FORM 10-Q
________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003.
Commission File No. 1-8129.
US 1 INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 95-3585609
(State of Incorporation) (I.R.S. Employer Identification No.)
1000 Colfax, Gary, Indiana 46406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 977-5225
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No ___
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ___ No _X_
As of November 12, 2003, there were 11,618,224 shares of
registrant's common stock outstanding.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002
Part I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
ASSETS
September 30, December 31,
2003 2002
(Unaudited)
CURRENT ASSETS:
Cash $ 0 $ 0
Accounts receivable-trade, less allowances for
doubtful accounts of $763,000 and $460,000
respectively 18,163,695 16,468,912
Other receivables, including receivables due
from affiliated entities of $211,481 and
$261,000, respectively 1,647,773 1,648,599
Prepaid expenses and other current assets 489,292 518,374
Current deferred tax asset 600,000 600,000
----------- ----------
Total current assets 20,900,760 19,235,885
FIXED ASSETS:
Equipment 1,792,032 1,669,781
Less accumulated depreciation and amortization (729,814) (512,406)
----------- ----------
Net fixed assets 1,062,218 1,157,375
----------- -----------
ASSETS HELD FOR SALE:
Land 195,347 195,347
Valuation allowance (141,347) (141,347)
----------- -----------
Net assets held for sale 54,000 54,000
Non-current deferred tax asset 600,000 600,000
Other Assets 397,745 396,527
----------- -----------
TOTAL ASSETS $23,014,723 $21,443,787
=========== ===========
<FN>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
2003 2002
(Unaudited)
CURRENT LIABILITIES:
Revolving line of credit $6,095,424 $6,118,480
Current portion of long-term debt 236,543 1,197,667
Accounts payable 6,795,639 5,627,909
Accrued expenses 356,304 403,296
Insurance and claims 839,464 1,044,222
Accrued compensation 87,650 87,273
Accrued interest 1,112,029 1,009,394
Fuel and other taxes payable 85,404 81,714
Accrued Legal Settlement 700,000 700,000
----------- ------------
Total current liabilities 16,308,457 16,269,955
----------- ------------
LONG-TERM DEBT (primarily to related parties) 3,221,916 3,113,653
Minority Interest 249,845 202,751
REDEEMABLE PREFERRED STOCK:
Authorized 5,000,000 shares; no par value
SHAREHOLDERS' EQUITY:
Common stock, authorized 20,000,000 shares;
no par value; 11,618,224 shares outstanding 42,180,095 42,068,639
as of September 30, 2003 and December 31, 2002.
Accumulated deficit (38,945,590) (40,211,211)
----------- -----------
Total shareholders' equity 3,234,505 1,857,428
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$23,014,723 $21,443,787
=========== ============
<FN>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
Three Months Ended Nine Months Ended
2003 2002 2003 2002
OPERATING REVENUES $30,877,231 $28,649,253 $91,139,154 $76,228,582
----------- ---------- ---------- ----------
OPERATING EXPENSES:
Purchased transportation 22,798,317 21,138,471 67,460,639 56,566,226
Commissions 3,238,736 2,863,216 9,209,084 7,524,323
Insurance and claims 1,418,498 1,309,381 3,878,072 3,128,462
Salaries, wages, and other 1,656,723 1,301,874 4,852,758 3,545,633
Other operating expenses 1,440,921 1,384,261 4,260,946 3,694,400
----------- ---------- ---------- ---------
Total operating expenses 30,553,195 27,997,203 89,661,499 74,459,044
----------- ---------- ---------- ----------
OPERATING INCOME 324,036 652,050 1,477,655 1,769,538
----------- ---------- ---------- ----------
NON-OPERATION INCOME (EXPENSE)
Legal Settlement 0 0 0 (350,964)
Interest income 6,802 6,609 14,161 23,135
Interest (expense) (120,753) (155,213) (388,737) (431,067)
Other income 67,347 70,516 263,288 174,967
----------- ---------- ---------- ----------
Total non-operating (expense) (46,604) (78,088) (111,288) (583,929)
----------- ---------- ---------- ----------
NET INCOME BEFORE MINORITY
INTEREST $ 277,432 $ 573,962 $1,366,367 $ 1,185,609
Minority Interest Expense (39,056) (31,393) (100,746) (76,231)
----------- ---------- ---------- ----------
NET INCOME $ 238,376 $ 542,569 $1,265,621 $ 1,109,378
DIVIDENDS ON PREFERRED SHARES 0 0 0 (56,573)
Redemption of redeemable
preferred stock 0 609,541 0 609,541
----------- ---------- ---------- ----------
NET INCOME AVAILABLE
TO COMMON SHAREHOLDERS 238,376 1,152,110 1,265,621 1,662,346
=========== ========== ========== ==========
Basic Net income Per Common
Share $ 0.02 $ 0.10 $ 0.11 $ 0.15
=========== ========== ========== ==========
Diluted Net Income Per
Common Share $ 0.02 $ 0.10 $ 0.10 $ 0.14
=========== ========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 11,618,224 11,433,441 11,618,224 10,892,949
=========== ========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 12,018,224 11,433,441 11,914,195 10,892,949
=========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
