Back to GetFilings.com
FORM 10-Q
________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003.
Commission File No. 1-8129.
US 1 INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 95-3585609
(State of Incorporation) (I.R.S. Employer
Identification No.)
1000 Colfax, Gary, Indiana 46406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 977-5225
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.
Yes _X_ No ___
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes ___ No _X_
As of May 14, 2003, there were 11,618,224 shares of registrant's common
stock were outstanding.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002
Part I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
ASSETS
March 31, December 31,
2003 2002
(Unaudited)
CURRENT ASSETS:
Cash $ 0 $ 0
Accounts receivable-trade, less allowance for
doubtful accounts of $530,000 and $460,000
respectively 18,180,843 16,468,912
Other receivables, including receivables due
from affiliated entities of $25,500 and
$261,000, respectively 1,677,792 1,648,599
Deposits 45,200 45,200
Prepaid expenses 565,685 473,174
Current deferred tax asset 600,000 600,000
---------- -----------
Total current assets 21,069,520 19,235,885
FIXED ASSETS:
Equipment 1,739,903 1,669,781
Less accumulated depreciation and amortization (585,245) (512,406)
----------- -----------
Net fixed assets 1,154,658 1,157,375
----------- -----------
ASSETS HELD FOR SALE:
Land 195,347 195,347
Valuation allowance (141,347) (141,347)
----------- -----------
Net assets held for sale 54,000 54,000
Non-current deferred tax asset 600,000 600,000
Other Assets 397,745 396,527
----------- -----------
TOTAL ASSETS $23,275,923 $21,443,787
=========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31,
2003 2002
(Unaudited)
CURRENT LIABILITIES:
Revolving line of credit $ 7,692,698 $ 6,118,480
Current portion of long-term debt 902,409 1,197,667
Accounts payable 6,393,109 5,627,909
Accrued expenses 334,703 403,296
Insurance and claims 585,238 1,044,222
Accrued compensation 70,766 87,273
Accrued interest 1,061,659 1,009,394
Fuel and other taxes payable 80,251 81,714
Accrued Legal Settlement 700,000 700,000
----------- ------------
Total current liabilities 17,820,833 16,269,955
----------- ------------
LONG-TERM DEBT
(primarily to related parties) 2,957,569 3,113,653
Minority Interest 118,573 202,751
REDEEMABLE PREFERRED STOCK:
Authorized 5,000,000 shares; no par value
SHAREHOLDERS' EQUITY:
Common stock, authorized 20,000,000
shares; no par value; 11,618,224
shares outstanding as of 42,103,080 42,068,639
March 31, 2003 and December 31, 2002.
Accumulated deficit (39,724,132) (40,211,211)
----------- -----------
Total shareholders' equity 2,378,948 1,857,428
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 23,275,923 $21,443,787
=========== ============
The accompanying notes are an integral part of the consolidated
financial statements.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
MARCH 31, 2003 AND MARCH 31, 2002 (UNAUDITED)
MARCH 31, MARCH 31,
2003 2002
_____________ ______________
OPERATING REVENUES $28,552,527 $ 20,935,674
------------ ------------
OPERATING EXPENSES:
Purchased transportation 21,230,405 15,654,412
Commissions 2,810,606 2,015,470
Insurance and claims 1,115,963 775,627
Salaries, wages, and other 1,533,174 1,023,337
Operating supplies and expense 660,407 464,211
Other expenses 674,613 529,387
------------ ------------
Total operating expenses 28,025,168 20,462,444
------------ ------------
OPERATING INCOME 527,359 473,230
------------ ------------
NON-OPERATING INCOME (EXPENSE):
Legal Settlement 0 (360,000)
Interest income 3,667 9,950
Interest expense (129,717) (135,467)
Other income 116,086 34,820
------------ ------------
Total non-operating expense (9,964) (450,697)
------------ ------------
NET INCOME BEFORE MINORITY INTEREST $ 517,395 $ 22,533
Minority Interest Expense 30,316 14,353
------------ ------------
NET INCOME $ 487,079 $ 8,180
DIVIDENDS ON PREFERRED SHARES 0 (28,286)
------------ -------------
NET INCOME(LOSS)AVAILABLE
TO COMMON SHAREHOLDERS 487,079 (20,106)
============ =============
Basic and Diluted Net Income
Per Common Share $ 0.04 $ 0.00
============ =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED $11,618,224 $ 10,618,224
============ =============
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003
Total
Common Common Accumulated Shareholders'
Shares Stock Deficit Equity
Balance, December 31, 2002 11,618,224 $42,068,639 $(40,211,211) $1,857,428
Minority interest in
subsidiary 0 34,441 0 34,441
Net income 0 0 487,079 487,079
Balance, March 31, 2003 11,618,224 $42,103,080 $(39,724,132)$2,378,948
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
MARCH 31, 2003 (UNAUDITED) AND MARCH 31, 2002 (UNAUDITED)
Three Months Ended March 31,
2003 2002
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 487,079 8,180
Adjustments to reconcile net income to net
net cash (used in) provided by operating activities
Depreciation and amortization 72,839 56,637
Compensation Expense resulting from
issuance of equity in subsidiary 37,500 37,500
Provision for bad debts 128,612 127,307
Minority interest expense 30,316 14,351
Legal Settlement 0 360,000
Changes in operating assets and liabilities:
Accounts receivable - trade (1,840,543) (1,526,587)
Other receivables (29,193) (433,528)
Prepaid expenses (92,511) 174,916
Deposits & other assets (1,218) (1,000)
Accounts payable 647,647 1,089,803
Accrued expenses (68,593) 13,533
Accrued interest 52,265 23,961
Insurance and claims (458,984) 121,638
Accrued compensation (16,507) 5,113
Fuel and other taxes payable (1,463) (22,654)
--------- --------
Net cash(used in)provided by
operating activities (1,052,754) 9,170
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets (70,122) (12,127)
-------- --------
Net cash used in investing activities (70,122) (12,127)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under
line of credit 1,574,218 (182,829)
Principal payments on long-term debt (181,342) (126,274)
Repayments of shareholder loans (270,000) (50,000)
--------- --------
Net cash provided by (used in)
financing activities 1,122,876 (359,103)
--------- --------
NET DECREASE IN CASH 0 (322,060)
CASH, BEGINNING OF PERIOD 0 322,060
--------- --------
CASH, END OF PERIOD 0 0
========= ========
Non-Cash Investing Activity
In March 2003, a majority owned subsidiary of the Company declared
a dividend. $117,553 due to Minority Shareholders is included in
accounts payable at March 31, 2003.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
The accompanying notes are an integral part of the consolidated
financial statements.
1. BASIS OF PRESENTATION
The accompanying consolidated balance sheet as of March 31 2003 and
the consolidated statements of income, shareholders' equity and cash
flows for the three months ended March 31 2003 and 2002 are unaudited,
but, in the opinion of management, include all adjustments (consisting
of normal, recurring accruals) necessary for a fair presentation of the
financial position and the results of operations at such date and for
such periods. The year-end balance sheet data was derived from audited
financial statements. These statements should be read in conjunction
with US 1 Industries, Inc. and Subsidiaries' ("Company") audited
consolidated financial statements for the year ended December 31, 2002,
and the notes thereto included in the Company's Annual Report on Form
10-K. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted, as permitted by the
requirements of the Securities and Exchange Commission, although the
Company believes that the disclosures included in these financial
statements are adequate to make the information not misleading. The
results of operations for the three months ended March 31, 2003 and
2002 are not necessarily indicative of the results for a full year.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the FASB issued Interpretation No. 46 ("FIN46"),
Consolidation of Variable Interest Entities, an interpretation of ARB
51. The primary objectives of FIN 46 are to provide guidance on the
identification of entities for which control is achieved through means
other than through voting rights ("variable interest entities" or
"VIEs") and how to determine when and which business enterprise should
consolidate the VIE (the "primary beneficiary"). This new model for
consolidation applies to an entity in which either (1) the equity
investors (if any) do not have a controlling financial interest or (2)
the equity investment at risk is insufficient to finance that entity's
activities without receiving additional subordinated financial support
from other parties. In addition, FIN 46 requires that both the primary
beneficiary and all other enterprises with a significant variable
interest in a VIE make additional disclosures. At this time, the
Company does not believe that the adoption of this interpretation will
have a material effect on its financial statements.
3. RECLASSIFICATIONS
Certain reclassifications have been made to the previously reported
2002 financial statements to conform with the 2003 presentation.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. EARNINGS PER COMMON SHARE
The Company calculates earnings per share ("EPS") in accordance
with Statement of Financial Accounting Standards No. 128. Following is
the reconciliation of the numerators and denominators of the basic and
diluted EPS. There were no outstanding common stock equivalents in
these periods.
Three Months Ended
Numerator 2003 2002
Net income $ 487,076 $ 8,180
Dividends on preferred shares 0 (28,286)
--------- ----------
Net income available to common
shareholders for basic and
diluted EPS 487,076 (20,106)
Denominator
Weighted average common shares
outstanding for basic and
diluted EPS 11,618,224 10,618,224
5. REVOLVING LINE OF CREDIT
The Company has an $8.5 million line of credit that matures on
October 1, 2003. Advances under this revolving line of credit are
limited to 75% of eligible accounts receivable. The interest rate is
based upon certain financial covenants and may range from prime to
prime plus .5%. At March 31, 2003, the interest rate on this line of
credit was at prime (4.25%). The Company's accounts receivable,
property, and other assets collateralize advances under the agreement.
Borrowings up to $1 million are guaranteed by the Chief Executive
Officer and Chief Financial Officer of the Company. At March 31, 2003,
the outstanding borrowings on this line of credit were $7.7 million.
This line of credit is subject to termination upon various events
of default, including failure to remit timely payments of interest,
fees and principal, any adverse change in the business of the Company
or failure to meet certain financial covenants. Financial covenants
include: minimum net worth requirements, total debt service coverage
ratio, capital expenditure limitations, and prohibition of additional
indebtedness without prior authorization.
6. MINORITY INTEREST
Carolina Group ("Carolina") consists of Carolina National
Transportation, Inc., Gulf Line Transport, Inc., Five Star Transport,
Inc., and Friendly Transport, Inc., all majority owned subsidiaries of
the Company. The Company entered into an agreement with certain key
employees of Carolina in which these employees will earn up to a 40%
ownership interest in Carolina over a three year period, beginning in
the year following the year in which Carolina achieves positive
retained earnings, contingent upon certain restrictions, including
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
continued employment at Carolina. In 2001, Carolina achieved positive
retained earnings. As a result, the Company will incur total
compensation expense of $400,000 over the three-year vesting period.
These employees received 15% ownership in Carolina at December 31,
2002. The employees will receive an additional 15% at December 31,
2003, and an additional 10% at December 31, 2004. As a result of this
agreement, the Company incurred compensation expense of $37,500 for
both the three months ended March 31, 2003 and 2002. The Company also
recognized minority interest expense of $30,316 and $14,351 relating to
the employees' portion of Carolina's net income for the three months
ended March 31, 2003 and 2002, respectively.
In March 2003, the Carolina Group declared a dividend. $117,543
due to the minority shareholders is included in accounts payable at
March 31, 2003.
7. LEGAL SETTLEMENT
CAM Regional Transport and Laurel Mountain Leasing, Inc. filed a
complaint against the Company in 1994 which alleges breach of contract,
claiming that Trailblazer Transportation, Inc., a subsidiary of the
Company which filed bankruptcy, failed to abide by a purchase agreement
entered into with Cam Regional Transport, Inc. and Laurel Mountain
Leasing, Inc. In addition, two individuals affiliated with these
companies claimed breach of employment contracts against the Company.
In May 2002, judgment was rendered on these claims in favor of the
plaintiff in the amount of $720,000. As a result, the Company
increased its accrual for this litigation to $700,000 by recording a
charge of $560,000 relating to this litigation for the year ended
December 31, 2002. $360,000 of this charge was recorded for the three
months ended March 31, 2003, based on the facts available at that time.
An additional $200,000 charge was recorded in the fourth quarter of
2002. The Company is currently appealing this judgment.
The Company is involved in other litigation in the normal course of
its business. Management intends to vigorously defend these cases. In
the opinion of management, the litigation now pending will not have a
material adverse effect on the consolidated financial position of the
Company.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Results of Operations
You should read the following discussion regarding the Company
along with the Company's consolidated financial statements and related
notes included in this quarterly report. The following discussion
contains forward-looking statements that are subject to risks,
uncertainties and assumptions. The Company's actual results,
performance and achievements in 2003 and beyond may differ materially
from those expressed in, or implied by these forward-looking
statements.
The financial statements and related notes contained elsewhere in
this Form 10-Q as of and for the three months ended March 31, 2003 and
2002 and in the Company's Form 10-K for its fiscal year ended December
31, 2002, are essential to an understanding of the comparisons and are
incorporated by reference into the discussion that follows.
Three months ended March 31, 2003 Compared to the three months ended
March 31, 2002
The Company's operating revenues increased to $28.6 million for the
three months ended March 31, 2003 from $20.9 million for the same
period in 2002. This is an increase of 36.4%. This increase is
attributable to the continued growth of Patriot Logistics, Inc. (f/k/a
Keystone Intermodal, Inc.) and Keystone Lines, Inc. and the opening of
Harbor Bridge Transportation. The growth of these subsidiaries is
primarily attributable to the addition of new terminals.
Purchased transportation represents the amount an independent
contractor is paid to haul freight and is primarily based on a
contractually agreed-upon percentage of revenue generated by the haul
for truck capacity provided by independent contractors. Purchased
transportation is the largest component of operating expenses.
Purchased transportation and commission expense increase or decrease in
proportion to the revenue generated through independent contractors.
Purchased transportation decreased slightly to 74.3% of revenue for the
three months ended March 31, 2003 from 74.8% for the three months ended
March 31, 2002. The slight decrease is partially offset by the slight
increase in commissions. Many agents negotiate a combined percentage
payable for purchased transportation and commission. The mix between
the amounts of purchased transportation paid versus commissions paid may
vary slightly based on agent negotiations with independent owner
operators. However, in total, commissions and purchased transportation
would typically be expected to remain relatively consistent as a
percentage of revenues.
Commissions to agents and brokers are primarily based on
contractually agreed-upon percentages of revenue. Commissions remained
relatively consistent at 9.8% of revenue for the three months ended
March 31, 2003 from 9.6% of revenue for the three months ended March
31, 2002. As previously described, the slight increase of 0.2% of
revenue is partially offset by the decrease in purchased transportation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION (continued)
Insurance and claims increased to 3.9% of revenue for the three
months ended March 31, 2003 from 3.7% of revenue for the three months
ended March 31, 2002. A majority of the insurance and claims expense
is based on a percentage of revenue and, as a result, will increase or
decrease on a consolidated basis with the Company's revenue. Potential
liability associated with accidents in the trucking industry is severe
and occurrences are unpredictable. A material increase in the frequency
or severity of accidents or the unfavorable development of existing
claims could adversely affect the Company's operating income.
The increase of 0.2% of revenue can be attributed to the increase
of certain operations' liability and cargo insurance rates due to
adverse loss experience and the continued increase of insurance rates
in today's economy.
Salaries, wages, and fringe benefits were 5.4% of revenue for the
three months ended March 31, 2003 compared to 4.9% of revenue for the
three months ended March 31, 2002. This increase of 0.5% can primarily
be attributed to three newer divisions that utilize employees who are
paid a salary instead of agents who would be paid commissions. In
addition, the Company hired three agent recruiters in the first quarter
2003.
Other operating expenses as a percentage of revenue remained
consistent at 4.7% for both the three months ended March 31, 2003 and
2002. While not all operating expenses are directly variable with
revenues, several components of operating expenses such as bad debt
expense are directly impacted by the increased revenue. In addition,
the Company has expanded by adding new terminals and operations
resulting in the addition of new locations which in turn leads to an
increase in operating expenses such as rent. Other operating expenses
increased $0.3 million from $1.0 million in 2002 to $1.3 million in
2003. The increase is primarily attributable to (1) a $0.15 million
increase due to new operations which began in the fourth quarter of
2002 and (2) an overall increase in operating expenses at other
locations as volume continued to grow during 2003.
The following table set forth the percentage relationships of expense
items to revenue for the three months ended March 31, 2003 and March
31, 2002:
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION (continued)
2003 2002
------ ------
Revenue 100.0% 100.0%
Operating expenses:
Purchased transportation 74.3 74.8
Commissions 9.8 9.6
Insurance and claims 3.9 3.7
Salaries, wages and fringe benefits 5.4 4.9
Other operating expenses 4.7 4.7
------- ------
Total operating expenses 98.1 97.7
------ ------
Operating income 1.9 2.3
Based on the changes in revenue and expenses described above,
operating income increased by $54,129. Operating income for the three
months ended March 31, 2003 was $527,359 compared to $473,230 for the
three months ended March 31, 2002.
Interest expense decreased by $5,750 in 2003. Interest expense for
the three months ended March 31, 2003 was $129,717 compared to interest
expense of $135,467 for the three months ended March 31, 2002. This
decrease in interest expense is attributable to a continued decrease in
the prime rate. The rate on the Company's loan with Firstar is
currently based on certain financial covenants and may range from prime
to prime plus .5%. At March 31, 2003, the interest rate charged on
the loan with Firstar was prime (4.25%).
Non-operating (income) expense, exclusive of interest expense, was
($119,750) for the three months ended March 31, 2003 versus $315,230
for the three months ended March 31, 2002. This is an increase of
($434,980) and is primarily attributable to a decrease in legal
settlement expense. For the three months ended March 31, 2002, the
Company incurred a $360,000 expense relating to a court ruling on
litigation against the Company.
Minority interest expense of $30,316 and $14,353 for the three
months ended March 31, 2003 and 2002, respectively, is the result of an
agreement with certain key employees of Carolina National, a wholly
owned subsidiary of the Company. Under the terms of this agreement,
these employees will earn up to a 40% ownership interest in Carolina
over a three year period (see note 6 to condensed financial
statements).
As a result of the factors described above, net income for the
three months ended March 31, 2003 was $487,076 compared with $8,180 for
the same period in 2002.
Liquidity and Capital Resources
Net cash provided by (used in) operating activities decreased
($1.1) million from $0.05 million for the three months ended March 31,
2002 to ($1.05) million for the three months ended March 31, 2003.
Although the Company continues to operate profitably, a significant
amount of the profits are utilized to fund the Company's continued
growth. As a result of the continued growth of existing terminals and
new operations in the second half of 2002, accounts receivable
increased approximately $1.8 million in 2003. This increase in accounts
receivable was only partially offset by a corresponding increase in
accounts payable of $0.6 million. This is due to the fact that the
Company's customers typically pay 30 - 45 days from the invoice date.
However, payment terms to many agents and independent owner operators
are typically less than 15 days. The Company also has $700,000 accrued
relating to a court ruling against the Company on certain litigation.
While the Company intends to appeal this verdict, if the appeal is
unsuccessful, the funding of this amount will result in a reduction in
future cash provided by operations.
Net cash used in investing activities was $70,122 (consisting
primarily of purchases of office equipment) for the three months ended
March 31, 2003 compared to net cash used in investing activities of
$12,127 for the three months ended March 31, 2002.
Net cash provided by (used in) financing activities increased $1.4
million from ($0.3) million for the three months ended March 31, 2002
to $1.1 million for the three months ended March 31, 2003. The cash
provided by financing activities for 2003 is primarily due to a net
increase in the Company's line of credit of $1.6 million. The Company
depends on its line of credit to fund its growth. Partially offsetting
the cash provided by the line of credit borrowings were payments of
subordinated shareholder debt (with bank approval) of $270,000 and
principal payments on other long-term debt of $181,342.
The Company has an $8.5 million revolving line of credit with
borrowings limited to 75% of eligible accounts receivable. Based on
the Company's eligible accounts receivable at March 31, 2003, unused
availability under the line of credit at March 31, 2003 was $807,382.
