SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934 [Fee Required]
For the Fiscal Year ended June 30, 1996
Commission File No. 0-18729
CONTINENTAL AMERICAN TRANSPORTATION, INC.
Name of Small Business Issuer in its Charter
COLORADO 84-1099599
State or Other Jurisdiction of IRS Employer Identification
Incorporation or Organization Number
495 Lovers Lane, Calhoun, Georgia 30701
Address of Principal Executive Offices Zip Code
(706) 629-8682
Issuer's telephone Number, Including Area Code
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock Over the Counter (OTC)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of Securities Exchange Act
during the past 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 [ ]
Registrant's' revenues for the fiscal year ended June 30, 1996
were $36,801,423
The aggregate market value of voting stock held by non-
affiliates of the registrant as of October 4, 1996, was
$8,487,581 (based upon $2.995 per share being the average bid
and asked prices on that date as reported by the Electronic
Bulletin Board of the National Association of Securities
Dealers, Inc.). In making this calculation, registrant has
assumed, without admitting for any purpose, that all executive
officers, directors, employees of registrant, as well as any
entities they control, and no other persons, are affiliates.
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Item 11: Security Ownership of Certain Beneficial Owners and
Management
Set forth below is information concerning stock ownership obtained by
Company management from the certified list of Company stockholders provided by
its transfer agent, United Stock Transfer, as of the record date of June 30,
1996, of (1) each person known by Company to own beneficially 5% or more of
Company's common stock, (2) each named director and officer and (iii) all
directors and officers of Company as a group, based upon the number of common
shares outstanding on June 30, 1996.
Title of Name and Address of Amount and Nature of Percent of
Class Beneficial Owner Beneficial Ownership Class
Common
Stock
Timothy Holstein 739,521 16.93%
c/o Continental American
Transportation, Inc.
Chief Executive Officer
President and Director
175 Hammon Road
Calhoun, GA 30701
Erik Bailey 519,897 11.90%
Chief Financial Officer
and Director
1039 Legacy Walk
Woodstock, GA 30189
Brian Henninger 46,300* 1.06%
Vice President-Secretary
and Director
275 Saddlebrook Drive
Calhoun, GA 30701
Charles B. Prater 500,000** 11.45%
877 Plainville Road
Plainville, GA 30733
Robert Herr 257,500+ 5.89%
349 Buck Road
Quarryville, PA 17566
Wayne S. Herr 257,500+ 5.89%
349 Buck Road
Quarryville, PA 30733
All directors and
officers as a group 1,805,718** 41.34%
* Includes non-qualified stock options to purchase 36,000 common shares, see,
"Employment Agreements" above.
+ Includes 51,500 common shares held of record by each of Robert Herr and Wayne
S. Herr as well as 154,500 common shares held by Herr's Motor Express, Inc., a
company owned and controlled by these persons.
** Mr. Prater is not a director or executive officer of the Company but is
a "named executive officer" as defined in Item 402(a)(2) of Regulation S-B and
his share holdings are included in the total number of common shares held by all
directors and officers as a group for this reason.
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EXHIBIT INDEX
Item 13. Exhibits and Reports Page or
on Form 8-K Method of Filing
(a) Exhibits.
Exhibit
No.
2.1 Letter of Intent, dated September 6,
1996, by and between the Company and
Country Wide Transport Services, Inc. Page 60
3.1 Articles of Incorporation of the
Company Page 64
3.2 Bylaws of the Company Page 71
4.1 Specimen of Common Stock Certificate Incorporated by reference to Exhibit
4(a) of the Company's Form S-3
Registration Statement No. 33-96496
("S-3 #33-96496")
4.2 Specimen of Warrant Certificate Incorporated by reference to Exhibit
4(b) of S-3 #33-96496
10.1 Investment Advisor Agreement dated
September 15, 1995, by and between
the Company and Explorer Financial
Services, Inc. Page 82
10.2 Finder's Fee Agreement, dated as of
October 15, 1995, by and between
the Company and Knobloch Bay Cove
Trust Page 85
10.3 Employment Agreement, dated
June 15, 1996, by and between the
Company and Brian Henninger Page 89
10.4 Employment Agreement, dated
September 1, 1996, by and between
the Company and Timothy Holstein Page 98
10.5 Employment Agreement, dated
September 1, 1996, by and between
the Company and Erik Bailey Page 112
10.6 Revolving Credit Agreement, dated
May 23, 1996, by and between Bio-Dyne
Corporation and the Company Page 126
10.7 Blue Mack Transport, Inc. 401(k)
Plan and Trust Page 166
38-1
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10.8 Revolving Credit Agreement, dated
April 8, 1996, by and between
Carpet Transport, Inc., A&P
Transportation, Inc., Chase
Brokerage, Inc. and Transport
Clearings L.L.C. Page 201
10.9 Carpet Transport, Inc. 401(k) Plan Page 216
10.10 Debt Restructure and Waiver Agreement,
dated August 21, 1996, by and between
the Company and Charles B. Prater Page 232
10.11 Corporate Promissory Note
by the Company to Charles B. Prater,
dated August 21, 1996 in the amount
of 2,820,000. Page 235
10.12 Debt Restructure and Waiver Agreement,
dated August 21, 1996, by and between
the Company and Lynwood S. Warmack Page 238
10.13 Corporate Promissory Note
by the Company to Lynwood S. Warmack,
dated August 21, 1996 in the amount
of $2,005,000.00 Page 241
10.14 Secured Promissory Note
by the Company to Lynwood S. Warmack
and Charles B. Prater, dated
August 21, 1996 in the amount of
$7,290,000.00 Page 244
16 Letter on Change in Certifying
Accountant Incorporated by reference to Item 9
of Company's Form 10-K for the Year
Ended June 30, 1994, and Exhibit G to
Company's Proxy Statement, dated
May 12, 1995 and filed with the
Securities and Exchange Commission on
or about May 13, 1995.
21 Subsidiaries of the Registrant Page 250
23 Consent of Rosenberg Rich Baker Berman
and Company Page 251
38-2
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(b) Reports on Form 8-K.
1. Report on Form 8-K, dated April 5, 1996, regarding the acquisition
by the Company of Carpet Transport, Inc., A&P Transportation, Inc.
and Chase Brokerage, Inc. from Messrs. Lynwood S. Warmack and
Charles B. Prater.
2. Amendment No. 1 to Report on Form 8-K, dated April 22, 1996,
regarding the indictment of Mr. Charles B. Prater.
3. Report on Form 8-K, dated April 22, 1996, regarding the relocation
of the Company's principal offices to Calhoun, Georgia.
4. Amendment No. 2 to Report on Form 8-K, dated June 14, 1996,
regarding the financial statements in connection with the
Company's acquisition of Carpet Transport, Inc.,
A&P Transportation, Inc. and Chase Brokerage, Inc.
38-3
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Exhibit No. 2.1
Continental American Transportation, Inc.
495 Lovers Lane Road
Calhoun, Georgia 30701
September 6, 1996
PERSONAL AND CONFIDENTIAL
VIA TELECOPY AND OVERNIGHT DELIVERY
Mr. Timothy Lepper
President and Chief Executive Officer
Country Wide Transport Services, Inc.
325 North Cota Street
Corona, California 91720
RE: Proposed Acquisition by Continental
American Transportation, Inc.
("Continental")
Dear Mr. Lepper:
This letter sets forth our understanding of the intent of the
parties concerning the possible acquisition of Country Wide
Transport Services, Inc. ("Country Wide") through an exchange of
shares and warrants with Continental as more fully explained below.
The further purpose of this letter is to acknowledge that
Continental and Country Wide have reached an agreement in principle
based upon our prior discussions and that we will move forward with
the proposed transaction in good faith.
The proposed terms of the purchase transaction are as follows:
1. General. Country Wide has a capitalization of
15,000,000 shares authorized, 5,000,000 of which are preferred
stock, $.01 par value per share, with no such shares issued and
outstanding, and; 10,000,000 of which shares are common shares,
$.02 par value per share, with 4,800,487 of such shares issued and
outstanding as of March 31, 1996. Continental has a capitalization
of 30,000,000 shares authorized, 10,000,000 of which are preferred
stock, $1.00 par value per share, with no such shares issued and
outstanding, and; 20,000,000 of which shares are common shares, no
par value, with 4,377,469 of such shares issued and outstanding as
of July 19, 1996.
The acquisition of Country Wide will be effected through an
exchange of our companies' common shares pursuant to which the
shareholders of Country Wide shall deliver all of Country Wide's
issued and outstanding common shares (the "Country Wide Shares") to
Continental in exchange for shares of Continental's Common Stock
and warrants to purchase additional Common Stock, on the basis of
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(x) one (1) share of Continental's Common Stock for five (5)
Country Wide Shares as well as (y) one (1) Continental warrant for
each twenty (20) Country Wide Shares so exchanged (the
"Acquisition"). Each of the Continental warrants (the
"Warrant(s)") shall entitle its holder to purchase one (1) Common
Share of Continental at the exercise price of $4.25 during an
exercise period to be negotiated and subject to earlier expiration
as described below; in the event the average trading price per
share of Continental's Common Stock is $5.00 or more over any
thirty (30) consecutive trading day period during the Warrant
exercise period, the Warrant holders shall have thirty (30) days
thereafter to exercise such Warrants which shall terminate
automatically at 5:00 PM, Eastern time, on the 30th day of such
period if not exercised. We acknowledge that the share exchange
rate is based upon a preliminary review of various materials
provided by you and upon our review of certain public documents.
2. Due Diligence. The Acquisition is subject to the results
of our independent due diligence investigation and business review
of Country Wide, which agrees to give reasonable access to
Continental and its representatives with respect to its books and
records, legal documents, and other material aspects of its
business and affairs and to furnish us and our representatives with
such additional information with respect to its business and
affairs as we and our representatives shall from time to time
request. On a mutually agreeable basis, Country Wide will make
available to us access to its business sites, lawyers, accountants,
customers and employees. Conjunctively, Continental will provide
the same access to Country Wide and its representatives concerning
its due diligence review of Continental and its business. Each
party shall bear its own expenses to perform their respective due
diligence review. Continental acknowledges that upon the
consummation of the closing it shall pay an investment
banking/finders fee to Raymond James & Associates and hereby agrees
to indemnify Country Wide from and against any liability that may
arise out of such relationship.
3. Confidentiality of Information. Each party will hold in
strict confidence all information concerning the business and
affairs of the other party obtained from the other party (the
"Confidential Material"), use such Confidential Material solely for
the purpose of evaluating the subject transaction and only make
available such information to such officers, employees and
representatives (including legal and accounting representatives) as
is necessary to evaluate the subject transactions or as may be
required by law or regulation or to comply with the applicable
requirements of any governmental agency. Confidential Material
does not, however, include any such information which (i) is or
becomes generally available to the public other than as a result of
a disclosure by the receiving party, (ii) was known to the
receiving party on a non-confidential basis prior to its disclosure
by the disclosing party, or (iii) becomes available to the
receiving party on a non-confidential basis from a source other
than the disclosing party or its agents, provided that such source
is not bound by a confidentiality agreement with the disclosing
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party known to the receiving party. If the subject transaction
contemplated are not consummated, each party will return or destroy
all information so obtained. All parties further agree that they
will consult with each other before issuing any press release or
otherwise making any public statements with resect to the subject
transactions contemplated in this agreement, and shall not issue
any such press release or make any such public statement prior to
such consultation or, after such consultation, if any party is not
reasonably satisfied with the text of such release or statement.
4. Exclusivity. In consideration of the time, expense, and
effort which will be incurred by Continental in evaluating the
subject transaction, neither Country Wide or its officers,
directors or representatives will solicit or encourage offers from,
or provide Confidential Material to any other party with respect to
the sale of assets, stock or other interests in the businesses of
Country Wide. Country Wide agrees to promptly notify Continental
if it receives an unsolicited offer or solicitation of interest to
buy assets, stock, or other interest in the business of Country
Wide.
5. Conditions. Any obligations of the parties to consummate
the Acquisition will be subject to, among other things, (a) the
receipt of the unanimous approvals of the parties' respective
Boards of Directors, (b) confirmation by the parties' respective
auditors that the transactions can be treated as a pooling of
interests pursuant to generally accepted accounting principles
under the Internal Revenue Code of 1986, as amended, (c) the
receipt of all approvals from applicable regulatory agencies (d)
the receipt of the respective approvals of Country Wide's and
Continental's shareholders, (e) the receipt by Continental of the
written resignations of all the members of the Board of Directors
of Country Wide and its subsidiaries, (f) the assumption by
Continental of the employment agreements of Timothy Lepper and
Wayne N. Parry, (g) the normal warranties, representations and
covenants that shall include (i) no material change in the
financial condition of Country Wide and (ii) no issuances of equity
or increases in debt above a to-be-negotiated threshold, and (h)
the filing by Continental of a registration statement on Form S-4
with the Securities and Exchange Commission ("SEC") registering the
Continental Common Shares to be issued in the Acquisition, as well
as those Continental Common Shares underlying the Warrants, and its
being declared effective by the SEC.
6. Termination. If the parties are unable to agree on the
terms and conditions of a definitive agreement of Acquisition by
October 15, 1996, then this letter shall expire, and except as set
forth in the following sentence, and subject to paragraphs 3 and 7
of this agreement, neither party shall have any further rights,
duties or obligations hereunder; it is however agreed, that either
party may request that the termination date be extended to October
30, 1996, any such request will not be unreasonably withheld. If
Country Wide is offered during this period a transaction by another
party that Country Wide believes is a more favorable transaction
for its shareholders and the Board of Directors of Country Wide, in
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the exercise of its fiduciary duty, decides to proceed with the new
party, Country Wide may terminate this letter by notifying
Continental in writing, reimbursing Continental for its out-of-
pocket expenses in connection with the transactions and paying
Continental a break-up fee of $1,000,000.
7. No Oral Modifications. This agreement cannot be changed,
modified, altered or amended in any way, other than in writing
signed by all parties. This agreement supersedes any and all prior
agreements, understandings and contracts between the parties,
whether oral or written, including but not limited to those
previously issued agreements issued by Continental and dated August
29, 1996, and August 14, 1996. In the event any dispute arises
under the terms of this agreement, both parties agree to submit any
such dispute or any claim arising hereunder to arbitration in the
City of Atlanta, State of Georgia, under the applicable rules of
the American Arbitration Association.
If the foregoing meets with your approval, please return the
enclosed counterpart signed where indicated and our accountants and
other advisors will commence their due diligence investigation and
our respective attorneys shall proceed to prepare a definitive
purchase agreement. Except as set forth in paragraphs 3, 4 and 6,
which shall be binding upon execution of this letter, this letter
shall not constitute a binding legal commitment to close the
subject transaction contemplated above until execution and delivery
by the parties of a definitive agreement of Acquisition
incorporating the terms hereof. We agree that this letter shall be
governed by the laws of the State of Delaware.
In further acknowledgment of our mutual concerns, please note
that if we have not received a fully executed copy of this letter
by 5:00 PM, Eastern Time, on September 10, 1996, we will consider
our proposal to have been rejected and it will be deemed withdrawn
without further notice or other action on our part.
Very truly yours,
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein
Chairman of the Board,
President and Chief
Executive Officer
ACKNOWLEDGED, APPROVED AND CONFIRMED:
COUNTRY WIDE TRANSPORT SERVICES, INC.
By: s/Timothy Lepper
Timothy Lepper
President and Chief
Executive Officer
cat-CWTS.3
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Exhibit No. 3.1
ARTICLES OF INCORPORATION
OF
CONTINENTAL AMERICAN TRANSPORTATION, INC.
The undersigned natural person of the age of eighteen years or
more, acting as an Incorporator of a corporation under the Colorado
Corporation Code, adopts the following Articles of Incorporation
for such corporation:
I
The name and style of the Corporation is and shall be:
CONTINENTAL AMERICAN TRANSPORTATION, INC.
II
The term and period of the duration of the said Corporation
shall be perpetual.
III
The purpose and objects for which said Corporation is formed
and organized are as follows:
1. To provide management and consulting services, including
services related to financing, and operate business in, the
medical, technology, health care resources, and other industries
with the authority to undertake all activities related to said
business.
2. In connection with the foregoing, to engage in any
similar business which, in the judgment of the Board of Directors,
may be of use or advantage to the Corporation, including but not
limited to formation of a broker-dealer and other subsidiaries.
3. To acquire, construct, maintain, develop, improve, rent,
use, mortgage and dispose of real property and interest and estates
and rights therein.
4. To guarantee, purchase or otherwise acquire, hold, sell,
assign, transfer, mortgage, pledge or otherwise dispose of the
shares of the capital stock, bonds, or other evidence of
indebtedness created by other corporations, and while the holder of
such stock, to exercise all of the rights and privileges of
ownership, including the right to vote therein, to the same extent
as a natural person might or could do.
5. To enter into, make and perform contracts of every kind
for any lawful purpose, without limit as to amount, with any
person, firm, association or corporation, town, city, county,
state, territory or government.
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6. To borrow money, to issue bonds, debentures or
obligations, and to secure the same by mortgage, pledge, deed of
trust or otherwise.
7. To purchase, hold, sell and transfer the shares of its
capital stock.
8. To have one or more officers and to conduct any or all of
its operations and business and to promote its objects within or
without the State of Colorado, without restrictions as to place or
amount.
9. To do any or all of the things set forth as principal,
agent, contractor, trustee or otherwise, alone or in company with
others.
10. To engage in and do any lawful action concerning any and
all lawful business for which the Corporation may be organized
under the laws of Colorado, now or hereinafter in effect.
IV
The aggregate number of shares and the amount of the total
authorized capital of the said Corporation shall consist of
20,000,000 shares of no par value common stock plus 10,000,000
shares of $1.00 par value preferred stock in such series and with
such rights as may be determined by the Board of Directors. All
shares, when issued, will be fully paid and non-assessable, and the
private property of stockholders shall not be liable for corporate
debts.
The Board may place restrictions and legends regarding
transfer and investment intent on any securities of the
Corporation. The Corporation and its shareholders may enter into
Buy-Sell agreements, voting trusts, or other agreements concerning
transfer or vote as of securities of the Corporation.
V
Cumulative voting of shares of the stock shall not be
permitted or allowed.
VI
The following provision provides that shareholders have no
pre-emptive right to acquire additional or treasury shares of the
Corporation. No stockholder of this Corporation shall, because of
his ownership of stock, have a pre-emptive or other right to
purchase, subscribe for, or take any part of the notes, debentures,
bonds, or other securities convertible into or carrying options or
warrants to purchase stock of this Corporation authorized by these
Articles of Incorporation or by Amended Articles of Incorporation
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duly filed or disposed of by this Corporation pursuant to
resolution of its Board of Directors to such person and upon such
terms as may such Board deem proper.
VII
The address of the initial registered office of the
Corporation is and shall be 400 Sussex Building, 1430 Larimer
Square, Denver, Colorado 80202, and the name of the initial
registered agent at said address is Mark A. Smith.
VIII
The corporate powers shall be exercised by a Board of
Directors of not less than three directors, who may or may not be
stockholders of this Corporation, and the following persons are
hereby named to manage the affairs of the Corporation for the first
year of its existence, and until their successors shall be elected:
Name Address
Mark A. Smith c/o 400 Sussex Building
1430 Larimer Square
Denver, Colorado 80202
The number of directors of this corporation shall be fixed in
accordance with the bylaws.
The principal place of business of this corporation shall be
as determined in the By-Laws. The Corporation may have such other
offices within or without the State of Colorado as it deems proper
for the carrying out of the business of the Corporation.
The stock books and ledgers and other books and records
required by the statutes of Colorado to be kept for inspection by
stockholders or creditors shall be kept at the principal office of
the Corporation in the State of Colorado.
Meetings of the Board of Directors and of the shareholders may
be held from time to time within or without the State of Colorado
at such times and places as may be designated in the By-Laws or
resolutions of the Board of Directors.
IX
The presence, in person or by proxy, of holders owning of
record a majority of the shares of the Company Stock issued and
outstanding entitled to vote shall constitute a quorum at any
meeting of the Shareholders.
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X
In furtherance and not in limitation of the powers hereinabove
conferred, or conferred by the statutes and laws of the State of
Colorado, the Board of Directors shall have the following powers:
1. To make, alter, amend, or repeal the By-Laws for the
Corporation.
2. From time to time, to fix and determine, and to vary, the
amount of working capital of this Corporation, to determine and
direct the use and disposition thereof, to set apart out of any
funds of the Corporation available for dividends from time to time
out of any funds available therefor.
3. To designate by resolution passed by a majority of the
whole Board, an executive committee and such other committees as
the Board shall deem desirable, each committee to consist of at
least two members of the board, which committee or committees, to
the extent provided in such resolution or in the By-Laws, shall
have and may exercise the powers of the Board of Directors in the
intervals between meeting of the Board, in the management of the
business and affairs of the Corporation.
4. The Board of Directors shall have power by unanimous vote
to authorize, and cause to be executed, mortgages and liens upon
all property of the Corporation or any part thereof and from time
to time to sell, lease, exchange, pledge, assign, transfer, list or
otherwise dispose of all of the property and assets of the
Corporation, including the goodwill and corporate franchise, upon
such terms and conditions and for such consideration as the Board
of Directors may deem expedient and for the best interests of the
Corporation; provided, that the sale, exchange, lease or disposal
of all, or the principal part of the business assets, property or
franchise shall be authorized or ratified by the affirmative vote
of the holders of at least a majority of the capital stock then
issued and outstanding (or of each class of stock if more than one
class), such vote to be taken at a meeting of stockholders duly
called for that purpose, as provided by the statutes of Colorado.
5. To confer in its By-Laws, additional powers to its Board
of Directors, in addition to the power and authority expressly
conferred upon them by law and by virtue of these Articles of
Incorporation.
XI
No contract or other transaction between the Corporation and
one or more of its directors or any other corporation, firm,
association, or entity in which one or more of its directors are
directors or officers or are financially or otherwise interested
shall in any way be affected or invalidated by such relationship.
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Any director of the Corporation, individually, or any firm with
which such director is affiliated may be a party to or may be
financially or otherwise interested in any contract or transaction
of the Corporation; provided, however, that the fact that he or
such firm is so interested shall be disclosed or shall have been
known to the Board of Directors of the Corporation, or a majority
thereof, at or before the entering into such contract or
transaction; and any director of the Corporation who is also a
director or officer of such other corporation, or who is so
interested in such other entity, amy be counted in determining the
existence of a quorum at any meeting of the Board of Directors of
the Corporation which shall authorize such contract or transaction,
with like force and effect as if he were not such director or
officer of such other corporation or not so interested in such
other entity.
XII
The officers and directors of the Corporation shall be subject
to the doctrine of corporate opportunities only insofar as it
applies to business opportunities in which the Corporation has
expressed an interest as determined from time to time by the
Corporation's Board of Directors as evidenced by resolutions
appearing in the Corporation's minutebook, and as otherwise
properly evidenced and provided for in contracts of employment or
similar agreements between the Corporation and its executive
officers. When such areas of interest are delineated, all such
business opportunities within such areas of interest which come to
the attention of the officers, directors and other members of
management of the Corporation shall be disclosed promptly to the
Corporation and made available to it. The Board of Directors may
reject any business opportunity presented to it and thereafter, any
officer, or director, or other member of management may avail
himself of such opportunity. Until such time as the Corporation,
through its Board of Directors has designated an area of interest,
the officers, directors and other members of management of the
Corporation shall be free to engage in such areas of interest on
their own and the provisions hereof shall not limit the rights of
any officer, director or other member of management of the
Corporation to continue a business existing prior to the time that
such area of interest is designated by the Corporation. This
article shall not be construed to release any employee of the
Corporation (other than an officer, director, or member of
management) from any duties which he may have to the Corporation.
XIII
The Corporation shall indemnify any and all of its directors
or officers or former directors or officers or any person who may
have served at its requires as a director or officer of another
corporation in which it owns shares of capital stock or of which it
is a creditor, against expenses actually and necessarily incurred
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by them, in connection with the defense of any action, suit or
proceeding in which they, or any of them, are made parties, or a
party, by reason of being or having been directors or officers of
the Corporation, or of such other corporation, except in relation
to matters to which any such director or officer or former director
or person shall be adjudged in such action, suit or proceeding to
be liable for gross negligence or willful misconduct in the
performance of duty. Such indemnification shall not be deemed
exclusive of any other rights to which those indemnified may be
entitled, under any By-Law; agreement, vote of shareholders or
otherwise.
XIV
The Board of Directors of the Corporation may, from time to
time, distribute to the Corporation's shareholders in partial
liquidation, out of stated capital or capital surplus of the
Corporation, a portion of its assets, in cash or properties, and if
at the time the laws of Colorado so permit, purchase the
Corporation's outstanding shares with stated capital or capital
surplus of the Corporation, a portion of its assets, in cash or
properties, and if at the time the laws of Colorado so permit,
purchase the Corporation's outstanding shares with stated capital
or capital surplus of the Corporation if (a) at the time the
Corporation is solvent; (b) such distribution or purchase would not
render the Corporation insolvent; (c) all cumulative dividends
accrued on all preferred or special class of shares entitled to
preferential dividends shall have been paid fully; (d) the
distribution or purchase would not reduce the remaining net assets
of the Corporation below the aggregate preferential amount payable
in the event of voluntary liquidation to the holders of shares
having preferential rights to the assets of the Corporation in the
event of liquidation; (e) the distribution or purchase is not made
out of capital surplus arising from unrealized appreciation of
assets or re-evaluation or surplus; and (f) as regard to
distribution, the distribution as identified as the distribution
and partial liquidation,out of stated capital or capital surplus,
and the source and amount per share paid from each source is
disclosed to all of the shareholders of the Corporation
concurrently with the distribution thereof.
XV
When, with respect to any option to be taken by shareholders
of the corporation, the Colorado Corporation Code requires a vote
or concurrence of the holders of two-thirds (2/3) of the
outstanding shares entitled to vote thereon, or any class or
series, such action may be taken by the vote or concurrence of a
majority of such shares or class or series thereof.
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XVI
The right is expressly reserved to amend, alter, change or
repeal any provision or provisions contained in these Articles of
Incorporation or any Article herein in any manner or respect now or
hereafter permitted or provided by the corporation laws of the
State of Colorado, and the rights of all officers, directors, and
stockholders are expressly made subject to such reservation.
art-inc.cat
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Exhibit No. 3.2
CONTINENTAL AMERICAN TRANSPORTATION, INC.
BYLAWS
ARTICLE I
OFFICES
The principal office of the Continental American Transportation, Inc. (the
"Corporation") shall be located in the State of Colorado. The Corporation may
have such other offices or relocate its principal office either within or
without the State of Colorado as the Board of Directors of the Corporation (the
"Board") may designate as the business of the Corporation may require.
The registered office of the Corporation in the Articles of Incorporation
(the "Articles") need not be identical with the principal office in the State of
Colorado.
ARTICLE II
SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall be
held each year on a date and at a time and place to be determined by resolution
of the Board, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the election of directors
shall not be held on the day designated for the annual meeting of the
shareholders, or at any adjournment thereof, the Board shall cause the election
to be held at a special meeting of the shareholders.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose, unless otherwise provided for by the statute, may, be called by the
Chief Executive Officer, the Board or by the Chief Executive Officer at the
request of the holders of not less than one half of all the shares of the
Corporation entitled to vote at the meeting.
Section 3. PLACE OF MEETING. The Board may designate any place, either
within or without the State of Colorado, as the place of meeting for any annual
or special meeting. If no designation is made, the place of meeting shall be the
registered office of the Corporation in the State of Colorado.
Section 4. NOTICE OF MEETING. Written notice, stating the place, day and
hour of the meeting and, in case of special meeting, the purpose or purposes for
which the meeting is called, shall be delivered as the laws of the State of
Colorado shall provide.
Section 5. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholder for any other
proper purpose, the Board may fix in advance a date (the "Record Date") for any
such determination of shareholders, which date shall not be more than 50 days
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prior to the date on which the particular action requiring such determination
of shareholders is to be taken. If no Record Date is fixed by the Board, the
Record Date for any such purpose shall be ten days before the date of such
meeting or action. The Record Date determined for the purpose of ascertaining
the number of shareholders entitled to notice of or to vote at a meeting may may
not be less than ten days prior to the meeting, the determination shall apply to
any adjournment thereof.to the meeting, the determination shall apply to any
adjournment thereof.
Section 6. QUORUM. If less than a quorum of the outstanding shares as
provided for in the Articles are represented at a meeting, such meeting may be
adjourned without further notice for a period which shall not exceed 60 days. At
such adjourned meeting, at which a quorum shall be present, any business may be
transacted which might have been transacted at the original meeting. Once a
quorum is present at a duly organized meeting, the shareholders present may
continue to transact business until adjournment, notwithstanding any departures
of shareholders during the meeting which leave less than a quorum.
Section 7. VOTING OF SHARES. Each outstanding share entitled to vote shall
be entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
Section 8. PROXIES. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
11 months from the date of its execution, unless otherwise provided in the
proxy. Proxies shall be in such form as shall be required by the information
statement concerning such meeting.
Section 9. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the name
of another corporation may be voted by agent or proxy as the bylaws of such
corporation may prescribe or, in the absence of such provision, as the Board of
Directors of such corporation may determine as evidenced by a duly certified
copy of either the bylaws or corporate resolution.
Neither treasury shares nor shares held by another corporation, if the
majority of the shares entitled to vote for the election of directors or such
other corporation is held by the corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given time.
Shares held by an administrator, executor, guardian or conservator
may be voted by such fiduciary, either in person or by proxy, without a
transfer of such shares into the name of such fiduciary. Shares standing in
the name of a trustee may be voted by such trustee, either in person or by
proxy, but no trustee shall be entitled to vote share held by a trustee without
a transfer of the shares into such trust.
Shares standing in the name of a receiver may be voted by such receiver and
shares held by or under the control of a receiver may be voted by such receiver,
without the transfer thereof into the name of such receiver if authority to do
so is contained in an appropriate order of the court by which the receiver was
appointed.
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A shareholder whose shares are pledge shall be entitled to vote such shares
until the shares have been transferred on the books of the corporation into the
name of the pledgee, and thereafter the pledge shall be entitled to vote the
shares so transferred.
Section 10. ACTION BY CONSENT OF ALL SHAREHOLDERS. Any action required to
be taken or which may be taken at a meeting of the shareholders may be taken
without a meeting, if a consent in writing setting forth the action so taken
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof. Such written consent or consent shall be filed with the
minutes of the corporation. Such action by written consent to all entitled to
vote shall have the same force and effect as a unanimous vote of such
shareholders.
Section 11. INSPECTORS. The Board may, in advance of any meeting of
shareholders, appoint one or more inspectors. Each inspector at such meeting
shall act with strict impartiality and according to the best of his ability. The
inspectors shall determine the number of shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result of any such acts as are proper to
conduct the election or vote with fairness to all shareholders. On request of
the chairman of the meeting or any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them.
The inspectors shall do any other act that may be proper to insure fairness to
all shareholders.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The Board shall have the power to manage the
business and affairs of the Corporation in such manner and as it sees fit. In
addition to the powers and authorities expressly conferred upon by it, the Board
may do all lawful acts which are not directed to be done by the shareholders by
statute, by the Articles or by these Bylaws including but not limited to:
(a) Select and remove all officers of the corporation; prescribe any powers
and duties for them that are consistent with law; with the Articles of
Incorporation, and with these bylaws; fix their compensation; and require from
them security for faithful service.
(b) Change the principal executive office or the principal business office
in the State of Colorado from one location to another; cause the corporation to
be qualified to do business in any other state, territory, dependency, or
country and conduct business within or without the State of Colorado for the
holding of any shareholders' meeting, or meetings, including annual meetings.
(c) Adopt, make, and use a corporate seal; prescribe the forms of
certificates of stock; and alter the form of the seal and certificate.
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(d) Authorize the issuance of shares of stock of the corporation on any
lawful terms, in consideration of money paid, labor done, services actually
rendered, debts or securities cancelled, or tangible or intangible property
actually received.
(e) Borrow money and incur indebtedness on behalf of the corporation, and
cause to be executed and delivered for the corporation's purposes, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations, and other evidences of debt and securities.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the Corporation shall be not less than one or more than thirteen. Each director
shall hold office until a successor director has been elected and qualified, or
until the death, resignation or removal of such director. Directors need not be
residents of the State of Colorado or shareholders of the Corporation.
Section 3. REGULAR MEETINGS. A regular meeting of the Board shall be held,
without other notice than this Bylaw, immediately after and at the same place as
the annual meeting of shareholders. The Board may provide, by resolution, the
time and place, either within or without the State of Colorado, for the holding
of additional regular meetings, without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board may be called by
or at the request of the Chief Executive Officer or any two directors. The
person or persons authorized to call special meetings of the Board may fix any
place, either within or without meeting of the Board called by them.
Section 5. NOTICE. Notice of any special meeting of the Board shall be
given by telephone, telegraph or written notice sent by mail. Notice shall be
delivered at least one day prior to the meeting (five days before the meeting if
the meeting is held outside the State of Colorado) if given by telephone or
telegram. If notice is given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Written
notice shall be delivered personally or by mail to each director at such
director's business or home address at least five days prior to the meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail so addressed with postage thereon paid. Any director may waive
notice of any meeting. The attendance of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened, shall
constitute Waiver of Notice. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board need be specified in the
notice or waiver of notice of such meeting.
Section 6. QUORUM. A majority of the total membership of the Board shall
constitute a quorum for the transaction of business at any meeting of the Board,
but if a quorum shall not be present at any meeting or adjournment thereof, a
majority of the directors present may adjourn the meeting without further
notice.
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Section 7. ACTION BY CONSENT OF ALL DIRECTORS. Any action required to be
taken, or which may be taken at a meeting of the Board may be taken without a
meeting, if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors entitled to vote with respect to the subject
matter thereof. Such written consent or consents shall be filed with the minutes
of the Corporation. Such action by written consent of all entitled to vote shall
have the same force and effect as a unanimous vote of such directors at a
meeting of directors at which a quorum is present.
Section 8. MANNER OF ACTING. The act of a majority of the directors present
at a meeting at which a quorum is present shall be an act of the Board.
The order of business at any regular or special meeting of the Board shall
be:
1. Record of those present.
2. Secretary's proof of notice of meeting, if notice is not waived.
3. Reading and disposal of unapproved minutes, if any.
4. Reports of officers, if any.
5. Unfinished business, if any.
6. New Business.
7. Adjournment.
Section 9. VACANCIES. Any vacancy occurring in the Board by reason of an
increase in the number as specified in these Bylaws, or for any other reason,
may be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board may remain at the time such meeting
considering filling such vacancies is held.
Section 10. COMPENSATION. By resolution of the Board, the directors may be
paid their expenses, if any, for attendance at each meeting of the Board and may
be paid a fixed sum for attendance at each meeting of the Board and a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor or from
receiving compensation for any extraordinary or unusual services as a director.
Section 11. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless the dissent
of such director shall be entered in the minutes of the meeting, filed in
writing with the person acting as the secretary of the meeting, before the
adjournment thereof or forwarded by registered mail to the secretary of the
Corporation immediately after the meeting. Such right to dissent shall not apply
to a director who voted in favor of such action.
Section 12. EXECUTIVE OR OTHER COMMITTEES. The Board, by resolution adopted
by a majority of the entire Board, may designate among its members an executive
committee and one or more other committees, each of which, to the extent
provided in the resolution, shall have all of the authority of the Board, but no
such committee shall have the authority of the Board in reference to amending
the Articles of Incorporation, adopting a plan of merger or consolidation,
recommending to the shareholders the sale, lease, exchange or other disposition
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of all or substantially all of the property and assets of the corporation
otherwise than in the usual and regular course of its business, recommending to
the shareholders a voluntary dissolution of the Corporation or a revocation
thereof, or amending the Bylaws. The designation of such committees and the
delegation thereto of authority shall not operate to relieve the Board, or any
member thereof, of any responsibility imposed by law.
Any action required to be taken, or which may be taken at a meeting of a
committee designated in accordance with this Section of the Bylaws, may be taken
without a meeting, if a consent in writing setting forth the action so taken
shall be signed by all those entitled to vote with respect to the subject matter
thereof. Such written consent or consents shall be filed with the minutes of the
Corporation. Such action by written consent of all entitled to vote shall have
the same force and effect as a unanimous vote of such persons.
Section 13. RESIGNATION OF OFFICERS OR DIRECTORS. Any director or officer
may resign at any time by submitting a resignation in writing (subject to the
specific terms of any employment contract which has been approved by the Board).
Such resignation takes effect from the time of its receipt by the Corporation
unless a date or time is fixed in the resignation, in which case it will take
effect from that time. Acceptance of the resignation shall not be required to
make it effective.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The Officers of the Corporation shall be a Chief
Executive Officer (CEO), a President, a Secretary and a Chief Financial Officer
or Treasurer all of whom shall be executive officers and each of whom shall be
elected by the Board.
A Chairman of the Board, Chairman of the Board/Chief Executive Officer and
one or more vice presidents shall be executive officers if the Board so
determines by resolution. Such other officers and assistant officers, as may be
deemed necessary, shall be designated administrative assistant officers and may
be appointed and removed at the Chief Executive Officer decides. Any two or more
offices may be held by the same person, except the offices of president and
secretary.
Section 2. ELECTION AND TERM OFFICE. The executive officers of the
Corporation, to be elected by the Board, shall be elected annually by the Board
at its first meeting held after each annual meeting of the shareholders or a t a
convenient time soon thereafter. Each executive officer shall hold office until
the resignation of such officer or a successor shall be duly elected and
qualified, until the death of such executive officer, or until removal of such
officer in the manner herein provided.
Section 3. REMOVAL. Any officer or agent elected or appointed by the Board
may be removed by the Board whenever, in its judgment, the best interest of the
Corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person who is removed.
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Section 4. VACANCIES. A vacancy in any executive office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
for the unexpired portion of the term.
Section 5. CHAIRMAN OF THE BOARD. If a Chairman of the Board (the
"Chairman") shall be elected by the Board, the Chairman shall be, subject to the
control of the Board, in general charge of the affairs of the Corporation and
shall preside at all meetings of the shareholders and of the Board.
Section 6. CHAIRMAN OF THE BOARD/CHIEF EXECUTIVE OFFICER. A Chairman of the
Board may also be elected as Chief Executive Officer ("CEO") in which case such
CEO shall perform the duties set forth by Board resolution.
Section 7. THE PRESIDENT. In the absence of a CEO or in the event of the
death or inability or refusal to act of the CEO, the president shall perform the
duties of the CEO, and when so acting shall have all powers of and be subject to
all the restrictions upon the CEO. The president may sign, with the other
officers authorized by the Board, certificates for shares of the Corporation and
shall perform such other duties as from time to time may be assigned to the
president by the Board. The President shall be the Chief Operating Officer of
the Corporation and shall direct all day-to-day business operations of the
Corporation.
Section 8. THE SECRETARY. Unless the Board otherwise directs, the secretary
shall keep the minutes of the shareholders' and directors' meetings in one or
more books provided for that purpose. The secretary shall also see that all
notices are duly given in accordance with the law and of the corporate records
and the seal of the Corporation, affix the seal or direct its affixing to all
documents, the execution of which on behalf of the Corporation is duly
authorized; keep a list of the address of each shareholder; sign with the
president or a vice president certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board; have
charge of the stock transfer books of the Corporation and perform all duties
incident to the office of the secretary and such other duties as may be assigned
by the president or by the Board.