Total
Common Common Accumulated Shareholders'
Shares Stock Deficit Equity
Balance, December 31, 2002 $11,618,224 $42,068,639 $(40,211,211)$1,857,428
Minority interest in subsidiary 0 48,599 0 48,599
Grant of restricted common stock 0 62,857 0 62,857
Net income for the nine months ended
September 30, 2003 1,265,621 1,265,621
_________________________________________________
Balance, September 30, 2003 $1,618,224 $42,180,095 $(38,945,590)$3,234,505
_________________________________________________
<FN>
The accompanying notes are in integral part of the consolidated
financial statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SEPTEMBER 30, 2003 (UNAUDITED) AND SEPTEMBER 30, 2002 (UNAUDITED)
Nine Months Ended Sept 30,
2003 2002
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 1,265,621 1,109,381
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 230,531 209,945
Compensation Expense resulting from
issuance of equity in subsidiary 112,500 112,500
Compensation expense resulting from
restricted stock grant to officers 62,857 0
Provision for bad debts 531,030 489,513
Minority interest expense 100,746 76,231
Legal Settlement 0 360,000
Changes in operating assets and liabilities:
Accounts receivable - trade (2,225,813) (4,906,383)
Other receivables 826 (268,590)
Prepaid expenses and other
current assets 29,082 371,748
Other assets (1,218) (13,741)
Accounts payable 1,167,731 3,226,638
Accrued expenses (46,992) 116,989
Accrued interest 102,636 54,060
Insurance and claims (204,758) 295,856
Accrued compensation 377 52,555
Fuel and other taxes payable 3,690 (14,654)
--------- ---------
Net cash provided by operating
activities 1,128,846 1,271,578
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets (151,086) (177,117)
Proceeds from sales of fixed assets 15,712 0
--------- ---------
Net cash used in investing activities (135,374) (177,117)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit (23,056) (840,972)
Principal payments on long-term debt (397,062) (363,076)
Repayments of shareholder loans (455,801) (212,473)
Distributions to minority interest (117,553) 0
--------- ---------
Net cash used in financing activities (993,472) (1,416,521)
--------- ---------
NET DECREASE IN CASH 0 (322,060)
CASH, BEGINNING OF PERIOD 0 322,060
--------- ---------
CASH, END OF PERIOD 0 0
========= =========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
1. BASIS OF PRESENTATION
The accompanying consolidated balance sheet as of September
30, 2003 and the consolidated statements of income, shareholders'
equity and cash flows for the three and nine month periods ended
September 30, 2003 and 2002 are unaudited, but, in the opinion of
management, include all adjustments (consisting of normal,
recurring accruals) necessary for a fair presentation of the
financial position and the results of operations at such date and
for such periods. The year-end balance sheet data was derived
from audited financial statements. These statements should be
read in conjunction with US 1 Industries, Inc. and Subsidiaries'
("Company") audited consolidated financial statements for the
year ended December 31, 2002, and the notes thereto included in
the Company's Annual Report on Form 10-K. Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been omitted, as permitted by the
requirements of the Securities and Exchange Commission, although
the Company believes that the disclosures included in these
financial statements are adequate to make the information not
misleading. The results of operations for the three and nine
months ended September 30, 2003 and 2002 are not necessarily
indicative of the results for a full year.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board
("FASB") issued Interpretation No. 46 ("FIN46"), Consolidation of
Variable Interest Entities, an interpretation of ARB 51. The
primary objectives of FIN 46 are to provide guidance on the
identification of entities for which control is achieved through
means other than through voting rights ("variable interest
entities" or "VIEs") and how to determine when and which business
enterprise should consolidate the VIE (the "primary
beneficiary"). This new model for consolidation applies to an
entity in which either (1) the equity investors (if any) do not
have a controlling financial interest or (2) the equity
investment at risk is insufficient to finance that entity's
activities without receiving additional subordinated financial
support from other parties. In addition, FIN 46 requires that
both the primary beneficiary and all other enterprises with a
significant variable interest in a VIE make additional
disclosures. The provisions of FIN 46 were effective immediately
for VIEs created after January 31, 2003. The provisions are
effective for the first period beginning after June 15, 2003 for
VIEs held prior to February 1, 2003. The Company has not
acquired an interest in any VIEs subsequent to January 31, 2003.
