FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2002.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File No. 1-8129.
US 1 INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana
(State of Incorporation)
(I.R.S. Employer Identification No.) 95-3585609
1000 Colfax, Gary, Indiana 46406
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (219) 944-6116
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, no par value None
Securities registered pursuant to Section 12(g) of the Act: None
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
On March 13, 2003, there were 11,618,224 shares of registrant's common stock
outstanding, and the aggregate market value of the voting stock held by non-
affiliates of the registrant was approximately $4,130,000. For purposes of
the forgoing statement, directors and officers of the registrant have been
assumed to be affiliates.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes ___ No _X_
On June 30, 2002, there were 10,618,224 shares of registrant's common stock
outstanding, and the aggregate market value of the voting stock held by non-
affiliates of the registrant was approximately $2,628,000. For purposes of
the forgoing statement, directors and officers of the registrant have been
assumed to be affiliates.
PART I
Item 1. Business.
The registrant, US 1 Industries, Inc. (hereinafter referred to, together
with its subsidiaries, as "US 1" or the "Company"), through its subsidiaries
is an interstate trucking company operating in 48 states. The Company's
business consists principally of a truckload operation for which the Company
obtains a significant percentage of its business through independent sales
agents who then arrange with independent truckers to haul the freight to the
desired destination.
US 1 was incorporated in California under the name Transcon Incorporated
on March 3, 1981. In March 1994, the Company changed its name to US 1
Industries, Inc. In February 1995, the Company was merged with an Indiana
corporation for purposes of re-incorporation under the laws of the state of
Indiana. The Company's principal subsidiaries consist of Blue and Grey
Transport, Inc., Blue and Grey Brokerage, Inc., Carolina National Logistics,
Inc., Carolina National Transportation, Inc., Friendly Transport, Inc., Five
Star Transport, Inc., Accu Scan Drug Testing, Inc., Keystone Logistics, Inc.,
Unity Logistics Inc., Gulf Line Brokerage, Inc., Gulf Line Transportation,
Inc., Keystone Lines, Inc., Cam Transport, Inc., ERX, Inc., Transport Leasing,
Inc., Harbor Bridge Intermodal, Inc., Keystone Intermodal Services, Inc., and
TC Services, Inc. Most of these subsidiaries operate under authority
granted by the United States Department of Transportation (the "DOT") and
various state agencies. The Company's operating subsidiaries generally
maintain separate offices, have their own management teams and offices and
directors, and are ran independently of the parent and each other.
Carolina Group ('Carolina') consists of Carolina National Transportation,
Inc., Gulf Line Transportation, Inc., Five Star Transport, Inc., and Friendly
Transport, Inc., all wholly owned subsidiaries of the Company. The Company
entered into an agreement with certain key employees in which these employees
will earn up to a 40% ownership interest in Carolina over a three year period,
beginning in the year following which Carolina achieves positive retained
earnings, contingent upon certain restrictions, including 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 a 15% ownership in
Carolina at December 31, 2002. The employees will receive an additional 15%
at December 31, 2003, and a 10% ownership interest at December 31, 2004. As a
result of this agreement, the company incurred compensation expense of
$150,000 for the year ended December 31, 2002. The Company also recognized
minority interest expense of $117,552 relating to the employees' portion of
Carolina's net income for the year ended December 31, 2002.
Net income for Carolina was $783,677, $486,000, and $563,814 for the years
ended 2002, 2001, and 2000, respectively.
Operations
The Company carries virtually all forms of freight transported by truck,
including specialized trucking services such as containerized, refrigerated,
and flatbed transportation.
The Company is primarily a non-asset based business, contracting with
independent truckers who generally own the truck they drive and independent
sales agents. The Company pays the independent truckers and agents a
percentage of the revenue received from customers for the transportation of
goods. The expenses related to the operation of the trucks are the
responsibility of the independent contractors. Certain operations of the
Company also subcontract ("broker") freight loads to other unaffiliated
transportation companies. Consequently, short-term fluctuations in
operating activity have less of an impact on the Company's net income than
they have on the net income of truck transportation companies that bear
substantially all of the fixed cost associated with the ownership of the
trucks. Like other truck transportation companies, however, US 1's revenues
are affected by competition and the state of the economy.
During 2001, the Company also began Keystone Intermodal, a division of
Keystone Lines, which utilized employees rather than independent sales agents.
During 2002, the Company's principal focus was to increase the revenue and
profitability of the Company.
Marketing and Customers
The Company conducts the majority of its business through a network of
independent sales agents who are in regular contact with shippers at the local
level. The sales agents have facilities and personnel to monitor and
coordinate shipments and respond to shippers' needs in a timely manner.
These agents are typically paid a commission of 6% to 10% of the Company's
revenues from its trucking operations.
During 2002, the Company utilized the services of approximately 51 sales
agents. One agent accounted for 6%, 8%, and 13% of the Company's revenue for
the years ended December 31, 2002, 2001, and 2000 respectively. The Company
shipped freight for approximately 1,000 customers in 2002, none of which
accounted for more than 10% of the Company's total revenues.
Independent Contractors
The independent contractors used by the Company must enter into standard
equipment operating agreements. The agreements provide that independent
contractors must bear many of the costs of operations, including drivers'
compensation, maintenance costs, fuel costs, collision insurance, taxes
related to the ownership and operation of the vehicle, licenses, and permits
for which they are paid 65% to 78% of the charges billed to the customer. The
Company requires independent contractors to maintain their equipment to
standards established by the DOT, and the drivers are subject to qualification
and training procedures established by the DOT. The Company is also required
to have random drug testing, enforce hours of service requirements, and
monitor maintenance of vehicles.
Employees
At December 31, 2002, the Company had approximately one hundred full-time
employees. The Company's employees are not covered by a collective bargaining
agreement.
Competition
The trucking industry is highly competitive. The Company competes for
customers primarily with other nationwide carriers, some of which have
company-owned equipment and company drivers, and many, have greater volume and
financial resources. The Company also competes with private carriage
conducted by existing and potential customers. In addition, the Company
competes with other modes of transportation including rail.
The Company also faces competition for the services of independent
trucking contractors and sales agents. Sales agents routinely do business
with a number of carriers on an ongoing basis. The Company has attempted to
develop a strong sales agent network by maintaining a policy of prompt payment
for services rendered and providing advanced computer systems.
Competition is based on several factors; principally cost, timely
availability of equipment, and quality of service.
Insurance
The Company insures the trucks with liability insurance coverage of up to
$1 million per occurrence with a $5,000 deductible. The Company has cargo
insurance coverage of up to $1,000,000 per occurrence with a $10,000
deductible. The Company also maintains a commercial general liability policy
with a limit of $1,000,000 per occurrence and no deductible. The current
insurance market is volatile with significant rate increases expected that
could adversely affect the cost and the available coverage.
Independent Contractor Status
From time to time, various legislative or regulatory proposals are
introduced at the federal or state levels to change the status of independent
contractors' classification to employees for either employment tax purposes
(withholding, social security, Medicare and unemployment taxes) or other
benefits available to employees. Currently, most individuals are classified
as employees or independent contractors for employment tax purposes based on
20 "common-law" factors rather than any definition found in the Internal
Revenue Code or Internal Revenue Service regulations. In addition, under
Section 530 of the Revenue Act of 1978, taxpayers that meet certain criteria
may treat similarly situated workers as employees, if they have received a
ruling from the Internal Revenue Service or a court decision affirming their
treatment, or if they are following a long-standing recognized practice.
Although management is unaware of any proposals currently pending to
change the employee/independent contractor classification, the costs
associated with potential changes, if any, in the employee/independent
contractor classification could adversely affect the Company's results of
operations if the Company were unable to reflect them in its fee arrangements
with the independent contractors and agent or in the prices charged to its
customer.
Regulation
The Company is a common and contract motor carrier regulated by the DOT
and various state agencies. Management does not believe that regulation by
the DOT or by the states in their remaining areas of authority will have a
material effect on the Company's operations. The Company's independent
contractor drivers also must comply with the safety and fitness regulations
promulgated by the DOT, including those relating to drug and alcohol testing
and hours of service.
The Company's operations are subject to various federal, state, and local
environmental laws and regulations, implemented principally by the EPA and
similar state regulatory agencies, governing the management of hazardous
wastes, other discharge of pollutants into the air and surface and underground
waters, and the disposal of certain substances. Management believes that its
operations are in compliance with current laws and regulations and does not
know of any existing condition (except as noted in the Environmental
Regulation section below) that would cause compliance with applicable
environmental regulations to have a material effect on the Company's earnings
or competitive position.
Environmental Regulation
The Company owns property in Phoenix, Arizona that was formerly leased to
Transcon Lines as a terminal facility, where soil contamination problems
existed or are known to exist currently. State environmental authorities
notified the Company of potential soil contamination from underground storage
tanks, and management has been working with the regulatory authorities to
implement the required remediation. The underground storage tanks were
removed from the Phoenix facility in February 1994. Currently the State
environmental authorities are requiring further testing of the property. The
Company believes it is in substantial compliance with state and federal
environmental regulations relative to the trucking business. However, the
Company is working with regulatory officials to eliminate any sources of
contamination and determine extent of existing problems. Estimates of the
costs to complete the future remediation of approximately $141,000 are
considered in the land valuation allowance in the Company's consolidated
financial statements at December 31, 2002 and 2001.
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
The statements contained in Item 1 (Description of Business) and Item 7
(Management Discussion and Analysis of Financial Condition and Results of
Operation), particularly the statements under "Future Prospects", contain
forward-looking statements that are subject to a variety of risks and
uncertainties. The Company cautions readers that these risks and
uncertainties could cause the Company's actual results in 2003 and beyond to
differ materially from those suggested by any forward-looking statements.
These risks and uncertainties include, without limitation, a lack of historic
information for new operations on which expectations regarding their future
performance can be based, general economic and business conditions affecting
the trucking industry, competition from, among others, national and regional
trucking companies that have greater financial and marketing resources than
the Company, the availability of sufficient capital, and the Company's ability
to successfully attract and retain qualified owner operators and agents.
Item 2. Properties
The Company's administrative offices are at 1000 Colfax, Gary, Indiana.
The Company leases its administrative offices of approximately 9,000 square
feet on a month to month basis for $3,000 per month. Keystone Intermodal
Services, Inc. leases office space in Fort Smith, AK of approximately 1,500
square feet on a month to month basis for $4,567. Both Companies lease their
space from Mr. Michael E. Kibler, President, Chief Executive Officer and a
director of the Company, and Mr. Harold Antonson, Treasurer, Chief Financial
Officer and a director of the Company.
In addition, the Company's subsidiaries lease office space and land in
several locations throughout the United States, as summarized below:
Approximate Monthly Lease
Subsidiary City,State Square Feet Rent Expiration
Carolina National
Transportation,Inc. Mt. Pleasant, SC 6,280 $ 8,699 Apr 30, 2004
Keystone Logistics, Inc. South bend, IN 2,046 1,523 month to month
CAM Transport, Inc. Gulfport, MS 3,000 2,250 Nov 1, 2003
Accuscan Drug Testing, Inc. Fort Worth, TX 700 700 Feb 29, 2004
Keystone Intermodal
Services, Inc. Atlanta, GA 57,420 1,914 Sep 1, 2005
Keystone Intermodal
Services, Inc. Port Allen, LA 60,800 3,700 month to month
Keystone Intermodal
Services, Inc. Irving, TX 8.0 acres 7,500 Jun 30, 2003
Keystone Intermodal
Services, Inc. Houston, TX 33,000 2,000 Dec 31, 2003
Keystone Lines, Inc. Laredo, TX 1,200 3,500 month to month
Transport Leasing, Inc. Sebastian County,AK 2,500 1,000 Mar 7, 2003
Transport Leasing, Inc. Calhoun, GA 8.4 acres 7,500 Jul 15, 2003
Keystone Intermodal
Services, Inc. Kansas City, MO 432 1,300 Jul 1, 2003
Keystone Intermodal
Services, Inc. Charlotte, NC 500 2,500 May 31, 2005
Keystone Intermodal
Services, Inc. Irving, TX 1,440 870 Nov 25, 2003
Management believes that the company's leased properties are adequate for
its current needs and can be retained or replaced at acceptable cost.
Item 3. Legal Proceedings
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. The Company
is currently appealing this judgment.
In February 2002, one of the Company's subsidiaries, Carolina National
Transportation, was named as a defendant in a suit entitled Hoover
Transportation Services, Inc. vs. Tim A. Frye, Sr. In essences, the suit
alleges that the primary defendant, Mr. Frye, violated a non-competition
agreement with, and confidentiality obligations to, the plaintiff by providing
freight related services in the metropolitan Charlotte area. Mr. Frye's
business contracted with the Company's subsidiary for shipping, and,
accordingly, the plaintiff alleges that the Company's subsidiary is liable for
damages as well. During July 2002, Mr. Frye was enjoined from further
violations of the non-competition agreement. The Company's subsidiary is
actively contesting the claims against it. Discovery is ongoing, and no trial
date has been set. At this time, the Company and its legal counsel are unable
to assess the outcome of this complaint. The Company intends to vigorously
defend itself in the matter.
In September 2002, CGU International Insurance, PLC filed a complaint in
the United States District Court for the Northern District of California
against Keystone Lines Inc., a subsidiary of the Company, which asserted
allegations for breach of contract regarding alleged damage to cargo which
occurred during interstate transportation. On November 18, 2002, Keystone
Lines Inc. filed an answer to the complaint generally denying liability for
the $392,000 loss asserted by the complaint. Keystone filed a cross-complaint
against other parties, which it believed are liable for any losses established
by the plaintiff. At this time, the Company and its legal counsel are unable
to assess the outcome of this complaint. The Company intends to vigorously
defend itself in this matter.
In October 2002, one of the Company's subsidiaries ("Keystone") was named
as a third party in a lawsuit in which an independent owner operator, leased
to the carrier, fell and injured himself on the property of Cooper Tire. As a
result, the independent owner operator filed suit against Cooper Tire. Cooper
Tire prevailed in their defense of this lawsuit and incurred $200,000 for
their defense. Cooper Tire is currently suing Keystone claiming that
Keystone, pursuant to a transportation rate agreement, is liable to reimburse
Cooper Tire for the defense costs. At this time, the Company and its legal
counsel are unable to assess the outcome of this complaint. The Company
intends to vigorously defend itself in this matter.
Item 3. Legal Proceedings (Continued)
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 4. Submission of Matters to a Vote of Security Holders.
At the Company's annual meeting of stockholders held on October 30, 2002,
the following individuals were elected as directors and received the notes
indicated:
For Vote Withheld
_________________ _______________
Harold E. Antonson 10,026,217 votes 100,310 votes
Brad A. James 10,077,894 votes 98,733 votes
Michael E. Kibler 10,076,317 votes 150,410 votes
Robert I. Scissors 10,075,717 votes 100,910 votes
William J. Sullivan 10,075,317 votes 101,310 votes
Lex L. Venditti 10,018,794 votes 157,833 votes
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Shares of Common Stock of the Company are listed and traded on the NASD
Electronic "bulletin board market" under the symbol USOO.
The following table sets forth for the period indicated the high and low
sales prices per share of the Common Stock as reported from NASDAQ quotations
provided by North American Quotations and reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.
<CAPTION
Calendar Year High Low
2002
First Quarter .8000 .4200
Second Quarter .6000 .3500
Third Quarter .6600 .2200
Fourth Quarter .6800 .4000
2001
First Quarter .2500 .0900
Second Quarter .3300 .1300
Third Quarter .3330 .1300
Fourth Quarter 1.0500 .1900
As of February 13, 2002, there were 3,197 holders of record of Common
Stock.
The Company has not paid any cash dividends on its Common Stock.
Management does not anticipate paying any dividends on the Common Stock in the
foreseeable future, and the Company's current credit agreement prohibits the
payment of dividends.