Section 9. CHIEF FINANCIAL OFFICER OR TREASURER. If required by the Board,
the Chief Financial Officer or Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or sureties as the
Board shall determine. The Chief Financial Officer or Treasurer shall have
charge and custody of and be responsible for all funds and securities of the
Corporation, receive and give receipts for monies due and payable to the
Corporation from any source whatsoever, deposit all such monies in the name of
the Corporation in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of the Bylaws and perform all the
duties as from time to time may be assigned by the president or the Board.
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Section 10. ASSISTANT OFFICERS. The Board may elect (or delegate to the
Chairman or to the president the right to appoint) such other officers and
agents as may be necessary or desirable for the business of the Corporation.
Such other officers shall include one or more assistant secretaries and
treasurers who shall have the power and authority to act in place of the officer
to whom they are elected or appointed as an assistant in the event of the
officer's inability or unavailability to act in his official capacity. The
assistant secretary or secretaries, when authorized by the president, may sign
with the president or a vice-president certificates for shares of the
Corporation which are issued pursuant to a resolution of the Board. The
assistant treasurer or treasurers shall, if required by the Board, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board shall determine. The assistant secretaries and assistant
treasurers, in general, shall perform such duties as shall be assigned to them
by the secretary or the treasurer, respectively, or by the president.
Section 11. SALARIES. The salaries of the executive officers shall be fixed
by the Board and no officer shall be prevented from receiving such salary by
reason of the fact that such officer is also a director of the Corporation. The
salaries of the administrative assistant officers shall be fixed by the
president.
ARTICLE V
CERTIFICATE FOR SECURITIES
AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SECURITIES. Certificates representing
securities of the Corporation (the "Securities") shall be determined by the
Board. To be effective such certificates for Securities (the "Certificate")
shall be signed by the Chief Executive Officer or the President and the
Secretary or an Assistant Secretary of the Corporation.
A Certificate signed or impressed with the facsimile signature of an
officer, who ceases by death, resignation or otherwise to be an officer of the
Corporation before the Certificate is delivered by the Corporation, is valid as
though signed by a duly elected, qualified and authorized officer, provided that
such Certificate is countersigned by the signature of the transfer agent or
facsimile signature of the transfer agent of the corporation and registered.
All Certificates shall be consecutively numbered or otherwise identified.
Certificates shall state the jurisdiction in which the Corporation is organized,
the name of the person to whom the Securities are issued, the designation of the
series, if any, and the par value of each share represented by the Certificate,
or a statement that the shares are without par value. The name and address of
the person to whom the Securities represented thereby are issued, the number of
Securities, and ate of issue, shall be entered on the Security transfer books of
the Corporation. All Certificates surrendered to the Corporation for transfer
shall be cancelled, except that, in case of a lost, destroyed or mutilated
Certificate, a new one may be issued therefor upon such terms and indemnity to
the Corporation as the Board may prescribe.
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Section 2. TRANSFER OF SECURITIES. Transfer of Securities shall be made
only on the security transfer books of the Corporation by the holder of record
thereof, by the legal representative of the holder who shall furnish proper
evidence of authority to transfer, or by an attorney authorized by a power of
attorney which was duly executed and filed with the secretary of the Corporation
and a surrender for cancellation of the certificate for such shares. The person
in whose name Securities stand on the books of the Corporation shall be deemed
by the Corporation to be the owner thereof for all purposes.
ARTICLE VI
BOOKS AND RECORDS
Section 1. MAINTENANCE AND INSPECTION OF ARTICLES AND BYLAWS. The
corporation shall keep at its principal executive office, or if its principal
executive office is not in the State of Colorado, at its principal business
office in this state, the original or a copy of the articles and bylaws as
amended to date, which shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside the State of Colorado and the corporation has no
principal business office in this state, the Secretary shall, upon the written
request of any shareholder, furnish to that shareholder a copy of the articles
and bylaws as amended to date.
Section 2. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the shareholders and
the board of directors and any committee or committees of the board of directors
shall be kept at such place or places designated by the board of directors, or,
in the absence of such designation, the principal executive office of the
corporation. The minutes shall be kept in written form and the accounting books
and records shall be kept in either written form or in any other form capable of
being converted into written form. The minutes and accounting books and records
shall be open to inspection upon the written demand of any shareholder or holder
of a voting trust certificate, at any reasonable time during usual business
hours, for a purpose reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust certificate. The inspection may
be made in person or by an agent or attorney, and shall include the right to
copy and make extracts. These rights of inspection shall extend to the records
of each subsidiary corporation of the corporation.
Section 3. INSPECTION BY DIRECTORS. Every director shall have the absolute
right at any reasonable time to inspect all books, records, and documents of
every kind and the physical properties of the corporation and each of its
subsidiary corporations. This inspection by a director may be made in person or
by an agent or attorney and the right of inspection includes the right to copy
and make extracts of documents.
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Section 4. FINANCIAL STATEMENTS. A copy of any annual financial statement
and any income statement of the corporation for each quarterly period of each
fiscal year, and any accompanying balance sheet of the corporation shall be kept
on file in the principal executive office of the corporation for twelve (12)
months and each such statement shall be exhibited at all reasonable times to any
shareholder demanding an examination of any such statement or a copy shall be
mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation make a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and a balance
sheet of the corporation as of the end of that period, the treasurer shall cause
that statement to be prepared, if not already prepared, and shall deliver
personally or mail that statement or statements to the person making the request
within (30) days after the receipt of the request. If the corporation has not
sent to the shareholder its annual report for the last fiscal year, this report
shall likewise be delivered or mailed to the shareholder or shareholders within
(30) days after the request.
The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual, semi-annual, or quarterly income
statement which it has prepared, and a balance sheet as of the end of that
period.
The quarterly income statement and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountant engaged by the corporation or the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the resolution of
the Board.
ARTICLE VIII
DIVIDENDS
The Board may declare, and the Corporation may pay in case, stock or other
property, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by laws and its Articles.
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ARTICLE IX
SEAL
The Board shall provide a corporate seal, circular in form, having
inscribed thereon the corporate name, the state of incorporation and the word
"Seal". The seal on Securities, any corporate obligation to pay money or any
other document may be by facsimile, or engraved embossed or printed.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director
of the Corporation under the provisions of these Bylaws or under the provisions
of the Articles or under the provisions of the applicable laws of the State of
Colorado, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before, at or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
ARTICLE XI
AMENDMENTS
These Bylaws may be altered, amended, repealed or replaced by new bylaws by
the Board at any regular or special meeting of the Board.
ARTICLE XII
UNIFORMITY OF INTERPRETATION
AND SEVERABILITY
These Bylaws shall be so interpreted and construed as to conform to the
Articles and the statues of the State of Colorado or of any other state in which
conformity may become necessary by reason of the qualification of the
Corporation to do business in such foreign state, and where conflict between
these Bylaws and such foreign state, and where conflict between these Bylaws and
the articles or a statue has arisen or shall arise, the Bylaws shall be
considered to be modified to the extent, but only to the extent, conformity
shall require. If any Bylaw provision or its application shall be deemed invalid
by reason of the said nonconformity, the remainder of the bylaws shall remain
operable in that the provisions set forth in the Bylaws are severable.
catbylaw
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Exhibit 10.1
INVESTMENT ADVISOR AGREEMENT
THIS INVESTMENT ADVISOR AGREEMENT (the "Agreement") made this
15 day of September, 1995 by and between CONTINENTAL AMERICAN
TRANSPORTATION, INC., a Colorado corporation, having its principal
offices located at 1822 Spruce Street, Philadelphia, Pennsylvania
("Continental") and EXPLORER FINANCIAL SERVICES, INC., a Delaware
corporation, having its principal offices located at 1822 Spruce
Street, Philadelphia, Pennsylvania 19103 ("Explorer")
B A C K G R O U N D:
WHEREAS, Continental desires to identify sources of capital in
order to fund its operations and acquisition candidates in the
transportation industry; and
WHEREAS, Explorer has the resources and knowledge of sources
of potential funding that may provide Continental with the capital
with which to fund its operations and the resources to identify
potential acquisition candidates.
NOW, THEREFORE, in consideration of the mutual covenants and
promises made by each party to the other, it is agreed:
1. Appointment of Agent. Continental hereby appoints
Explorer its non-exclusive agent to seek and identify potential
sources of capital as well as potential acquisition candidates in
the transportation industry.
By this appointment, Explorer hereby acknowledges and agrees
to conduct its activities under this Agreement as follows:
(a) Explorer shall identify potential sources of capital
and potential acquisition candidates and shall be authorized to
make contact with such entities on behalf of Continental;
(b) Explorer is authorized to negotiate capital funding
proposals on behalf of Continental as well as negotiate the general
terms and conditions that would govern any acquisition of assets or
stock of, or any merger with and into, any potential acquisition
candidate and to deliver any such proposals as soon as practicable
to Continental;
(c) to the extent permitted by law, Explorer shall
utilize its best efforts to keep confidential its appointment as
agent for Continental as well as all of its activities under this
Agreement: Explorer hereby further agrees to utilize its best
efforts to obtain nondisclosure agreements from all potential
capital-funding sources and potential acquisition candidates.
(d) Explorer hereby acknowledges and agrees that
Continental shall have the full right and authority, in its sole
and absolute discretion, to reject any potential capital-funding
proposals and/or any acquisition proposals received from any entity
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through Explorer at any time, without any necessity whatsoever to
give any reasons therefor. In the event Continental does, in fact,
reject any such proposals or terminate any such negotiations, both
parties agree that neither shall have any claims against the other,
at law or equity, which shall include but not be limited to any
claims for compensation under this Agreement or otherwise.
3. Compensation. Continental hereby agrees to pay Explorer
a fee equal to Two (2%) Percent of (a) the amount of any capital
furnished to Continental by any entity whose proposal was provided
by Explorer and (b) the value of any transaction concluded by
Continental which would include any acquisition of stock or assets
of an entity, or any merger with an entity introduced by Explorer.
Explorer shall only be deemed to have earned its fee upon the
completion and closing of (a) any financing procured by Explorer
and any transaction or series of transactions resulting in the
acquisition of stock or assets of, or a merger with an entity
initially introduced by Explorer. Continental agrees to pay
Explorer its fee at the time of the completion and closing of any
such transactions. Notwithstanding any termination of this
Agreement as provided below, Continental hereby agrees to pay
Explorer the fee described herein for the services identified above
in the event of a closing or closings of such transactions occuring
at any time within two (2) years of any such termination.
4. Term. Subject to any earlier termination, the term of
this Agreement shall commence upon the date hereof and shall
terminate on the second anniversary of the date hereof. Either
party may terminate this Agreement upon thirty (30) days written
notice to the other party at any time during the term hereof.
5. Notices. All notices required or permitted to be given
under this Agreement shall be in writing and shall be deemed to
have been duly given: (i) two (2) hours after delivered personally
to the party to be notified; or (ii) three (3) business days after
deposited in the U.S. mail, postage paid via registered or
certified mail, return receipt requested. Notices to the
Continental shall be addressed to its president at its principal
executive office and to Explorer to its president at its principal
executive office, or to such other addresses as either party may
designate upon at least ten days' notice to the other party.
If to Continental: Continental American Transportation, Inc.
1822 Spruce Street
Philadelphia, Pennsylvania 19103
Attention: Timothy Holstein, President
Chief Executive Officer
If to Explorer: Explorer Financial Services, Inc.
1822 Spruce Street
Philadelphia, Pennsylvania 19103
Attention: Christopher Bailey, President
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6. Governing Law. This Agreement shall be constructed by
and enforced in accordance with the laws of the State of Colorado.
7. Entire Agreement. This Agreement contains the entire
understanding and agreement between the parties. There are no
other agreements, conditions or representations, oral or written,
express or implied, with regard thereto. This Agreement may be
amended only in writing signed by both parties.
8. Non-Waiver. A delay or failure by either party to
exercise a right under this Agreement, or a partial or single
exercise of that right, shall not constitute a waiver of that or
any other right.
9. Headings. Headings in this Agreement are for convenience
only and shall not be used to interpret or construe its provisions.
10. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
11. Binding Effect. The provisions of this Agreement shall
be binding upon the parties, their successors and assigns.
12. Severability. If any provisions of this Agreement, or
the application thereof to any person or circumstance shall be
deemed or held to be invalid, illegal or unenforceable to any
extent, the remainder of this Agreement shall not be affected and
the application of such affected provisions shall be enforced to
the greatest extent possible under law.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement to be effective as of the day and year
first written above.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By s/ Timothy Holstein
Timothy Holstein
EXPLORER FINANCIAL SERVICES, INC.
By s/Christopher Bailey
Christopher Bailey, President
catinvad.efs
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FINDER'S FEE AGREEMENT
THIS AGREEMENT, dated as of this 16th day of October, 1995, by
and between Continental American Transportation, Inc., a Colorado
corporation, having its principal offices located at 1822 Spruce
Street, Philadelphia, Pennsylvania 19103, ("Continental") and
Knobloch Bay Cove Trust, a corporation organized under the laws of
the Country of Switzerland, and having an address at Splugenstrasse
10 CH 8002, Switzerland ("Knobloch").
R E C I T A L S :
WHEREAS, Continental desires to identify potential
acquisitions for its transportation business and to enlist the
assistance of Knobloch as a finder to provide it with acquisition
candidates; and
WHEREAS, Knobloch, through its contacts in the United States
has the ability to assist Continental in identifying and
introducing transportation companies in the United States to
Continental as potential acquisition candidates; and
WHEREAS, Continental and Knobloch desire to set forth in this
agreement all of the terms and conditions that shall govern their
agreement including, but not limited to setting forth the
compensation that Continental will pay Knobloch in the event it
purchases or acquires an acquisition candidate introduced to it by
Knobloch.
NOW, THEREFORE, in consideration of the mutual promises made
by each party to the other, it is agreed:
1. Appointment of Knobloch. Continental hereby authorizes
Knobloch to seek out potential acquisition candidates for its
transportation business in the United States; upon the
identification by Knobloch of any potential acquisition candidate,
it shall furnish the name of such acquisition to Continental;
thereafter, Continental shall, in its sole and absolute discretion,
proceed to contact the responsible officers of such potential
acquisition candidate in order to communicate its desire to
investigate such entity as a potential acquisition candidate:
Knobloch hereby acknowledges and agrees that it shall have no
further contact or any discussion with any such introduced
potential acquisition candidate unless permitted to do so by
Continental. Knobloch hereby further acknowledges and agrees that
Continental may, at any time following the intoduction of a
potential acquisition candidate by Knobloch, decide, in its sole
and absolute discretion, to determine that such potential
acquisition candidate is not suitable for its transportation
business and may terminate any contacts or agreements it may have
with such proposed acquisition candidate.
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2. Independent Contractor. Continental and Knobloch hereby
agree that Knobloch shall be an independent contractor for all
purposes under this Agreement and that accordingly, Knobloch shall
pay all of its own taxes, assessments or other impositions that may
be incurred, assessed or imposed at any time during the term of
this Agreement and that Continental shall not be responsible or
liable for any such taxes, assessments or impositions at any time.
3. Non-Exclusive Authorization. Knobloch hereby
acknowledges that the authority given to it by Continental under
the terms of this Agreement is non-exclusive in nature and that
Continental may, in its sole and absolute discretion, at any time
during the term of this Agreement, hire, employ, authorize or
otherwise engage other parties to identify potential acquisition
candidates for it in the transportation business in the United
States without incurring any liability of any nature whatsoever
under any term or provision of this Agreement.
4. Compensation. Continental agrees that in the event it
acquires a potential acquisition candidate identified by Knobloch
at any time during the term of this Agreement and continuing for a
period of one (1) year after any termination hereof, it shall pay
to Knobloch a finder's fee equal to the following:
5% of the 1st $1,000,000 of the value of the transaction;
4% of the 2nd $1,000,000 of the value of the transaction;
3% of the 3rd $1,000,000 of the value of the transaction;
2% of the 4th $1,000,000 of the value of the transaction, and;
1% of the value of the transaction in excess of $5,000,000
In addition to the foregoing, and at the sole and absolute
discretion of Continental, Continental may pay some or all of
Knobloch's expenses and costs incurred during the period prior to
the completion of any acquisition of a potential acquisition
candidate it introduced under the terms of this Agreement.
For purposes of this Agreement, the aforementioned finder's
fee shall be payable in the event Continental acquires a potential
acquisition candidate through a purchase transaction that shall
include an exchange of securities or merger with such entity.
The finder's fee payable hereunder shall only be deemed earned
and payable upon the closing of the transactions pursuant to which
the potential acquisition candidate is acquired by Continental.
5. Indemnification. The parties hereto agree to indemnify
each other from and against any liability of any nature whatsoever
arising out of or in connection with any activities undertaken by
either of them pursuant to the terms of this Agreement which have
been unauthorized by the other party.
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6. Governing Law. This Agreement shall in all respects be
interpreted, construed and governed by and in accordance with the
internal substantive laws of the State of Colorado disregarding
principles of conflict of laws and the like.
7. Entire Agreement/Severability. This Agreement represents
the entire agreement between the parties hereto and supersedes any
and all prior understandings, contracts and agreements, whether
oral or written. All of the schedules annexed hereto are
incorporated into this Agreement by reference and form a part
hereof. Each section, subsection and lesser section of this
Agreement constitutes a separate and distinct undertaking, covenant
and/or provision hereof. In the event that any provision of this
Agreement shall finally be determined to be unlawful, such
provision shall be deemed severed from this Agreement, but every
other provision of this Agreement shall retain in full force and
effect.
8. Headings. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in
the construction or interpretation of this Agreement.
9. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which shall constitute the same agreement.
10. Notices.
All notices provided or required to be given by one party to
the other herein shall be deemed efficient if sent by first-class,
postage prepaid, registered air mail, and addressed as follows:
To Coninental: Mr. Timothy Holstein
President
1822 Spruce Street
Philadelphia, Pennsylvania 19103
To Knobloch: Knobloch Bay Cove Trust
Splugenstrasse 10 CH 8002
Switzerland
10. Assignment. Knoblock agrees that it shall not assign any
of its rights under this Agreement, which are deemed to be
particular and special to it, without the prior written consent of
Continental.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first set forth above.
ONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein
President
KNOBLOCH BAY COVE TRUST
By: s/Herbert Bailey
Herbert Bailey
Trustee, Director
finders.kno
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Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 15th day of June, 1996, by and
between Brian Henninger, residing at 275 Saddlebrook Drive,
Calhoun, Georgia 30701 (hereinafter referred to as the "Employee")
and Continental American Transportation, Inc., a Colorado
corporation with principal offices located at 495 Lovers Lane Road,
Calhoun, Georgia 30701 (hereinafter referred to as the "Company).
W I T N E S S E T H :
WHEREAS, the Company is engaged in the nationwide
transportation industry primarily serving the carpet manufacturing
sector in the southeastern region of the United States;
WHEREAS, Employee is currently serving as the Secretary, Vice
President-Finance of the Company and the Company desires to retain
the services of the Employee in such capacity as a valuable member
of the Company's management team; and
WHEREAS, the Employee desires to continue in his present
employment with the Company as Secretary, Vice President-Finance
and to enter into this Agreement for such purposes, superseding all
prior agreements between the Company, its subsidiaries and/or
predecessors and Employee.
NOW, THEREFORE, it is mutually agreed by and between the
parties hereto as follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this
Agreement, the Company hereby employs and agrees to continue the
employment of the Employee, and the Employee hereby accepts such
continued employment in his capacity as Secretary, Vice President-
Finance. In this capacity, Employee will report to the Company's
Board of Directors.
ARTICLE II
DUTIES
(A) The Employee shall, during the term of his employment
with the Company, and subject to the direction and control of the
Company's Board of Directors, perform such duties and functions
related to the position of Secretary, Vice President-Finance as he
may be called upon to perform by the Company's Board of Directors
during the term of this Agreement.
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(B) The Employee agrees to devote all of his business time
and best efforts to the performance of his duties for the Company
and to render such services for any subsidiary corporations of the
Company or Parent.
(C) The Employee shall perform, in conjunction with the
Company's Senior Management, to the best of his ability the
following services and duties for the Company and its subsidiary
corporations (by way of example, and not by way of limitation):
(i) Those duties attendent to the position with the
Company for which he is hired;
(ii) Corporate development;
(iii) Formulation of the Company's business plans and
implementation of such plans subject to the direction of the Board
of Directors.
(iv) Promotion of the relationships of the Company and
its subsidiary corporations with their respective employees,
customers, suppliers and others in the business community.
(D) Employee shall be based at the Company's headquarters
located in Calhoun, Georgia, and shall undertake such occasional
travel, within or without the United States as is or may be
reasonably necessary in the interests of the Company.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date hereof, the Company
shall pay to Employee a salary at the rate of $78,000 for the first
twelve (12) months of this Agreement; $104,000 for the second
twelve (12) months of this Agreement, and; $130,000 for the last
twelve (12) months of this Agreement (the "Base Salary"). These
salary payments shall be payable in such installments as are
utilized by the Company to pay its senior management personnel and
shall be payable as above stated as long as this Agreement is in
effect.
(B) Employee shall be entitled to receive a bonus (the
"Bonus") during each year of this Agreement as determined by the
Company's Board of Directors.
(C) Employee is hereby granted non-qualified stock options to
purchase 36,000 shares of the Company's Common Stock (the "Stock
Options") at any time during the term of this Agreement (the
"Exercise Period"); the Employee shall exercise his right to
purchase the Common Shares, in whole or in part at any time during
the Exercise Period, by giving written notice of exercise to the
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Company, specifying the number of Common Shares to be purchased and
accompanied by payment therefor; the Employee shall pay an amount
equal to the closing bid price of a Common Share as quoted on the
applicable exchange where the Common Shares are then listed for
trading as of the close of business on the day immediatley
preceding the date of exercise, less a 20% discount, not to exceed
$2.25, in order to exercise each Stock Option to purchase one
Common Share. For all purposes hereunder, the Stock Options shall
be deemed fully vested for the account of the Employee as of the
date hereof.
(D) Employee shall be entitled to receive reimbursement for
all his expenses incurred during the course of his performance of
his duties under this Agreement upon the delivery to the Company of
receipts for any such expenses, provided, however, that such
expenses qualify as a deduction by the business from income under
the Internal Revenue Code of 1986, as amended.
(E) The Company shall deduct from Employee's compensation all
federal, state and local taxes which it may now or may hereafter be
required to deduct.
ARTICLE IV
BENEFITS
(A) Employee Benefit Plans. During the term hereof, the
Company shall continue to cause the Employee and his family to
participate in the Company's existing medical/health plan,
disability plan and life insurance plan without any requirement for
Employee contribution or payroll deduction, the level of which
benefits shall not be reduced by the Company during the term
hereof. In addition, and notwithstanding any participation in any
group life insurance plan to which Employee is entitled to
participate hereunder, the Company shall provide to Employee life
insurance in an amount equal to twice Employee's Base Salary
hereunder or that amount of life insurance that may be available to
the Employee by virtue of any future adoption of a key-man life
insurance program-policy, whichever policy provides Employee the
higher amount of insurance.
(B) Relocation Expense Allowance. The Company recognizes
that Employee currently owns a home in Lawrenceville, New Jersey
and agrees to assist Employee to relocate his family to Calhoun,
Georgia. The Company shall provide to Employee an interest-free
loan in the amount of $30,000 which Employee shall use as a
downpayment on a residence in the Calhoun, Georgia environs. The
Company agrees that as long as this Agreement is in full force and
effect it shall forgive one-third of this loan amount following the
end of each of the three (3) years of this Agreement. In addition,
the Company shall make arrangements with a relocation company,
i.e., Remax, at its sole cost and expense, to sell Employee's
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current residence in Lawrenceville, New Jersey, and shall pay all
of Employee's mortggage payments, taxes and expenses of maintaining
his Lawrenceville, New Jersey residence until it is sold. In
addition, the Company shall pay to Employee a relocation expense
payment for the purchase of new appliances for installation in his
future Georgia residence in an amount up to $5,000. The Company
shall provide the Employee with moving services and transportation
necessary to relocate Employee's personal and household property
from New Jersey to Employee's future Georgia residence.
(C) For each year of the term hereof, Employee shall be
entitled to two weeks paid vacation.
ARTICLE V
NON-DISCLOSURE
The Employee shall not, at any time during or after the
termination of his employment hereunder except when acting on
behalf of and with the authorization of the Company, make use of or
disclose to any person, corporation, or other entity, for any
purpose whatsoever, any trade secret or other confidential
information concerning the Company's business, finances, proposed
and current services and pricing, and any information relating to
the Company's business (collectively referred to as the
"Proprietary Information"). For the purposes of this Agreement,
trade secrets and confidential information shall mean information
disclosed to the Employee or known by him as a consequence of his
employment by the Company, whether or not pursuant to this
Agreement, and not generally known in the industry, concerning the
business, finances, methods, operations, marketing information,
pricing and information relating to proposed expansion of the
Company or the Company's business plans. The Employee acknowledges
that trade secrets and other items of confidential information, as
they may exist from time to time, are valuable and unique assets of
the Company, and that disclosure of any such information would
cause substantial injury to the Company. The foregoing is intended
to be confirmatory of the common law of the State of New Jersey
relating to trade secrets and confidential information.
ARTICLE VI
RESTRICTIVE COVENANT
(A) In the event of the voluntary termination of employment
with the Company or Employee's discharge in accordance with Article
IX paragraph (C), Employee agrees that he will not, for a period of
two years following such termination, nor during the term of this
Agreement, directly or indirectly enter into or become associated
with or engage in any other business (whether as a partner,
officer, director, shareholder, employee, consultant, or
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otherwise), which business is primarily involved in the
transportation industry serving the distribution needs of carpet
manufacturers located in the southeastern region of the United
States, either alone or in association with others.
(B) If any court shall hold that the duration of non-
competition or any other restriction contained in this paragraph is
unenforceable, it is our intention that same shall not thereby be
terminated but shall be deemed amended to delete therefrom such
provision or portion adjudicated to be invalid or unenforceable or
in the alternative such judicially substituted term may be
substituted therefor.
ARTICLE VII
TERM
This Agreement shall be for a term commencing on the first
date set forth above and terminating June 14, 1999 (the "Initial
Term") subject, however to extension and/or renewal at the option
of the Company and the Employee (a "Renewal Term(s)"), unless
sooner terminated pursuant to the terms hereof.
ARTICLE VIII
DISABILITY DURING TERM
In the event that the Employee becomes totally disabled so
that he is unable or prevented from performing any one or all of
his usual duties hereunder for a period of four (4) consecutive
months then, and in that event, the Company shall continue to
compensate him and he shall receive his Base Salary as provided
under Article III of this Agreement for such four consecutive month
period commencing from the date of such total disability and
continuing during the applicable period: the aforesaid obligations
of the Company shall not extend beyond the Initial Term or beyond
any Renewal Term of this Agreement. The obligation of the Company
to make the aforesaid payments shall be modified and reduced and
the Company shall receive a credit for all disability insurance
payments which Employee may receive or to which he may become
entitled.
ARTICLE IX
TERMINATION
The Company may terminate this Agreement:
(A) Upon the death of Employee during the term hereof, except
that the Employee's legal representatives, successors, assigns and
heirs shall have those rights and interests as otherwise provided
in this Agreement.
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(B) Subject to the terms of Article VIII herein, upon written
notice from the Company to the Employee, if Employee becomes
totally disabled and as a result of such total disability, has been
prevented from and unable to perform all of his duties hereunder
for a consecutive period of four (4) months.
(C) If the Employee engaged in fraud, misappropriation of
Company funds or gross negligence in the performance of his duties.
(D) If the Company undergoes a change of control or other
reorganization and the Company's successor refuses or fails to
assume all of the responsibilities of the Company under this
Agreement, then upon thirty days written notice to the Employee,
the Company may terminate this Agreement, provided, however, the
Company shall pay to the Employee the severance benefits set forth
in Article XIX below.
ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the
parties and supersedes all prior agreements between the parties,
whether oral or written, without prejudice to Employee's right to
all accrued compensation prior to the effective date of this
Agreement.
ARTICLE XI
ARBITRATION
Any dispute arising out of the interpretation, application
and/or performance of this Agreement with the sole exception of any
claim, breach or violation arising under Articles V or VI hereof
shall be settled through final and binding arbitration before a
single arbitrator in the City of Atlanta, the State of Georgia in
accordance with the rules of the American Arbitration Association.
The arbitrator shall be selected by the Association and shall be an
attorney at law experienced in the field of employment law. Any
judgment upon any arbitration award may be entered in any court,
federal or state, having competent jurisdiction of the parties.
ARTICLE XII
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
remain in full force and effect in all other circumstances.
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ARTICLE XIII
NOTICE
All notices required to be given under the terms of this
Agreement shall be in writing and shall be deemed to have been duly
given only if delivered to the addressee in person or mailed by
certified mail, return receipt requested, to the address as
included in the Company's records or to any other address as the
party to receive the notice shall advise by due notice given in
accordance with this paragraph.
ARTICLE XIV
BENEFIT
This Agreement shall inure to, and shall be binding upon, the
parties hereto, the successors and assigns of the Company, and the
heirs and personal representatives of the Employee.
ARTICLE XV
WAIVER
The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach of construction and validity.
ARTICLE XVI
GOVERNING LAW
This Agreement has been negotiated and executed in the State
of Georgia, and that State's law shall govern its construction and
validity.
ARTICLE XVII
JURISDICTION
Any or all actions or proceedings which may be brought by the
Company or Employee under this Agreement shall be brought in courts
having a situs within the State of Georgia and Employee hereby
consents to the jurisdiction of any local, state or federal court
located within the State of Georgia.
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ARTICLE XVIII
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the
parties hereto. No change, addition or amendment shall be made
hereto, except by written agreement signed by the parties hereto.
ARTICLE XIX
SEVERANCE BENEFITS
In the event that (a) this Agreement is not renewed by the
Company upon the expiration of its initial or any renewed term(s)
hereof, or (b) the Company terminates this Agreement for reasons
other than those set forth in Article IX, paragraph (A) (B) or (C),
or (c) the Company undergoes a change of control or other
reorganization and the Company's successor refuses or fails to
assume all of the responsibilities of the Company under this
Agreement, upon any such termination of Employee's employment as a
result thereof, the Company shall provide the following severance
benefits to the Employee:
1. The Company shall pay to the Employee a severance payment
in an amount equal to the greater of (i) the aggregate amount of
the Employee's Base Salary that would be payable to the Employee
through the initial or any renewed term of this Agreement, or (ii)
the aggregate of Employee's Base Salary for each month that the
Employee was subject to the provisions of this Agreement during the
initial and any renewed term(s) hereof;
2. To the extent permissible under applicable laws, the
Company shall maintain its medical/health coverage for the benefit
of the Employee and his family for a period of four (4) months
following termination of employment for those reasons identified in
this Article XIX.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and affixed their hands and seals the day and year first
above written.
COMPANY:
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein
President & Chief
Executive Officer
EMPLOYEE:
s/Brian Henninger
Brian Henninger
emplagr2.hen
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Exhibit No. 10.4
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of September, 1996, by and
between Timothy Holstein, residing at 175 Hammond Road, Calhoun,
Georgia 30701 (hereinafter referred to as either "Employee" or
"Holstein") and Continental American Transportation, Inc., a
Colorado corporation, having its principal offices located at 495
Lovers Lane Road, Calhoun, Georgia 30701 (hereinafter referred to
as the "Company).
W I T N E S S E T H :
WHEREAS, the Company is engaged in the nationwide
transportation industry primarily serving the carpet manufacturing
sector in the southeastern region of the United States;
WHEREAS, Employee is currently serving as the President and
Chief Executive Officer of the Company and the Company desires to
retain the services of the Employee in such capacity as a valuable
member of the Company's management team; and
WHEREAS, the Employee desires to continue in his present
employment with the Company as President and Chief Executive
Officer and to enter into this Agreement for such purposes,
superseding all prior agreements between the Company, its
subsidiaries and/or predecessors and Employee.
NOW, THEREFORE, it is mutually agreed by and between the
parties hereto as follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this
Agreement, the Company hereby employs and agrees to continue the
employment of Holstein, and Holstein hereby accepts such continued
employment in his capacity as President and Chief Executive
Officer. In this capacity, Holstein will report to the Board of
Directors.
ARTICLE II
DUTIES
(A) Holstein shall, during the term of his employment with
the Company, and subject to the direction and control of the
Company's Board of Directors, perform such duties and functions
related to this position as he may be called upon to perform by the
Company's Board of Directors during the term of this Agreement.
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(B) Holstein agrees to devote all of his business time and
best efforts to the performance of his duties for the Company and
to render such services for any subsidiary corporations of the
Company or Parent.
(C) Holstein shall perform, in conjunction with the Company's
Senior Management, to the best of his ability the following
services and duties for the Company and its subsidiary corporations
(by way of example, and not by way of limitation):
(i) Those duties attendent to the position with the
Company for which he is hired;
(ii) Corporate development;
(iii) Formulation of the Company's business plans and
implementation of such plans subject to the direction of the Board
of Directors.
(iv) Promotion of the relationships of the Company and
its subsidiary corporations with their respective employees,
customers, suppliers and others in the business community.
(D) Holstein shall be based at the Company's headquarters in
Calhoun, Georgia, and shall undertake such occasional travel,
within or without the United States as is or may be reasonably
necessary in the interests of the Company.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date hereof, the Company
shall pay to Holstein a salary at the rate of $200,000 per annum,
until September 1, 1997; $250,000 per annum, until September 1,
1998, and; $300,000 per annum, until September 1, 1999, thereafter,
provided, however, that this Agreement shall then be in effect,
which annual salaries shall be payable in equal weekly installments
or pursuant to such regular pay periods adopted by the Company (the
"Base Salary").
(B) Holstein shall be entitled to receive a bonus (the
"Bonus") during each year of this Agreement, determined as follows:
The amount to be paid as a Bonus shall be determined as of each
September 1th during the term hereof based upon the fiscal year end
and shall be equal to five percent (5%) of the first $1,000,000,
upon reaching $1,000,000 and six percent (6%) of the next $500,000,
upon reaching $1,500,000 and seven percent (7%) after $1,500,000,
of all the pre-tax profits of the Company as determined by the
Company's then independent auditors no later than 90 days following
the end of the Company's fiscal year and giving effect to and
including revenues received by the Company during the fiscal year
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excluding any expense deduction attributed to any bonus paid to any
other executive officer which bonus is predicated on operating
results of the Company (the "Pre-Tax Profit"). Such determination,
for Bonus purposes only, shall be made in accordance with generally
accepted accounting principles, consistently applied.
(C) Employee shall be entitled to receive reimbursement for
all his expenses incurred during the course of his performance of
his duties under this Agreement upon the delivery to the Company of
receipts for any such expenses, provided, however, that such
expenses qualify as a deduction by the business from income under
the Internal Revenue Code of 1986, as amended.
(D) The Company shall deduct from Employee's compensation all
federal, state and local taxes which it may now or may hereafter be
required to deduct.
ARTICLE IV
BENEFITS
(A) During the term hereof, (i) Holstein and his dependents
shall participate in the current medical, disability, life
insurance and other employee benefit plans the Company now
maintains or which it may adopt in the future; (ii) Holstein shall
be reimbursed by the Company upon presentation of appropriate
vouchers for all business expenses incurred by Holstein on behalf
of the Company, and; (iii) the Company shall provide Holstein with
an automobile suitable for his position and reimburse reasonable
automobile expenses including repairs, maintenance, gasoline
charges, mobile phone, etc. via receipted expense reports.
(B) In the event the Company wishes to obtain Key Man life
insurance on the life of Holstein, Holstein agrees to cooperate
with the Company in completing any applications necessary to obtain
such insurance and promptly submit to such physical examinations
and furnish such information as any proposed insurance carrier may
request.
(C) The Company will obtain and maintain during the full term
hereof and at its sole cost and expense a policy of life insurance
on the life of Holstein in the face amount of $1,000,000 payable to
a beneficiary named and designated by Holstein. Upon the
conclusion of this Agreement, all right, title and interest in the
policy shall be transferred to Holstein, and Holstein shall be
responsible for any premiums due after such transfer. Upon either
the termination of the policy or transfer of the policy to
Holstein, the Company shall be entitled to the percentage of the
cash surrender value of the policy as attributed to the payments
made by the Company on Holstein's behalf.
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(D) For each year of the term hereof, Holstein shall be
entitled to two weeks paid vacation.
ARTICLE V
NON-DISCLOSURE
Holstein shall not, at any time during or after the
termination of his employment hereunder except when acting on
behalf of and with the authorization of the Company, make use of or
disclose to any person, corporation, or other entity, for any
purpose whatsoever, any trade secret or other confidential
information concerning the Company's business, finances, proposed
and current services and pricing, and any information relating to
the Company's business (collectively referred to as the
"Proprietary Information"). For the purposes of this Agreement,
trade secrets and confidential information shall mean information
disclosed to Holstein or known by him as a consequence of his
employment by the Company, whether or not pursuant to this
Agreement, and not generally known in the industry, concerning the
business, finances, methods, operations, marketing information,
pricing and information relating to proposed expansion of the
Company or the Company's business plans. Holstein acknowledges
that trade secrets and other items of confidential information, as
they may exist from time to time, are valuable and unique assets of
the Company, and that disclosure of any such information would
cause substantial injury to the Company.
ARTICLE VI
RESTRICTIVE COVENANT
(A) In the event of the voluntary termination of employment
with the Company or Employee's discharge in accordance with Article
IX paragraph (C), Employee agrees that he will not, for a period of
two years following such termination, nor during the term of this
Agreement, directly or indirectly enter into or become associated
with or engage in any other business (whether as a partner,
officer, director, shareholder, employee, consultant, or
otherwise), which business is primarily involved in the
transportation industry serving the distribution needs of carpet
manufacturers located in the southeastern region of the United
States, either alone or in association with others.
(B) If any court shall hold that the duration of non-
competition or any other restriction contained in this paragraph is
unenforceable, it is our intention that same shall not thereby be
terminated but shall be deemed amended to delete therefrom such
provision or portion adjudicated to be invalid or unenforceable or
in the alternative such judicially substituted term may be
substituted therefor.
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ARTICLE VII
TERM
This Agreement shall be for a term commencing on the first
date set forth above and terminate 5:00 PM, August 31, 1999, unless
sooner terminated pursuant to the terms hereof.
ARTICLE VIII
DISABILITY DURING TERM
In the event that Holstein becomes totally disabled so that he
is unable or prevented from performing any one or all of his usual
duties hereunder for a period of four (4) consecutive months then,
and in that event, the Company shall continue to compensate him and
he shall receive his Base Salary as provided under Article III of
this Agreement until the expiration of the term of this Agreement.
The aforesaid obligations of the Company shall not extend beyond
the term of this Agreement. The obligation of the Company to make
the aforesaid payments shall be modified and reduced and the
Company shall receive a credit for all disability insurance
payments which Holstein may receive or to which he may become
entitled; and provided further that the payments herein provided
shall not extend beyond the term of this Agreement.
ARTICLE IX
TERMINATION
The Company may terminate this Agreement:
(A) Upon the death of Holstein during the term hereof, except
that Holstein's legal representatives, successors, assigns and
heirs shall have those rights and interests as otherwise provided
in this Agreement, including the right to receive accrued by unpaid
bonus compensation, if any.
(B) Subject to the terms of Article VIII herein, upon written
notice from the Company to Holstein, if Holstein becomes totally
disabled and as a result of such total disability, has been
prevented from and unable to perform all of his duties hereunder
for a consecutive period of four (4) months.