The Company has evaluated American Inter-Fidelity Exchange
("AIFE"), a reciprocal insurance company, to determine if this
entity qualifies as a VIE. AIFE provides auto liability
insurance to several subsidiaries of the Company as well as other
entities related to the Company by common ownership. AIFE
currently receives a majority of its premiums from the Company.
The Company has determined that AIFE does not qualify as a VIE
and as a result the adoption of FIN 46 did not have a material
impact on our consolidated financial statements. However, the
Company will continue to evaluate its relationship with AIFE upon
any change in circumstances to evaluate the applicability of FIN
46 and other accounting guidance on consolidation.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In April 2003, the FASB issued Statement of Financial
Accounting Standards ("SFAS") No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities," which
amends and clarifies accounting for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities under Statement 133. In
particular, this Statement clarifies under what circumstances a
contract with an initial net investment meets the characteristic
of a derivative and clarifies when a derivative contains a
financing component that warrants special reporting in the
statement of cash flows. This Statement is generally effective
for contracts entered into or modified after September 30, 2003
and is to be applied prospectively. We do not expect the
adoption of SFAS No. 149 to have a material impact on our
consolidated financial statements.
In May 2003, the FASB issued ("SFAS") No. 150, "Accounting
for Certain Financial Instruments with Characteristics of both
Liabilities and Equity." SFAS No. 150 requires that certain
financial instruments, which under previous guidance were
accounted for as equity, must now be accounted for as
liabilities. The financial instruments affected include
mandatory redeemable stock, certain financial instruments that
require or may require the issuer to buy back some of its shares
in exchange for cash or other assets and certain obligations that
can be settled with shares of stock. SFAS No. 150 is effective
for all financial instruments entered into or modified after May
31, 2003 and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The adoption of
this standard did not have a material impact on our consolidated
financial statements.
In November 2002, the Emerging Issues Task Force ("EITF")
reached consensus on EITF 00-21, "Accounting for Revenue
Arrangements with Multiple Deliverables", which addresses how to
account for arrangements that may involve the delivery or
performance of multiple products, services, and/or rights to use
assets. The final consensus of EITF 00-21 was applicable to
agreements entered into in fiscal periods beginning after June
15, 2003, with early adoption permitted. Additionally, companies
were permitted to apply the consensus guidance to all existing
arrangements as the cumulative effect of a change in accounting
principle in accordance with APB Opinion No. 20, "Accounting
Changes." The adoption of EITF No. 00-21 did not have a material
impact on our consolidated financial statements.
3. RECLASSIFICATIONS
Certain reclassifications have been made to the previously
reported 2002 financial statements to conform with the 2003
presentation.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. EARNINGS PER COMMON SHARE
The Company calculates earnings per share ("EPS") in
accordance with SFAS No. 128. Following is the reconciliation of
the numerators and denominators of the basic and diluted EPS.
There were no outstanding common stock equivalents in these
periods.