Item 6. Selected Financial Data
The selected consolidated financial data presented below have been derived
from the Company's consolidated financial statements. The consolidated
financial statements for the years ended December 31, 2002, 2001 and 2000 have
been audited by the Company's independent certified public accountants, whose
report on such consolidated financial statements is included herein under Item
8. The information set forth below should be read in conjunction with the
consolidated financial statements and notes thereto under Item 8 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Item 6. Selected Financial Data Continued
(in thousands, except per share data)
Fiscal Year Ended December 31,
2002 2001 2000 1999 1998
STATEMENT OF OPERATIONS DATA:
Operating revenues $110,387 $72,110 $48,284 $32,334 $30,177
Purchased transportation 83,188 55,609 37,627 24,846 23,417
Commissions 10,361 6,597 4,344 3,052 3,178
Other operating costs and
expenses 14,436 8,122 4,988 3,481 3,408
Operating income 2,402 1,782 1,325 954 174
Interest expense 550 712 623 661 744
Income before income taxes 1,684 1,168 802 412 173
Income tax benefit 0 400 800 0 0
Net income 1,684 1,568 1,602 412 173
Net Income available to common
shares 2,237 1,465 1,509 330 101
Income (loss) per common share
Net Income
Basic $0.20 $0.14 $0.14 $0.03 $0.01
Diluted $0.20 $0.14 $0.14 $0.03 $0.01
Weighted average shares
outstanding:
Basic 11,075,758 10,618,224 10,618,224 10,618,224 10,618,224
Diluted 11,075,758 10,618,224 10,618,224 10,618,224 10,618,224
BALANCE SHEET DATA:
Total assets 21,444 17,161 11,891 5,352 4,499
Long-term debt, including
current portion 4,311 4,660 4,259 2,547 2,967
Working capital 2,966 2,039 1,720 (712) (861)
Shareholders'equity
(deficiency) 1,857 (995) (2,459) (3,968) (4,298)
OTHER DATA:
Cash provided by(used in)
operating activities 831 (1,364) (2,656) (370) 490
Cash (used in) provided by
investing activities (157) (1,210) (84) 74 58
Cash (used in)provided by
financing activities (996) 2,895 2,740 296 (848)
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Overview
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 and increases or decreases in proportion to the revenue
generated through independent contractors. Commissions to agents and brokers
are primarily based on contractually agreed-upon percentages of revenue.
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.
Historically salaries, wages, fringe benefits, and other operating
expenses had been principally non-variable expenses and remained relatively
fixed with slight changes in relationship to revenue. However, during 2002
and 2001, the Company has added certain operations, which utilize employees
rather than independent agents.
The following table set forth the percentage relationships of expense
items to revenue for the periods indicated:
Fiscal Years
--------------------------
2002 2001 2000
------ ------ ------
Revenue 100.0% 100.0% 100.0%
Operating expenses:
Purchased transportation 75.4 77.1 77.9
Commissions 9.4 9.1 9.0
Insurance and claims 3.9 3.3 3.2
Salaries, wages and fringe benefits 4.6 3.5 3.6
Other operating expenses 4.5 4.5 3.6
------- ------ ------
Total operating expenses 97.8 97.5 97.3
------- ------ ------
Operating Income 2.2 2.5 2.7
General
Carolina Group ('Carolina') consists of Carolina National Transportation,
Inc., Gulf Line Transport, Inc., Five Star Transport, Inc., and Friendly
Transport, Inc., all wholly owned subsidiaries of the Company. The Company
entered into an agreement with certain key employees in which these employees
will earn up to a 40% ownership interest in Carolina over a three year period,
beginning in the year following which Carolina achieves positive retained
earnings, contingent upon certain restrictions, including 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. These employees will receive an additional 15% at
December 31, 2003, and a 10% ownership interest at December 31, 2004. As a
result of this agreement, the company incurred compensation expense of
$150,000 for the year ended December 31, 2002. The Company also recognized
minority interest expense of $117,552 relating to the employees' portion of
Carolina's net income for the year ended December 31, 2002, respectively. Net
income for Carolina was $783,677, $486,000, and $563,814 for the years ended
2002, 2001, and 2000, respectively.
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.
2002 Compared to 2001
Revenue for the 2002 fiscal year was $110.4 million, an increase of $38.3
million, or 53.1%, over revenue for the 2001 fiscal year. The increase was
attributable to continued growth at Carolina National Transportation, Keystone
Lines, and Transport Leasing, Inc. and the opening of a new operation, Harbor
Bridge. The growth at Carolina National Transportation, Keystone Lines, and
Transport Leasing is primarily attributable to the addition of independent
agents and drivers.
Purchased transportation was 75.4% of revenue in 2002 compared with 77.1%
in 2001. Purchased transportation has decreased 1.7% as a percentage of
revenue for the year ended December 31, 2002, compared to the year ended
December 31,2001. Purchased transportation and commission expense generally
increase or decrease in proportion to the revenue generated through
independent contractors. The 1.7% decrease in purchased transportation as a
percentage of revenue in 2002 compared with 2001 is attributable to the
following: (1) Insurance surcharges have been billed at several operations.
100% of this revenue is retained by the Company to help offset increased
insurance costs. Since there is no purchased transportation paid on the
surcharge revenue, purchased transportation, as a percentage of revenue, will
decline. (2) At certain new terminals and existing terminals where the
insurance surcharge is not billed, the Company has been able to negotiate
lower purchased transportation to assist in offsetting increasing insurance
costs. (3) A new intermodel division at Keystone, which began operations in
November 2001, operated for a full year. This intermodel division pays drivers
based on mileage rather than a fixed percentage of revenue and as a result
typically has a lower purchased transportation cost. (4) Many agents negotiate
a combined percentage payable for purchased transportation and commission. The
mix between the amount of purchased transportation paid verses commissions
paid may vary slightly based on agent negotiations with independent owner
operators.
2002 Compared to 2001 (continued)
As discussed above, the mix between the amount paid for purchased
transportation versus commissions may vary slightly from year to year.
However, in total, commissions and purchased transportation would typically be
expected to remain relatively consistent as a percentage of revenues.
Commissions to agents were 9.4% of revenue in 2002 compared with 9.1% in 2001.
The increase in commissions is offset partially by the decrease in purchased
transportation. Overall, purchased transportation and commissions in total
decreased as a percentage of revenue due to an increase of divisions that
utilize employees rather than agents. These divisions tend to pay lower
purchased transportation and commission. Also contributing to the overall
decrease in purchased transportation and commissions as a percentage of
revenue are the reasons provided above for the decrease in purchased
transportation as a percentage of revenues.
Insurance and claims increased in 2002 to 3.9% of revenue compared to 3.3%
of revenue for 2001. 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 0.7% 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 (see Item3--Legal Proceedings-for discussion of currently
pending litigation that has had or could have a material impact on the
Company).
Salaries, wages and fringe benefits were 4.6% of revenue in 2002 and 3.5%
in 2001. This increase of 1.1% can primarily be attributed to the newer
divisions that utilize employees who are paid a salary instead of agents who
would be paid commissions.
Other operating expenses remained consistent at 4.5% of revenue in both
2002 and 2001. 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
hasexpanded by adding new terminals and operations resulting in the addition of
new locations resulting in an increase in operating expenses such as rent.
Operating expenses increased $1.7 million from $3.3 million in 2001 to $5.0
million in 2002. The increase is primarily attributable to (1) a $1.0 million
increase (excluding rent) due to first full year of operation for two
operations which began in the fourth quarter of 2002, (2) $0.3 million
increase in rent expense due to the addition of new locations, (3)$0.1 million
increase in bad debt expense, and (4) overall increase in operating expenses
at other locations as volume continued to grow during 2002.
Based on the changes in revenue and expenses discussed above, operating
income increased by $619,785 from $1,782,040 in 2001 to $2,401,825 in 2002.
During fiscal 2002, the company incurred a charge of $550,857 relating to
a court ruling on litigation against the Company. See Item 3 - Legal
Proceedings for further discussion of this matter.
2002 Compared to 2001 (continued)
Interest expense decreased to $0.55 million in 2002 from $0.71 million in
2001. This decrease in interest expense is attributable to a continued
decrease in the prime rate, as well as the decrease in the Company's line of
credit balance. The rate on the Company's revolving line of credit is
currently based on certain financial covenants and may range from prime to
prime plus .5%. At December 31, 2002 the Company's interest rate on the loan
with its lender was at prime (4.25%).
Other income increased $.38 million in 2002 from 2001. The majority of
this increase was due to a non-recurring management fee in the amount of $0.2
million due to the Company from Eastern Refridgerated Express, an entity
partially owned by the Chief Executive Officer and Chief Financial Officer of
the Company. This fee was earned as a result of management and administrative
services which the Company provided to Eastern during fiscal 2002.
The Company also recognized minority interest expense of $117,552 relating
to the employees' portion of Carolina's net income for the year ended December
31, 2002. As previously discussed, the Company has entered into an agreement
in which certain key employees of Carolina will receive up to 40% ownership
interest in Carolina over a three year period. At December 31, 2002, these
employees had received 15% ownership interest and the minority interest
expense represents 15% of the net income of Carolina.
As a result of the factors outlined above, income before income tax
benefit was $1,684,219 in 2002 compared to $1,167,517 in 2001.
The Company has net operating loss carry-forwards of approximately $54
million at December 31, 2002. These carry-forwards are available to offset
taxable income in future years and substantially all of these carry-forwards
will expire in the years 2005 through 2010. The Company recognized no income
tax benefit in 2002 compared to $400,000 in 2001. At December 31, 2001, the
Company has realized a net deferred tax asset of $1,200,000. Based on
anticipated future taxable income and anticipated future usage of the net
operating loss, the Company believes it is more likely than not that the net
deferred tax asset will be realized. Due to the uncertainty of the remaining
tax asset, a valuation allowance has been maintained for the remaining
deferred tax asset at December 31, 2002.
As a result of the factors outlined above, net income in 2002 was
$1,684,219 compared with $1,567,517 in 2001.
On July 18, 2002, the Company redeemed all of its outstanding Series A
preferred stock plus all accrued dividends in exchange for 1,000,000 shares of
the Company's common stock. The carrying value of the preferred stock exceeded
the fair value of the common stock issued. As a result, the Company has
reflected the $609,541 excess of the carrying value of the preferred stock
over the fair value of the common shares as an addition to net income
available to shareholders. Series A preferred stock dividends of $56,573 were
accrued up to the date of redemption and have been reflected as a reduction in
net income available to common shareholders.
Net income available to common shareholders was $2,237,187 in 2002
compared to $1,464,661 in 2001.
2001 Compared to 2000
Revenue for the 2001 fiscal year was $72.1 million, an increase of $23.8
million, or 49.3%, over revenue for the 2000 fiscal year. The increase was
attributable to continued growth at Carolina National Transportation, the
opening of a new operation that specialized in over-size loads at Keystone
Lines, the addition of new intermodal operations at Keystone Lines, the new
operations of Transport Leasing, Inc. and ERX Transportation.
Purchased transportation was 77.1% of revenue in 2001 compared with 77.9%
in 2000. Purchased transportation has decreased .8% as a percentage of
revenue for the year ended December 31, 2001, compared to the year ended
December 31,2000. In 2000, the Company imposed a fuel surcharge on their
customers. This surcharge was payable 100% to the owner operators. Due to
the slight decrease in fuel costs in 2001, this component of revenue has
reduced relative to total revenue. The corresponding purchased transportation
has also decreased. Thus purchased transportation as a percentage of revenue
has decreased. In addition, in 2001, the Company started a new operation that
hauls over-dimensional freight using Company owned trailers at a lower over
all cost of purchased transportation.
Commissions to agents were 9.1% of revenue in 2001 compared with 9.0% in
2000. The increase in commissions is offset partially by the decrease in
purchased transportation.
Insurance and claims increased slightly in 2001 compared to 2000 at 3.3%
of revenue for 2001 verses 3.2% of revenue for 2000.
Salaries, wages and fringe benefits were 3.5% of revenue in 2001 and 3.6%
in 2000. The slight decrease in salaries, wages and fringe benefit expenses
as a percentage of revenue was due to increased productivity and economies of
scale.
Other operating expenses were 4.5% of revenue in 2001 and 3.6% in 2000.
One factor that substantially increased other operating expenses in 2001
compared to 2000 was an increase in depreciation expense. Depreciation
expense increased by 0.3% of revenue in 2001 compared to 2000. During 2001,
the Company had capital expenditures of $1.2 million, relating primarily to
the purchase of trailers for new operations. This increase in depreciation
partially offsets the decrease of purchased transportation in 2001 as a
percentage of revenue. Another factor contributing to the increase in
operating expenses was an increase in bad debt expense. The company's bad
debt expense increased 0.3% from 0.4% of revenue to 0.7% of revenue due to the
adverse affect of customers filing bankruptcy. Collections are an ongoing
challenge with today's soft economy and the company continually focuses on
this area.
Based on the changes in revenue and expenses discussed above, operating
income increased by $456,631 from $1,325,409 in 2000 to $1,782,040 in 2001.
Interest expense increased to $0.71 million in 2001 from $0.62 million
in 2000. Although the Company's line of credit interest rate is lower, the
loan balance is higher due to additional borrowings needed to fund the
Company's growth. The net effect was an increase in interest expense.
2002 Compared to 2001 (continued)
As a result of the factors outlined above, income before income tax
benefit was $1,167,517 in 2001 compared to $801,671 in 2000.
The Company has net operating loss carry-forwards of approximately $55
million at December 31, 2001. These carry-forwards are available to offset
taxable income in future years and substantially all of these carry-forwards
will expire in the years 2003 through 2010. The Company recognized an income
tax benefit of $400,000 in 2001 compared to $800,000 in 2000. Based on
profitability in recent years, the Company initially reduced its valuation
allowance for its deferred tax assets by $800,000 in 2000. A continuing
upward trend in profitability resulted in an additional $400,000 decrease in
the valuation allowance during 2001. At December 31, 2001, the Company has
realized a net deferred tax asset of $1,200,000. The Company believes it is
more likely than not that this amount will be realized as a result of
anticipated future taxable income to be generated. Due to the uncertainty of
the remaining tax asset, a valuation allowance has been maintained for the
remaining deferred tax asset at December 31, 2001.
Net income in 2001 was $1,567,517 compared with $1,601,671 in 2000. Income
available to common shareholders was $1,464,661, or $0.14 per common share, in
2001 compared with $1,509,099 or $0.14 per common share, in the prior year.
Liquidity and Capital Resources
During fiscal 2002, the Company's financial position continued to
improve. The Company had shareholders' equity of $1.9 million at December
31, 2002, compared with $1.0 million deficit at December 31, 2001. Working
capital at December 31, 2002 was $2.9 million compared to $2.0 million at
the end of 2001. This increase in working capital is due to continuing
profitability.
Net cash provided by (used in) operating activities increased $2.2
million from $(1.4) million for the year ended December 31, 2001 to $0.8
million for the year ended December 31, 2002. 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 fiscal 2002, accounts receivable
increased approximately $5.4 million in 2002. This increase in accounts
receivable was only partially offset by a corresponding increase in accounts
payable and accrued expenses of $2.8 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.
Liquidity and Capital Resources (continued)
Net cash used in investing activities was $0.2 million for the year ended
December 31, 2002 compared to net cash used in investing activities of $1.2
million for the year ended December 31, 2001. Net cash used in investing
activities during 2001 related to the Company's investment in additional
equipment, consisting primarily of trailers. The Company began operations of
a division that hauls oversized freight in 2001. The start-up of this division
required an initial investment in trailers. During 2002, the Company started
a new operation at its TLI subsidiary which required an initial investment in
equipment, consisting primarily of trailers.
Net cash (used in) provided by financing activities decreased $(3.9)
million from $2.9 million for the year ended December 31, 2001 to $(1.0)
million for the year ended December 31, 2002. The cash used in financing
activities during 2002 is primarily due to a net decrease in the Company's
line of credit of $0.6 million. The Company has been able to partially fund
working capital needs with cash generated from operations.
On August 12, 2002, the Company's lender amended its loan agreement,
increasing the line from $7.0 million to $8.5 million. The lender also
increased the company's advance rate from 70% of eligible accounts receivable
to 75%. Borrowings up to $1 million are guaranteed by the Chief Executive
Officer and Chief Financial Officer of the Company. Based on the Company's
eligible accounts receivable at December 31, 2002, unused availability under
the line of credit at December 31, 2002 was $2,382,000. The Company is
dependent upon the funds available under the loan agreement for liquidity.
The facility generally permits us 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
sufficient liquidity to meet the Company's needs on an ongoing basis.
However, as we grow, we will need to expand the facility in order to fund our
growth.
The Company also has 2 additional equipment loans used to fund equipment
purchases. The outstanding balance on these loans bear interest at the prime
rate in effect plus 1% per annum (5.25% at December 31, 2002). The principal
balance of these equipment lines are payable based on a five year amortization
of the outstanding balance with any remaining unpaid balance due in October
2003. The outstanding balance under these equipment loans totaled $652,515 at
December 31, 2002 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 aggregate amounts of long-term debt maturing by year is as follows:
2003 $1,197,669
2004 3,113,651
Total Long term Debt 4,311,320
$3.3 million of this debt is 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. It
is anticipated that the maturity date of this debt will eventually be
extended beyond 2004.
During 2002, the Company also incurred rental expense of approximately
$507,000 primarily due to operating leases of office space and land throughout
the United States. Future commitments under these operating leases are as
follows:
2003 $255,000
2004 60,000
2005 15,000
$330,000
Environmental Liabilities
The Company is not a party to any Super-fund litigation and otherwise does
not have any known environmental claims against it. However, the Company does
have one property where soil contamination problems existed or are known to
exist currently. The Company has preliminarily evaluated its potential
liability as this site and believes that it has reserved appropriately for its
remediation or that the fair market value of the property exceeds its net book
value by an amount in excess of any remediation cost. There can be no
assurance, however, that the cost of remediation would not exceed the expected
amounts. The Company continues to monitor soil contamination and may be
required to remediate the property in the near future.