The Company is dependent upon the funds available under its loan
agreement for liquidity. The facility generally permits the Company to
borrow up to 75% of its receivables. As a result, as long as the
Company can fund the remaining 25% from funds generated internally from
operations or otherwise, this facility provides the Company sufficient
liquidity to meet its needs on an ongoing basis. However, as the
Company continues to grow, it will need to expand the facility in order
to fund its growth.
The Company also has two additional equipment loans used to fund
equipment purchases. The outstanding balances on these loans bear
interest at the prime rate in effect plus 1% per annum (5.25% at March
31, 2003). The principal balance of these equipment loans is payable
based on a five year amortization of the outstanding balances with any
remaining unpaid balance due in October 2003. The outstanding balances
under these equipment loans totaled $606,756 at March 31, 2003 and are
collateralized by the related equipment funded by these borrowings. The
Company intends to and believes it will be successful in extending the
maturity date of these loans into fiscal 2004.
The line of credit and equipment loans are subject to termination
upon various events of default, including failure to remit timely
payments of interest, fees and principal, any adverse change in the
business of the Company or failure to meet certain financial covenants.
Financial covenants include: minimum net worth requirements, total debt
service coverage ratio, capital expenditure limitations, and
prohibition of additional indebtedness without prior authorization.
The Company also has approximately $3.1 million of debt payable to
the Chief Executive Officer and Chief Financial Officer or entities
under their control. This debt is subordinate to the bank and is
currently being repaid at a rate of $240,000 per year. Currently, this
shareholder debt matures in October 2, 2004. It is anticipated that the
maturity date of this debt will eventually be extended beyond 2004.
Critical Accounting Policies and Estimates
Our financial statements reflect the selection and application of
accounting policies, which require management to make significant
estimates and assumptions. We believe that the following are some of
the more critical judgment areas in the application of our accounting
policies that currently affect our financial condition and results of
operations.
Preparation of the consolidated financial statements in accordance
with accounting principles generally accepted in the United States
requires management to make estimates and assumptions affecting the
reported amounts of assets, liabilities, revenues, and expenses and
related contingent liabilities. On an on-going basis, the Company
evaluates its estimates, including those related to revenues, bad
debts, income taxes and contingencies and litigation. The Company bases
its estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions or
conditions.
We record an allowance for doubtful accounts based on (1)
specifically identified amounts that we believe to be uncollectible and
(2) an additional allowance based on certain percentages of our aged
receivables, which are determined based on historical experience and
our assessment of the general financial conditions affecting our
customer base. If actual collections experience changes, revisions to
our allowance may be required. After all attempts to collect a
receivable have failed, the receivable is written off against the
allowance. In addition, we review the components of other receivables,
consisting primarily of advances to drivers and agents, and write off
specifically identified amounts that we believe to be uncollectible.
Revenue for freight is recognized upon delivery. Amounts payable
for purchased transportation, commissions and insurance expense are
accrued when the related revenue is recognized.
We are involved in various litigation in the normal course of
business. Management evaluates the likelihood of a potential loss from
various litigation on a quarterly basis. When it is probable that a
loss will occur from litigation and the amount of the loss can be
reasonably estimated, the loss is recognized in the Company's financial
statements. If a potential loss is not both reasonably possible and
cannot be reasonably estimated, but there is at least a reasonable
possibility that a loss may be incurred, the litigation is not recorded
in the Company's financial statements but this litigation is disclosed
in the footnotes of the financial statements.
The Company carries insurance for public liability and property
damage, and cargo loss and damage through various programs. A
significant portion of the Company's liability insurance is obtained
from American Inter-Fidelity Exchange, a related party. The Company's
insurance liabilities are based upon the best information currently
available and are subject to revision in future periods as additional
information becomes available. Management believes it has adequately
provided for insurance claims.
Deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial
statement carrying amounts and the tax basis of existing assets and
liabilities. At December 31, 2002, the Company's deferred tax asset
consists principally of net operating loss carryforwards. The Company's
deferred tax asset has been reduced by a valuation allowance to the
extent such benefits are not expected to be fully utilized. The Company
has based its estimate of the future utilization of the net operating
loss upon its estimate of future taxable income. If actual future
taxable income differs, revisions to the valuation allowance and net
deferred tax asset may be required.
Quantitative and Qualitative Disclosures About Market Risk
Inflation
Changes in freight rates charged by the Company to its customers
are generally reflected in the cost of purchased transportation and
commissions paid by the Company to independent contractors and agents,
respectively. Therefore, management believes that future-operating
results of the Company will be affected primarily by changes in volume
of business. However, due to the highly competitive nature of the
truckload motor carrier industry, it is possible that future freight
rates and cost of purchased transportation may fluctuate, affecting the
Company's profitability.
Certain Relationships and Related Transactions.
The Company leases office space for its headquarters in Gary,
Indiana, for $3,000 monthly, from Michael E. Kibler, the president and
Chief Executive Officer and a director of the Company, and Harold E.
Antonson, the Chief Financial Officer, treasurer and a director of the
Company. Messrs. Kibler and Antonson own the property as joint tenants.
One of the Company's subsidiaries provides safety, management, and
accounting services to companies controlled by the President and Chief
Financial Officer of the Company. These services are priced to cover
the cost of the employees providing the services.
The Company has approximately $25,500 of other accounts receivable
due from entities under common control as of March 31, 2003.
One of the Company's insurance providers, American Inter-Fidelity
Exchange (AIFE), is managed by a Director of the Company and the
Company has a deposit with the provider.
The Company has long-term notes payable due to its Chief Executive
Officer, Chief Financial Officer, and August Investment Partnership, an
entity affiliated through common ownership, totaling approximately $3.1
million.
In addition, the Company has approximately $1 million of accrued
interest due under these notes payable.
The Company conducts business with freight companies under the
control of a director of the Company. Accounts receivable at March 31,
2003 includes $413,000 due from or guaranteed by these companies.
PART II. OTHER INFORMATION
Item 1. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Based on
their evaluations as of a date within 90 days of the filing
of this report, our principal executive officer and principal financial
officer, with the participation of our full management team, have
concluded that our disclosure controls and procedures (as defined in
Rules 13(a)-14(c) and 15(d)-14(c) under the Securities Exchange Act)
are effective to ensure that information required to be disclosed by
us in reports that we file or submit under the Securities Exchange
Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the
SEC.
(b) Changes in controls. There were no significant changes in
our internal controls or in other factors that could
significantly affect these internal controls subsequent to
the date of their most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Item 6 Exhibits and Reports on Form 8-K
(a)(1) List of Exhibits
The following exhibits, numbered in accordance with Item 601 of Regulation
S-K, are filed as part of this report:
Exhibit 1.1 Seventh Amendment of Loan and Security Agreement with
FIRSTAR and Carolina National Transportation Inc., Keystone
Lines, Gulfline Transport Inc., Five Star Transport, Inc., Cam
Transport, Inc., and US1 Industries, Inc. (by reference to the
Company's Form 10-Q for the quarterly period ended March 31, 2003
filed on May 14, 2003).
(b)(1) Reports on Form 8-K
No Reports on Form 8-K have been filed during the quarter.
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 there unto duly authorized.
US 1 Industries, Inc.
Michael E. Kibler
President
Harold E. Antonson
Chief Financial Officer
May 14, 2003
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Michael Kibler, certify that:
1. I have reviewed this quarterly report on Form 10-Q of US 1
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: 05/14/2003 /s/Michael Kibler
Michael Kibler
Chief Executive Officer
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Harold Antonson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of US 1
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: 05/14/2003 /s/Harold Antonson
Harold Antonson
Chief Financial Officer
SEVENTH AMENDMENT TO LOAN AGREEMENT
This Seventh Amendment to Loan Agreement ("Amendment"), dated as of
March 21, 2003, is between CAROLINA NATIONAL TRANSPORTATION INC., an Indiana
corporation ("Carolina"); KEYSTONE LINES, a California corporation
("Keystone"); GULF LINE TRANSPORT INC., an Indiana corporation ("Gulf
Line"); FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five Star");
CAM TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an Indiana
corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana corporation
("Friendly"); TRANSPORT LEASING, INC., an Arkansas corporation ("Transport
Leasing"); TRANSPORT LOGISTICS, LLC, an Arkansas limited liability
Company ("Transport Logistics"); HARBOR BRIDGE INTERMODAL, INC., an Indiana
corporation ("Harbor"); PATRIOT LOGISTICS, INC., an Indiana corporation
("Patriot"); LIBERTY TRANSPORT, INC., an Indiana corporation ("Liberty");
and KEYSTONE LINES CORPORATION, an Indiana corporation ("Keystone-
Indiana"), (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty,
and Keystone-Indiana are hereinafter collectively referred to as "Borrowers"
or individually as a "Borrower"); US 1 INDUSTRIES, INC., an Indiana
corporation ("Guarantor"); and U.S. BANK NATIONAL ASSOCIATION, a national
banking association, formerly known as FIRSTAR BANK N.A. ("Lender").
Capitalized terms not defined herein have the meanings ascribed to them in
the Loan Agreement, as that term is defined herein.
PRELIMINARY STATEMENT:
All Borrowers except Patriot, Liberty, and Keystone-Indiana have
previously entered into a Loan Agreement with Lender dated as of April 18,
2000, and amended as of June 9, 2000, December 7, 2000, March 1, 2001,
October 15, 2001, May 1, 2002, and August 1, 2002 (the April 18, 2000
Loan Agreement, as so amended, is the "Existing Loan Agreement," and, as
amended by this Amendment, constitutes the "Loan Agreement").
Lender has agreed to amend the Existing Loan Agreement to do the
following: (i) consent to the joinder of Patriot, Liberty, and Keystone-
Indiana as Borrowers, (ii) consent to the merger of Keystone into
Keystone-Indiana, and (iii) provide for the issuance of standby letters of
credit under the Revolving Loan.
NOW, THEREFORE, it is hereby agreed as follows:
1. Guarantor hereby designates each of Patriot, Liberty, and Keystone-
Indiana as an entity to be included as a Borrower under the Loan Agreement;
Lender hereby consents to the addition of each of the foregoing as an
additional Borrower.
2. Each of Patriot, Liberty and Keystone-Indiana hereby agrees to all of
the terms and conditions set forth in the Loan Agreement, assumes the
obligations of Borrowers thereunder jointly and severally with the other
Borrowers, agrees to be bound by all of the terms, covenants, agreements,
and conditions thereof, as the same apply to the other Borrowers, and agrees
to execute such documents as Lender may reasonably require in connection with
the assumption of the foregoing undertakings.
3. Lender hereby consents to the merger of Keystone into Keystone-Indiana.
4. Each of Borrowers and Guarantor represent and warrant that no Event of
Default or Incipient Default exists or will occur as a result of the execution
of and performance under this Seventh Amendment to Loan Agreement and that
each of their representations and warranties set forth in the Loan Instruments
is true and correct as of the date hereof, except to the extent that any such
representations or warranties speak exclusively to an earlier date.
5. The parties hereby agree to amend and restate in their entirety
the following definitions in Section 1.1 of the Loan Agreement as
follows:
"Advance: any advance of the Revolving Loan (including, without
limitation, the payment of any sum pursuant to a Standby Letter of
Credit to the beneficiary named therein), the Equipment Loan, or the
Guidance Loan."
"Borrowers: 'Borrowers' means Carolina National Transportation
Inc., an Indiana corporation; Keystone Lines, a California corporation;
Gulf Line Transport Inc., an Indiana corporation; Five Star Transport,
Inc., an Indiana corporation; Cam Transport, Inc., an Indiana corporation;
Unity Logistic Services Inc., an Indiana corporation; ERX, Inc., an
Indiana corporation; Friendly Transport, Inc., an Indiana corporation;
Transport Leasing, Inc., an Arkansas corporation; Transport Logistics,
LLC, an Arkansas limited liability company; Harbor Bridge Intermodal,
Inc., an Indiana corporation; Patriot Logistics, Inc., an Indiana
corporation; Liberty Transport, Inc., an Indiana corporation; and
Keystone Lines Corporation, an Indiana corporation, and such other
entities owned or controlled by any of the foregoing or US 1 Industries,
Inc., an Indiana corporation, which elect in writing to be designated as
a Borrower hereunder in writing and on terms satisfactory to Lender and to
which Lender elects to extend credit hereunder.";
"Equipment Loan Note: the promissory note executed by Borrowers
payable to the order of Lender in the amount of the Equipment Loan
Commitment, dated as of December 7, 2000, as amended and restated as of
October 15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003";
"Guidance Loan Note: the promissory note executed by Borrowers
payable to the order of Lender in the amount of the Guidance Loan
Commitment, dated as of October 15, 2001, as amended and restated as of
May 1, 2002, August 1, 2002, and March 21, 2003";
"Loan Instruments:
(i) Loan Agreement;
(ii) Revolving Loan Note;
(iii) Equipment Loan Note;
(iv) Guidance Loan Note;
(v) Corporate Guaranty;
(vi) Security Instruments;
(vii) Closing Certificate;
(viii) Subordination Agreements;
(ix) Personal Guaranties
(x) Reaffirmations of Personal Guaranties;
(xi) Corporate Guaranty
(xii) Reaffirmation of Corporate Guaranty;
(xiii) Standby Letter of Credit;
(xiv) Application and Agreement for Standby Letter of Credit;
(xv) Continuing Reimbursement Agreement for Standby Letters of
Credit; and
(XVI) such other instruments and documents as Lender may
reasonably require in connection with the transactions contemplated
by this Loan Agreement;as the same may be amended and/or restated from
time to time, including without limitation as amended by or pursuant to
that certain Loan Agreement dated April, 18, 2000, by and between the
parties hereto, as amended by that certain Amendment to Loan Agreement
dated June 9, 2000, that certain Second Amendment to Loan Agreement
dated December 7, 2000, that certain Third Amendment to Loan Agreement
dated March 1, 2001, that certain Fourth Amendment to Loan Agreement
dated October 15, 2001, that certain Fifth Amendment to Loan Agreement
dated May 1, 2002, that certain Sixth Amendment to Loan Agreement
dated August 1, 2002, and that certain Seventh Amendment to Loan
Agreement dated March 21, 2003"; and
"Revolving Loan Note: the promissory note executed by
Borrowers payable to the order of Lender in the amount of the Revolving
Loan Commitment, dated as of April 18, 2000, and as further amended and
Restated as of June 9, 2000, December 7, 2000, October 15, 2001, May 1,
2002, August 1, 2002, and March 21, 2003".
6. The parties hereby agree to amend Section 1.1 of the Loan
Agreement to add the following definition:
"Standby Letters of Credit: standby letters of credit issued by
Lender at the request of Borrower, from time to time, in a form
acceptable to Lender, in an aggregate face amount of up to the lesser
of $850,000 or the available portion of the Revolving Loan Commitment,
to be issued in favor of the beneficiary named therein, on the terms
and conditions set forth in the Loan Agreement."
7. The parties hereto agree to amend and restate Section 2.1.1 of
the Loan Agreement in its entirety as follows:
(a) Advances of the Revolving Loan and Issuance of Standby Letters
of Credit. Upon the terms and subject to the conditions herein set
forth, Lender agrees to make Advances of the Revolving Loan to Borrower
from time to time from the Closing Date to the Revolving Loan Maturity
Date in an aggregate amount outstanding at any one time not in excess
of the Revolving Loan Commitment then in effect. Lender agrees to issue
Standby Letters of Credit under the Revolving Loan upon satisfaction of
the conditions set forth in subsection 2.1.1(b) below. The issuance of
a Standby Letter of Credit shall immediately reduce the amount of the
Revolving Loan Commitment available for Advances by the face amount of
that Standby Letter of Credit. A draw against a Standby Letter of
Credit shall constitute an Advance of the Revolving Loan, and any
Indebtedness with respect to a Standby Letter of Credit or the
reimbursement obligations pursuant thereto shall be evidenced by the
Note and secured by the Security Agreement and the other Loan
Documents;
(b) Conditions to Issuance of a Standby Letter of
Credit. As preconditions to the issuance of a Standby Letter of
Credit, Lender shall require the following: (i)The conditions
attendant to an Advance of the Revolving Loan shall be satisfied;
and(ii)One or more Borrowers shall execute and deliver Lender's
Application and Agreement for Standby Letter of Credit and Lender's
Continuing Reimbursement Agreement for Standby Letters of Credit, on
the forms provided by and acceptable to Lender, as said documents may
be amended or replaced from time to time, together with such other
documentation as Lender may request in support thereof (collectively,
the "Letter of Credit Documents"), at least five (5) Business Days prior
to the proposed date of issuance of a Standby Letter of Credit. In the
event of any conflict between the terms of this Loan Agreement and the
Letter of Credit Documents, the former shall control; (c) Payments.
In determining whether to pay under a Standby Letter of Credit, Lender
shall not have any obligation to the Borrowers or Guarantor other than
to confirm that any documents required to be delivered under such
Standby Letter of Credit appear to have been delivered and appear to
comply on their face with the requirements of such Standby Letter of
Credit. Any action taken or omitted by Lender under or in connection
with any Standby Letter of Credit, if taken or omitted in the absence
of gross negligence and willful misconduct, shall not impose upon Lender
any liability to the Borrowers or Guarantor and shall not reduce or
impair Borrowers' reimbursement obligations thereunder;
(d) Term and Renewals. A Standby Letter of Credit may be issued
for a term of up to one year, and, if Lender thereafter agrees, may be
renewed for such additional periods as Lender may agree to, provided
however, that the expiration date of a Standby Letter of Credit may
not extend beyond the Revolving Loan Maturity Date;
(e) Fees. A letter of credit fee in the amount of two percent
(2%) of the face value of each Standby Letter of Credit issued hereunder
shall be paid to Lender upon the date of issuance, and upon each
anniversary thereof, for so long as that Standby Letter of Credit remains
outstanding;
(f) Obligations Absolute. The Borrowers' obligations to repay any
Indebtedness arising from a draw on a Standby Letter of Credit shall be
shall be absolute and unconditional, irrespective of any setoff,
counterclaim or defense to payment which any Borrower may have or have
had against Lender that Lender shall not be responsible for, and the
Borrowers' obligation to reimburse sums paid under a Standby Letter of
Credit shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any respect invalid or
fraudulent, or any dispute between or among any Borrower, the
beneficiaries of the Standby Letter of Credit, and/or Lender.
Lender shall not be liable for any error, omission, interruption or
Delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with a Standby Letter of Credit.
The Borrowers agree that any action taken or omitted by Lender under or
in connection with a Standby Letter of Credit and the related drafts
and documents, if done without gross negligence or willful misconduct,
shall be binding upon the Borrowers and shall incur any liability to
the Borrowers on the part of Lender;
(g) Actions of Lender. The Lender shall be entitled to rely, and
Shall be fully protected in relying, upon a Standby Letter of Credit
and any draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine
and correct and to have been signed, sent or made by the proper person
or persons, and upon advice and statements of legal counsel, independent
accountants and other advisors selected by the Lender;
(h) INDEMNIFICATION. THE BORROWERS, JOINTLY AND SEVERALLY, SHALL
INDEMNIFY AND HOLD HARMLESS LENDER AND ITS DIRECTORS, OFFICERS, AGENTS
AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES
LIABILITIES, COSTS OR EXPENSES WHICH LENDER MAY INCUR (OR WHICH MAY BE
CLAIMED AGAINST LENDER BY ANY PERSON WHATSOEVER) BY REASON OF OR IN
CONNECTION WITH THE ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF OR
PAYMENT OR FAILURE TO PAY UNDER A STANDBY LETTER OF CREDIT OR ANY ACTUAL
OR PROPOSED USE OF THE STANDBY LETTER OF CREDIT, provided that the Borrowers
shall not be required to indemnify Lender for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused
by, (y) the willful misconduct or gross negligence of Lender in determining
whether a request presented under a Standby Letter of Credit complied with
the terms thereof, or (z) Lender's failure to pay under a Standby Letter
of Credit after the presentation to it of a request strictly complying
with the terms and conditions thereof. Nothing in this Section 2.1.1 is
intended to limit the rights or obligations of the Borrowers under any
other provision of this Loan Agreement;
(i) Excessive Borrowers' Obligations. If at any time, however, Borrowers'
Obligations exceed the Revolving Loan Commitment then in effect, all of such
excess nevertheless shall constitute a part of Borrowers' Obligations and
shall be secured by the Security Interests. Notwithstanding the references
in this Agreement and the Loan Instruments to the various Borrowers as a
singular Borrower, each of them acknowledges and agrees that they are and
shall remain jointly and severally liable for all of Borrowers'
Obligations."