Three Months Ended Nine Months Ended
Numerator 2003 2002 2003 2002
Net income $ 238,376 $ 542,569 $ 1,265,621 $1,109,378
Dividends on preferred shares 0 0 0 (56,573)
Redemption of redeemable
preferred stock 609,541 609,541
--------- ---------- ---------- ----------
Net income available to common
shareholders for basic
EPS $ 238,376 $1,152,110 $ 1,265,621 $1,662,346
Net income attributable to unvested
Minority interest shares in
subsidiary (52,772) (52,320) (4,790) (127,050)
--------- ---------- ---------- ----------
Net income available to common
shareholders for
diluted EPS $ 185,604 $ 1,099,790 $ 1,260,831 $1,535,296
Denominator
Weighted average common
shares outstanding for
basic EPS 11,618,224 11,433,441 11,618,224 10,892,949
Effect of diluted securities
Unvested restricted stock
granted to employees $ 400,000 $ 0 $ 295,971 $ 0
__________________________________________________
Weighted average shares
Outstanding for diluted
EPS $12,018,224 $11,433,441 $11,914,195 $10,892,949
5. REVOLVING LINE OF CREDIT
Effective October 1, 2003, the Company's Lender agreed to
amend the existing bank agreement to increase the Company's
revolving line of credit from $8.5 million to $10.0 million. The
maturity date of the Company's revolving line of credit was also
extended from October 1, 2003 to October 1, 2005. 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 less 0.50%.
At September 30, 2003, the interest rate on this line of credit
was at prime (4.00%). The Company's accounts receivable,
property, and other assets collateralize advances under the
agreement. Borrowings of up to $1 million are guaranteed by the
Chief Executive Officer and Chief Financial Officer of the
Company. At September 30, 2003, 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
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. MINORITY INTEREST
The Company entered into an agreement with certain key
employees of Carolina National Logistics Inc., ("Carolina") a
subsidiary of the Company, in which these employees will earn up
to a 40% ownership interest in Carolina over a three year period,
beginning in the year following the year in which Carolina
achieves positive retained earnings, contingent upon certain
restrictions, including continued employment at Carolina. In
2001, Carolina achieved positive retained earnings. As a result,
the Company will incur total compensation expense of $400,000
over the three-year vesting period. These employees received 15%
ownership in Carolina at December 31, 2002. The employees will
receive an additional 15% at December 31, 2003, and an additional
10% at December 31, 2004. As a result of this agreement, the
Company incurred compensation expense of $37,500 and $112,500 for
the three months and nine months ended September 30, 2003 and
2002. The Company also recognized minority interest expense
(relating to the employees' portion of Carolina's net income) of
$39,056 and $31,393 for the three months ended September 30, 2003
and 2002, respectively, and $100,746 and $76,231 for the nine
months ended September 30, 2003 and 2002, respectively.
7. 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 $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. $360,000 of this charge was
recorded for the three months ended March 31, 2002, based on the
facts available at that time. An additional $200,000 charge was
recorded in the fourth quarter of 2002. The Company is currently
appealing this judgment.
The Company is involved in various 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.
8. STOCK COMPENSATION
In March 2003, the Company granted a total of 400,000 shares
of common stock to the Company's Chief Executive Officer and
Chief Financial Officer, subject to the continued employment of
these employees through December 2004. As a result, the Company
will incur approximately $220,000 of compensation expense (based
on the quoted market price of the Company's stock on the date of
grant) over the vesting period of this grant. These shares of
common stock vest on December 31, 2004.
US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company has recognized $31,400 and $62,800 of
compensation expense related to these stock grants for the three
month and nine month periods ended September 30, 2003,
respectively.
9. Stock Repurchase Program
In March 2003, the Board of Directors of the Company
authorized the Company to repurchase shares of its common stock
at the discretion of the Company but subject to (a) a limit on
repurchases equal to 5% of the Company's earnings subsequent to
December 31, 2001 and (b) a maximum price per share of five times
the earnings per share for the Company's most recently completed
fiscal quarter. No shares have been repurchased as of September
30, 2003 under this provision.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Results of Operations
You should read the following discussion regarding the
Company along with the Company's consolidated financial
statements and related notes included in this quarterly report.
The following discussion contains forward-looking statements that
are subject to risks, uncertainties and assumptions. The
Company's actual results, performance and achievements in 2003
and beyond may differ materially from those expressed in, or
implied by, these forward-looking statements.