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.
Recently Issued Accounting Standards
In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 145, "Rescission of
FASB Statements No.4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. "This Statement rescinds SFAS No. 4, "Reporting Gains
and Losses from Extinguishment of Debt" and an amendment of that Statement,
SFAS No. 64, "Extinguishment of Debt Made to Satisfy Sinking-Fund
Requirements." This Statement also rescinds SFAS No. 44, "Accounting for
Intangible Assets of Motor Carriers." This Statement amends SFAS No. 13,
"Accounting for Leases," to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This Statement also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed conditions.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"). This Statement
addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for costs associated
with an exit or disposal activity be recognized and measured initially at fair
value only when the liability is incurred. The provisions of this Statement
are effective for exit or disposal activities that are initiated after
December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-
Based Compensation - Transition and Disclosure." This statement amends the
transition and disclosure requirements of FASB Statement No. 123, "Accounting
for Stock-Based Compensation." The impact of Statement 148 is more frequent
and prominent disclosure of stock-based compensation expense beginning with
financial statements for fiscal years ending after December 15, 2002.
Statement 148 amends existing disclosures that a company should make in its
annual financial statements and requires for the first time, disclosure in
interim financial reports.
Management does not believe that the adoption of these statements will
have a material impact on the presentation of the Company's financial
statements.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
The Company has a revolving line of credit with a bank, which currently
bears interest in an amount equal to the prime rate in affect (4.25% at
December 31, 2002). The interest rate is based on certain financial covenants
and may range from prime to prime plus .5%. In addition, the company has
certain equipment lines-of-credit which bear interest at the prime rate plus
1%annum (at December 31, 2002 the rate was 5.25%). The Company also has
subordinated debt with related parties which bears interest at rates ranging
from prime + .75% to prime plus 1%.
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
US 1 Industries, Inc.
Gary, Indiana
We have audited the accompanying consolidated balance sheets of US 1
Industries, Inc. and Subsidiaries as of December 31, 2002 and 2001 and the
related consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 2002. We
have also audited the schedule listed in the accompanying index. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements and the schedule are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and schedule. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements and schedule. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of US 1
Industries, Inc. and Subsidiaries at December 31, 2002 and 2001, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States.
Also in our opinion, the schedule presents fairly, in all material
respects, the information set forth therein.
BDO Seidman, LLP
Chicago, Illinois
March 11, 2003
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
ASSETS
2002 2001
CURRENT ASSETS:
Cash $ 0 $ 322,060
Accounts receivable-trade, less allowance for
doubtful accounts of $460,000 and $524,000
respectively 16,468,912 11,946,382
Other receivables, including receivables due
from affiliated entities of $261,000 and
$359,000 in 2002 and 2001, respectively 1,648,599 1,374,835
Deposits 45,200 44,200
Prepaid expenses 473,174 544,143
Current Deferred tax asset 600,000 600,000
------------ ----------
Total current assets 19,235,885 14,831,620
FIXED ASSETS:
Equipment 1,669,781 1,542,945
Less accumulated depreciation and amortization (512,406) (250,954)
------------ ----------
Net fixed assets 1,157,375 1,291,991
------------ ----------
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 396,527 383,786
------------- -----------
TOTAL ASSETS $21,443,787 $17,161,397
============= ===========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
2002 2001
CURRENT LIABILITIES:
Revolving line of credit $6,118,480 $6,765,999
Current portion of long-term debt 1,197,667 399,190
Accounts payable 5,627,909 3,469,666
Accrued expenses 403,296 251,859
Insurance and claims 1,044,222 629,796
Accrued compensation 87,273 79,545
Accrued interest 1,009,394 974,039
Fuel and other taxes payable 81,714 82,228
Accrued Legal Settlement 700,000 140,000
----------- -----------
Total current liabilities 16,269,955 12,792,322
----------- -----------
LONG-TERM DEBT 3,113,653 4,260,668
MINORITY INTEREST 202,751 0
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
Authorized 5,000,000 shares; no par value,
Series A shares issued and outstanding:
2002 and 2001 - 0 and 1,094,224 0 1,102,968
SHAREHOLDERS' EQUITY (DEFICIENCY):
Common stock, authorized 20,000,000 shares;
no par value; shares outstanding 11,618,224
and 10,618,224 outstanding as of December
31, 2002 and December 31, 2001, respectively.
42,068,639 40,844,296
Accumulated deficit (40,211,211) (41,838,857)
----------- -----------
Total shareholders' equity (deficiency) 1,857,428 (994,561)
----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY) $21,443,787 $ 17,161,397
=========== =============
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
OPERATING REVENUES $110,386,649 $72,109,813 $48,284,013
OPERATING EXPENSES:
Purchased transportation 83,188,453 55,609,408 37,626,623
Commissions 10,361,169 6,596,625 4,343,529
Insurance and claims 4,342,330 2,350,254 1,553,892
Salaries, wages, and other 5,050,396 2,502,848 1,719,291
Other Operating expenses 5,042,476 3,268,638 1,715,269
Total operating expenses 107,984,824 70,327,773 46,958,604
OPERATING INCOME 2,401,825 1,782,040 1,325,409
NON OPERATING INCOME (EXPENSE):
Legal Settlement (550,857) 0 0
Interest income 28,937 6,058 19,003
Interest expense (550,248) (712,381) (622,990)
Other income, net 472,114 91,800 80,249
Total non operating (expense) (600,054) (614,523) (523,738)
NET INCOME BEFORE MINORITY INTEREST 1,801,771 1,167,517 801,671
Minority Interest (117,552) 0 0
NET INCOME BEFORE TAXES 1,684,219 1,167,517 801,671
Income tax benefit 0 400,000 800,000
NET INCOME BEFORE DIVIDENDS 1,684,219 1,567,517 1,601,671
Dividends on Preferred Shares (56,573) (102,856) (92,572)
Redemption of Redeemable
Preferred Stock 609,541 0 0
NET INCOME AVAILABLE TO
COMMON SHARES $ 2,237,187 $ 1,464,661 $ 1,509,099
Basic and Diluted Net Income
Per Common Share $0.20 $0.14 $0.14
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 11,075,758 10,618,224 10,618,224
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2002, 2001, and 2000
Common Stock Accumulated
Shares Amount Deficit Total
January 1, 2000 10,618,224 40,844,296 (44,812,617) (3,968,321)
Dividends on Preferred
Stock (92,572) (92,572)
Net Income 1,601,671 1,601,671
Balance at 10,618,224 $40,844,296 (43,303,518) (2,459,222)
December 31, 2000
Dividends on Preferred Stock (102,856) (102,856)
Net Income 1,567,517 1,567,517
Balance at 10,618,224 $40,844,296 $(41,838,857) $ (994,561)
December 31, 2001
Cumulative Dividends
On Preferred Stock (56,573) (56,573)
Conversion of Redeemable
Preferred Stock into
Common Stock 1,000,000 1,159,541 1,159,541
Minority Interest in
Subsidiary (Note 9) 64,802 64,802
Net Income for the
twelve months ended
December 31, 2002 1,684,219 1,684,219
Balance at
December 31, 2002 11,618,224 $42,068,639 $(40,211,211) $1,857,428
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
2002 2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,684,219 $ 1,567,517 $ 1,601,671
Adjustments to reconcile net income to
net cash provided by(used in)
operating activities:
Depreciation and amortization 287,642 184,608 26,818
Compensation Expense resulting from
Issuance of equity in subsidiary 150,000 0 0
Provision for bad debt 648,768 519,949 186,233
Minority Interest 117,552 0 0
Deferred Income Tax benefit 0 (400,000) (800,000)
Loss on disposal of equipment 4,060 0 3,609
Changes in operating assets and liabilities:
Accounts receivable-trade (5,171,298) (2,554,895) (5,124,823)
Other receivables (273,764) (992,778) (276,287)
Prepaid expenses 70,969 (234,246) (147,724)
Deposits & other assets (13,741) (261,075) (157,666)
Accounts payable 2,158,243 466,358 1,456,455
Accrued expenses 151,437 7,413 28,941
Insurance and claims 414,426 211,346 213,858
Accrued interest 35,355 138,020 222,452
Accrued compensation 7,728 45,654 16,577
Fuel and other taxes payable (514) (61,568) 93,848
Accrued Legal Settlement 560,000 0 0
Net cash provided by(used in)
operating activities 831,082 (1,363,697) (2,656,038)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets (219,739) (1,209,994) (92,500)
Proceeds from sale of fixed assets 62,655 0 8,885
Net cash used in investing
activities (157,084) (1,209,994) (83,615)
CASH FLOWS FROM FINANCING ACTIVITIES: Net (repayments)borrowings
under line of credit (647,519) 2,494,895 1,193,498
Proceeds from Long term debt 282,216 1,049,094 158,052
Principal payments of long-term debt (400,754) (331,672) (121,808)
Net(repayments of)proceeds from
shareholder loans (230,001) (316,566) 1,509,911
Net cash (used in) Provided by
financing activities ( 996,058) 2,895,751 2,739,653
NET (DECREASE) INCREASE IN CASH (322,060) 322,060 0
CASH, BEGINNING OF YEAR 322,060 0 0
CASH, END OF YEAR $ 0 $322,060 $ 0
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION--
Cash paid during year for interest $469,050 $574,361 $400,538
The Company recorded $56,573, $102,856, and $92,572 in 2002, 2001, and 2000
respectively, for dividends on preferred stock.
On July 18, 2002, the Company redeemed all of the outstanding Series A
redeemable preferred stock (1,094,224 shares) plus all accrued dividends
through the issuance of 1,000,000 shares of the Company's common stock.
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
US1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, AND 2001
1. OPERATIONS
The Company is primarily an interstate truckload carrier of general
commodities, which uses independent agents and owner-operators to contract for
and haul freight for its customers in 48 states and Canada with a concentration
in the Southeastern United States. One agent accounted for 13% of the
Company's revenue in 2000. No agents represented more than 10% of sales for
the years ended December 31, 2002 and 2001.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation--The consolidated financial statements include
the accounts of US 1 Industries, Inc. and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Allowance for Doubtful Accounts-The Company records an allowance for
doubtful accounts based on specifically identified amounts that it believes
to be uncollectible. The Company also records an additional allowance based
on percentages of aged receivables, which are determined based on historical
experience and an assessment of the general financial conditions affecting
its customer base. If actual collections experience changes, revisions to
the allowance may be required. After all attempts to collect a receivable
have failed, the receivable is written off against the allowance.
Revenue Recognition--Revenue for freight in transit is recognized upon
delivery. Amounts payable for purchased transportation, commissions and
insurance expense are accrued when the related revenue is recognized.
Fixed Assets--Fixed assets are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets,
which range from three to eight years.
Assets Held for Sale--Such assets comprise real estate, not required for
the Company's operations, which is carried at the lower of historical cost or
estimated net realizable value. See Note 11.
Long-Lived Assets - The Company assesses the realizability of its long-
lived assets in accordance with statement of Financial Accounting Standards
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets".
Accounting Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
dates of financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from
those estimates.
Income Taxes--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 bases of existing assets and
liabilities. In addition, the amount of any future tax benefits are reduced
by a valuation allowance to the extent such benefits are not expected to be
fully utilized.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
YEARS ENDED DECEMBER 31, 2002, AND 2001
Earnings Per Common Share-The Company computes earnings per share under
Statement of Financial Accounting Standards No. 128 "Earnings Per Share." The
statement required presentation of two amounts, basic and diluted earnings per
share. Basic earnings per share are computed by dividing loss available to
common stock holders by the weighted average common shares outstanding.
Dilutive earnings per share would include all common stock equivalents. There
are no common stock equivalents at December 31, 2002, 2001, or 2000.
Business Segments - Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" requires
public enterprises to report certain information about reporting segments in
financial statements. The Company presents its operations in one business
segment.
Recently Issued Accounting Standards - In April 2002, the Financial
Accounting Standards Board ("FASB") issued statement of Financial Accounting
Standards ("SFAS") No. 145, "Rescission of FASB Statements No.4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections. "This
Statement rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment
of Debt" and an amendment of that Statement, SFAS No. 64, "Extinguishment of
Debt Made to Satisfy Sinking-Fund Requirements." This Statement also rescinds
SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers." This
Statement amends SFAS No. 13, "Accounting for Leases," to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. This Statement
also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings or describe their applicability
under changed conditions.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"). This Statement
addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for costs associated
with an exit or disposal activity be recognized and measured initially at fair
value only when the liability is incurred. The provisions of this Statement
are effective for exit or disposal activities that are initiated after
December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-
Based Compensation - Transition and Disclosure." This statement amends the
transition and disclosure requirements of FASB Statement No. 123,
"Accounting for Stock-Based Compensation." The impact of Statement 148 is
more frequent and prominent disclosure of stock-based compensation expense
beginning with financial statements for fiscal years ending after December
15, 2002. Statement 148 amends existing disclosures that a company should make
in its annual financial statements and requires for the first time, disclosure
in interim financial reports.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
YEARS ENDED DECEMBER 31, 2002, AND 2001
Management does not believe that the adoption of these statements
will have a material impact on the presentation of the Company's financial
statements.
3. REDEMPTION OF REDEEMABLE PREFERRED STOCK
On February 19, 2002, the company's board of directors approved the
redemption of all of the outstanding Series A redeemable preferred stock
(1,094,224 shares) plus all accrued dividends through the issuance of
1,000,000 shares of the Company's common stock. The conversion was
finalized on July 18, 2002.
The carrying value of the preferred stock exceeded the fair value of the
common stock issued by $609,541. As a result, the Company recorded this
amount as an addition to net income available to common shareholders by
offsetting charges and credits to common stock without any effect in total
shareholders' equity.
4. RELATED PARTY TRANSACTIONS
One of the Company's subsidiaries provides safety, management, and
accounting services to companies controlled by the Chief Executive Officer and
Chief Financial Officer of the Company. These services are priced to cover
the cost of the employees providing the services. Revenues related to those
services was approximately $69,000, $68,000 and $124,000 in 2002, 2001, and
2000, respectively. Also, during 2002, the Company earned a management fee of
approximately $200,000 for non-recurring management services provided to
Eastern Refrigerated Express, Inc., an entity partially owned by the CEO and
CFO of the Company. These management fees have been classified as other
income in the consolidated statement of income for the year ended December
31, 2002. Accounts receivable due from entities affiliated through common
ownership was $261,000 and $359,000 as of December 31, 2002 and 2001,
respectively.
The Company has an investment of $126,461 in American Inter-Fidelity
Exchange ("AIFE"), an entity which provides the Company with truck
Liability insurance. The Company exercised no control over the operations
of AIFE. As a result, the Company has recorded its investment in AIFE under
the cost method of accounting for these periods.
Under the cost method, the investment in AIFE is reflected at its
original amount and income is recognized only to the extent of dividends paid
by the investee. There were no dividends declared by AIFE for the years ended
December 31, 2002, 2001 and 2000.
For the years ended December 31, 2002, 2001, and 2000, cash paid for
related party insurance premiums and deductibles amounted to $3,922,764,
$1,597,168, and $1,448,547, respectively.
The Company conducts business with freight companies under the control of
a director of the Company. Accounts receivable at December 31, 2002 and 2001
include $237,000 and $472,000, respectively, due from or guaranteed by these
companies.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The Company has notes payable due to its Chief Executive Officer, Chief
Financial Officer, and August Investment Partnership, an entity affiliated
through common ownership, as described in Note 7.
5. LEASES
The Company's administrative offices are at 1000 Colfax, Gary, Indiana.
The Company leases its administrative offices of approximately 9,000 square
feet on a month to month basis for $3,000 per month. Keystone Intermodal
Services, Inc. leases office space in Fort Smith, AK of approximately 1,500
square feet on a month to month basis for $4,567. Both offices lease their
space from The Company's President/Chief Executive Officer, and
Treasurer/Chief Financial Officer who are both directors of the Company.
In addition, the Company's subsidiaries lease office space and land in
Mississippi, Texas, South Carolina, Louisiana, Georgia, Missouri, North
Carolina, Indiana, and Arkansas under operating leases ranging from one to
three years.
Rent expense under these operating leases was $507,000, $227,000 and
$111,000 for the years ended 2002, 2001, and 2000 respectively.