(C) If Holstein engaged in fraud, misappropriation of Company
funds or gross negligence in the performance of his duties.
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ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the
parties and supersedes all prior agreements between the parties,
whether oral or written, without prejudice to Holstein's right to
all accrued compensation prior to the effective date of this
Agreement.
ARTICLE XI
ARBITRATION
Any dispute arising out of the interpretation, application
and/or performance of this Agreement with the sole exception of any
claim, breach or violation arising under Articles V or VI hereof
shall be settled through final and binding arbitration before a
single arbitrator in the City of Atlanta, the State of Georgia in
accordance with the rules of the American Arbitration Association.
The arbitrator shall be selected by the Association and shall be an
attorney at law experienced in the field of employment law. Any
judgment upon any arbitration award may be entered in any court,
federal or state, having competent jurisdiction of the parties.
ARTICLE XII
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
remain in full force and effect in all other circumstances.
ARTICLE XIII
NOTICE
All notices required to be given under the terms of this
Agreement shall be in writing and shall be deemed to have been duly
given only if delivered to the addressee in person or mailed by
certified mail, return receipt requested, to the address as
included in the Company's records or to any other address as the
party to receive the notice shall advise by due notice given in
accordance with this paragraph.
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ARTICLE XIV
BENEFIT
This Agreement shall inure to, and shall be binding upon, the
parties hereto, the successors and assigns of the Company, and the
heirs and personal representatives of Holstein.
ARTICLE XV
WAIVER
The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach of construction and validity.
ARTICLE XVI
GOVERNING LAW
This Agreement has been negotiated and executed in the State
of Georgia, and Georgia law shall govern its construction and
validity.
ARTICLE XVII
JURISDICTION
Any or all actions or proceedings which may be brought by the
Company or Holstein under this Agreement, except for Articles V and
VI above, shall be resolved by arbitration in the City of Atlanta,
State of Georgia pursuant to Article XI above and Holstein hereby
consents to the jurisdiction of such arbitration process; any
disputes arising under Article V or VI hereof may be resolved by a
proceeding brought by either party in either the State or Federal
Courts of the State of Georgia, to which jurisdiction(s) the
parties hereby expressly consent.
ARTICLE XVIII
SEVERANCE COMPENSATION
The Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
Holstein, to their assigned duties without distraction in
potentially disturbing circumstances arising from the possibility
of a change in control of the Company.
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This Agreement sets forth the severance compensation which the
Company agrees it will pay to Holstein if Holstein's employment
with the Company terminates under one of the circumstances
described herein following a Change in Control of the Company (as
defined herein). The terms of this Article XVIII shall supersede
any other provision of this Agreement after a Change in Control as
defined below.
1. Term. This Article XVIII shall terminate, except to the
extent that any obligation of the Company hereunder remains unpaid
as of such time, upon the occurrence of the earliest of the
following events: (i) the termination of this Agreement including
any renewal period, if a Change in Control of the Company has not
occurred within such three-year period; (ii) the termination of
Holstein's employment with the Company based on death, Disability
(as defined in Section 3(b)), Retirement (as defined in Section
3(c)) or Cause (as defined in Section 3(d)) or by Holstein other
than for Good Reason (as defined in Section 3(e)); or (iii) one
year from the date of a Change in Control of the Company if
Holstein has not terminated his employment for Good Reason as of
such time.
2. Change in Control. No compensation shall be payable
under this Article XVIII unless and until (a) there shall have been
an involuntary Change in Control of the Company, while Holstein is
still an employee of the Company and (b) Holstein's employment by
the Company thereafter shall have been terminated in accordance
with Section 3. For purposes of this Agreement, a Change in
Control of the Company shall be deemed to have occurred if (i)
there shall be consummated (x) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common
Stock would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets
of the Company, or (ii) the stockholders of the Company approved
any plan or proposal for the liquidation or dissolution of the
Company, or (iii) any person (as such term is used in Sections
13(d) and 13(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 20% or
more of the Company's outstanding Common Stock, or (iv) during any
period of two consecutive years, individuals who at the beginning
of such period constitute the entire Board of Directors shall cease
for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were
directors at the beginning of the period.
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3. Termination Following Change in Control.
(a) If a Change in Control of the Company shall have
occurred while Holstein is still an employee of the Company,
Holstein shall be entitled to the compensation provided in Section
4 upon the subsequent termination of Holstein's employment with the
Company by Holstein or by the Company unless such termination is as
a result of (i) Holstein's death; (ii) Holstein's disability (as
defined in Section 3(b) below); (iii) Holstein's Retirement (as
defined in Section 3(c) below); (iv) Holstein's termination by the
Company for Cause (as defined in Section 3(d) below); or (v)
Holstein's decision to terminate employment other than for Good
Reason (as defined in Section 3(e) below).
(b) Disability. If, as a result of Holstein's
incapacity due to physical or mental illness, Holstein shall have
been absent from his duties with the Company on a full-time basis
for four months and within 30 days after written notice of
termination is thereafter given by the Company Holstein shall not
have returned to the full-time performance of Holstein's duties,
the Company may terminate this Agreement for "Disability", except,
however, and notwithstanding the Company's termination of this
Agreement, the Company shall remain obligated to pay to Employee
his Base Salary throughout the remaining Term or any renewal term
of this Agreement: this provision shall survive any termination of
this Agreement.
(c) Retirement. The term "Retirement" as used in this
Article XVIII shall mean termination by the Company or Holstein of
Holstein's employment based on Holstein's having reached age 65 or
such other age as shall have been fixed in any arrangement
established with Holstein's consent with respect to the Executive.
(d) Cause. the Company may terminate Holstein's
employment for Cause. For purposes of this Agreement only, the
Company shall have "Cause" to terminate Holstein's employment
hereunder only on the basis of fraud, misappropriation or
embezzlement on the part of Holstein. Notwithstanding the
foregoing, Holstein shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to Holstein
a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Company's
Board of Directors at a meeting of the Board called and held for
the purpose (after reasonable notice to Holstein and an opportunity
for Holstein, together with Holstein's counsel, to be heard before
the Board), finding that in the good faith opinion of the Board
Holstein was guilty of conduct set forth in the second sentence of
this Section 3(d) and specifying the particulars thereof in detail.
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(e) Good Reason. Holstein may terminate Holstein's
employment for Good Reason at any time during the term of this
Agreement. For purposes of this Agreement "Good Reason" shall mean
any of the following (without Holstein's express written consent):
(i) the assignment to Holstein by the Company of
duties inconsistent with Holstein's position, duties,
responsibilities and status with the Company immediately prior to
a Change in Control of the Company, or a change in Holstein's
titles or offices as in effect immediately prior to a Change in
Control of the Company, or any removal of Holstein from or any
failure to reelect Holstein to any of such position, except in
connection with the termination of his employment for Disability,
Retirement or Cause or as a result of Holstein's death or by
Holstein other than for Good Reason;
(ii) a reduction by the Company in Holstein's base
salary as in effect on the date hereof or as the same may be
increased from time to time during the term of this Agreement or by
the Company's failure to increase (within 12 months of Holstein's
last increase in base salary) Holstein's base salary after a Change
in Control of the Company in an amount which at least equals, on a
percentage basis, the average percentage increase in base salary
for all officers of the Company effected in the preceding 12
months;
(iii) any failure by the Company to continue in
effect any benefit plan or arrangement (including, without
limitation, the Company's life insurance and medical, dental,
accident and disability plans) in which Holstein is participating
at the time of a Change in Control of the Company (or any other
plans providing Holstein with substantially similar benefits)
(hereinafter referred to as "Benefit Plans"), or the taking of any
action by the Company which would adversely affect Holstein's
participation in or materially reduce Holstein's benefits under any
such Benefit Plan or deprive Holstein of any material fringe
benefit enjoyed by Holstein at the time of a Change in Control of
the Company;
(iv) any failure by the Company to continue in
effect any incentive plan or arrangement (including, without
limitation, bonus and contingent bonus arrangements and credits and
the right to receive performance awards and similar incentive
compensation benefits) in which Holstein is participating at the
time of a Change in Control of the Company (or any other plans or
arrangements providing him with substantially similar benefits)
(hereinafter referred to as "Incentive Plans") or the taking of any
action by the Company which would adversely affect Holstein's
participation in any such Incentive Plan or reduce Holstein's
benefits under any such Incentive Plan, expressed as a percentage
of his base salary, by more than 10 percentage points in any fiscal
year as compared to the immediately preceding fiscal year;
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(v) any failure by the Company to continue in
effect any plan or arrangement to receive securities of the Company
(including, without limitation, the Company's Incentive Plan, and
any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants
thereof) in which Holstein is participating at the time of a Change
in Control of the Company (or plans or arrangements providing him
with substantially similar benefits) (hereinafter referred to as
"Securities Plans") or the taking of any action by the Company
which would adversely affect Holstein's participation in or
materially reduce Holstein's benefits under any such Securities
Plan;
(vi) a relocation of the Company's principal
executive offices to a location outside of the Atlanta or Calhoun,
Georgia regions, or Holstein's relocation to any place other than
the location at which Holstein performed Holstein's duties prior to
a Change in Control of the Company, except for required travel by
Holstein on the Company's business to an extent substantially
consistent with Holstein's business travel obligations at the time
of a Change in Control of the Company;
(vii) any failure by the Company to provide
Holstein with the number of paid vacation days to which Holstein is
entitled at the time of a Change in Control of the Company;
(viii) any material breach by the Company of any
provision of this Agreement;
(ix) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the
Company; or
(x) any purported termination of Holstein's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 3(f), and for
purposes of this Agreement, no such purported termination shall be
effective.
(f) Notice of Termination. Any termination by the
Company pursuant to Section 3(b), 3(c) or 3(d) shall be
communicated by a Notice of Termination. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice
which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of Holstein's employment under the provision so indicated. For
purposes of this Agreement, no such purported termination by the
Company shall be effective without such Notice of Termination.
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(g) Date of Termination. "Date of Termination" shall
mean (a) if this Agreement is terminated by the Company for
Disability, 30 days after Notice of Termination is given to
Holstein (provided that Holstein shall not have returned to the
performance of Holstein's duties on a full-time basis during such
30-day period) or (b) if Holstein's employment is terminated by the
Company for any other reason, the date on which a Notice of
Termination is given; provided that if within 30 days after any
Notice of Termination is given to Holstein by the Company Holstein
notifies the Company that a dispute exists concerning the
termination, the Date of Termination shall be the date the dispute
is finally determined, whether by mutual agreement by the parties
or upon final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
4. Severance Compensation upon Termination of
Employment.
If the Company shall terminate Holstein's employment other
than pursuant to Section 3(b), 3(c) or 3(d) or if Holstein shall
terminate his employment for Good Reason, then the Company shall:
(i) pay to Holstein as severance pay in a lump
sum, in cash, on the fifth day following the Date of Termination,
an amount equal to three times the aggregate annual compensation,
including Base Salary and Bonus, paid to Holstein during the fiscal
year preceding the Change in Control of the Company by the Company
and any of its subsidiaries subject to United States income taxes;
provided, however, that if the lump sum severance payment under
this Section 4, either alone or together with other payments which
Holstein has the right to receive from the Company, would
constitute a "parachute payment" (as defined in Section 280G of the
Internal Revenue Code of 1954, as amended (the "Code")), such lump
sum severance payment shall be reduced to the largest amount as
will result in no portion of the lump sum severance payment under
this Section 4 being subject to the excise tax imposed by Section
4999 of the Code. The determination of any reduction in the lump
sum severance payment under this Section 4 pursuant to the
foregoing proviso shall be made by Holstein in good faith, and such
determination shall be conclusive and binding on the Company; and
(ii) within ten days following the Date of
Termination, shall cause Holstein to be relieved of any and all
personal guarantees of Company obligations, and fully pay all
outstanding loans and other obligations of the Company to the
Executive. If, for any reason, the Company fails to comply with
its obligations under this subparagraph, Holstein shall have the
option, at his sole discretion, to convert up to the principal
amount of such Notes to shares of the Company's Common Stock at the
rate of $2.50 per share; provided, that the conversion of all or a
portion of any outstanding loans by Holstein shall not relieve the
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Company of any of its obligations arising under this subparagraph
including the obligations to repay any unconverted loans and
relieve Holstein of any personal guarantees.
5. No Obligation to Mitigate Damages; No Effect on
Other Contractual Rights.
(a) Holstein shall not be required to mitigate damages
or the amount of any payment provided for under this Article XVIII
by seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Article XVIII be reduced by any
compensation earned by Holstein as the result of employment by
another employer after the Date of Termination, or otherwise.
(b) The provisions of this Article XVIII, and any
payment provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish Holstein's existing
rights, or rights which would accrue solely as a result of the
passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or
arrangement.
6. Successor to the Company.
(a) The Company will require any successor or assignee
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) of all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
satisfactory to Holstein, expressly, absolutely and unconditionally
to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
Any failure of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a
material breach of this Agreement and shall entitle Holstein to
terminate Holstein's employment for Good Reason. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor or assign to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in
this Section 6 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law. If at any
time during the term of this Agreement Holstein is employed by any
corporation a majority of the voting securities of which is then
owned by the Company, "Company" as used in Sections 3 and 4 hereof
shall in addition include such employer. In such event, the
Company agrees that it shall pay or shall cause such employer to
pay any amounts owed to Holstein pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by Holstein's personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Holstein should die while any amounts
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are still payable to him hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Holstein's devisee, legatee, or other
designee or, if there be no such designee, to Holstein's estate.
7. Legal Fees and Expenses. The Company shall pay all
legal fees and expenses which Holstein may incur as a result of the
Company's contesting the validity, enforceability or Holstein's
interpretation of, or determinations under, this Article XVIII.
ARTICLE XIX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the
parties hereto. No change, addition or amendment shall be made
hereto, except by written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and affixed their hands and seals the day and year first
above written.
(Corporate Seal) THE COMPANY
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Erik L. Bailey
Erik L. Bailey, Vice President
and Chief Financial Officer
EMPLOYEE: President and
Chief Executive Officer
s/Timothy Holstein
Timothy Holstein
emplagr.tim
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Exhibit No. 10.5
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of September, 1996, by and
between Erik L. Bailey, residing at 1039 Legacy Walk, Woodstock,
Georgia 30189 (hereinafter referred to as either "Employee" or
"Bailey") and Continental American Transportation, Inc., a Colorado
corporation, having its principal offices located at 495 Lovers
Lane Road, Calhoun, Georgia 30701 (hereinafter referred to as the
"Company).
W I T N E S S E T H :
WHEREAS, the Company is engaged in the nationwide
transportation industry primarily serving the carpet manufacturing
sector in the southeastern region of the United States;
WHEREAS, Employee is currently serving as the Vice President
and Chief Financial Officer of the Company and the Company desires
to retain the services of the Employee in such capacity as a
valuable member of the Company's management team; and
WHEREAS, the Employee desires to continue in his present
employment with the Company as Vice President and Chief Financial
Officer and to enter into this Agreement for such purposes,
superseding all prior agreements between the Company, its
subsidiaries and/or predecessors and Employee.
NOW, THEREFORE, it is mutually agreed by and between the
parties hereto as follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this
Agreement, the Company hereby employs and agrees to continue the
employment of Bailey, and Bailey hereby accepts such continued
employment in his capacity as Vice President and Chief Financial
Officer. In this capacity, Bailey will report to the Board of
Directors.
ARTICLE II
DUTIES
(A) Bailey shall, during the term of his employment with the
Company, and subject to the direction and control of the Company's
Board of Directors, perform such duties and functions related to
this position as he may be called upon to perform by the Company's
Board of Directors during the term of this Agreement.
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(B) Bailey agrees to devote all of his business time and best
efforts to the performance of his duties for the Company and to
render such services for any subsidiary corporations of the Company
or Parent.
(C) Bailey shall perform, in conjunction with the Company's
Senior Management, to the best of his ability the following
services and duties for the Company and its subsidiary corporations
(by way of example, and not by way of limitation):
(i) Those duties attendent to the position with the
Company for which he is hired;
(ii) Corporate development;
(iii) Formulation of the Company's business plans and
implementation of such plans subject to the direction of the Board
of Directors.
(iv) Promotion of the relationships of the Company and
its subsidiary corporations with their respective employees,
customers, suppliers and others in the business community.
(D) Bailey shall be based at the Company's headquarters in
Calhoun, Georgia, and shall undertake such occasional travel,
within or without the United States as is or may be reasonably
necessary in the interests of the Company.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date hereof, the Company
shall pay to Bailey a salary at the rate of $104,000 per annum,
until June 30, 1997; $130,000 per annum, until June 30, 1998, and;
$156,000 per annum, until June 30, 1999, thereafter, provided,
however, that this Agreement shall then be in effect, which annual
salaries shall be payable in equal weekly installments or pursuant
to such regular pay periods adopted by the Company (the "Base
Salary").
(B) Bailey shall be entitled to receive a bonus (the "Bonus")
during each year of this Agreement, determined as follows: The
amount to be paid as a Bonus shall be determined as of each June
30th during the term hereof based upon the fiscal year end and
shall be equal to five percent (5%) of the first $1,000,000, upon
reaching $1,000,000 and six percent (6%) of the next $500,000, upon
reaching $1,500,000 and seven percent (7%) after $1,500,000, of all
the pre-tax profits of the Company as determined by the Company's
then independent auditors no later than 90 days following the end
of the Company's fiscal year and giving effect to and including
revenues received by the Company during the fiscal year excluding
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any expense deduction attributed to any bonus paid to any other
executive officer which bonus is predicated on operating results of
the Company (the "Pre-Tax Profit"). Such determination, for Bonus
purposes only, shall be made in accordance with generally accepted
accounting principles, consistently applied.
(C) Employee shall be entitled to receive reimbursement for
all his expenses incurred during the course of his performance of
his duties under this Agreement upon the delivery to the Company of
receipts for any such expenses, provided, however, that such
expenses qualify as a deduction by the business from income under
the Internal Revenue Code of 1986, as amended.
(D) The Company shall deduct from Employee's compensation all
federal, state and local taxes which it may now or may hereafter be
required to deduct.
ARTICLE IV
BENEFITS
(A) During the term hereof, (i) Bailey and his dependents
shall participate in the current medical, disability, life
insurance and other employee benefit plans the Company now
maintains or which it may adopt in the future; (ii) Bailey shall be
reimbursed by the Company upon presentation of appropriate vouchers
for all business expenses incurred by Bailey on behalf of the
Company, and; (iii) the Company shall provide Bailey with an
automobile suitable for his position and reimburse reasonable
automobile expenses including repairs, maintenance, gasoline
charges, mobile phone, etc. via receipted expense reports.
(B) In the event the Company wishes to obtain Key Man life
insurance on the life of Bailey, Bailey agrees to cooperate with
the Company in completing any applications necessary to obtain such
insurance and promptly submit to such physical examinations and
furnish such information as any proposed insurance carrier may
request.
(C) The Company will obtain and maintain during the full term
hereof and at its sole cost and expense a policy of life insurance
on the life of Bailey in the face amount of $1,000,000 payable to
a beneficiary named and designated by Bailey. Upon the conclusion
of this Agreement, all right, title and interest in the policy
shall be transferred to Bailey, and Bailey shall be responsible for
any premiums due after such transfer. Upon either the termination
of the policy or transfer of the policy to Bailey, the Company
shall be entitled to the percentage of the cash surrender value of
the policy as attributed to the payments made by the Company on
Bailey's behalf.
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(D) For each year of the term hereof, Bailey shall be
entitled to two weeks paid vacation.
ARTICLE V
NON-DISCLOSURE
Bailey shall not, at any time during or after the termination
of his employment hereunder except when acting on behalf of and
with the authorization of the Company, make use of or disclose to
any person, corporation, or other entity, for any purpose
whatsoever, any trade secret or other confidential information
concerning the Company's business, finances, proposed and current
services and pricing, and any information relating to the Company's
business (collectively referred to as the "Proprietary
Information"). For the purposes of this Agreement, trade secrets
and confidential information shall mean information disclosed to
Bailey or known by him as a consequence of his employment by the
Company, whether or not pursuant to this Agreement, and not
generally known in the industry, concerning the business, finances,
methods, operations, marketing information, pricing and information
relating to proposed expansion of the Company or the Company's
business plans. Bailey acknowledges that trade secrets and other
items of confidential information, as they may exist from time to
time, are valuable and unique assets of the Company, and that
disclosure of any such information would cause substantial injury
to the Company.
ARTICLE VI
RESTRICTIVE COVENANT
(A) In the event of the voluntary termination of employment
with the Company or Employee's discharge in accordance with Article
IX paragraph (C), Employee agrees that he will not, for a period of
two years following such termination, nor during the term of this
Agreement, directly or indirectly enter into or become associated
with or engage in any other business (whether as a partner,
officer, director, shareholder, employee, consultant, or
otherwise), which business is primarily involved in the
transportation industry serving the distribution needs of carpet
manufacturers located in the southeastern region of the United
States, either alone or in association with others.
(B) If any court shall hold that the duration of non-
competition or any other restriction contained in this paragraph is
unenforceable, it is our intention that same shall not thereby be
terminated but shall be deemed amended to delete therefrom such
provision or portion adjudicated to be invalid or unenforceable or
in the alternative such judicially substituted term may be
substituted therefor.
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ARTICLE VII
TERM
This Agreement shall be for a term commencing on the first
date set forth above and terminate 5:00 PM, August 31, 1999, unless
sooner terminated pursuant to the terms hereof.
ARTICLE VIII
DISABILITY DURING TERM
In the event that Bailey becomes totally disabled so that he
is unable or prevented from performing any one or all of his usual
duties hereunder for a period of four (4) consecutive months then,
and in that event, the Company shall continue to compensate him and
he shall receive his Base Salary as provided under Article III of
this Agreement until the expiration of the term of this Agreement.
The aforesaid obligations of the Company shall not extend beyond
the term of this Agreement. The obligation of the Company to make
the aforesaid payments shall be modified and reduced and the
Company shall receive a credit for all disability insurance
payments which Bailey may receive or to which he may become
entitled; and provided further that the payments herein provided
shall not extend beyond the term of this Agreement.
ARTICLE IX
TERMINATION
The Company may terminate this Agreement:
(A) Upon the death of Bailey during the term hereof, except
that Bailey's legal representatives, successors, assigns and heirs
shall have those rights and interests as otherwise provided in this
Agreement, including the right to receive accrued by unpaid bonus
compensation, if any.
(B) Subject to the terms of Article VIII herein, upon written
notice from the Company to Bailey, if Bailey becomes totally
disabled and as a result of such total disability, has been
prevented from and unable to perform all of his duties hereunder
for a consecutive period of four (4) months.
(C) If Bailey engaged in fraud, misappropriation of Company
funds or gross negligence in the performance of his duties.
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ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the
parties and supersedes all prior agreements between the parties,
whether oral or written, without prejudice to Bailey's right to all
accrued compensation prior to the effective date of this Agreement.
ARTICLE XI
ARBITRATION
Any dispute arising out of the interpretation, application
and/or performance of this Agreement with the sole exception of any
claim, breach or violation arising under Articles V or VI hereof
shall be settled through final and binding arbitration before a
single arbitrator in the City of Atlanta, the State of Georgia in
accordance with the rules of the American Arbitration Association.
The arbitrator shall be selected by the Association and shall be an
attorney at law experienced in the field of employment law. Any
judgment upon any arbitration award may be entered in any court,
federal or state, having competent jurisdiction of the parties.
ARTICLE XII
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
remain in full force and effect in all other circumstances.
ARTICLE XIII
NOTICE
All notices required to be given under the terms of this
Agreement shall be in writing and shall be deemed to have been duly
given only if delivered to the addressee in person or mailed by
certified mail, return receipt requested, to the address as
included in the Company's records or to any other address as the
party to receive the notice shall advise by due notice given in
accordance with this paragraph.
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ARTICLE XIV
BENEFIT
This Agreement shall inure to, and shall be binding upon, the
parties hereto, the successors and assigns of the Company, and the
heirs and personal representatives of Bailey.
ARTICLE XV
WAIVER
The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach of construction and validity.
ARTICLE XVI
GOVERNING LAW
This Agreement has been negotiated and executed in the State
of Georgia, and Georgia law shall govern its construction and
validity.
ARTICLE XVII
JURISDICTION
Any or all actions or proceedings which may be brought by the
Company or Bailey under this Agreement, except for Articles V and
VI above, shall be resolved by arbitration in the City of Atlanta,
State of Georgia pursuant to Article XI above and Bailey hereby
consents to the jurisdiction of such arbitration process; any
disputes arising under Article V or VI hereof may be resolved by a
proceeding brought by either party in either the State or Federal
Courts of the State of Georgia, to which jurisdiction(s) the
parties hereby expressly consent.
ARTICLE XVIII
SEVERANCE COMPENSATION
The Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
Bailey, to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change
in control of the Company.
This Agreement sets forth the severance compensation which the
Company agrees it will pay to Bailey if Bailey's employment with
the Company terminates under one of the circumstances described
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herein following a Change in Control of the Company (as defined
herein). The terms of this Article XVIII shall supersede any other
provision of this Agreement after a Change in Control as defined
below.
1. Term. This Article XVIII shall terminate, except to the
extent that any obligation of the Company hereunder remains unpaid
as of such time, upon the occurrence of the earliest of the
following events: (i) the termination of this Agreement including
any renewal period, if a Change in Control of the Company has not
occurred within such three-year period; (ii) the termination of
Bailey's employment with the Company based on death, Disability (as
defined in Section 3(b)), Retirement (as defined in Section 3(c))
or Cause (as defined in Section 3(d)) or by Bailey other than for
Good Reason (as defined in Section 3(e)); or (iii) one year from
the date of a Change in Control of the Company if Bailey has not
terminated his employment for Good Reason as of such time.
2. Change in Control. No compensation shall be payable
under this Article XVIII unless and until (a) there shall have been
an involuntary Change in Control of the Company, while Bailey is
still an employee of the Company and (b) Bailey's employment by the
Company thereafter shall have been terminated in accordance with
Section 3. For purposes of this Agreement, a Change in Control of
the Company shall be deemed to have occurred if (i) there shall be
consummated (x) any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a
merger of the Company in which the holders of the Company's Common
Stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately
after the merger, or (y) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Company, or (ii)
the stockholders of the Company approved any plan or proposal for
the liquidation or dissolution of the Company, or (iii) any person
(as such term is used in Sections 13(d) and 13(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 20% or more of the Company's outstanding
Common Stock, or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute
a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
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3. Termination Following Change in Control.
(a) If a Change in Control of the Company shall have
occurred while Bailey is still an employee of the Company, Bailey
shall be entitled to the compensation provided in Section 4 upon
the subsequent termination of Bailey's employment with the Company
by Bailey or by the Company unless such termination is as a result
of (i) Bailey's death; (ii) Bailey's disability (as defined in
Section 3(b) below); (iii) Bailey's Retirement (as defined in
Section 3(c) below); (iv) Bailey's termination by the Company for
Cause (as defined in Section 3(d) below); or (v) Bailey's decision
to terminate employment other than for Good Reason (as defined in
Section 3(e) below).
(b) Disability. If, as a result of Bailey's incapacity
due to physical or mental illness, Bailey shall have been absent
from his duties with the Company on a full-time basis for four
months and within 30 days after written notice of termination is
thereafter given by the Company Bailey shall not have returned to
the full-time performance of Bailey's duties, the Company may
terminate this Agreement for "Disability", except, however, and
notwithstanding the Company's termination of this Agreement, the
Company shall remain obligated to pay to Employee his Base Salary
throughout the remaining Term or any renewal term of this
Agreement: this provision shall survive any termination of this
Agreement.
(c) Retirement. The term "Retirement" as used in this
Article XVIII shall mean termination by the Company or Bailey of
Bailey's employment based on Bailey's having reached age 65 or such
other age as shall have been fixed in any arrangement established
with Bailey's consent with respect to the Executive.
(d) Cause. the Company may terminate Bailey's
employment for Cause. For purposes of this Agreement only, the
Company shall have "Cause" to terminate Bailey's employment
hereunder only on the basis of fraud, misappropriation or
embezzlement on the part of Bailey. Notwithstanding the foregoing,
Bailey shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to Bailey a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Company's Board of
Directors at a meeting of the Board called and held for the purpose
(after reasonable notice to Bailey and an opportunity for Bailey,
together with Bailey's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board Bailey was
guilty of conduct set forth in the second sentence of this Section
3(d) and specifying the particulars thereof in detail.
(e) Good Reason. Bailey may terminate Bailey's
employment for Good Reason at any time during the term of this
Agreement. For purposes of this Agreement "Good Reason" shall mean
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any of the following (without Bailey's express written consent):
(i) the assignment to Bailey by the Company of
duties inconsistent with Bailey's position, duties,
responsibilities and status with the Company immediately prior to
a Change in Control of the Company, or a change in Bailey's titles
or offices as in effect immediately prior to a Change in Control of
the Company, or any removal of Bailey from or any failure to
reelect Bailey to any of such position, except in connection with
the termination of his employment for Disability, Retirement or
Cause or as a result of Bailey's death or by Bailey other than for
Good Reason;
(ii) a reduction by the Company in Bailey's base
salary as in effect on the date hereof or as the same may be
increased from time to time during the term of this Agreement or by
the Company's failure to increase (within 12 months of Bailey's
last increase in base salary) Bailey's base salary after a Change
in Control of the Company in an amount which at least equals, on a
percentage basis, the average percentage increase in base salary
for all officers of the Company effected in the preceding 12
months;
(iii) any failure by the Company to continue in
effect any benefit plan or arrangement (including, without
limitation, the Company's life insurance and medical, dental,
accident and disability plans) in which Bailey is participating at
the time of a Change in Control of the Company (or any other plans
providing Bailey with substantially similar benefits) (hereinafter
referred to as "Benefit Plans"), or the taking of any action by the
Company which would adversely affect Bailey's participation in or
materially reduce Bailey's benefits under any such Benefit Plan or
deprive Bailey of any material fringe benefit enjoyed by Bailey at
the time of a Change in Control of the Company;
(iv) any failure by the Company to continue in
effect any incentive plan or arrangement (including, without
limitation, bonus and contingent bonus arrangements and credits and
the right to receive performance awards and similar incentive
compensation benefits) in which Bailey is participating at the time
of a Change in Control of the Company (or any other plans or
arrangements providing him with substantially similar benefits)
(hereinafter referred to as "Incentive Plans") or the taking of any
action by the Company which would adversely affect Bailey's
participation in any such Incentive Plan or reduce Bailey's
benefits under any such Incentive Plan, expressed as a percentage
of his base salary, by more than 10 percentage points in any fiscal
year as compared to the immediately preceding fiscal year;
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(v) any failure by the Company to continue in
effect any plan or arrangement to receive securities of the Company
(including, without limitation, the Company's Incentive Plan, and
any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants
thereof) in which Bailey is participating at the time of a Change
in Control of the Company (or plans or arrangements providing him
with substantially similar benefits) (hereinafter referred to as
"Securities Plans") or the taking of any action by the Company
which would adversely affect Bailey's participation in or
materially reduce Bailey's benefits under any such Securities Plan;
(vi) a relocation of the Company's principal
executive offices to a location outside of the Atlanta or Calhoun,
Georgia regions, or Bailey's relocation to any place other than the
location at which Bailey performed Bailey's duties prior to a
Change in Control of the Company, except for required travel by
Bailey on the Company's business to an extent substantially
consistent with Bailey's business travel obligations at the time of
a Change in Control of the Company;
(vii) any failure by the Company to provide Bailey
with the number of paid vacation days to which Bailey is entitled
at the time of a Change in Control of the Company;
(viii) any material breach by the Company of any
provision of this Agreement;
(ix) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the
Company; or
(x) any purported termination of Bailey's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 3(f), and for
purposes of this Agreement, no such purported termination shall be
effective.
(f) Notice of Termination. Any termination by the
Company pursuant to Section 3(b), 3(c) or 3(d) shall be
communicated by a Notice of Termination. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice
which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of Bailey's employment under the provision so indicated. For
purposes of this Agreement, no such purported termination by the
Company shall be effective without such Notice of Termination.
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(g) Date of Termination. "Date of Termination" shall
mean (a) if this Agreement is terminated by the Company for
Disability, 30 days after Notice of Termination is given to Bailey
(provided that Bailey shall not have returned to the performance of
Bailey's duties on a full-time basis during such 30-day period) or
(b) if Bailey's employment is terminated by the Company for any
other reason, the date on which a Notice of Termination is given;
provided that if within 30 days after any Notice of Termination is
given to Bailey by the Company Bailey notifies the Company that a
dispute exists concerning the termination, the Date of Termination
shall be the date the dispute is finally determined, whether by
mutual agreement by the parties or upon final judgment, order or
decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
4. Severance Compensation upon Termination of
Employment.
If the Company shall terminate Bailey's employment other than
pursuant to Section 3(b), 3(c) or 3(d) or if Bailey shall terminate
his employment for Good Reason, then the Company shall:
(i) pay to Bailey as severance pay in a lump sum,
in cash, on the fifth day following the Date of Termination, an
amount equal to three times the aggregate annual compensation,
including Base Salary and Bonus, paid to Bailey during the fiscal
year preceding the Change in Control of the Company by the Company
and any of its subsidiaries subject to United States income taxes;
provided, however, that if the lump sum severance payment under
this Section 4, either alone or together with other payments which
Bailey has the right to receive from the Company, would constitute
a "parachute payment" (as defined in Section 280G of the Internal
Revenue Code of 1954, as amended (the "Code")), such lump sum
severance payment shall be reduced to the largest amount as will
result in no portion of the lump sum severance payment under this
Section 4 being subject to the excise tax imposed by Section 4999
of the Code. The determination of any reduction in the lump sum
severance payment under this Section 4 pursuant to the foregoing
proviso shall be made by Bailey in good faith, and such
determination shall be conclusive and binding on the Company; and
(ii) within ten days following the Date of
Termination, shall cause Bailey to be relieved of any and all
personal guarantees of Company obligations, and fully pay all
outstanding loans and other obligations of the Company to the
Executive. If, for any reason, the Company fails to comply with
its obligations under this subparagraph, Bailey shall have the
option, at his sole discretion, to convert up to the principal
amount of such Notes to shares of the Company's Common Stock at the
rate of $2.50 per share; provided, that the conversion of all or a
portion of any outstanding loans by Bailey shall not relieve the
Company of any of its obligations arising under this subparagraph
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including the obligations to repay any unconverted loans and
relieve Bailey of any personal guarantees.
5. No Obligation to Mitigate Damages; No Effect on
Other Contractual Rights.
(a) Bailey shall not be required to mitigate damages or
the amount of any payment provided for under this Article XVIII by
seeking other employment or otherwise, nor shall the amount of any
payment provided for under this Article XVIII be reduced by any
compensation earned by Bailey as the result of employment by
another employer after the Date of Termination, or otherwise.
(b) The provisions of this Article XVIII, and any
payment provided for hereunder, shall not reduce any amounts
otherwise payable, or in any way diminish Bailey's existing rights,
or rights which would accrue solely as a result of the passage of
time, under any Benefit Plan, Incentive Plan or Securities Plan,
employment agreement or other contract, plan or arrangement.
6. Successor to the Company.
(a) The Company will require any successor or assignee
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) of all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
satisfactory to Bailey, expressly, absolutely and unconditionally
to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
Any failure of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a
material breach of this Agreement and shall entitle Bailey to
terminate Bailey's employment for Good Reason. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor or assign to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in
this Section 6 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law. If at any
time during the term of this Agreement Bailey is employed by any
corporation a majority of the voting securities of which is then
owned by the Company, "Company" as used in Sections 3 and 4 hereof
shall in addition include such employer. In such event, the
Company agrees that it shall pay or shall cause such employer to
pay any amounts owed to Bailey pursuant to Section 4 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by Bailey's personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Bailey should die while any amounts are
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still payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to Bailey's devisee, legatee, or other designee or, if
there be no such designee, to Bailey's estate.
7. Legal Fees and Expenses. The Company shall pay all
legal fees and expenses which Bailey may incur as a result of the
Company's contesting the validity, enforceability or Bailey's
interpretation of, or determinations under, this Article XVIII.
ARTICLE XIX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the
parties hereto. No change, addition or amendment shall be made
hereto, except by written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and affixed their hands and seals the day and year first
above written.
(Corporate Seal) THE COMPANY
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President
and Chief Executive Officer
EMPLOYEE: Vice President and
Chief Financial Officer
s/Erik L. Bailey
Erik L. Bailey
emplagr.erk
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Exhibit 10.6
$1,000,000
REVOLVING CREDIT AGREEMENT
between
BIO-DYNE CORPORATION
and
CONTINENTAL AMERICAN TRANSPORTATION, INC.
Dated May 23, 1996
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REVOLVING CREDIT AGREEMENT
THIS AGREEMENT is made as of May 23, 1996, by and between
Bio-Dyne Corporation, a Georgia corporation (the "Borrower"), and
Continental American Transportation, Inc., a Colorado corporation
(the "Lender.").
SECTION 1. DEFINITIONS
1.1. Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below:
Affiliate of a Person shall mean any Person controlling,
controlled by, or under common control with, such person.
Bankruptcy Law shall mean Title 11 of the U.S. Code, as in effect
from time to time, or any similar Federal or state law for the
relief of debtors.
Borrowing Date shall mean the date of any borrowing by the
Borrower pursuant hereto.
"Business Day means any day other than a Saturday, Sunday or
other day-on which commercial banks are authorized or required by
law to close in New York City.
Debt shall mean any indebtedness, contingent or otherwise, of the
Borrower, including, without limitation, (i) indebtedness
evidenced by guarantees or in effect guarantees by the Borrower
of debt of any other Person, (ii) indebtedness evidenced by
notes, debentures, bonds or similar instruments or letters of
credit, (iii) indebtedness representing the deferred and unpaid
balance of the purchase price of any property or interest therein
and obligations of the Borrower under any agreement to lease, or
lease of, any real or personal property in each case which, in
accordance with generally accepted accounting principles then in
effect, appears as a liability upon a balance sheet of the
Borrower, and (iv) obligations of the Borrower under interest
rate swaps, caps, collars, calls and similar arrangements, and
foreign currency hedges entered into in respect of any
indebtedness or obligations.
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Default shall mean any event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default.
ERISA means the Employee Retirement Income Security Act of
1974, as amended.
Environmental Law means any and all present and future federal,
state, local and statutes, laws, regulations, ordinances,
rules,judgments, orders, decrees, permits, grants, franchises,
licenses or agreements relating to .(a) the protection of the
environment, health or workers safety; (b) pollution or
environmental contamination; or (c) the use, processing,
distribution, generation, treatment, storage, recycling,
transportation, disposal, handling, Release or threatened or
potential Release of any Material of Environmental Concern.
Event of Default shall have the meaning assigned to it in
Section 7.1.
Governmental or Regulatory Body means any government or political
subdivision thereof, whether federal, state, county, local or
foreign, or any agency, authority or instrumentality of any such
government or political subdivision.
Lien shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the
foregoing).
Loan shall have the meaning assigned to it in Section 2.1.
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Loan Commitment shall have the meaning assigned to it in Section
2.1.
Loan Commitment Period shall mean the period from the date
hereof through the Termination Date.
Material Adverse Effect or Material Adverse Change means any
change or changes or effect or effects that individually or in
the aggregate are or may reasonably be expected to be materially
adverse to (a) the business or the assets, operations, income,
prospects or conditions (financial or otherwise) of the Borrower
or its Subsidiaries or (b) the ability of the Borrower to perform
its obligations under this Agreement.