8. The parties hereto agree to amend and restate Section 2.2 of the
Loan Agreement in its entirety, as follows:
"The proceeds of the Revolving Loan shall be used, (i) to refinance
Borrowers' and Guarantor's secured loan obligations to Finova, (ii) for
Borrowers' working capital, (iii) to pay related transaction costs, and
(iv) as to amounts which Lender becomes obligated to pay under Standby
Letters of Credit, to secure the obligations of Borrower to third parties
named as beneficiaries thereunder"
9. The parties hereto agree to add a new Section 5.22 to the Loan
Agreement, as follows:
"5.22 Solvency. Upon the execution of this Amendment, and
upon the date of any subsequent amendment or modification of the Loan
Agreement, the following are true and correct:
5.22.1 The fair saleable value of the assets of each of the
Borrowers exceed the amount that will be required to be paid on,
or in respect of, the Borrowers' Obligations (including, without
limitation, pending or overtly threatened litigation in amounts in
excess of effective insurance coverage and all other contingent
liabilities) as they mature.
5.22.2 The assets of each Borrower do not constitute
unreasonably small capital for it to carry out its respective business
as now conducted and as proposed to be conducted including its respective
capital needs, taking into account the particular capital requirements of
the business conducted by it, and projected capital requirements and
capital availability thereof.
5.22.3 No Borrower intends to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and
amounts of cash to be received by any Borrower, as the case may be, and
of amounts to be payable on or in respect of debt of any Borrower, as
the case may be).
10. Simultaneously with the execution hereof, Borrowers and Guarantor
shall deliver to Lender the following, duly executed by the parties
thereto other than Lender:
i) The Revolving Loan Note, dated as of March 21, 2003, in the form
attached hereto as Exhibit "A" (the "Revolving Loan Note");
ii) The Equipment Loan Note, dated as of March 21, 2003, in the form
attached hereto as Exhibit "B" (the "Equipment Loan Note");
iii) The Guidance Loan Note, dated as of March 21, 2003, in the form
attached hereto as Exhibit "C" (the "Guidance Loan Note");
iv) Reaffirmations of Personal Guaranties of Michael Kibler and Harold
Antonson, in the forms attached hereto as Exhibit "D-1" and "D-2";
v) Reaffirmation of Corporate Guaranty of Guarantor, in the form attached
hereto as Exhibit "E";
vi) Security Agreements executed by Lender and those Borrowers not
party to the Loan Agreement before the execution of this Amendment, in the
form attached hereto as Exhibit "F".
vii) Acknowledgements of the holders of Subordinated Indebtedness of,
1) the execution of the Seventh Amendment to Loan Agreement; 2) the
continued effectiveness of those certain Subordination Agreements by and
between Lender and, a) Harold Antonson and Michael Kibler, dated as of
April 18, 2000, as amended pursuant to that certain Amendment to
Subordination Agreement dated as of August 1, 2002, and b) August Investment
Partnership, as amended and restated pursuant to that certain Amended and
Restated Subordination Agreement dated as of August 1, 2002 (collectively,
as so amended, the "Subordination Agreements"); and 3) the inclusion of
any indebtedness incurred under the Loan Agreement by any Borrower,
including Patriot, Liberty, and Keystone-Indiana, within the term "Senior
Debt," as defined in the Subordination Agreements, in the forms attached
hereto as Exhibit "G-1" and "G-2";
viii) Certified Resolutions of the Boards of Directors or the Managers,
as the case may be, of each of Patriot, Liberty and Keystone-Indiana and
of the Guarantor authorizing the execution and delivery and performance of
this Amendment and other documents referred to herein; and
ix) Certified Articles of Incorporation of Patriot, Liberty, Keystone-Indiana,
and, when reincorporated under the laws of Indiana, Keystone;
x) Certified Articles of Merger of Keystone and Keystone-Indiana;
xi) Evidence of good standing for Guarantor and each Borrower; and
xii) An opinion letter from Borrowers' counsel, Troutman Sanders, L.L.P.,
in a form reasonably satisfactory to Lender's counsel regarding the
Borrowers' and the Guarantor's authorization, execution and delivery of
this Amendment and the documents referenced herein, and the incorporation
or organization, as the case may be, and good standing, of each Borrower
and of the Guarantor.
11. All references therein to the "Loan Agreement" and other terms defined
in the Loan Agreement shall be deemed to take account of the Loan Agreement,
as amended by this Amendment.
12. Lender and two creditors of Guarantor whose claims for repayment are
junior to those of Lender, Harold Antonson ("Antonson") and Michael Kibler
("Kibler"), are parties to that certain Subordination Agreement dated as of
April 1, 2000, as amended by that certain Amendment to Subordination
Agreement dated as of August 1, 2002, (as so amended, the "Subordination
Documents"). Under the terms of the Subordination Documents, Antonson and
Kibler may accept payments of interest only (and certain limited payments
of principal towards certain loans) with regards to the Subordinated Debt,
for so long as there remains any Senior Debt, outstanding. During the
fourth quarter of 2002, Guarantor accepted a payment of $300,000 from
Eastern Refrigerated, Inc., a subsidiary of Guarantor, $250,000 of which
Guarantor intends to pay to Antonson and Kibler, as an unscheduled payment
of principal in connection with certain Subordinated Debt. Notwithstanding
the terms of the Subordination Documents, Lender hereby waives the Event
of Default arising out of, and consents to, the foregoing unscheduled payment
of principal, without waiving its right strictly to enforce the terms of the
Loan Documents in the future.
13. The parties hereto agree that the payment from Eastern Refrigerated,
Inc. to Guarantor, referred to in paragraph 12 hereof, shall not constitute
Net Income for the purposes of the Loan Agreement.
14. The Borrowers, other than Patriot, Liberty, and Keystone-Indiana, and
Guarantor hereby acknowledge that they have previously entered into and
executed Security Agreements dated as of April 18, 2000 (in the case of
Carolina, Keystone, Gulf Line, Five Star, and Guarantor), as of December 7,
2000 (in the case of Cam), as of October 15, 2001 (in the case of Unity,
ERX, Friendly, Transport Leasing, and Transport Logistics), and as of May
1, 2002, (in the case of Harbor), all of which have been acknowledged
and reaffirmed, most recently as of August 1, 2002 (collectively, the
"Existing Security Agreements"), with Lender, by which certain assets of
the Borrowers and the Guarantor were pledged to secure Borrowers'
Obligations (as that term is defined in the Loan Agreement). The
Borrowers and the Guarantor do hereby acknowledge that Borrowers'
Obligations, as that term is used in the Loan Agreement and the Existing
Security Agreements, means Borrowers' Obligations under the Loan
Agreement, and includes, without limitation, the obligation to repay as and
when due any and all amounts advanced by Lender to the Borrowers (including
Borrowers other than the existing Borrowers), or any of them, together with
interest thereon, as provided in the Revolving Loan Note in the face amount
of $8,500,000, dated April 18, 2000, as amended and restated as of June 12,
2000, December 7, 2000, October 15, 2001, May 1, 2002, August 1, 2002, and
March 21, 2003; the Equipment Loan Note in the face amount of $1,000,000,
dated December 7, 2000, as amended and restated as of March 1, October 15,
2001, May 1, 2002, and March 21, 2003; and the Guidance Loan in the face
amount of $300,000, dated as of October 15, 2001, as amended and restated
as of May 1, 2002 and March 21, 2003, all made by the Borrowers and payable
to Lender, and do hereby reaffirm their obligations thereunder.
15. Borrowers shall reimburse Lender for all of Lender's out-of-pocket
costs related to the transaction contemplated herein, including without
limitation public record searches ordered by Lender or its counsel and legal
fees incurred by Lender in connection with the preparation of documents, due
diligence review or closing regarding the transaction contemplated herein or
the enforcement of the terms hereof or of any of the Loan Instruments.
16. From time to time, Borrowers and Guarantor shall execute and deliver
to Lender such additional documents as Lender reasonably may require to
carry out the purposes of this Amendment and the Loan Instruments and to
protect Lender's rights hereunder and thereunder, and shall not take any
action inconsistent with the purposes of the Loan Instruments.
17. Except as expressly amended hereby, the terms and conditions of the
Existing Loan Agreement shall remain in full force and effect.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the undersigned Borrowers, Lender, and Guarantor have
signed this Amendment as of the date first above written.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ___________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
US 1 INDUSTRIES, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT "A"
REVOLVING LOAN NOTE
$8,500,000.00 Dated as of April 18, 2000
Chicago, Illinois Amended and Restated as of June 12, 2000
Further Amended and Restated as of December 7, 2000
Further Amended and Restated as of October 15, 2001
Further Amended and Restated as of May 1, 2002
Further Amended and Restated as of August 1, 2002
Further Amended and Restated as of March 21, 2003
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL TRANSPORTATION
INC., an Indiana corporation ("Carolina"); KEYSTONE LINES, a California
corporation ("Keystone"); GULF LINE TRANSPORT INC., an Indiana corporation
("Gulf Line"); FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five
Star"); CAM TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an Indiana
corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana corporation
("Friendly"); TRANSPORT LEASING, INC., an Arkansas corporation ("Transport
Leasing"); TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics"); HARBOR BRIDGE INTERMODAL, INC. ("Harbor"); PATRIOT
LOGISTICS, INC., an Indiana corporation; LIBERTY TRANSPORT, INC., an
Indiana corporation; and KEYSTONE LINES CORPORATION, an Indiana corporation;
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as "Maker"),
hereby promise, jointly and severally, to pay to the order of U.S. BANK
NATIONAL ASSOCIATION, a national banking association, formerly known as
FIRSTAR BANK N.A. ("Lender"), the principal sum of EIGHT MILLION FIVE
HUNDRED THOUSAND AND NO/100ths DOLLARS ($8,500,000.00), or, if less, the
aggregate unpaid amount of the Revolving Loan made by Lender pursuant to and
in accordance with the applicable provisions of that certain Loan Agreement
dated April 18, 2000, and amended as of June 9, 2000, December 7, 2000,
October 15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003 (as the
same may be amended, modified, supplemented or restated from time to time,
the "Loan Agreement") between Maker, US 1 INDUSTRIES, INC., an Indiana
corporation ("Guarantor"), and Lender, at the office of Lender at 30 N.
Michigan Avenue, Chicago, Illinois 60602, or at such other place as the
holder hereof may appoint, plus interest thereon as set forth below.
This Revolving Loan Note is delivered by Maker to Lender pursuant
To and in accordance with the applicable provisions of the Loan Agreement.
All capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The Principal Balance of this Revolving Loan Note shall bear interest
at the per annum rate of interest set forth in subsection 2.3.1 of the Loan
Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Revolving Loan Note shall be paid in the manner set forth in Section 2.4
Of the Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual number of days during the period
for which interest is being charged.
During a Default Rate Period, the Principal Balance of this
Revolving Loan Note shall bear interest at the Default Rate, which
interest at such Default Rate shall be paid by Maker to Lender immediately
upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement, at
the election of the holder hereof, upon the occurrence of an Event of
Default, without further notice or demand, the Principal Balance of this
Revolving Loan Note, and all accrued and unpaid interest thereon, shall be
and become immediately due and payable in full. Failure to exercise this
option shall not constitute a waiver of the right to exercise the same in
the event of any subsequent Event of Default, and such failure shall not
be deemed to establish a custom or course of dealing or performance between
Maker and Lender.
This Revolving Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan Agreement
applicable thereto.
All funds received by Lender during the existence of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions therefore set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is
in receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on
any obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interest").
If any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Revolving Loan Note or any
other Loan Instrument, then in such event (i) Maker shall not be obligated
to pay such Excess Interest, (ii) any Excess Interest collected by Lender
shall be, (A) if any Event of Default exists and is continuing, applied to
the Principal Balance or to accrued and unpaid interest not in excess of
the maximum rate permitted by applicable law or (B) if no Event of Default
exists and is continuing, refunded to the payor thereof, (iii) the interest
rates provided for herein (collectively the "Stated Rate") shall be
automatically reduced to the maximum rate allowed from time to time under
applicable law (the "Maximum Rate") and this Revolving Loan Note and the
other Loan Instruments, as applicable, shall be deemed to have been, and
shall be, modified to reflect such reduction, and (iv) Maker shall not
have any action against Lender for any damages arising out of the payment
or collection of such Excess Interest; provided, however, that if at any
time thereafter the Stated Rate is less than the Maximum Rate, Maker shall,
to the extent permitted by law, continue to pay interest at the Maximum
Rate until such time as the total interest received by Lender is equal to
the total interest which Lender would have received had the Stated Rate
been (but for the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable shall be the Stated Rate unless and
until the Stated Rate again exceeds the Maximum Rate, in which event the
provisions contained in this paragraph again shall apply.
If any suit or action is instituted or attorneys are employed to
collect this Revolving Loan Note or any part thereof, Maker promises and
agrees, jointly and severally, to pay all costs of collection, including
all court costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand
And notice of protest, demand, dishonor and nonpayment of this Revolving
Loan Note, and expressly agrees that this Revolving Loan Note, or any
payment hereunder, may be extended from time to time before, at or after
maturity, without in any way affecting the liability of Maker hereunder or
any guarantor hereof.
This Revolving Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without
regard to the conflict of laws principles thereof. All funds disbursed
to or for the benefit of Maker will be deemed to have been disbursed in
Chicago, Illinois.
Maker hereby agrees that all actions or proceedings initiated by
any Maker and arising directly or indirectly out of this Revolving Loan
Note shall be litigated in either the Circuit Court of Cook County,
Illinois or in the United States District Court for the Northern District
of Illinois, or, if Lender initiates such action, in addition to the
foregoing courts, any court in which Lender shall initiate or to which
Lender shall remove such action, to the extent such court has
jurisdiction. Maker hereby expressly submits and consents in advance to
such jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that personal
service of the summons and complaint, or other process or papers issued
therein may be made by registered or certified mail addressed to Maker at
the address to which notices are to be sent pursuant to Section 11.1 of
the Loan Agreement. Maker waives any claim that either the Circuit Court
of Cook County, Illinois or the United States District Court for the
Northern District of Illinois is an inconvenient forum or an improper
forum based on lack of venue. To the extent provided by law, should any
Maker, after being so served, fail to appear or answer to any summons,
complaint, process or papers so served within the number of days
prescribed by law after the mailing thereof, Maker shall be deemed in
default and an order and/or judgment may be entered by the court against
Maker as demanded or prayed for in such summons, complaint, process or
papers. The exclusive choice of forum for Maker set forth in this
paragraph shall not be deemed to preclude the enforcement by Lender of
any judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Maker hereby waives the right to collaterally attack any such judgment
or action.
Maker acknowledges and agrees that any controversy which may arise
under this Revolving Loan Note would be based upon difficult and complex
issues and, therefore, Maker agrees that any lawsuit arising out of any
such controversy will be tried in a court of competent jurisdiction by
a judge sitting without a jury.
This Revolving Loan Note may not be changed or amended orally, but
only by an instrument in writing signed by the party against whom enforcement
of the change or amendment is sought.
This Revolving Loan Note shall be binding upon Maker and upon
Maker's successors and assigns, and shall inure to the benefit of the
successors and permitted assigns of Lender. If more than one party shall
sign this Revolving Loan Note as Maker, their obligations hereunder as Maker
shall be joint and several.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
placed thereon by any court or any Governmental Body, this Revolving Loan
Note shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are lawful
and valid shall remain in full force and effect.
Time for the performance of Maker's obligations under this Revolving
Loan Note is of the essence.
This Revolving Loan Note is entitled to the benefit of certain
collateral security, all as more fully set forth in the Loan Agreement.
This Revolving Loan Note amends, restates in its entirety, and
supercedes a Revolving Loan Note dated August 1, 2002, which amended and
restated a Revolving Loan Note dated May 1, 2002, in the principal face
amount of $7,000,000, which amended and restated a Revolving Loan Note
dated October 15, 2001, in the principal face amount of $7,000,000, which
amended and restated a Revolving Loan Note dated December 7, 2000, in the
principal face amount of $5,500,000, which amended and restated a
Revolving Loan Note dated June 12, 2000, in the principal face amount of
$3,500,000, Which amended and restated a Revolving Loan Note dated April
18, 2000, in the principal face amount of $2,000,000, made by Maker and
payable to Lender.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Revolving Loan Note has been executed and
delivered by Maker by its duly authorized officer on the date first set
forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
EXHIBIT "B"
EQUIPMENT LOAN NOTE
$1,000,000.00 Dated as of December 7, 2000
Chicago, Illinois Amended and Restated as of March 1, 2001
Further Amended and Restated as of October 15, 2001
Further Amended and Restated as of May 1, 2002
Further Amended and Restated as of March 21, 2003
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL TRANSPORTATION
INC., an Indiana corporation ("Carolina"); KEYSTONE LINES, a California
corporation ("Keystone"); GULF LINE TRANSPORT INC., an Indiana corporation
("Gulf Line"); FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five
Star"); CAM TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an Indiana
corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana corporation
("Friendly"); TRANSPORT LEASING, INC., an Arkansas corporation ("Transport
Leasing"); TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics"); HARBOR BRIDGE INTERMODAL, INC. ("Harbor"); PATRIOT
LOGISTICS, INC., an Indiana corporation; LIBERTY TRANSPORT, INC., an Indiana
corporation; and KEYSTONE LINES CORPORATION, an Indiana corporation;
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as "Maker"),
hereby promise, jointly and severally, to pay to the order of U.S. BANK
NATIONAL ASSOCIATION, a national banking association, formerly known as
FIRSTAR BANK N.A. ("Lender"), the principal sum of ONE MILLION AND NO/100ths
DOLLARS ($1,000,000.00), or, if less, the aggregate unpaid amount of the
Equipment Loan made by Lender pursuant to and in accordance with the
applicable provisions of that certain Loan Agreement dated April 18, 2000,
and amended as of June 12, 2000, December 7, 2000, March 1, 2001, October
15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003 (as the same may
be amended, modified, supplemented or restated from time to time, the
Loan Agreement") between Maker, US 1 INDUSTRIES, INC., an Indiana corporation
("Guarantor") and Lender, at the office of Lender at 30 N. Michigan Avenue,
Chicago, Illinois 60602, or at such other place as the holder hereof may
appoint, plus interest thereon as set forth below.
This Equipment Loan Note is delivered by Maker to Lender pursuant
to and in accordance with the applicable provisions of the Loan Agreement.
All capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The principal balance of this Equipment Loan Note ("Principal
Balance") shall bear interest at the per annum rate of interest set forth
in subsection 2.3 of the Loan Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Equipment Loan Note shall be paid in the manner set forth in Section 2.4
of the Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual number of days during the period
for which interest is being charged.
During a Default Rate Period, the Principal Balance shall bear
interest at the Default Rate, which interest at such Default Rate shall be
paid by Maker to Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement,
at the election of the holder hereof, upon the occurrence of an Event
of Default, without further notice or demand, the Principal Balance, and
all accrued and unpaid interest thereon, shall be and become immediately
due and payable in full. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same in the event of any
subsequent Event of Default, and such failure shall not be deemed to
establish a custom or course of dealing or performance between Maker and
Lender.
This Equipment Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan
Agreement applicable thereto.
All funds received by Lender during the existence of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions therefore set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is
in receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on
any obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interest").