Future commitments under these operating leases are as follows:
2003 $255,000
2004 60,000
2005 15,000
$330,000
6. BANK 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 December
31, 2002, 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
December 31, 2002, the outstanding borrowings on this line of credit were $6.1
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.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. LONG-TERM DEBT
Long-term debt at December 31, 2002 and 2001 comprises:
2002 2001
Note payable to the Chief Executive Officer
And Chief Financial Officer, interest at
prime + .75%, monthly principal payments
of $20,000, with remaining balance due in
October 2004. $2,495,508 $2,725,509
Mortgage note payable to the Chief Executive
Officer and Chief Financial Officer
collateralized by land, interest at
prime + .75%, interest only payments
required, principal balance due
July 2004 500,000 500,000
Note payable to August Investment
Partnership, interest at prime + .75%,
interest only payments required, principal
balance due October 2004 250,000 250,000
Mortgage note payable to August Investment
Partnership, interest at prime + .75%, interest
only payments required, principal balance due
October 2004 100,000 100,000
Other 0 12,785
-------------- --------------
Subtotal - related party debt $3,345,508 $3,588,294
Equipment loan, collateralized by equipment,
monthly payments of $12,537 including interest
at prime plus 1% (5.75% at December 31, 2001)
through September, 2003 with a balloon payment
of $401,000 due in October 2003. 514,039 664,489
Note Payable, FIFC Cargo Insurance
monthly payments of $30,945 including interest
at 5.7% through September 2003 272,000 0
Note payable, IPF Cargo Insurance
monthly payments of $24,561.94 including
interest at 4.70% through August 2002 0 192,227
Equipment loan, collateralized by equipment,
interest rate at prime + 1%, principal payment
of $2,715(based on five year amortization
of principal balance)beginning in April 2002
through September 2003 with a balloon
payment of $114,000 due in October 2003. 138,476 162,912
Note payable, collateralized by equipment,
monthly payments of $2,077 including
interest at 9.55% through April 2004 31,080 51,936
Other 10,217 0
--------- ---------
Total debt 4,311,320 4,659,858
Less current portion 1,197,667 399,190
--------- ---------
Total long-term debt $ 3,113,653 $ 4,260,668
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Interest expense on related party notes was approximately $176,000, $280,000,
and $342,500 for the years ended December 31, 2002, 2001, and 2000,
respectively.
Scheduled maturities of the long-term debt at December 31, 2002 are due as
follows:
2003 $1,197,669
2004 3,113,651
__________
$4,311,320
==========
8. INCOME TAXES
The composition of taxes on income (benefit) is as follows:
Current 2002 2001 2000
Federal $573,000 $397,000 $273,000
State 101,000 70,000 48,000
Utilization of net operating loss (674,000) (467,000) (321,000)
carry-forward
Adjustment of valuation allowance 0 (400,000) (800,000)
__________________________________________________________________
Income tax expense (benefit) $ 0 $(400,000) $(800,000)
__________________________________________________________________
The Company and its subsidiaries file a consolidated federal income tax
return.
Deferred income taxes consist of the following:
December 31, 2002 2001 2000
___________________________________________________________________
Total deferred tax assets, relating
principally to net operating
loss carry-forwards $21,597,000 $22,261,000 $22,728,000
21,597,000 22,261,000 22,728,000
Less valuation allowance (20,397,000) (21,061,000) (21,928,000)
Total net deferred tax asset $ 1,200,000 $ 1,200,000 $ 800,000
At December 31, 2002 and 2001, the Company has realized a net deferred
tax asset of $1,200,000 as it is more likely than not that this amount will be
realized as a result of anticipated future taxable income to be generated by
the Company. Due to the uncertainty of realization, a valuation allowance has
been maintained for the remaining deferred tax asset at December 31, 2002.
The Company has net operating loss carry-forwards of approximately $54
million at December 31, 2002. These carry-forwards are available to offset
taxable income in future years and substantially all of these carry-forwards
will expire in the years 2005 through 2010.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(Continued)
9. MINORITY INTEREST
Carolina Group ('Carolina') consists of Carolina National Transportation,
Inc., Gulf Line Transport, Inc., Five Star Transport, Inc., and Friendly
Transport, Inc., all wholly owned subsidiaries of the Company. The Company
entered into an agreement with certain key employees in which these employees
will earn up to a 40% ownership interest in Carolina over a three year period,
beginning in the year following which Carolina achieves positive retained
earnings, contingent upon certain restrictions, including 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 a 10% ownership interest at December 31, 2004. As a
result of this agreement, the company incurred compensation expense of
$150,000 for the year ended December 31, 2002. The Company also recognized
minority interest expense of $117,552 relating to the employees' portion of
Carolina's net income for the year ended December 31, 2002.
10.COMMITMENTS AND CONTINGENCIES
Litigation
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 $700,000. 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. The Company
is currently appealing this judgment.
In February 2002, one of the Company's subsidiaries, Carolina National
Transportation, was named as a defendant in a suit entitled Hoover
Transportation Services, Inc. vs. Tim A. Frye, Sr. In essences, the suit
alleges that the primary defendant, Mr. Frye, violated a non-competition
agreement with, and confidentiality obligations to, the plaintiff by providing
freight related services in the metropolitan Charlotte area. Mr. Frye's
business contracted with the Company's subsidiary for shipping, and,
accordingly, the plaintiff alleges that the Company's subsidiary is liable for
damages as well. During July 2002, Mr. Frye was enjoined from further
violations of the non-competition agreement. The Company's subsidiary is
actively contesting the claims against it. Discovery is ongoing, and no trial
date has been set. At this time, the Company and its legal counsel are
unable to assess the outcome of this complaint. The Company intends to
vigorously defend itself in the matter.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In September 2002, CGU International Insurance, PLC filed a complaint in
the United States District Court for the Northern District of California
against Keystone Lines Inc., a subsidiary of the Company, which asserted
allegations for breach of contract regarding alleged damage to cargo which
occurred during interstate transportation. On November 18, 2002, Keystone
Lines Inc. filed an answer to the complaint generally denying liability for
the $392,000 loss asserted by the complaint. Keystone filed a cross-complaint
against other parties, which it believed are liable for any losses established
by the plaintiff. At this time, the Company and its legal counsel are unable
to assess the outcome of this complaint. The Company intends to vigorously
defend itself in this matter.
In February 2002, one of the Company's subsidiaries, Carolina National
Transportation, was named as a defendant in a suit entitled Hoover
Transportation Services, Inc. vs. Tim A. Frye, Sr. In essence, the suit
alleges that the primary defendant, Mr. Frye, violated a non-competition
agreement with, and confidentiality obligations to, the plaintiff by providing
freight related services in the metropolitan Charlotte area. Mr. Frye's
business contracted with the Company's subsidiary for shipping, and,
accordingly, the plaintiff alleges that the Company's subsidiary is liable for
damages as well. During July 2002, Mr. Frye was enjoined from further
violations of the non-competition agreement. The Company's subsidiary is
actively contesting the claims against it. Discovery is ongoing, and no trial
date has been set. At this time, the Company and its legal counsel are unable
to assess the outcome of this complaint. The Company intends to vigorously
defend itself in the matter.
In October 2002, one of the Company's subsidiaries ("Keystone") was named
as a third party in a lawsuit in which an independent owner operator, leased
to the carrier, fell and injured himself on the property of Cooper Tire. As a
result, the independent owner operator filed suit against Cooper Tire. Cooper
Tire prevailed in their defense of this lawsuit and incurred $200,000 for
their defense. Cooper Tire is currently suing Keystone claiming that
Keystone, pursuant to a transportation rate agreement, is liable to reimburse
Cooper Tire for the defense costs. At this time, the Company and its legal
counsel are unable to assess the outcome of this complaint. The Company
intends to vigorously defend itself in this matter.
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.
Insurance
The Company carries insurance for public liability and property damage, and
cargo loss and damage through various programs. 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.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
11. ENVIRONMENTAL MATTERS
The Company owns a piece of property in Phoenix where soil contamination
problems exist. The Company has been working with regulatory officials to
eliminate new contamination sources and determine the extent of existing
problems. Estimates of the cost to complete the future remediation of
approximately $141,000 are considered in the land valuation allowance at
December 31, 2002 and 2001.
12. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data) Net
Net Income
Operating Operating Income per share
Revenue Income (basic and diluted)
2002
$110,387 $2,402 $1,684 $0.20
Quarters:
Fourth 29,731 593 574 0.05
Third 30,404 652 543 0.10
Second 28,121 684 559 0.05
First 22,131 473 8 0.00
2001
$72,110 $1,782 $1,568 $0.14
Quarters:
Fourth 22,419 624 849 0.07
Third 17,719 443 318 0.03
Second 16,826 304 212 0.02
First 15,146 411 189 0.02
US 1 INDUSTRIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
Schedule II
Balance At Charged to Write-Offs,
Beginning of Costs and Retirements & Balance At
Year Expenses Collection End of Year
Description
Year Ended
December 31, 2000
Allowance for
Doubtful Accounts
Receivable $ 67,000 $186,233 $ 44,233 $209,000
Year Ended
December 31, 2001
Allowance for
Doubtful Accounts
Receivable $209,000 $519,949 $204,949 $524,000
Year Ended
December 31, 2002
Allowance for
Doubtful Accounts
Receivable $524,000 $648,768 $712,768 $460,000
Item 9. Changes in and Disagreements with Accountants' on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the company as of March 12, 2003 were as follows
NAME AGE POSITION
- ---- --- --------
Michael E. Kibler 62 President, Chief Executive Officer,
and Director
Harold E. Antonson 63 Chief Financial Officer, Treasurer,
and Director
Lex Venditti 50 Director
Robert I. Scissors 69 Director
Brad James 47 Director
Bill Sullivan 55 Director
Name Office and Experience
Michael E. Kibler Mr. Kibler is President and Chief Executive
Officer of the Company and has held these
positions since September 13, 1993. He also has
been President of Enterprise Truck Lines, Inc.,
an interstate trucking company engaging in
operations similar to the Company's, since 1972.
Harold E. Antonson Mr. Antonson is Chief Financial Officer of the
Company, a position he has held since March
1998. Mr. Antonson is a certified public
accountant. Prior to joining the Company, he
was Secretary/Treasurer of American
Inter-fidelity Exchange. Mr Antonson is also a
partner in August Investment Partnership. Mr.
Antonson was elected a director and Treasurer of
the Company in November 1999.
Lex Venditti Mr. Venditti has served as a director of the
Company since 1993. Mr. Venditti has been the
General Manager of American Interfidelity
Exchange, an insurance reciprocal located in
Indiana that is the subject of an order of
rehabilitation by the Indiana Department of
Insurance, since 1995.
Robert Scissors Mr. Scissors has been a Director of the Company
since 1993. Mr. Scissors began his career in
the Insurance Industry in 1957. In 1982, Mr.
Scissors joined a brokerage firm called
Alexander/Alexander where he worked until
retiring in 1992. Mr. Scissors currently works
as an insurance consultant and broker.
Item 10. Directors and Executive Officers of the Registrant (continued)
Brad James Mr. James is the President of Seagate
Transportation Services, Inc. Mr. James
graduated from Bowling Green University with a
Bachelors Degree in Business Administration. He
has been in the trucking industry since 1977.
Mr. James was elected a director of the Company
in 1999.
Bill Sullivan Mr. Sullivan has been the president of One Call
Motor Freight Inc. since 1981. He is also the
President of Unity Logistic Services, Inc. since
June 2000. Mr. Sullivan was elected a director
Of the Company in 2002. Mr. Sullivan has over
30 years experience in the trucking industry.
Item 11. Executive Compensation
The following Summary Compensation Table sets forth compensation paid by
the Company during the years ended December 31, 2002, 2001 and 2000 to its
Chief Executive Officer. No other officer earned in excess of $ 100,000.
Summary Compensation Table
Annual Compensation
Name and Position Year Salary Bonus Other
- ----------------- ---- ------ ----- -----
Michael Kibler 2002 90,186 0 0
President 2001 33,048 0 0
2000 33,048 0 0
No disclosure regarding equity compensation plans has been provided
because the registrant does not have any outstanding equity compensation
plans or arrangements that would be covered by Regulation S-X.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Management
The following table sets forth the number and percentage of shares of
Common Stock that as of August 30, 2002 are deemed to be beneficially owned by
each director of the company and director nominee, by each executive officer
of the Company and by all directors and executive officers of the company as a
group
Number of Shares of
Common Stock
Name and position Beneficially Owned Percentage of Class
- ----------------- ------------------ -------------------
Michael E Kibler 2,830,790 (1,2) 24%
Director, President and
Chief Executive Officer
Robert I. Scissors, 51,770 (4) 0
Director
Lex L. Venditti 20,000 0
Director
Brad A. James 170,981 0
William Sullivan 18,000 (5) 0
Harold E. Antonson 2,890,235 (1,2,3) 25%
Chief Financial Officer,
Treasurer and Director
All Directors and Executive Officers 4,198,459 36%
(1) As partners of August Investment Partnership (AIP), Messrs. Kibler and
Antonson, may be deemed to be beneficial owners of 1,150,946 shares of
common stock owned by AIP
(2) As Director of Eastern Refrigerated Express Inc, )an entity under common
control) Messrs. Kibler, Antonson may be deemed to be beneficial owner of
522,439 Shares of Common Stock owned by Eastern.
(3) Mr. Antonson disclaims beneficial ownership of 197,500 shares of Common
Stock owned by American Inter-Fidelity Exchange, of which Mr Antonson is
Secretary and Treasurer
(4) Includes 11,770 shares held in the Saundra L. Scissors Trust of which Mr.
and Mrs. Scissors are joint trustees.
(5) Includes 18,000 shares owned by ERX, Inc. of which Mr. Sullivan is a
controlling owner.
Security Ownership of Certain Beneficial Owners and Management (continued)
Security Ownership of Certain Beneficial Owners
The following table sets forth the number and percentage of shares of
Common Stock beneficially owned as of August 30, 2002 by any person who is
known to the Company to be the beneficial owner of more than five percent of
the outstanding shares of Common Stock:
Number of Shares of
Name and Address of Common Stock Percentage
Beneficial Owner Beneficially Owned of Class
- ---------------- ------------------ --------
Harold E. Antonson 2,890,235 (1,2,3) 25%
8400 Louisiana Street
Merrillville, IN 46410
August Investment Partnership 1,150,946 10%
8400 Louisiana Street
Merrillville, IN 46410
Michael Kibler 2,830,790 (1,3) 24%
8400 Louisiana Street
Merrillville, IN 46410
John K. Lavery 1,673,385 (1,3) 14%
8400 Louisiana Street
Merrillville, IN 46410
(1) As partners of AIP, Messrs. Kibler, and Antonson, and Lavery may be
deemed to be beneficial owners of the shares of Common Stock owned by AIP.
(2) Mr. Antonson disclaims beneficial ownership of 197,500 shares of Common
Stock owned by American Inter-Fidelity Exchange, of which Mr. Antonson is
Secretary and Treasurer.
(3) As directors of Eastern Refrigerated Express, Inc. Messrs. Antonson,
Kibler and Lavery may be deemed to be beneficial owners of 522,439 shares
of Common Stock owned by Eastern.
Item 13. Certain Relationships and Related Transactions.
The Company's administrative offices are at 1000 Colfax, Gary, Indiana.
The Company leases its administrative offices of approximately 9,000 square
feet on a month to month basis for $3,000 per month. Keystone Intermodal
Services, Inc. leases office space in Fort Smith, AK of approximately 1,500
square feet on a month to month basis for $4,567. Both offices lease their
space from Mr. Michael E. Kibler, President, Chief Executive Officer and a
director of the Company, and Mr. Harold Antonson, Treasurer, Chief Financial
Officer and a director of the Company.
One of the Company's subsidiaries provides safety, management, and
accounting services to companies controlled by the Chief Executive Officer
and Chief Financial Officer of the Company. These services are priced to cover
the cost of the employees providing the services. Revenues related to those
services was approximately $69,000, $68,000 and $124,000 in 2002, 2001, and
2000, respectively. Also, during 2002, the Company earned a management fee of
approximately $200,000 for non-recurring management service provided to
Eastern Refrigerated Express, Inc. an entity partially owned by the CEO and
CFO of the Company.
One of the Company's insurance providers, American Inter-Fidelity Exchange
(AIFE) is managed by a Director of the Company and the Company has an
investment in the Provider. In addition, the Director also manages an
affiliated insurance carrier, Indiana Truckers Exchange (ITE). For the years
ended December 31, 2002, 2001, and 2000 cash paid for related party insurance
premiums and deductibles amounted to $3,922,764, $1,597,168, and $1,448,547,
respectively.
The Company conducts business with freight companies under the control of
a director of the Company. Accounts receivable at December 31, 2002 and 2001
included $237,000 and $472,000, respectively, due from or guaranteed by these
companies.
The Company has notes payable due to its Chief Executive Officer, Chief
Financial Officer, and August Investment Partnership, an entity affiliated
through common ownership, as described in Note 7 to the consolidated financial
statements.
Item 14. Controls and Procedures
(a) Valuation 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.