Material of Environmental Concern means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous, petroleum or
petroleum products.
Note shall have the meaning assigned to it in Section 2.2.
Person shall mean an individual, a corporation, a partnership, a
joint venture, a firm, an enterprise, a trust, an unincorporated
organization, a government or any agency or political subdivision
thereof.
Plan means any plan, fund, program, understanding, policy,
arrangement, contract or commitment, whether qualified or not
qualified for federal income tax purposes, whether formal or
informal, whether for the benefit of a single individual or more
than one individual, which is in the nature of (a) an employee
pension benefit plan (as defined in ERISA Sec. 3(2)) (b) an employee
welfare benefit plan (as defined in ERISA Sec. 3(l)) or (c) an
incentive, deferred compensation, or other benefit arrangement
for employees, former employees, their dependents or their
beneficiaries.
Release means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment.
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Tax or Taxes mean all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign
Taxing Authority, including, without limitation, gross income,
gross receipts, income, capital, excise, property (tangible and
intangible), sales, transfer, value added, employment, payroll
and franchise taxes and such terms shall include any interest,
penalties or additions attributable to or imposed on or with
respect to such assessments.
Termination Date shall mean the date falling 2 years following
the date hereof.
SECTION 2. AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS
2.1 The Loan Commitment. Subject to the terms and
conditions of this Agreement, the Lender agrees to make revolving
credit loans (individually, a "Loan"; collectively, the "Loans")
to the Borrower from time to time during the Loan Commitment
Period in an aggregate principal amount at any one time
outstanding not to exceed $1,000,000(the "Loan Commitment").
2.2 The Note. The Loans made by the Lender shall be
evidenced by a promissory note of the Borrower substantially in
the form of Exhibit A, with appropriate insertions, which shall
be payable to the order of the Lender and shall represent the
obligation of the Borrower to pay the amount of the Loan or, if
less, the aggregate unpaid principal amount of all Loans made by
the Lender, with interest thereon as prescribed in Section 2.5.
The date and amount of each Loan made by the Lender and each
payment of principal with respect thereto may be endorsed by the
Lender on the schedule annexed to and constituting a part of the
Note, which endorsement, absent manifest error, shall constitute
prima facie evidence of the accuracy of the information endorsed.
The Note shall (a) be dated the date hereof, (b) be stated to
mature on the Termination Date and (c) bear interest for the
period from the date hereof until paid in full on the unpaid
principal amount thereof from time to time outstanding at the
rates prescribed in Section 2.5.
2.3 Procedure for Borrowing Under Loan Commitment.
Except with respect to the Initial Advance (as hereinafter
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defined) and the Subsequent Advance (as hereinafter defined), the
Borrower may borrow under the Loan Commitment at any time during
the Loan Commitment Period following the date of the Subsequent
Advance, provided that the Borrower shall give the Lender
irrevocable notice at least five (5) Business Days prior to the
requested Borrowing Date, specifying (i) the requested Borrowing
Date (which shall be a Business Day) and (ii) the amount of the
requested borrowing. Not later than 12:00 noon, New York time,
on the date specified in such notice from the Borrower, the
Lender shall make available to the Borrower at such account of
the Borrower as the same may designate from time to time, in
immediately available funds, the amount to be then loaned by it.
2.4 Optional Prepayment The Borrower may, at its option,
prepay the Note without premium or penalty, in whole or in part,
upon at least two Business Day's prior notice to the Lender,
specifying the date and amount of prepayment. Such notice shall
be irrevocable and the payment amount specified in such notice
shall be due and payable on the date specified.
2.5 Interest Rates. (a) The Loans shall bear interest
(calculated on the basis of a 360-day year for the actual number
of days elapsed) on the unpaid principal amount thereof at a rate
per annum equal to 12% payable.quarterly in arrears on the last
day of each June, September, December and March in each year.
(b) If all or a portion of the principal amount of any of
the Loans shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue principal
amount shall bear interest at the rate of 18!k per annum, to the
extent permitted by law.
2.6 Use of Proceeds. The Borrower covenants that it will
apply all of the proceeds of the Loan for the Borrower's general
corporate purposes, except with respect to the Initial Advance
(as hereinafter defined).
2.7 Payment. All payments made by the Borrower to the
Lender shall be made in federal or other immediately available
funds in lawful money of the United States for credit, not later
than 12:00 noon, New York time, or the day when due, or in any
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case by such other reasonable method or at such other address as
the Lender shall have from time to time notified the Borrower.
2.8 Maturity of Loans. The outstanding principal amount of
the Loans shall be due and payable on the Termination Date.
2.9 Initial Advance. The Lender agrees at Closing to
advance an amount equal to $300,000 (the "Initial Advance") to
Borrower to be disbursed in accordance with the terms and
conditions of that certain Escrow Agreement by and among the
Borrower, the Lender and Kutak Rock, as escrow agent, as amended
by First Amendment to Escrow Agreement, forms of which are
attached hereto as Exhibit B. As a condition to Lender's making
the Initial Advance, the Borrower has agreed to use a portion of
the Initial Advance to repay $100,000 of that certain promissory
note of the Borrower to Edward and Carol Beam currently in the
aggregate amount of $171,525.66 and to repay $50,000 of that
certain promissory note of the Borrower to Edward Beam, Jr.
currently in the aggregate amount of $122,823.55.
2.10 Subsequent Advance. The Lender agrees to advance an
amount of not less than $150,000 (the "Subsequent Advance") by or
before May 31, 1996 (or such other date as agreed upon by the
parties) so long as the Resignations and Appointments (as such
terms are hereinafter defined) are delivered in form and
substance satisfactory to Lender, forms of which have already
been approved by Lender. As a condition to Lender's making the
Subsequent Advance, the Borrower has agreed to use a portion of
the Subsequent Advance to repay $37,094.58 of that-certain
promissory note of the Borrower to Edward and Carol Beam and to
repay $37,905.43 of that certain promissory note of the Borrower
to Edward Beam, Jr.
SECTION 3. COVENANTS
3.1 Payment of Note. The Borrower shall pay the principal
of, and interest on, the Note on the dates and in the manner
provided herein and in the Note.
3.2 Financial and Business Information. The Borrower
covenants and agrees that so long as the Loan Commitment shall be
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in effect or any Debt under the Note shall be outstanding,
the Borrower will deliver to the Lender:
(a) as soon as available, but not later than 120 days after
the close of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower as at the end of such fiscal year
and the related consolidated statements of income and retained
earnings and changes in financial position of the Borrower for
such fiscal year, setting forth in each case in the comparative
form the figures for the previous year, reported on by
independent certified public accountants of nationally recognized
standing selected by the Borrower;
(b) promptly on their becoming available, any such other
financial data, information or reports as from time to time may
be furnished to all stockholders of the Borrower in their
capacity as stockholders.
3.3 Notice of Default. If any one or more events occur
which constitute a Default or an Event of Default, upon obtaining
knowledge thereof, the Borrower will forthwith give notice to the
Lender, specifying the nature and status of the Default or Event
of Default.
3.4 Covenants of the Borrower. The Borrower covenants and
agrees that from and after the date hereof to the date of the
making of the Subsequent Advance:
(a) Neither the Borrower nor any of its
Subsidiaries will sell, pledge, encumber, assign or transfer, or
enter into any agreement, commitment, instrument or contract
pursuant to which any right, title or interest may be sold,
pledged, encumbered, assigned or transferred in or to the shares
of capital stock of the Borrower or any of its Subsidiaries.
(b) The Borrower and its Subsidiaries shall
continue to conduct their business and affairs in the ordinary
course of business and shall not enter into any agreement,
commitment, instrument or contract or take any action out of the
ordinary course of business, including without limitation:
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(i) Declare, or pay, any dividend or any other distribution
with respect to the capital stock of the Borrower or its
Subsidiaries, or purchase or redeem any of such stock;
(ii) Sell or issue, or enter into any contract, instrument
or agreement pursuant to which the Borrower or its Subsidiaries
might be obligated to sell or issue, any capital stock or any
other security;
(iii) Enter into any mortgage, indenture, pledge or other
contract, instrument or agreement, or take, suffer or permit any
action to be taken, as the result of which any lien, claim,
charge or encumbrance of any kind or nature whatsoever would be
established or created with respect to any of the assets of the
Borrower or its Subsidiaries;
(iv) Borrow any money, or enter into any contract,
commitment or agreement to borrow any money on behalf of the
Borrower or its Subsidiaries; and
(v) Pay, or enter into any contract, commitment or
agreement to pay any additional compensation, bonus or commission
or any benefit of any kind to any officer, director or consultant
of the Borrower and its Subsidiaries.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement
and to make the Loans hereunder, the Borrower hereby represents
and warrants as follows:
4.l Organization and Qualification. Each of the Borrower
and its direct and indirect subsidiaries ("Subsidiaries") is a
corporation validly existing and in good standing under the laws
of the state of its incorporation, and has all requisite
corporate power and authority to (a) own, lease and operate its
properties and assets as they are now owned, leased and operated
and (b) carry on its business as now presently conducted and as
proposed to be conducted. Each of the Borrower and its
Subsidiaries is duly qualified to do business in each
jurisdiction in which the nature of its business or properties
makes such qualification necessary, except where the failure to
do so would not have a Material Adverse Effect.
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The jurisdictions in which the Borrower and its Subsidiaries
are qualified are set forth on Schedule 4.1.
4.2 Capitalization; Subsidiaries and Affiliates. For each
of the Borrower and its Subsidiaries, if any, Schedule 4.2 sets
forth the par value, number of authorized shares of capital stock
and number of issued and outstanding shares of each class of its
capital stock. All of the issued and outstanding shares of
capital stock of each of the Borrower and its Subsidiaries are
duly authorized, validly issued, fully paid and non-assessable.
All of the issued and outstanding shares of the Borrower and its
Subsidiaries are owned of record by the shareholders attached to
Schedule 4.2 as of April 25, 1996. Except for those certain
warrants set forth on the Borrower's SB-2 Registration Statement
effective April 18, 1996 (the "Registration Statement"), there
are no securities outstanding which are exchangeable or
exercisable for, or convertible into shares of capital stock of
the Borrower and its Subsidiaries. Except as set forth on
Schedule 4.2, the Borrower has no subsidiaries nor does any
affiliate of the Borrower or any of its Subsidiaries thereof own
any equity interest in any other corporation, partnership, joint
venture or other entity. To the best knowledge of the Borrower,
no officer, director or five percent (5%) or greater stockholder
of the Borrower has been convicted of any felony, securities law
violation or been a party to any agreement, understanding or
consent with any state or federal securities commission or the
National Association of Securities Dealers.
4.3. Validity and Execution of Agreement. The Borrower has
the full legal right, capacity and power and all requisite
corporate authority and approval required to enter into, execute
and deliver this Agreement and any other agreement or instrument
contemplated hereby, and to perform fully its respective
obligations hereunder and thereunder. The board of directors of
the Borrower has approved the transactions contemplated pursuant
to this Agreement and each of the other agreements required to be
entered into pursuant hereto by the Borrower. This Agreement and
such other agreements and instruments have been duly executed and
delivered by the Borrower and each constitutes the valid and
binding obligation of the Borrower enforceable against it in
accordance with its terms, subject to the qualifications that
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enforcement of the rights and remedies created hereby is subject
to (i) bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and
remedies of creditors, and (ii) general principals of equity
(regardless of whether such enforcement is considered in a
proceedings in equity or at law).
4.4. No Conflict. Neither the execution and delivery of
this Agreement nor the performance by the Borrower of the
transactions contemplated hereby will violate or conflict with
(a) any of the provisions of the Articles of Incorporation or By-
Laws of the Borrower; (b) or result in the acceleration of, or
entitle any party to accelerate the maturity or the cancellation
of the performance of any obligation under, or result in the
creation or imposition of any Lien in or upon the assets of the
Borrower or constitute a default (or an event which might, with
the passage of time.or the giving of notice, or both, constitute
a default) under any contract, (c) to the best of Borrower's
knowledge, any order, judgment, regulation or ruling of any
Governmental or Regulatory Body to which the Borrower is a party
or by which any of its property or assets may be bound or
affected or to the best of . Borrower's knowledge, with any
provision of any law, rule, regulation, order, judgment, or
ruling of any Governmental or Regulatory Body applicable to the
Borrower.
4.5 Litigation. Except as disclosed in the Registration
Statement, there are no outstanding orders, judgments,
injunctions, investigations, awards or-decrees of any court,
Governmental or Regulatory Body or arbitration tribunal by which
the Borrower or its Subsidiaries, or any of its securities,
assets, properties or business is bound. Except as disclosed in
the Registration Statement, there are no actions, suits, claims,
legal, administrative or arbitration proceedings pending or, to
the best knowledge of the Borrower, overtly threatened (whether
or not the defense thereof or liabilities in respect thereof are
covered by insurance) against or affecting the Borrower or any
Affiliate thereof, or any of its assets or properties, that,
individually or in the aggregate, could, if determined adversely
to the Borrower or such affiliate have a Material Adverse Effect,
nor, to the best knowledge of the Borrower, are there any facts
which are likely to give rise to any such action, suit, claim,
investigation or legal, administrative or arbitration proceeding.
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4.6 The Assets. The Borrower owns outright and has good and
marketable title (except for leasehold interests specifically set
forth on Schedule 4.6 and its assets pledged to Colonial
Financial Services, a Division of First Factors Corporation) to
its assets, free and clear of any Lien. To the best of
Borrower's knowledge, the assets reflected on Borrower's
Financial Statements (as hereinafter defined) constitute all of
the assets necessary and appropriate for the. conduct of
Borrower's business and the business of its Subsidiaries in
substantially the same manner as its business has heretofore been
conducted.
4.7 Intangible Property. No patents, trademarks, service
marks, trade names, copyrights, logos and the like and franchises
exist that are material to the Borrower's business operations.
4.8 Inventory. The inventory of the Borrower and its
Subsidiaries is or was, prior to the sale,thereof, in good and
merchantable condition and suitable and usable or saleable in the
ordinary course of business for the purposes for which intended.
Assuming that the Borrower has sufficient funds with which to pay
suppliers, to the best of Borrower's knowledge, the Borrower is
not aware of any material adverse condition affecting the supply
of inventory available to the Borrower and its Subsidiaries.
4.9. Accounts Receivable. All accounts and notes receivable
reflected on the Borrower's Financial Statements, and all
accounts and notes receivable arising subsequent to December 31,
1995, (a) have arisen in the ordinary course of business of the
Borrower, (b) represent valid obligations due to the Borrower
enforceable in accordance with their terms and (c) except to the
extent of the reserves therefor reflected on the Borrower's
Financial Statements, are fully collectible in the ordinary
course of business in the aggregate recorded amounts thereof in
accordance with their terms.
4.10 Financial Statements. The balance sheet of the
Borrower as of December 31, 1995 and the related statements of
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income and cash flow for the 3 and 9 months then ended, including
the footnotes thereto (collectively, the "Financial Statement"),
true and complete copies of which have been delivered to the
Lender, will fairly present the financial position of the
Borrower as at such date and for the period then ended, in
accordance with generally accepted accounting principles as then
in effect (GAAP) consistently applied for the period covered
thereby.
4.11 Undisclosed Liabilities. To the best of Borrower's
knowledge, the Borrower does not have any Liabilities that is not
fully and adequately reflected or reserved against on the
Borrower Financial Statements or covered in full by insurance.
To the best of Borrower's knowledge, the Borrower and its
Subsidiaries do not have any, direct or indirect, indebtedness,
liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated
or unliquidated, secured or unsecured, accrued, ' absolute,
contingent or otherwise (collectively, the "Liabilities"),
whether or not of a kind required by GAAP to be set forth on a
financial statement, other than (a) Liabilities incurred since
December 31, 1995 in the ordinary course of business (none of
which is to the best of Borrower's knowledge a liability for a
breach of contract, breach of warranty, tort or infringement
claim or lawsuit), none of which individually or in the
aggregate, to the best of the Borrower's knowledge has had.or
could reasonably be expected to have a Material Adverse Effect or
(b) Liabilities disclosed and reflected as liabilities on the
Financial Statements.
4.12 No Material Adverse Change. Except as disclosed in the
Registration Statement and with respect to a diminished cash
position, supplier credit and inventory since April 10, 1996,
there has been no material adverse change in the business,
operations or condition (financial or otherwise) of the Borrower
or its Subsidiaries, or in the assets, liabilities, net worth or
properties of the Borrower or its Subsidiaries, and the Borrower
does not know of any such change that is threatened, or has there
been any damage, destruction or loss which could have a Material
Adverse Effect, whether or not covered by insurance.
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4.13 Tax Matters. All Tax Returns required to be filed with
respect to the Borrower have been duly filed and were in all
material respects true, complete and correct and filed on a
timely basis, (b) the Borrower has paid all Taxes that are due,
or claimed or asserted by the IRS or any Taxing,Authority to be
due from the Borrower for the periods covered by such Tax Returns
or Borrower has duly and fully provided reserves adequate to pay
all Taxes in the Borrower's Financial Statements, (c) the
Borrower has complied in all material respects with all
applicable laws relating to withholding of Taxes (including
withholding Taxes pursuant to Sections 1441 and 1442 of the
Internal Revenue Service Code of 1986, as amended (the "Code,,)
and similar provisions under any other applicable laws) and the
payment thereof over to the Taxing Authorities (d) insofar as is
known to Borrower,.the income Tax Returns of the Borrower have
not been audited or examined by any the Taxing Authority
(including the IRS) for any period for which the applicable
statute of limitations period has not yet expired and no statute
of limitations for any such period has been extended.
4.14 Contracts and Other Agreements. Schedules 4.14 and
4.15 sets forth all material written agreements (and, to the best
knowledge of the Borrower, any oral agreement) and . arrangements
to which either the Borrower or its Subsidiaries is a party or by
or to which the Borrower or its Subsidiaries or any of their
respective assets or properties is bound or subject and
specifically identifies which contracts or arrangements require
the consent of a third party upon a change in control of the
Borrower.
4.15 Real Estate. Schedule 4.15 sets forth a list and
supplies descriptions of (a) all real property owned by the
Borrower and its Subsidiaries; (b) all leases, subleases or other
agreements under which each of the Borrower and its Subsidiaries
is lessor or lessee of any real property; (c) all options held by
the Borrower or contractual obligations on its respective part to
purchase or acquire any interest in real property (as set forth
on Schedule 4.15) and (d) all options granted by the Borrower or
contractual obligations on any such Persons' part to sell or
dispose of any interest in real property (as set forth on
Schedule 4.15) (collectively, the "Borrower Real Estate
Documents"). To the best of Borrower's knowledge, all of the
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Borrower's Real Estate Documents, true, correct and complete
copies of which have been delivered to the Borrower, are in full
force and effect and the Borrower has not received any notice of
any default thereunder. Except as separately identified on
Schedule 4.15, no approval or consent of any person is needed for
the Borrower's Real Estate Documents to continue to be in full
force and effect and such documents will not become unenforceable
by the Borrower following the consummation of the transactions
contemplated by this Agreement.
4.16 Transactions with Affiliates. Except in the ordinary
course of each party's business and as set forth on Schedule
4.16, no Affiliate of the Borrower or its Subsidiaries has: (a)
borrowed money from or loaned money to the Borrower which remains
outstanding; (b) any contractual or other claim, express or
implied, of any kind whatsoever against or by any Affiliate; (c)
any interest in any property or assets used by any Affiliate in
their respective businesses; or (d) engaged in any other
transaction with any Affiliate (other than employment
relationships).
4.17 ERISA. (a) Except as set forth on Schedule 4.17, the
Borrower does not sponsor, or maintain, or have any obligation to
contribute to, or have any liability under, nor is Borrower
otherwise a Party to, any Plan. None of the Plans is a
multiemployer plan with the meaning of Section 3(37) of ERISA and
none of the Plans is subject to Title IV of ERISA. Neither the
Borrower nor any Affiliate has.ever participated in nor had an
obligation to contribute to any "multiemployer plan" or any plan
subject to Title IV of ERISA.
(b) with respect to each Plan, Borrower has delivered to
Lender to the extent applicable, a copy of (i) the plan document
as currently in effect (or a written description of any Plan for
which there in no plan document) and all relevant document
related thereto, including but not limited to all current trust
agreements, insurance contracts, investment management contracts
and administrative service contracts, (ii) the most recent annual
reports (Form 5500 Series) filed with the Internal Revenue
Service, together with all schedules, actuarial reports,
accountant's statement and
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trustee reports, and (iii) all IRS determination letters and
pending IRS determination letters.
(c) Each Plan has been maintained, operated and
administered in compliance with its terms and any related
documents or agreement and in compliance with ERISA and the Code.
(d) There are no pending or, to the knowledge of the
Borrower, overtly threatened claims (other than routine claims
for benefits), assessments, complaints, proceedings or
investigations of any kind by any court or governmental agency
with respect to any Plan.
(e) No Plan provides benefits, including without
limitation, death or medical benefits (whether or not insured),
beyond retirement or other termination of service other than (i)
coverage mandated by applicable law, (ii) death benefits or
retirement benefits or retirement benefits under any "employee
pension plan" as that term is defined in Section 3 (2) of ERISA,
or (ii) deferred compensation benefits accrued as liabilities on
the Unaudited Financials.
(f) Neither a "Prohibited transaction" within the
meaning of ERISA Section 4O6 or Code Section 4975 nor any breach
of a duty imposed by Title I of ERISA has occurred wit . h
respect to any Plan.
(h) With respect to each Plan that is a "group health
plan".within the meaning of ERISA Section 607(l) and that is
subject to Code Section 4980B, Borrower and each ERISA Affiliate
have complied in all material respects with the continuation
coverage requirements of the Code and ERISA.
(i) Except as noted on Schedule 3.17, all
contributions to, and payments from, any Plan that may have been
required to be made in accordance with the Plan, or the Code or
ERISA, have been timely made.
(j) Neither Borrower nor any ERISA Affiliate has
incurred or is reasonably likely to incur any liability with
respect to any plan or arrangement that would be included in the
definition of Plan hereunder but for the fact that such plan or
arrangement was terminated before the date of this Agreement.
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4.18 Employees. Each of the Borrower and its Subsidiaries
is not a party to, and there does not otherwise exist, any
agreements with any labor organization, collective bargaining or
similar agreement with respect to employees of the Borrower.
Schedule 4.18 sets forth the name and current annual salary,
including any bonus, if applicable, of all present officers and
employees of the Borrower and its Subsidiaries whose current
annual salary, including any promised, expected or customary
bonus, equals or exceeds $50,000. All health and health related
employee benefits and other costs have been paid or adequately
reserved for on the Audited Financials. Each of the Borrower and
its Subsidiaries is in compliance in all material respects with
its obligations under all Federal, state, and local statutes and
ordinances, executive orders, regulations and common law
governing its employment practices with respect to the Borrower.
To the best knowledge of the Borrower, there are no attempts
being made to organize any employees presently employed by their
Borrower.
4.19 Environmental Matters. To the best of Borrower's
knowledge, (a) each of the Borrower and its Subsidiaries is not
in violation of, or delinquent in respect to, any Environmental
Law which violation or delinquency would have a Material Adverse
Effect, and (b) neither the Borrower nor to the best of
Borrower's knowledge any of its Subsidiaries has received any
written communication, whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the
Borrower or any of its Subsidiaries is not in full compliance
with the Environmental Laws, and (c) the Borrower and its
Subsidiaries have obtained all permits, licenses and other
authorizations required under the Environmental Laws, if any, the
absence of which would have a Material Adverse Effect. Neither
the Borrower nor any of its Subsidiaries has received any written
notice by any Person alleging that Borrower or to the best of
Borrower's knowledge any of its Subsidiaries has or may have
liability, either directly, by contract or by operation of law,
based on or resulting from the presence of, or threatened Release
or any Material of Environmental Concern. To the best of
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Borrower's knowledge, there are no present and have been no past
Release of any material of Environmental Concern that could form
the basis of any claim of liability against the Borrower or any
of the Subsidiaries under Environmental Laws or the common law,
which, if decided adversely to the Borrower or any of its
Subsidiaries, would have a Material Adverse Effect.
4.20 Insurance. Schedule 4.20 sets forth a list and brief
description (specifying the insurer, the policy number or
covering note number with respect to binders and the amount of
any deductible, describing the pending claims if such claims
exceed applicable policy limits, setting forth the aggregate
amount paid out under each such policy through the date hereof
and the aggregate limit, if any, of the insurer's liability
thereunder) of all policies or binders of fire, liability,
product liability, workmen's compensation, vehicular, .
unemployment and other insurance held by or on behalf of the
Borrower. Such policies and binders are valid and enforceable in
accordance with their terms in all material risks and liabilities
to-the extent and in respect of amount, types and risks insured,
as are customary in the industries in which the Borrower
operates. The Borrower is not in default with respect to any
material provision contained in-any such policy or binder or has
failed to give any notice or present any claim under any such
policy or binder in due and timely fashion. Except-for claims
disclosed pursuant to Section 4.5 hereof, to the best of
Borrower's knowledge, there are no outstanding unpaid claims
under any such policy or binder which have gone unpaid for more
than forty-five (45) days or as to which the carrier has
disclaimed liability.
4.21 Licenses and Permits. Schedule 4.21 sets forth a list
of the governmental permits, licenses, registrations and other
governmental consents (federal, state and local) which the
Borrower and its Subsidiaries have obtained and which are
necessary in connection with their respective operations and
properties, and to the best of Borrower's knowledge no others are
required. All such permits, licenses, registrations and consents
are in full force and effect and in good standing. The Borrower
has not received any written notice of any claim of revocation or
has actual knowledge of any event which might give rise to such a
claim.
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4.22 Compliance with Laws. Each of the Borrower and to
the best of Borrower's knowledge, its Subsidiaries has complied
in all respects with all applicable federal, state and local
laws, regulations and ordinances or any requirement of any
Governmental or Regulatory Body, court or arbitrator affecting
the business or the assets of the Borrower and its Subsidiaries,
the failure to comply with which could have a Material Adverse
Effect on the Business or the Assets.
4.23 Products. There are no written statements, citations
or decisions by any Governmental or Regulatory Body that any
product manufactured, marketed or distributed at any time by the
Borrower and its Subsidiaries ("Product") is defective or fails
to meet in any material respect any standards promulgated by any
such Governmental or Regulatory Body. There have been no recalls
ordered by any such Governmental or Regulatory Body with respect
to any Product. To the best of Borrower's knowledge, there is no
(a) fact relating to any Product that may impose upon the
Borrower (or the Borrower upon consummation of the transactions
contemplated hereby) a duty to recall any Product or a duty to
warn customers of a defect in any Product, other than defects
about which the Borrower has issued appropriate and adequate
warnings or (b) latent or overt design, manufacturing or other
defect in any Product.
4.24 SEC Reports. The Borrower has filed all required forms,
reports and documents with the Securities and Exchange Commission
("SEC") and The Nasdaq Stock Market since October 1991
(collectively, the "Borrower SEC Reports"), all of which complied
as to form in all material respects with all applicable
requirements of The Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended. To the best of the
Borrower's knowledge, none of the SEC Reports, including without
limitation any financial statements or schedules included
therein, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
Except as set forth in. the SEC Reports, each of the balance
sheets (including the related notes) included in the SEC Reports
fairly presents the consolidated financial position of the
Borrower and its Subsidiaries as of the respective dates thereof,
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and the other related statements (including the related notes)
included therein fairly present the results of operations and the
changes in financial position of the Borrower and its
Subsidiaries for the respective fiscal years, except, in the case
of interim financial statement, for year-end audit adjustments,
consisting only of normal recurring accruals. Except as set
forth in the SEC Reports, each of the financial statements
(including the related notes) included in the SEC Reports has
been prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved,
except as otherwise noted therein.
4.25 Disclosure. To the best knowledge of the Borrower,
neither this Agreement, nor any Schedule or Exhibit to this
Agreement contains an untrue statement of a material fact or
omits a material fact necessary to make the statements contained
herein or therein not misleading. To the best knowledge of
Borrower, all statements, documents, certificates or other items
prepared or supplied by the Borrower with respect to the
transactions contemplated hereby are true, correct and complete
and contain no untrue statement of a material fact or omit a
material fact necessary to make the statement's contained therein
not misleading.
4.26 Survival. All of the representations and warranties of
the Borrower contained herein shall survive the Closing Date
until the date upon which the liability to which any claim
relating to any such representation or warranty is barred by all
applicable statutes of limitations.
SECTION 5. CONDITIONS TO INITIAL ADVANCE
The obligation of the Lender to make the Initial Advance
pursuant to this Agreement shall be subject to compliance by the
Borrower with its agreements herein contained, and, to the
satisfaction, prior to or substantially contemporaneously with,
the making of such initial Loan, of the following conditions:
5.1 Note. The Borrower shall have executed and delivered
to the Lender the Note in the form of Exhibit A hereto
(appropriately completed).
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5.2 Corporate Proceedings. The Lender shall have received
a copy of the resolutions, in form and substance reasonably
satisfactory to the Lender, of the board of directors of the
Borrower authorizing the execution, delivery and performance of
thus this Agreement and the Note, in each case, certified by a
duly authorized officer of the Borrower as of the date hereof;
and such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded
as of the date of such certificate.
5.3 Incumbency Certificates. The lender shall have
received a certificate of the Secretary or an Assistant Secretary
of the Borrower, dated the date hereof, as to the incumbency and
signatures of the officers of the Borrower executing this
Agreement, and the Note and any certificate or other documents to
be delivered by it pursuant thereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary, as the
case may be.
5.4 Certain Legal Opinions. The Lender shall have received
the executed legal opinion of Kutak Rock, counsel to the
Borrower, in form and substance reasonably satisfactory to the
Lender, together with copies of the legal opinions, if any, upon
which such counsel rely.
5.5 Representations and Warranties. Each of the
representations and warranties made by the Borrower pursuant to
this Agreement shall be true and correct in all material respects
on and as of the date hereof, as if made on and as of such date.
SECTION 6. CONDITIONS TO ALL LOANS. Except with respect to the
Initial Advance, the obligation of the Lender to make a Loan on
any Borrowing Date is subject to fulfillment of the following
conditions precedent to the satisfaction of the Lender:
6.1 Representations and Warranties. The representations
and warranties made by the Borrower in this Agreement and in any
certificate, document or financial or other statement furnished
at any time hereunder shall be true and correct in all material
respects unless stated to relate to a specific earlier date.
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6.2 No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing on such
Borrowing Date.
6.3 Resignations by Certain Directors of the Borrower.
Immediately preceding the making of the Subsequent Advance by
Lender, Messrs. Edward B. Beam, Jr., Harvey Miller, Edward B.
Beam, Sr., L. Clark Brand and William C. Buck shall deliver
irrevocable written notification to the Borrower that effective
as of receipt by the borrower of the Subsequent Advance, such
individuals resign as officers and directors of the Borrower (the
Resignations). Contemporaneously with the execution and delivery
of the Resignations, Messrs. Kenneth Jones and David York shall
execute and deliver a written consent in lieu of a meeting of the
Board of Directors of the Borrower appointing Messrs. Erik-
Bailey, Timothy Holstein, and Brian Henninger to fulfill the
vacancies created on the Borrower's Board of Directors resulting
from the delivery of the Resignations (the Appointments).
SECTION 7. DEFAULTS AND REMEDIES
7.1 Events of Default. Event of Default, whenever used
herein means any of the following events:
(a) the Borrower defaults in the due and punctual payment
of principal of, interest on, or any other amount owing in
respect of, the Note when and as the same shall become due and
payable, and continuance of such default for a period of 5
Business Days after receipt of notice; or
(b) the Borrower defaults in the performance or observance
of any covenant or agreement of the Borrower in this Agreement or
the Note and the continuance of such default for a period of 30
calendar days after there has been given to the Borrower by the
Lender a written notice specifying such default and requiring it
to be remedied; or
(c) the Borrower shall (i) default in any payment of
principal of or interest on any Debt or (ii) default in the
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observance or performance of any agreement or condition relating to
any such Debt or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause
(immediately or with the giving of notice or lapse of time or both)
any such Debt to become due prior to its stated maturity; or
(d) the Borrower, either pursuant to or within the meaning
of any Bankruptcy Law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an
involuntary case, (iii) consents to the appointment of'- a
Custodian of it or for all or substantially all of its property,
or (iv) makes a general assignment for the benefit of its
creditors; or
(e) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against
the Borrower in an involuntary case, (ii) appoints a custodian of
the Borrower for any substantial part of all the property of the
Borrower, or (iii) orders the liquidation of the Borrower; and
the order or decree remains unstayed and in effect for 60 days.
The term Custodian means any receiver, trustee, assignee,
custodian, liquidator or similar official under any Bankruptcy
Law.
7.2 Acceleration of Maturity. If an Event of Default
occurs and is continuing, then and in every such case the Lender
may, declare the principal of the Note to be due and payable
immediately and the Loan Commitment to be terminated, by a notice
in writing to the Borrower, and upon any such declaration the
principal of the Note shall become immediately due and payable
and the Loan Commitment shall be terminated.
SECTION 8. SECURITY INTEREST
8.1 Security Interest. In order to secure the payment of
all of Borrower's obligations under this Agreement and the Note,
the Borrower shall, simultaneously with the delivery to Borrower
of the Subsequent Advance, cause its Subsidiaries to execute and
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deliver to Lender a Security Agreement, a form of which is attached hereto
as Exhibit C.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waiver. This Agreement and the Note may
be amended, and the terms hereof waived, only by a written
instrument signed by the parties hereto or, in the case of a
waiver, by the party waiving compliance.
9.2 Notices. Any notice, demand or delivery pursuant to
the provisions hereof shall be sufficiently given or made if sent
by hand or by registered or certified mail, postage prepaid,
addressed to the Lender at 401 West High Street, Pottstown, PA
19464, Attention: President or, except as otherwise expressly
provided herein, to the Borrower at 5400 Buchnell Drive S.W.
Atlanta, GA 30366, or such other address as shall have been
furnished to the party giving or making such notice, demand or
delivery. Any such notice shall be deemed given when so
delivered personally or, if mailed, three days after the date of
deposit in the United States mails or one day following the
deposit with a reputable overnight courier.
9.3 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Georgia without regard to principles of conflicts of law.
9.4 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
9.5 Successors and Assigns. This Agreement and each
document and certificate delivered pursuant thereto shall be
binding upon and inure to the benefit of the Borrower and the
Lender and their respective successors and permitted assigns,
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except that neither the Borrower nor the Lender may assign or
transfer any of its rights under this Agreement or the Note
without the prior written consent of the other.
9.6 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement in any number of separate
counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be
lodged with the Borrower and the Lender.
9.7 Severability. Any provision of this Agreement or the
Note which is prohibited, invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the,extent of such prohibition, invalidity or unenforceability
without invalidating the remaining provisions hereof, and any
such prohibition, invalidity or unenforceability in any juris-
diction shall not invalidate or render unenforceable such
provision in any other jurisdiction or any other provision of
this Agreement or the Note.
9.8 Investment. The Lender is acquiring the Note for its
own account and not with a view to resale.
9.9 Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto) and the agreements, certificates
and other documents delivered pursuant to this Agreement contain
the entire agreement among the parties with respect to the
transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto.
9.10 Agreement Regarding Transaction. The Lender represents
and warrants that it has had the opportunity to ask questions of
and receive answers from management of the Borrower. The Lender
represents and warrants that it has received any and all
materials, documents, certificates, and other matters it
requested be made available and has reviewed and evaluated the
same and, based upon such review and evaluation as well as the
representations, warranties and covenants of the Borrower
contained in this Agreement and the Exhibits hereto, the Lender
has entered into this Agreement with the Borrower. Lender hereby
acknowledges that given the current financial condition of the
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Borrower as of the date of this Agreement and that as a result of
such financial condition, the Borrower is in immediate need for
cash in order to continue its operations. Notwithstanding its
participation in the preparation of this Agreement, Kutak Rock
(as special counsel to the Borrower) is hereby released by the
parties hereto with respect to any and all responsibilities and
liabilities to the Borrower or otherwise in connection with the
negotiation, execution and performance of this Agreement.
Borrower and Lender hereby acknowledge and agree that Kutak Rock
had no responsibility for the preparation of any schedules
attached hereto, providing any information to the Lender, or
conducting any diligence whatsoever. The Borrower hereby
acknowledges and agrees that the transaction contemplated hereby
is based on the Borrower's independent review and analysis of the
abilities (financial or otherwise) of the Lender to perform its
respective obligations hereunder. The Borrower also agrees that
any and all schedules attached to this Agreement and any
documents referred to therein have been prepared and thoroughly
reviewed by the Borrower and that the Borrower is responsible for
its own due diligence in connection with preparing such items,
executing this Agreement and agreeing to the transactions
contemplated hereby.. The Borrower has made its independent
analysis of such information and has not relied on any factors,
conversations or communications made by any other party.
9.11 Lender Covenants. Lender hereby covenants that it
shall use its best efforts to cause the continued listing of the
Borrower's shares of Common Stock on The Nasdaq SmallCap Market
through the Termination Date.
9.12 Indemnification. The Borrower agrees to indemnify,
defend and hold harmless the Lender and its respective
shareholders, officers, directors, employees, and any Affiliates
of the foregoing, and their successors and assigns (collectively,
the Lender Group) from and against any and all losses,
liabilities (including punitive or exemplary damages and fines or
penalties and any interest thereon), expenses (including
reasonable fees and disbursements of counsel and expenses of
investigation and defense), claims, Liens or other obligations of
any nature whatsoever (hereinafter individually, a "Loss" and
collectively, "Losses") which, directly or indirectly, arise out
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of, result form or relate to, (i) any inaccuracy in or any breach
of any representation or warranty of the Borrower contained in
Section 4, and (ii) any breach of any covenant of the Borrower
contained in this Agreement or in any other document contemplated
by this Agreement.
9.13 Recourse. Except with respect to any potential claim
based on any fraud, any obligation or liability whatsoever of
Borrower which may arise at any time under this Agreement shall
be satisfied, if at all, out of the Borrower's, or any of its
Subsidiaries assets only. No such obligation or liability shall
be personally binding upon, nor shall resort for the enforcement
thereof be had to, the property of any of Borrower's or
Subsidiaries, shareholders, directors, officers, employees or
agents, regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise, unless such obligation
or liability relates to fraudulent conduct on the part of such
entity or individuals. Notwithstanding the foregoing, nothing in
this Section shall be interpreted or construed as an agreement or
admission by the Borrower, its shareholders, directors, officers,
employees or agents that any such entity or person is or may be
personally liable for any obligation or liability (whether the
result of fraud or otherwise) with respect to this Agreement.
9.14 Validity and Execution of Agreement. The Lender has
the full legal right, capacity and power and all requisite
corporate authority and approval required to enter into, execute
and deliver this Agreement and any other agreement or instrument
contemplated hereby, and to perform fully its respective
obligations hereunder and thereunder. The board of directors of
the Lender has approved the transactions contemplated pursuant to
this Agreement and each of the other agreements required to be
entered into pursuant hereto by the Lender. This Agreement and
such other agreements and instruments have been duly executed and
delivered by the Lender and each constitutes the valid and
binding obligation of the Lender enforceable against it in
accordance with its terms, subject to the qualifications that
enforcement of the rights and remedies created hereby is subject
to (i) bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and
remedies of creditors,-and (ii) general principals of equity
(regardless of whether such enforcement is considered in a
proceedings in equity or at law).