If any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Equipment Loan Note or any
other Loan Instrument, then in such event (i) Maker shall not be obligated
to pay such Excess Interest, (ii) any Excess Interest collected by Lender
shall be, (A) if any Event of Default exists and is continuing, applied to
the Principal Balance or to accrued and unpaid interest not in excess of the
maximum rate permitted by applicable law or (B) if no Event of Default exists
and is continuing, refunded to the payor thereof, (iii) the interest rates
provided for herein (collectively the "Stated Rate") shall be automatically
reduced to the maximum rate allowed from time to time under applicable law
(the "Maximum Rate") and this Equipment Loan Note and the other Loan
instruments, as applicable, shall be deemed to have been, and shall be,
modified to reflect such reduction, and (iv) Maker shall not have any action
against Lender for any damages arising out of the payment or collection of
such Excess Interest; provided, however, that if at any time thereafter the
Stated Rate is less than the Maximum Rate, Maker shall, to the extent
permitted by law, continue to pay interest at the Maximum Rate until such
time as the total interest received by Lender is equal to the total interest
which Lender would have received had the Stated Rate been (but for the
operation of this provision) the interest rate payable. Thereafter, the
interest rate payable shall be the Stated Rate unless and until the Stated
Rate again exceeds the Maximum Rate, in which event the provisions contained
in this paragraph again shall apply.
If any suit or action is instituted or attorneys are employed to
collect this Equipment Loan Note or any part thereof, Maker promises and
agrees, jointly and severally, to pay all costs of collection, including all
court costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand and
notice of protest, demand, dishonor and nonpayment of this Equipment Loan
Note, and expressly agrees that this Equipment Loan Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Maker hereunder or any guarantor
hereof.
This Equipment Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without regard
to conflict of laws principles. All funds disbursed to or for the benefit
of Maker will be deemed to have been disbursed in Chicago, Illinois.
Maker hereby agrees that all actions or proceedings initiated by
any Maker and arising directly or indirectly out of this Equipment Loan
Note shall be litigated in either the Circuit Court of Cook County, Illinois
or in the United States District Court for the Northern District of Illinois,
or, if Lender initiates such action, in addition to the foregoing courts,
any court in which Lender shall initiate or to which Lender shall remove
such action, to the extent such court has jurisdiction. Maker hereby expressly
submits and consents in advance to such jurisdiction in any action or
proceeding commenced by Lender in or removed by Lender to any of such courts,
and hereby agrees that personal service of the summons and complaint, or
other process or papers issued therein may be made by registered or
certified mail addressed to Maker at the address to which notices are to be
sent pursuant to Section 11.1 of the Loan Agreement. Maker waives any claim
that either the Circuit Court of Cook County, Illinois or the United States
District Court for the Northern District of Illinois is an inconvenient forum
or an improper forum based on lack of venue. To the extent provided by law,
should any Maker, after being so served, fail to appear or answer to any
summons, complaint, process or papers so served within the number of days
prescribed by law after the mailing thereof, Maker shall be deemed in default
and an order and/or judgment may be entered by the court against Maker as
demanded or prayed for in such summons, complaint, process or papers. The
exclusive choice of forum for Maker set forth in this paragraph shall not be
deemed to preclude the enforcement by Lender of any judgment obtained in any
other forum or the taking by Lender of any action to enforce the same in any
other appropriate jurisdiction, and Maker hereby waives the right to
collaterally attack any such judgment or action.
Maker acknowledges and agrees that any controversy which may arise
under this Equipment Loan Note would be based upon difficult and complex
issues and, therefore, Maker agrees that any lawsuit arising out of any such
controversy will be tried in a court of competent jurisdiction by a judge
sitting without a jury.
This Equipment Loan Note may not be changed or amended orally, but
only by an instrument in writing signed by the party against whom enforcement
of the change or amendment is sought.
This Equipment Loan Note shall be binding upon Maker and upon
Maker's successors and assigns, and shall inure to the benefit of the
successors and permitted assigns of Lender. If more than one party shall sign
this Equipment Loan Note as Maker, their obligations hereunder as Maker shall
be joint and several.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
placed thereon by any court or any Governmental Body, this Equipment Loan
Note shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are lawful
and valid shall remain in full force and effect.
Time for the performance of Maker's obligations under this Equipment
Loan Note is of the essence.
This Equipment Loan Note is entitled to the benefit of certain
collateral security, all as more fully set forth in the Loan Agreement.
This Equipment Loan Note amends, restates in its entirety, and
supercedes an Equipment Loan Note dated as of December 7, 2000, in the
original face amount of $500,000 as amended and restated as of March 1, 2001,
in the principal face amount of $1,000,000, as amended and restated as of
October 15, 2001, and as further amended and restated as of May 1, 2002.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Equipment Loan Note has been executed and delivered
by Maker by its duly authorized officer on the date first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
EXHIBIT "C"
GUIDANCE LOAN NOTE
$300,000.00 Dated as of October 15, 2001
Chicago, Illinois Amended and Restated as of May 1, 2002
Further Amended and Restated as of March 21, 2003
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL TRANSPORTATION
INC., an Indiana corporation ("Carolina"); KEYSTONE LINES, a California
corporation ("Keystone"); GULF LINE TRANSPORT INC., an Indiana corporation
("Gulf Line"); FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five
Star"); CAM TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an Indiana
corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana corporation
("Friendly"); TRANSPORT LEASING, INC., an Arkansas corporation ("Transport
Leasing"); TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics"); HARBOR BRIDGE INTERMODAL, INC. ("Harbor"); PATRIOT
LOGISTICS, INC., an Indiana corporation; LIBERTY TRANSPORT, INC., an Indiana
corporation; and KEYSTONE LINES CORPORATION, an Indiana corporation;
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as "Maker"),
hereby promise, jointly and severally, to pay to the order of U.S. BANK
NATIONAL ASSOCIATION, a national banking association, formerly known as
FIRSTAR BANK N.A. ("Lender"), the principal sum of THREE-HUNDRED THOUSAND
AND NO/100ths DOLLARS ($300,000.00), or, if less, the aggregate unpaid amount
of the Guidance Loan made by Lender pursuant to and in accordance with the
applicable provisions of that certain Loan Agreement dated as of April 18,
2000, and amended as of June 12, 2000, December 7, 2000, March 1, 2001,
October 15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003 (as the
same may be amended, modified, supplemented or restated from time to time,
the "Loan Agreement") between Maker, US 1 INDUSTRIES, INC., an Indiana
corporation ("Guarantor") and Lender, at the office of Lender at 30 N.
Michigan Avenue, Chicago, Illinois 60602, or at such other place as the
holder hereof may appoint, plus interest thereon as set forth below.
This Guidance Loan Note is delivered by Maker to Lender pursuant to
and in accordance with the applicable provisions of the Loan Agreement.
all capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The principal balance of this Guidance Loan Note ("Principal Balance")
shall bear interest at the per annum rate of interest set forth in Section 2.3
of the Loan Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Guidance Loan Note shall be paid in the manner set forth in Section 2.4 of
The Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of 360
days and (ii) charged for the actual number of days during the period for which
interest is being charged.
During a Default Rate Period, the Principal Balance shall bear interest
at the Default Rate, which interest at such Default Rate shall be paid by
Maker to Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement, at the
election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal Balance, and all accrued and
unpaid interest thereon, shall be and become immediately due and payable in
full. Failure to exercise this option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent Event of Default,
and such failure shall not be deemed to establish a custom or course of
dealing or performance between Maker and Lender.
This Guidance Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan Agreement
applicable thereto.
All funds received by Lender during the existence of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions therefore set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is
in receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interest").
If any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Equipment Loan Note or any
other Loan Instrument, then in such event (i) Maker shall not be obligated
to pay such Excess Interest, (ii) any Excess Interest collected by Lender
shall be, (A) if any Event of Default exists and is continuing, applied to
the Principal Balance or to accrued and unpaid interest not in excess of the
maximum rate permitted by applicable law or (B) if no Event of Default
exists and is continuing, refunded to the payor thereof, (iii) the interest
rates provided for herein (collectively the "Stated Rate") shall be
automatically reduced to the maximum rate allowed from time to time under
applicable law (the "Maximum Rate") and this Equipment Loan Note and the
other Loan Instruments, as applicable, shall be deemed to have been, and
shall be, modified to reflect such reduction, and (iv) Maker shall not have
any action against Lender for any damages arising out of the payment or
collection of such Excess Interest; provided, however, that if at any time
thereafter the Stated Rate is less than the Maximum Rate, Maker shall, to
the extent permitted by law, continue to pay interest at the Maximum Rate
until such time as the total interest received by Lender is equal to the
total interest which Lender would have received had the Stated Rate been
(but for the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable shall be the Stated Rate unless
And until the Stated Rate again exceeds the Maximum Rate, in which event
The provisions contained in this paragraph again shall apply.
If any suit or action is instituted or attorneys are employed to
collect this Guidance Loan Note or any part thereof, Maker promises and
agrees, jointly and severally, to pay all costs of collection, including
all court costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand
and notice of protest, demand, dishonor and nonpayment of this Guidance
Loan Note, and expressly agrees that this Guidance Loan Note, or any
payment hereunder, may be extended from time to time before, at or after
maturity, without in any way affecting the liability of Maker hereunder
or any guarantor hereof.
This Guidance Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without regard
to conflict of laws principles. All funds disbursed to or for the benefit
of Maker will be deemed to have been disbursed in Chicago, Illinois.
Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising directly or indirectly out of this Guidance Loan Note shall
be litigated in either the Circuit Court of Cook County, Illinois or in the
United States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts, any court
in which Lender shall initiate or to which Lender shall remove such action,
to the extent such court has jurisdiction. Maker hereby expressly submits
and consents in advance to such jurisdiction in any action or proceeding
commenced by Lender in or removed by Lender to any of such courts, and hereby
agrees that personal service of the summons and complaint, or other process
or papers issued therein may be made by registered or certified mail addressed
to Maker at the address to which notices are to be sent pursuant to Section
11.1 of the Loan Agreement. Maker waives any claim that either the Circuit
Court of Cook County, Illinois or the United States District Court for the
Northern District of Illinois is an inconvenient forum or an improper forum
based on lack of venue. To the extent provided by law, should any Maker,
after being so served, fail to appear or answer to any summons, complaint,
process or papers so served within the number of days prescribed by law
after the mailing thereof, Maker shall be deemed in default and an order
and/or judgment may be entered by the court against Maker as demanded or
prayed for in such summons, complaint, process or papers. The exclusive
choice of forum for Maker set forth in this paragraph shall not be deemed to
preclude the enforcement by Lender of any judgment obtained in any other
forum or the taking by Lender of any action to enforce the same in any other
appropriate jurisdiction, and Maker hereby waives the right to collaterally
attack any such judgment or action.
Maker acknowledges and agrees that any controversy which may arise
under this Guidance Loan Note would be based upon difficult and complex
issues and, therefore, Maker agrees that any lawsuit arising out of any such
controversy will be tried in a court of competent jurisdiction by a judge
sitting without a jury.
This Guidance Loan Note may not be changed or amended orally, but only
by an instrument in writing signed by the party against whom enforcement of
the change or amendment is sought.
This Guidance Loan Note shall be binding upon Maker and upon Maker's
successors and assigns, and shall inure to the benefit of the successors and
permitted assigns of Lender. If more than one party shall sign this Guidance
Loan Note as Maker, their obligations hereunder as Maker shall be joint and
several.
This Guidance Loan Note amends, restates in its entirety, and
supercedes a Guidance Loan Note dated as of May 1, 2002, which amended and
restated a Guidance Loan Note dated as of October 15, 2001, in the principal
face amount of $300,000.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
placed thereon by any court or any Governmental Body, this Guidance Loan
Note shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are lawful
and valid shall remain in full force and effect.
Time for the performance of Maker's obligations under this Guidance
Loan Note is of the essence.
This Guidance Loan Note is entitled to the benefit of certain
collateral security, all as more fully set forth in the Loan Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Guidance Loan Note has been executed and delivered
by Maker by its duly authorized officer on the date first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: ______________________________
Name: ____________________________
Title: _____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _______________________________
Name: _____________________________
Title: ______________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ___________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
EXHIBIT D-1
Date: March 21, 2003
REAFFIRMATION OF LIMITED GUARANTY
In connection with the execution of that certain Seventh Amendment to
Loan Agreement dated as of the date hereof, the undersigned, Michael Kibler
("Kibler") ("Guarantor"), does hereby absolutely and unconditionally,
reaffirm his limited guarantee dated as of August 1, 2002 to U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), of (i) prompt payment when due, whether at
stated maturity, upon acceleration or otherwise, and at all times thereafter,
of that certain Revolving Loan Note, dated April 18, 2000, as amended and
restated as of June 12, 2000, December 7, 2000, October 15, 2001, May 1,
002, and August 1, 2002, in the principal amount of $8,500,000 (the
Revolving Loan Note"); that certain Equipment Loan Note, dated December 7,
000, as amended and restated as of March 1, 2001, October 15, 2001, and May
1, 2002 in the principal amount of $1,000,000 (the "Equipment Loan Note");
and that certain Guidance Loan Note dated October 15, 2001, as amended and
restated as of May 1, 2002, in the principal amount of $300,000 (the
Guidance Loan Note"), all executed by Carolina National Transportation Inc.,
an Indiana corporation ("Carolina"); Keystone Lines, a California
corporation ("Keystone"); Gulf Line Transport Inc., an Indiana corporation
("Gulf Line"); Five Star Transport, Inc., an Indiana corporation ("Five
tar"); CAM Transport, Inc., an Indiana corporation ("Cam"); Unity Logistic
Services Inc., an Indiana corporation ("Unity"); ERX, Inc., an Indiana
corporation ("ERX"); Friendly Transport, Inc. ("Friendly"); Transport
Leasing, Inc., an Arkansas corporation ("Transport Leasing"); Transport
Logistics, LLC, an Arkansas limited liability company ("Transport
Logistics"); Harbor Bridge Intermodal, Inc., an Indiana corporation
"Harbor"); Patriot Logistics, Inc., an Indiana corporation ("Patriot");
Liberty Transport, Inc., an Indiana corporation ("Liberty"), and Keystone
Lines Corporation, an Indiana corporation ("Keystone-Indiana") (Carolina,
Keystone, Gulf Line, Five Star, Unity, ERX, Friendly, Transport Leasing,
Transport Logistics, Harbor, Patriot, Liberty and Keystone-Indiana are
hereinafter collectively referred to as "Borrowers") (the Revolving Loan
Note, Equipment Loan Note and Guidance Loan Note are collectively referred
to herein as the "Notes") and (ii) prompt performance and payment of all of
Borrowers' Obligations (as defined in that certain Loan Agreement dated
April 18, 2000, as amended and restated as of June 9, 2000, December 7, 2000,
March 1, 2001, October 15, 2001, May 1, 2002, and August 1, 2002, between
Borrowers, Lender, and US 1 Industries, Inc. (the "Loan Agreement")) (any
and all indebtedness represented or evidenced by or arising with respect to
the Notes in favor of Lender and Borrowers' Obligations hereinafter sometimes
collectively referred to as the "Guaranteed Debt"), all on the terms set
forth therein, and further guarantees the performance of his obligations with
regards to the Notes and the Loan Agreement, as the same have been amended
(or amended and restated, as the case may be), as of March 21, 2003.
Chicago, Illinois
_________________________
Michael Kibler
EXHIBIT D-2
Date: March 21, 2003
REAFFIRMATION OF LIMITED GUARANTY
In connection with the execution of that certain Seventh Amendment to
Loan Agreement dated as of the date hereof, the undersigned, Michael Kibler
("Kibler") ("Guarantor"), does hereby absolutely and unconditionally,
reaffirm his limited guarantee dated as of August 1, 2002 to U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), of (i) prompt payment when due, whether at
stated maturity, upon acceleration or otherwise, and at all times thereafter,
of that certain Revolving Loan Note, dated April 18, 2000, as amended and
restated as of June 12, 2000, December 7, 2000, October 15, 2001, May 1,
2002, and August 1, 2002, in the principal amount of $8,500,000 (the
Revolving Loan Note"); that certain Equipment Loan Note, dated December 7,
2000, as amended and restated as of March 1, 2001, October 15, 2001, and May
1, 2002 in the principal amount of $1,000,000 (the "Equipment Loan Note");
and that certain Guidance Loan Note dated October 15, 2001, as amended and
restated as of May 1, 2002, in the principal amount of $300,000 (the
Guidance Loan Note"), all executed by Carolina National Transportation Inc.,
an Indiana corporation ("Carolina"); Keystone Lines, a California
corporation ("Keystone"); Gulf Line Transport Inc., an Indiana corporation
("Gulf Line"); Five Star Transport, Inc., an Indiana corporation ("Five
tar"); CAM Transport, Inc., an Indiana corporation ("Cam"); Unity Logistic
Services Inc., an Indiana corporation ("Unity"); ERX, Inc., an Indiana
corporation ("ERX"); Friendly Transport, Inc. ("Friendly"); Transport
Leasing, Inc., an Arkansas corporation ("Transport Leasing"); Transport
Logistics, LLC, an Arkansas limited liability company ("Transport
Logistics"); Harbor Bridge Intermodal, Inc., an Indiana corporation
"Harbor"); Patriot Logistics, Inc., an Indiana corporation ("Patriot");
Liberty Transport, Inc., an Indiana corporation ("Liberty"), and Keystone
Lines Corporation, an Indiana corporation ("Keystone-Indiana") (Carolina,
Keystone, Gulf Line, Five Star, Unity, ERX, Friendly, Transport Leasing,
Transport Logistics, Harbor, Patriot, Liberty and Keystone-Indiana are
hereinafter collectively referred to as "Borrowers") (the Revolving Loan
Note, Equipment Loan Note and Guidance Loan Note are collectively referred
to herein as the "Notes") and (ii) prompt performance and payment of all of
Borrowers' Obligations (as defined in that certain Loan Agreement dated April
18, 2000, as amended and restated as of June 9, 2000, December 7, 2000, March
1, 2001, October 15, 2001, May 1, 2002, and August 1, 2002, between Borrowers,
Lender, and US 1 Industries, Inc. (the "Loan Agreement")) (any and all
indebtedness represented or evidenced by or arising with respect to the Notes
in favor of Lender and Borrowers' Obligations hereinafter sometimes
collectively referred to as the "Guaranteed Debt"), all on the terms set
forth therein, and further guarantees the performance of his obligations
with regards to the Notes and the Loan Agreement, as the same have been
amended (or amended and restated, as the case may be), as of March 21, 2003.
Chicago, Illinois
____________________
Harold Antonson
EXHIBIT E
Date: March 21, 2003
REAFFIRMATION OF CORPORATE GUARANTY
To induce U.S. Bank National Association, a national banking
association formerly known as Firstar Bank N.A., whose address is 30 N.
Michigan Avenue, Chicago, Illinois 60602 ("Lender"), to advance funds to
Carolina National Transportation Inc., an Indiana corporation ("Carolina");
Keystone Lines, a California corporation ("Keystone"); Gulf Line Transport
Inc., an Indiana corporation ("Gulf Line"); Five Star Transport, Inc., an
Indiana corporation ("Five Star"); CAM Transport, Inc., an Indiana
corporation ("Cam"); Unity Logistic Services Inc., an Indiana corporation
("Unity"); ERX, Inc., an Indiana corporation ("ERX"); Friendly Transport,
Inc. ("Friendly"); Transport Leasing, Inc., an Arkansas corporation
"Transport Leasing"); and Transport Logistics, LLC, an Arkansas limited
liability company ("Transport Logistics"); Harbor Bridge Intermodal, Inc.
("Harbor"); Patriot Logistics, Inc. ("Patriot"); Liberty Transport, Inc.
