UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the period ended June 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-13586
THE MORGAN GROUP, INC.
- --------------------------------------------------------------------------------
Delaware 22-2902315
- --------------------------------------------------------------------------------
(State of other jurisdiction of (I.R.S. Employer identification no.)
of incorporation or organization)
2746 Old U.S. 20 West Elkhart, Indiana 46514-1168
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(Address of principal executive offices) (Zip Code)
(219) 295-2200
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(Registrant's telephone number, include area code)
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $0.15 Par Value:
Class A - 1,499,960 shares as of June 30, 1996
Class B - 1,200,000 shares as of June 30, 1996
<PAGE>
The Morgan Group, Inc.
INDEX
PAGE NUMBER
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 2 - 3
Condensed Consolidated Statements of
Operations for the Three and Six Month
Periods Ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of
Cash Flows for the Six Month Periods Ended
June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial
Statements as of June 30, 1996 6 - 8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 11
PART II OTHER INFORMATION
Item 2 Changes in Securities 12
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 6 Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibits 16
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
The Morgan Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30 Dec. 31,
1996 1995
---------- ---------
(Unaudited) (Note)
(Dollars in thousands)
Assets
Current assets:
Cash and cash equivalents $1,243 $2,851
Trade accounts receivable,
less allowance for doubtful
accounts of $50,000 in 1996 and
$102,000 in 1995 14,012 11,285
Accounts receivable, other 709 514
Prepaid expenses and other current assets 2,448 2,875
Deferred income taxes 586 586
--- ---
Total current assets 18,998 18,111
Property and equipment, net 6,658 6,902
Intangible assets, net 5,072 5,285
Other assets 664 497
--- ---
Total assets $31,392 $30,795
======= =======
<PAGE>
The Morgan Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (continued)
June, 30 Dec. 31,
1996 1995
---------- --------
(Unaudited) (Note)
(Dollars in thousands)
Liabilities and Shareholders' Equity
Current liabilities:
Note payable to bank $ 1,850 $- - -
Trade accounts payable 2,442 3,845
Accrued liabilities 1,566 2,039
Accrued driver pay 631 206
Accrued claims payable 3,910 3,623
Refundable deposits 1,576 1,607
Current portion of long-term debt 784 784
-------- --------
Total current liabilities 12,759 12,104
Long-term debt 2,199 2,491
Deferred income taxes 622 622
Commitments and contingencies - - - - - -
Shareholders' equity
Preferred stock without par value
Authorized shares - 50,000
No shares issued and outstanding
Common stock, $.015 par value
Class A
Authorized shares - 7,500,000;
Issued and outstanding shares -
1,499,960 and 1,449,554 23 23
Class B
Authorized shares - 2,500,000;
Issued and outstanding shares - 1,200,000 18 18
Additional paid-in capital 12,441 12,441
Retained earnings 4,719 4,370
-------- --------
Less - treasury stock, 105,593 shares, at cost (885) (1,274)
- loan to officer for purchase of stock (504) - - -
-------- --------
Total shareholders' equity 15,812 15,578
-------- --------
Total liabilities and shareholders' equity $ 31,392 $ 30,795
======== ========
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date, but does not include all of
the information and footnotes required by generally accepted accounting
principles or complete financial statements.
<PAGE>
The Morgan Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------------- ----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
Operating revenues:
<S> <C> <C> <C> <C>
Manufactured housing outsourcing $ 20,008 $ 16,338 $ 35,566 $ 29,552
Specialized transport 6,938 7,814 14,081 15,500
Driver outsourcing 6,871 5,002 12,130 9,105
Other service revenues 2,881 2,400 5,427 4,200
----------- ----------- ----------- -----------
Total operating revenues 36,698 31,554 67,204 58,357
Costs and expenses:
Operating costs 33,564 28,074 61,763 52,046
Depreciation and amortization 380 313 742 574
Selling, general and administrative 2,076 1,925 4,069 3,758
----------- ----------- ----------- -----------
Operating income 678 1,242 630 1,979
Net interest income (expense) (109) 1 (172) 19
Income before income taxes 569 1,243 458 1,998
Income tax expense 152 479 32 771
----------- ----------- ----------- -----------
Net income 417 764 426 1,227
Less preferred stock dividends - - - 62 - - - 122
----------- ----------- ----------- -----------
Net income applicable to common stock $ 417 $ 702 $ 426 $ 1,105
=========== =========== =========== ===========
Net income per common share:
Primary $ 0.15 $ 0.27 $ 0.16 $ 0.42
=========== =========== =========== ===========
Fully diluted $ 0.15 $ 0.27 $ 0.16 $ 0.42
=========== =========== =========== ===========
Average number of common shares
and common stock equivalents 2,708,128 2,635,273 2,677,957 2,643,780
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
The Morgan Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow
(Unaudited)
Six Months Ended
June 30,
---------------------
1996 1995
------- -------
(Dollars in thousands)
Operating activities
Net income $ 426 $ 1,227
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 742 574
Debt amortization 16 16
------- -------
1,184 1,817
Changes in operating assets and liabilities:
Accounts receivable (2,727) (2,481)
Accounts receivable, other (195) (60)
Prepaid expenses and other current expenses 411 (594)
Accounts payable (1,392) 83
Accrued liabilities (473) 827
Accrued drivers pay 425 525
Accrued insurance claims 287 204
Refundable deposits (31) (4)
------- -------
Net cash provided by (used in operating activities (2,511) 317
Investing activities
Purchases of property and equipment, net of disposals (285) (1,187)
Increase in other assets (167) (359)
------- -------
Net cash used in investing activities (2,963) (3,857)
Financing activities
Net proceeds from (payment on) bank and seller
financed notes and credit line 1,558 1,573
Dividends on common and preferred stock (88) (204)
Treasury stock purchase, net of officer loan (115) (338)
------- -------
Net cash provided by (used in) financing activities 1,355 1,137
------- -------
Net decrease in cash and equivalents (1,608) (2,403)
Cash and cash equivalents at beginning of period 2,851 6,694
------- -------
Cash and cash equivalents at end of period $ 1,243 $ 4,291
======= =======
See notes to condensed consolidated financial statements.
<PAGE>
The Morgan Group, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1996
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of The Morgan Group, Inc. and Subsidiaries (the
"Company") have been prepared in accordance with generally
accepted accounting principles for interim financial reporting
and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for fair
presentation have been included. Operating results for the
three months and six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 1996. These financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto, for the year ended December 31,
1995.
The condensed consolidated financial statements include the
accounts of the Company and its subsidiaries, Morgan Drive
Away, Inc. ("Morgan"), TDI, Inc. ("TDI"), Interstate Indemnity
Company ("Interstate"), and Morgan Finance, Inc. ("Finance")
all of which are wholly owned. Significant intercompany
accounts and transactions have been eliminated in
consolidation.