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
BIO-DYNE CORPORATION
By/s/Edward B. Beam, Jr.
Name: Edward B. Beam, Jr.
Title: Chief Executive Officer and
Chief Operating officer
CONTINENTAL AMERICAN TRANSPORTATION,
INC.
By/s/Erik L. Bailey
Name: Erik L. Bailey
Title: Chief Financial Officer
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PROMISSORY NOTE
$1,000,000 May 23, 1996
FOR VALUE RECEIVED, the undersigned, Bio-Dyne Corporation, a
Georgia corporation, hereby unconditionally promises to pay on
May 9, 1998, to the order of Continental American Transportation,
Inc., a Colorado corporation (the Lender), at the account of the
Lender maintained at Bank Account
Number (or at such other account in the United States as the
Lender shall notify the undersigned), in lawful money of the
United States of America and in immediately available funds, the
principal amount of the lesser of (i) ONE MILLION DOLLARS
($1,000,000) and (ii) the aggregate unpaid principal amount of
all Loans made by the Lender to the undersigned pursuant to
Section 2.1 of the Revolving Credit Agreement, dated as of the
date hereof, between the undersigned and the Lender (the "Credit
Agreement"). Capitalized terms used herein shall have the same
meanings as set forth in the Credit Agreement, unless otherwise
defined herein.
The undersigned further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to
time from the date hereof until such amount shall be paid
(whether at the stated maturity, by acceleration or otherwise) on
the dates and at the applicable rates per annum as provided in
Section 2.5 of the Credit Agreement.
The holder of this Note is authorized to endorse the date
and amount of each Loan pursuant to Section 2.2 of the Credit
Agreement, the date and amount of each payment or prepayment of
principal thereof and the interest rate with respect thereto, on
the schedule annexed hereto and made a part hereof or on a
continuation thereof, which endorsement, absent manifest error,
shall constitute prima facie evidence of the accuracy of the
information so endorsed.
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If any payment on this Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
This Note is the Note referred to in the Credit Agreement
and is entitled to the benefits thereof and is subject to the
terms and conditions provided therein.
Except as expressly provided herein, the undersigned hereby
waives presentation, demand, protest and all other notices of any
kind.
This Note shall be governed by, and construed in accordance
with, the laws of the State of Georgia without regard to
principles of conflicts of law.
BIO-DYNE CORPORATION
By/s/Edward B. Beam
Name: Edward B. Beam
Title: President and Chief
Operating Officer
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SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of May 17,1996 made by and
among Blo-Dyne North Corporation, a North Carolina corporation
("BDNC"), Carolina Fitness Equipment, Inc., a North
Carolina corporation ("Carolina Fitness"), Home Fitness Studios,
Inc., a Florida corporation ("HFS"), Home Fitness Studio of
Florida, Inc., a Florida corporation ("HFSF"), Home Fitness
Studios North, Inc., a Florida corporation ("HFSN"), and
Continental American Transportation, Inc., a Georgia corporation
(the "Lender").
W I T N E S S E T H
WHEREAS, Blo-Dyne Corporation, a Georgia corporation (the
"Borrower") and the Lender entered into that certain Revolving
Credit Agreement (the "Credit Agreement") dated as of the date
hereof, pursuant to which the Borrower may borrow from time to
time an amount not to exceed $1,000,000 (the "Loans"); and
WHEREAS, BDNC, Carolina Fitness, HFS, HFSF and HFSN
(collectively, the "Subsidiaries") as subsidiaries of the
Borrower, will benefit from the Loans; and
WHEREAS, as a condition to entering into the Credit
Agreement, the Lender required that the Subsidiaries
(collectively, the "Pledgors") agreed to pledge the Collateral
(as hereinafter defined).
NOW THEREFORE, in consideration of the foregoing and the
mutual promises and covenants contained herein, the parties
hereto agree as follows:
SECTION 1. Definitions of Terms Used Herein.
Accounts Receivable means any and all rights of each Pledgor to
payment of accounts, whether due or to become due, whether or not
earned by performance, and whether now owned or hereafter
acquired or arising in the future, together with all rights,
titles, securities and guarantees with respect thereto and all
related security interest, liens and pledges, whether voluntary
or involuntary. .
Collateral means all Accounts Receivable, Inventory, General
Intangibles, Instruments, Equipment and Proceeds.
Equipment means with respect to each Pledgor existing, future-
created and future-acquired equipment, machines, trade fixtures,
fixtures, tools, molds, dies, stamps, appliances, office
equipment, computer software, furniture, motor vehicles and all
proceeds and products of the above as well as all related
warranties, documents and insurance policies.
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General Intangible(s) means with respect to each Pledgor
existing, future-acquired and future created trade secrets, know-
how,. inventions, good-will, patents, applications for patents,
renewals and continuation of patents, reissues, trademarks,
service marks, customer lists, copyrights, manufacturing
processes, rights of payments from, or performance of,
obligations by any Person, all intangible property of any kind,
all "general intangibles" of any kind as defined in the Georgia
Uniform Commercial Code, and all rights, agreements, records and
documents relating to any of the property described in this
provision.
Instruments means all of the Debtor's existing, future created
and future-acquired "instruments" as
that term is defined in the Georgia Uniform Commercial Code.
Inventory means any and all now owned or hereafter acquired
inventory, merchandise, raw materials, parts, supplies, work in
process and finished products Intended for sale, of every kind
and description, including extracted minerals, in the custody or
possession, actual or constructive, of each Pledgor, including
such inventory as is temporarily out of the custody or possession
of each Pledgor and items in transit and including any returns
upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale and disposition of any of the
foregoing.
Proceeds means any and all consideration received from the sale,
exchange, lease or other disposition of any asset or property
which constitutes Collateral, any value received as a consequence
of the possession of any Collateral and any payment received from
any insurer or other person as a result of the. destruction,
loss, theft or other involuntary conversion of whatever nature of
any asset or property which constitutes Collateral.
SECTION 2. Security Interest. To secure the,prompt and complete
payment and performance of the obligations of the Borrower (the
Obligations) to the Lender under the Credit Agreement, the
Pledgors hereby pledge, hypothecate, assign, transfer, set over
and deliver unto the Lender and hereby grant to the Lender its
successors and assigns a continuing first priority security
interest in the Collateral (collectively, the Security Interest),
subject to the terms, covenants and conditions herein set forth.
Without limiting the foregoing, the Lender is hereby authorized,
to the extent permitted by applicable law, to file one or more
financing statements, continuation statements or other documents,
without the signature of each of the Pledgors, for the purpose of
perfecting, confirming, continuing, enforcing or protecting the
Security Interest, naming the Pledgors as debtor and the Lender
as secured party. Each of the Pledgors agree at all times to
keep accurate and complete accounting records with respect to the
Collateral, including a record of all payments and Proceeds
received.
SECTION 3. Further Assurances. Each of the Pledgors agree, at their expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Lender may from
time to time reasonably request for the better assuring and preserving
of the Security Interest and the rights and remedies created hereby, including
the payment of any fees and taxes required in connection with the execution
and delivery of this Agreement, the granting of the Security Interest created
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hereby and the filing of any financing statements or other documents in
connection herewith. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Lender, duly endorsed in a manner satisfactory to the Lender. Each of the
Pledgors agrees promptly to notify the Lender of any change in its corporate
name or in the location of its chief executive office, its chief place of
business or the office where it keeps its records relating to the Accounts
Receivable owned by it. Each of the Pledgors agrees promptly to notify The
Lender if any material portion of the Collateral is damaged or destroyed.
SECTION 4. Inspection and Verification. The Lender and such persons as it
may reasonably designate in a written notice provided to Pledgors shall have the
right, upon prior notice, at any reasonable time or times during the Pledgors'
usual business hours, to inspect the Collateral and all records related thereto
(and to make extracts and copies from such records) and the premises upon which
any of the Collateral is located, to discuss the Pledgor's affairs with the
officers of the Pledgor and its independent accountants and to verify under
reasonable procedures the validity, amount, quality, value and condition of, or
any other matter relating to, the Collateral.
SECTION 5. Records of Accounts Receivable. Each of the Pledgors
shall keep or cause to be kept records of Accounts Receivable
which are accurate in all material respects.
SECTION 6. Use and Disposition of Collateral. Each of the
Pledgors agree that it ill not sell, transfer or otherwise
dispose of any of the Collateral outside the ordinary course of
business.
SECTION 7. Remedies on Default. In the event that the
obligations of the Borrower shall remain unpaid after the
principal amount of and Interest on the Loan shall have been
declared due whether at maturity or otherwise, in accordance with
the terms thereof (an "Event of Default"), the Lender may seize
the Collateral and exercise any or all of its rights as a secured
lender including, without limitation, the rights granted to a
secured lender under the Georgia Uniform Commercial Code. If any
notification of intending disposition of the Collateral is
required by law, such notification, if mailed, shall be deemed
reasonably and properly given if mailed at least ten (10) days
before such disposition prepaid, addressed to Pledgor at the
address of Pledgor shown postage paid below.
SECTION 8. Application of Proceeds. The proceeds of the sale of
the Collateral in accordance with Section 7 hereof, if any, shall
be applied: first, to the payment of all costs and expenses of
the collection of such moneys, including all reasonable expenses,
including reasonable legal fees, incurred by the Lender; second,
to the payment or reduction of the obligations owing by the
Borrower to the Lender under the Credit Agreement; and third, to
the Borrower, unless otherwise directed by a court of competent
jurisdiction.
SECTION 9. Continuing Security Interest. This Security Agreement
shall create a continuing security interest in the Collateral and
shall remain in full force and effect until payment in full of
the Obligations.
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SECTION 10. Termination. This Security Agreement shall terminate
as to the Pledgors when all of the Borrower's obligations secured
hereby have been fully paid and performed at which time the
Lender shall release the Collateral and deliver to each of the
Pledgors appropriate instruments of release.
SECTION 11. Entire Agreement. This Agreement (including the
Exhibits hereto) and the certificates and other documents
delivered pursuant to the Credit Agreement contained agreements,
certificate the entire agreement among the parties with respect
to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto.
SECTION 12. Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms
hereof may be waived, only by a written instrument signed by the
parties hereto or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof.
SECTION 13. Binding, Effect, No Assignments. This Agreement
shall be binding upon and inure to the benefit of the parties and
their respective successors, assigns and legal representatives
except that the Pledgors shall not, except in the ordinary course
of business, be permitted to assign this Agreement or any
interest herein or in the Collateral, or any part thereof, or
otherwise pledge, encumber or grant any option with respect to
the Collateral or any part thereof, except as contemplated by
this Agreement.
SECTION 14. Variations in Pronouns. All pronouns and any
variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
SECTION 15. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all
of the parties hereto.
SECTION 16. Exhibits and Schedules. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be
deemed references to such parts of this Agreement, unless the
context shall otherwise require.
SECTION 17. Severability of Provisions. If any provision or any
portion of any provision of this Agreement or the application of
such provision or any portion thereof to any Person or
circumstance, shall be held invalid or unenforceable, the
remaining portion of such provision and the remaining provisions
of this Agreement, or the application of such provision or
portion of such provision as is held invalid or unenforceable to
persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby.
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SECTION 18. Governing Law. This Security Agreement, and the
authority, liabilities, duties and obligations of the Lender
hereunder, shall be determined in accordance with and governed by
the laws of the State of Georgia, without regard to the
principles of conflict of laws.
SECTION 19. Section Headings. The Section headings in this
Security Agreement are for convenience only and shall not affect
the construction hereof.
SECTION 20. Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall
be in writing and shall be given personally, telegraphed,
telefaxed, sent by facsimile transmission or sent by prepaid air
courier or certified, registered or express mail, postage
prepaid. Any such notice shall be deemed to have been given (a)
when received, if delivered in person, telegraphed, telexed, sent
by facsimile transmission and confirmed in writing within three
(3) Business Days thereafter or sent by prepaid air courier or
(b) three (3) Business Days following the mailing thereof, if
mailed by certified first class mail, postage prepaid, return
receipt requested, in any such case as follows (or to such other
address or addresses as a party may have advised the other in the
manner provided in this Section 20):
If to the Lender, to:
Continental American Transportation, Inc.
401 West High Street
Pottstown, PA 19464
Telephone Number: (800) 562-0707
Telecopier Number: (706) 629-2720
If to the Subsidiaries, to:
3883 Pembroke Rd.
Hollywood, FL 33021
Telephone Number: (954) 963-2900
Telecopler Number: (954) 963-4677
160
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be fully executed and delivered as of the day and year first
above written.
HOME FITNESS STUDIOS OF CONTINENTAL AMERICAN
FLORIDA TRANSPORTATION, INC.
By: /s/Edward B. Beam Jr. By:/s/Edward B. Beam, Jr.
Name: Edward B. Beam, Jr. Name: Edward B. Beam, Jr.
HOME FITNESS STUDIOS BIO-DYNE NORTH CORPORATION
NORTH, INC.
By:/s/Edward B. Beam, Jr. By:/s/Edward B. Beam, Jr.
Name: Edward B. Beam, Jr Name: Edward B. Beam, Jr.
Title: Chief Executive Officer Tile: Chief Executive Officer
CAROLINA FITNESS
EQUIPMENT, INC.
By:s/sEdward B. Beam, Jr.
Name: Edward B. Beam, Jr.
Title: Chief Executive Officer
HOME FITNESS STUDIOS, INC.
By:/s/Edward B. Beam, Jr.
Name: Edward B. Beam, Jr.
Title: Chief Executive Officer
161
<PAGE>
AMENDMENT TO PROMISSORY NOTE
This Second Amendment to Promissory Note ("Amendment") is made this 16th
day of May, 1996 by and between BIO-DYNE CORPORATION, a Georgia corporation
("Bio-Dyne"), and EDWARD B. BEAM, SR. and CAROLYN M. BEAM (collectively,
the "Lender").
W I T N E S S E T H
WHEREAS, H.F.S. Acquisition Co., Inc.., n/k/a Home Fitness Studios,
Inc., a Florida corporation ("HFS"), executed that certain Promissory Note
dated May 17, 1999 (the "Note") in favor of the Lender in the original
principal amount of $200,000.00; and
WHEREAS, Bio-Dyne executed that certain Promissory Note dated April
18, 1994 (the "Note") in favor of the Lender as part of Bio-Dyne's
acquisition of HFS on April 18, 1994, and
WHEREAS, the Note was further amended by Agreement effective September
1, 1995 (the Amendment Agreement) executed by Bio-Dyne, the Lender and
Edward B. Beam, Jr.; and
WHEREAS, the parties hereto wish to further modify said Note in
accordance with the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the agreements contained
herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Section 3 of the Amendment Agreement is hereby deleted in its entirety.
2. The outstanding principal balance of the Note is hereby reduced to
$36,146.34 (the "Outstanding Principal Balance") as a result of the payment to
the Lender on the date hereof of an amount equal to $137,094.58 (which amount is
comprised of principal in the amount of $135,379.32 and interest in the amount
of $1,715.26. The Outstanding Principal Balance shall continue to accrue
interest at the rate of 12% per annum and the Outstanding Principal Balance,
together with any and all accrued but unpaid interest with respect to the Note
(as previously modified) shall be due and payable in its entirety on July 1,
1996.
3. The Note, as previously modified and as modified by this Amendment,
together with all prior existing notes, security agreements, UCC filings and
obligations thereunder and in connection therewith by and between the parties
hereto are all specifically acknowledged and confirmed by the parties hereto and
will remain in full force and effect in accordance with their respective terms,
and the parties hereto hereby ratify and affirm the same. In addition, Bio-Dyne
and the Lender hereby acknowledge and agree that no default and no rights of
offset or nonpayment exist with respect to the Note, as previously modified and
as modified by this Amendment. Finally, the Note, as modified by this Amendment,
shall not constitute a novation.
4. This Amendment was approved by Bio-Dyne's Board of Directors on
May 15, 1996.
162
<PAGE>
IN WITNESS WHEREOF, the parties hereto execute this Amendment under seal as
of the day and year first above written.
/s/Edward B. Beam, Sr. (SEAL)
Edward B. Beam, Sr.
/s/Carolyn M. Beam (SEAL)
Carolyn M. Beam
BIO-DYNE CORPORATION
By:/s/Harvey Miller
Harvey Miller
Secretary
[CORPORATE SEAL]
163
<PAGE>
AMENDMENT TO PROMISSORY NOTE
This Amendment to Promissory Note ("Amendment") is made this 16th day of
May, 1996 by and between BIO- DYNE CORPORATION, a Georgia corporation
("Bio-Dyne"), and EDWARD B. BEAM, JR. (the "Lender").
W I T N E S S E T H
WHEREAS, H.F.S. Acquisition Co., Inc., n/k/a Home Fitness Studios, Inc., a
Florida corporation ("HFS"), executed that certain Promissory Note dated May 17,
1989 in favor of the Lender in the original principal amount of $150,000.00; and
WHEREAS, Bio-Dyne executed that certain Promissory Note dated April 18,
1994 (the "Note") in favor of the Lender as part of Bio-Dyne's acquisition of
HFS on April 18, 1994; and
WHEREAS, the Note was further amended by Agreement effective September 1,
1995 (the "Amendment Agreement") executed by Bio-Dyne, the Lender and Edward B.
Beam, Sr. and Carolyn M. Beam; and
WHEREAS, the parties hereto wish to further modify said Note in accordance
with the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 3 of the Amendment Agreement is hereby deleted in its entirety.
The outstanding principal balance of the Note is hereby reduced to
$36,146.36 (the "Outstanding Principal Balance") as a result of the payment to
the Lender on the date hereof of an amount equal to $87,905.43 (which amount is
comprised of principal in the amount of $86,677.19 and interest in the amount of
$1,228.24) The Outstanding Principal Balance shall continue to accrue interest
at the rate of 12% per annum and the Outstanding.Principal Balance, together
with any and all accrued but unpaid interest with respect to the Note (as
previously modified) shall be due and payable in its entirety on July 1, 1996.
The Note, as previously modified and as modified by this Amendment,
together with all prior existing notes, security agreements, UCC filings and
obligations thereunder and in connection therewith by and between the parties
hereto are all specifically acknowledged and confirmed by the parties hereto and
will remain in full force and effect in accordance with their respective terms,
and the parties hereto hereby ratify and affirm the same. In addition, Bio- Dyne
and the Lender hereby acknowledge and agree that no default and no rights of
offset or nonpayment exist with respect to the Note, as previously modified and
as modified by this Amendment. Finally, this Note, as modified by this
Amendment. shall not constitute a novation.
This Amendment was approved by Bio-Dyne's Board of Directors on May 15,
1996.
164
<PAGE>
IN WITNESS WHEREOF, the parties hereto execute this Amendment under seal as
of the day and year first above written.
/s/Edward B. Beam (SEAL)
Edward B. Beam, Jr.
BIO-DYNE CORPORATION
By /s/Harvey Miller
Harvey Miller
Secretary
[CORPORATE SEAL]
cat10ksb.sca
165
<PAGE>
Exhibit No. 10.7
RESOLUTION OF THE BOARD OF DIRECTORS FOR THE ADOPTION OF
BLUE MACK TRANSPORT, INC. 401 (K) PLAN AND TRUST
On February 2, 1995 the following resolutions to adopt Blue mack Transport,
Inc. 401 (k) Plan and Trust were duly adopted by unanimous consent of the Board
of Directors of Blue Mack Transport, Inc. and that such resolutions have not
been modified or rescinded as of the date hereof:
RESOLVED, that the form of Plan presented to this meeting is a Cash or
Deferred Profit Sharing Plan as authorized under Internal Revenue Code Sections
401 (a) , 401 (k) , 402 (g) , and other Code Sections.
RESOLVED, that the form of Blue Mack Transport, Inc. 401 (k) Plan and Trust
presented to this meeting is hereby adopted and approved and that the proper
officers of the Employer are hereby authorized and directed to execute and
deliver to the Plan Administrator one or more counterparts of the Plan.
RESOLVED, that, the Plan Year shall be for a 12 month period beginning on
January 1, and ending on December 31 of each year.
RESOLVED, that, for purposes of the limitations on contributions and
benefits under the Plan as prescribed by Internal Revenue Code Section 415, the
Limitation Year shall be for a 12 month period beginning on January 1 to
December 31 of each year.
RESOLVED, that, prior to the due date (including extensions) of the
Employer's federal income tax return for each of its fiscal years hereafter, the
Employer shall contribute to the Plan amounts sufficient to meet its obligation
under the Cash or Deferred Profit Sharing Plan for each such fiscal year in such
amount as the Board of Directors determines. The Treasurer of the Corporation is
empowered and directed to pay such contribution to the Trustee of the Plan in
cash or property, in accordance with the terms of the Plan Document and shall
notify the Plan Administrator as to which fiscal year said contributions shall
be applied.
RESOLVED, that the proper officers of the Employer shall act as soon as
possible to notify employees of the Employer of the adoption of the Plan and
Trust by delivering to each employee a copy of the summary plan description of
the Plan in the form of the Summary Plan Description presented to this meeting,
which form is hereby approved.
166
<PAGE>
Blue Mack Transport, Inc. 401(k) Plan and Trust
Plan Documentation
167
<PAGE>
SUMMARY OF
PLAN DOCUMENTATION
Executed Non-Standardized Adoption Agreement for the Blue Mack
Transport, Inc. 401(k) Plan and Trust.
Uniglobal Regional Prototype Document as applies to the Blue
Mack Transport, Inc. 401(k) Plan and Trust.
Uniglobal Favorable Determination Letter as applies to the Blue
Mack Transport, Inc. 401(k) Plan and Trust.
Certification by Regional Sponsor permitting the use of the Uniglobal
Regional Prototype f or the Blue Mack Transport, Inc. 401(k) Plan and Trust.
Model Section 401 (a) (17) and 401 (a) (31) Amendments to, the
Blue Mack Transport, Inc. 401(k) Plan and Trust.
Revenue Procedure 93-47 Amendment to the Blue Mack Transport,
Inc. 401(k) Plan and Trust.
168
<PAGE>
ADOPTION AGREEMENT
FOR THE UNIGLOBAL REGIONAL PROTOTYPE
NON-STANDARDIZED CASH OR DEFERRED PROFIT SHARING PLAN AND TRUST
169
<PAGE>
ADOPTION AGREEMENT
FOR THE UNIGLOBAL REGIONAL PROTOTYPE
NON-STANDARDIZED CASH OR DEFERRED PROFIT SHARING PLAN AND TRUST
The Uniglobal Regional Prototype Non-Standardized Cash or
Deferred Profit Sharing Plan and Trust (the Plan and Trust) is
hereby adopted by:
Blue Mack Transport, Inc. (the Employer).
The Plan and Trust as applicable to the Employer shall be known
as:
Blue Mack Transport, Inc. 401(k) Plan and Trust
The Plan and Trust is effective as of: February 2, 1995.
(Specify, if applicable.)
( ) a. The Plan and Trust is an amendment of a preexisting
Plan which was originally effective as of:
.
b. The Plan and Trust is an amendment and restatement of a
preexisting Plan which was originally effective as of:
.
* * * CAUTION * * *
FAILURE TO FILL OUT THE ADOPTION AGREEMENT PROPERLY MAY
RESULT IN DISQUALIFICATION OF THE PLAN
PART 1. The following identifying information pertains to the
Employer and the Plan and Trust:
1. Employer Address: 401 West High Street
Pottstown, PA 19464
2. Employer Telephone: (610)327-8275
3. Employer Tax ID: 23-2389779
4. Employer Fiscal Year: January I to December 31
5. Three Digit Plan Number: 001
170
<PAGE>
6. Trust ID Number: Applied For
7. Plan Fiscal Year (must :January 1 to December 31 be 12
consecutive mos.)
8. Short Initial Plan Year:February 5, 1995 to December 31, 1995
9. Plan Agent: Blue Mack Transport, Inc.
401 West High Street
Pottstown, PA 19464
10. Plan Administrator: Blue Mack Transport, Inc.
401 West High Street
Pottstown, PA 19464
11. Plan Administrator
ID Number: 23-2389779
12. Plan Trustees: Timothy Holstein
Erik Bailey
Richard Graybeal
c/o Blue Mack Transport, Inc.
401 West High Street
Pottstown, PA 19464
13. IRS Determination
Letter Date: N/A
(Leave blank for a New Plan
14. IRS File Folder
Number: N/A
(Leave blank for a New Plan)
15. Legal Organization of Employer:
( ) a. Sole Proprietorship
( ) b. Partnership
(X) c. C Corporation
( ) d. S Corporation
( ) e. Not for Profit Corporation
( ) f. Personal Service Corporation
( ) g. Other - Explain :
16. Business Code: 4213
17. State of Legal
Construction: Pennsylvania
171
<PAGE>
18. Other Members of a Controlled Group or Affiliated Service
Group:
(If any, each member should sign Adoption Agreement or
otherwise satisfy applicable participation requirements.
Leave blank if not applicable)
Controlled Group
(X) a. Not Applicable
( ) b. Other Members
Affiliated Service Group
(X) a. Not Applicable
( ) b. Other Members
172
<PAGE>
PART II. The Plan contains certain predetermined design features
intended to provide the statutory requirement or most commonly
adopted feature but permits the selection of alternative features.
If an Employer desires to retain the predetermined design feature,
select the provision designated Plan Provision. If an alternative
design feature is desired, select the appropriate provision.
Unless specifically provided to the contrary, only one selection
may be made for each design category. Section references are to
relevant Plan Sections. Defined terms have the meanings provided
in the Plan.
A. Eligibility and Service Provisions
1. Eligible Employees - Section 1.2.23 provides that all
employees, including employees of certain related businesses and
leased employees are eligible except for certain union members and
non-resident aliens. (Specify all applicable)
(X) a. Plan Provision
( ) b. Include members of collective bargaining unit
( ) c. Exclude self-employed persons
( ) d. Exclude Employees not employed by the Employer
( ) e. Exclude commissioned Employees
( ) f. Exclude hourly Employees
( ) g. Exclude salaried Employees
() h. Other - Specify. (Cannot discriminate in favor of
Highly Compensated Employees).
2. Eligibility Requirements (See Section 2.1.1) - An Employee is
eligible to participate in Non-Elective Contribution portions
of the Plan if he satisfies the following requirements during
the Eligibility Computation Period. (Specify one option or any
combination other than c and d. Selecting more than one option
means that an Employee must meet all indicated requirements
for eligibility, except for option e. option e overrides all
other requirements):
( ) a. Date of hire, i.e. no age or service required (no
other choices may be selected)
( ) b. Minimum Age of ____ years (Not to exceed 21, partial
years may be used)
( ) c. Minimum of ____ months of service (Cannot require
more than 24 months, or more than 12 months if full
v@sting after not more than 2 Years of Service is
not selected; if periods other than whole years are
selected an Employee cannot be required to complete
any specified number of Hours of Service to receive
credit for the fractional year)
173
<PAGE>
( ) d. ____Hours of Service required during each 12 month
Eligibility Computation Period (cannot exceed 1000)
( ) e. Employed on - / - / - . (For new plans only, select
an additional option if this provision is selected)
(X) f. Not applicable. Non-Elective Contributions are not
permitted.
3. For the purposes of having Elective Contributions made on the
Employee's behalf, Section 2.1.1 provides that, unless the
Employer specifies otherwise in the Adoption Agreement, an
Employee must complete 1000 Hours of Service during the
Eligibility Computation Period. For these purposes, an
Employee is eligible if he satisfies the following
requirements: (Select all applicable. Selecting more than one
option means that an Employee must meet all indicated
requirements for eligibility, except for option e. option e
overrides all other requirements):
( ) a. Date of hire, i.e. no age or service requirement
(No other choices may be selected)
(X) b. Minimum Age of 21 years (Not to exceed 21, partial
years may be specified)
(X) c. Minimum of 12 months of service (Not to exceed 12,
if other than full years are selected hours may not
be specified)
(X) d. 1,000 Hours of Service required during each 12
month Eligibility Computation Period (cannot exceed
1000)
(X) e. Employed on February 5th, 1995. (For new plans
only, select an additional option if this provision
is selected)
4. Matching Eligibility Requirements (See Section 2.1.1 - An
Employee is eligible to participate in the Matching
Contributions portion of the Plan if he satisfies the
following requirements during the Eligibility Computation
Period. (Specify one option or any combination other than c
and d. Selecting more.than one option means that an Employee
must meet all indicated requirements for eligibility, except
for option e. option e overrides all other requirements):
( ) a. Date of hire, i.e. no age or service required
(No other choices may be selected)
(X) b. Minimum Age of 21 years (Not to exceed 21, partial
years may be used)
174
<PAGE>
(X) c. Minimum of 12 months of service (Cannot require
more than 24 months, or more than 12 months
if full vesting after not more than 2 Years
of Service is not selected; if periods other
than whole years are selected an Employee
cannot be required to complete any specified
number of Hours of Service to receive
credit for the fractional year)
(X) d. 1,000 Hours of Service required during each 12
month Eligibility Computation Period
(cannot exceed 1000)
(X) e. Employed on February 5th, 1995. (For new plans
only, select an additional option if this
provision is selected)
( ) f. Not applicable. Matching Contributions are not
permitted.
5. Eligibility Computation Period - Section 1.2.22 provides that
the initial eligibility computation period begins on the date
of hire and the subsequent periods commence on each annual
anniversary of such date. (Select one)
( ) a. Plan Provision
(X) b. The eligibility computation periods subsequent to
the initial eligibility computation period are the
Plan Year beginning with the first Plan Year
commencing prior to the first anniversary of the
employment commencement date.
6. Hour of Service - Section 1.2.35 provides that service will be
credited on the basis of actual hours for which the employee
is paid or entitled to payment. If records of actual hours
are not maintained, credit is given on the basis of: (Select
one)
(X) a. Plan Provision - Records are maintained
( ) b. Days Worked - An Employee will be credited with 10
Hours of Service if he is credited with at least 1
Hour of Service during the day
( ) c. Weeks Worked - An Employee will be credited with 45
Hours of Service if he is credited with at least 1
Hour of Service during the week
( ) d. Semi-Monthly Payroll Period - An Employee will be
credited with 95 Hours of Service if he is credited
with at least 1 Hour of Service during the payroll
period
( ) e. Months worked - An Employee will be credited with
190 Hours of Service if he is credited with at
least 1 Hour of Service during the month
175
<PAGE>
7. Service with Predecessor Employers - Section 1.2.35 provides
that service with predecessor employers is treated as service
for the Employer. Where applicable, identify the predecessor
employers) and any documents) which provides for the crediting
of service with such predecessors):
(X) a. Not applicable.
( ) b. Service with the following entities shall be
credited as service under this plan:
____________________________________________________
Service with the above entities has been determined
under the terms of the following documents:
_____________________________________________________
8. Entry Date - Section 2.1.2 provides that an Employee who
satisfies any eligibility requirements enters the Plan on the
Entry Date. For this purpose the Entry Date is the: (Select
one)
( ) a. First day of next Plan Year or ____ months (Not to
exceed 6) after satisfying the eligibility
requirements, if earlier
( ) b. First day of ____ month (Not more than 6) after
satisfying the eligibility
( ) c. Date of satisfying the eligibility requirements
( ) d. First day of Plan Year in which the eligibility
requirements are satisfied
( ) e. First day of Plan Year nearest to the date the
eligibility requirements are satisfied
(X) f. Semiannual - (X) first or ( ) last day of 6 month
periods, beginning with first of Plan Year,
coincident with or after satisfying eligibility
requirements
176
<PAGE>
( ) g. Quarterly - ( ) first or ( ) last day of 3 month
periods, beginning with first of Plan Year,
coincident with or after satisfying eligibility
requirements
( ) h. Monthly - ( ) first or ( ) last day of each month
of the Plan Year, coincident with or after
satisfying eligibility requirements
( ) i. First day of the Plan Year coincident with or
immediately following the date the eligibility
requirements are satisfied. (May be selected only
if eligibility requirements of Plan do not require
more than 6 months of service (18 months if 100%
immediate vesting) and attainment of age 20 1/2.)
( ) j. Last day of the Plan Year coincident with or after
satisfying the eligibility requirements. (May be
selected only if eligibility requirements of Plan
do not require more than 6 months of service (18
months if 1000-. immediate vesting) and attainment
of age 20 1/2). -
NOTE: The Entry Date should be coordinated with the
Compensation Computation Period.
9. Break in Service - Section 1.2.8 provides that a Break in
Service occurs if an Employee fails to complete more than 500
hours of service during the applicable computation period
unless a lesser number is specified. (Select one)
(X) a. Plan Provision
( ) b. A Break will occur if the Employee fails to
complete (Not to exceed 500) Hours of Service
more than (not to exceed 500) Hours of Service
B. Date Provisions
1. Anniversary Date - Section 1.2.5 provides that the Anniversary
Date is the last day of the Plan Year unless another date is
specified. (Select one)
(X) a. Plan Provision - No other date is specified.
( ) b. The first day of the Plan Year.
( ) c. Other - Specify. (Must be at least annually)
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<PAGE>
2. Valuation Date - Section 1.2.63 provides that the Valuation
Date is the date or dates specified in the Adoption
Agreement. (Select one)
( ) a. Anniversary Date
( ) b. Semiannually on the last day of each 6 month
period beginning with the first of the Plan Year
( ) c. Quarterly on the last day of each 3 month period
beginning with the first of the Plan Year
( ) d. Monthly on the last day of each month of the Plan
Year
( ) e. Last day of Plan Year (use option (a) if
Anniversary Date is last day of the Plan Year
(X) f. other - Specify. (Must be at least annually)
Any portion of the Participant's Account that is
subject to the investment control of the Participant
will be adjusted to reflect investment experience as of
the close of each business day. For all other
purposes, the Valuation Date is the last day of the
Plan Year.
3. Normal Retirement Date - Section 1.2.46 permits the adoption of
a Normal Retirement Date. (Select one)
( ) a. Date Normal Retirement Age is attained
( ) b. First day of month in which Normal Retirement Age
is attained
( ) c. First day of month nearest date Normal Retirement
Age is attained
(X) d. First day of month coincident with or next
following the date Normal Retirement Age is
attained
( ) e. Anniversary Date nearest date Normal Retirement Age
is attained
( ) f. Anniversary Date coincident with or next following
date Normal Retirement Age is attained
4. Normal Retirement Age - For each Participant the Normal
Retirement Age is:
(X) a. Age 65 (not to exceed 65)
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<PAGE>
( ) b. The later of age ____ (not to exceed 65) or the ____
(not to exceed the fifth (5th)) anniversary of the
participation commencement date, if later. The
participation commencement date is the first day
of the Plan Year in which a Participant commenced
participation in the Plan. Solely for Plan Years
beginning before 1988, if the normal retirement
age was determined by reference to the anniversary
of the participation commencement date, the
anniversary for participants who first commenced
participation before the first Plan Year beginning
on or after January 1, 1988 is the earlier of the
tenth anniversary of the date the participant
commenced participation in the Plan (or such
anniversary as had been elected by the Employer if
less than ten) or the day of the first Plan 1,
1988.
( ) c. Age ___ and the ____ anniversary of the
participation commencement date, if both
requirements are are met earlier than the
later age of 65 or the fifth (5th) anniversary of
participation
5. Early Retirement Date - Section 1.2.17 permits the adoption of
an Early Retirement Date: (Select one)
(X) a. The Plan does not provide an early retirement date
( ) b. The actual date the Participant attains the Early
Retirement Age
( ) c. The Anniversary Date coincident with or next
following the date the Participant attains the
Early Retirement Age
( ) d. The Valuation Date coincident with or next
following the date the Participant attains the
Early Retirement Age
( ) e. The ( ) first ( ) last day of the month coincident
with or next following the date the Participant
attains the Early Retirement Age
( ) f. other - Specify. (Cannot discriminate in favor of
Highly Compensated Employees)
179
<PAGE>
6. Early Retirement Date: (Select all applicable. If more than
one option is selected, Early Retirement Age is attained on
the first date the requirements of any option are met.)
( ) a. Age _____ (not to exceed 65)
( ) b. Age _____ and ____ Years of Service
( ) c. Age _____ and ____ Years of Service while a
Participant
( ) d. ____ years prior to the Normal Retirement Age
( ) e. Sum of age and Years of Service equals
(X) f. Not Applicable
NOTE: Cannot discriminate in favor of Highly Compensated
Employees.
C. Compensation
1. Compensation - See Section 1.2.10. For purposes of the Plan a
Participant's compensation is based on the Compensation
Computation Period and shall: (Select a, b, or c and all of d
and e which are applicable)
( ) a. Equal compensation as defined in Section 3401(a)
except as indicated below
( ) b. Equal compensation as defined in Section 415(c)(3)
except as indicated below
(X) c. Equal compensation as defined for the Wages, Tips,
and Other Compensation Box on Form W-2 except as
indicated below
(X) d. Include compensation which is not included in gross
income by reason of Section
(X) Sections 402(h)(1)(B)(SEP deferrals)
(X) 125 (Cafeteria Plan)
(X) 402 (a) (8) (401(k) deferrals)
(X) 403(b)
(X) 457(b)
( ) e. Exclude compensation which is for
( ) overtime
( ) discretionary bonuses
( ) Bonuses
( ) taxable employee benefits
( ) in excess of $
() Other exclusion - Specify. (Cannot discriminate in favor
of Highly Compensated Employees)
NOTE: Exclusions are permissible if the Plan is not
integrated with Social Security. Exclusions may cause
the Plan to be impermissible discriminatory.
180
<PAGE>
2. The Compensation Computation Period is:
( ) a. The Plan Year
(X) b. The calendar year ending with or within the Plan
Year
3. For the initial Plan Year of participation, include
Compensation from: (Select one)
( ) a. Entry Date as a Participant
(X) b. First day of the Compensation Computation Period
which ends during the initial Plan Year of
participation
D. Contribution and Allocation
1. Non-Elective Contribution Formula - The Employer's Non-
Elective contribution to the Plan shall be: (Select one)
( ) a. Discretionary, out of profits
( ) b. Discretionary, but not limited to profits
( ) c. _____% of each Participant's Compensation. (not to exceed
15%)
(X) d. Not applicable. Non-Elective Contributions are not
permitted.
2. Allocation Method - The Employer Non-Elective contribution is
allocated to Participants: (Select one)
( ) a. Proportionate to Salary. Based upon each
Participant's Compensation in proportion to the
Compensation of all Participants.
( ) b. Integrated with Social Security. See Sections
2.3.1 and 2.3.3 (Select one of d. through h.,
below.)
(X) c. Not applicable - No Non-Elective Contributions.
The Social Security Integration Level is equal to:
( ) d. The taxable wage base under Section 230 of the
Social Security Act in effect as of the first day
of the Plan Year.
( ) e. $_____ (Not to exceed the taxable wage base under
Section 230 of the Social Security Act in effect as
of the first day of the Plan Year).
( ) f. _____% (Not to exceed 100) of the taxable wage base
under Section 230 of the Social Security act in
effect as of the first day of the Plan Year.
( ) g. The greater of $10,000 or 20% of the taxable wage
base under Section 230 of the Social Security Act
in effect as of the first day of the Plan Year.
( ) h. 80% of the taxable wage base under Section 230 of
the Social Security Act in effect as of the first
day of the Plan Year plus $1.00.
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3. Requirement to Share in Non-Elective Contribution Allocation.