("Liberty") and Keystone Lines Corporation, an Indiana corporation
"Keystone-Indiana") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty,
and Keystone-Indiana are hereinafter collectively referred to as "Borrowers")
and to enter into a certain Seventh Amendment to Loan Agreement of even date
herewith between Borrowers and Lender (which Seventh Amendment to Loan
Agreement, together with the original Loan Agreement dated April 18, 2000,
and the amendments thereto dated June 9, 2000, December 7, 2000, March 1,
2001, October 15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003 is
the "Loan Agreement") and to otherwise extend credit to Borrowers, the
undersigned hereby irrevocably, absolutely and unconditionally reaffirms
its Corporate Guaranty dated as of August 1, 2002, concerning the payment
and performance when due of all presently existing or hereafter incurred
direct, indirect, absolute or contingent indebtedness, liabilities and other
obligations of Borrowers to Lender arising out of or incurred in connection
with the Revolving Loan Note dated April 18, 2000 from Borrowers to Lender,
as amended and restated as of June 9, 2000, December 7, 2000, October 15, 2001,
May 1, 2002, and August 1, 2002 (the "Revolving Loan Note"); the Equipment
Loan Note from Borrowers to Lender dated as of December 7, 2000, as amended
and restated as March 1, 2001, October 15, 2001, and May 1, 2002 (the
Equipment Loan Note"); and the Guidance Line Note, dated as of October 15,
2001 and as amended and restated as of May 1, 2002 (the "Guidance Loan Note")
(the Revolving Loan Note, the Equipment Loan Note, and the Guidance Loan Note
are herein collectively referred to as the "Notes"), or any document,
instrument, mortgage, guaranty, or security agreement given or delivered to
evidence or secure the indebtedness evidenced by the Notes, and all
modifications, amendments and supplements thereto including, but not limited
to, charges, interest and the principal, interest and other sums payable
pursuant to the Notes or the Loan Agreement or any of the Loan Instruments
as defined in the Loan Agreement) (collectively, the "Obligations").
[SIGNATURE PAGE FOLLOWS]
Chicago, Illinois
US 1 INDUSTRIES, INC., an Indiana corporation
By: _________________________________
Name: _______________________________
Title: ________________________________
Address: 1000 Colfax Street
Gary, IN 46406
Fax No.: (219) 977-5227
EXHIBIT F
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of March 21, 2003, is between
PATRIOT LOGISTICS, INC., an Indiana corporation, LIBERTY TRANSPORT, INC.,
an Indiana corporation, and KEYSTONE LINES CORPORATION, an Indiana
corporation (collectively "Borrower"), and U.S. BANK NATIONAL ASSOCIATION,
a national banking association formerly known as FIRSTAR BANK N.A.
("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION INC., KEYSTONE LINES,
GULF LINE TRANSPORT INC., FIVE STAR TRANSPORT, INC., CAM TRANSPORT, INC.,
UNITY LOGISTIC SERVICES INC., ERX, INC., FRIENDLY TRANSPORT, INC.,
TRANSPORT LEASING, INC., TRANSPORT LOGISTICS, LLC, and HARBOR BRIDGE
INTERMODAL, INC. (the "Other Borrowers"), US 1 INDUSTRIES, INC.
("Guarantor"), and Lender have entered into a Seventh Amendment to Loan
Agreement of even date herewith which amends that certain Loan Agreement by
and between Lender, the Other Borrowers, and Guarantor, dated as of April
18, 2000, and amended as of June 9, 2000, December 7, 2000, March 1, 2001,
October 15, 2001, May 1, 2002, and August 1, 2002 (the April 18, 2000 Loan
Agreement, as so amended and as amended by the Seventh Amendment to Loan
Agreement, constitutes the "Loan Agreement"). Pursuant to the Loan
agreement and subject to the terms and conditions thereof, Lender has
agreed to make loans and other financial accommodations to Borrower and
the Other Borrowers.
B. One of the conditions precedent to Lender's obligations under
the Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations thereunder.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement, together with any future amendments and
modifications thereto or restatements thereof. As used herein, the following
terms shall have the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent Collateral
and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and applications
for letters patent of Borrower throughout the world, including all patent
applications of Borrower in preparation for filing anywhere in the world,
(ii) patent licenses of Borrower, (iii) reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
Patent Collateral and (iv) all proceeds of, and rights associated with, the
foregoing (including licenses, royalties and proceeds of infringement
suits), the right of Borrower to sue third parties for past, present and
future infringements of any patent or patent application, and for breach
or enforcement of any patent license of Borrower, and all rights
corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
he foregoing have appeared or appear, designs and general intangibles of a
like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by
Borrower against third parties for past, present or future infringement or
dilution of any Trademark, Trademark registration or Trademark license, or
for any injury to the goodwill associated with the use of any such Trademark
or for breach or enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all
additions and accessions thereto or replacements thereof, including, but not
limited to, all machinery, inventory and equipment of any and every kind and
description comprising, belonging to or used in connection with the operation
of the business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts,
contract rights, chattel paper, instruments, investment property, deposit
accounts, documents, and general intangibles, and all additions and
accessions thereto and replacements thereof, including, but not limited to,
all licenses, franchises, permits and authorizations heretofore or hereafter
granted or issued to Borrower under federal, state or local laws (excluding,
however, any licenses, franchises, permits and authorizations issued by any
Governmental Body to the extent, and only to the extent, it is unlawful to
grant a security interest in such licenses, franchises, permits and
authorizations, but including, without limitation, the right to receive
all proceeds derived or arising from or in connection with the sale or
assignment of such licenses, franchises, permits and authorizations)
which permit or pertain to the operation of the business of Borrower, and
all of Borrower's Intellectual Property Collateral, Operating Agreements,
income tax refunds, copyrights, patents, trademarks, trade names, trade
styles, goodwill, going concern value, franchise, supply and distributorship
agreements, non-competition agreements and employment contracts
collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance,
eminent domain and other governmental taking and tort claims) and products
of the Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above. All of the Property
described above hereinafter is referred to collectively as the "Collateral."
The security interest of Lender in the Collateral shall be superior and prior
to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after-acquired Property, and Borrower will be the owner of such
after-acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the
location of the chief executive office of Borrower, all of the other places
of business of Borrower and all locations where the Tangible Collateral and
the books and records of Borrower are kept. Except as described in Exhibit
A, none of the Collateral is in the possession of any consignee, bailee,
warehouseman, agent or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or
assumed names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of
Lender and the financing statements pertaining to the Permitted Senior
Indebtedness Liens, if any, no financing statement covering any Collateral
or any portion or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best
of Borrower's knowledge, as of the date of this Security Agreement, there
is no valid defense, set-off or counterclaim against Borrower and in
connection with which there is no default with respect to any material
payment or material performance on the part of Borrower, or, to the best
of Borrower's knowledge, any other party. With respect to any Intellectual
Property Collateral of Borrower the loss, impairment or infringement of
which singly or in the aggregate could reasonably be expected to have a
Material Adverse Effect: (i) such Intellectual Property Collateral is
subsisting and has not been adjudged invalid or unenforceable, in whole or
in part, (ii) such Intellectual Property Collateral is valid and enforceable,
(iii) Borrower has made all filings and recordations necessary in the
exercise of reasonable and prudent business judgment to protect its interest
in such Intellectual Property Collateral in the United States Patent and
Trademark Office, the United States Copyright Office and in corresponding
offices throughout the world, as appropriate, (iv) Borrower is the owner of
the entire and unencumbered right, title and interest in and to such
Intellectual Property Collateral and no claim has been made that the use
of such Intellectual Property Collateral does or may violate the asserted
rights of any third party, and (v) Borrower has performed and will continue
to perform all acts and has paid and will continue to pay all required fees
and taxes to maintain each and every item of such Intellectual Property
Collateral in full force and effect throughout the world, as applicable.
Borrower owns directly, or is entitled to use by license or otherwise, all
Intellectual Property Collateral of any Person used in, necessary for or
material to the conduct of Borrower's businesses. Except as set forth in
he Loan Agreement, no litigation is pending or, to the best knowledge of
Borrower, threatened which contains allegations respecting the validity,
enforceability, infringement or ownership of any of the Intellectual
Property Collateral of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each
hereafter-arising Account will constitute, to the best of Borrower's
knowledge, the legally valid and binding obligation of the account debtor
obligated to pay the same. The amount represented by Borrower to Lender as
owing by each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances where
applicable. To the best of Borrower's knowledge, no account debtor has any
defense, set-off, claim or counterclaim against Borrower that can be
asserted against Lender, whether in any proceeding to enforce Lender's rights
in the Collateral or otherwise. None of the Accounts is, nor will any
hereafter-arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been terminated,
Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such form,
with such companies and in such amounts as may be reasonably satisfactory
to Lender and otherwise comply with the provisions of Section 6.6 of the
Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral
at all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to the
Tangible Collateral and (ii) take all actions reasonably requested by Lender
to cause the Lien granted to Lender hereunder to be noted on such certificates
of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees applicable
thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts
reasonably necessary to maintain and preserve the Intangible Collateral,
including, without limitation, filing of documents, renewals or other
information with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the
request of Lender, promptly deliver to Lender the original executed copies
of all instruments and letters of credit which constitute part of the
Intangible Collateral, together with such endorsements, assignments and
other agreements as Lender may request in order to perfect the Security
Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after the
occurrence and during the continuation of an Event of Default, permit Lender
itself, at any time, in the name of Lender or Borrower, to verify directly with
the obligors the indebtedness due Borrower on any account or other item of
Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could have
a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart thereof
or any court) regarding Borrower's ownership of any of its Intellectual
Property Collateral, its right to register the same or to keep and maintain
and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any country or any political subdivision thereof, to
maintain and pursue any application (and to obtain the relevant registration)
filed with respect to, and to maintain any registration of, its Intellectual
Property Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts to
collect the proceeds of indebtedness owing to Borrower by any Person under
any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with the
execution of this Security Agreement, and from time to time hereafter as
requested by Lender, execute and deliver to Lender such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents, in form satisfactory to Lender,
as Lender may require to perfect and continue in effect the Security
interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the cost
of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrowers' Obligations are paid
and performed in full and the Loan Agreement shall have been terminated,
Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted by
and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at least
30 days' advance written notice thereof and having taken any and all action
reasonably requested by Lender to maintain and preserve the first perfected
Lien in favor of Lender on all Property thereof free and clear of any Lien
whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or control
of any warehouseman, bailee or processor without Lender's prior written
consent and unless Lender has received warehouse receipts or bailee letters
satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term or
provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees to,
unless Borrower shall either (i) reasonably and in good faith determine that
any of its Trademark Collateral is of negligible economic value to Borrower
or (ii) have a valid business purpose to do otherwise: (A) fail to continue
to use any of its Trademark Collateral in order to maintain all of its
Trademark Collateral in full force free from any claim of abandonment for
non-use, (B) fail to maintain as in the past the quality of products and
services offered under all of its Trademark Collateral, (C) fail to employ
all of its Trademark Collateral registered with any federal, state or
foreign authority with an appropriate notice of such registration, (D) adopt
or use any trademark which is confusingly similar or a colorable imitation
of any of its Trademark Collateral except in compliance with applicable law,
(E) use any of its Trademark Collateral registered with any federal, state
r foreign authority except for the uses for which registration or application
for registration of such Trademark Collateral has been made except in
compliance with applicable law or (F) do or permit any act or knowingly omit
to do any act whereby any of its Trademark Collateral may lapse or become
invalid or unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i) reasonably
and in good faith determine that any of its Patent Collateral is of
negligible economic value to Borrower or (ii) have a valid business purpose
to do otherwise, do any act, or omit to do any act, whereby any of
Borrower's Patent Collateral may lapse or become abandoned or dedicated to
the public or unenforceable.
6. Protection of Collateral. In the event of any failure of Borrower
to (i) maintain in force and pay for any insurance or bond which Borrower is
required to provide pursuant to this Security Agreement or the other Loan
Instruments, (ii) keep the Tangible Collateral in good repair and operating
condition, (iii) keep the Collateral free from all Liens except for Permitted
Liens, (iv) pay when due all taxes, levies and assessments on or in respect of
the Collateral, except as permitted pursuant to the terms of Section 4.1 above,
(v) make all payments and perform all acts on the part of Borrower to be paid
or performed with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral or (vi) keep fully and perform
promptly any other of the obligations of Borrower under this Security
Agreement or the other Loan Instruments, Lender, at its option, may (but shall
not be required to) procure and pay for such insurance, place such Collateral
in good repair and operating condition, pay or contest or settle such Liens or
taxes or any judgments based thereon or otherwise make good any other
aforesaid failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any such
purpose, together with all costs, expenses and attorneys' fees paid or incurred
by Lender in connection therewith and interest at the Default Rate on all sums
so paid or advanced from the date of such payment or advancement until repaid
to Lender. All such sums paid or advanced by Lender, with interest thereon,
immediately upon payment or advancement thereof, shall be deemed to be part
of Borrowers' Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this Security
Agreement upon the occurrence of an Event of Default under the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall have the
right, from time to time, at Lender's discretion, to contact account debtors
of Borrower and Guarantor to verify that Accounts are valid and not subject
to setoff or counterclaim and to verify the creditworthiness of the account
debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and remedies
of a secured party under the Code and all other rights and remedies accorded to
Lender at equity or law, including, without limitation, the right to apply for
and have a receiver appointed by a court of competent jurisdiction to manage,
protect and preserve the Collateral, to continue operating the business of
Borrower and to collect all revenues and profits thereof. Any notice of sale
or other disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of such
action. Lender may postpone or adjourn any such sale from time to time by
announcement at the time and place of sale stated in the notice of sale or
by announcement of any adjourned sale, without being required to give a
further notice of sale. Any such sale may be for cash or, unless prohibited
by applicable law, upon such credit or installment terms as Lender shall
determine. Borrower shall be credited with the net proceeds of such sale
only when such proceeds actually are received by Lender in Good Funds.
Despite the consummation of any such sale, Borrower shall remain liable for
any deficiency on Borrowers' Obligations which remains outstanding following
any such sale. All net proceeds received pursuant to a sale shall be applied
in the manner set forth in Section 8.4 of the Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender, Borrower
shall assemble and make the Collateral available to Lender at a place
designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the Collateral
collected by Borrower in trust for Lender, and, after Borrower receives
notice from Lender, promptly after the receipt of the proceeds of Collateral,
turn over such proceeds to Lender in the exact form in which they were
received.
9.4 Other Rights. Lender, at its election, and without notice to
Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper or
general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property payable
or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue upon or
otherwise enforce any item of Collateral as Lender may determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose of
enforcing Lender's rights under this Security Agreement, receive and open mail
addressed to Borrower, and endorse notes, checks, drafts, money orders,
documents of title or other forms of payment on behalf and in the name of
Borrower. All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of Section 8.4
of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies of Lender
under this Security Agreement, Borrower hereby irrevocably appoints Lender as
its attorney-in-fact, in the name of Borrower or in the name of Lender, (i) to
execute and file from time to time financing statements, continuation
statements, termination statements and amendments thereto, covering
the Collateral, in form satisfactory to Lender and (ii) take all action and
execute all documents referred to in Section 9.4 above. The power of attorney
granted pursuant to this Section 10 is coupled with an interest and shall be
irrevocable until all of Borrowers' Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the acceptance
of this Security Agreement and, except as otherwise specifically provided in
Section 9.1 and 9.3 above or in the Loan Agreement, all other notices, demands
or protests to which Borrower otherwise might be entitled by law (and which
lawfully may be waived) with respect to this Security Agreement, Borrowers'
Obligations and the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall have no
duty as to the collection or protection of the Collateral or any income
thereon, (ii) may exercise the rights and remedies of Lender with respect to
the Collateral without resort or regard to other security or sources for
payment and (iii) shall not be deemed to have waived any of the rights or
remedies granted to Lender hereunder unless such waiver shall be in writing
and shall be signed by Lender. Borrower and Lender acknowledge their intent
that, upon the occurrence of an Event of Default, Lender shall receive, to
the fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to exercise
all remedies available to Lender under the Loan Instruments, the Code or other
applicable law. Borrower and Lender further acknowledge and agree that, in the
event of changes in law or governmental policy occurring subsequent to the date
hereof that affect in any manner Lender's rights of access to, or use or sale
of, the Collateral, or the procedures necessary to enable Lender to obtain such
rights of access, use or sale, Lender and Borrower shall amend the Loan
Instruments, in such manner as Lender shall request, in order to provide Lender
such rights to the greatest extent possible consistent with then applicable law
and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay or
omission on the part of Lender in exercising any rights or remedies contained
herein shall operate as a waiver of such right or remedy or of any other
right or remedy, and no single or partial exercise of any right or remedy
shall preclude any other or further exercise thereof, or the exercise of any
other right or remedy. A waiver of any right or remedy on any one occasion
shall not be construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial exercise of
any right or remedy shall be deemed to establish a custom or course of
dealing or performance between the parties hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly agrees that,
anything herein to the contrary notwithstanding, Borrower shall remain liable
under each contract, agreement, interest or obligation assigned by Borrower to
Lender hereunder to observe and perform all of the conditions and obligations
to be observed and performed by Borrower thereunder, all in accordance with and
pursuant to the terms and provisions thereof. The exercise by Lender of any of
the rights assigned hereunder shall not release Borrower from any of its duties
or obligations under any such contract, agreement, interest or obligation.
Lender shall have no duty, responsibility, obligation or liability under any
such contract, agreement, interest or obligation by reason of or arising out of
the assignment thereof to Lender or the granting to Lender of a Security
Interest therein or the receipt by Lender of any payment relating to any such
contract, agreement, interest or obligation pursuant hereto, nor shall Lender be
required or obligated in any manner to perform or fulfill any of the obligations
of Borrower thereunder or pursuant thereto, or to make any payment, or to make
any inquiry as to the nature or sufficiency of any payment received by Lender or
the sufficiency of any performance of any party under any such contract,
agreement, interest or obligation, or to present or file any claim, or to take
any action to collect or enforce any performance of the payment of any amounts
which may have been assigned to Lender, in which Lender may have been granted a
Security Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral. Borrower
hereby grants to Lender, after the occurrence and during the continuance of an
Event of Default, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to Borrower) to use, assign, license or
sublicense any Intellectual Property Collateral, now owned or hereafter acquired
by Borrower, and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items may be
recorded or stored and to all computer programs and used for the compilation or
printout thereof.
12. Rights Cumulative. All rights and remedies of Lender pursuant to
this Security Agreement, the Loan Agreement or otherwise, shall be cumulative
and non-exclusive, and may be exercised singularly or concurrently.
13. Severability. In the event that any provision of this Security
Agreement is deemed to be invalid by reason of the operation of any law or by
reason of the interpretation placed thereon by any court or any other
Governmental Body, this Security Agreement shall be construed as not containing
such provision and the invalidity of such provision shall not affect the
validity of any other provisions hereof, and any and all other provisions
hereof which otherwise are lawful and valid shall remain in full force and
effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in the
Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which, when taken together, shall be one and the same instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive the
execution and delivery of the Loan Agreement and shall continue in fall
force and effect until Borrowers' Obligations are paid and performed in full
and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed in
accordance with and governed by the laws and decisions of the
State of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all actions
or proceedings initiated by Borrower and arising directly or indirectly out
of this Security Agreement shall be litigated in either the Circuit Court
of Cook County, Illinois or in the United States District Court for the
Northern District of Illinois, or, if Lender initiates such action, in
addition to the foregoing courts, any other court in which Lender shall
initiate or to which Lender shall remove such action, to the extent such
court has jurisdiction. Borrower hereby expressly submits and consents in
advance to such jurisdiction in any action or proceeding commenced by Lender
in or removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or papers
issued therein may be served in the manner provided for notices herein, and
agrees that service of such summons and complaint or other process or papers
may be made by registered or certified mail addressed to Borrower at the
address to which notices are to be sent pursuant to Section 11.1 of the
Loan Agreement. Borrower waives any claim that either the Circuit Court
of Cook County, Illinois or the United States District Court for the
Northern District of Illinois is an inconvenient forum or an improper
forum based on lack of venue. To the extent provided by law, should
Borrower, after being so served, fail to appear or answer to any summons,
complaint, process or papers so served within the number of days prescribed
by law after the mailing thereof, Borrower shall be deemed in default and
an order and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers. The
exclusive choice of forum for Borrower set forth in this Section 19 shall
not be deemed to preclude the enforcement by Lender of any judgment obtained
in any other forum or the taking by Lender of any action to enforce the same
in any other appropriate jurisdiction, and Borrower hereby waives the right
to collaterally attack any such judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and agrees
that any controversy which may arise under any of the Loan Instruments or with
respect to the transactions contemplated thereby would be based upon difficult
and complex issues and, therefore, the parties agree that any lawsuit arising
out of any such controversy will be tried in a court of competent jurisdiction
by a judge sitting without a jury.