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements:
Reports of Independent Certified Public Accountants 17
Consolidated Balance Sheets as of December 31, 2002 and 2001 18-19
Consolidated Statements of Income for the years ended 20
December 31, 2002, 2001, and 2000
Consolidated Statements of Shareholders' Equity 21
for the years ended December 31, 2002, 2001, and 2000
Consolidated Statements of Cash Flows 22
for the years ended December 31, 2002, 2001, and 2000
Notes to Consolidated Financial Statements 23-31
(a)(2) Financial Statement Schedules:
Schedule of Valuation and Qualifying Accounts 32
Other schedules are not included because of the absence of the conditions
under which they are required or because the required information is included in
the consolidated financial statements or notes thereto.
(a)(3) List of Exhibits
The following exhibits, numbered in accordance with Item 601 of Regulation
S-K, are filed as part of this report:
Exhibit 3.1 Articles of Incorporation of the Company.
(incorporated herein by reference to the Company's Proxy
Statement of November 9, 1993).
Exhibit 3.2 By-Laws of the Company.
(incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994).
Exhibit 10.1 Loan and Security Agreement with FIRSTAR and Carolina
National Transportation Inc., Keystone Lines, Inc.,
Gulfline Transport Inc., and US1 Industries, Inc.(by reference to
the Company's Form 10-Q for the quarterly period ended March 31,
2000 filed on May 22, 2000).
Exhibit 10.2 Loan agreements with August Investment Partnership and US 1
Industries.
Exhibit 10.3 Loan agreements with Michael Kibler/Harold Antonson and US 1
Industries.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(continued)
(a)(3) List of Exhibits (continued)
Exhibit 10.4 First Amendment of Loan and Security Agreement with
FIRSTAR and Carolina National Transportation Inc.,
Keystone Lines, Gulfline Transport Inc., and US1 Industries,
Inc. (by reference to the Company's Form 10-Q for the
quarterly period ended June 30, 2000 filed on August 14,
2000)Loan agreements with AIFE/ITE and US 1 Industries.
Exhibit 10.5 Second 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 Annual report on Form 10-K for
the year ended December 31, 2000).
Exhibit 10.6 Third 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, 2001
filed on May 15, 2001).
Exhibit 10.7 Fourth 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 September 30,
2001 filed on November 9, 2001).
Exhibit 10.8 Sixth 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 June 30, 2002
filed on August 16, 2002).
Exhibit 10.9 Fifth 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-K
for the year ended December 31, 2002 filed on April 8, 2003).
b) Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of Sections 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned there unto duly authorized.
US 1 INDUSTRIES, INC.
Date:_________________ By: _________________________
Michael E. Kibler
President & Chief Executive Officer
(Principal Executive Officer)
Date:_________________ By: _________________________
Harold Antonson
Chief Financial Officer & Treasurer
(Principal Financial & Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date:_________________ _________________________
Michael E. Kibler, Director
Date:_________________ _________________________
Robert I. Scissors, Director
Date:_________________ _________________________
Lex L. Venditti, Director
Date:_________________ _________________________
Bill Sullivan, Director
Date:_________________ _________________________
Brad James, Director
Date:_________________ _________________________
Harold Antonson, Director
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Michael Kibler, certify that:
1. I have reviewed this yearly report on Form 10-K of US 1 Industries, Inc.;
2. Based on my knowledge, this yearly 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 yearly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this yearly 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
yearly 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 yearly
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 yearly report (the "Evaluation Date"); and
c) presented in this yearly 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
yearly 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: April 8, 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 yearly report on Form 10-K of US 1 Industries, Inc.;
2. Based on my knowledge, this yearly 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 yearly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this yearly 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
yearly 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 yearly
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 yearly report (the "Evaluation Date"); and
c) presented in this yearly 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
yearly 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: April 8, 2003 /s/ Harold Antonson
Harold Antonson
Chief Financial Officer
FIFTH AMENDMENT TO LOAN AGREEMENT
Loan Agreement, as that term is defined herein. This Fifth
Amendment to Loan Agreement ("Amendment"), dated as of May 1, 2002,
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"); and
HARBOR BRIDGE INTERMODAL, INC., an Indiana corporation ("Harbor")
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, and Harbor 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 PRELIMINARY STATEMENT:
All Borrowers, other than Harbor, 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, and October 15, 2001 (the
April 18, 2000 Loan Agreement, as so amended, is the "Existing Loan
Agreement," and, as amended by this Fifth Amendment to Loan Agreement,
constitutes the "Loan Agreement").
Transport Leasing and Transport Logistics, though not signatories
to the Existing Loan Agreement, each agreed to become a Borrower (as defined
therein) pursuant to an Assumption Agreement dated as of October 15, 2001.
Lender has agreed to amend the Existing Loan Agreement to add Harbor as an
additional Borrower and to make other changes thereto, as hereinafter set
forth.
NOW, THEREFORE, it is hereby agreed as follows:
1. Guarantor hereby designates Harbor as an entity to be included as a
Borrower under the Loan Agreement; Lender hereby consents to the addition
of Harbor as an additional Borrower.
2. Harbor 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, and agrees to be bound by all of the
terms, covenants, agreements, and conditions thereof, as the same apply to
the other Borrowers.
3. 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
addition of Harbor as a Borrower or from any Advance under the 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.
4. The parties hereby agree to amend and restate in their entirety the
following definitions in Section 1.1 of the Loan Agreement as follows:
"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;
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."
"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; and
(x) such other instruments and documents as Lender reasonably may
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, and that certain
Fifth Amendment to Loan Agreement dated May 1, 2002."
5. 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 May 1, 2002, in the form attached
hereto as Exhibit "A" (the "Revolving Loan Note");
ii) The Equipment Loan Note, dated as of May 1, 2002, in the form attached
hereto as Exhibit "B" (the "Equipment Loan Note");
iii) The Guidance Loan Note, dated as of May 1, 2002, in the form attached
hereto as Exhibit "C" (the "Guidance Loan Note");
iv) A Security Agreement executed by Lender and Harbor, in the form
attached hereto as Exhibit "D";
v) Amended and Restated Personal Guaranties of Michael Kibler and Harold
Antonson, in the forms attached hereto as Exhibit "E-1" and "E-2";
vi) Amended and Restated Corporate Guaranty of Guarantor, in the form
attached hereto as Exhibit "F";
vii) Acknowledgements of the holders of Subordinated Indebtedness of, 1)
the execution of the Fifth Amendment to Loan Agreement; 2) the continued
effectiveness of those certain Subordination Agreements dated April 18,
2000, as amended, by and between Lender and a) Harold Antonson and Michael
Kibler, and b) August Investment Partnership (as so amended, the
"Subordination Agreements"); and 3) the inclusion of any indebtedness
incurred under the Loan Agreement by any borrower, including Harbor, within
the term "Senior Debt," as defined in the Subordination Agreements, in the
forms attached hereto as Exhibit "G-1" and "G-2";
viii) A UCC-1 Financing Statement by Harbor, in the form attached hereto as
Exhibit "H";
ix) Certified Resolutions of the Boards of Directors or the Managers, as
the case may be, of each Borrower and of the Guarantor authorizing the
execution and delivery and performance of this Amendment and other documents
referred to herein;
x) 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;
xi) Certified Articles of Incorporation for Harbor issued by the Secretary
of State of the State of Indiana no earlier than April 30, 2002;
xii) A good standing certificate for Harbor issued by the Secretary of State
of the State of Indiana no earlier than April 30, 2002; and
xiii) A certified copy of the bylaws of Harbor.
6. As a condition to the fulfillment of its obligations hereunder, Lender
will cause to be conducted public record searches and must receive UCC,
judgment, and tax lien search results showing that no liens or other
indebtedness, other than those specifically approved in writing by Lender,
exist as to Harbor or any of its assets, which would be senior to Lender's
security interest therein.
7. The Borrowers, other than Harbor (the "Existing Borrowers"), 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), and as of October 15, 2001 (in the case of
Unity, ERX, Friendly, Transport Leasing, and Transport Logistics), all of
which have been acknowledged and reaffirmed, most recently as of October 15,
2001 (collectively, the "Existing Security Agreements"), with Lender, by
which certain assets of the Existing Borrowers and the Guarantor were
pledged to secure Borrowers' Obligations (as that term is defined in the
Loan Agreement). The Existing 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, including
without limitation, Harbor), or any of them, together with interest thereon,
as provided in the Revolving Loan Note in the face amount of $7,000,000,
dated April 18, 2000, as amended and restated as of June 12, 2000, December
7, 2000, October 15, 2001, and May 1, 2002; 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 and May 1, 2002; 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, all made by Borrowers and payable to Lender, and
do hereby reaffirm their obligations thereunder.
8. 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.
9. 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.
10. The parties hereto agree that by execution of this Amendment, Harbor
shall be deemed and shall be made a party to the Loan Agreement as amended
hereby and shall be an additional Borrower (as that term is defined in the
Loan Agreement).
11. Except as expressly amended hereby, the terms and conditions of the
Existing Loan Agreement shall remain in full force and effect.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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: ____________________________
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
$7,000,000.00 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
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"); and HARBOR BRIDGE INTERMODAL,
INC. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor 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 SEVEN MILLION AND NO/100ths DOLLARS ($7,000,000.00), 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, and May 1, 2002 (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 therefor 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.
The Revolving Loan Note amends, restates in its entirety, and
supercedes 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
December 7, 2000, in the principal face amount of $5,500,000, which amended
and restated a Revolving Loan Note dated June 12, 2000, made by Borrowers
and payable to the order of Lender, which amended and restated a Revolving
Loan Note dated April 18, 2000, in the principal face amount of $3,500,000.
[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: ____________________________
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
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"); and HARBOR BRIDGE INTERMODAL,
INC. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor 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, and May 1, 2002 (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 therefor 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, and as amended and
restated as of October 15, 2001.
[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: ____________________________
EXHIBIT "C"
GUIDANCE LOAN NOTE
$300,000.00 Dated as of October 15, 2001
Chicago, Illinois Amended and Restated as of May 1, 2002
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"); and HARBOR BRIDGE INTERMODAL,
INC. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor 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, and May 1, 2002 (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 therefor 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 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: ____________________________
EXHIBIT "D"
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of May 1, 2002, is between HARBOR
BRIDGE INTERMODAL, INC., an Indiana corporation ("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., and TRANSPORT LOGISTICS, LLC, (the "Other Borrowers"), US 1
INDUSTRIES, INC. ("Guarantor"), and Lender have entered into a Fifth
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, and October 15, 2001 (the April 18, 2000 Loan
Agreement, as so amended and as amended by the Fifth 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 Borrower's
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: HARBOR BRIDGE INTERMODAL, INC.,
1000 Colfax an Indiana corporation
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 "E-1"
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
Further 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
LIMITED GUARANTY
The undersigned, Michael Kibler ("Kibler") ("Guarantor"), does hereby
absolutely and unconditionally, subject to the limitation as to amount set
forth below, guarantee to U.S. Bank National Association, a national banking
association formerly known as Firstar Bank N.A. ("Lender"), (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, and May 1, 2002, in the principal amount of
$7,000,000; 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; 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, 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"); and Harbor Bridge Intermodal, Inc., an Indiana corporation
("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, and Harbor are hereinafter
collectively referred to as "Borrowers") (including all renewals, extensions
and modifications thereof and all court costs, expert witness fees and
reasonable attorneys' fees incurred by Lender in connection with the
collection or enforcement thereof) (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, and May 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").
The undersigned waives notice of the acceptance of this Guaranty and
of the extension or continuation of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment, protest, notice, demand or
action on delinquency and any other formalities required to charge the
undersigned with liability hereunder, in respect of the Guaranteed Debt or
any part thereof, or otherwise to enforce payment thereof against any
collateral securing the
Guaranteed Debt or any part thereof. It is the intent hereof that Guarantor
remain liable as a principal until all of the Guaranteed Debt is paid in
full notwithstanding any act or thing that might otherwise operate as a
legal or equitable discharge of a surety.
In the event of default under the Notes or the Loan Agreement,
Guarantor agrees to pay on demand by Lender all sums then or thereafter due
under the Notes and Loan Agreement regardless of any defense, right of
setoff or claims which any Borrowers or Guarantor might have against Lender.
This is a guaranty of payment and performance, not collection. It
is expressly understood and agreed that the liability of the undersigned
Guarantor hereunder for the Guaranteed Debt shall be limited to the sum of
(i) the principal sum of $1,500,000 and (ii) all interest, fees, charges,
costs and attorneys' fees applicable thereto which may accrue or be incurred
after demand for payment of such principal sum. It is further expressly
understood and agreed that separate recovery may be had by Lender for such
sum regardless of whether action is taken or suit is brought by Lender
against any other person liable for the Guaranteed Debt and regardless of
whether any action is taken by Lender to enforce its rights against any
collateral for the Guaranteed Debt.
In any right of action which shall accrue to Lender by reason of
this Guaranty, Lender may, at its sole election, proceed against Guarantor
with or without (a) joining any of Borrowers or the Corporate Guarantor, US
1 Industries, Inc., in such action or (b) commencing any action against, or
obtain any judgment against any of Borrowers.
The validity and enforceability of this Guaranty shall not be impaired
or affected by any of the following, whether occurring before or after
receipt by Lender of notice of termination of this Guaranty: (a) any
extension, modification or renewal of, or indulgence with respect to, or
substitutions for, the Guaranteed Debt or any part thereof or any agreement
relating thereto at any time; (b) any failure or omission to enforce any
right, power or remedy with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto, or any collateral securing the
Guaranteed Debt or any part thereof; (c) any waiver of any right, power or
remedy or of any default with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto or with respect to any collateral
securing the Guaranteed Debt or any part thereof; (d) any release,
surrender, compromise, settlement, waiver, subordination or modification,
with or without consideration, of any collateral securing the Guaranteed
Debt or any part thereof, any other guaranties with respect to the
Guaranteed Debt or any part thereof, or any other obligation of any person
or entity with respect to the Guaranteed Debt or any part thereof; (e) the
enforceability or validity of the Guaranteed Debt or any part thereof or the
genuineness, enforceability or validity of any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part
thereof; or (f) the application of payments received from any source to the
permitted payment of indebtedness other than the Guaranteed Debt, any part
thereof or amounts which are not covered by this Guaranty even though Lender
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty, all
whether or not the undersigned shall have had notice or knowledge of any act
or omission referred to in the foregoing clauses (a) through (f) of this
paragraph. It is agreed that the undersigned's liability hereunder is joint
and several and independent of any other guaranties or other obligations at
any time in effect with respect to the Guaranteed Debt or any part thereof
and that the undersigned's liability hereunder may be enforced regardless
of the existence, validity, enforcement or non-enforcement of any such
other guaranties or other obligations.
The undersigned further agrees that if at any time all or any part
of any payment heretofore applied by Lender to the Guaranteed Debt hereby
is or must be rescinded or returned by Lender for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy, or
reorganization of any Guarantor), such indebtedness shall for the purposes
of this Guaranty, to the extent that such payment is or must be rescinded
or returned, be deemed to have continued in existence, notwithstanding
such application by Lender, and this Guaranty shall continue to be
effective or be reinstated as the case may be, as to such guaranteed
indebtedness, all as though such application by Lender had not been
made.
Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral, if any, which may from time to time secure
the Guaranteed Debt or any part thereof and (ii) the undersigned authorizes
Lender to take any action or exercise any remedy with respect thereto, which
Lender in its sole discretion shall determine, without notice to the
undersigned. In the event Lender in its sole discretion elects to give
notice of any action with respect to the collateral, if any, securing the
Guaranteed Debt or any part thereof, ten (10) days' written notice shall
be deemed reasonable notice of any matters contained in such notice. The
payment by the undersigned of any amount pursuant to this Limited Guaranty
shall not entitle the undersigned to any right, title or interest, whether
by way of subrogation or otherwise, in and to any of the Obligations,
including, but not limited to, any indebtedness evidenced by the Notes,
or any collateral therefor. The undersigned does hereby release Borrowers
from any and all obligations of indemnification, contribution, subrogation
and exoneration which may arise or come into existence as a result of the
undersigned's assumption or performance of its obligations in this Limited
Guaranty on behalf of Borrowers in favor of Lender or its successors and
assigns.
The undersigned shall pay all costs, fees and expenses (including
court costs, expert witness fees and reasonable attorneys' fees) incurred
by Lender in collecting or enforcing the undersigned's obligations under
this Guaranty.
Any notice, demand or request which may be permitted, required or
desired to be given in connection therewith shall be given in writing and
directed to Lender and Guarantor as follows:
Lender: U.S. Bank National Association
30 N. Michigan Avenue
Chicago, IL 60602
Fax: (312) 696-1397
With a copy to Christopher J. Horvay
its attorneys: Gould & Ratner
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 235-3241
Guarantor: Michael Kibler
1000 Colfax Street
Gary, Indiana 46406
Fax: (219) 977-5227
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
100 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other
overnight courier; or (iii) delivered by facsimile provided a hard copy of
any such notice delivered by facsimile is delivered to the addressee within
one business day thereafter by either of the methods listed in (i) or (ii)
above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
This Guaranty amends, restates in its entirety, and supercedes an
original Guaranty made by the Guarantor dated April 18, 2000, as amended and
restated as of June 9, 2000, December 7, 2000, March 1, 2001, and October
15, 2001, in favor of Lender.