Note 2. Indebtedness
The Company has extended, through April 30, 1997, various
credit facilities with banks at terms similar to those terms
disclosed in the December 31, 1995 financial statements. The
Company expects to renew or extend these agreements in the
normal course of business.
Note 3. In February of 1996, Morgan Drive Away adopted a Special
Employee Stock Purchase Plan ("Plan") under which Morgan Drive
Away's President and Chief Executive Officer purchased 70,000
shares of Class A Common stock from treasury stock at the then
current market value price of $560,000. Under the terms of the
Plan, $56,000 was delivered to the Company and a promissory
note was executed in the amount of $504,000 bearing an
interest rate of five (5%) percent per annum due in 2003. The
Plan allows for repayment of the note using shares at $8.00
per share. Morgan Drive Away has the right to repurchase, at
$8.00 per share, 56,000 shares during the first year of the
agreement and 28,000 during the second year.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2 - Management Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
The following table sets forth the percentage relationships of
operations data to revenue for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- -------------------------
1996 1995 1996 1995
Unaudited) (Unaudited)
Statement of Operations Data:
<S> <C> <C> <C> <C>
Operating revenue 100.0% 100.0% 100.0% 100.0%
Operating costs 91.5 89.0 91.9 89.2
Depreciation and amortization 1.0 1.0 1.1 1.0
Selling, general and administrative 5.7 6.1 6.1 6.4
----- ----- ----- -----
Operating income 1.8 3.9 .9 3.4
Net interest expense (.3) -- (.3) --
----- ----- ----- -----
Income before income taxes 1.5 3.9 .6 3.4
Income taxes (.4) (1.5) -- (1.3)
----- ----- ----- -----
Net income 1.1% 2.4% .6 2.1%
===== ===== ===== =====
</TABLE>
Operating Revenues
Operating revenues for the second quarter of 1996 totaled $36.7
million, representing an increase of 16% when compared to operating revenues of
$31.6 million in the second quarter of 1995. Prior to giving effect to the TDI
acquisition, which occurred in May of 1995, second quarter operating revenues
increased by 13%. Year to date operating revenues reached $67.2 million, 15%
above last year's six month revenue of $58.4 million. Prior to giving effect to
the TDI acquisition, the revenue gain for the first six months was 10%. The
revenue growth is credited to the strength of the manufactured housing industry
and revenues generated from driver outsourcing services. Unit shipments by the
manufactured housing industry (considering double-wide units as two shipments)
in the United States increased by approximately 11% through May of 1996 compared
to the similar period in 1995, according to the Manufactured Housing Institute.
The increase in industry production, along with longer miles per move, spurred a
22% increase in manufactured housing outsourcing revenues for the quarter and
20% growth year to date. Specialized transport revenues, which consist of the
transportation of van conversions, automobiles, semi-trailers, military
vehicles, and other commodities by utilizing specialized equipment, decreased
11% during the quarter and 9% year to date. A slight reduction in tent camper
and van conversion production, coupled with reduced industry participation in
travel trailers have led to the decline in specialized transport revenues. The
increase of driver outsourcing revenues for the quarter of 37% and year to date
of 33% was aided by the acquisition of TDI, Inc. Other service revenues, which
includes revenues from Interstate Indemnity, Morgan Finance, permit ordering
services, and labor services increased 20% for the quarter and 29% year to date
over the same period of the prior year.
Operating Costs
Operating costs as a percent of revenue increased from 89% in the
second quarter of 1995 to 91.5% in the second quarter of 1996. Year to date
operating costs are 91.9% versus 89.2% for the first six months of 1995. Drivers
pay on a percentage of revenue increased 1.5% for the quarter and year to date.
The higher pay percentage was principally attributed to margin compression in
the Company's Specialized Transport Division, higher pay percentage in driver
outsourcing due to lower margin commercial vehicle business, and a change in mix
in manufactured housing business to lower margin accounts. Operating costs also
increased due to higher claims reserves, highway road taxes, and higher
investment in safety and dispatching personnel without corresponding increase in
revenue levels.
<PAGE>
Depreciation and Amortization
Depreciation and amortization as a percent of revenue remained constant
at 1% for the quarter and year to date increased from 1% for the first six
months of 1995 to 1.1% in 1996. The increase in depreciation and amortization
cost from $313,000 in the second quarter of 1995 to $380,000 in the second
quarter of 1996 relates to higher capital expenditure levels in 1995 and a full
quarter amortization of the TDI acquisition in 1996.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the second quarter
declined as a percentage of revenue from 6.1% in the second quarter of 1995 to
5.7% in the second quarter of 1996. Year to date, selling, general and
administrative expenses decreased from 6.4% of revenue in 1995 to 6.1% in 1996.
Dollars expended on selling, general and administrative expenses increased from
$1,925,000 in the second quarter of 1995 to $2,076,000 in 1996. This increase
was principally related to the inclusion of the TDI acquisition for the full
quarter in 1996. The TDI acquisition also explains the increase in year to date
selling, general and administrative expenses.
Operating Income (Loss)
Operating income decreased from $1,242,000 in the second quarter of
1995 to $678,000 in the second quarter of 1996, and year to date operating
income has decline from $1,979,000 for the first six months of 1995 to $630,000.
The decline in operating revenues for the quarter and year to date is primarily
at the Morgan Drive Away, Inc. subsidiary level and is related to higher
operating costs.
Interest Expense, Net
Interest expense during the second quarter was $109,000 compared to
interest income during the second quarter of 1995 of $1,000. Year to date
interest expense is $172,000 compared to interest income of $19,000 for the
first six months of 1995. Interest expense in 1996 is primarily related to (i)
interest expense associated with the TDI acquisition ($74,000 year to date),
(ii) treasury share purchases and early redemption of preferred stock which has
reduced the Company's cash levels, and (iii) higher working capital levels in
1996 giving rise to additional interest cost.
Pretax Income (Loss)
Pretax income decreased from 3.9% of revenue in 1995 to 1.5% of revenue
in the second quarter of 1996. Year to date pretax income decreased from 3.4% of
revenue in 1995 to .6% of revenue in 1996.
Income Taxes
The provision for federal and state income taxes was 27% of pretax
income in the second quarter of 1996 compared to a provision of 39% in the
second quarter of 1995. The year to date provision for federal and state income
taxes is 7% compared to 39% year to date in 1995. The lower provision for the
quarter and year to date is associated with the low income being generated from
The Morgan Group, Inc.'s subsidiaries excluding the earnings from Interstate
Indemnity.
Net Income
Net income was $417,000, or 15 cents per share, in the first quarter of
1996, compared to a net income of $764,000, or 27 cents primary earnings per
common share in the second quarter of 1995. Year to date net income was
$426,000, 16 cents primary earnings per common share, compared to $1,227,000 of
net income, or 42 cents primary earnings per common share for the first six
months of 1995.