22. Time of the Essence. Time for the performance of Borrowers'
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and security
interests granted hereunder shall not terminate until the full and complete
performance and payment and satisfaction of Borrowers' Obligations and the
Loan Agreement shall have terminated, whereupon Lender shall release all such
Liens and security interests in favor of Lender affecting the Collateral.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Security Agreement has been executed and delivered
by the parties hereto by a duly authorized officer of each such party on the
date first set forth above.
Address: PATRIOT LOGISTICS, INC.
1000 Colfax
Gary, IN 46406
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: LIBERTY TRANSPORT, INC.
1000 Colfax
Gary, IN 46406
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: KEYSTONE LINES CORPORATION
1000 Colfax
Gary, IN 46406
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: U.S. BANK NATIONAL ASSOCIATION,
30 N. Michigan Avenue a national banking association
Chicago, IL 60602
By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
1000 Colfax
Gary, IN 46406
Location of Other Places of Business
NONE
Location of Books and Records
1000 Colfax
Gary, IN 46406
Locations of All Tangible Collateral
1000 Colfax
Gary, IN 46406
EXHIBIT G-1
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledge and agree, 1) that U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), has agreed to enter into a certain Seventh
Amendment to Loan Agreement dated as of March 21, 2003 (the "Amendment")
with the Borrowers identified therein (the "Borrowers"); 2) that the
Subordinated Debt (as defined in that certain Subordination Agreement
dated April 18, 2000, as amended by that certain Amendment to
Subordination Agreement dated August 1, 2002, between Lender and the
undersigned (the "Subordination Agreement")) is and shall continue to be
subordinate, all as provided in the Subordination Agreement, to any sums
loaned to the Borrowers, or any of them, in addition to being subordinate
to any amounts otherwise advanced to Borrowers, or any of them, by Lender
prior to or subsequent to the date hereof under the Loan Agreement (as that
term is defined in the Amendment); and 3) that any amounts advanced to any
of the Borrowers prior to or subsequent to the date hereof under the Loan
Agreement shall constitute Senior Debt for purposes of the Subordination
Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and delivered as
of March 21, 2003.
______________________________
Harold Antonson
______________________________
Michael Kibler
EXHIBIT G-2
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledges and agrees, 1) that U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), has agreed to enter into a certain Seventh
Amendment to Loan Agreement dated as of March 21, 2003 (the "Amendment")
with the Borrowers identified therein (the "Borrowers"); 2) that the
Subordinated Debt (as defined in that certain Amended and Restated
Subordination Agreement dated as of August 1, 2002, between Lender and
the undersigned (the "Subordination Agreement")) is and shall continue to
be subordinate, all as provided in the Subordination Agreement, to any
sums loaned to the Borrowers, or any of them, in addition to being
subordinate to any amounts otherwise advanced to Borrowers, or any of them,
by Lender prior to or subsequent to the date hereof under the Loan Agreement
(as that term is defined in the Amendment); and 3) that any amounts advanced
to any of the Borrowers prior to or subsequent to the date hereof under the
Loan Agreement shall constitute Senior Debt for purposes of the
Subordination Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and delivered as
of March 21, 2003.
AUGUST INVESTMENT PARTNERSHIP
By: AUGUST INVESTMENT CORPORATION,
General Partner
By: ______________________________
Its: ______________________________
REVOLVING LOAN NOTE
$8,500,000.00 Dated as of April 18, 2000
Chicago, Illinois Amended and Restated as of June 12, 2000
Further Amended and Restated as of December 7, 2000
Further Amended and Restated as of October 15, 2001
Further Amended and Restated as of May 1, 2002
Further Amended and Restated as of August 1, 2002
Further Amended and Restated as of March 21, 2003
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL
TRANSPORTATION INC., an Indiana corporation ("Carolina"); KEYSTONE LINES, a
California corporation ("Keystone"); GULF LINE TRANSPORT INC., an Indiana
corporation ("Gulf Line"); FIVE STAR TRANSPORT, INC., an Indiana corporation
("Five Star"); CAM TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY
LOGISTIC SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an
Indiana corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana corporation
("Friendly"); TRANSPORT LEASING, INC., an Arkansas corporation ("Transport
Leasing"); TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics"); HARBOR BRIDGE INTERMODAL, INC. ("Harbor"); PATRIOT
LOGISTICS, INC., an Indiana corporation; LIBERTY TRANSPORT, INC., an Indiana
corporation; and KEYSTONE LINES CORPORATION, an Indiana corporation;
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as "Maker"),
hereby promise, jointly and severally, to pay to the order of U.S. BANK
NATIONAL ASSOCIATION, a national banking association, formerly known as
FIRSTAR BANK N.A. ("Lender"), the principal sum of EIGHT MILLION FIVE HUNDRED
THOUSAND AND NO/100ths DOLLARS ($8,500,000.00), or, if less, the aggregate
unpaid amount of the Revolving Loan made by Lender pursuant to and in
accordance with the applicable provisions of that certain Loan Agreement
dated April 18, 2000, and amended as of June 9, 2000, December 7, 2000,
October 15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003 (as the
same may be amended, modified, supplemented or restated from time to time,
the "Loan Agreement") between Maker, US 1 INDUSTRIES, INC., an Indiana
corporation ("Guarantor"), and Lender, at the office of Lender at 30 N.
Michigan Avenue, Chicago, Illinois 60602, or at such other place as the
holder hereof may appoint, plus interest thereon as set forth below.
This Revolving Loan Note is delivered by Maker to Lender pursuant to
and in accordance with the applicable provisions of the Loan Agreement. All
capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The Principal Balance of this Revolving Loan Note shall bear interest
at the per annum rate of interest set forth in subsection 2.3.1 of the Loan
Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Revolving Loan Note shall be paid in the manner set forth in Section 2.4 of
the Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual number of days during the period
for which interest is being charged.
During a Default Rate Period, the Principal Balance of this Revolving
Loan Note shall bear interest at the Default Rate, which interest at such
Default Rate shall be paid by Maker to Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement, at
the election of the holder hereof, upon the occurrence of an Event of
Default, without further notice or demand, the Principal Balance of this
Revolving Loan Note, and all accrued and unpaid interest thereon, shall be
and become immediately due and payable in full. Failure to exercise this
option shall not constitute a waiver of the right to exercise the same in
the event of any subsequent Event of Default, and such failure shall not be
deemed to establish a custom or course of dealing or performance between
Maker and Lender.
This Revolving Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan Agreement
applicable thereto.
All funds received by Lender during the existence of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the Loan
Agreement.
All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions therefore set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is
in receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interest"). If
any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Revolving Loan Note or any other
Loan Instrument, then in such event (i) Maker shall not be obligated to pay
such Excess Interest, (ii) any Excess Interest collected by Lender shall be,
(A) if any Event of Default exists and is continuing, applied to the Principal
Balance or to accrued and unpaid interest not in excess of the maximum rate
permitted by applicable law or (B) if no Event of Default exists and is
continuing, refunded to the payor thereof, (iii) the interest rates provided
for herein (collectively the "Stated Rate") shall be automatically reduced to
the maximum rate allowed from time to time under applicable law (the "Maximum
Rate") and this Revolving Loan Note and the other Loan Instruments, as
applicable, shall be deemed to have been, and shall be, modified to reflect
such reduction, and (iv) Maker shall not have any action against Lender for
any damages arising out of the payment or collection of such Excess
Interest; provided, however, that if at any time thereafter the Stated Rate
is less than the Maximum Rate, Maker shall, to the extent permitted by law,
continue to pay interest at the Maximum Rate until such time as the total
interest received by Lender is equal to the total interest which Lender would
have received had the Stated Rate been (but for the operation of this
provision) the interest rate payable. Thereafter, the interest rate payable
shall be the Stated Rate unless and until the Stated Rate again exceeds the
Maximum Rate, in which event the provisions contained in this paragraph again
shall apply.
If any suit or action is instituted or attorneys are employed to collect
this Revolving Loan Note or any part thereof, Maker promises and agrees,
jointly and severally, to pay all costs of collection, including all court
costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand and
notice of protest, demand, dishonor and nonpayment of this Revolving Loan
Note, and expressly agrees that this Revolving Loan Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Maker hereunder or any guarantor
hereof.
This Revolving Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without regard
to the conflict of laws principles thereof. All funds disbursed to or for
the benefit of Maker will be deemed to have been disbursed in Chicago,
Illinois.
Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising directly or indirectly out of this Revolving Loan Note
shall be litigated in either the Circuit Court of Cook County, Illinois or
in the United States District Court for the Northern District of Illinois,
or, if Lender initiates such action, in addition to the foregoing courts,
any court in which Lender shall initiate or to which Lender shall remove
such action, to the extent such court has jurisdiction. Maker hereby
expressly submits and consents in advance to such jurisdiction in any action
or proceeding commenced by Lender in or removed by Lender to any of such
courts, and hereby agrees that personal service of the summons and
complaint, or other process or papers issued therein may be made by
registered or certified mail addressed to Maker at the address to which
notices are to be sent pursuant to Section 11.1 of the Loan Agreement.
Maker waives any claim that either the Circuit Court of Cook County,
Illinois or the United States District Court for the Northern District of
Illinois is an inconvenient forum or an improper forum based on lack of
venue. To the extent provided by law, should any Maker, after being so
served, fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the mailing
thereof, Maker shall be deemed in default and an order and/or judgment may
be entered by the court against Maker as demanded or prayed for in such
summons, complaint, process or papers. The exclusive choice of forum for
Maker set forth in this paragraph shall not be deemed to preclude the
enforcement by Lender of any judgment obtained in any other forum or the
taking by Lender of any action to enforce the same in any other appropriate
jurisdiction, and Maker hereby waives the right to collaterally attack any
such judgment or action.
Maker acknowledges and agrees that any controversy which may arise
under this Revolving Loan Note would be based upon difficult and complex
issues and, therefore, Maker agrees that any lawsuit arising out of any such
controversy will be tried in a court of competent jurisdiction by a judge
sitting without a jury.
This Revolving Loan Note may not be changed or amended orally, but
only by an instrument in writing signed by the party against whom enforcement
of the change or amendment is sought.
This Revolving Loan Note shall be binding upon Maker and upon Maker's
successors and assigns, and shall inure to the benefit of the successors and
permitted assigns of Lender. If more than one party shall sign this Revolving
Loan Note as Maker, their obligations hereunder as Maker shall be joint and
several.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
placed thereon by any court or any Governmental Body, this Revolving Loan
Note shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are lawful
and valid shall remain in full force and effect.
Time for the performance of Maker's obligations under this Revolving
Loan Note is of the essence.
This Revolving Loan Note is entitled to the benefit of certain
collateral security, all as more fully set forth in the Loan Agreement.
This Revolving Loan Note amends, restates in its entirety, and
supercedes a Revolving Loan Note dated August 1, 2002, which amended and
restated a Revolving Loan Note dated May 1, 2002, in the principal face
amount of $7,000,000, which amended and restated a Revolving Loan Note
dated October 15, 2001, in the principal face amount of $7,000,000, which
amended and restated a Revolving Loan Note dated December 7, 2000, in the
principal face amount of $5,500,000, which amended and restated a Revolving
Loan Note dated June 12, 2000, in the principal face amount of $3,500,000,
which amended and restated a Revolving Loan Note dated April 18, 2000, in
the principal face amount of $2,000,000, made by Maker and payable to
Lender.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Revolving Loan Note has been executed and delivered
by Maker by its duly authorized officer on the date first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
EQUIPMENT LOAN NOTE
$1,000,000.00 Dated as of December 7, 2000
Chicago, Illinois Amended and Restated as of March 1, 2001
Further Amended and Restated as of October 15, 2001
Further Amended and Restated as of May 1, 2002
Further Amended and Restated as of March 21, 2003
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL TRANSPORTATION
INC., an Indiana corporation ("Carolina"); KEYSTONE LINES, a California
corporation ("Keystone"); GULF LINE TRANSPORT INC., an Indiana corporation
("Gulf Line"); FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five
Star"); CAM TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an Indiana
corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana corporation
("Friendly"); TRANSPORT LEASING, INC., an Arkansas corporation ("Transport
Leasing"); TRANSPORT LOGISTICS, LLC, an Arkansas limited liability company
("Transport Logistics"); HARBOR BRIDGE INTERMODAL, INC. ("Harbor"); PATRIOT
LOGISTICS, INC., an Indiana corporation; LIBERTY TRANSPORT, INC., an Indiana
corporation; and KEYSTONE LINES CORPORATION, an Indiana corporation;
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as "Maker"),
hereby promise, jointly and severally, to pay to the order of U.S. BANK
NATIONAL ASSOCIATION, a national banking association, formerly known as
FIRSTAR BANK N.A. ("Lender"), the principal sum of ONE MILLION AND NO/100ths
DOLLARS ($1,000,000.00), or, if less, the aggregate unpaid amount of the
Equipment Loan made by Lender pursuant to and in accordance with the
applicable provisions of that certain Loan Agreement dated April 18, 2000,
and amended as of June 12, 2000, December 7, 2000, March 1, 2001, October
15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003 (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement") between Maker, US 1 INDUSTRIES, INC., an Indiana corporation
("Guarantor") and Lender, at the office of Lender at 30 N. Michigan Avenue,
Chicago, Illinois 60602, or at such other place as the holder hereof may
appoint, plus interest thereon as set forth below.
This Equipment Loan Note is delivered by Maker to Lender pursuant to
And in accordance with the applicable provisions of the Loan Agreement. All
capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The principal balance of this Equipment Loan Note ("Principal
Balance") shall bear interest at the per annum rate of interest set forth
in subsection 2.3 of the Loan Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Equipment Loan Note shall be paid in the manner set forth in Section 2.4
Of the Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual number of days during the period for
which interest is being charged.
During a Default Rate Period, the Principal Balance shall bear interest
at the Default Rate, which interest at such Default Rate shall be paid by Maker
to Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement, at the
election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal Balance, and all accrued and
unpaid interest thereon, shall be and become immediately due and payable in
full. Failure to exercise this option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent Event of Default, and
such failure shall not be deemed to establish a custom or course of dealing or
performance between Maker and Lender.
This Equipment Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan Agreement
applicable thereto.
All funds received by Lender during the existence of an Event of Default
shall be applied in the manner set forth in Section 8.4 of the Loan Agreement.
All payments to be made by Maker pursuant to this Note shall be made in
accordance with the instructions therefore set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is in
receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interest").
If any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Equipment Loan Note or any
other Loan Instrument, then in such event (i) Maker shall not be obligated
to pay such Excess Interest, (ii) any Excess Interest collected by Lender
shall be, (A)if any Event of Default exists and is continuing, applied to
the Principal Balance or to accrued and unpaid interest not in excess of
the maximum rate permitted by applicable law or (B) if no Event of Default
exists and is continuing, refunded to the payor thereof, (iii) the interest
rates provided for herein (collectively the "Stated Rate") shall be
automatically reduced to the maximum rate allowed from time to time under
applicable law (the "Maximum Rate") and this Equipment Loan Note and the
other Loan Instruments, as applicable, shall be deemed to have been, and
shall be, modified to reflect such reduction, and (iv) Maker shall not have
any action against Lender for any damages arising out of the payment or
collection of such Excess Interest; provided, however, that if at any time
thereafter the Stated Rate is less than the Maximum Rate, Maker shall, to
the extent permitted by law, continue to pay interest at the Maximum Rate
until such time as the total interest received by Lender is equal to the
total interest which Lender would have received had the Stated Rate been
(but for the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable shall be the Stated Rate unless and
until the Stated Rate again exceeds the Maximum Rate, in which event the
provisions contained in this paragraph again shall apply.
If any suit or action is instituted or attorneys are employed to
collect this Equipment Loan Note or any part thereof, Maker promises and
agrees, jointly and severally, to pay all costs of collection, including
all court costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand
and notice of protest, demand, dishonor and nonpayment of this Equipment
Loan Note, and expressly agrees that this Equipment Loan Note, or any
payment hereunder, may be extended from time to time before, at or after
maturity, without in any way affecting the liability of Maker hereunder or
any guarantor hereof.
This Equipment Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without regard
to conflict of laws principles. All funds disbursed to or for the benefit
of Maker will be deemed to have been disbursed in Chicago, Illinois.
Maker hereby agrees that all actions or proceedings initiated by
any Maker and arising directly or indirectly out of this Equipment Loan
Note Shall be litigated in either the Circuit Court of Cook County, Illinois
or in the United States District Court for the Northern District of Illinois,
or, if Lender initiates such action, in addition to the foregoing courts,
any court in which Lender shall initiate or to which Lender shall remove
such action, to the extent such court has jurisdiction. Maker hereby
expressly submits and consents in advance to such jurisdiction in any action
or proceeding commenced by Lender in or removed by Lender to any of such
courts, and hereby agrees that personal service of the summons and complaint,
or other process or papers issued therein may be made by registered or
certified mail addressed to Maker at the address to which notices are to be
sent pursuant to Section 11.1 of the Loan Agreement. Maker waives any claim
that either the Circuit Court of Cook County, Illinois or the United States
District Court for the Northern District of Illinois is an inconvenient
Forum or an improper forum based on lack of venue. To the extent provided by
law, should any Maker, after being so served, fail to appear or answer to
any summons, complaint, process or papers so served within the number of
days prescribed by law after the mailing thereof, Maker shall be deemed in
default and an order and/or judgment may be entered by the court against
Maker as demanded or prayed for in such summons, complaint, process or
papers. The exclusive choice of forum for Maker set forth in this paragraph
shall not be deemed to preclude the enforcement by Lender of any judgment
obtained in any other forum or the taking by Lender of any action to enforce
the same in any other appropriate jurisdiction, and Maker hereby waives the
right to collaterally attack any such judgment or action.
Maker acknowledges and agrees that any controversy which may arise
under this Equipment Loan Note would be based upon difficult and complex
issues and, therefore, Maker agrees that any lawsuit arising out of any
such controversy will be tried in a court of competent jurisdiction by a
judge sitting without a jury.
This Equipment Loan Note may not be changed or amended orally, but
only by an instrument in writing signed by the party against whom
enforcement of the change or amendment is sought.
This Equipment Loan Note shall be binding upon Maker and upon
Maker's successors and assigns, and shall inure to the benefit of the
successors and permitted assigns of Lender. If more than one party shall
sign this Equipment Loan Note as Maker, their obligations hereunder as
Maker shall be joint and several.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
laced thereon by any court or any Governmental Body, this Equipment Loan
Note shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are lawful
and valid shall remain in full force and effect.
Time for the performance of Maker's obligations under this Equipment
Loan Note is of the essence.
This Equipment Loan Note is entitled to the benefit of certain collateral
security, all as more fully set forth in the Loan Agreement.