Chicago, Illinois
_________________________
Michael Kibler
EXHIBIT "E-2"
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
Further 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
LIMITED GUARANTY
The undersigned, Harold Antonson ("Antonson") ("Guarantor"), does
hereby absolutely and unconditionally, subject to the limitation as to
amount set forth below, guarantee to U.S. Bank National Association, a
national banking association formerly known as Firstar Bank N.A. ("Lender"),
(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, and May 1, 2002, in the principal amount
of $7,000,000; 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; 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, 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"); and Harbor Bridge Intermodal, Inc., an Indiana corporation
("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, and Harbor are hereinafter
collectively referred to as "Borrowers") (including all renewals, extensions
and modifications thereof and all court costs, expert witness fees and
reasonable attorneys' fees incurred by Lender in connection with the
collection or enforcement thereof) (the Revolving Loan Note, Equipment Loan
Note and Guidance Loan Note are 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, and
May 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").
The undersigned waives notice of the acceptance of this Guaranty and
of the extension or continuation of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment, protest, notice, demand or
action on delinquency and any other formalities required to charge the
undersigned with liability hereunder, in respect of the Guaranteed Debt or
any part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof. It is the
intent hereof that Guarantor remain liable as a principal until all of
the Guaranteed Debt is paid in full notwithstanding any act or thing that
might otherwise operate as a legal or equitable discharge of a surety.
In the event of default under the Notes or the Loan Agreement,
Guarantor agrees to pay on demand by Lender all sums then or thereafter due
under the Notes and Loan Agreement regardless of any defense, right of
setoff or claims which any Borrowers or Guarantor might have against Lender.
This is a guaranty of payment and performance, not collection. It
is expressly understood and agreed that the liability of the undersigned
Guarantor hereunder for the Guaranteed Debt shall be limited to the sum of
(i) the principal sum of $1,500,000 and (ii) all interest, fees, charges,
costs and attorneys' fees applicable thereto which may accrue or be incurred
after demand for payment of such principal sum. It is further expressly
understood and agreed that separate recovery may be had by Lender for such
sum regardless of whether action is taken or suit is brought by Lender
against any other person liable for the Guaranteed Debt and regardless of
whether any action is taken by Lender to enforce its rights against any
collateral for the Guaranteed Debt.
In any right of action which shall accrue to Lender by reason of
this Guaranty, Lender may, at its sole election, proceed against Guarantor
with or without (a) joining any of Borrowers or the Corporate Guarantor, US
1 Industries, Inc., in such action or (b) commencing any action against, or
obtain any judgment against any of Borrowers.
The validity and enforceability of this Guaranty shall not be impaired
or affected by any of the following, whether occurring before or after
receipt by Lender of notice of termination of this Guaranty: (a) any
extension, modification or renewal of, or indulgence with respect to, or
substitutions for, the Guaranteed Debt or any part thereof or any agreement
relating thereto at any time; (b) any failure or omission to enforce any
right, power or remedy with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto, or any collateral securing the
Guaranteed Debt or any part thereof; (c) any waiver of any right, power or
remedy or of any default with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto or with respect to any collateral
securing the Guaranteed Debt or any part thereof; (d) any release,
surrender, compromise, settlement, waiver, subordination or modification,
with or without consideration, of any collateral securing the Guaranteed
Debt or any part thereof, any other guaranties with respect to the
Guaranteed Debt or any part thereof, or any other obligation of any person
or entity with respect to the Guaranteed Debt or any part thereof; (e) the
enforceability or validity of the Guaranteed Debt or any part thereof or the
genuineness, enforceability or validity of any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part
thereof; or (f) the application of payments received from any source to the
permitted payment of indebtedness other than the Guaranteed Debt, any part
thereof or amounts which are not covered by this Guaranty even though Lender
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty, all
whether or not the undersigned shall have had notice or knowledge of any act
or omission referred to in the foregoing clauses (a) through (f) of this
paragraph. It is agreed that the undersigned's liability hereunder is joint
and several and independent of any other guaranties or other obligations at
any time in effect with respect to the Guaranteed Debt or any part thereof
and that the undersigned's liability hereunder may be enforced regardless
of the existence, validity, enforcement or non-enforcement of any such other
guaranties or other obligations.
The undersigned further agrees that if at any time all or any part of
any payment heretofore applied by Lender to the Guaranteed Debt hereby is or
must be rescinded or returned by Lender for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy, or
reorganization of any Guarantor), such indebtedness shall for the purposes
of this Guaranty, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence, notwithstanding such
application by Lender, and this Guaranty shall continue to be effective or
be reinstated as the case may be, as to such guaranteed indebtedness, all as
though such application by Lender had not been made.
Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral, if any, which may from time to time secure
the Guaranteed Debt or any part thereof and (ii) the undersigned authorizes
Lender to take any action or exercise any remedy with respect thereto, which
Lender in its sole discretion shall determine, without notice to the
undersigned. In the event Lender in its sole discretion elects to give
notice of any action with respect to the collateral, if any, securing the
Guaranteed Debt or any part thereof, ten (10) days' written notice shall be
deemed reasonable notice of any matters contained in such notice. The
payment by the undersigned of any amount pursuant to this Limited Guaranty
shall not entitle the undersigned to any right, title or interest, whether
by way of subrogation or otherwise, in and to any of the Obligations,
including, but not limited to, any indebtedness evidenced by the Notes, or
any collateral therefor. The undersigned does hereby release Borrowers from
any and all obligations of indemnification, contribution, subrogation and
exoneration which may arise or come into existence as a result of the
undersigned's assumption or performance of its obligations in this Limited
Guaranty on behalf of Borrowers in favor of Lender or its successors and
assigns.
The undersigned shall pay all costs, fees and expenses (including
court costs, expert witness fees and reasonable attorneys' fees) incurred
by Lender in collecting or enforcing the undersigned's obligations under
this Guaranty.
Any notice, demand or request which may be permitted, required or
desired to be given in connection therewith shall be given in writing and
directed to Lender and Guarantor as follows:
Lender: U.S. Bank National Association
30 N. Michigan Avenue
Chicago, IL 60602
Fax: (312) 696-1397
With a copy to Christopher J. Horvay
its attorneys: Gould & Ratner
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 235-3241
Guarantor: Harold Antonson
1000 Colfax Street
Gary, Indiana 46406
Fax: (219) 977-5227
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
600 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other
overnight courier; or (iii) delivered by facsimile provided a hard copy of
any such notice delivered by facsimile is delivered to the addressee within
one business day thereafter by either of the methods listed in (i) or (ii)
above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
This Guaranty amends, restates in its entirety, and supercedes an
original Guaranty made by the Guarantor dated April 18, 2000, as amended and
restated as of June 9, 2000, December 7, 2000, March 1, 2001, and October
15, 2001, in favor of Lender.
Chicago, Illinois
_________________________
Harold Antonson
EXHIBIT "F"
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
Further 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
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"); and Harbor Bridge Intermodal,
Inc. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor are
hereinafter collectively referred to as "Borrowers") and to enter into a
certain Fifth Amendment to Loan Agreement of even date herewith
between Borrowers and Lender (which Fifth 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,
and October 15, 2001, is the "Loan Agreement") and to otherwise extend
credit to Borrowers, the undersigned hereby irrevocably, absolutely and
unconditionally guarantees 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, and May 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; and the Guidance Line Note, dated
as of October 15, 2001 and as amended and restated as of May 1, 2002
(the Revolving Loan Note, the Equipment Loan Note, and the Guidance 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"). The undersigned further agrees to pay all costs of
collection and attorneys' fees paid or incurred by Lender in the
collection of the Obligations and the enforcement of this Corporate
Guaranty. This Corporate Guaranty shall continue in full force and effect
until all of the Obligations, including, but not limited to, all
indebtedness evidenced by the Notes, have been fully and irrevocably paid
and discharged. This is a guarantee of payment and not of collection and
shall be enforceable directly without resorting to any other right, remedy
or security.
If Borrowers do not pay or otherwise fully perform the Obligations
in a timely manner as provided in the Notes and Loan Agreement, the
undersigned will promptly pay the amount due and payable by Borrowers to
Lender upon demand. The undersigned acknowledges that it will benefit from
the extension of credit described herein made by Lender to Borrowers and
that, in order to induce Lender to accept the Notes and to otherwise extend
credit to Borrowers that it has agreed to execute and deliver this Corporate
Guaranty on the understanding that doing so is a condition precedent to
Lender accepting the Notes and otherwise agreeing to extend credit. The
undersigned represents and warrants that it (i) has personal knowledge of
and is familiar with Borrowers' business affairs, books and records; and
(ii) has the ability to influence Borrowers' decision making process. The
undersigned further represents and warrants that Borrowers are in sound
financial condition, that all financial statements of Borrowers and the
undersigned heretofore provided to Lender are true, correct and complete and
that Borrowers are able to and will perform their obligations in accordance
with the terms and conditions of the Notes. The undersigned acknowledges
that Lender is relying upon the undersigned's representations, warranties
and covenants herein in accepting the Notes and agreeing to otherwise extend
credit to Borrowers, and undertakes to perform or cause Borrowers to perform
the Obligations promptly and in good faith. If Borrowers do not pay any sum
when due under the Notes or Loan Agreement, upon the expiration of the
applicable cure period, if any, Lender in its sole discretion, may proceed
directly against the undersigned under this Corporate Guaranty without first
proceeding against any of Borrowers or any of the collateral or exhausting
any of its remedies against any of Borrowers. The payment by the
undersigned of any amount pursuant to this Corporate Guaranty shall not
entitle the undersigned to any right, title or interest, whether by way of
subrogation or otherwise, in and to any of the Obligations, including, but
not limited to, any indebtedness evidenced by the Notes, or any collateral
therefor. The undersigned does hereby release Borrowers from any and all
obligations of indemnification, contribution, subrogation and exoneration
which may arise or come into existence as a result of the undersigned's
assumption or performance of its obligations in this Corporate Guaranty on
behalf of Borrowers in favor of Lender or its successors and assigns.
The liability and obligation of the undersigned hereunder shall not
be affected or impaired in any manner by (and Lender is hereby expressly
authorized to make, from time to time, without notice to the undersigned)
any sale, pledge, surrender, compromise, release, renewal, extension,
modification, or other disposition of or with respect to any of the
Obligations, including, without limitation, the indebtedness evidenced by
the Notes, or any collateral therefor, and such obligation and liability of
the undersigned shall not in any manner be affected or impaired by any
acceptance of security for or other guarantees of any such indebtedness or
by any forbearance or indulgence in the collection thereof or any failure,
neglect or omission to realize upon any collateral therefor. Diligence in
collection and presentment for payment, demand, protest and/or notice of
dishonor, default or nonpayment and notice of the creation or existence of
any and all Obligations and security therefor and of the acceptance of this
Corporate Guaranty are hereby expressly waived.
The undersigned agrees that, if at any time all or any part
of any payment theretofore applied to any of the Obligations is rescinded
or returned for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy, liquidation, receivership, arrangement or
reorganization of any party or by any defense which any Borrower or any
shareholder thereof may have by reason of the order, decree or decision of
any court or administrative body resulting from any such proceeding), such
Obligation shall, for the purposes of this Corporate Guaranty, be deemed to
have continued in existence to the extent of such payment, notwithstanding
such application by Lender, and this Corporate Guaranty shall continue to
be effective or be reinstated, as the case may be, as to such Obligation,
all as though such application had not been made.
The undersigned agrees that the obligations, covenants and
agreements of the undersigned under this Corporate Guaranty shall not be
affected or impaired by any act of Lender, or any event or condition except
full performance of the Obligations and any other sums due hereunder. The
undersigned agree that, without full performance of the Obligations, the
liability of the undersigned hereunder shall not be discharged or diminished
by: (i) the renewal or extension of time for the performance of the
Obligations under the Loan Instruments or any other agreement relating to
the Obligations, whether made with or without the knowledge or consent of
the undersigned; (ii) any transfer, waiver, compromise, settlement,
modification, surrender, or release of the Loan Instruments or any
collateral assigned, pledged or hypothecated thereby; (iii) the existence of
any defenses to enforcement of the Loan Instruments; (iv) any failure,
omission, delay or inadequacy, whether entire or partial, of Lender to
exercise any right, power or remedy under the Loan Instruments regarding the
Obligations; (v) the existence of any setoff, claim, reduction, or
diminution of the Obligations, or any defense of any kind or nature, which
the undersigned may have against any of the Borrowers or which any party has
against Lender; (vi) the application of payments received from any source to
the payment of any obligation other than the Obligations, even though Lender
might lawfully have elected to apply such payments to any part or all of the
Obligations; or (vii) the addition of any and all other endorsers,
guarantors, obligors and other persons liable for the performance of the
Obligations and the acceptance of any and all other security for the
performance of the Obligations, all whether or not the undersigned shall
have had notice or knowledge of any act or omission referred to in the
foregoing clauses (i) through (vii) of this paragraph. The undersigned
intends that the undersigned shall remain liable hereunder as a principal
until all Obligations shall have been performed in full, notwithstanding,
any fact, act, event or occurrence which might otherwise operate as a legal
or equitable discharge of a surety or guarantor other than payment and
performance in full of the Obligations.
If this Corporate Guaranty is signed by more than one person, firm,
or corporation, every obligation of each signatory shall be joint and
several. No release or discharge of any one or more of the undersigned, if
there be more than one, shall release or discharge any other or others of
the undersigned unless and until all of the Obligations shall have been
fully paid. This Corporate Guaranty and each and every part hereof shall be
binding upon the undersigned jointly and severally (if there be more than
one) and upon the heirs, legal representatives, successors and assigns of
the undersigned, and shall inure to the benefit of Lender and its successors
and assigns.
The undersigned expressly waives: (i) notice of the acceptance by
Lender of this Corporate Guaranty; (ii) notice of the existence, creation,
payment or nonpayment of the Obligations; (iii) presentment, demand at
maturity, notice of dishonor, protest, and all other notices whatsoever; and
(iv) any failure by Lender to inform the undersigned of any facts Lender may
now or hereafter know about any of Borrowers or the transactions
contemplated by the Loan Instruments, it being understood and agreed that
Lender has no duty so to inform and that the undersigned is fully
responsible for being and remaining informed by Borrowers of all
circumstances bearing on the existence, creation, or risk of nonpayment of
the Obligations. Credit may be granted or continued from time to time by
Lender to Borrowers without notice to or authorization from the undersigned,
regardless of the financial or other condition of any of Borrowers at the
time of any such grant or continuation. Lender shall have no obligation to
disclose or discuss with the undersigned its assessment of the financial
condition of any Borrower. No modification or waiver of any of the
provisions of this Corporate Guaranty will be binding upon Lender except as
expressly set forth in a writing duly signed and delivered on behalf of
Lender. The undersigned further agrees that any exculpatory language
pertaining to any Borrower contained in the Loan Instruments or any document
executed and delivered by any Borrower thereunder shall in no event apply to
this Corporate Guaranty, and will not prevent Lender from proceeding against
the undersigned to enforce this Corporate Guaranty.
This Corporate Guaranty has been executed in Chicago, Illinois, and
shall be governed by the laws of the State of Illinois without reference to
the principles of conflicts of law thereof. If any provision of this
Corporate Guaranty, or any paragraph, sentence, clause, phrase, or word, or
the application thereof, in any circumstances, is adjudicated by a court of
competent jurisdiction to be invalid, the validity of the remainder of this
Corporate Guaranty shall be construed as if such invalid part were never
included herein. Time is of the essence of this Corporate Guaranty. All
payments to be made hereunder shall be made in currency and coin of the
United States of America which is legal tender for public and private debts
at the time of payment.
This Corporate Guaranty is secured by a Security Agreement dated
April 18, 2000 from Guarantor to Lender and by all collateral described
therein.
The undersigned hereby submits to personal jurisdiction in the State
of Illinois for the enforcement of this Corporate Guaranty and waives any
and all personal rights to object to such jurisdiction for the purposes of
litigation to enforce this Corporate Guaranty. The undersigned hereby
consents to the jurisdiction of either the Circuit Court of Cook County,
Illinois, or the United States District Court for the Northern District of
Illinois, Eastern Division, in any action, suit or proceeding which Lender
may at any time wish to file in connection with this Corporate Guaranty or
any related matter. The undersigned hereby agrees that any action, suit or.
proceeding to enforce this Corporate Guaranty may be. brought in any State
or Federal Court in the State of Illinois and hereby waive any objection
which the undersigned may have to the laying of the venue of any such
action, suit or proceeding in any such Court; provided, however, that the
provisions of this paragraph shall not be deemed to preclude Lender from
filing any such action, suit or proceeding in any other appropriate forum.
THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING
OUT OF OR RELATING. TO THIS CORPORATE GUARANTY.