Seasonality
Shipments of manufactured homes tend to decline in the winter months in
areas where poor weather conditions inhibit transport. In addition, in the
winter months relocation of consumer rental trucks decline. These two factors
may reduce revenues in the first and fourth quarters of the year. RV movements
are generally stronger in the spring when dealers build stock in anticipation of
summer vacation season and late summer and early fall when new vehicle models
are introduced. The Company's revenues, therefore, are stronger in the second
and third quarters of the year.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased from $2,851,000 as of December 31,
1995 to $1,243,000 as of June 30, 1996. In addition, the Company borrowed
$1,850,000 on its working capital line of credit. Increased receivables of
$2,727,000 during the first six months of 1996 was $246,000 higher than the
comparable period in 1995. The increase is attributed to an increase in days
sales outstanding from 28 as of June 30, 1995 to 29 as of June 30, 1996. Prepaid
expenses decreased $411,000 during the first six months of 1996 which compared
favorably to a $594,000 increase during the first six months of 1995. The
changes in prepaid expenses between years relates to a company prepayment of a
portion of its 1995/1996 liability insurance premiums in June of 1995 while this
transaction in the current year did not take place until July of 1996. Accounts
payable and accrued liabilities declined $1,865,000 in 1996 compared to an
increase in accounts payable and accrued liabilities in 1995 of $910,000. The
increase in 1995 is specifically related to the premium finance agreement
entered into for the Company's insurance liability premiums of $1,145,000 in
June of 1995. The decrease in accounts payable and accrued liabilities in 1996
is related to (i) payments made on Workers' Compensation liability claims of
$400,000, and (ii) an increase in cash overdrafts totaling $800,000. Cash
expended on investing activities was $452,000 during the first six months of
1996 compared to $2,857,000 in the first six months of 1995. The expenditures in
1995 related to the purchase of intangibles of TDI, purchase of property and
equipment comprised principally of operating assets, and an increase in the
number of driver loans made by Morgan Finance, Inc. During 1996, the Company has
reduced its expenditures on operating equipment and reduced the level of
financing for new driver loans through Morgan Finance, Inc. Financing activities
in 1996 represented by borrowings under its working capital line of credit of
$1,850,000 less $495,000 of payments in outstanding bank and seller financed
notes, and payments of cash dividends, and treasury stock purchases of $203,000.
On July 31, 1996, the Board of Directors approved the potential repurchase of up
to an additional 50,000 shares of its Class A common stock. The Company has
substantially completed the purchase of a previously authorized 100,000 share
stock buy back. At June 30, 1996, the Company had $1,200,000 of cash, marketable
securities, and short-term investments, in addition to unused bank facilities of
$12,000,000. The Company expects current cash flow from existing operations,
existing cash and line of credit to be adequate to fund the existing operations
for the foreseeable future.
FORWARD-LOOKING DISCUSSION
Management believes the Company is situated to begin to show improved
results toward the end of the calendar year. The Company initiated modest price
increases late in the second quarter and expects to realize significant
insurance savings in the second half due to a favorable insurance renegotiation
completed in June. These profit enhancing measures will be partially mitigated
by the prospect of continued softness in the specialized transport and consumer
rental truck relocations as well as the macro-economic factors impacting the
market. The matters discussed in this paragraph are forward looking statements
that involve risk and uncertainties. Potential risk and uncertainties include,
without limitation, continued competitive pressures in the market place, the
effect competitive factors and the Company's reaction to them may have on
consumer and business buying decisions with respect to the Company's services,
the cost of accident claims on the Company's results, and the ability to
continue to recruit qualified drivers to service the business. These factors may
cause actual results to differ materially from what the Company has projected.
<PAGE>
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
On May 6, 1996, the Company held its annual meeting of
shareholders, the results of which follow:
Report of proxies received and shares voted May 6, 1996
Total Voted % of Total
--------- --------- ----------
Number of Shares of Class B
Common Stock 1,200,000 1,200,000 100%
Number of Shares of Class A
Common Stock 1,516,005 1,310,585 86%
1. Election of Directors Elected
by all Shareholders
(1-year term)
Against
For or Withheld Abstained Non-Votes
--------- ------------ --------- ---------
Charles C. Baum 3,705,685 5,900 205,420
Bradley J. Bell 3,705,685 5,900 205,420
Richard B. Black 3,705,685 5,900 205,420
Mario J. Gabelli 3,705,685 5,900 205,420
2. Election of Directors
by Holders of Class A
Common Stock
(1-year term)
Todd L. Parchman 3,704,485 6,100 205,420
3. Approval and ratification of the appointment of Ernst & Young
LLP, certified public accountants, auditors for the fiscal year
ended December 31, 1996.
Against
For or Withheld Abstained Non-Votes
--------- ------------ --------- ---------
3,707,935 200 2,450 205,420
<PAGE>
Item 6
Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
Exhibit 4.1 Second Amendment to Line of Credit Loan Agreement -
TDI, Inc. with KeyBank National Association dated
July 31, 1996.
Exhibit 4.2 Third Amendment to Standby Letter of Credit Facility
Agreement - Morgan Drive Away, Inc. and Interstate
Indemnity Company with KeyBank National Association
dated July 31, 1996.
Exhibit 4.3 Fourth Amendment to Finance Line of Credit Agreement
- Morgan Finance, Inc. with KeyBank National
Association dated July 31, 1996.
Exhibit 4.4 Fifth Amendment to Transactional Life of Credit
Agreement - The Morgan Group with KeyBank National
Association dated July 31, 1996.
Exhibit 4.5 Renewal Master Line of Credit Note - TDI, Inc. with
KeyBank National Association dated July 31, 1996.
Exhibit 4.6 Renewal Transactional Revolving Note - The Morgan
Group, Inc. with KeyBank National Association dated
July 31, 1996.
Exhibit 4.7 Renewal Demand Note - Morgan Drive Away, Inc. and
Interstate Indemnity Company with KeyBank National
Association dated July 31, 1996.
Exhibit 4.8 Renewal Finance Line of Credit Note - Morgan Finance,
Inc. with KeyBank National Association dated July 31,
1996.
Exhibit 11 - Statement re: computation of earnings per share.
(b) No reports on Form 8-k were filed by the Company during the
quarter ended June 30, 1996.
<PAGE>
Second
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MORGAN GROUP, INC.
BY: /s/ Richard B. DeBoer
-------------------------------------
Richard B. DeBoer
Vice President and CFO
Date: August 13, 1996
SECOND AMENDMENT TO LINE OF CREDIT LOAN AGREEMENT
THIS AMENDMENT TO LINE OF CREDIT LOAN AGREEMENT is made and entered on
this 31st day of July, 1996 by and between TDI, INC., an Indiana corporation
("Company") and KEYBANK NATIONAL ASSOCIATION, formerly known as Society National
Bank, Indiana ("Bank").
