<RECEIVABLES> 29,143,208
<ALLOWANCES> 706,000
<INVENTORY> 0
<CURRENT-ASSETS> 37,171,475
<PP&E> 51,448,136
<DEPRECIATION> 8,630,112
<TOTAL-ASSETS> 130,526,981
<CURRENT-LIABILITIES> 30,062,983
<BONDS> 0
<COMMON> 222,177
0
0
<OTHER-SE> 47,933,356
<TOTAL-LIABILITY-AND-EQUITY> 130,526,981
<SALES> 177,552,961
<TOTAL-REVENUES> 177,552,961
<CGS> 0
<TOTAL-COSTS> 168,660,861
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,310,359
<INCOME-PRETAX> 4,581,741
<INCOME-TAX> (7,114,000)
<INCOME-CONTINUING> 11,695,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,695,741
<EPS-PRIMARY> .52
<EPS-DILUTED> .49
</TABLE>