In order to share in the allocation of the Employer's Non-
Elective Contribution a Participant: (Select all applicable)
( ) a. must complete ____ Hours (cannot exceed 1000), but
( ) is eligible regardless of Hours if the Employee dies
during the Plan Year
( ) is eligible regardless of Hours of Service if the
Employee retires during the Plan Year
( ) is eligible regardless of Hours of Service if the
Employee becomes totally disabled during the Plan Year
( ) b. must complete ___(cannot exceed 1000) Hours and be
employed at Plan Year end but
( ) is eligible if Employee dies during the plan year,
( ) regardless of Hours of Service.
( ) only if employee meets Hours requirement
( ) is eligible if Employee retires during the Plan Year,
( ) regardless of Hours of Service.
( ) only if Employee meets Hours requirement.
( ) is eligible if Employee becomes totally disabled during
the Plan Year
( ) regardless of the Hours of Service.
( ) only if Employee meets Hours requirement.
(X) c. Not applicable - No Non-Elective Contributions.
4. Requirement to Share in Matching Contribution Allocation - In
order to share in the allocation of the Employer's Matching
Contribution a Participant: (Select all applicable)
(X) a. must complete 1 Hours (cannot exceed 1000), but
(X) is eligible regardless of Hours if the Employee
dies during the Plan Year
(X) is eligible regardless of Hours of Service if the
Employee retires during the Plan Year
(X) is eligible regardless of Hours of Service if the
Employee becomes totally disabled during the Plan
Year
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( ) b. must complete _____ (cannot exceed 1000) Hours and
be employed at Plan Year end but
( ) is eligible if Employee dies during the plan year,
( ) regardless of Hours of Service.
( ) only if employee meets Hours requirement
( ) is eligible if Employee retires during the Plan Year,
( ) regardless of Hours of Service.
( ) only if Employee meets Hours requirement.
( ) is eligible if Employee becomes totally disabled
during the Plan Year
( ) regardless of the Hours of Service.
( ) only if Employee meets Hours requirement.
( ) c. Not Applicable
5. Matching Contributions - The Matching Contribution by the
Employer for the Plan Year in accordance with Section 2.2.1(a)
(3) (ii) is
( ) a. Matching Contributions are not permitted
( ) b. Discretionary each Plan Year
(X) c. Based upon the Allocation Method set forth below
( ) d. Based upon the Allocation Method set forth below
plus a supplemental discretionary Matching
contribution
6. Allocation Method for Matching Contributions - Matching
Contributions shall be allocated to eligible Participants in an
amount:
( ) a. Proportionate to the Elective Contributions made on
behalf of a Participant
(X) b. Equal to 25 percent of the Elective Contributions
made on behalf of a Participant
( ) c. Graded based on the dollar amount of the Elective
Contribution of each Participant as follows:
____ % of the first $____ plus
____ % of the next $____ plus
____ % of the next $____ plus
____ % of the next $____.
( ) d. Graded based on the percentage of compensation of
the Elective Contribution of each Participant as
follows:
____ % of the first $____ plus
____ % of the next $____ plus
____ % of the next $____ plus
____ % of the next $____.
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( ) e. Graded based on the dollar amount of the Elective
Contribution of each Participant as follows:
____ % if contribution is $____ or more;
____ % if contribution is $____ or more;
____ % if contribution is $____ or more;
____ % if contribution is $____ or more;
( ) f. Graded based on the percentage of compensation of
the Elective Contribution of each Participant as
follows:
____ % if contribution is $____ or more
____ % if contribution is $____ or more
____ % if contribution is $____ or more
____ % if contribution is $____ or more
( ) g. Not applicable
NOTE: Graded percentages entered in c. through f. must
decrease as percentage or amount of compensation
increases.
7 . If a supplemental discretionary Matching Contribution is
made, Matching Contributions shall be allocated to eligible
Participants in an amount:
( ) a. Proportionate to the Elective Contributions made on
behalf of a Participant
( ) b. According to the method selected in Gb. - f . above
(X) c. Not applicable
8. Matching Contribution Allocation Date - Matching
Contributions are allocated as of the Anniversary Date
unless an alternate date is selected. For the purposes
of this Plan the Matching Contribution is allocated as
of: (Select one)
( ) a. Plan Provision - the Anniversary Date.
( ) b. The next Valuation Date.
(X) c. Other - Specify. (Must be allocated at least
annually)
Matching Contributions will be allocated to a
Participant's Account on a monthly basis.
( ) d. Not applicable
9. Limitations on Matching Contributions - The Employer
shall not make Matching Contributions: (Select all
applicable)
(X) a. with respect to Elective Contributions in excess
of 4 percent of a Participant's Compensation
( ) b. In excess of $ ____ for any Participant
( ) c. To Key Employees
( ) d. Not applicable.
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10. Allocation of Qualified Non-Elective Contributions -
(Select a or b. if a is selected, do not complete the
remainder of this section)
( ) a. Qualified Non-Elective Contributions are not
permitted.
(X) b. Qualified Non-Elective Contributions shall be made
at the Employer's discretion.
Qualified Non-Elective Contributions shall be
allocated(complete c and d):
(X) c. On behalf of
( ) All Participants
( ) Solely on behalf of Participants who are not
Highly Compensated Employees
(X) Solely on behalf of Participants who are not
Highly Compensated Employees to the extent
necessary to satisfy the ACP or the ADP test
( ) d. Who are eligible to receive an allocation of
( ) Non-Elective Contributions
( ) Matching Contributions
Qualified Non-Elective Contributions shall be allocated:
(Select e or f; also select g, if applicable)
(X) e. In proportion to a Participant's Compensation.
( ) f. As a uniform dollar amount.
(X) g. To the extent necessary to satisfy the ACP test or
the ADP test.
11. Limitation Year - Section 1.2.40 provides that unless
otherwise specified the Limitation Year for purposes of the
limitation imposed by IRC Section 415 is the Plan Year.
(Select one)
(X) a. Plan Provision
( ) b. Calendar year coinciding with or ending within the
Plan Year
( ) c. Twelve consecutive month period ending _/_
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<PAGE>
E. Vesting Provisions
1. Years of Service - Section 1.2.65 provides that a Year of
Service is the 12 consecutive month period specified in the
Adoption Agreement in which at least 1000 Hours of Service
are performed unless a lesser number is specified. (Select
all applicable)
(X) a. Use the Plan Year as the computation period
b. Use Eligibility Computation Period as the
computation period
c. Use _____ in lieu of 1000 Hours of Service (Not to
exceed 1000 hours)
2. Excluded Years - Section 1.2.65 provides unless otherwise
specified all Years of Service are taken into account.
(X) a. Plan Provision - Include all Years of Service
( ) b. Exclude Plan Years prior to age 18
( ) c. Exclude Plan years prior to adoption of plan or
predecessor plan. Effective date of (prior) plan:
___/___/___
3. Vesting Schedule - Section 2.4.2(f) provides that benefits
will vest in accordance with the method specified in the
Adoption Agreement. (Select one of a, b, c, d, f, or g. Also
select e if applicable.)
Employer Accounts:
( ) a. At the rate of 20% each year after 3 Years of
Service. (20% vested in third year)
( ) b. At the rate of 20% each year after 2 Years of
Service. (20% vested in second year)
( ) c. 100% vesting upon participation.
( ) d. l00% vesting after ___Year(s) of Service (Not to
exceed 5)
( ) e. 100% vesting at Early Retirement Date (Must also
select another alternative)
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<PAGE>
( ) f. Other: (optional vesting schedule must be at least
as favorable as a. or d.)
Year(s) of Service Percent Vesting
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
(X) g. Not applicable - No Non-Elective Employer
Contributions
Matching Accounts:
( ) a. At the rate of 200% each year after 3 Years of
Service. (200% vested in third year)
(X) b. At the rate of 20% each year after 2 Years of
Service. (20% vested in second year)
( ) c. 100% vesting upon participation.
( ) d. l00% vesting after Year(s) of Service (Not to
exceed 5)
( ) e. 100% vesting at Early Retirement Date (Must also
select another alternative)
( ) f. other: (optional vesting schedule must be at least
as favorable as a. or d.)
Year(s) of Service Percent Vesting
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
( ) g. No Matching Contributions
4. Prior Vesting Schedule - Section 3.10.3 provides that if the
Vesting schedule has been amended to a less favorable
schedule, participants are entitled to have their vested
interest calculated under the prior schedule under certain
instances.
(X) a. Not applicable. Either not amended or new schedule
is more favorable.
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<PAGE>
( ) b. The prior schedule was
Employer
Year(s) of Service Percent Vesting
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More
Year(s) of Service Percent Vesting
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
5. Top Heavy Vesting Schedule - Section 2.6.1(c) provides that if
the Plan becomes Top Heavy, unless the Employer specifies
otherwise, vesting will be at a rate of 20% per year beginning
with the second Year of Service.
Employer Accounts:
( ) a. Plan Provision
( ) b. l00% vested after Year(s) of Service (Not to
exceed 3 )
( ) c. Same as non-Top Heavy vesting schedule (Must be at
least as favorable as a or b)
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<PAGE>
( ) d. Other: (Optional vesting schedule must be at least
as favorable as a. or b.)
Year(s) of Service Percent Vesting
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
(X) e. Not Applicable - No Employer Non-Elective
Contributions
Matching Accounts:
( ) a. Plan Provision
( ) b. 100% vested after _____ Year(s) of Service (Not to
exceed 3 )
(X) c. Same as non-Top Heavy vesting schedule (Must be at
least as favorable as a or b)
( ) d. other: (Optional vesting schedule must be at least
as favorable as a. or b.)
Year(s) of Service Percent Vesting
Less than 1 _______
1 but less than 2 _______
2 but less than 3 _______
3 but less than 4 _______
4 but less than 5 _______
5 but less than 6 _______
6 but less than 7 _______
7 or More _______
( ) e. Not Applicable - No Matching Contributions.
6. Re-emplovment - Section 2.4.4 provides that Years of Service
completed after a Break in Service are not counted for
purposes of increasing the vested percentage attributable to
service before the Break unless reemployed within 5 years.
(X) a. Plan Provision
( ) b. Count all service after the Break
( ) c. Not applicable - 100% immediate vesting
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<PAGE>
7. Forfeitures - Section 2.4.6 provides that forfeitures are
determined as of the last day of the Plan Year in which the
Participant's entire interest is distributed from the Plan.
(X) a. Plan Provision.
( ) b. Determine in Plan Year of 5th consecutive Break in
Service.
( ) c. Determination as of the Valuation Date coincident
with or next following the Distribution Date
( ) d. Not applicable - All benefits are fully vested.
Leave the remaining items in this Section E blank.
8. Forfeitures of Non-Elective Contributions shall be applied to
(select all applicable):
( ) a. Supplement Non-Elective Contributions
( ) b. Reduce Non-Elective Contributions
( ) c. Reduce Qualified Non-Elective Contributions
( ) d. Supplement Matching Contributions ( ) e. Reduce
Matching Contributions
9. Forfeitures of Non-Elective Contributions shall be reallocated
to participants:
( ) a. In the same manner as Non-Elective Contributions
( ) b. In proportion to each participant's Compensation
( ) c. Not applicable. Forfeitures are applied to reduce
contributions.
NOTE: If the Plan provides for permitted disparity,
forfeitures must be allocated under the Plan's
allocation formula.
10. Forfeitures of Matching Contributions shall be applied to:
(Select all applicable)
( ) a. Supplement Matching Contributions
(X) b. Reduce Matching contributions
( ) c. Reduce Qualified Non-Elective contributions
( ) d. Supplement Non-Elective Contributions
( ) e. Reduce Non-Elective Contributions
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<PAGE>
11. Forfeitures of Matching Contributions shall be reallocated to
participants:
( ) a. In the same manner as Non-Elective Contributions
( ) b. In proportion to each participant's Compensation
( ) c. In proportion to Matching Contributions
( ) d. In proportion to Elective Contributions
(X) e. Not applicable. Forfeitures are applied to reduce
contributions.
12. Requirement to Share in Allocation of Forfeitures - In order
to share in the allocation of Forfeitures which supplement
rather than reduce other contributions, a Participant: (Select
all applicable)
( ) a. Must be eligible to receive an allocation of the
respective type of contribution, i.e. Matching or
Non-elective
( ) b. Must be employed on the date the forfeiture is
determined.
(X) c. Not applicable. Forfeitures reduce contributions.
13. Restoration of Forfeitures - If a Participant is entitled to
a restoration of a forfeiture, the amount to be restored shall
be restored by:
( ) a. An additional contribution by the Employer
specifically allocated to the Participant's
Account.
(X) b. Allocating other forfeitures arising in the year
of restoration to the Participant's Account to the
extent thereof and an additional contribution by
the Employer specifically allocated to the
Participant's Account to the extent that allocable
forfeitures are insufficient.
F. CODA Limitation Provisions
1. Actual Deferral Percentages - Qualified Non-Elective
Contributions may be taken into account for purposes of
calculating the ADP-Actual Deferral Percentages. For
purposes of the ADP test in Section 2.7.1, the amount taken
into account shall be:
( ) a. All Qualified Non-Elective Contributions.
(X) b. The Qualified Non-Elective Contributions that are
needed to meet the ADP test.
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<PAGE>
2. Average Contribution Percentage - The amount of Elective
Deferrals and Qualified Non-Elective Contributions taken
into account as contribution percentage amounts for the
purpose of calculating the ACP-Average Contribution
Percentage, subject to such other requirements as may be
prescribed by the Secretary of the Treasury, shall be:
For elective deferrals:
( ) a. All such Elective Deferrals.
(X) b. Only those Elective Deferrals that are needed to
meet the Average Contribution Percentage test.
( ) c. Elective Deferrals are not to be included in the
ACP test.
( ) d. Not applicable.
For Qualified Non-Elective Contributions:
( ) e. All such Qualified Non-Elective contributions.
(X) f. Only those Qualified Non-Elective Contributions
that are needed to meet the Average Contribution
Percentage test.
( ) g. Qualified Non-Elective Contributions are not to be
included in the ACP test.
( ) h. Not applicable.
3. Excess Aggregate Contributions - Forfeitures of Excess
Aggregate Contributions pursuant to Section 2.7.7 shall be:
(X) a. Applied to reduce Employer contributions.
b. Allocated, after all other forfeitures under the
Plan, to each Participant's Matching Contribution
Account in the ratio which each Participant's
Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
Such forfeitures will not be allocated to the
Account of any Highly Compensated Employee.
G. Distribution Provisions
1. Form of Distributions - Section 2.5.2 provides that the
Employer may elect to permit Plan distributions to be made in
the form of: (Select all applicable)
(X) a. Lump sum without regard to amount.
( ) b. Lump sum but not to exceed $ ____.
( ) c. Installments over ____ years payable: Select one
or more
( ) c.1. annually
( ) c.2. quarterly
( ) c.3. monthly
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<PAGE>
( ) d. Installments over a period of years certain
selected by the Participant that is less than the
life of the Participant payable (Select one or
more.)
( ) d.l. annually
( ) d.2. quarterly
( ) d.3. monthly
( ) e. An annuity for not more than ____,
( ) f. An annuity for the life of: (Select one or more)
f.l. the Participant
f.2. the Participant and spouse
f.3. the Participant and a designated beneficiary
( ) g. An annuity for __ years certain and thereafter for
the life of: (Select one or more)
g.l. the Participant
g.2. the Participant and spouse
g.3. the Participant and a designated beneficiary
( ) h. An annuity for a period certain selected by the
Participant that is less than the life of: (Select
one or more)
h.l. the Participant
h.2. the Participant and spouse
h.3. the Participant and a designated beneficiary
NOTE: Any number of options may be selected. Once
selected, however, any option may not thereafter be
eliminated.
If an annuity option of life or longer is selected
Qualified Joint: and Survivor Annuity provisions
are required.
2. Survivor Annuity Percentage - If a Joint and Survivor Annuity
is payable, Section 1.2.37 provides that the normal survivor
annuity is 50% of the amount payable during the joint lives
of the Participant and spouse, unless the Employer elects a
different percentage (Select one):
( ) a. Plan Provision - 50%
( ) b. Other Percentage -_____% (Not less than 50% nor more
than 100%)
( ) c. Other Percentage selected by the Participant (Not
less than 50% or more than 100%
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<PAGE>
3. Time of Distribution - Section 2.5.1(b) provides that
distributions are deferred to Participants who resign or are
discharged prior to retirement until the retirement date
unless the employer elects to permit distributions in advance
of such date.
( ) a. Plan Provision without advance distribution
election.
(X) b. Distributions may be made at the/Participant's
election within a reasonable period following the
Distribution Date.
4. Distribution Date - Section 2.4.5 provides that, subject to
the necessity of obtaining the consent of a Participant and
spouse, for the purposes of determining the amount to be
distributed, the Distribution Date:
For a Participant who is not fully vested, is
( ) a. The Anniversary Date coinciding with or following
the date of termination.
( ) b. The Valuation Date coinciding with or following the
date of termination
(X) c. As soon as practical but prior to the Anniversary
Date coinciding with or following the date of
termination, based on the preceding Valuation Date.
( ) d. the ( ) Valuation Date ( ) Anniversary Date
following ___ consecutive Breaks in Service
( ) e. The Participant's Normal or Early Retirement Date
For a Participant who is fully vested but who terminates
employment prior to death, total and permanent disability or
retirement at his retirement date is:
( ) a. The Anniversary Date coinciding with or following
the date of termination
( ) b. The Valuation Date coinciding with or following
the date of termination
(X) c. As soon as practical but prior to the Anniversary
Date following the date of termination, based upon
the preceding Valuation Date
( ) d. The Participant's Normal or Early Retirement Date
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<PAGE>
For a Participant who terminates employment as a result of
death, total and permanent disability or retirement at his
retirement date, is:
( ) a. The Anniversary Date coinciding with or following
the date of termination.
( ) b. The Valuation Date coinciding with or following
the date of termination
(X) c. As soon as practical but prior to the Anniversary
Date following the date of termination, based upon
the preceding Valuation Date
In the case of a Participant's interest in an Elective
Account, Voluntary Account or Segregated Account
attributable tb a rollover contribution from another plan,
notwithstanding the foregoing, the Distribution Date, is:
( ) a. Not applicable - The Distribution Date is
determined in the manner indicated above for the
fully vested Participants
( ) b. The Anniversary Date coinciding with or following
the date of termination
( ) c. The Valuation Date coinciding with or following
the date of termination
(X) d. As soon as practical but prior tb the Anniversary
Date following the date of termination, based upon
the preceding Valuation Date.
5. Hardship Distributions - Section 2.5.5 provides that an
Employer may permit distributions to Participants while
employed in the event of financial hardship as specified in
the Plan:
(X) a. Hardship distributions are permitted.
( ) b. Hardship distributions are not permitted. Hardship
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<PAGE>
Distributions may be made from a Participants
Account as elected below in c and d, provided that
Hardship Distributions of earnings on elective
Deferrals may only be made on such earnings
credited to the Participant's account as of the
end of the last Plan Year ending before July 1,
1989. Therefore, subject to such limitation,
Hardship Distributions may be taken from:
( ) c. all of Participant's Accounts.
(X) d. only the Participant's Account balances
attributable to the following accounts:
d.l. Employer Account
d.2. Qualified Non-Elective Contribution Account
(X) d.3. Elective Contribution Account
d.4. Matching Account
d.5. Segregated Account(attributable to a rollover)
d.6. Voluntary Account
6. In Service Distributions - Section 2.5.6 provides that an
Employer may permit distributions to fully vested Participants
over the age of 59-1/2 prior to termination of employment if
the amounts withdrawn have been allocated to the Participant
for two (2) or more years or the Participant has been a
Participant for at least five (5) years. (Select all applicable)
(X) a. Plan Provision.
( ) b. Require that amounts have been allocated for ___
years. (Must be at least 2)
( ) c. Require participation for at least ___ years.
(Must be at least 5)
( ) d. In Service Distributions are permitted upon
reaching Normal Retirement Date
( ) e. In Service Distribution are permitted for amounts
attributable to a rollover from another plan
regardless of age or periods of participation
( ) f. In Service Distributions are not permitted.
7. Qualified Domestic Relations Orders - Section 3.12.9 provides
that the Employer may elect to permit distributions to an
alternate payee pursuant to the terms of a qualified domestic
relations order even if the Participant continues to be
employed. (Select one)
( ) a. Distributions to an alternate payee are not
permitted while the Participant continues to be
employed.
(X) b. Distributions to an alternate payee are permitted
while the Participant continues to be employed.
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<PAGE>
H. Other Administrative Provisions
1. Earnings - Section 3.1.2 permits the Employer to specify the
manner in which earnings are allocated to Participants who
receive distributions on any date other than a Valuation Date.
Select any of the following:
(X) a. Earnings will be credited solely/as of the
immediately preceding Valuation Date.
( ) b. Actual earnings will be credited to the date of
distribution.
( ) c. Earnings will be credited solely as of the
immediately preceding Valuation Date if
distribution is within ___ days of such Valuation
Date and will be credited to date of distribution
otherwise.
( ) d. Earnings will be credited to the date of
distribution based upon an estimate of earnings
equal to ___% annually.
( ) e. Earnings will be credited to the date of
distribution based upon an estimate of earnings
equal to the average rate of earnings during the
preceding
e.1. Valuation Period.
e.2. Plan Year.
e.3. _____ Valuation Periods.
2. Loans - Section 3.7.1 provides that the Employer may elect to
permit loans to Participants and Beneficiaries in accordance
with a participant loan program adopted by the Trustee.
(X) a. Loans are permitted.
( ) b. Loans are not permitted.
3. Rollovers - Section 3.11.3 authorizes the Employer to permit
the transfer of interests in other qualified plans to the
Plan.
( ) a. Rollover contributions are not permitted.
( ) b. Rollover contributions are permitted only from
other plans of the Employer
( ) c. Rollover contributions are permitted only by
Employees who have satisfied the conditions for
participation.
(X) d. Rollover contributions are permitted from any
employee even if not otherwise eligible to be a
Participant.
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<PAGE>
4. Investment Control - Section 3.6.5 provides that the Employer
may elect to permit Participants to control the investment of
their Accounts.
( ) a. Participants may not control their investments.
( ) b. Participants may control the investment of their
Accounts if fully vested in the Account.
( ) c. Participants may control the investment of their
Accounts to the extent vested.
(X) d. Participants may control their investments without
regard to their vested interest.
(X) e. Participants may control their investments solely
with respect to amounts attributable to: (Select
all applicable)
( ) e.1. Non-Elective Contributions
(X) e.2. Qualified Non-Elective Contributions
(X) e.3. Elective Contributions
(X) e.4. Matching Contributions
( ) e.5. Voluntary Contributions
(X) e.6. Amounts rolled over and held in a Segregated
Account
5. Top Heavy Assumptions - (This question applies only if the
Employer has a Defined Benefit plan.) The interest rate used
to establish the Present Value of Accrued Benefits in order to
calculate the top heavy ratio under IRC Section 416 shall be
% and the mortality tables used shall be .
6. Valuation Date - For purposes of computing the top-heavy
ratio, the Valuation Date is (Select one):
( ) a. the first day of Plan Year.
(X) b. the last day of the Plan Year.
() c. other - Specify. __/__ (Must be at least annually)
7. Single Plan Minimum Top-Heavy Allocation - For purposes of
minimum top-heavy allocations, contributions and forfeitures
equal to the following percentage of each non-Key Employee's
compensation will be allocated to the Employee's account when
the Plan is top-heavy (Select one):
(X) a. 3% or the highest percentage allocated to any Key
Employee if less.
( ) b. _____% (Must be at least 3).
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<PAGE>
8. Multiple Plans Provision - The Employer which maintains or
ever maintained another qualified defined benefit plan or
welfare benefit fund or individual medical account in which
any participant in the Plan is, was or could become a
participant adds the following optional provision which it
deems necessary to satisfy Section 41S or 416 of the Code
because of the required aggregation of multiple plans: (Select
one)
(X) a. Not applicable (No other plan or other plan
terminated prior to the Effective Date of this
Adoption Agreement).
( ) b. A minimum contribution allocation of 5-. of each
Non-Key Participant's total compensation shall be
provided in a defined contribution plan of the
Employer.
( ) c. A minimum contribution allocation of 7.5-. of each
Non-Key Participant's total compensation shall be
provided in a defined contribution plan of the
Employer.
( ) d. A minimum benefit of _____ (must be at least the
lesser of 2% times years of service or 20%) of each
Non-Key Participant's total compensation shall be
provided in a defined benefit plan of the Employer.
( ) e. A minimum benefit of ______ (must be the lesser of
2% times years of service or 20%) of each Non-Key
Participant's total compensation shall be provided
in a defined benefit plan of the Employer but
offset by the amount contributed on such
participant's behalf under any defined contribution
plan of the Employer.
( ) f. other - Specify.
NOTE: The method selected must preclude Employer
discretion and the Employer must obtain a
determination letter in order to continue reliance
on the Plan's qualified status.
9. Multiple Defined Contribution Plans - If the Participant is
covered under another qualified defined contribution plan
maintained by the Employer, other than a master or prototype
plan: (Select one)
(X) a. Not applicable.
( ) b. The provisions of this Plan limiting annual
additions will apply as if the other plan is a
master or prototype plan.
( ) c. other - Specify.
NOTE: Specify the method under which the plans will
limit: total annual additions to the maximum
permissible amount, and will properly reduce any
excess amounts in a manner that precludes Employer
discretion.
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10. Top Heavy Duplications - The Employer who maintains two or
more Defined Contribution plans makes the following election:
(X) a. Not applicable.
( ) b. A minimum non-integrated contribution of 3% of each
Non-Key Participant's Compensation shall be
provided by:
( ) b.i. this Plan.
( ) b.2. the following defined contribution plan:
( ) c. Other - Specify.
NOTE: The method selected must preclude Employer
discretion and avoid inadvertent omissions,
including any adjustments required under Code
Section 415(e). The Employer must obtain a
determination letter in order to continue reliance
on the Plan's qualified status.
11. Annual Addition Limitation - If a Participant is or has ever
been a participant in a defined benefit pension plan
maintained by the Employer, Section 3.2.1(c) provides that
Annual Additions shall be limited.
(X) a. Not applicable
( ) b. The contribution to the Plan allocable to the
Participant shall be reduced so that the limitations are
not exceeded.
( ) c. Other - Specify
NOTE: specify the method under which the plans will
limit total additions to the maximum permissible
amount, and will properly reduce any excess amounts
in a manner that precludes employer discretion.
12. Section 415 Compensation Definition. For purposes of
calculating an Employee's compensation pursuant to Section
3.2.1(h), relating to limitations on contributions and
benefits, Compensation means all of each Participant's
( ) a. Wages as computed for Wages, Tips, and Other
Compensation Box on Form W-2.
( ) b. Section 3401(a) wages.
(X) c. Section 415 safe harbor compensation.
cat10ksb.sca
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Exhibit No. 10.8
REVOLVING CREDIT AGREEMENT
Dated as of April 8 , 1996
Carpet Transport, inc. , a Florida corporation ("CTI") , A & P
Transportation, Inc. , a Georgia corporation ("APT") and Chase Brokerage,
Inc. , a Georgia corporation ("CBI") (collectively, CTI, APT and CBI are
herein refereed to as "Borrowers") , and Transport Clearings L.L.C. , a
Minnesota limited liability company ("Lender") agree as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
and
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles.
"Advance,, means an advance by Lender to the Borrowers or any of them
pursuant to Article II.
"Commitment" means $5,000,000 unless said amount is reduced pursuant
to Section 2 .04, in which event it means the amount to which said amount
is reduced.
"Event of Default" has the meaning specified in Section 7.01.
"Guaranty" means the joint and several guaranty dated of even date
herewith of Timothy Holstein, Erik Bailey, Continental American
Transportation, Inc., a Colorado corporation, and Carpet Transport Holdings
Corp., a Delaware corporation (hereinafter collectively, if more than one,
referred to as "Guarantors"), pursuant to which Guarantors guarantee
payment to Lender of the amounts payable by Borrowers to Lender pursuant to
this Agreement.
"Net Worth, means the aggregate of capital and surplus of the
Borrowers, all determined in accordance with generally accepted accounting
principles.
"Note" has the meaning specified in Section 2.02.
"Security Agreement" means that certain Security Agreement dated of
even date herewith from the Borrowers to lender, granting Lender a security
interest in all accounts receivables and other assets of Borrowers, as
security for the obligations hereunder.
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ARTICLE II
Amount and Terms of the Revolving Loans
Section 2. 01 Revolving Loans. Lender agrees, on the terms and subject
the conditions hereinafter set forth, to make Advances to the Borrowers
from time to time commencing on the date hereof and continuing for a period
of six months, or the earlier date of termination in whole of the
Commitment pursuant to Section 2.04 or Section 7.02, in an aggregate amount
(the "Borrowing Base") not to exceed at any time outstanding the lesser of
(a) an amount equal to the sum of (i) 80% of the Qualified Receivables as
defined in Section 2.09 hereof of CTI, plus (ii) 80% of the Qualified
Receivables of APT, plus (iii) or 80% of the Qualified Receivables of CBI,
or (b) the Revolving Loan Commitment. Each Advance shall be in the amount
of $1,000 or an integral multiple thereof. The Borrowers may borrow,
prepay pursuant to Section 2.05 and reborrow under this Section. Upon
request of Borrowers, Lender may, at its option, and in its sole
discretion, renew the commitment upon the terms and conditions of this
Agreement for additional six-month periods in such amounts as Lender may
determine in its sole discretion. Any such renewal shall be effective only
if in writing signed by Lender; provided, however, that any Advances made
by Lender after the date of expiration of the commitment shall be subject
to all of the terms and conditions of this Agreement.
Section 2.02 The Note. The Advances made by Lender pursuant to
Section 2. 01 shall be evidenced by and repayable with interest in
accordance with a single, joint and several Promissory note of the
Borrowers (the "Note") payable to the order of Lender, substantially in the
Form of Exhibit A hereto, dated the date of the initial Advance hereunder.
The Note shall bear interest on the unpaid principal amount thereof from
the date thereof until paid at the rate therein provided.
Section 2.03 Making the Revolving Loans. Each Advance shall be made
on at least one business day' s prior notice from the Borrowers to Lender
by telephonic request or in writing by any person purporting to be
authorized to request Advances on behalf of each Borrower, which request
shall specify (a) the date of the requested Advance, (b) the amount
thereof, and (c) the portion of the Advance to be made to each Borrower,
which portion shall not exceed 80% of the Qualified Receivables of such
Borrower. Each borrowing request shall he accompanied by supporting
information with respect to the amount of the Qualified Receivables for
each requesting Borrower as of the date of such request. Lender shall use
its best efforts to make the requested Advance to Borrowers in the
proportions requested by Borrowers on the date such request is made
provided that Lender receives the written request prior to 11:00 a.m.
Central Standard Time on any business day. Upon fulfillment of the
applicable conditions set forth in Article III, Lender may disburse the
amount of the requested Advance in such manner as Lender and the Borrowers
may from time to time agree. Any request for an Advance, whether written
or telephonic, shall be deemed to be a representation that the statements
set forth in Section 3.02 are correct. Advances shall be made directly to
each individual in the amount requested, in an amount not to exceed 80% of
the Qualified Receivables of such Borrower. If the amount of the borrowing
requests would result in an aggregate outstanding principal balance of the
loan in excess of the amount of the Commitment at any time, Lender may
reduce the amount(s) of the Advances to any or all of the Borrowers in such
manner and amounts as Lender may determine in its sole discretion.
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Section 2.04 Termination or Reduction of the Commitment.
(a) The Borrowers shall have the right at any time and from time to
time upon three business days' prior notice to Lender permanently to
terminate in whole or Permanently to reduce in part the Commitment, without
penalty or premium, and provided that no reduction shall reduce the
Commitment to an amount less than the aggregate amount of the Advances
outstanding at the time with respect thereto.
(b) Lender may, at any time, with or without cause, and regardless of
whether Borrowers are in default hereunder, terminate this Agreement and its
Commitment to advance funds hereunder upon thirty (30) days written notice to
Borrowers. This provision shall not be construed to limit or affect Lender's
right to terminate this Agreement and the Commitment immediately in the event of
a default, or to otherwise exercise its rights and remedies under Section 7.02
hereof.
Section 2.05 Voluntary Prepayments . The Borrowers may prepay the Note
in whole at any time or from time to time in part, without penalty or
premium, provided, that any prepayment shall include accrued interest
thereon, and each partial prepayment shall be in the principal amount of
$1,000 or an integral multiple thereof.
Section 2.06 Computation of Interest. Interest under the Note shall
be computed as provided in the Note.
Section 2.07 Payment. All payments of principal and interest under
the Note hereunder shall be made to Lender in immediately available funds.
Borrowers agree that the amount shown on the books and records of Lender as
being the aggregate amount of Advances outstanding on the Note shall be
prima facie evidence of the principle amount of the Note then outstanding.
Borrowers will direct each of their account debtors to make payments due
under the relevant account or chattel paper directly to Lender, and shall
immediately turn over to Lender any of such receivables, bills or accounts
collected by Borrowers. Borrowers hereby authorize and direct Lender to
deposit such bills into a special collateral account to be established and
maintained in Lender's name all: checks, drafts and cash payments received
from Borrowers' account debtors. All deposits in said collateral account
shall constitute proceeds of Collateral until credited against Borrowers'
obligations hereunder. Borrowers shall immediately turn over to Lender any
payments received by Borrowers from account debtors. Payments received by
Lender prior to 12:00 noon central standard time on each business day shall
be applied against Borrowers' obligations hereunder two (2) business days
after receipt by Lender; until such application, the account so paid shall
continue to be included in the Borrowing Base. If any collection item, the
subsequently dishonored or otherwise returned unpaid to Lender may debit
Borrowers' loan account for such amount, including any charges for
dishonored items, retroactively to the date that the amount was credited
against Borrowers' obligations.
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Section 2.08 Payment on Non-Business Days. Whenever any payment to be
made hereunder or under the Note shall be stated to be due on a Saturday,
Sunday or a holiday for Lender under the laws of the State of Minnesota,
such payment may be made on the next succeeding Lender business day, and
such extension of time shall in such case be included in the computation of
payment of interest on the Note or the fees hereunder, as the case may be.
Section 2.09 Accounts Receivable. In order to qualify for inclusion
in the Borrowing Base formulation, accounts receivable of the Borrowers
shall, at all times comply with the following criteria (receivables so
complying shall be referred to herein as "Qualified Receivables"):
(a) The account shall consist of a bona fide freight bill arising out
of shipments of goods in interstate or intrastate commerce;
(b) The title of the Borrowers to the account is absolute and is not
subject to any prior assignment, claim, lien or security interest;
(c) The amount shown on the books of the Borrowers and on a copy or
schedule of any freight bills or statements delivered to Lender is owing to
the Borrowers, and no partial payment for which full credit has not been
reflected has been made thereon by anyone;
(d) The account is not subject to any known: (1) claim of reduction,
counterclaim, setoff, recoupment, or (2) any claim for credits, allowances
or adjustments by the account debtor because of damaged goods or
unsatisfactory services, or for any other reason;
(f) The account is due and payable not more than thirty (30) days from
the date of the invoice therefor;
(g) The account is not more than sixty (60) days past due (If fifty
percent (50%) or more of the receivables of any customer of Borrowers is
more than 60 days past due, the entire account of such customer shall be
deemed to be more than 60 days past due);
(h) The account does not arise out of a contract with, or order from
an account debtor that, by its terms forbids or makes the assignment of
that account to the lender void or unenforceable;
(i) The Borrowers have not received any note, trade acceptance, draft
or other instrument with respect to or in payment of the account, or any
chattel paper with respect to the goods giving rise to the account, and, if
any such instrument or chattel paper is received, the Borrowers will
immediately notify the Lender and, at Lender's request, endorse or assign
and deliver the same to Lender;
(j) Neither the Borrowers nor Lender has any notice of anything which
might, in Lender's sole judgment, impair the credit standing of the account
debtor;
(k) The account debtor is not an affiliate of any of the Borrowers;
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(l) Neither the account nor the account debtor have been placed on
Lender's nonpurchase list;
(m) In determining the Borrowing Base, all funds held by Borrowers as
advance deposits shall be deducted from the total amount of all accounts.
ARTICLE III
Conditions of Lending
Section 3.01 Conditions Precedent to the Initial Advance. The
obligation of Lender to make its initial Advance on the Note is subject to
the condition precedent that Lender shall have received on or before the
day of such Advance all of the following, each dated (unless otherwise
indicated) such day, in form and substance satisfactory to Lender:
(a) The Note and the Security Agreement properly executed on behalf
of the Borrowers.
(b) Certified copies of the resolutions of the boards of Directors of
the Borrowers evidencing approval of this Agreement, the Security
Agreement, the Note and other matters contemplated hereby.
(c) A signed copy of a certificate of the Secretaries or an Assistant
Secretaries of each of the Borrowers which shall certify the names of the
officers of the Borrowers authorized to sign this Agreement and the Note
and the other documents or certificates to be delivered pursuant to this
Agreement by the Borrowers or any of their respective officers, together
with the true signatures of such officers. Lender may conclusively rely on
such certificate until it shall receive a further certificate of the
Secretary or Assistant Secretary of the Borrowers canceling or amending the
prior certificate and submitting the signatures of the officers named in
such further certificate.
(d) A Certificate of Good Standing from the Secretary of State of
incorporation of each of the Borrowers and copies of the Articles of
Incorporation and Bylaws of each of the Borrowers, certified by the
Secretaries or an Assistant Secretary of each of the Borrowers as being
true and correct copies thereof.
(e) The Guaranty executed by Guarantors.
Section 3.02 Conditions Precedent to All Advances. The obligation of
Lender to make each Advance (including the initial Advance) shall be
subject to the further conditions precedent that on the date of such
Advance:
(a) the representations and warranties contained in Article IV are
correct on and as of the date of such Advance as though made on and as of
such date, except to the extent that such representations and warranties
relate solely to an earlier date;
(b) no event has occurred and is continuing, or would result from
such Advance, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both;
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(c) Lender shall have received the Note properly executed on behalf
of the Borrowers;
(d) The guaranty shall be in full force and effect;
(3) Borrowers shall have and retain valid and current motor carrier's
licenses and/or such licenses or permits as are necessary to ship goods and
operate their business.
ARTICLE IV
Representations and Warranties
The Borrowers represent and warrant to Lender as follows:
Section 4.01 Corporate Existence and Power.
a. APT and CBI are corporations duly incorporated, validly
existing and in good standing under the laws of Georgia. CTI is a
corporation duly incorporated, validly existing and in good standing
under the laws of Florida. Borrowers are duly licensed or qualified
to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by
it makes such licensing or qualification necessary. The Borrowers
have all requisite power and authority, corporate or otherwise, and
have obtained all licenses and permits necessary to conduct its
business, and to execute and deliver, and to perform all of their
obligations under this Agreement, the Note and the Security Agreement.
b. Carpet Transport Holdings Corp. ("CTHC") is a corporation
duly incorporated, validly existing and in good standing under the
laws of Delaware. Continental American Transportation, Inc. ("CAT")
is a corporation duly incorporated, validly existing and in good
standing under the laws of Colorado. CTHC and CAT are duly licensed
or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the
business transacted by it makes such licensing or qualification
necessary. CTHC and CAT have all requisite power and authority,
corporate or otherwise, and have obtained all licenses and permits
necessary to conduct its business, and to execute and deliver, and to
perform all of their obligations under the Guaranty.
Section 4.02 Validity of Accounts. Borrowers warrant that all
Qualified Receivables submitted by Borrowers for Advances hereunder
pursuant to Section 2.01 hereof shall be genuine and in all respects what
they purport to be, that Borrowers have good and unencumbered title
thereto; that Borrowers have no knowledge of any facts impairing the worth
or validity thereof; that the amounts set forth thereon are the true and
correct amounts and that there are no offsets, counterclaims or deductions
existing against the same. Lender may verify accounts at any time, and
Borrowers shall assist Lender in so doing.