RECITALS
A. On or about July 26 1995, Company and Bank entered into a Line of
Credit Loan Agreement ("Loan Agreement"). It was amended on or about May 8,
1996.
B. The parties wish again to amend the Loan Agreement to extend the
Termination Date.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and other valuable consideration, the parties hereto agree that the
Recitals above set forth are part of this amendment for all purposes and further
agree as follows:
1. The definition of "Termination Date" contained in Section 1.2 shall
be amended by deleting "July 31, 1996" and replacing that date with "April 30,
1997."
2. All other terms, provisions and conditions of the Master Line of
Credit Loan Agreement are hereby ratified and shall continue in full force and
effect.
IN WITNESS WHEREOF, the Company has hereunto set its hand by its duly
authorized officers on the day and year first above mentioned.
COMPANY:
TDI, Inc.
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
BANK:
KeyBank National Association
By: /s/ R. David Londergan, Jr.
------------------------------------------
R. David Londergan, Jr., V.P.
------------------------------------------
(Typed or Printed Name and Office)
SIGNATURES CONTINUED ON PAGE 2
<PAGE>
The undersigned, The Morgan Group, Inc. represents and warrants that it
has read and reviewed this amendment and that it consents to the execution of
this document by Morgan Drive Away, Inc. and agrees to be bound by the terms and
conditions contained herein.
THE MORGAN GROUP, INC.:
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
2
THIRD AMENDMENT TO STANDBY
LETTER OF CREDIT FACILITY AGREEMENT
This THIRD AMENDMENT TO STANDBY LETTER OF CREDIT FACILITY AGREEMENT is
made and entered this 31st day of July, 1996 by and between MORGAN DRIVE AWAY,
INC., an Indiana corporation ("Morgan") and INTERSTATE INDEMNITY COMPANY, a
Vermont corporation ("Interstate") (hereinafter collectively referred to as
"Companies") and KEYBANK NATIONAL ASSOCIATION, formerly known as Society
National Bank, Indiana ("Bank").
RECITALS
A. On or about September 13, 1994, Companies and Bank entered into a
Standby Letter of Credit Facility Agreement which was amended on or about July
28, 1995 and on May 8, 1996 ("Agreement").
B. The parties wish to amend the Agreement to extend the Termination
Date.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and other valuable consideration, the parties hereto agree that the
Recitals above set forth are part of this amendment for all purposes and further
agree as follows:
1. The definition of "Termination Date" contained in Section 1.2 shall
be amended by deleting "July 31, 1996" and replacing that date with "April 30,
1997."
2. All other terms, provisions and conditions of the Standby Letter of
Credit Facility Agreement (as previously amended) are hereby ratified and shall
continue in full force and effect.
IN WITNESS WHEREOF, the Companies have hereunto set their hands by
their duly authorized officers on the day and year first written above and
effective as of August 1, 1996.
COMPANIES:
Morgan Drive Away, Inc.
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
SIGNATURES CONTINUED ON PAGE 2
<PAGE>
Interstate Indemnity Company
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
BANK:
KeyBank National Association
By: /s/ R. David Londergan, Jr.
------------------------------------------
(Signature)
R. David Londergan, Jr., V.P.
------------------------------------------
(Typed or Printed Name and Office)
The undersigned, The Morgan Group, Inc. represents and warrants that it
has read and reviewed this amendment and that it consents to the execution of
this document by Morgan Drive Away, Inc. and agrees to be bound by the terms and
conditions contained herein. THE MORGAN GROUP, INC.:
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
2
FOURTH AMENDMENT TO FINANCE LINE OF CREDIT AGREEMENT
This FOURTH AMENDMENT TO FINANCE LINE OF CREDIT AGREEMENT is made and
entered into this 31st day of July, 1996 by and between MORGAN FINANCE, INC., an
Indiana corporation ("Company") and KEYBANK NATIONAL ASSOCIATION, formerly known
as Society National Bank, Indiana ("Bank").
RECITALS
A. On or about September 13, 1994, Company and Bank entered into a
Finance Line of Credit Agreement ("Agreement").
B. On or about September 26, 1994, the agreement was amended and it was
further amended on or about July 28, 1995 and on May 8, 1996.
C. The parties wish to again amend the Agreement to extend the
Termination Date.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and other valuable consideration, the parties hereto agree that the
Recitals above set forth are part of this amendment for all purposes and further
agree as follows:
1. The definition of "Termination Date" contained in Section 1.2 shall
be amended by deleting "July 31, 1996" and replacing that date with "April 30,
1997."
2. All other terms, provisions and conditions of the Finance Line of
Credit Agreement (as previously amended) are hereby ratified and shall continue
in full force and effect.
IN WITNESS WHEREOF, the Company has hereunto set its hand by its duly
authorized officers on the day and year first above mentioned and effective as
of August 1, 1996.
COMPANY:
Morgan Finance, Inc.
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
SIGNATURES CONTINUED ON PAGE 2
<PAGE>
BANK:
KeyBank National Association
By: /s/ R. David Londergan, Jr.
------------------------------------------
(Signature)
R. David Londergan, Jr., V.P.
------------------------------------------
(Typed or Printed Name and Office)
The undersigned, The Morgan Group, Inc. represents and warrants that it
has read and reviewed this amendment and that it consents to the execution of
this document by Morgan Drive Away, Inc. and agrees to be bound by the terms and
conditions contained herein. THE MORGAN GROUP, INC.:
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
2
FIFTH AMENDMENT TO
TRANSACTIONAL LINE OF CREDIT AGREEMENT
This FIFTH AMENDMENT TO TRANSACTIONAL LINE OF CREDIT AGREEMENT is made
and entered into this 31st day of July, 1996 by and between THE MORGAN GROUP,
INC., a Delaware corporation ("Company") and KEYBANK NATIONAL ASSOCIATION,
formerly known as Society National Bank, Indiana, ("Bank").
RECITALS
A. On or about September 13, 1994, Company and Bank entered into a
Transac- tional Line of Credit Agreement ("Agreement").
B. On or about September 26, 1994, the Agreement was amended.
C. On or about May 12, 1995, the maturity date was extended by a Note
Modifi- cation Agreement.
D. On or about July 28, 1995, and again on May 8, 1996 the Agreement
was amended.
E. The parties wish to again amend the Agreement to extend the
Termination Date.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and other valuable consideration, the parties hereto agree that the
Recitals above set forth are part of this amendment for all purposes and further
agree as follows:
1. The definition of "Termination Date" contained in Section 1.2 shall
be deleted in its entirety and replaced with the following:
Termination Date shall mean April 30, 1997 or such earlier
date that an acceleration has occurred pursuant to Article
VIII of this Agreement.