This Equipment Loan Note amends, restates in its entirety, and
supercedes an Equipment Loan Note dated as of December 7, 2000, in the
original face amount of $500,000 as amended and restated as of March 1, 2001,
in the principal face amount of $1,000,000, as amended and restated as of
October 15, 2001, and as further amended and restated as of May 1, 2002.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Equipment Loan Note has been executed and delivered
by Maker by its duly authorized officer on the date first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GUIDANCE LOAN NOTE
$300,000.00 Dated as of October 15, 2001
Chicago, Illinois Amended and Restated as of May 1, 2002
Further Amended and Restated as of March 21, 2003
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL
TRANSPORTATION INC., an Indiana corporation ("Carolina"); KEYSTONE LINES,
a California corporation ("Keystone"); GULF LINE TRANSPORT INC., an Indiana
corporation ("Gulf Line"); FIVE STAR TRANSPORT, INC., an Indiana
corporation ("Five Star"); CAM TRANSPORT, INC., an Indiana corporation
("Cam"); UNITY LOGISTIC SERVICES INC., an Indiana corporation ("Unity");
ERX, INC., an Indiana corporation ("ERX"); FRIENDLY TRANSPORT, INC., an
Indiana corporation ("Friendly"); TRANSPORT LEASING, INC., an Arkansas
corporation ("Transport Leasing"); TRANSPORT LOGISTICS, LLC, an Arkansas
limited liability company ("Transport Logistics"); HARBOR BRIDGE INTERMODAL,
INC. ("Harbor"); PATRIOT LOGISTICS, INC., an Indiana corporation; LIBERTY
TRANSPORT, INC., an Indiana corporation; and KEYSTONE LINES CORPORATION, an
Indiana corporation; (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity,
ERX, Friendly, Transport Leasing, Transport Logistics, Harbor, Patriot,
Liberty and Keystone-Indiana are hereinafter collectively referred to as
"Maker"), hereby promise, jointly and severally, to pay to the order of
U.S. BANK NATIONAL ASSOCIATION, a national banking association, formerly
known as FIRSTAR BANK N.A. ("Lender"), the principal sum of THREE-HUNDRED
THOUSAND AND NO/100ths DOLLARS ($300,000.00), or, if less, the aggregate
unpaid amount of the Guidance Loan made by Lender pursuant to and in
accordance with the applicable provisions of that certain Loan Agreement
dated as of April 18, 2000, and amended as of June 12, 2000, December 7,
2000, March 1, 2001, October 15, 2001, May 1, 2002, August 1, 2002, and March
21, 2003 (as the same may be amended, modified, supplemented or restated from
time to time, the "Loan Agreement") between Maker, US 1 INDUSTRIES, INC., an
Indiana corporation ("Guarantor") and Lender, at the office of Lender at 30
N. Michigan Avenue, Chicago, Illinois 60602, or at such other place as the
holder hereof may appoint, plus interest thereon as set forth below.
This Guidance Loan Note is delivered by Maker to Lender pursuant to
and in accordance with the applicable provisions of the Loan Agreement. All
capitalized terms used but not elsewhere defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The principal balance of this Guidance Loan Note ("Principal Balance")
shall bear interest at the per annum rate of interest set forth in Section
2.3 of the Loan Agreement.
Accrued and unpaid interest on, and the Principal Balance of, this
Guidance Loan Note shall be paid in the manner set forth in Section 2.4 of
the Loan Agreement.
Interest shall be: (i) computed on the basis of a year consisting of
360 days and (ii) charged for the actual number of days during the period for
which interest is being charged.
During a Default Rate Period, the Principal Balance shall bear interest
at the Default Rate, which interest at such Default Rate shall be paid by
Maker to Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan Agreement, at the
election of the holder hereof, upon the occurrence of an Event of Default,
without further notice or demand, the Principal Balance, and all accrued and
unpaid interest thereon, shall be and become immediately due and payable in
full. Failure to exercise this option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent Event of Default,
and such failure shall not be deemed to establish a custom or course of
dealing or performance between Maker and Lender.
This Guidance Loan Note may be prepaid, in whole or in part, without
penalty and in accordance with the terms and conditions of the Loan Agreement
applicable thereto.
All funds received by Lender during the existence of an Event of
Default shall be applied in the manner set forth in Section 8.4 of the Loan
Agreement.
All payments to be made by Maker pursuant to this Note shall be made
in accordance with the instructions therefore set forth in the Loan Agreement.
Payment shall not be deemed to have been received by Lender until Lender is
in receipt of Good Funds.
Notwithstanding any provision to the contrary contained herein or in
any other Loan Instrument, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Maker in excess of the maximum
contract rate of interest permitted by applicable law ("Excess Interest").
If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Equipment Loan Note
or any other Loan Instrument, then in such event (i) Maker shall not be
obligated to pay such Excess Interest, (ii) any Excess Interest collected
by Lender shall be, (A) if any Event of Default exists and is continuing,
applied to the Principal Balance or to accrued and unpaid interest not in
excess of the maximum rate permitted by applicable law or (B) if no Event
of Default exists and is continuing, refunded to the payor thereof, (iii)
the interest rates provided for herein (collectively the "Stated Rate") shall
be automatically reduced to the maximum rate allowed from time to time under
applicable law (the "Maximum Rate") and this Equipment Loan Note and the
other Loan Instruments, as applicable, shall be deemed to have been, and
shall be, modified to reflect such reduction, and (iv) Maker shall not have
any action against Lender for any damages arising out of the payment or
collection of such Excess Interest; provided, however, that if at any time
thereafter the Stated Rate is less than the Maximum Rate, Maker shall, to
the extent permitted by law, continue to pay interest at the Maximum Rate
until such time as the total interest received by Lender is equal to the
total interest which Lender would have received had the Stated Rate been
(but for the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable shall be the Stated Rate unless
And until the Stated Rate again exceeds the Maximum Rate, in which event
the provisions contained in this paragraph again shall apply.
If any suit or action is instituted or attorneys are employed to
collect this Guidance Loan Note or any part thereof, Maker promises and
agrees, jointly and severally, to pay all costs of collection, including all
court costs and reasonable attorneys' fees.
Maker hereby waives presentment for payment, protest and demand and
notice of protest, demand, dishonor and nonpayment of this Guidance Loan
Note, and expressly agrees that this Guidance Loan Note, or any payment
hereunder, may be extended from time to time before, at or after maturity,
without in any way affecting the liability of Maker hereunder or any
guarantor hereof.
This Guidance Loan Note shall be construed in accordance with and
governed by the laws and decisions of the State of Illinois, without regard
to conflict of laws principles. All funds disbursed to or for the benefit
of Maker will be deemed to have been disbursed in Chicago, Illinois.
Maker hereby agrees that all actions or proceedings initiated by any
Maker and arising directly or indirectly out of this Guidance Loan Note
Shall be litigated in either the Circuit Court of Cook County, Illinois or
in the United States District Court for the Northern District of Illinois,
or, if Lender initiates such action, in addition to the foregoing courts,
any court in which Lender shall initiate or to which Lender shall remove
such action, to the extent such court has jurisdiction. Maker hereby
expressly submits and consents in advance to such jurisdiction in any
action or proceeding commenced by Lender in or removed by Lender to any of
such courts, and hereby agrees that personal service of the summons and
complaint, or other process or papers issued therein may be made by
registered or certified mail addressed to Maker at the address to which
notices are to be sent pursuant to Section 11.1 of the Loan Agreement.
Maker waives any claim that either the Circuit Court of Cook County, Illinois
or the United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To the
extent provided by law, should any Maker, after being so served, fail to
appear or answer to any summons, complaint, process or papers so served
within the number of days prescribed by law after the mailing thereof,
Maker shall be deemed in default and an order and/or judgment may be entered
by the court against Maker as demanded or prayed for in such summons,
complaint, process or papers. The exclusive choice of forum for Maker set
forth in this paragraph shall not be deemed to preclude the enforcement by
Lender of any judgment obtained in any other forum or the taking by Lender
of any action to enforce the same in any other appropriate jurisdiction,
and Maker hereby waives the right to collaterally attack any such judgment
or action.
Maker acknowledges and agrees that any controversy which may arise
under this Guidance Loan Note would be based upon difficult and complex
issues and, therefore, Maker agrees that any lawsuit arising out of any
such controversy will be tried in a court of competent jurisdiction by a
judge sitting without a jury.
This Guidance Loan Note may not be changed or amended orally, but
only by an instrument in writing signed by the party against whom
enforcement of the change or amendment is sought.
This Guidance Loan Note shall be binding upon Maker and upon
Maker's successors and assigns, and shall inure to the benefit of the
successors and permitted assigns of Lender. If more than one party shall
sign this Guidance Loan Note as Maker, their obligations hereunder as
Maker shall be joint and several.
This Guidance Loan Note amends, restates in its entirety, and
supercedes a Guidance Loan Note dated as of May 1, 2002, which amended and
restated a Guidance Loan Note dated as of October 15, 2001, in the principal
face amount of $300,000.
In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law, or by reason of the interpretation
placed thereon by any court or any Governmental Body, this Guidance Loan Note
shall be construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other provisions hereof, and
any and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.
Time for the performance of Maker's obligations under this Guidance
Loan Note is of the essence.
This Guidance Loan Note is entitled to the benefit of certain
collateral security, all as more fully set forth in the Loan Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Guidance Loan Note has been executed and delivered by
Maker by its duly authorized officer on the date first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: ______________________________
Name: ____________________________
Title: _____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _______________________________
Name: _____________________________
Title: ______________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ___________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
Date: March 21, 2003
REAFFIRMATION OF LIMITED GUARANTY
In connection with the execution of that certain Seventh Amendment to
Loan Agreement dated as of the date hereof, the undersigned, Michael Kibler
("Kibler") ("Guarantor"), does hereby absolutely and unconditionally,
reaffirm his limited guarantee dated as of August 1, 2002 to U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), of (i) prompt payment when due, whether at
stated maturity, upon acceleration or otherwise, and at all times thereafter,
of that certain Revolving Loan Note, dated April 18, 2000, as amended and
restated as of June 12, 2000, December 7, 2000, October 15, 2001, May 1,
2002, and August 1, 2002, in the principal amount of $8,500,000 (the
"Revolving Loan Note"); that certain Equipment Loan Note, dated December 7,
2000, as amended and restated as of March 1, 2001, October 15, 2001, and May
1, 2002 in the principal amount of $1,000,000 (the "Equipment Loan Note");
and that certain Guidance Loan Note dated October 15, 2001, as amended and
restated as of May 1, 2002, in the principal amount of $300,000 (the
"Guidance Loan Note"), all executed by Carolina National Transportation Inc.,
an Indiana corporation ("Carolina"); Keystone Lines, a California corporation
("Keystone"); Gulf Line Transport Inc., an Indiana corporation ("Gulf Line");
Five Star Transport, Inc., an Indiana corporation ("Five Star"); CAM
Transport, Inc., an Indiana corporation ("Cam"); Unity Logistic Services
Inc., an Indiana corporation ("Unity"); ERX, Inc., an Indiana corporation
("ERX"); Friendly Transport, Inc. ("Friendly"); Transport Leasing, Inc.,
an Arkansas corporation ("Transport Leasing"); Transport Logistics, LLC,
an Arkansas limited liability company ("Transport Logistics"); Harbor Bridge
Intermodal, Inc., an Indiana corporation ("Harbor"); Patriot Logistics, Inc.,
an Indiana corporation ("Patriot"); Liberty Transport, Inc., an Indiana
corporation ("Liberty"), and Keystone Lines Corporation, an Indiana
corporation ("Keystone-Indiana") (Carolina, Keystone, Gulf Line, Five Star,
Unity, ERX, Friendly, Transport Leasing, Transport Logistics, Harbor,
Patriot, Liberty and Keystone-Indiana are hereinafter collectively referred
to as "Borrowers") (the Revolving Loan Note, Equipment Loan Note and Guidance
Loan Note are collectively referred to herein as the "Notes") and (ii)
prompt performance and payment of all of Borrowers' Obligations (as defined
in that certain Loan Agreement dated April 18, 2000, as amended and restated
as of June 9, 2000, December 7, 2000, March 1, 2001, October 15, 2001, May 1,
2002, and August 1, 2002, between Borrowers, Lender, and US 1 Industries, Inc.
(the "Loan Agreement")) (any and all indebtedness represented or evidenced by
or arising with respect to the Notes in favor of Lender and Borrowers'
Obligations hereinafter sometimes collectively referred to as the
"Guaranteed Debt"), all on the terms set forth herein, and further
guarantees the performance of his obligations with regards to the Notes and
the Loan Agreement, as the same have been amended (or amended and restated,
as the case may be), as of March 21, 2003.
Chicago, Illinois
_________________________
Michael Kibler
Date: March 21, 2003
REAFFIRMATION OF LIMITED GUARANTY
In connection with the execution of that certain Seventh Amendment to
Loan Agreement dated as of the date hereof, the undersigned, Michael Kibler
("Kibler") ("Guarantor"), does hereby absolutely and unconditionally,
reaffirm his limited guarantee dated as of August 1, 2002 to U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), of (i) prompt payment when due, whether at stated
maturity, upon acceleration or otherwise, and at all times thereafter, of that
certain Revolving Loan Note, dated April 18, 2000, as amended and restated as
of June 12, 2000, December 7, 2000, October 15, 2001, May 1, 2002, and August
1, 2002, in the principal amount of $8,500,000 (the "Revolving Loan Note");
that certain Equipment Loan Note, dated December 7, 2000, as amended and
restated as of March 1, 2001, October 15, 2001, and May 1, 2002 in the
principal amount of $1,000,000 (the "Equipment Loan Note"); and that certain
Guidance Loan Note dated October 15, 2001, as amended and restated as of May
1, 2002, in the principal amount of $300,000 (the "Guidance Loan Note"), all
executed by Carolina National Transportation Inc., an Indiana corporation
("Carolina"); Keystone Lines, a California corporation ("Keystone"); Gulf
Line Transport Inc., an Indiana corporation ("Gulf Line"); Five Star
Transport, Inc., an Indiana corporation ("Five Star"); CAM Transport, Inc.,
an Indiana corporation ("Cam"); Unity Logistic Services Inc., an Indiana
corporation ("Unity"); ERX, Inc., an Indiana corporation ("ERX"); Friendly
Transport, Inc. ("Friendly"); Transport Leasing, Inc., an Arkansas
corporation ("Transport Leasing"); Transport Logistics, LLC, an Arkansas
limited liability company ("Transport Logistics"); Harbor Bridge Intermodal,
Inc., an Indiana corporation ("Harbor"); Patriot Logistics, Inc., an
Indiana corporation ("Patriot"); Liberty Transport, Inc., an Indiana
corporation ("Liberty"), and Keystone Lines Corporation, an Indiana
corporation ("Keystone-Indiana") (Carolina, Keystone, Gulf Line, Five Star,
Unity, ERX, Friendly, Transport Leasing, Transport Logistics, Harbor, Patriot,
Liberty and Keystone-Indiana are hereinafter collectively referred to as
"Borrowers") (the Revolving Loan Note, Equipment Loan Note and Guidance
Loan Note are collectively referred to herein as the "Notes") and (ii) prompt
performance and payment of all of Borrowers' Obligations (as defined in that
certain Loan Agreement dated April 18, 2000, as amended and restated as of June
9, 2000, December 7, 2000, March 1, 2001, October 15, 2001, May 1, 2002, and
August 1, 2002, between Borrowers, Lender, and US 1 Industries, Inc. (the "Loan
Agreement")) (any and all indebtedness represented or evidenced by or arising
with respect to the Notes in favor of Lender and Borrowers' Obligations
hereinafter sometimes collectively referred to as the "Guaranteed Debt"), all
on the terms set forth therein, and further guarantees the performance of his
obligations with regards to the Notes and the Loan Agreement, as the same have
been amended (or amended and restated, as the case may be), as of March 21,
2003.
Chicago, Illinois
____________________
Harold Antonson
Date: March 21, 2003
REAFFIRMATION OF CORPORATE GUARANTY
To induce U.S. Bank National Association, a national banking
association formerly known as Firstar Bank N.A., whose address is 30 N.
Michigan Avenue, Chicago, Illinois 60602 ("Lender"), to advance funds to
Carolina National Transportation Inc., an Indiana corporation ("Carolina");
Keystone Lines, a California corporation ("Keystone"); Gulf Line Transport
Inc., an Indiana corporation ("Gulf Line"); Five Star Transport, Inc., an
Indiana corporation ("Five Star"); CAM Transport, Inc., an Indiana
corporation ("Cam"); Unity Logistic Services Inc., an Indiana corporation
("Unity"); ERX, Inc., an Indiana corporation ("ERX"); Friendly Transport,
Inc. ("Friendly"); Transport Leasing, Inc., an Arkansas corporation
("Transport Leasing"); and Transport Logistics, LLC, an Arkansas limited
liability company ("Transport Logistics"); Harbor Bridge Intermodal, Inc.
("Harbor"); Patriot Logistics, Inc. ("Patriot"); Liberty Transport, Inc.
("Liberty") and Keystone Lines Corporation, an Indiana corporation
"Keystone-Indiana") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, Harbor, Patriot, Liberty,
and Keystone-Indiana are hereinafter collectively referred to as "Borrowers")
and to enter into a certain Seventh Amendment to Loan Agreement of even date
herewith between Borrowers and Lender (which Seventh Amendment to Loan
Agreement, together with the original Loan Agreement dated April 18, 2000,
and the amendments thereto dated June 9, 2000, December 7, 2000, March 1,
2001, October 15, 2001, May 1, 2002, August 1, 2002, and March 21, 2003 is
the "Loan Agreement") and to otherwise extend credit to Borrowers, the
undersigned hereby irrevocably, absolutely and unconditionally reaffirms
its Corporate Guaranty dated as of August 1, 2002, concerning the payment
and performance when due of all presently existing or hereafter incurred
direct, indirect, absolute or contingent indebtedness, liabilities and other
obligations of Borrowers to Lender arising out of or incurred in connection
with the Revolving Loan Note dated April 18, 2000 from Borrowers to Lender,
as amended and restated as of June 9, 2000, December 7, 2000, October 15,
2001, May 1, 2002, and August 1, 2002 (the "Revolving Loan Note"); the
equipment Loan Note from Borrowers to Lender dated as of December 7, 2000,
as amended and restated as March 1, 2001, October 15, 2001, and May 1, 2002
the "Equipment Loan Note"); and the Guidance Line Note, dated as of October
5, 2001 and as amended and restated as of May 1, 2002 (the "Guidance Loan
Note") (the Revolving Loan Note, the Equipment Loan Note, and the Guidance
Loan Note are herein collectively referred to as the "Notes"), or any
document, instrument, mortgage, guaranty, or security agreement given or
delivered to evidence or secure the indebtedness evidenced by the Notes, and
all modifications, amendments and supplements thereto including, but not
limited to, charges, interest and the principal, interest and other sums
payable pursuant to the Notes or the Loan Agreement or any of the Loan
Instruments (as defined in the Loan Agreement) (collectively, the
"Obligations").
[SIGNATURE PAGE FOLLOWS]
Chicago, Illinois
US 1 INDUSTRIES, INC., an Indiana corporation
By: _________________________________
Name: _______________________________
Title: ________________________________
Address: 1000 Colfax Street
Gary, IN 46406
Fax No.: (219) 977-5227
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of March 21, 2003, is between
PATRIOT LOGISTICS, INC., an Indiana corporation, LIBERTY TRANSPORT, INC.,
n Indiana corporation, and KEYSTONE LINES CORPORATION, an Indiana
corporation (collectively "Borrower"), and U.S. BANK NATIONAL ASSOCIATION,
a national banking association formerly known as FIRSTAR BANK N.A.
("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION INC., KEYSTONE LINES,
GULF LINE TRANSPORT INC., FIVE STAR TRANSPORT, INC., CAM TRANSPORT, INC.,
UNITY LOGISTIC SERVICES INC., ERX, INC., FRIENDLY TRANSPORT, INC., TRANSPORT
LEASING, INC., TRANSPORT LOGISTICS, LLC, and HARBOR BRIDGE INTERMODAL, INC.