Section 4.03 Authorization of Borrowing; No Conflict as to Law or
Agreements. The execution, delivery and performance by the Borrowers of
this Agreement, the Note and the Security Agreement and the borrowings from
time to time hereunder have been duly authorized by all necessary corporate
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action and do and will not (i) require any consent or approval of the
stockholders of any of the Borrowers, or any authorization, consent or
approval by any governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect having applicability to the Borrowers or to the
Articles of Incorporation or Bylaws of any of the Borrowers, (iii) result
in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which any
of the Borrowers is a party or by which it or its properties may be bound
or affected, or (iv) result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or other
charge or encumbrance of any nature (other than the Security Agreement)
upon or with respect to any of the properties now owned or hereafter
acquired by the Borrowers.
Section 4.04 Legal Agreements. This Agreement and the Security
Agreement constitute, and the Note, when executed and delivered by the
Borrowers hereunder, will constitute the legal, valid and binding
obligations of the Borrowers enforceable against the Borrowers in
accordance with their respective terms.
Section 4.05 Subsidiaries. The Borrowers have no subsidiaries.
Section 4.06 Financial Condition. The Borrowers and Guarantors have
heretofore furnished certain financial statements to Lender. Said
financial statements fairly present the financial condition of the
Borrowers and Guarantors as of the dates thereof and the results of
Borrowers' operations for the periods then ended, and were prepared in
accordance with generally accepted accounting principles.
Section 4.07 Adverse Change. There has been no material adverse
change in the business, properties or condition (financial or otherwise) of
the Borrowers or Guarantors since the date of the latest financial
statements referred to in Section 4.06.
Section 4.08 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrowers or Guarantors, threatened
against or affecting the Borrowers or the Guarantors or the properties of
the Borrowers or Guarantors before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to the Borrowers or Guarantors, would have a
material adverse effect on the financial condition, properties, or
operations of the Borrowers or Guarantors.
Section 4.09 Taxes. The borrowers have filed all federal, state and
local tax returns which to the knowledge of the officers of such Borrowers
are required to be filed, and the Borrowers have paid or caused to be paid
to the respective taxing authorities all taxes as shown on said returns or
on any assessment received by it to the extent such taxes have become due.
Section 4.10 Titles and Liens. The Borrowers and Guarantors have
good title to each of the properties and assets assigned to Lender pursuant
to the Security Agreement free and clear of all liens and encumbrances of
any kind and nature whatsoever.
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Section 4.11 Pension Program. No Reportable Event has occurred and
is continuing with respect to any Plan.
Section 4.12 Security Agreement. The Security Agreement creates a
valid security interest in favor of Lender in all of the property covered
thereby to the extent that Article 9 of the Uniform Commercial Code is
applicable thereto, and a Financing Statement in appropriate form has been
duly filed Pursuant to the Uniform Commercial Code resulting in all such
property.
Section 4.13 Other Security Interests. Except as disclosed to lender
in writing, there are no security interests or liens against the property
covered by the Security Agreement.
ARTICLE V
Affirmative Covenants of the Borrowers
So long as the Note shall remain unpaid or the Commitment shall be
outstanding, the Borrowers will comply with the following requirements,
unless Lender shall otherwise consent in writing:
Section 5.01. Financial Statements. In addition to the statements
required pursuant to Section 5.03 below, the Borrowers will deliver to
Lender:
(a) as soon as available, and in any event within 120 days after the end of
each fiscal year of the Borrowers, audited balance sheets and statements of
income and expenses, all in reasonable detail, and in form and substance
satisfactory to Lender and prepared by an independent public accountant in
accordance with generally accepted accounting principles.
(b) as soon as avail-able and in any event within 120 days after the end of
each calendar year, the personal financial statement of assets and liabilities
of each Guarantor, in reasonable detail, and in form and content satisfactory to
Lender, prepared by an independent public accountant in accordance with
generally accepted accounting principles;
(c) Within twenty (20) days after the end of each month (i) a summary of
the operations of each of the Borrowers during such month in such form as Lender
may reasonably request, (ii) a profit and loss statement for such month, and a
balance sheet for each of the Borrowers as of the end of such month. (iii) such
information respecting the Borrowers and their affairs as Lender may reasonably
request;
(d) immediately after the commencement thereof, notice in writing of all
litigation and of all proceedings before any governmental or regulatory agency
affecting the Borrowers or Guarantors of the type described in Section 4.07 or
which seek a monetary recovery against the Borrowers or Guarantors in excess of
$5,000;
(e) as promptly as practicable (but in any event not later than five
business days) after any officer of the Borrowers obtains knowledge of the
occurrence of any event which constitutes an Event of Default or would
constitute an Event of Default with the passage of time or the giving of notice,
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or both, notice of such occurrence, together with a detailed statement by a
responsible officer of the Borrowers of the steps being taken by the Borrowers
to cure the effect of such event;
(f) such other information respecting the financial condition and results
of operations of the Borrowers as Lender may from time to time reasonably
request.
Section 5.02 Books and Records; Inspection and Examination. The
Borrowers will keep accurate books of records and account for itself in
which true and complete entries will be made in accordance with generally
accepted accounting principles consistently applied and, upon request of
Lender, will given any representative of Lender access to, and permit such
representative to examine, copy or make extracts from, any and all books,
records and documents in its possession, to inspect any of its properties
and to discuss its affairs, finances and accounts with any of its principal
officers, all at such times during normal business hours and as often as
Lender may reasonably request.
Section 5.03 Collateral Records and Statements. Lender shall have
access to all records of Borrowers, and may turn over to any institution
providing financing to lender, statements and reports containing all
reasonable information and reports required by such institution, including,
among other things, a weekly account receivable aging and daily information
regarding which receivables, are Qualified Receivables and which
receivables are not Qualified Receivables, a classification of accounts
according to age, identifying those which are current, those which ar less
than 30 days past due, those which are more than 31 but less than 60 days
past due and a reconciliation of such aging of accounts. Borrowers shall
cooperate with lender in compiling and providing such information.
Section 5.04 Compliance with Laws. The Borrowers will comply with
the requirements of applicable laws and regulations, the noncompliance with
which would materially and adversely affect its business or its financial
condition.
Section 5.05 Payment of Taxes and Other Claims. The Borrowers will
pay or discharge all taxes, assessments and governmental charges levied or
imposed upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which penalties attach thereto and
all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien or charge upon any properties of the Borrowers;
provided, that the Borrowers shall not be required to pay any such tax,
assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
Section 5.06 Insurance. The Borrowers will obtain and maintain
insurance with insurers believed by the Borrowers to be responsible and
reputable, in such amounts and against such risks as is usually carried by
companies engaged in similar business and owning similar properties in the
same general areas in which the Borrowers operate, including without
limitation liability and cargo insurance, and shall provide Lender, upon
Lender's request from time to time, with a certificate of insurance
confirming the existence of such insurance.
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Section 5.07 Preservation of Corporate Existence. The Borrowers will
preserve and maintain their corporate existence and all of its rights,
privileges and franchises; provided, however, that the Borrowers shall not
be required to preserve any of their rights, privileges and franchises if
its Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Borrowers and that
the loss thereof is not disadvantageous in any material respect to Lender
as a holder of the Note. Borrowers shall promptly notify Lender in writing
prior to any change in Borrowers' name or corporate structure.
Section 5.08 Net Worth. The Net Worth of any of the Borrowers will
not decrease from the beginning to the end of any period of three
consecutive months during the term of this Agreement.
ARTICLE VI
Negative Covenants
So long as the Note shall remain unpaid or Lender shall have any
Commitment hereunder, the Borrowers agree that, without the prior written
consent of Lender:
Section 6.01 Sale of Assets. The Borrowers will not sell, lease,
assign, transfer or otherwise dispose of all or a substantial part of its
assets (whether in one transaction or in a series of transactions) to any
other Person.
Section 6.02 Consolidation and merger. The Borrowers will not
consolidate with or merge into any Person, or permit any other Person to
merge into it, or acquire (in a transaction analogous in purpose or effect
to a consolidation or merger) all or substantially all he assets of any
other Person.
Section 6.03 Restrictions on Nature of Business. The Borrowers will
not engage in any line of business materially difference from that
presently engaged in by the Borrowers.
Section 6.04 Ownership Transfers. No part of the legal, beneficial,
or equitable ownership of Borrowers shall be changed by sale, conveyance,
transfer, assignment, or encumbrance without the prior written consent of
Lender.
ARTICLE VII
Events of Default, Rights and Remedies
Section 7.01 Events of Default. "Events of Default," wherever used
herein, means any one of the following events:
(a) Default in the payment of any interest on the Note when it
becomes due and payable or default in payment of the principal of the Note
when it becomes due and payable;
(b) Any representation or warranty made by the Borrowers in this
Agreement or by the Borrowers (or any of their officers) in any
certificate, instrument, or statement contemplated by or made or delivered
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pursuant to or in connection with this Agreement, shall prove to have been
incorrect in any material respect when made;
(c) Default in the performance, or breach, of any covenant or
agreement of the Borrowers in this Agreement or in the Security Agreement;
(d) Any of the Borrowers or Guarantors shall be adjudicated a
bankrupt or insolvent, or admit in writing its inability to pay its debts
as they mature, or make an assignment for the benefit of creditors; or any
of the Borrowers or guarantors shall apply for or consent to the
appointment of any receiver, trustee, or similar officer for it or for all
or any substantial part of its property; or such receiver, trustee or
similar officer shall be appointed without the application or consent of
any of the Borrowers or Guarantors and such appointment shall continue
undischarged for a period of 30 days; or a petition shall be filed by any
of the Borrowers or Guarantors under the United States Bankruptcy Code
naming any of the Borrowers or Guarantors as debtor thereunder or any such
petition shall be filed against any of the Borrowers or Guarantors and
shall remain undismissed for a period of 30 days; or any judgment, writ,
warrant of attachment or execution or similar process shall be issued or
levied against a substantial part of the property of any of the Borrowers
or Guarantors and such judgment, writ, or similar process shall not be
released, vacated or fully bonded within 30 days after its issue or levy;
(e) The rendering against any of the Borrowers or Guarantors of a
final judgment, decree or order for the payment of money in excess of
$10,000 and the continuance of such judgment, decree or order unsatisfied
and in effect for any period of 30 consecutive days without a stay of
execution;
(f) Any Guarantor shall sell, transfer, convey, assign or otherwise
dispose of any of its shares of stock in any of the Borrowers (whether in
one transaction or a series of transactions and whether voluntarily or
involuntarily).
(g) Lender shall deem itself insecure.
(h) Any lien or encumbrance shall be filed against any of the
Borrowers, or any property given as collateral pursuant to the Security
Agreement.
Section 7.02 Rights and Remedies. Upon the occurrence of an Event of
Default or at any time thereafter until such Event of Default is cured to
the written satisfaction of Lender, Lender may exercise any or all of the
following rights and remedies:
(a) Lender may, by notice to the Borrowers declare the Commitment to
be terminated, whereupon the same shall forthwith terminate;
(b) Lender may, by notice to the Borrowers, declare the entire unpaid
principal amount of the Note then outstanding, all interest accrued and
unpaid thereon, and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Note, all such accrued interest
and all such amounts shall become and be forthwith due and payable, without
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presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrowers.
(c) Lender may, without notice to the Borrowers and without further
action, apply any and all money owing by Lender to the Borrowers to the
payment of the principal amounts of the Note then outstanding, including
interest accrued thereon, and of all other sums then owing by the Borrowers
hereunder, all in such order as Lender shall determine; and
(d) Lender may exercise and enforce its rights and remedies under the
Security Agreement.
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ARTICLE VIII
Miscellaneous
Section 8.01 No Waiver; Cumulative Remedies. No failure or delay on
the part of Lender in exercising any right, power or remedy hereunder or
under the Security Agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right,
power or remedy hereunder or under the Security Agreement. The remedies
herein and in the Security Agreement provided are cumulative and not
exclusive of any remedies provided by law.
Section 8.02 Amendments, Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, the Security
Agreement or the Note or consent by the Borrowers to any departure
therefrom shall be effective unless the same shall be in writing and signed
by Lender and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No notice
to or demand on the Borrowers in any case shall entitle the Borrowers to
any other or further notice or demand in similar or other circumstances.
Section 8.03 Addresses for Notices, Etc. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for hereunder and under the Security Agreement
shall be in writing and mailed or delivered to the applicable party at its
address indicated below:
If to the Borrowers:
495 Lovers' Lane
Calhoun, Georgia 30701
If to Lender:
Transport Clearings L.L.C.
1821 University Avenue W. Suite N200
St. Paul, Minnesota 55104-3196
or as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall, when mailed, be effective when deposited in the
mails, addressed as aforesaid, except that notices or requests to Lender
pursuant to any of the provisions of Article II shall not be effective
until received by Lender.
Section 8.04 Costs and Expenses. The Borrowers agree to pay on
demand all costs and expenses of Lender in connection with the preparation
of this Agreement, the Note and the other instruments and documents to be
delivered hereunder and thereunder, including the reasonable fees and out-
of-pocket expenses of counsel for Lender with respect thereto. The
Borrowers further agree to pay on demand all out-of-pocket expenses of
legal counsel retained by Lender in connection with the enforcement of this
Agreement, the Note, the Security Agreement and the other instruments and
documents to be delivered hereunder and thereunder.
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<PAGE>
Section 8.05 Execution in Counterparts. This Agreement and the
Security Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and
all of which counterparts of this Agreement or the Security Agreement, as
the case may be, taken together, shall constitute but one and the same
instrument.
Section 8.06 Binding Effect, Assignment. This Agreement and the
Security Agreement shall be binding upon and inure to the benefit of the
Borrowers and Lender and their respective successors and assigns, except
that the Borrowers shall not have the right to assign its rights hereunder
or thereunder or any interest herein or therein without the prior written
consent of Lender.
Section 8.07 Governing Law. This Agreement, the Note and the
Security Agreement shall be governed by, and construed in accordance with,
the laws of the State of Minnesota.
Section 8.08 Jurisdiction. Borrowers agree that the state and federal
courts sitting in the State of Minnesota shall have exclusive jurisdiction
to hear and determine any claims or disputes between the Borrowers and
Lender pertaining directly or indirectly to this Agreement, the Note, the
indebtedness evidenced hereby, or to any matter arising therefrom and
Borrowers hereby waive any objection to the inconvenient forum.
Section 8.09 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
Section 8.10 Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TRANSPORT CLEARINGS L.L.C.
By: s/Richard L.
Its: Treasurer
CARPET TRANSPORT, INC.
By: s/Timothy Holstein
Its: President
A & P TRANSPORTATION, INC.
By: s/Timothy Holstein
Its: President
CHASE BROKERAGE, INC.
By: s/Timothy Holstein
Its: President
cat10ks2.sca
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<PAGE>
Exhibit No. 10.9
ADOPTION AGREEMENT FOR RESOURCES TRUST COMPANY
STANDARDIZED 401(k) PROFIT SHARING PLAN AND TRUST
(WITH PAIRING PROVISIONS)
The undersigned Employer adopts the Resources Trust Company
Standardized 401(k) Profit Sharing Plan for those Employees who
shall qualify as Participants hereunder, to be known as the
A1 CTI Retirement Plan
(Enter Plan Name)
It shall be effective as of the date specified below. The
Employer hereby selects the following Plan specifications:
EMPLOYER INFORMATION
CAUTION: The failure to properly fill out this Adoption Agreement
may result in disqualification of the Plan.
B1 Name of Employer Carpet Transport, Inc.
B2 Address P.O. Box 7
Calhoun GA 30703-7014
City State ZIP
B3 Employer Identification Number 59-1275946
B4 Date Business Commenced December 19, 1967
B5 TYPE OF ENTITY
a. ( ) S Corporation
b. ( ) Professional Service Corporation
c. (X) Corporation
d. ( ) Sole Proprietorship
e. ( ) Partnership
f. ( ) Other
AND, is the Employer a member of ...
g. a controlled group? (X) Yes ( ) No
h. an affiliated service group? (X) Yes ( ) No
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<PAGE>
B6 NAME(S) OF TRUSTEE(S)
a. Don Conord
b.
c.
B7 TRUSTEES' ADDRESS
a. (X) Use Employer Address
b. ( )
Street
City State ZIP
B8 LOCATION OF EMPLOYER'S PRINCIPAL OFFICE
a. (X) state of GA or b. ( ) commonwealth of
and this Plan and Trust shall be
governed under the same.
B9 EMPLOYER FISCAL YEAR (means the 12 consecutive-month period):
Commencing on
a. July 1 (e.g., January 1st) and ending on
month day
b. June 30.
month day
PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement of the Resources Trust Company
Standardized 401(k) Profit Sharing Plan and Trust shall:
a. (X) establish a new Plan and Trust effective as of
July 1, 1995 (hereinafter called the Effective
Date).
b. ( ) constitute an amendment and restatement in its
entirety of a previously
(hereinafter called the Effective Date).
Except as specifically provided in the Plan,
the effective date of this amendment and
restatement is ,
(For TRA '86 amendments, enter the first day
of the first Plan Year beginning in 1989).
C2 PLAN YEAR (means the 12 consecutive-month period):
Commencing on
a. July 1 (e.g., January 1st) and ending on
b. June 30.
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<PAGE>
C2 (con't) IS THERE A SHORT PLAN YEAR?
c. (X) No
d. ( ) Yes, beginning
and ending .
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date)
a. June 30
month day
C4 PLAN NUMBER assigned by the Employer (select one)
a. (X) 001
b. ( ) 002
c. ( ) 003
d. ( ) Other .
C5 NAME OF PLAN ADMINISTRATOR (Document provides for the Employer
to appoint an Administrator. If none is named, the Employer
will become the Administrator.)
a. (X) Employer (Use Employer Address)
b. ( ) Name
Address
City State ZIP
Telephone
Administrator's I.D. Number
C6 PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS
a. (X) Employer (Use Employer Address)
b. ( ) Name
Address
City State ZIP
ELIGIBILITY, VESTING AND RETIREMENT AGE
NOTE: For purposes of this section, the term Employee shall
include all Employees of this Employer, any Affiliated Employer,
and any leased employees deemed to be Employees under Code Section
414(n) or 414(o).
D1 ELIGIBLE EMPLOYEES (Plan Section 1.15) shall mean all
Employees who have satisfied the eligibility requirements
except those checked below:
a. ( ) N/A. No exclusions.
b. (X) Employees whose employment is governed by a
collective bargaining agreement between the
Employer and employee representatives under
which retirement benefits were the subject of
good bargaining. For this purpose, the term
employee representatives does not include any
organization more than half of whose members
are employees who are owners, officers, or
executives of the Employer.
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<PAGE>
c. (X) Employees who are nonresident aliens who
received no earned income (within the meaning
of Code Section 911(d)(2) from the Employer
which constitutes income from sources within
the United States (within the meaning of Code
Section 861(a)(3)).
D2 HOURS OF SERVICE (Plan Section 1.31) will be determined on the
basis of the method selected below. Only one method may be
selected. The method selected will be applied to all
Employees covered under the Plan.
a. (X) On the basis of actual hours for which an
Employee is paid or entitled to payment.
b. ( ) On the basis of days worked. An Employee will
be credited with ten (10) Hours of Service if
under the Plan such Employee would be credited
with at least one (1) Hour of Service during
the day.
c. ( ) On the basis of weeks worked. An Employee will
be credited forty-five (45) Hours of Service
if under the Plan such Employee would be
credited with at least one (1) Hour of Service
during the week.
d. ( ) On the basis of semi-monthly payroll periods.
An Employee will be credited with ninety-five
(95) Hours of Service if under the Plan such
Employee would be credited with at least one
(1) Hour of Service during the semi-monthly
payroll period.
e. ( ) On the basis of months worked. An Employee
will be credited with one hundred ninety (190)
Hours of Service if under the Plan such
Employee would be credited with at least one
(1) Hour of Service during the month.
D3 CONDITIONS OF ELIGIBILITY (Plan Section 3.1)
NOTE: If the Year(s) of Service selected is or includes a
fractional year, an Employee will not be required to complete
any specified number of Hours of Service to receive credit for
such fractional year. If expressed in Months of Service, an
Employee will not be required to complete any specified number
of Hours of Service in a particular month.
Check either a. OR b. and c., and if applicable, d.
Any Eligible Employee will be eligible to participate in
the Plan if such Eligible Employee has satisfied the
service and age requirements, if any, specified below:
a. ( ) NO AGE OR SERVICE REQUIRED.
b. (X) SERVICE REQUIREMENT (may not exceed 1 year)
1. ( ) None
2. (X) 1/2 Year of Service
3. ( ) 1 Year of Service
4. ( ) Other
c. (X) AGE REQUIREMENT (may not exceed 21)
1. ( ) N/A - No Age Requirement
2. ( ) 20-1/2
3. (X ) 21
4. ( ) Other
d. ( ) FOR NEW PLANS ONLY--Regardless of any of the
above age or service requirements, any
Eligible Employee who was employed on the
Effective Date of the Plan shall be eligible
to participate hereunder and shall enter the
Plan as of such date.
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<PAGE>
D4 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2) An Eligible
Employee shall become a Participant as of:
a. ( ) the first day of the Plan Year in which he met
the requirements.
b. ( ) the first day of the Plan Year in which he met
the requirements, if he met the requirements
in the first 6 months of the Plan Year, or as
of the first day of the next succeeding Plan
Year if he met the requirements in the last 6
months of the Plan Year.
c. (X) the earlier of the first day of the seventh
month or the first day of the Plan Year
coinciding with or next following the date on
which he met the requirements.
d. ( ) the first day of the Plan Year next following
the date on which he met the requirements.
(Eligibility must be 1/2 Year of Service or
less and age 20-1/2 or less.)
e. ( ) the first day of the month coinciding with or
next following the date on which he met the
requirements.
f. ( ) Other:
provided that an Employee who has satisfied
the maximum age and service requirements that
are permissible in Section D3 above and who is
otherwise entitled to participate, shall
commence participation no later than the
earlier of (a) 6 months after such
requirements are satisfied, or (b) he first
day of the first Plan Year after such
requirements are satisfied, or (b) the first
day of the first Plan Year after such
requirements are satisfied, unless the
Employee separates from service before such
participation date.
D5 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
The vesting schedule, based on number of Years of
Service, shall be as follows:
a. ( ) 100% upon entering Plan. (Required if eligibility
requirement is greater than one (1) Year of Service.)
b. ( ) 0-2 years 0% c. ( ) 0-4 years 0%
3 years 100% 5 years 100%
d. ( ) 0-1 year 0% e. ( ) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g. (X) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h. ( ) Other--Must be at least as liberal as either c or g above.
Years of Service Percentage
_______________ _______
_______________ _______
_______________ _______
_______________ _______
_______________ _______
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<PAGE>
D6 FOR AMENDED PLANS (Plan Section 6.4(f)). If the vesting
schedule has been amended to a less favorable schedule, enter
the pre-amended schedule below:
a. ( ) Vesting schedule has not been amended or amended
schedule is more favorable in all years.
b. ( ) Years of Service Percentage
_______________ __________
_______________ __________
_______________ __________
_______________ __________
_______________ __________
c. (X) N/A
D7 TOP-HEAVY VESTING (Plan Section 6.4(c)).
Note: This section does not apply to the Account balances of
any Participant who does not have an Hour of Service after the
Plan has initially become top heavy. Such participant's
Account balance attributable to Employer contributions and
Forfeitures will be determined without regard to this section.
If this Plan becomes a Top-Heavy Plan, the following
vesting schedule, based on number of Years of Service,
for such Plan, shall apply and shall be treated as a Plan
amendment pursuant to this Plan. Once effective, this
schedule shall also apply to any contributions made prior
to the effective date of Code Section 416 and/or before
the Plan became a Top-Heavy Plan.
a. ( ) N/A (D5a,b,d,e or f was selected)
(X) 0-1 year 0% c. ( ) 0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
D8 VESTING (Plan Section 6.4(h)). In determining Years of
Service for vesting purposes, Years of Service
attributable to the following shall be EXCLUDED:
a. (X) Service prior to the Effective Date of the Plan or
a predecessor plan.
b. ( ) N/A
c. ( ) Service prior to the time an Employee attained age
18.
d. ( ) N/A
D9 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER
NOTE: If the predecessor Employer maintained this
qualified Plan, then Years of Service with such
predecessor Employer shall be recognized pursuant to
Section 1.74 and b. must be marked.
a. (X) No.
b. ( ) Yes: Years of Service with
shall be recognized for the purpose of this Plan.
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<PAGE>
D10 NORMAL RETIREMENT AGE (NRA)(Plan Section 1.42) means:
a. (X) the date a Participant attains his 65th birthday.
(not to exceed 65th)
b. ( ) the later of the date a Participant attains his ____
birthday (not to exceed 65th) or the
c. ( ) ______ (not to exceed 5th) anniversary of the first
day of the Plan Year in which participant in the
Plan commenced.
D11 NORMAL RETIREMENT DATE (Plan Section 1.43) shall commence:
a. (X) as of the Participant's NRA.
OR (must select b. or c. AND 1. or 2.)
b. ( ) as of the first day of the month...
c. ( ) as of the Anniversary Date...
1. ( ) coinciding with or next following the
Participant's NRA
2. ( ) nearest the Participant's NRA.
D12 EARLY RETIREMENT DATE (Plan Section 1.12) means the:
a. (X) No Early Retirement provision provided
b. ( ) date on which a Participant...
c. ( ) first day of the month coinciding with or next
following the date on which a Participant...
d. ( ) Anniversary Date coinciding with or next following
the date on which a Participant
AND, if b,c or d was selected...
1. ( ) attains his ________ birthday and has
2. ( ) completed at least _______ Years of Service
CONTRIBUTIONS, ALLOCATIONS AND REDISTRIBUTIONS
NOTE: The Limitation Year shall be the same as the year on which
Compensation is based.
E1 a. COMPENSATION (Plan Section 1.9) with respect to any
Participant means:
1. ( ) 415 Compensation.
2. (X) Compensation reportable as wages on Form W-2.
b. COMPENSATION shall be
1. (X) actually paid (must be selected if Plan is
integrated)
2. ( ) accrued
c. FOR PURPOSES OF THIS SECTION E1, Compensation shall be
based on:
1. (X) the Plan Year.
2. ( ) the Fiscal Year coinciding with or ending with
the Plan Year.
d. HOWEVER, for an Employee's first year of participation,
Compensation shall be recognized as of:
1. ( ) the first day of the Plan Year.
2. (X) the date the Participant entered the Plan.
e. IN ADDITION, COMPENSATION and 414(s) Compensation
1. (X) shall
2. ( ) shall not
include compensation which is not currently includable in
the Participant's gross income by reason of the
application of Code Section 125, 402(a)(8), 402(h)(1)(B),
or 403(b).
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<PAGE>
E2 SALARY REDUCTION ARRANGEMENT -- ELECTIVE CONTRIBUTION (Plan
Section 11.2). Each Employee may elect to have his
compensation reduced by:
a. ( ) ________%
b. ( ) up to ______%
c. (X) from 1% to 15%
d. ( ) up to the maximum percentage allowable not to
exceed the limits of Code Sections 401(k), 404 and
415.
AND
e. (X) A Participant may elect to commence salary
reductions as of each January 1 or July 1
(ENTER AT LEAST ONE DATE OR PERIOD). A Participant may modify
the amount of salary reductions as of each January 1 or July 1
(ENTER AT LEAST ONE DATE OR PERIOD).
AND
Shall cash bonuses paid within 2-1/2 months after the end of
the Plan Year be subject to the salary reduction election?
f. ( ) Yes
g. (X) No
E3 FORMULA FOR DETERMINING EMPLOYER'S MATCHING CONTRIBUTION (Plan
Section 11.1(b))
a. ( ) N/A. There shall be no matching contributions.
b. ( ) The Employer shall make matching contributions
equal to ____% (e.g. 50%) of the Participant's
salary reductions.
c. (X) The Employer may make matching contributions equal
to a discretionary percentage, to be determined by
the Employer, of the Participant's salary
reductions.
d. ( ) The Employer shall make matching contributions
equal to the sum of ____% of the portion of the
Participant's salary reduction which does not
exceed _____% of the Participant's Compensation
plus _____% of the portion of the Participant's
Compensation but does not exceed ____ % of the
Participant's Compensation.
e. ( ) The Employer shall make matching contributions
equal to the percentage determined under the
following schedule:
Participant's Total Matching Percentage
Years of Service
_______________ __________
_______________ __________
_______________ __________
FOR PLANS WITH MATCHING CONTRIBUTIONS
f. (X) Matching contributions:
g. ( ) shall
h. ( ) shall not
be used in satisfying the deferral percentage tests. (If
used, full vesting and restrictions on withdrawals will
apply and the match will be deemed to be an Elective
Contribution).
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<PAGE>
i. (X) For Plan Years beginning prior to 1990, a Year of
Service
(X) N/A
( ) shall
j. ( ) shall not
be required in order to share in the matching
contributions. For Plan Years beginning after 1989, a
Year of Service shall not be required in order to share
in the matching contributions.
k. (X) In determining matching contributions, only salary
reductions up to 4% of a Participant's
Compensation will be matched.
l. ( ) N/A
m. ( ) The matching contribution made on behalf of a
Participant for any Plan Year shall not exceed
$ ______
n. ( ) N/A
o. (X) Matching contributions shall be made on behalf of
1. (X) all Participants
2. ( ) only Non-Highly Compensated Employees.
E4 WILL A DISCRETIONARY EMPLOYER CONTRIBUTION BE PROVIDED (OTHER
THAN A DISCRETIONARY MATCHING OR QUALIFIED NON-ELECTIVE
CONTRIBUTION)(Plan Section 11.1(c))
NOTE: If the plan is Top Heavy for any plan year, a 3%
employer contribution may be required.
NOTE: The integration percentage of 5.7% shall be reduced to:
1) 4.3% if h. or i. (below) is more than 20% and less than or
equal to 80% of the Taxable Wage Base; 2) 5.4% if h. or i.
(below) is less than 100% and more than 80% of the Taxable
Wage Base.
a. ( ) No.
b. ( ) Yes, the Employer may make a discretionary
contribution out of its current or accumulated Net
Profit.
c. (X) Yes, the Employer may make a discretionary
contribution which is not limited to its current or
accumulated Net Profit.
IF YES, (b. or c. is selected above), the Employer's
discretionary contribution shall be allocated as follows:
d. (X) FOR A NON-INTEGRATED PLAN: The Employer
discretionary contribution for the Plan Year shall
be allocated in the same ratio as each
Participant's Compensation bears to the total of
such Compensation of all participants.
e. ( ) FOR AN INTEGRATED PLAN: The Employer discretionary
contribution for the Plan Year shall be allocated
in accordance with Plan Section 4.3(b)(2) based on
a Participant's Compensation in excess of:
f. ( ) The Taxable Wage Base.
g. ( ) The greater of $10,000 or 20% of the Taxable Wage
Base.
h. ( ) % of the Taxable Wage Base (See Note).
i. ( ) $ (See Note).
E5 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1(d))
a. ( ) N/A. There shall be no Qualified Non-Elective
Contributions except as provided in Section 11.5(b)
and 11.7(h).
b. ( ) The Employer shall make a Qualified Non-Elective
Contribution equal to % of the total
Compensation of all Participants eligible to share
in the allocations.
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<PAGE>
c. (X) The Employer may make a Qualified Non-Elective
Contribution in an amount to be determined by the
Employer.
E6 FORFEITURES (Plan Section 4.3(e))
a. Forfeitures of contributions other than matching
contributions shall be..
1. ( ) N/A. No contributions other than matching
contributions or non-matching contributions
are fully vested.
2. (X) added to the Employer's contribution under
the Plan.
3. ( ) allocated to all Participants eligible to
share in the allocations in the same
proportion that each Participant's
Compensation for the year bears to the
Compensation of all Participants for such
year.
b. Forfeitures of matching contributions shall be...
1. ( ) N/A. No matching contributions or match is
fully vested.
2. (X) used to reduce the Employer's matching
contribution.
3. ( ) allocated to all Participants eligible to
share in the allocations in proportion to each
such Participant's Compensation for the year.
4. ( ) allocated to all Non-Highly Compensated
Employees eligible to share in the allocations
in proportion to each such Participant's
Compensation for the year.
E7 ALLOCATIONS TO TERMINATED PARTICIPANTS (Plan Section 4.3(k))
Any Participant who terminated employment during the Plan
Year for reasons other than death, Total and Permanent
Disability or retirement:
a. With respect to the allocation of Employer Non-Elective
Contributions (other than matching), Qualified Non-
Elective Contributions, and Forfeitures for Plan Years
beginning prior to 1990:
1. (X) N/A
2. ( ) shall share in such allocations provided such
Participant completed a Year of Service.
3. ( ) shall not share in such allocations regardless
of Hours of Service.
NOTE: The Plan provides that for Plan Years beginning
after 1989, a terminated Participant shall share in such
allocations provided such Participant completed more than
500 Hours of Service.
b. With respect to the allocation of Employer Matching
Contributions, a Participant:
1. For Plan Years beginning after 1989,
i, ( ) N/A, Plan does not provide for matching
contributions.
ii, (X) shall share in the allocations,
regardless of Hours of Service.
iii, ( ) shall share in the allocations provided
such Participant completed more than 500
Hours of Service.
2. For Plan Years beginning before 1990,
i, (X) N/A, new Plan, or same as Plan Years
beginning after 1989.
ii, ( ) shall share in the allocations,
regardless of Hours of Service.
iii, ( ) shall share in the allocations provided
such Participant completed a Year of
Service.
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<PAGE>
E8 ALLOCATIONS OF EARNINGS (Plan Section 4.3(c))
Allocations of earnings with respect to amounts contributed to
the Plan after the previous Anniversary Date or other
valuation date shall be determined...
a. ( ) by using a weighted average.
b. ( ) by treating one-half of all such contributions as
being a part of the Participant's nonsegregated
account balance as of the previous Anniversary Date
or valuation date.
c. ( ) by using the method specified in Section 4.3(c).
d. (X) other by using the method specified in Section
4.8(b).
E9 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
NOTE: If a.3 below is selected, an Employer may not rely on
the opinion letter issued by the Internal Revenue Service that
this Plan is qualified under Code Section 401.
a. If any Participant is or was covered under another
qualified defined contribution plan maintained by the
Employer, other than a Master or Prototype Plan, or if
the Employer maintains a welfare benefit fund, as defined
in Code Section 419(e), or an individual medical account,
as defined in Code Section 415(1)(2), under which amounts
are treated as Annual Additions with respect to any
Participant in this Plan:
1. (X) N/A
2. ( ) The provisions of Section 4.4(b) of the Plan
will apply as if the other plan were a Master
or Prototype Plan.
3. ( ) Provide the method under which the Plans will
limit total Annual Additions to the Maximum
Permissible Amount, and will properly reduce
any Excess Amounts, in a manner that precludes
Employer discretion:
___________________________________________
b. If the Participant is or ever has been a Participant in
a defined benefit plan (other than a plan that is paired
with this Plan) maintained by the Employer:
1. (X) N/A
2. ( ) In any Limitation Year, the Annual Additions
credited to the Participant under this Plan
may not cause the sum of the Defined Benefit
Plan Fraction and the Defined Contribution
Fraction to exceed 1.0. If the Employer's
contribution that would otherwise be made on
the Participant's behalf during the limitation
year would cause the 1.0 limitation to be
exceeded, the rate of contribution under this
Plan will be reduced so that the sum of the
fractions equals 1.0. If the 1.0 limitation
is exceeded because of an Excess Amount, such
Excess Amount will be reduced in accordance
with Section 4.4(a)(4) of the Plan. Except,
however, if the plans are standardized paired
plans, the rate of accrual in the defined
benefit plan will be reduced to the extent
necessary so that the sum of the Defined
Contribution Fraction and the Defined Benefit
Fraction will equal 1.0.
3. ( ) Provide the method under which the Plans
involved will satisfy the 1.0 limitation in a
manner that precludes Employer discretion:
______________________________________________
______________________________________________
______________________________________________
226
<PAGE>
E10 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h))
Distributions upon the death of a Participant prior to
receiving any benefits shall:
a. (X) be made pursuant to the election of the Participant
or beneficiary.
b. ( ) begin within 1 year of death for a designated
beneficiary and be payable over the life (or over a
period not exceeding the life expectancy) of such
beneficiary, except that if the beneficiary is the
Participant's spouse, begin within the time the
Participant would have attained age 70-1/2.
c. ( ) be made within 5 years of death for all
beneficiaries
d. ( ) other ____________________________________
E11 LIFE EXPECTANCIES (Plan Section 6.5(f) for minimum
distributions required pursuant to Code Section 401(a)(9)
shall:
a. (X) be recalculated at the Participant's election.
b. ( ) be recalculated
c. ( ) not be recalculated.
E12 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION
Distributions upon termination of employment pursuant to
Section 6.4(a) of the Plan shall not be made unless the
following conditions have been satisfied:
a. (X) N/A. Immediate distributions may be made at
participant's election.
b. ( ) The Participant has incurred _____1-Year Break(s)
in Service.
c. ( ) The Participant has reached his or her Early or
Normal Retirement Age.
d. ( ) Distributions may be made at the Participant's
election on or after the Anniversary Date following
termination of employment.
e. ( ) Other ________________________________
E13 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6)
NOTE: b.1. below may not be elected if this is an amendment to
a plan which permitted annuities as a form of distribution or
if this Plan has accepted a plan to plan transfer of assets
from a plan which permitted annuities as a form of
distribution.
Distributions under the plan may be made...
a. 1. (X) in lump sums.
2. ( ) in lump sums or installments.
b. AND, pursuant to Plan Section 6.13,
1. (X) no annuities are allowed (avoids Joint and
Survivor rules).
2. ( ) annuities are allowed (Plan Section 6.13 shall
not apply.
c. AND may be made in...
1. (X) cash only (except for insurance or annuity
contracts).
2. ( ) cash or property.
TOP-HEAVY REQUIREMENTS
F1 TOP-HEAVY DUPLICATIONS (Plan Section 4.3(i)). When a Non-Key
Employee is a Participant in this Plan and a Defined Plan
maintained by the Employer, indicate which method shall be
utilized to avoid duplication of top-heavy minimum benefits.