2. All other terms, provisions and conditions of the Transactional
Line of Credit Agreement (as previously amended) are hereby ratified and shall
continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Company has hereunto set its hand by its duly
authorized officers on the day and year first above mentioned and effective as
of August 1, 1996.
COMPANY:
Morgan Group, Inc.
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
BANK:
KeyBank National Association
By: /s/ R. David Londergan, Jr.
------------------------------------------
(Signature)
R. David Londergan, Jr., V.P.
------------------------------------------
(Typed or Printed Name and Office)
2
RENEWAL MASTER LINE OF CREDIT NOTE
$1,000,000.00 July 31, 1996
For value received, TDI, INC. (the "Company") promises to pay to the
order of KEYBANK NATIONAL ASSOCIATION, formerly known as Society National Bank,
Indiana, Elkhart, Indiana (the "Bank"), its successors and assigns, at its main
office, on the date or dates and in the manner specified in Article II of the
Loan Agreement (as defined below), the sum of One Million Dollars
($1,000,000.00) or such amount which may be advanced by Bank under the terms and
conditions of the Loan Agreement as shown on any ledger or other record of the
Bank, which shall be rebuttably presumptive evidence of the principal amount
owing and unpaid on this Note.
The Company promises to pay to the order of the Bank interest on the
unpaid principal amount of each Revolving Loan made pursuant to the Loan
Agreement from the date of such Revolving Loan until such principal amount is
paid in full at such interest rate(s) and at such times as are specified in
Article II of the Loan Agreement.
This Note replaces a Master Line of Credit Note in the amount of One
Million Dollars ($1,000,000.00) dated May 8, 1996, but does not serve as
payment, discharge or release of said Master Line of Credit Note.
This Note is the Master Line of Credit Note referred to in, and is
entitled to the benefits of, the Line of Credit Agreement by and between the
Bank and the Company dated July 26, 1995, as amended in May 8, 1996, and again
on July 31, 1996, and as the same may be hereafter amended from time to time
(the "Loan Agreement"). This Note may be declared forthwith due and payable in
the manner and with the effect provided in the Loan Agreement, which contains
provisions for acceleration of the maturity hereof upon the happening of any
Event of Default and also for prepayment on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified and for the
payment of all expenses incurred by the Bank, including reasonable fees and
disbursements of counsel, relating to collection or enforcement hereunder.
Each defined term used in this Note shall have the meaning ascribed
thereto in Section 1.2 of the Loan Agreement.
This Note is secured by a Security Agreement of May 19, 1995 and any
and all security agreements ratified pursuant to the Loan Agreement, Other
Collateral Documents, and by any and all collateral securing any obligation of
Company to Bank.
As security for the payment of the obligations evidenced by this Note
and the other liabilities and obligations of Company to Bank, however and
whenever created or acquired, direct or contingent, which now or after the date
of this Note may exist, in addition to all other security for such payment,
Company grants to Bank a continuing lien and security
<PAGE>
interest in all Company's personal property, or Company's interest in personal
property, which now is or which may after the date of this Note be in the
possession of Bank, and a continuing lien and security interest in Company's
interest in all amounts on deposit at Bank and upon the occurrence of an Event
of Default (as that is defined in the Loan Agreement), Bank may apply such
property, interests, and/or amounts upon any and all liabilities and obligations
of Company to Bank, without prior notice to Company.
The holder of this Note, in its sole discretion, may renew this Note,
accept a renewal note or notes, extend the time for the payment of the
indebtedness evidenced by this Note, reduce the payments under this Note, or do
any combination of such actions on any number of occasions; provided, however,
any such action shall not release the Company or any endorser, accommodation
party or guarantor from any liability on the obligation evidenced by this Note.
Company and any endorser, accommodation party or guarantor of this Note each
waive presentment for payment, protest, notice of protest, notice of nonpayment
or dishonor of this Note and diligence in the collection of this Note; and each
of them consents to any actions by Bank or any holder of this Note as set forth
in this paragraph.
By signing or guaranteeing this Note, each and every guarantor, surety,
endorser, and accommodation party of the obligations contained herein shall be
deemed to and shall have irrevocably waived and relinquished (i) the benefit of
any and all defenses to enforcement of this Note, any counterclaim, offset or
claim in recoupment, based upon contract, arising at equity, or under any state
or federal law regarding suretyship or guaranty generally; or (ii) any discharge
provided in Indiana Code ss. 26-1-3.1-605, or other state or federal statute of
similar import. Consistent with this waiver, and not by way of limitation, the
person or persons entitled to enforce this instrument may, at any time and
without notice to any guarantor, surety, endorser or accommodation party of the
obligations contained in this Note, (i) extend the maturity date of this Note;
(ii) adjust any and all terms of this Note, even if such adjustment materially
alters the obligation; (iii) take any action (or not take any action) with
respect to any collateral for this Note, including without limitation, releasing
or diminishing (intentionally or otherwise) the extent or value of such
collateral.
No failure by Bank to exercise any right under this Note, including any
rights resulting from an Event of Default (as that term is defined in the Loan
Agreement), shall operate as a waiver or otherwise prevent Bank from exercising
any of its rights under this Note at any other time, including the exercise by
Bank of any rights at any time during the continuance of such Event of Default
or on the occurrence of a subsequent Event of Default.
Company agrees that Bank shall be entitled to rely on any written, oral
or telephonic communication requesting a draw or advance under this Note which
may be received by Bank from any person reasonably believed by Bank to be an
authorized representative of Company. Each draw or advance made under this Note
will be evidenced by a written record made by Bank indicating the amount and
date of such transaction. Such records of Bank shall be deemed by Company and
Bank to be sufficient evidence of credit extended under this Note.
2
<PAGE>
This Note and any extensions or renewals of this Note relates to and is
subject to all of the terms, conditions, and provisions of the Loan Agreement
and any extensions, renewals, modifications or amendments of or to the Loan
Agreement; and this Note and any extensions or renewals of this Note is related
to any mortgage, pledge, financing statement, guaranty, security agreement and
other document required under or related to the Loan Agreement.
This Note is made and shall be governed by the laws of the state of
Indiana and the Company consents to the jurisdiction of any local, state or
federal court located within Elkhart County, Indiana (or in the case of a
federal court, the jurisdiction of which includes Elkhart County, Indiana).
IN WITNESS WHEREOF, the Company has hereunto set its hand by its duly
authorized officers on the day and the year first above mentioned.
"COMPANY":
TDI, Inc.