(the "Other Borrowers"), US 1 INDUSTRIES, INC. ("Guarantor"), and Lender have
entered into a Seventh Amendment to Loan Agreement of even date herewith which
amends that certain Loan Agreement by and between Lender, the Other Borrowers,
and Guarantor, dated as of April 18, 2000, and amended as of June 9, 2000,
December 7, 2000, March 1, 2001, October 15, 2001, May 1, 2002, and August
1, 2002 (the April 18, 2000 Loan Agreement, as so amended and as amended by
the Seventh Amendment to Loan Agreement, constitutes the "Loan Agreement").
Pursuant to the Loan Agreement and subject to the terms and conditions
thereof, Lender has agreed to make loans and other financial accommodations
to Borrower and the Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations thereunder.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement, together with any future amendments and
modifications thereto or restatements thereof. As used herein, the following
terms shall have the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes resulting
from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent Collateral
and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and applications
for letters patent of Borrower throughout the world, including all patent
applications of Borrower in preparation for filing anywhere in the world, (ii)
patent licenses of Borrower, (iii) reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any Patent
Collateral and (iv) all proceeds of, and rights associated with, the foregoing
(including licenses, royalties and proceeds of infringement suits), the right
of Borrower to sue third parties for past, present and future infringements of
any patent or patent application, and for breach or enforcement of any patent
license of Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
dress, service marks, certification marks, collective marks, logos, other
sources of business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of a like
nature of Borrower (each of the foregoing items referred to as a "Trademark"),
now existing anywhere in the world or hereafter adopted or acquired, whether
currently in use or not, all registrations and recordings thereof and all
applications in connection therewith, whether pending or in preparation for
filing, including registrations, recordings and applications in the
United States Patent and Trademark Office and any foreign country, (ii) all
Trademark licenses of Borrower, (iii) all reissues, extensions or renewals of
any of the items described in clauses (i) and (ii) above, (iv) all of the
goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds of,
and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property
described below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's goods,
machinery, equipment and inventory, wherever located, and all additions and
accessions thereto or replacements thereof, including, but not limited to, all
machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto and
replacements thereof, including, but not limited to, all licenses, franchises,
permits and authorizations heretofore or hereafter granted or issued to
Borrower under federal, state or local laws (excluding, however, any licenses,
franchises, permits and authorizations issued by any Governmental Body to the
extent, and only to the extent, it is unlawful to grant a security interest
in such licenses, franchises, permits and authorizations, but including, without
limitation, the right to receive all proceeds derived or arising from or in
connection with the sale or assignment of such licenses, franchises, permits
and authorizations) which permit or pertain to the operation of the business
of Borrower, and all of Borrower's Intellectual Property Collateral, Operating
Agreements, income tax refunds, copyrights, patents, trademarks, trade names,
trade styles, goodwill, going concern value, franchise, supply and
distributorship agreements, non-competition agreements and employment
contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after-acquired Property, and Borrower will be the owner of such
after-acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the
location of the chief executive office of Borrower, all of the other places
of business of Borrower and all locations where the Tangible Collateral and
the books and records of Borrower are kept. Except as described in Exhibit A,
none of the Collateral is in the possession of any consignee, bailee,
warehouseman, agent or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion or
proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best
of Borrower's knowledge, as of the date of this Security Agreement, there is
no valid defense, set-off or counterclaim against Borrower and in connection
with which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual
Property Collateral is valid and enforceable, (iii) Borrower has made all
filings and recordations necessary in the exercise of reasonable and
prudent business judgment to protect its interest in such Intellectual
Property Collateral in the United States Patent and Trademark Office, the
United States Copyright Office and in corresponding offices throughout the
world, as appropriate, (iv) Borrower is the owner of the entire and
unencumbered right, title and interest in and to such Intellectual Property
Collateral and no claim has been made that the use of such Intellectual
Property Collateral does or may violate the asserted rights of any third
party, and (v) Borrower has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and taxes to
maintain each and every item of such Intellectual Property Collateral in full
force and effect throughout the world, as applicable. Borrower owns directly,
or is entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened which
contains allegations respecting the validity, enforceability, infringement
or ownership of any of the Intellectual Property Collateral of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter-
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to pay
the same. The amount represented by Borrower to Lender as owing by each
account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor has
any defense, set-off, claim or counterclaim against Borrower that can be
asserted against Lender, whether in any proceeding to enforce Lender's rights
in the Collateral or otherwise. None of the Accounts is, nor will any
hereafter-arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been terminated,
Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments and
governmental charges upon and relating to any of the Property, income or
receipts of Borrower or otherwise for which Borrower is or may be liable,
except to the extent that the failure to pay any of such taxes, levies,
assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such form,
with such companies and in such amounts as may be reasonably satisfactory to
Lender and otherwise comply with the provisions of Section 6.6 of the Loan
Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times shall
be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral
at all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to the
Tangible Collateral and (ii) take all actions reasonably requested by Lender
to cause the Lien granted to Lender hereunder to be noted on such certificates
of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees applicable
thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information with
any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the
request of Lender, promptly deliver to Lender the original executed copies
of all instruments and letters of credit which constitute part of the
Intangible Collateral, together with such endorsements, assignments and
other agreements as Lender may request in order to perfect the Security
Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could have
a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify
Lender immediately if it knows, or has reason to know, that any application
or registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart thereof
or any court) regarding Borrower's ownership of any of its Intellectual
Property Collateral, its right to register the same or to keep and maintain
and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any country or any political subdivision thereof, to
maintain and pursue any application (and to obtain the relevant
registration) filed with respect to, and to maintain any registration of,
its Intellectual Property Collateral, including the filing of applications
for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and the payment of
fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts to
collect the proceeds of indebtedness owing to Borrower by any Person under
any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, and from time to time hereafter
as requested by Lender, execute and deliver to Lender such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents, in form satisfactory to Lender, as
Lender may require to perfect and continue in effect the Security Interests,
to carry out the purposes of this Security Agreement and to protect Lender's
rights hereunder. Borrower, upon demand, shall pay the cost of filing all
such financing statements, continuation statements, termination statements,
amendments to any of the foregoing and other documents.
5. Negative Covenants. Until all of Borrowers' Obligations are paid
and performed in full and the Loan Agreement shall have been terminated,
Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license or
otherwise dispose of any of the Collateral, except as may be permitted by and
in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of (i)
Borrower's (A) chief executive office or (B) books and records or (ii) any
Tangible Collateral, in each case without first giving Lender at least 30 days'
advance written notice thereof and having taken any and all action reasonably
requested by Lender to maintain and preserve the first perfected Lien in favor
of Lender on all Property thereof free and clear of any Lien whatsoever except
for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of Borrower
or any other Person so as to become a part thereof or become in any sense a
fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or control
of any warehouseman, bailee or processor without Lender's prior written consent
and unless Lender has received warehouse receipts or bailee letters
satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or grant
any exclusive license with respect to the Intellectual Property Collateral to
an Affiliate of Borrower or otherwise take any action with respect to its
Intellectual Property Collateral in violation of any term or provision of the
Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees to,
unless Borrower shall either (i) reasonably and in good faith determine that
any of its Trademark Collateral is of negligible economic value to Borrower or
(ii) have a valid business purpose to do otherwise: (A) fail to continue to
use any of its Trademark Collateral in order to maintain all of its Trademark
Collateral in full force free from any claim of abandonment for non-use, (B)
fail to maintain as in the past the quality of products and services offered
under all of its Trademark Collateral, (C) fail to employ all of its
Trademark Collateral registered with any federal, state or foreign authority
with an appropriate notice of such registration, (D) adopt or use any trademark
which is confusingly similar or a colorable imitation of any of its Trademark
Collateral except in compliance with applicable law, (E) use any of its
Trademark Collateral registered with any federal, state or foreign authority
except for the uses for which registration or application for registration of
such Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby any
of its Trademark Collateral may lapse or become invalid or unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i) reasonably
and in good faith determine that any of its Patent Collateral is of negligible
economic value to Borrower or (ii) have a valid business purpose to do
otherwise, do any act, or omit to do any act, whereby any of Borrower's Patent
Collateral may lapse or become abandoned or dedicated to the public or
unenforceable.
6. Protection of Collateral. In the event of any failure of Borrower
to (i) maintain in force and pay for any insurance or bond which Borrower is
required to provide pursuant to this Security Agreement or the other Loan
Instruments, (ii) keep the Tangible Collateral in good repair and operating
condition, (iii) keep the Collateral free from all Liens except for Permitted
Liens, (iv) pay when due all taxes, levies and assessments on or in respect
of the Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of Borrower to
be paid or performed with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral or (vi) keep fully and perform promptly
any other of the obligations of Borrower under this Security Agreement or the
other Loan Instruments, Lender, at its option, may (but shall not be required
to) procure and pay for such insurance, place such Collateral in good repair
and operating condition, pay or contest or settle such Liens or taxes or any
judgments based thereon or otherwise make good any other aforesaid failure of
Borrower. Borrower shall reimburse Lender immediately upon demand for all sums
paid or advanced on behalf of Borrower for any such purpose, together with all
costs, expenses and attorneys' fees paid or incurred by Lender in connection
therewith and interest at the Default Rate on all sums so paid or advanced
from the date of such payment or advancement until repaid to Lender. All such
sums paid or advanced by Lender, with interest thereon, immediately upon
payment or advancement thereof, shall be deemed to be part of Borrowers'
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this Security
Agreement upon the occurrence of an Event of Default under the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall have the
right, from time to time, at Lender's discretion, to contact account debtors of
Borrower and Guarantor to verify that Accounts are valid and not subject to
setoff or counterclaim and to verify the creditworthiness of the account
debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and remedies
of a secured party under the Code and all other rights and remedies accorded to
Lender at equity or law, including, without limitation, the right to apply for
and have a receiver appointed by a court of competent jurisdiction to manage,
protect and preserve the Collateral, to continue operating the business of
Borrower and to collect all revenues and profits thereof. Any notice of sale
or other disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of such
action. Lender may postpone or adjourn any such sale from time to time by
announcement at the time and place of sale stated in the notice of sale or by
announcement of any adjourned sale, without being required to give a further
notice of sale. Any such sale may be for cash or, unless prohibited by
applicable law, upon such credit or installment terms as Lender shall
determine. Borrower shall be credited with the net proceeds of such sale only
when such proceeds actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any deficiency
on Borrowers' Obligations which remains outstanding following any such sale.
All net proceeds received pursuant to a sale shall be applied in the manner
set forth in Section 8.4 of the Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender, Borrower
shall assemble and make the Collateral available to Lender at a place
designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the Collateral
collected by Borrower in trust for Lender, and, after Borrower receives notice
from Lender, promptly after the receipt of the proceeds of Collateral, turn
over such proceeds to Lender in the exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice to
Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper or
general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property payable
or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue upon
or otherwise enforce any item of Collateral as Lender may determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive and
open mail addressed to Borrower, and endorse notes, checks, drafts, money
orders, documents of title or other forms of payment on behalf and in the
name of Borrower. All monies received by Lender pursuant to this Section
9 shall be applied by Lender in accordance with the applicable provisions
of Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies of
Lender under this Security Agreement, Borrower hereby irrevocably appoints
Lender as its attorney-in-fact, in the name of Borrower or in the name of
Lender, (i) to execute and file from time to time financing statements,
continuation statements, termination statements and amendments thereto,
covering the Collateral, in form satisfactory to Lender and (ii) take all
action and execute all documents referred to in Section 9.4 above. The power
of attorney granted pursuant to this Section 10 is coupled with an interest
and shall be irrevocable until all of Borrowers' Obligations have been paid
and performed in full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the acceptance
of this Security Agreement and, except as otherwise specifically provided in
Section 9.1 and 9.3 above or in the Loan Agreement, all other notices, demands
or protests to which Borrower otherwise might be entitled by law (and which
lawfully may be waived) with respect to this Security Agreement, Borrowers'
Obligations and the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall have no
duty as to the collection or protection of the Collateral or any income
thereon, (ii) may exercise the rights and remedies of Lender with respect to
the Collateral without resort or regard to other security or sources for
payment and (iii) shall not be deemed to have waived any of the rights or
remedies granted to Lender hereunder unless such waiver shall be in writing
and shall be signed by Lender. Borrower and Lender acknowledge their intent
that, upon the occurrence of an Event of Default, Lender shall receive, to
the fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to exercise
all remedies available to Lender under the Loan Instruments, the Code or
other applicable law. Borrower and Lender further acknowledge and agree that,
in the event of changes in law or governmental policy occurring subsequent
to the date hereof that affect in any manner Lender's rights of access to,
or use or sale of, the Collateral, or the procedures necessary to enable
Lender to obtain such rights of access, use or sale, Lender and Borrower
shall amend the Loan Instruments, in such manner as Lender shall request,
in order to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay or
omission on the part of Lender in exercising any rights or remedies
contained herein shall operate as a waiver of such right or remedy or of
any other right or remedy, and no single or partial exercise of any right or
remedy shall preclude any other or further exercise thereof, or the exercise
of any other right or remedy. A waiver of any right or remedy on any one
occasion shall not be construed as a bar or waiver of any right or remedy on
future occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a custom or
course of dealing or performance between the parties hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly agrees that,
anything herein to the contrary notwithstanding, Borrower shall remain liable
under each contract, agreement, interest or obligation assigned by Borrower
to Lender hereunder to observe and perform all of the conditions and
obligations to be observed and performed by Borrower thereunder, all in
accordance with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release Borrower
from any of its duties or obligations under any such contract, agreement,
interest or obligation. Lender shall have no duty, responsibility, obligation
or liability under any such contract, agreement, interest or obligation by
reason of or arising out of the assignment thereof to Lender or the granting
to Lender of a Security Interest therein or the receipt by Lender of any
payment relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any manner to
perform or fulfill any of the obligations of Borrower thereunder or pursuant
thereto, or to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by Lender or the sufficiency of any
performance of any party under any such contract, agreement, interest or
obligation, or to present or file any claim, or to take any action to collect
or enforce any performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security Interest
or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral. Borrower
hereby grants to Lender, after the occurrence and during the continuance of an
Event of Default, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to Borrower) to use, assign, license
or sublicense any Intellectual Property Collateral, now owned or hereafter
acquired by Borrower, and wherever the same may be located, including in such
license reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for the
compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender pursuant to
this Security Agreement, the Loan Agreement or otherwise, shall be cumulative
and non-exclusive, and may be exercised singularly or concurrently.
13. Severability. In the event that any provision of this Security
Agreement is deemed to be invalid by reason of the operation of any law or
by reason of the interpretation placed thereon by any court or any other
Governmental Body, this Security Agreement shall be construed as not
containing such provision and the invalidity of such provision shall not
affect the validity of any other provisions hereof, and any and all other
provisions hereof which otherwise are lawful and valid shall remain in full
force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in the
Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
17. Counterparts. This Security Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which, when taken together, shall be one and the same instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive the
execution and delivery of the Loan Agreement and shall continue in fall
force and effect until Borrowers' Obligations are paid and performed in full
and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed in
accordance with and governed by the laws and decisions of the State of
Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all actions or
proceedings initiated by Borrower and arising directly or indirectly out of
this Security Agreement shall be litigated in either the Circuit Court of Cook
County, Illinois or in the United States District Court for the Northern
District of Illinois, or, if Lender initiates such action, in addition to the
foregoing courts, any other court in which Lender shall initiate or to which
Lender shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such jurisdiction
in any action or proceeding commenced by Lender in or removed by Lender to any
of such courts, and hereby agrees that personal service of the summons and
complaint, or other process or papers issued therein may be served in the manner
provided for notices herein, and agrees that service of such summons and
complaint or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent pursuant to
Section 11.1 of the Loan Agreement. Borrower waives any claim that either the
Circuit Court of Cook County, Illinois or the United States District Court
for the Northern District of Illinois is an inconvenient forum or an improper
forum based on lack of venue. To the extent provided by law, should Borrower,
after being so served, fail to appear or answer to any summons, complaint,
process or papers so served within the number of days prescribed by law after
the mailing thereof, Borrower shall be deemed in default and an order and/or
judgment may be entered by the court against Borrower as demanded or prayed
for in such summons, complaint, process or papers. The exclusive choice of
forum for Borrower set forth in this Section 19 shall not be deemed to
preclude the enforcement by Lender of any judgment obtained in any other
forum or the taking by Lender of any action to enforce the same in any other
appropriate jurisdiction, and Borrower hereby waives the right to
collaterally attack any such judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and agrees
that any controversy which may arise under any of the Loan Instruments or with
respect to the transactions contemplated thereby would be based upon difficult
and complex issues and, therefore, the parties agree that any lawsuit arising
out of any such controversy will be tried in a court of competent jurisdiction
by a judge sitting without a jury.
22. Time of the Essence. Time for the performance of Borrowers'
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and security
interests granted hereunder shall not terminate until the full and complete
performance and payment and satisfaction of Borrowers' Obligations and the
Loan Agreement shall have terminated, whereupon Lender shall release all such
Liens and security interests in favor of Lender affecting the Collateral.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Security Agreement has been executed and delivered
by the parties hereto by a duly authorized officer of each such party on
the date first set forth above.
Address: PATRIOT LOGISTICS, INC.
1000 Colfax
Gary, IN 46406
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: LIBERTY TRANSPORT, INC.
1000 Colfax
Gary, IN 46406
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: KEYSTONE LINES CORPORATION
1000 Colfax
Gary, IN 46406
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: U.S. BANK NATIONAL ASSOCIATION,
30 N. Michigan Avenue a national banking association
Chicago, IL 60602
By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
1000 Colfax
Gary, IN 46406
Location of Other Places of Business
NONE
Location of Books and Records
1000 Colfax
Gary, IN 46406
Locations of All Tangible Collateral
1000 Colfax
Gary, IN 46406
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledge and agree, 1) that U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), has agreed to enter into a certain Seventh
Amendment to Loan Agreement dated as of March 21, 2003 (the "Amendment")
with the Borrowers identified therein (the "Borrowers"); 2) that the
Subordinated Debt (as defined in that certain Subordination Agreement
dated April 18, 2000, as amended by that certain Amendment to Subordination
Agreement dated August 1, 2002, between Lender and the undersigned (the
"Subordination Agreement")) is and shall continue to be subordinate, all
as provided in the Subordination Agreement, to any sums loaned to the
Borrowers, or any of them, in addition to being subordinate to any amounts
otherwise advanced to Borrowers, or any of them, by Lender prior to or
subsequent to the date hereof under the Loan Agreement (as that term is
defined in the Amendment); and 3) that any amounts advanced to any of the
Borrowers prior to or subsequent to the date hereof under the Loan
Agreement shall constitute Senior Debt for purposes of the Subordination
Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and delivered as
of March 21, 2003.
______________________________
Harold Antonson
______________________________
Michael Kibler
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledges and agrees, 1) that U.S. Bank
National Association, a national banking association formerly known as
Firstar Bank N.A. ("Lender"), has agreed to enter into a certain Seventh
Amendment to Loan Agreement dated as of March 21, 2003 (the "Amendment")
with the Borrowers identified therein (the "Borrowers"); 2) that the
Subordinated Debt (as defined in that certain Amended and Restated
Subordination Agreement dated as of August 1, 2002, between Lender and
the undersigned (the "Subordination Agreement")) is and shall continue to
be subordinate, all as provided in the Subordination Agreement, to any sums
loaned to the Borrowers, or any of them, in addition to being subordinate to
any amounts otherwise advanced to Borrowers, or any of them, by Lender prior
to or subsequent to the date hereof under the Loan Agreement (as that term
is defined in the Amendment); and 3) that any amounts advanced to any of the
Borrowers prior to or subsequent to the date hereof under the Loan Agreement
shall constitute Senior Debt for purposes of the Subordination Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and delivered as
of March 21, 2003.
AUGUST INVESTMENT PARTNERSHIP
By: AUGUST INVESTMENT CORPORATION,
General Partner
By: ______________________________
Its: ______________________________