227
<PAGE>
NOTE: if d. below is selected, an Employer may not rely on the
opinion letter issued by the Internal Revenue Service that
this Plan is qualified under Code Section 401.
a. (X) N/A. The Employer does not maintain a Defined
Benefit Plan.
b. ( ) A minimum, non-integrated contribution of 5% of
each Non-Key Employee's total Compensation shall be
provided in this Plan, as specified in Section
4.3(i). (The Defined Benefit and Defined
Contribution Fractions will be computed using 100%
if this choice is selected.)
c. ( ) A minimum, non-integrated contribution of 7-1/2% of
each Non-Key Employee's total Compensation shall be
provided in this Plan, as specified in Section
4.3(i).
d. ( ) Specify the method under which the Plans will
provide top-heavy minimum benefits for Non-Key
Employees that will preclude Employer discretion
and avoid inadvertent omissions, including any
adjustments required under Code Section 415(e):
______________________________________________
______________________________________________
______________________________________________
______________________________________________
F2 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2) for Top-
Heavy purposes where the Employer maintains a Defined Benefit
Plan in addition to this Plan, shall be based on:
a. (X) N/A. The Employer does not maintain a defined
benefit plan.
b. ( ) Interest Rate:
Mortality Table:
F3 TOP-HEAVE DUPLICATIONS: Employer maintaining two (2) or more
Defined Contribution Plans (other than paired plans).
a. (X) N/A.
b. ( ) A minimum, non-integrated contribution of 3% of
each Non-Key Employee's total Compensation shall be
provided in the Money Purchase Plan (or other plan
subject to Code Section 412), where the Employer
maintains two (2) or more non-paired Defined
Contribution Plans.
c. ( ) Specify the method under which the Plans will
provide top-heavy minimum benefits for Non-Key
Employees that will preclude Employer discretion
and avoid inadvertent omissions, including any
adjustments required under Code Section 415(e):
________________________________________________
________________________________________________
________________________________________________
________________________________________________
F4 IS THIS A PAIRED PLAN?
a. ( ) Yes. Name the Plan's with which is paired:
b. (X) No or N/A
228
<PAGE>
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.4)
NOTE: Department of Labor Regulations require the adoption of
a separate written loan program setting forth the requirements
outlined in Plan Section 7.4.
a. ( ) Yes, loans may be made up to $50,000 or 1/2 Vested
interest.
b. (X) No, loans may not be made.
If YES, (check all that apply)...
c. ( ) loans shall be treated as a Directed Investment.
d. ( ) loans shall only be made for hardship or financial
necessity.
e. ( ) the minimum loan shall be $1,000.
f. ( ) $10,000 de minimis loans may be made regardless of
Vested interest. (If selected, plan may need
security in addition to Vested interest.)
G2 DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.8) are permitted
for the interest in any one or more accounts.
a. (X) Yes, regardless of the Participant's Vested
interest in the Plan.
b. ( ) Yes, but only with respect to the Participant's
Vested interest in the Plan.
c. ( ) Yes, but only with respect to those accounts which
are 100% Vested.
d. ( ) No directed investments are permitted.
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.6)
a. (X) Yes, transfers from qualified plans (and rollovers)
will be allowed.
b. ( ) No, transfers from qualified plans (and rollovers)
will not be allowed.
AND, transfers shall be permitted...
c. ( ) from any Employee, even if not a Participant.
d. ( ) from Participants only.
G4 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.7)
NOTE: TRA '86 subjects voluntary contributions to strict
discrimination rules.
a. ( ) Yes, Voluntary Contributions are allowed subject to
the limits of Section 4.10.
b. (X) No, Voluntary Contributions will not be allowed.
G5 HARDSHIP DISTRIBUTIONS (Plan Sections 6.11 and 11.8)
NOTE: Distributions from a Participant's Elective Account are
limited to the portion of such account attributable to such
Participant's Deferred Compensation and Earnings attributable
thereto up to December 31,, 1988. Also, hardship
distributions are not permitted from a Participant's Qualified
Non-Elective Account.
a. ( ) Yes, from any accounts up to the vested balance.
b. (X) Yes, from Participant's Elective Account only.
c. ( ) Yes, but limited to the Participant's Account only.
d. ( ) No.
229
<PAGE>
G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10)
NOTE: Distributions are not permitted prior to age 59-1/2 from
a Participant's Qualified Non-Elective Account, or from a
Participant's Elective Account except in the case of a
Hardship Distribution under G5.
a. ( ) If a Participant has reached the age of ____,
distributions may be made, at the Participant's
election, from any accounts up to the vested
balance without requiring the Participant to
terminate employment.
b. (X) No pre-retirement distribution may be made.
G7 LIFE INSURANCE (Plan Section 7.2(d)) may be purchased with
Plan contributions.
a. (X) No life insurance may be purchased.
b. ( ) Yes, at the option of the Administrator.
c. ( ) Yes, at the option of the Participant.
AND, the purchase of initial or additional life insurance
shall be subject to the following limitations (select all that
apply):
d. ( ) N/A, no limitations.
e. ( ) each initial Contract shall have a minimum face
amount of $______.
f. ( ) each additional Contract shall have a minimum face
amount of $______ .
g. ( ) the Participant has completed _____Years of
Service.
h. ( ) the Participant has completed _____Years of Service
while a Participant in the Plan.
i. ( ) the Participant is under age ____ on the Contract
issue date.
j. ( ) the maximum amount of all Contracts on behalf of a
Participant shall not exceed $_____ .
k. ( ) the maximum face amount of life insurance shall be
$______.
An Employer who has ever maintained or who later adopts any
plan in addition to this Plan (including a welfare benefit
fund, as defined in Code Section 419(e), which provides post-
retirement medical benefits allocated to separate accounts for
Key Employees, as defined in Code Section 419A(d)(3) or an
individual medical account, as defined in Code Section
415(1)(2))(other than paired plan #03-002,#03-004,#02-003 or
#02-004) may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence
that this Plan is qualified under Code Section 401. If the
Employer who adopts or maintains multiple plans wishes to
obtain reliance that the Employer's plan(s) are qualified,
application for a determination letter should be made to the
appropriate key district director of Internal Revenue.
This Adoption Agreement may be used only in conjunction
with basic Plan document #03. This Adoption Agreement
and the basic Plan document shall together be known as
Resources Trust Company Standardized 401(k) Profit
Sharing Plan #03-006.
The adoption of this Plan, its qualification by the IRS,
and the related tax consequences are the responsibility
of the Employer and its independent tax and legal
advisors.
230
<PAGE>
Resources Trust Company will notify the Employer of any
amendments made to the Plan or of the discontinuance or
abandonment of the Plan provided this Plan has been
acknowledged by Resources Trust Company or its authorized
representative. Furthermore, in order to be eligible to
receive such notification, we agree to notify Resources
Trust Company of any change in address.
IN WITNESS WHEREOF, the Employer and Trustee hereby cause
this Plan to be executed on the 20 day of June ,
1995. Furthermore, this Plan may not be used unless
acknowledged by Resources Trust Company or its authorized
representative.
EMPLOYER: TRUSTEE(S):
CARPET TRANSPORT, INC. /s/Don Conord
TRUSTEE SIGNATURE
By: /s/Don Conord
V. P. Terminal Opr. TRUSTEE SIGNATURE
PARTICIPATING EMPLOYER:
TRUSTEE SIGNATURE
___________________
(enter name)
By: ___________________
This Plan may not be used, and shall not be deemed to be
a Prototype Plan, unless and authorized representative of
Resources Trust Company has acknowledged the use of the
Plan. Such acknowledgment is for administerial purposes
only. It acknowledges that the Employer is using the
Plan but does not represent that this Plan, including the
choices selected on the Adoption Agreement, has been
reviewed by a representative of the sponsor or
constitutes a qualified retirement plan.
Resources Trust Company
By: _____________________
With regard to any questions regarding the provisions of
the Plan, adoption of the Plan, or the effect of an
opinion letter from the IRS, call or write (this
information must be completed by the sponsor of this Plan
or its designated representative):
Name Resources Trust Company
Address P. O. Box 3485
Englewood, CO 80155-3485
Telephone 303/694-2917
cat10ks3.sca
231
<PAGE>
Exhibit No. 10.10
DEBT RESTRUCTURE AND WAIVER AGREEMENT
THIS AGREEMENT, made this 21 day of August, 1996, by and
between Continental American Transportation, Inc., a Colorado
corporation having its principal place of business at 495 Lovers
Lane Road, Calhoun, Georgia 30701 ("Continental") and Charles B.
Prater, residing at 877 Plainville Road, Plainville, Georgia 30733
("Prater").
B A C K G R O U N D:
WHEREAS, on April 4, 1996 Continental purchased from Lynwood
S. Warmack and Prater all of the issued and outstanding stock of
Carpet Transport, Inc., A & P Transportation, Inc. and Chase
Brokerage, Inc. (collectively, "CTI") and delivered as payment
therefor, among other things, (a) its Demand Promissory Note, dated
April 1, 1996, without interest, in the original principal amount
of $2,820,000 to Prater (the "Note") and (b) its Secured Promissory
Note dated April 1, 1996 to Warmack and Prater in the principal
amount of $7,290,000, accruing interest at the rate of 8% per
annum, and secured by a mortgage on the property owned by a
subsidiary located in Calhoun, Georgia (the "Mortgage Note");
WHEREAS, Continental has not dispersed any of the accrued
interest on the Mortgage Note to either Warmack or Prater;
WHEREAS, Continental now desires (a) to execute and deliver to
Prater a new corporate promissory note that shall bear interest at
the rate of 8% per annum in favor of Prater (the "New Note"), a
copy of which is annexed hereto as Exhibit A, and; (b) to execute
and deliver to Warmack and Prater a new corporate mortgage note in
the principal amount of $7,290,000 that shall contain all of the
same terms as the Mortgage Note but shall provide for the payment
of interest on an annual basis in shares of Continental's Common
Stock on each April 1st during the five (5) year term thereof (the
"New Mortgage Note"), a copy of which is annexed hereto as Exhibit
B;
WHEREAS, in consideration of the foregoing Prater shall (1)
return the original Note to the Company for cancellation; (2)
Warmack and Prater shall return the Mortgage Note to Continental
for cancellation, and; (3) Prater shall agree to release
Continental and waive any of his rights or claims under the Note
and the Mortgage Note; and
WHEREAS, the parties desire to set forth in this Agreement all
of the terms and conditions that shall govern their aforementioned
mutual promises.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and the parties intending to be legally bound
agree as follows:
232
<PAGE>
1. Delivery of New Note and Cancellation of Prior Note.
Upon the execution and delivery hereof, Prater hereby delivers the
prior Note to Continental for cancellation and Continental in
exchange therefor hereby delivers to Prater the New Note, a copy of
which is annexed hereto as Exhibit A.
2. Acknowledgment of Amount of Debt. Continental and Prater
hereby acknowledge that the outstanding principal balance due under
the New Note is $2,820,000 that provides for monthly interest
payments to be made in cash over a twelve month period upon which
date the outstanding principal balance and accrued interest thereon
shall be due and payable in full.
3. New Secured Promissory Note. Continental hereby delivers
to prater and Lynwood S. Warmack its New Mortgage Note, a copy of
which is annexed hereto as Exhibit B, and simultaneous therewith,
Prater and Lynwood S. Warmack deliver to Continental their prior
Mortgage Note for cancellation.
4. Prater's Ratification and Waiver. In consideration of
his receipt of the New Note, paying him monthly interest at the
rate of 8% per annum, Prater hereby acknowledges and accepts this
Agreement and agrees to release Continental forever from and
against any claims for payment defaults and the like that may have
arisen out of or under the Note and/or the Mortgage Note.
5. Term. This Agreement shall commence upon the date hereof
and shall terminate on March 1, 2001.
6. Complete Agreement. This Agreement represents the entire
understanding and agreement between the parties and supersedes any
and all prior agreements, contracts, understandings and the like,
whether oral or written.
7. Benefit. This Agreement shall inure to, and shall be
binding upon, the parties hereto, their respective successors,
assigns, heirs and personal representatives.
8. Waiver. The waiver by either party of any breach or
violation of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach of construction
and validity.
9. Governing Law. This Agreement has been negotiated and
executed in the State of Georgia, and Georgia law shall govern its
construction and validity.
233
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and affixed their hands and seals the day and year first
above written.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President and
Chief Executive Officer
s/Charles B. Prater
Charles B. Prater
cat-prat.deb
234
<PAGE>
Exhibit No. 10.11
EXHIBIT A
CORPORATE PROMISSORY NOTE
$2,820,000.00 Calhoun, Georgia
Dated: August 21 , 1996
FOR VALUE RECEIVED, the undersigned Maker hereby promises to
pay to the order of CHARLES B. PRATER (hereinafter with any
subsequent holder called the "Holder") the principal sum of Two
Million Eight Hundred Twenty Thousand Dollars ($2,820,000.00),
accruing interest at the rate of 8% per annum and due and payable
as follows:
Payments of interest only shall be made on a monthly basis
commencing October 1, 1996 and shall continue on the first day of
each successive month therafter until September 1, 1997 when the
outstanding principal balance and accrued interest shall be due and
payable in full.
This Note shall be payable at Calhoun, Georgia, or at such
other place as the Holder hereof may designate in writing; this
Note may be prepaid, in whole or in part, without penalty.
Each of the following events shall constitute an Event of
Default hereunder:
(a) If any amounts due hereunder, or under any liabilities of
the undersigned to the Holder are not paid as and when due, or
(b) If the undersigned fails to perform any of its agreements
in addition to the payment of money as set forth in this Note, or
(c) If any default occurs under any of the aforementioned
instruments or other similar agreement relating to any liabilities
of the undersigned to the Holder, or
(d) If the undersigned shall become insolvent (as defined in
the Uniform Commercial Code as is in effect at that time in benefit
of creditors), or should the undersigned file for relief in a
proceeding filed pursuant to the Bankruptcy Code, or other laws for
the protection or reorganization of debtors, or should an
involuntary petition pursuant to the Bankruptcy Code be filed
against the undersigned and not be dismissed for sixty (60) days,
or if a receiver be appointed for any substantial part or all of
the assets of the undersigned, or
Upon the occurrence of any Event of Default (as defined
herein), and if such Event of Default has not been cured by Maker
within thirty (30) days after receipt by Maker of written notice of
an Event of Default under this Note or under any other agreements
to which the Maker and the Holder are parties, the Holder may, at
the option of the Holders and without demand or notice of any kind,
235
<PAGE>
be declared, and thereupon immediately shall become, due and
payable and the Holders may exercise any rights available to Holder
by operation of law, or available under any written instrument or
agreement, in addition to this Note, relating to any of the
indebtedness or liabilities of the undersigned to the Holder for
any Collateral, including, but not limited to, exercise of any
power granted to the original Holder in any collateral agreements,
pledge agreement or other instruments.
If this Note is collected by Law, or through an attorney at
law, the undersigned shall pay all costs of collection, including
all reasonable attorney's fees. Any principal or interest not paid
when due, whether by acceleration or otherwise, shall bear interest
at the rate of twelve percent (12%) per annum from the date due
hereunder until finally paid.
The undersigned, and each of them, whether Maker, endorser,
guarantor, or surety, hereby severally waives and renounces, for
himself and family, and all exemption rights either may have under
or by virtue of the Constitution of the United States or the laws
of the State of Georgia, or any other State, or the United States,
as against this debt or any renewal thereof; and each further
waives demand, protest and notice of demand, protest and
nonpayment.
The Holder shall be under no duty to exercise any or all of
the rights and remedies given by this Note, or the Georgia Uniform
Commercial Code, and no party to this Note shall be discharged from
his obligations or undertakings hereunder (a) should the Holder
release or agree not to sue any person against whom the party has,
to the knowledge of the Holder, a right of recourse, or (b) should
the Holder agree to suspend the right to enforce this Note, (c)
should the Holder extend in whole or in part the time for payment
of this Note. No forbearance or indulgence shall operate as a
waiver of any right or remedy of Holder or obligation of the
undersigned and no single or partial exercise by the Holder of any
right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy and, unless Holder shall
otherwise agree in writing, Holder shall be entitled to invoke any
remedy available to Holder under this Note or by law or in equity
and enforce any covenant or condition against the undersigned,
despite the forbearance or indulgence. Upon default and demand for
payment hereunder, any acceptance of partial payment by Holder
shall not constitute a waiver of such demand or any rights
(including the right to recover attorney's fees) accruing as a
result of such demand, but such payment shall be applied to the
amounts due hereunder.
236
<PAGE>
THE UNDERSIGNED HEREBY WAIVES PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR.
As used herein, the term "undersigned" shall mean each party
directly or indirectly obligated for the indebtedness which this
Note evidences, whether as Maker, Co-Maker, Endorser, Surety,
Guarantor or otherwise. If more than one party shall sign this
Note, they shall be jointly and severally liable.
This Note replaces a certain Demand Promissory Note, dated
April 1, 1996, made by Continental American Transportation, Inc. in
favor of Charles B. Prater in the original principal amount of
$2,820,000. This Note is executed under seal on the date printed
above.
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President
cti-prom.not
237
<PAGE>
Exhibit No. 10.12
DEBT RESTRUCTURE AND WAIVER AGREEMENT
THIS AGREEMENT, made this 21st day of August, 1996, by and
between Continental American Transportation, Inc., a Colorado
corporation having its principal place of business at 495 Lovers
Lane Road, Calhoun, Georgia 30701 ("Continental") and Lynwood S.
Warmack, residing at ("Warmack").
B A C K G R O U N D:
WHEREAS, on April 4, 1996 Continental purchased from Warmack
and Charles B. Prater all of the issued and outstanding stock of
Carpet Transport, Inc., A & P Transportation, Inc. and Chase
Brokerage, Inc. (collectively, "CTI") and delivered as payment
therefor, among other things, (a) its Demand Promissory Note, dated
April 1, 1996, without interest, in the original principal amount
of $4,080,000, to Warmack (the "Note") and (b) its Secured
Promissory Note, dated April 1, 1996, to Warmack and Prater in the
principal amount of $7,290,000, accruing interest at the rate of 8%
per annum, and secured by a mortgage on the property owned by a
subsidiary located in Calhoun, Georgia (the "Mortgage Note");
WHEREAS, Continental has made payments aggregating $1,075,000
against the outstanding principal balance of the Note which have
reduced the principal balance of the Note to $3,005,000;
WHEREAS, Continental has not dispersed any of the accrued
interest on the Mortgage Note to either Warmack or Prater;
WHEREAS, Continental now desires (a) to make a further payment
in the amount of $1,000,000 against the Note; (b) to execute and
deliver to Warmack a new corporate promissory note that shall bear
interest at the rate of 8% per annum, and that shall provide for
the payment of such interest in shares of Continental's Common
Stock (the "New Note"), a copy of which is annexed hereto as
Exhibit A; and (c) to execute and deliver to Warmack and Prater a
new corporate mortgage note in the principal amount of $7,290,000
that shall contain all of the same terms as the Mortgage Note but
shall provide for the payment of interest (i) on a monthly basis in
cash to Warmack and (ii) on an annual basis in shares of
Continental's Common Stock to Prater on each April 1st during the
five (5) year term thereof (the "New Mortgage Note"), a copy of
which is annexed hereto as Exhibit B;
WHEREAS, in consideration of the foregoing Warmack shall (1)
return the original Note to the Company for cancellation; (2)
Warmack and Prater shall return the Mortgage Note to Continental
for cancellation, and; (3) Warmack shall agree to release
Continental and waive any of his rights or claims that may have
arisen under the Note and the Mortgage Note; and
238
<PAGE>
WHEREAS, the parties desire to set forth in this Agreement all
of the terms and conditions that shall govern their aforementioned
mutual promises.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and the parties intending to be legally bound
agree as follows:
1. Payment to Warmack; New Note. Continental shall deliver
a payment in the amount of $1,000,000 (the "Payment") to Warmack
within seventy-two (72) hours of the execution and delivery of this
Agreement. Continental hereby delivers to Warmack its fully
executed New Note; upon his receipt of the Payment, Warmack shall
deliver his prior Note to Continental for cancellation.
2. Acknowledgment of Amount of Debt. Continental and
Warmack hereby acknowledge that after crediting the $1,000,000
payment against the Note, that the outstanding principal balance
due Warmack under the debt evidenced by the Note shall be the sum
of $2,005,000 which is the principal outstanding balance of the New
Note.
3. New Secured Promissory Note. Continental hereby delivers
to Warmack and Charles B. Prater its New Mortgage Note, a copy of
which is annexed hereto as Exhibit B, and simultaneous therewith,
Warmack and Charles B. Prater deliver to Continental their prior
Mortgage Note for cancellation.
4. Warmack's Ratification and Waiver. In consideration of
his receipt of (a) his payment in the amount of $1,000,000, and (b)
the delivery to him of the New Note paying him monthly interest at
the rate of 8% per annum, Warmack hereby acknowledges and accepts
this Agreement and agrees to release Continental forever from and
against any claims for payment, defaults and the like that may have
arisen out of or under the Note and/or the Mortgage Note.
5. Term. This Agreement shall commence upon the date hereof
and shall terminate upon the earlier of (a) the expiration of
seventy-two (72) hours from the date hereof in the event the
Payment has not been received by Warmack, or (b) on March 1, 2001.
6. Complete Agreement. This Agreement represents the entire
understanding and agreement between the parties and supersedes any
and all prior agreements, contracts, understandings and the like,
whether oral or written.
7. Benefit. This Agreement shall inure to, and shall be
binding upon, the parties hereto, their respective successors,
assigns, heirs and personal representatives.
239
<PAGE>
8. Waiver. The waiver by either party of any breach or
violation of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach of construction
and validity.
9. Governing Law. This Agreement has been negotiated and
executed in the State of Georgia, and Georgia law shall govern its
construction and validity.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and affixed their hands and seals the day and year first
above written.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President and
Chief Executive Officer
s/Lynwood S. Warmack
Lynwood S. Warmack
cat-warm.deb
240
<PAGE>
Exhibit No. 10.13
EXHIBIT A
CORPORATE PROMISSORY NOTE
$2,005,000.00 Calhoun, Georgia
Dated: August 21 , 1996
FOR VALUE RECEIVED, the undersigned Maker hereby promises to
pay to the order of LYNWOOD S. WARMACK (hereinafter with any
subsequent holder called the "Holder") the principal sum of Two
Million Five Thousand Dollars ($2,005,000.00), accruing interest at
the rate of 8% per annum and due and payable as follows:
Interest only shall be due and payable annually; interest
shall be payable for the period that commenced on September 1, 1996
until September 1, 1997, when the entire outstanding principal
balance and interest shall be due and payable in full; interest
shall be payable either in cash or, in the sole and absolute
discretion of the maker, in the Common Shares of Continental
American Transportation, Inc. (the "Shares"), the number of such
shares to be determined as follows: the dollar amount of the
interest due on September 1, 1997 shall be calculated and
thereafter divided by the amount which represents the average of
the closing bid trading prices for the Shares over the ten-day
trading period immediately preceding September 1, 1997; for
example, if the annual interest on the outstanding principal
balance due is $600,000 and the average trading price over the
applicable ten-day period is $5.00 per Share, then the undersigned,
if Maker elects to pay the interest due in Shares, shall issue to
the Payee 120,000 Shares representing the interest payment.
Interest payments shall be paid within 30 days of their respective
due dates. Time is of the essence of this Note.
This Note shall be payable at Calhoun, Georgia, or at such
other place as the Holder hereof may designate in writing; this
Note may be prepaid, in whole or in part, without penalty.
Each of the following events shall constitute an Event of
Default hereunder:
(a) If any amounts due hereunder, or under any liabilities of
the undersigned to the Holder are not paid as and when due, or
(b) If the undersigned fails to perform any of its agreements
in addition to the payment of money as set forth in this Note, or
(c) If any default occurs under any of the aforementioned
instruments or other similar agreement relating to any liabilities
of the undersigned to the Holder, or
(d) If the undersigned shall become insolvent (as defined in
the Uniform Commercial Code as is in effect at that time in benefit
of creditors), or should the undersigned file for relief in a
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proceeding filed pursuant to the Bankruptcy Code, or other laws for
the protection or reorganization of debtors, or should an
involuntary petition pursuant to the Bankruptcy Code be filed
against the undersigned and not be dismissed for sixty (60) days,
or if a receiver be appointed for any substantial part or all of
the assets of the undersigned, or
Upon the occurrence of any Event of Default (as defined
herein), and if such Event of Default has not been cured by Maker
within thirty (30) days after receipt by Maker of written notice of
an Event of Default under this Note or under any other agreements
to which the Maker and the Holder are parties, the Holder may, at
the option of the Holders and without demand or notice of any kind,
be declared, and thereupon immediately shall become, due and
payable and the Holders may exercise any rights available to Holder
by operation of law, or available under any written instrument or
agreement, in addition to this Note, relating to any of the
indebtedness or liabilities of the undersigned to the Holder for
any Collateral, including, but not limited to, exercise of any
power granted to the original Holder in any collateral agreements,
pledge agreement or other instruments.
If this Note is collected by Law, or through an attorney at
law, the undersigned shall pay all costs of collection, including
all reasonable attorney's fees. Any principal or interest not paid
when due, whether by acceleration or otherwise, shall bear interest
at the rate of twelve percent (12%) per annum from the date due
hereunder until finally paid.
The undersigned, and each of them, whether Maker, endorser,
guarantor, or surety, hereby severally waives and renounces, for
himself and family, and all exemption rights either may have under
or by virtue of the Constitution of the United States or the laws
of the State of Georgia, or any other State, or the United States,
as against this debt or any renewal thereof; and each further
waives demand, protest and notice of demand, protest and
nonpayment.
The Holder shall be under no duty to exercise any or all of
the rights and remedies given by this Note, or the Georgia Uniform
Commercial Code, and no party to this Note shall be discharged from
his obligations or undertakings hereunder (a) should the Holder
release or agree not to sue any person against whom the party has,
to the knowledge of the Holder, a right of recourse, or (b) should
the Holder agree to suspend the right to enforce this Note, (c)
should the Holder extend in whole or in part the time for payment
of this Note. No forbearance or indulgence shall operate as a
waiver of any right or remedy of Holder or obligation of the
undersigned and no single or partial exercise by the Holder of any
right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy and, unless Holder shall
otherwise agree in writing, Holder shall be entitled to invoke any
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remedy available to Holder under this Note or by law or in equity
and enforce any covenant or condition against the undersigned,
despite the forbearance or indulgence. Upon default and demand for
payment hereunder, any acceptance of partial payment by Holder
shall not constitute a waiver of such demand or any rights
(including the right to recover attorney's fees) accruing as a
result of such demand, but such payment shall be applied to the
amounts due hereunder.
THE UNDERSIGNED HEREBY WAIVES PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR.
As used herein, the term "undersigned" shall mean each party
directly or indirectly obligated for the indebtedness which this
Note evidences, whether as Maker, Co-Maker, Endorser, Surety,
Guarantor or otherwise. If more than one party shall sign this
Note, they shall be jointly and severally liable.
This Note replaces a certain Demand Promissory Note, dated
April 1, 1996, made by Continental American Transportation, Inc. in
favor of Lynwood S. Warmack in the original principal amount of
$4,080,000. This Note is executed under seal on the date printed
above.
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President
cti-prom.not
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Exhibit No. 10.14
EXHIBIT B
SECURED PROMISSORY NOTE
$7,290,000.00 Calhoun, Georgia
Dated: August 21, 1996
FOR VALUE RECEIVED, the undersigned Maker hereby promises to
pay to the order of LYNWOOD S. WARMACK and CHARLES B. PRATER
(hereinafter collectively referred to as the "Payee") the principal
sum of Seven Million Two Hundred Ninety Thousand Dollars
($7,290,000.00), together with interest on the unpaid balance
thereof from the date of this Note until maturity at the rate of
eight percent (8%) per annum, both principal and interest payable
as hereinafter provided in lawful money of the United States of
America.
Principal and interest shall be payable at Calhoun, Georgia,
or at such other place as the Holder hereof may designate in
writing.
Interest only shall be due and payable monthly; interest shall
be payable for the period that commenced on October 1, 1996 and on
each month thereafter until March 1, 2001, when the entire
outstanding principal balance and interest shall be due and payable
in full; interest shall be payable in cash to LYNWOOD S. WARMACK
and either cash or, in the sole and absolute discretion of the
maker, in the Common Shares of Continental American Transportation,
Inc. (the "Shares"), to CHARLES B. PRATER, the number of such
shares to be determined as follows: the dollar amount of the
interest due on any of the April 1st annual due dates shall be
calculated and thereafter divided by the amount which represents
the average of the closing bid trading prices for the Shares over
the ten-day trading period immediately preceding each applicable
April 1st date; for example, if the annual interest on the
outstanding principal balance due is $600,000 and the average
trading price over the applicable ten-day period is $5.00 per
Share, then the undersigned, if Maker elects to pay the interest
due in Shares, shall issue to the Payee 120,000 Shares representing
the interest payment. Interest payments shall be paid within 30
days of their respective due dates. Time is of the essence of
this Note.
Acknowledgments of the Payee. The Payee, Charles B. Prater,
hereby represents and warrants to the Maker as follows:
(a) The Payee is fully aware that the Shares have not
been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under any applicable state Securities laws.
The Payee further understands that the Shares are being issued in
reliance on the exemption from the registration requirements of the
Shares Act provided by Section 4(2) thereof or Regulation D
promulgated under the Securities Act, and in reliance on exemptions
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from the registration requirements of certain state securities
laws, on the grounds that the offering involved has been made to a
limited number of potential investors.
(b) The Payee is acquiring the Shares for their own
account as a principal, for investment, and not with an intent to
sell, or for sale in connection with any distribution of the
Shares, and no other person has any interest in or right with
respect to the Shares, nor has the Payee agreed to give any person
any such interest or right in the future. The Payee is not
purchasing the Shares as a result of any material information about
the Maker's affairs that has not been heretofore disclosed to them.
(c) The Payee is able to bear the economic risks of the
investment in the Shares, including, without limiting the
generality of the foregoing, the risk of losing part or all of the
Payee's investment in the Shares, and hereby acknowledges the
inability to sell or transfer the Shares for an indefinite period
of time or at a price which would enable the Payee to recoup their
investment in the Shares; the Payee hereby further acknowledges
that they have the knowledge and experience in financial and
business matters in general, and investments in companies and
entities that have been or are in the development stage as is the
Maker, and that they are able to evaluate the merits and risks of
their investment in the Shares.
(d) The Payee hereby acknowledges that they have
received all information with respect to the Maker they have
requested.
(e) The Payee has been given the opportunity to ask
questions of, and receive answers from, officers of the Maker
concerning the terms and conditions of the investment in the Shares
and to obtain such additional information which the Maker possesses
or can acquire without unreasonable effort or expense that is
necessary to verify information that was otherwise provided.
(f) The Payee recognizes that his investment in the
Shares involves substantial risks. In deciding whether to invest
in the Shares, the Payee has weighed these risks against the
potential return. Considering all relevant factors in their
financial and personal circumstances, the Payee is able to bear the
economic risk of the investment. The Payee has adequate means of
providing for their current needs and possible personal
contingencies and has no need in the foreseeable future for
liquidity of their investment in the Shares; the Payee hereby
acknowledges and declares that each of them is an "Accredited"
investor as such term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended.
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(g) The Payee has sought such accounting, legal and tax
advice as they have considered necessary to make an informed
investment decision with respect to their investment in the Shares.
(h) The Payee is aware that no Federal or state agency,
including but not limited to the U.S. Securities and Exchange
Commission as well as the Attorney General or State Securities
Commission of the State of Georgia has (i) made any finding or
determination as to the fairness of any aspect of the investment in
the Shares or (ii) passed on or endorsed the merits of the
investment of the Shares.
(i) The Payee hereby acknowledges that the Shares that
he will be acquiring are "restricted securities" as that term is
defined in Rule 144 promulgated under the Securities Act of 1933,
as amended; that the exemption from registration under Rule 144
will not be available in any event for at least two years from the
date of issuance of the Shares to them, and even then will not be
available unless (1) a public trading market then exists for the
Shares, (2) adequate information concerning the Maker is then
available to the public, and (3) other terms and conditions of Rule
144 are complied with; that any sale of the Shares may be made by
the Payee only in accordance with such terms and conditions; and
that the certificate or certificates representing the Shares shall
bear a legend describing the aforementioned restrictions on the
transfer of the Shares which legend will not be removed until the
Shares have been registered under the Securities Act of 1933, as
amended, the Shares are sold in accordance with any of the
provisions of Rule 144 or Rule 144A under said Act, or the Common
Shares qualify for resale under Rule 144(k) promulgated under said
Act.
(j) The Payee has not retained any broker or finder in
connection with the transactions contemplated in this Note so as to
give rise to any valid claim against the Maker or any of its
subsidiaries for any broker's or finder's fee, commission or
similar compensation.
(k) Any information that the Payee has heretofore
furnished to the Maker with respect to their financial position,
and investment experience is correct and complete as of the date of
this Note and, if there should be any material change in such
information prior to the date hereof, such Payee will immediately
furnish such revised or corrected information to the Maker.
(l) The Payee hereby acknowledges that the Maker has
only recently been reorganized, has no assets or working capital
and has no operating or financial history.
This Note is secured by a Pledge Agreement, dated April 1,
1996, between CTI Properties, Inc., a wholly owned subsidiary of
the undersigned and Lynwood S. Warmack and Charles B. Prater.
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Each of the following events shall constitute an Event of
Default hereunder:
(a) If any amounts due hereunder, or under any liabilities of
the undersigned to the Payee are not paid as and when due, or
(b) If the undersigned fails to perform any of its agreements
in addition to the payment of money as set forth in this Note, or
(c) If any default occurs under any of the aforementioned
Pledge Note or other similar agreement relating to any liabilities
or security of the undersigned to the Payee, or
(d) If the undersigned shall become insolvent (as defined in
the Uniform Commercial Code as is in effect at that time in benefit
of creditors), or should the undersigned file for relief in a
proceeding filed pursuant to the Bankruptcy Code, or other laws for
the protection or reorganization of debtors, or should an
involuntary petition pursuant to the Bankruptcy Code be filed
against the undersigned and not be dismissed for sixty (60) days,
or if a receiver be appointed for any substantial part or all of
the assets of the undersigned, or
(e) If the Payee shall reasonably determine that the real
estate asset owned by CTI Properties, Inc., the Pledgor has been,
substantially impaired from the date hereof due to the actions or
omissions of the Maker and/or its subsidiaries or affiliates, Payee
may demand that the Maker supply additional collateral to secure
the indebtedness represented by this Note. Payee may exercise its
right to demand additional collateral by written notice to the
Maker of such demand. Payee shall provide to the Maker its
computation and basis for such demand. Maker shall have thirty
(30) days within which to either (i) supply to the Payee the
additional collateral demanded, or (ii) file in good faith the
proper notice necessary to commence an arbitration proceeding in
the City of Atlanta, State of Georgia, pursuant to the applicable
rules of the American Arbitration Association with respect to the
interpretation and application of Payee's demand for additional
collateral and Maker's objection to such demand; to the extent not
inconsistent with the aforementioned rules, each of the Payee and
the Maker shall pick an arbitrator of its choice, which arbitrators
shall select a third arbitrator; if the two selected arbitrators
are unable to mutually agree upon the selection of a third
arbitrator, then in that event, both parties shall request that the
decision of the arbitrators shall be final and binding upon both
the Payee and the Maker with respect to its findings on these
issues, and such finding may be enforced by either party in the
applicable courts.
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Upon the occurrence of any Event of Default (as defined
herein), and if such Event of Default has not been cured by Maker
within thirty (30) days after receipt by Maker of written notice of
an Event of Default under this Note or under any other agreements
to which the Maker and the Payee are parties, the Payee may, at the
option of the Payees and without demand or notice of any kind, be
declared, and thereupon immediately shall become, due and payable
and the Payees may exercise any rights available to Payee by
operation of law, or available under any written instrument or
agreement, in addition to this Note, relating to any of the
indebtedness or liabilities of the undersigned to the Payee for any
Collateral, including, but not limited to, exercise of any power
granted to the original Payees in the aforementioned Pledge
Agreement.
If this Note is collected by Law, or through an attorney at
law, the undersigned shall pay all costs of collection, including
all reasonable attorney's fees. Any principal or interest not paid
when due, whether by acceleration or otherwise, shall bear interest
at the rate of twelve percent (12%) per annum from the date due
hereunder until finally paid.
The undersigned, and each of them, whether Maker, endorser,
guarantor, or surety, hereby severally waives and renounces, for
himself and family, and all exemption rights either may have under
or by virtue of the Constitution of the United States or the laws
of the State of Georgia, or any other State, or the United States,
as against this debt or any renewal thereof; and each further
waives demand, protest and notice of demand, protest and
nonpayment.
The Payee shall be under no duty to exercise any or all of the
rights and remedies given by this Note, the Pledge Agreement
identified above, or the Georgia Uniform Commercial Code, and no
party to this Note shall be discharged from his obligations or
undertakings hereunder (a) should the Payee release or agree not to
sue any person against whom the party has, to the knowledge of the
Payee, a right of recourse, or (b) should the Payee agree to
suspend the right to enforce this Note, or Payee's rights with the
aforementioned Pledge Agreement or, (c) should the Payee extend in
whole or in part the time for payment of this Note. No forbearance
or indulgence shall operate as a waiver of any right or remedy of
Payee or obligation of the undersigned and no single or partial
exercise by the Payee of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or
remedy and, unless Payee shall otherwise agree in writing, Payee
shall be entitled to invoke any remedy available to Payee under
this Note or by law or in equity and enforce any covenant or
condition against the undersigned, despite the forbearance or
indulgence. Upon default and demand for payment hereunder, any
acceptance of partial payment by Payee shall not constitute a
waiver of such demand or any rights (including the right to recover
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attorney's fees) accruing as a result of such demand, but such
payment shall be applied to the amounts due hereunder.
Notwithstanding anything to the contrary set forth herein, any
and all sums due under this Note, whether principal, interest or
other fees or charges shall be subject to the Maker's right of set-
off pursuant to the indemnification provisions set forth in a
certain Restated Stock and Assets Purchase Agreement, dated
February 29, 1996, by and between Lynwood S. Warmack and Charles B.
Prater, Carpet Transport, Inc., Carpet Transport Holdings Corp. and
related parties including Maker.
The undersigned may prepay this Note in whole at any time
without premium or penalty other than the payment of accrued and
unpaid interest. This Note is executed and delivered in the State
of Georgia and shall be governed by the laws of that State.
THE UNDERSIGNED HEREBY WAIVES PRESENTMENT, PROTEST AND NOTICE
OF DISHONOR. TIME IS OF THE ESSENCE OF THIS NOTE.
As used herein, the term "undersigned" shall mean each party
directly or indirectly obligated for the indebtedness which this
Note evidences, whether as Maker, Co-Maker, Endorser, Surety,
Guarantor or otherwise. If more than one party shall sign this
Note, they shall be jointly and severally liable.
This Note replaces a certain secured Promissory Note, dated
April 1, 1996, made by Continental American Transportation, Inc. in
favor of Lynwood St. Warmack and Charles B. Prater. This Note is
executed under seal on the date printed above.
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President
As To The Acknowledgments
of the Payee:
s/Charles B. Prater
Charles B. Prater
s/Lynwood S. Warmack
Lynwood S. Warmack
cti-prm2.not
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Exhibit No. 21
SUBSIDIARIES OF REGISTRANT
1. Blue Mack Transport, Inc., organized under the
laws of the State of Pennsylvania
2. Carpet Transport Holdings Corp., organized
under the laws of the State of Delaware
3. Carpet Transport, Inc., organized under the
laws of the State of Florida
4. Chase Brokerage, Inc., organized under the
laws of the State of Georgia
5. CTI Properties, Inc., organized under the laws
of the State of Delaware
cat9610k.amn
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Exhibit No. 23 Independent Auditors' Consent
We consent to the incorporation by reference in this
Annual Report (Form 10-KSB) of Continental American
Transportation, Inc. of our report dated October 11,
1996.
s/Rosenberg Rich Baker Berman & Co.
Bridgewater, New Jersey
October 15, 1996
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amendment No. 1 to Form
10-KSB to be signed on its behalf by the undersigned, thereunto duly authorized.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President and Director
Dated: October 30, 1996
By: s/Erik Bailey, Vice President,
Chief Financial Officer and Director
Dated: October 30, 1996
By: s/Brian Henninger
Brian Henninger, Secretary and Director
Dated: October 30, 1996
CAT9610K.AMN
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