Any notice, demand or other communication which either party may
desire or may be required to give to the other party shall be in writing,
and shall be deemed given (i) if and when personally delivered, or (ii) upon
receipt via facsimile transmission provided that a copy is also sent via
overnight mail, addressed to the intended recipient at its address set forth
below, or to such other address as such party may have designated to all
other parties by notice furnished in accordance herewith:
if to Lender: U.S. Bank National Association
30 N. Michigan Avenue
Chicago, Illinois 60602
Attention: Craig B. Collinson, Senior Vice
President
Fax No.: (312) 696-1397
With a copy to: Gould & Ratner
222 North LaSalle Street
Suite 800
Chicago, Illinois 60601
Attention: Christopher J. Horvay
Fax No.: (312) 236-3241
and if to the undersigned: at the address set forth below its name
Except as otherwise specifically required herein, notice of the exercise of
any right, option or power granted to Lender by this Corporate Guaranty is
not required to be given.
This Corporate Guaranty amends, restates in its entirety, and
supercedes an original Corporate Guaranty made by the Guarantor dated April
18, 2000, as amended and restated as of June 9, 2000, December 7, 2000,
March 1, 2001, and October 15, 2001, in favor of Lender.
US 1 INDUSTRIES, INC., an Indiana corporation
By: _________________________________
Name: _______________________________
Title: ________________________________
Address: 1000 Colfax Street
Gary, IN 46406
Fax No.: (219) 977-5227
EXHIBIT "G-1"
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledge that U.S. Bank National
Association, a national banking association formerly known as Firstar
Bank N.A. ("Lender"), has agreed to add Harbor Bridge Intermodal, Inc.,
an Indiana corporation ("Harbor"), as an additional Borrower pursuant to
that certain Fifth Amendment to Loan Agreement dated as of the date hereof
between 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 (collectively
"Borrowers"). Borrowers, Lender, and US 1 Industries, Inc., the parent
of Borrowers ("Borrowers' Parent"), hereby acknowledge and agree that
the Subordinated Debt (as defined in that certain Subordination
Agreement dated April 18, 2000, as amended, between Lender and the
undersigned (the "Subordination Agreement")) is and shall continue to be
subordinate, all as provided in the Subordination Agreement, to any such
sums loaned to the Borrowers, or any of them, including Harbor, as
provided in such Fifth Amendment to Loan Agreement, 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 that
certain Loan Agreement among Borrowers, Lender and Borrowers' Parent dated
April 18, 2000, as amended as of June 9, 2000, December 7, 2000, March 1,
2001, October 15, 2001, and May 1, 2002 (as so amended, the "Loan
Agreement") among Borrowers, Lender, and Borrowers' Parent and that any
amounts advanced to any of 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 May 1, 2002.
______________________________
Harold Antonson
______________________________
Michael Kibler
EXHIBIT "G-2"
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledges that U.S. Bank National
Association, a national banking association formerly known as Firstar
Bank N.A. ("Lender"), has agreed to add Harbor Bridge Intermodal, Inc.,
an Indiana corporation ("Harbor"), as an additional Borrower pursuant to
that certain Fifth Amendment to Loan Agreement dated as of the date hereof
between 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 (collectively
"Borrowers"). Borrowers, Lender, and US 1 Industries, Inc., the parent of
Borrowers ("Borrowers' Parent"), hereby acknowledge and agree that the
Subordinated Debt (as defined in that certain Subordination Agreement dated
April 18, 2000, as amended, between Lender and the undersigned (the
"Subordination Agreement")) is and shall continue to be subordinate, all as
provided in the Subordination Agreement, to any such sums loaned to the
Borrowers, or any of them, including Harbor, as provided in such Fifth
Amendment to Loan Agreement, 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 that certain Loan Agreement among
Borrowers, Lender and Borrowers' Parent dated April 18, 2000, as amended as
of June 9, 2000, December 7, 2000, March 1, 2001, October 15, 2001, and May
1, 2002 (as so amended, the "Loan Agreement") among Borrowers, Lender, and
Borrowers' Parent and that any amounts advanced to any of 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 May 1, 2002.
AUGUST INVESTMENT PARTNERSHIP
By: AUGUST INVESTMENT CORPORATION,
General Partner
By: ______________________________
Its: ______________________________
EXHIBIT "H"
UCC-1 FINANCING STATEMENT
HARBOR BRIDGE INTERMODAL, INC., DEBTOR
[Please see the attached pages.]
REVOLVING LOAN NOTE
$7,000,000.00 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
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"); and HARBOR BRIDGE INTERMODAL,
INC. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor 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 SEVEN MILLION AND NO/100ths DOLLARS ($7,000,000.00), 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, and May 1, 2002 (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 therefor 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.
The Revolving Loan Note amends, restates in its entirety, and
supercedes 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
December 7, 2000, in the principal face amount of $5,500,000, which amended
and restated a Revolving Loan Note dated June 12, 2000, made by Borrowers
and payable to the order of Lender, which amended and restated a Revolving
Loan Note dated April 18, 2000, in the principal face amount of $3,500,000.
[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: ____________________________
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
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"); and HARBOR BRIDGE INTERMODAL,
INC. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor 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, and May 1, 2002 (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 therefor 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
Noteshall 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, and as amended and
restated as of October 15, 2001.
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: ____________________________
GUIDANCE LOAN NOTE
$300,000.00 Dated as of October 15, 2001
Chicago, Illinois Amended and Restated as of May 1, 2002
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"); and HARBOR BRIDGE INTERMODAL,
INC. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor 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, and May 1, 2002 (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 therefor 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 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.
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: ____________________________
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of May 1, 2002, is between HARBOR
BRIDGE INTERMODAL, INC., an Indiana corporation ("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., and TRANSPORT LOGISTICS, LLC, (the "Other Borrowers"), US 1
INDUSTRIES, INC. ("Guarantor"), and Lender have entered into a Fifth
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, and October 15, 2001 (the April 18, 2000 Loan
Agreement, as so amended and as amended by the Fifth 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 Borrower's
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: HARBOR BRIDGE INTERMODAL, INC.,
1000 Colfax an Indiana corporation
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
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
Further 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
LIMITED GUARANTY
The undersigned, Michael Kibler ("Kibler") ("Guarantor"), does hereby
absolutely and unconditionally, subject to the limitation as to amount set
forth below, guarantee to U.S. Bank National Association, a national banking
association formerly known as Firstar Bank N.A. ("Lender"), (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, and May 1, 2002, in the principal amount of
$7,000,000; 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; 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, 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"); and Harbor Bridge Intermodal, Inc., an Indiana corporation
("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, and Harbor are hereinafter
collectively referred to as "Borrowers") (including all renewals, extensions
and modifications thereof and all court costs, expert witness fees and
reasonable attorneys' fees incurred by Lender in connection with the
collection or enforcement thereof) (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, and May 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").
The undersigned waives notice of the acceptance of this Guaranty and
of the extension or continuation of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment, protest, notice, demand or
action on delinquency and any other formalities required to charge the
undersigned with liability hereunder, in respect of the Guaranteed Debt or
any part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof. It is the
intent hereof that Guarantor remain liable as a principal until all of the
Guaranteed Debt is paid in full notwithstanding any act or thing that might
otherwise operate as a legal or equitable discharge of a surety.
In the event of default under the Notes or the Loan Agreement,
Guarantor agrees to pay on demand by Lender all sums then or thereafter due
under the Notes and Loan Agreement regardless of any defense, right of
setoff or claims which any Borrowers or Guarantor might have against Lender.
This is a guaranty of payment and performance, not collection. It
is expressly understood and agreed that the liability of the undersigned
Guarantor hereunder for the Guaranteed Debt shall be limited to the sum of
(i) the principal sum of $1,500,000 and (ii) all interest, fees, charges,
costs and attorneys' fees applicable thereto which may accrue or be incurred
after demand for payment of such principal sum. It is further expressly
understood and agreed that separate recovery may be had by Lender for such
sum regardless of whether action is taken or suit is brought by Lender
against any other person liable for the Guaranteed Debt and regardless of
whether any action is taken by Lender to enforce its rights against any
collateral for the Guaranteed Debt.
In any right of action which shall accrue to Lender by reason of
this Guaranty, Lender may, at its sole election, proceed against Guarantor
with or without (a) joining any of Borrowers or the Corporate Guarantor, US
1 Industries, Inc., in such action or (b) commencing any action against, or
obtain any judgment against any of Borrowers.
The validity and enforceability of this Guaranty shall not be impaired
or affected by any of the following, whether occurring before or after
receipt by Lender of notice of termination of this Guaranty: (a) any
extension, modification or renewal of, or indulgence with respect to, or
substitutions for, the Guaranteed Debt or any part thereof or any agreement
relating thereto at any time; (b) any failure or omission to enforce any
right, power or remedy with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto, or any collateral securing the
Guaranteed Debt or any part thereof; (c) any waiver of any right, power or
remedy or of any default with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto or with respect to any collateral
securing the Guaranteed Debt or any part thereof; (d) any release,
surrender, compromise, settlement, waiver, subordination or modification,
with or without consideration, of any collateral securing the Guaranteed
Debt or any part thereof, any other guaranties with respect to the
Guaranteed Debt or any part thereof, or any other obligation of any person
or entity with respect to the Guaranteed Debt or any part thereof; (e) the
enforceability or validity of the Guaranteed Debt or any part thereof or the
genuineness, enforceability or validity of any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part
thereof; or (f) the application of payments received from any source to the
permitted payment of indebtedness other than the Guaranteed Debt, any part
thereof or amounts which are not covered by this Guaranty even though Lender
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty, all
whether or not the undersigned shall have had notice or knowledge of any act
or omission referred to in the foregoing clauses (a) through (f) of this
paragraph. It is agreed that the undersigned's liability hereunder is joint
and several and independent of any other guaranties or other obligations at
any time in effect with respect to the Guaranteed Debt or any part thereof
and that the undersigned's liability hereunder may be enforced regardless of
the existence, validity, enforcement or non-enforcement of any such other
guaranties or other obligations.
The undersigned further agrees that if at any time all or any part of
any payment heretofore applied by Lender to the Guaranteed Debt hereby is
or must be rescinded or returned by Lender for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy, or reorganization
of any Guarantor), such indebtedness shall for the purposes of this Guaranty,
to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application by
Lender, and this Guaranty shall continue to be effective or be reinstated as
the case may be, as to such guaranteed indebtedness, all as though such a
pplication by Lender had not been made.
Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral, if any, which may from time to time secure
the Guaranteed Debt or any part thereof and (ii) the undersigned authorizes
Lender to take any action or exercise any remedy with respect thereto, which
Lender in its sole discretion shall determine, without notice to the
undersigned. In the event Lender in its sole discretion elects to give
notice of any action with respect to the collateral, if any, securing the
Guaranteed Debt or any part thereof, ten (10) days' written notice shall be
deemed reasonable notice of any matters contained in such notice. The
payment by the undersigned of any amount pursuant to this Limited Guaranty
shall not entitle the undersigned to any right, title or interest, whether
by way of subrogation or otherwise, in and to any of the Obligations,
including, but not limited to, any indebtedness evidenced by the Notes, or
any collateral therefor. The undersigned does hereby release Borrowers from
any and all obligations of indemnification, contribution, subrogation and
exoneration which may arise or come into existence as a result of the
undersigned's assumption or performance of its obligations in this Limited
Guaranty on behalf of Borrowers in favor of Lender or its successors and
assigns.
The undersigned shall pay all costs, fees and expenses (including
court costs, expert witness fees and reasonable attorneys' fees) incurred
by Lender in collecting or enforcing the undersigned's obligations under this
Guaranty.
Any notice, demand or request which may be permitted, required or
desired to be given in connection therewith shall be given in writing and
directed to Lender and Guarantor as follows:
Lender: U.S. Bank National Association
30 N. Michigan Avenue
Chicago, IL 60602
Fax: (312) 696-1397
With a copy to Christopher J. Horvay
its attorneys: Gould & Ratner
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 235-3241
Guarantor: Michael Kibler
1000 Colfax Street
Gary, Indiana 46406
Fax: (219) 977-5227
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
100 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other
overnight courier; or (iii) delivered by facsimile provided a hard copy of
any such notice delivered by facsimile is delivered to the addressee within
one business day thereafter by either of the methods listed in (i) or (ii)
above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
This Guaranty amends, restates in its entirety, and supercedes an
original Guaranty made by the Guarantor dated April 18, 2000, as amended and
restated as of June 9, 2000, December 7, 2000, March 1, 2001, and October
15, 2001, in favor of Lender.
Chicago, Illinois
_________________________
Michael Kibler
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
Further 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
LIMITED GUARANTY
The undersigned, Harold Antonson ("Antonson") ("Guarantor"), does
hereby absolutely and unconditionally, subject to the limitation as to
amount set forth below, guarantee to U.S. Bank National Association, a
national banking association formerly known as Firstar Bank N.A. ("Lender"),
(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, and May 1, 2002, in the principal amount
of $7,000,000; 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; 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, 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"); and Harbor Bridge Intermodal, Inc., an Indiana corporation
("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX, Friendly,
Transport Leasing, Transport Logistics, and Harbor are hereinafter
collectively referred to as "Borrowers") (including all renewals, extensions
and modifications thereof and all court costs, expert witness fees and
reasonable attorneys' fees incurred by Lender in connection with the
collection or enforcement thereof) (the Revolving Loan Note, Equipment Loan
Note and Guidance Loan Note are 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, and
May 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").
The undersigned waives notice of the acceptance of this Guaranty and
of the extension or continuation of the Guaranteed Debt or any part thereof.
The undersigned further waives presentment, protest, notice, demand or
action on delinquency and any other formalities required to charge the
undersigned with liability hereunder, in respect of the Guaranteed Debt or
any part thereof, or otherwise to enforce payment thereof against any
collateral securing the Guaranteed Debt or any part thereof. It is the
intent hereof that Guarantor remain liable as a principal until all of the
Guaranteed Debt is paid in full notwithstanding any act or thing that might
otherwise operate as a legal or equitable discharge of a surety.
In the event of default under the Notes or the Loan Agreement,
Guarantor agrees to pay on demand by Lender all sums then or thereafter due
under the Notes and Loan Agreement regardless of any defense, right of
setoff or claims which any Borrowers or Guarantor might have against Lender.
This is a guaranty of payment and performance, not collection. It
is expressly understood and agreed that the liability of the undersigned
Guarantor hereunder for the Guaranteed Debt shall be limited to the sum of
(i) the principal sum of $1,500,000 and (ii) all interest, fees, charges,
costs and attorneys' fees applicable thereto which may accrue or be incurred
after demand for payment of such principal sum. It is further expressly
understood and agreed that separate recovery may be had by Lender for such
sum regardless of whether action is taken or suit is brought by Lender
against any other person liable for the Guaranteed Debt and regardless of
whether any action is taken by Lender to enforce its rights against any
collateral for the Guaranteed Debt.
In any right of action which shall accrue to Lender by reason of
this Guaranty, Lender may, at its sole election, proceed against Guarantor
with or without (a) joining any of Borrowers or the Corporate Guarantor, US
1 Industries, Inc., in such action or (b) commencing any action against, or
obtain any judgment against any of Borrowers.
The validity and enforceability of this Guaranty shall not be impaired
or affected by any of the following, whether occurring before or after
receipt by Lender of notice of termination of this Guaranty: (a) any
extension, modification or renewal of, or indulgence with respect to, or
substitutions for, the Guaranteed Debt or any part thereof or any agreement
relating thereto at any time; (b) any failure or omission to enforce any
right, power or remedy with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto, or any collateral securing the
Guaranteed Debt or any part thereof; (c) any waiver of any right, power or
remedy or of any default with respect to the Guaranteed Debt or any part
thereof or any agreement relating thereto or with respect to any collateral
securing the Guaranteed Debt or any part thereof; (d) any release,
surrender, compromise, settlement, waiver, subordination or modification,
with or without consideration, of any collateral securing the Guaranteed
Debt or any part thereof, any other guaranties with respect to the
Guaranteed Debt or any part thereof, or any other obligation of any person
or entity with respect to the Guaranteed Debt or any part thereof; (e) the
enforceability or validity of the Guaranteed Debt or any part thereof or the
genuineness, enforceability or validity of any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part
thereof; or (f) the application of payments received from any source to the
permitted payment of indebtedness other than the Guaranteed Debt, any part
thereof or amounts which are not covered by this Guaranty even though Lender
might lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty, all
whether or not the undersigned shall have had notice or knowledge of any act
or omission referred to in the foregoing clauses (a) through (f) of this
paragraph. It is agreed that the undersigned's liability hereunder is joint
and several and independent of any other guaranties or other obligations at
any time in effect with respect to the Guaranteed Debt or any part thereof
and that the undersigned's liability hereunder may be enforced regardless of
the existence, validity, enforcement or non-enforcement of any such other
guaranties or other obligations.