By: /s/ Richard B. DeBoer
--------------------------------------
Richard B. DeBoer, CFO
3
RENEWAL
TRANSACTIONAL REVOLVING NOTE
$4,000,000.00 July 31, 1996
For value received, THE MORGAN GROUP, INC. (the "Company") promises to
pay to the order of KEYBANK NATIONAL ASSOCIATION, formerly known as Society
National Bank, Indiana, Elkhart, Indiana (the "Bank"), its successors and
assigns, at its main office, on the date or dates and in the manner specified in
Article II of the Loan Agreement (as defined below), the sum of Four Million
Dollars ($4,000,000.00) or such amount which may be advanced by Bank under the
terms and conditions of the Loan Agreement as shown on any ledger or other
record of the Bank, which shall be rebuttably presumptive evidence of the
principal amount owing and unpaid on this Note.
The Company promises to pay to the order of the Bank interest on the
unpaid principal amount of each Revolving Loan made pursuant to the Loan
Agreement from the date of such Revolving Loan until such principal amount is
paid in full at such interest rate(s) and at such times as are specified in
Article II of the Loan Agreement.
This Note replaces a Renewal Transactional Revolving Note in the amount
of Four Million Dollars ($4,000,000.00) dated May 8, 1996 but does not serve as
a payment, discharge, or release of said Renewal Transactional Revolving Note.
This Note is the Transactional Revolving Note referred to in, and is
entitled to the benefits of, the Transactional Line of Credit Agreement by and
between the Bank and the Company to be effective July 29, 1994, as amended on
September 26, 1994, July 28, 1995, May 8, 1996 and on July 31, 1996, and as the
same may be hereafter amended from time to time (the "Loan Agreement"). This
Note may be declared forthwith due and payable in the manner and with the effect
provided in the Loan Agreement, which contains provisions for acceleration of
the maturity hereof upon the happening of any Event of Default and also for
prepayment on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified and for the payment of all expenses
incurred by the Bank, including reasonable fees and disbursements of counsel,
relating to collection or enforcement hereunder.
Each defined term used in this Note shall have the meaning ascribed
thereto in Section 1.2 of the Loan Agreement.
This Note is secured by all security agreements ratified pursuant to
the Loan Agreement, Other Collateral Documents, and by any and all collateral
securing any obligation of Company to Bank.
As security for the payment of the obligations evidenced by this Note
and the other liabilities and obligations of Company to Bank, however and
whenever created or acquired,
<PAGE>
direct or contingent, which now or after the date of this Note may exist, in
addition to all other security for such payment, Company grants to Bank a
continuing lien and security which now is or which may after the date of this
Note be in the possession of Bank, and a continuing lien and security interest
in Company's interest in all amounts on deposit at Bank and upon the occurrence
of an Event of Default (as that is defined in the Loan Agreement), Bank may
apply such property, interests, and/or amounts upon any and all liabilities and
obligations of Company to Bank, without prior notice to Company.
The holder of this Note, in its sole discretion, may renew this Note,
accept a renewal note or notes, extend the time for the payment of the
indebtedness evidenced by this Note, reduce the payments under this Note, or do
any combination of such actions on any number of occasions; provided, however,
any such action shall not release the Company or any endorser, accommodation
party or guarantor from any liability on the obligation evidenced by this Note.
Company and any endorser, accommodation party or guarantor of this Note each
waive presentment for payment, protest, notice of protest, notice of nonpayment
or dishonor of this Note and diligence in the collection of this Note; and each
of them consents to any actions by Bank or any holder of this Note as set forth
in this paragraph.
All payments will be made without relief from valuation or appraisement
laws.
By signing or guaranteeing this Note, each and every guarantor, surety,
endorser, and accommodation party of the obligations contained herein shall be
deemed to and shall have irrevocably waived and relinquished (i) the benefit of
any and all defenses to enforcement of this Note, any counterclaim, offset or
claim in recoupment, based upon contract, arising at equity, or under any state
or federal law regarding suretyship or guaranty generally; or (ii) any discharge
provided in Indiana Code ss. 26-1-3.1-605, or other state or federal statute of
similar import. Consistent with this waiver, and not by way of limitation, the
person or persons entitled to enforce this instrument may, at any time and
without notice to any guarantor, surety, endorser or accommodation party of the
obligations contained in this Note, (i) extend the maturity date of this Note;
(ii) adjust any and all terms of this Note, even if such adjustment materially
alters the obligation; (iii) take any action (or not take any action) with
respect to any collateral for this Note, including without limitation, releasing
or diminishing (intentionally or otherwise) the extent or value of such
collateral.
No failure by Bank to exercise any right under this Note, including any
rights resulting from an Event of Default (as that term is defined in the Loan
Agreement), shall operate as a waiver or otherwise prevent Bank from exercising
any of its rights under this Note at any other time, including the exercise by
Bank of any rights at any time during the continuance of such Event of Default
or on the occurrence of a subsequent Event of Default.
Company agrees that Bank shall be entitled to rely on any written, oral
or telephonic communication requesting a draw or advance under this Note which
may be received by Bank from any person reasonably believed by Bank to be an
authorized representative of Company. Each draw or advance made under this Note
will be evidenced by a written
2
<PAGE>
record made by Bank indicating the amount and date of such transaction. Such
records of Bank shall be deemed by Company and Bank to be sufficient evidence of
credit extended under this Note.
This Note and any extensions or renewals of this Note relates to and is
subject to all of the terms, conditions, and provisions of the Loan Agreement
and any extensions, renewals, modifications or amendments of or to the Loan
Agreement; and this Note and any extensions or renewals of this Note is related
to any mortgage, pledge, financing statement, guaranty, security agreement and
other document required under or related to the Loan Agreement.
This Note is made and shall be governed by the laws of the state of
Indiana and the Company consents to the jurisdiction of any local, state or
federal court located within Elkhart County, Indiana (or in the case of a
federal court, the jurisdiction of which includes Elkhart County, Indiana).
IN WITNESS WHEREOF, the Company has hereunto set its hand by its duly
authorized officers on the day and the year first above mentioned.
"COMPANY":
The Morgan Group, Inc.
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
3
RENEWAL
DEMAND NOTE
$4,000,000.00 July 31, 1996
For value received, MORGAN DRIVE AWAY, INC. and INTERSTATE INDEMNITY
COMPANY (the "Companies") promise to pay to the order of KEYBANK NATIONAL
ASSOCIATION, formerly known as Society National Bank, Indiana, Elkhart, Indiana
(the "Bank"), its successors and assigns, at its main office, on the date or
dates and in the manner specified in Article II of the Loan Agreement (as
defined below), the sum of Four Million Dollars ($4,000,000.00) or such amount
which may be advanced by Bank under the terms and conditions of the Loan
Agreement as shown on any ledger or other record of the Bank, which shall be
rebuttably presumptive evidence of the principal amount owing and unpaid on this
Note.
The Companies promise to pay to the order of the Bank interest at such
times as are specified in Article II of the Loan Agreement.