The undersigned further agrees that if at any time all or any part
of any payment heretofore applied by Lender to the Guaranteed Debt hereby
is or must be rescinded or returned by Lender for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy, or reorganization
of any Guarantor), such indebtedness shall for the purposes of this Guaranty,
to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application by
Lender, and this Guaranty shall continue to be effective or be reinstated as
the case may be, as to such guaranteed indebtedness, all as though such
application by Lender had not been made.
Until the Guaranteed Debt is paid in full (i) the undersigned waives
any benefit of the collateral, if any, which may from time to time secure
the Guaranteed Debt or any part thereof and (ii) the undersigned authorizes
Lender to take any action or exercise any remedy with respect thereto, which
Lender in its sole discretion shall determine, without notice to the
undersigned. In the event Lender in its sole discretion elects to give
notice of any action with respect to the collateral, if any, securing the
Guaranteed Debt or any part thereof, ten (10) days' written notice shall be
deemed reasonable notice of any matters contained in such notice. The
payment by the undersigned of any amount pursuant to this Limited Guaranty
shall not entitle the undersigned to any right, title or interest, whether
by way of subrogation or otherwise, in and to any of the Obligations,
including, but not limited to, any indebtedness evidenced by the Notes, or
any collateral therefor. The undersigned does hereby release Borrowers from
any and all obligations of indemnification, contribution, subrogation and
exoneration which may arise or come into existence as a result of the
undersigned's assumption or performance of its obligations in this Limited
Guaranty on behalf of Borrowers in favor of Lender or its successors and
assigns.
The undersigned shall pay all costs, fees and expenses (including
court costs, expert witness fees and reasonable attorneys' fees) incurred
by Lender in collecting or enforcing the undersigned's obligations under
this Guaranty.
Any notice, demand or request which may be permitted, required or
desired to be given in connection therewith shall be given in writing and
directed to Lender and Guarantor as follows:
Lender: U.S. Bank National Association
30 N. Michigan Avenue
Chicago, IL 60602
Fax: (312) 696-1397
With a copy to Christopher J. Horvay
its attorneys: Gould & Ratner
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 235-3241
Guarantor: Harold Antonson
1000 Colfax Street
Gary, Indiana 46406
Fax: (219) 977-5227
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
600 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if(i)
personally delivered; (ii) delivered by Federal Express or other overnight
courier; or (iii) delivered by facsimile provided a hard copy of any such
notice delivered by facsimile is delivered to the addressee within one
business day thereafter by either of the methods listed in (i) or (ii)
above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
This Guaranty amends, restates in its entirety, and supercedes an
original Guaranty made by the Guarantor dated April 18, 2000, as amended and
restated as of June 9, 2000, December 7, 2000, March 1, 2001, and October
15, 2001, in favor of Lender.
Chicago, Illinois
_________________________
Harold Antonson
Date: April 18, 2000
Amended and Restated as of June 9, 2000
Further Amended and Restated as of December 7, 2000
Further 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
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"); and Harbor Bridge Intermodal,
Inc. ("Harbor") (Carolina, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, and Harbor are hereinafter
collectively referred to as "Borrowers") and to enter into a certain Fifth
Amendment to Loan Agreement of even date herewith between Borrowers and
Lender (which Fifth 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, and October 15, 2001, is the "Loan
Agreement") and to otherwise extend credit to Borrowers, the undersigned
hereby irrevocably, absolutely and unconditionally guarantees 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, and May 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; and the
Guidance Line Note, dated as of October 15, 2001 and as amended and restated
as of May 1, 2002 (the Revolving Loan Note, the Equipment Loan Note, and the
Guidance 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"). The undersigned further agrees to pay all costs of
collection and attorneys' fees paid or incurred by Lender in the collection
of the Obligations and the enforcement of this Corporate Guaranty. This
Corporate Guaranty shall continue in full force and effect until all of the
Obligations, including, but not limited to, all indebtedness evidenced by
the Notes, have been fully and irrevocably paid and discharged. This is a
guarantee of payment and not of collection and shall be enforceable directly
without resorting to any other right, remedy or security.
If Borrowers do not pay or otherwise fully perform the Obligations
in a timely manner as provided in the Notes and Loan Agreement, the
undersigned will promptly pay the amount due and payable by Borrowers to
Lender upon demand. The undersigned acknowledges that it will benefit from
the extension of credit described herein made by Lender to Borrowers and
that, in order to induce Lender to accept the Notes and to otherwise extend
credit to Borrowers that it has agreed to execute and deliver this Corporate
Guaranty on the understanding that doing so is a condition precedent to
Lender accepting the Notes and otherwise agreeing to extend credit. The
undersigned represents and warrants that it (i) has personal knowledge of
and is familiar with Borrowers' business affairs, books and records; and
(ii) has the ability to influence Borrowers' decision making process. The
undersigned further represents and warrants that Borrowers are in sound
financial condition, that all financial statements of Borrowers and the
undersigned heretofore provided to Lender are true, correct and complete and
that Borrowers are able to and will perform their obligations in accordance
with the terms and conditions of the Notes. The undersigned acknowledges
that Lender is relying upon the undersigned's representations, warranties
and covenants herein in accepting the Notes and agreeing to otherwise extend
credit to Borrowers, and undertakes to perform or cause Borrowers to perform
the Obligations promptly and in good faith. If Borrowers do not pay any sum
when due under the Notes or Loan Agreement, upon the expiration of the
applicable cure period, if any, Lender in its sole discretion, may proceed
directly against the undersigned under this Corporate Guaranty without first
proceeding against any of Borrowers or any of the collateral or exhausting
any of its remedies against any of Borrowers. The payment by the
undersigned of any amount pursuant to this Corporate Guaranty shall not
entitle the undersigned to any right, title or interest, whether by way of
subrogation or otherwise, in and to any of the Obligations, including, but
not limited to, any indebtedness evidenced by the Notes, or any collateral
therefor. The undersigned does hereby release Borrowers from any and all
obligations of indemnification, contribution, subrogation and exoneration
which may arise or come into existence as a result of the undersigned's
assumption or performance of its obligations in this Corporate Guaranty on
behalf of Borrowers in favor of Lender or its successors and assigns.
The liability and obligation of the undersigned hereunder shall not
be affected or impaired in any manner by (and Lender is hereby expressly
authorized to make, from time to time, without notice to the undersigned)
any sale, pledge, surrender, compromise, release, renewal, extension,
modification, or other disposition of or with respect to any of the
Obligations, including, without limitation, the indebtedness evidenced by
the Notes, or any collateral therefor, and such obligation and liability of
the undersigned shall not in any manner be affected or impaired by any
acceptance of security for or other guarantees of any such indebtedness or
by any forbearance or indulgence in the collection thereof or any failure,
neglect or omission to realize upon any collateral therefor. Diligence in
collection and presentment for payment, demand, protest and/or notice of
dishonor, default or nonpayment and notice of the creation or existence of
any and all Obligations and security therefor and of the acceptance of this
Corporate Guaranty are hereby expressly waived.
The undersigned agrees that, if at any time all or any part of any
payment theretofore applied to any of the Obligations is rescinded or
returned for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy, liquidation, receivership, arrangement or
reorganization of any party or by any defense which any Borrower or any
shareholder thereof may have by reason of the order, decree or decision of
any court or administrative body resulting from any such proceeding), such
Obligation shall, for the purposes of this Corporate Guaranty, be deemed to
have continued in existence to the extent of such payment, notwithstanding
such application by Lender, and this Corporate Guaranty shall continue to be
effective or be reinstated, as the case may be, as to such Obligation, all
as though such application had not been made.
The undersigned agrees that the obligations, covenants and
agreements of the undersigned under this Corporate Guaranty shall not be
affected or impaired by any act of Lender, or any event or condition except
full performance of the Obligations and any other sums due hereunder. The
undersigned agree that, without full performance of the Obligations, the
liability of the undersigned hereunder shall not be discharged or diminished
by: (i) the renewal or extension of time for the performance of the
Obligations under the Loan Instruments or any other agreement relating to
the Obligations, whether made with or without the knowledge or consent of
the undersigned; (ii) any transfer, waiver, compromise, settlement,
modification, surrender, or release of the Loan Instruments or any
collateral assigned, pledged or hypothecated thereby; (iii) the existence of
any defenses to enforcement of the Loan Instruments; (iv) any failure,
omission, delay or inadequacy, whether entire or partial, of Lender to
exercise any right, power or remedy under the Loan Instruments regarding the
Obligations; (v) the existence of any setoff, claim, reduction, or
diminution of the Obligations, or any defense of any kind or nature, which
the undersigned may have against any of the Borrowers or which any party has
against Lender; (vi) the application of payments received from any source to
the payment of any obligation other than the Obligations, even though Lender
might lawfully have elected to apply such payments to any part or all of the
Obligations; or (vii) the addition of any and all other endorsers,
guarantors, obligors and other persons liable for the performance of the
Obligations and the acceptance of any and all other security for the
performance of the Obligations, all whether or not the undersigned shall
have had notice or knowledge of any act or omission referred to in the
foregoing clauses (i) through (vii) of this paragraph. The undersigned
intends that the undersigned shall remain liable hereunder as a principal
until all Obligations shall have been performed in full, notwithstanding,
any fact, act, event or occurrence which might otherwise operate as a legal
or equitable discharge of a surety or guarantor other than payment and
performance in full of the Obligations.
If this Corporate Guaranty is signed by more than one person, firm,
or corporation, every obligation of each signatory shall be joint and
several. No release or discharge of any one or more of the undersigned, if
there be more than one, shall release or discharge any other or others of
the undersigned unless and until all of the Obligations shall have been
fully paid. This Corporate Guaranty and each and every part hereof shall be
binding upon the undersigned jointly and severally (if there be more than
one) and upon the heirs, legal representatives, successors and assigns of
the undersigned, and shall inure to the benefit of Lender and its successors
and assigns.
The undersigned expressly waives: (i) notice of the acceptance by
Lender of this Corporate Guaranty; (ii) notice of the existence, creation,
payment or nonpayment of the Obligations; (iii) presentment, demand at
maturity, notice of dishonor, protest, and all other notices whatsoever; and
(iv) any failure by Lender to inform the undersigned of any facts Lender may
now or hereafter know about any of Borrowers or the transactions
contemplated by the Loan Instruments, it being understood and agreed that
Lender has no duty so to inform and that the undersigned is fully
responsible for being and remaining informed by Borrowers of all
circumstances bearing on the existence, creation, or risk of nonpayment of
the Obligations. Credit may be granted or continued from time to time by
Lender to Borrowers without notice to or authorization from the undersigned,
regardless of the financial or other condition of any of Borrowers at the
time of any such grant or continuation. Lender shall have no obligation to
disclose or discuss with the undersigned its assessment of the financial
condition of any Borrower. No modification or waiver of any of the
provisions of this Corporate Guaranty will be binding upon Lender except as
expressly set forth in a writing duly signed and delivered on behalf of
Lender. The undersigned further agrees that any exculpatory language
pertaining to any Borrower contained in the Loan Instruments or any document
executed and delivered by any Borrower thereunder shall in no event apply to
this Corporate Guaranty, and will not prevent Lender from proceeding against
the undersigned to enforce this Corporate Guaranty.
This Corporate Guaranty has been executed in Chicago, Illinois, and
shall be governed by the laws of the State of Illinois without reference to
the principles of conflicts of law thereof. If any provision of this
Corporate Guaranty, or any paragraph, sentence, clause, phrase, or word, or
the application thereof, in any circumstances, is adjudicated by a court of
competent jurisdiction to be invalid, the validity of the remainder of this
Corporate Guaranty shall be construed as if such invalid part were never
included herein. Time is of the essence of this Corporate Guaranty. All
payments to be made hereunder shall be made in currency and coin of the
United States of America which is legal tender for public and private debts
at the time of payment.
This Corporate Guaranty is secured by a Security Agreement dated
April 18, 2000 from Guarantor to Lender and by all collateral described
therein.
The undersigned hereby submits to personal jurisdiction in the State
of Illinois for the enforcement of this Corporate Guaranty and waives any
and all personal rights to object to such jurisdiction for the purposes of
litigation to enforce this Corporate Guaranty. The undersigned hereby
consents to the jurisdiction of either the Circuit Court of Cook County,
Illinois, or the United States District Court for the Northern District of
Illinois, Eastern Division, in any action, suit or proceeding which Lender
may at any time wish to file in connection with this Corporate Guaranty or
any related matter. The undersigned hereby agrees that any action, suit or.
proceeding to enforce this Corporate Guaranty may be. brought in any State
or Federal Court in the State of Illinois and hereby waive any objection
which the undersigned may have to the laying of the venue of any such
action, suit or proceeding in any such Court; provided, however, that the
provisions of this paragraph shall not be deemed to preclude Lender from
filing any such action, suit or proceeding in any other appropriate forum.
THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING
OUT OF OR RELATING. TO THIS CORPORATE GUARANTY.
Any notice, demand or other communication which either party may
desire or may be required to give to the other party shall be in writing,
and shall be deemed given (i) if and when personally delivered, or (ii) upon
receipt via facsimile transmission provided that a copy is also sent via
overnight mail, addressed to the intended recipient at its address set forth
below, or to such other address as such party may have designated to all
other parties by notice furnished in accordance herewith:
if to Lender: U.S. Bank National Association
30 N. Michigan Avenue
Chicago, Illinois 60602
Attention: Craig B. Collinson, Senior Vice
President
Fax No.: (312) 696-1397
With a copy to: Gould & Ratner
222 North LaSalle Street
Suite 800
Chicago, Illinois 60601
Attention: Christopher J. Horvay
Fax No.: (312) 236-3241
and if to the undersigned: at the address set forth below its name
except as otherwise specifically required herein, notice of the exercise of
any right, option or power granted to Lender by this Corporate Guaranty is
not required to be given.
This Corporate Guaranty amends, restates in its entirety, and
supercedes an original Corporate Guaranty made by the Guarantor dated April
18, 2000, as amended and restated as of June 9, 2000, December 7, 2000,
March 1, 2001, and October 15, 2001, in favor of Lender.
US 1 INDUSTRIES, INC., an Indiana corporation
By: _________________________________
Name: _______________________________
Title: ________________________________
Address: 1000 Colfax Street
Gary, IN 46406
Fax No.: (219) 977-5227
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledge that U.S. Bank National
Association, a national banking association formerly known as Firstar Bank
N.A. ("Lender"), has agreed to add Harbor Bridge Intermodal, Inc., an
Indiana corporation ("Harbor"), as an additional Borrower pursuant to that
certain Fifth Amendment to Loan Agreement dated as of the date hereof
between 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 (collectively
"Borrowers"). Borrowers, Lender, and US 1 Industries, Inc., the parent of
Borrowers ("Borrowers' Parent"), hereby acknowledge and agree that the
Subordinated Debt (as defined in that certain Subordination Agreement dated
April 18, 2000, as amended, between Lender and the undersigned (the
"Subordination Agreement")) is and shall continue to be subordinate, all as
provided in the Subordination Agreement, to any such sums loaned to the
Borrowers, or any of them, including Harbor, as provided in such Fifth
Amendment to Loan Agreement, 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 that certain Loan Agreement among
Borrowers, Lender and Borrowers' Parent dated April 18, 2000, as amended as
of June 9, 2000, December 7, 2000, March 1, 2001, October 15, 2001, and May
1, 2002 (as so amended, the "Loan Agreement") among Borrowers, Lender, and
Borrowers' Parent and that any amounts advanced to any of 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 May 1, 2002.
______________________________
Harold Antonson
______________________________
Michael Kibler
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledges that U.S. Bank National Association,
a national banking association formerly known as Firstar Bank N.A.
("Lender"), has agreed to add Harbor Bridge Intermodal, Inc., an Indiana
corporation ("Harbor"), as an additional Borrower pursuant to that certain
Fifth Amendment to Loan Agreement dated as of the date hereof between
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 (collectively "Borrowers").
Borrowers, Lender, and US 1 Industries, Inc., the parent of Borrowers
("Borrowers' Parent"), hereby acknowledge and agree that the Subordinated
Debt (as defined in that certain Subordination Agreement dated April 18,
2000, as amended, between Lender and the Undersigned (the "Subordination
Agreement")) is and shall continue to be subordinate, all as provided in
the Subordination Agreement, to any such sums loaned to the Borrowers, or
any of them, including Harbor, as provided in such Fifth Amendment to Loan
Agreement, 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 that certain Loan Agreement among Borrowers, Lender and
Borrowers' Parent dated April 18, 2000, as amended as of June 9, 2000,
December 7, 2000, March 1, 2001, October 15, 2001, and May 1, 2002 (as so
amended, the "Loan Agreement") among Borrowers, Lender, and Borrowers'
Parent and that any amounts advanced to any of 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 May 1, 2002.
AUGUST INVESTMENT PARTNERSHIP
By: ______________________________
General Partner