This Note replaces a Renewal Demand Note in the amount of Four Million
Dollars ($4,000,000.00) dated May 8, 1996 but does not serve as a payment,
discharge or release of said Renewal Demand Note.
This Note is the Demand Note referred to in, and is entitled to the
benefits of, the Standby Letter of Credit Facility Agreement by and between the
Bank and the Companies to be effective July 29, 1994, as amended on July 28,
1995, on May 8, 1996, and on July 31, 1996 as the same may be hereafter amended
from time to time (the "Loan Agreement"). This Note may be declared forthwith
due and payable on demand and with the effect provided in the Loan Agreement
including reasonable fees and disbursements of counsel relating to collection or
enforcement hereunder.
Each defined term used in this Note shall have the meaning ascribed
thereto in Section 1.2 of the Loan Agreement.
This Note is secured by Security Agreements of September 13, 1994 and
any and all security agreements ratified pursuant to the Loan Agreement, Other
Collateral Documents, and by any and all collateral securing any obligation of
Companies to Bank.
As security for the payment of the obligations evidenced by this Note
and the other liabilities and obligations of Companies to Bank, however and
whenever created or acquired, direct or contingent, which now or after the date
of this Note may exist, in addition to all other security for such payment,
Companies grant to Bank a continuing lien and security interest in all
Companies' personal property, or Companies' interest in personal property, which
now is or which may after the date of this Note be in the possession of Bank,
and a
<PAGE>
continuing lien and security interest in Companies' interest in all amounts on
deposit at Bank and upon the occurrence of an Event of Default (as that is
defined in the Loan Agreement), Bank may apply such property, interests, and/or
amounts upon any and all liabilities and obligations of Companies to Bank,
without prior notice to Companies.
The holder of this Note, in its sole discretion, may renew this Note,
accept a renewal note or notes, extend the time for the payment of the
indebtedness evidenced by this Note, reduce the payments under this Note, or do
any combination of such actions on any number of occasions; provided, however,
any such action shall not release the Companies or any endorser, accommodation
party or guarantor from any liability on the obligation evidenced by this Note.
Companies and any endorser, accommodation party or guarantor of this Note each
waive presentment for payment, protest, notice of protest, notice of nonpayment
or dishonor of this Note and diligence in the collection of this Note; and each
of them consents to any actions by Bank or any holder of this Note as set forth
in this paragraph.
All payments will be made without benefit from valuation or
appraisement laws.
By signing or guaranteeing this Note, each and every guarantor, surety,
endorser, and accommodation party of the obligations contained herein shall be
deemed to and shall have irrevocably waived and relinquished (i) the benefit of
any and all defenses to enforcement of this Note, any counterclaim, offset or
claim in recoupment, based upon contract, arising at equity, or under any state
or federal law regarding suretyship or guaranty generally; or (ii) any discharge
provided in Indiana Code ss. 26-1-3.1-605, or other state or federal statute of
similar import. Consistent with this waiver, and not by way of limitation, the
person or persons entitled to enforce this instrument may, at any time and
without notice to any guarantor, surety, endorser or accommodation party of the
obligations contained in this Note, (i) extend the maturity date of this Note;
(ii) adjust any and all terms of this Note, even if such adjustment materially
alters the obligation; (iii) take any action (or not take any action) with
respect to any collateral for this Note, including without limitation, releasing
or diminishing (intentionally or otherwise) the extent or value of such
collateral.
No failure by Bank to exercise any right under this Note, including any
rights resulting from an Event of Default (as that term is defined in the Loan
Agreement), shall operate as a waiver or otherwise prevent Bank from exercising
any of its rights under this Note at any other time, including the exercise by
Bank of any rights at any time during the continuance of such Event of Default
or on the occurrence of a subsequent Event of Default.
Companies agree that Bank shall be entitled to rely on any written,
oral or telephonic communication requesting a financial accommodation under this
Note which may be received by Bank from any person reasonably believed by Bank
to be an authorized representative of Morgan Drive Away, Inc. or Interstate
Indemnity Company. Records of Bank shall be deemed by Companies and Bank to be
sufficient evidence of credit extended under this Note.
2
<PAGE>
This Note and any extensions or renewals of this Note relates to and is
subject to all of the terms, conditions, and provisions of the Loan Agreement
and any extensions, renewals, modifications or amendments of or to the Loan
Agreement; and this Note and any extensions or renewals of this Note is related
to any mortgage, pledge, financing statement, guaranty, security agreement and
other document required under or related to the Loan Agreement.
This Note is made and shall be governed by the laws of the state of
Indiana and the Companies consent to the jurisdiction of any local, state or
federal court located within Elkhart County, Indiana (or in the case of a
federal court, the jurisdiction of which includes Elkhart County, Indiana).
IN WITNESS WHEREOF, the Companies have hereunto set their hands by
their duly authorized officers on the day and the year first above mentioned.
"COMPANIES":
Morgan Drive Away, Inc.
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
Interstate Indemnity Company
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
3
RENEWAL
FINANCE LINE OF CREDIT NOTE
$1,000,000.00 July 31, 1996
For value received, MORGAN FINANCE, INC. (the "Company") promises to
pay to the order of KEYBANK NATIONAL ASSOCIATION, formerly known as Society
National Bank, Indiana, Elkhart, Indiana (the "Bank"), its successors and
assigns, at its main office, on the date or dates and in the manner specified in
Article II of the Loan Agreement (as defined below), the sum of One Million
Dollars ($1,000,000.00) or such amount which may be advanced by Bank under the
terms and conditions of the Loan Agreement as shown on any ledger or other
record of the Bank, which shall be rebuttably presumptive evidence of the
principal amount owing and unpaid on this Note.
The Company promises to pay to the order of the Bank interest on the
unpaid principal amount of each Revolving Loan made pursuant to the Loan
Agreement from the date of such Revolving Loan until such principal amount is
paid in full at such interest rate(s) and at such times as are specified in
Article II of the Loan Agreement.
This Note replaces a Finance Line of Credit Note in the amount of One
Million Dollars ($1,000,000.00) dated May 8, 1996 but does not serve as a
payment, discharge or release of said Finance Line of Credit Note.
This Note is the Finance Line of Credit Note referred to in, and is
entitled to the benefits of, the Finance Line of Credit Agreement by and between
the Bank and the Company dated September 13, 1994, as amended on September 26,
1994, July 28, 1995, May 8, 1996, and July 31, 1996, as the same may be
hereafter amended from time to time (the "Loan Agreement"). This Note may be
declared forthwith due and payable in the manner and with the effect provided in
the Loan Agreement, which contains provisions for acceleration of the maturity
hereof upon the happening of any Event of Default and also for prepayment on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified and for the payment of all expenses incurred by the
Bank, including reasonable fees and disbursements of counsel, relating to
collection or enforcement hereunder.
Each defined term used in this Note shall have the meaning ascribed
thereto in Section 1.2 of the Loan Agreement.
This Note is secured by a Security Agreement and Assignment of
Contracts and Notes of September 13, 1994 and any and all security agreements
ratified pursuant to the Loan Agreement, Other Collateral Documents, and by any
and all collateral securing any obligation of Company to Bank.
<PAGE>
As security for the payment of the obligations evidenced by this Note
and the other liabilities and obligations of Company to Bank, however and
whenever created or acquired, direct or contingent, which now or after the date
of this Note may exist, in addition to all other security for such payment,
Company grants to Bank a continuing lien and security interest in all Company's
personal property, or Company's interest in personal property, which now is or
which may after the date of this Note be in the possession of Bank, and a
continuing lien and security interest in Company's interest in all amounts on
deposit at Bank and upon the occurrence of an Event of Default (as that is
defined in the Loan Agreement), Bank may apply such property, interests, and/or
amounts upon any and all liabilities and obligations of Company to Bank, without
prior notice to Company.
The holder of this Note, in its sole discretion, may renew this Note,
accept a renewal note or notes, extend the time for the payment of the
indebtedness evidenced by this Note, reduce the payments under this Note, or do
any combination of such actions on any number of occasions; provided, however,
any such action shall not release the Company or any endorser, accommodation
party or guarantor from any liability on the obligation evidenced by this Note.
Company and any endorser, accommodation party or guarantor of this Note each
waive presentment for payment, protest, notice of protest, notice of nonpayment
or dishonor of this Note and diligence in the collection of this Note; and each
of them consents to any actions by Bank or any holder of this Note as set forth
in this paragraph.
All payments will be made without benefit from valuation or
appraisement laws.
By signing or guaranteeing this Note, each and every guarantor, surety,
endorser, and accommodation party of the obligations contained herein shall be
deemed to and shall have irrevocably waived and relinquished (i) the benefit of
any and all defenses to enforcement of this Note, any counterclaim, offset or
claim in recoupment, based upon contract, arising at equity, or under any state
or federal law regarding suretyship or guaranty generally; or (ii) any discharge
provided in Indiana Code ss. 26-1-3.1-605, or other state or federal statute of
similar import. Consistent with this waiver, and not by way of limitation, the
person or persons entitled to enforce this instrument may, at any time and
without notice to any guarantor, surety, endorser or accommodation party of the
obligations contained in this Note, (i) extend the maturity date of this Note;
(ii) adjust any and all terms of this Note, even if such adjustment materially
alters the obligation; (iii) take any action (or not take any action) with
respect to any collateral for this Note, including without limitation, releasing
or diminishing (intentionally or otherwise) the extent or value of such
collateral.
No failure by Bank to exercise any right under this Note, including any
rights resulting from an Event of Default (as that term is defined in the Loan
Agreement), shall operate as a waiver or otherwise prevent Bank from exercising
any of its rights under this Note at any other time, including the exercise by
Bank of any rights at any time during the continuance of such Event of Default
or on the occurrence of a subsequent Event of Default.
2
<PAGE>
Company agrees that Bank shall be entitled to rely on any written, oral
or telephonic communication requesting a draw or advance under this Note which
may be received by Bank from any person reasonably believed by Bank to be an
authorized representative of Company. Each draw or advance made under this Note
will be evidenced by a written record made by Bank indicating the amount and
date of such transaction. Such records of Bank shall be deemed by Company and
Bank to be sufficient evidence of credit extended under this Note.
This Note and any extensions or renewals of this Note relates to and is
subject to all of the terms, conditions, and provisions of the Loan Agreement
and any extensions, renewals, modifications or amendments of or to the Loan
Agreement; and this Note and any extensions or renewals of this Note is related
to any mortgage, pledge, financing statement, guaranty, security agreement and
other document required under or related to the Loan Agreement.
This Note is made and shall be governed by the laws of the state of
Indiana and the Company consents to the jurisdiction of any local, state or
federal court located within Elkhart County, Indiana (or in the case of a
federal court, the jurisdiction of which includes Elkhart County, Indiana).
IN WITNESS WHEREOF, the Company has hereunto set its hand by its duly
authorized officers on the day and the year first above mentioned.
"COMPANY":
Morgan Finance, Inc.
By: /s/ Richard B. DeBoer
------------------------------------------
(Signature)
Richard B. DeBoer, Chief Financial Officer
------------------------------------------
(Typed or Printed Name and Office)
3
The Morgan Group, Inc. and Subsidiaries
Exhibit 11 - Statement re: Computation of Per Share Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30,
------------------------ ------------------------
1996 1995 1995 1996
--------- --------- -------- ---------
Primary
<S> <C> <C> <C> <C>
Average shares outstanding 2,566,665 2,566,665 2,566,665 2,566,665
Exercise of warrants 88,888 88,888 88,888 88,888
Redemption of shares of
series A preferred stock 150,000 - - - 150,000 - - -
Treasury stock repurchased (97,425) (20,280) (127,596) (11,773)
--------- --------- --------- ---------
Total 2,708,128 2,635,273 2,677,957 2,643,780
Fully Diluted
Net effect of dilutive warrants,
based upon the treasury
stock method using the average
stock prices - - - 8,507 - - - - - -
--------- --------- --------- ---------
Total 2,708,128 2,643,780 2,677,957 2,643,780
Net Income $ 417 $ 764 $ 426 $ 1,227
Series A Redeemable
Preferred stock dividends - - - $ 62 - - - $ 122
--------- --------- --------- ---------
Net Income $ 417 $ 702 $ 426 $ 1,105
=========== ========= ========= =========
Primary earnings per share $ .15 $ .27 $ .16 $ .42
Fully diluted earnings per share $ .15 .27 $ .16 $ .42
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000906609
<NAME> THE MORGAN GROUP
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Jun-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 310
<SECURITIES> 933
<RECEIVABLES> 14,771
<ALLOWANCES> 50
<INVENTORY> 0
<CURRENT-ASSETS> 18,998
<PP&E> 11,542
<DEPRECIATION> 4,884
<TOTAL-ASSETS> 31,392
<CURRENT-LIABILITIES> 12,759
<BONDS> 0
<COMMON> 41
0
0
<OTHER-SE> 15,771
<TOTAL-LIABILITY-AND-EQUITY> 31,392
<SALES> 67,204
<TOTAL-REVENUES> 67,204
<CGS> 61,763
<TOTAL-COSTS> 66,574
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172
<INCOME-PRETAX> 458
<INCOME-TAX> 32
<INCOME-CONTINUING> 426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 426
<EPS-PRIMARY> $.16
<EPS-DILUTED> $.16
</TABLE>