The financial statements and related notes contained
elsewhere in this Form 10-Q as of and for the three months and
nine months ended September 30, 2003 and 2002 and in the
Company's Form 10-K for its fiscal year ended December 31, 2002,
are essential to an understanding of the comparisons and are
incorporated by reference into the discussion that follows.
Nine months ended September 30, 2003 Compared to the nine months
ended September 30, 2002
The following table sets forth the percentage relationships of
expense items to revenue for the nine months ended September 30,
2003 and September 30, 2002:
2003 2002
------ ------
Revenue 100.0% 100.0%
Operating expenses:
Purchased transportation 74.0 74.2
Commissions 10.1 9.9
Insurance and claims 4.3 4.1
Salaries, wages and other 5.3 4.7
Other operating expenses 4.7 4.8
------- ------
Total operating expenses 98.4 97.7
------ ------
Operating income 1.6 2.3
Nine months ended September 30, 2003 Compared to the nine months
ended September 30, 2002 (Continued)
The Company's operating revenues increased to $91.1 million
for the nine months ended September 30, 2003 from $76.2 million
for the same period in 2002. This is an increase of 19.6%. This
increase is attributable to the continued growth of Patriot Logistics,
Inc. (f/k/a Keystone Intermodal, Inc.) and Keystone Lines, Inc. and the
opening of Harbor Bridge Transportation. The growth of these subsidiaries
is primarily attributable to the addition of new terminals.
Purchased transportation represents the amount an independent
contractor is paid to haul freight and is primarily based on a
contractually agreed-upon percentage of revenue generated by the haul
for truck capacity provided by independent contractors. Purchased
transportation is the largest component of operating expenses.
Purchased transportation and commission expense increase or decrease
in proportion to the revenue generated through independent contractors.
Purchased transportation decreased slightly to 74.0% of revenue
for the nine months ended September 30, 2003 from 74.2% for the nine
months ended September 30, 2002. The slight decrease was partially offset
by the slight increase in commissions. Many agents negotiate a combined
percentage payable for purchased transportation and commission. The mix
between the amounts of purchased transportation paid versus commissions
paid may vary slightly based on agent negotiations with independent owner
operators. However, in total, commissions and purchased transportation
would typically be expected to remain relatively consistent as a percentage
of revenues.
Commissions to agents and brokers are primarily based on
contractually agreed-upon percentages of revenue. Commissions
increased to 10.1% of revenue for the nine months ended September
30, 2003 from 9.9% of revenue for the nine months ended September
30, 2002. As previously described, the slight increase of 0.2%
of revenue was partially offset by the decrease in purchased
transportation.
Insurance and claims increased to 4.3% of revenue for the
nine months ended September 30, 2003 from 4.1% of revenue for the
nine months ended September 30, 2002. A majority of the
insurance and claims expense is based on a percentage of revenue
and, as a result, will increase or decrease on a consolidated
basis with the Company's revenue. Potential liability associated
with accidents in the trucking industry is severe and occurrences
are unpredictable. A material increase in the frequency or
severity of accidents or the unfavorable development of existing
claims could adversely affect the Company's operating income. The
increase of 0.2% of revenue can be attributed to the increase of
certain operations' liability and cargo insurance rates due to adverse
loss experience and the continued increase of insurance rates in
today's economy.
Salaries, wages, and fringe benefits were 5.3% of revenue for
the nine months ended September 30, 2003 compared to 4.7% of
revenue for the nine months ended September 30, 2002. This
increase of 0.6% can primarily be attributed to an increase in
officer compensation during 2003 and the Company's hiring of
other sales and management personnel, such as agent recruiters,
whose work did not benefit the company sufficiently to offset the
cost of their compensation during the nine months ended September
30, 2003.
Other operating expenses as a percentage of revenue decreased
slightly to 4.7% of revenue for the nine months ended September
30, 2003 from 4.8% for the nine months ended September 30, 2002.
While not all operating expenses are
Nine months ended September 30, 2003 Compared to the nine months
ended September 30, 2002 (Continued)
directly variable with revenues, the increased revenue directly impacts
several components of operating expenses such as bad debt expense. In
addition, the Company has expanded by adding new terminals and operations
resulting in the addition of new locations, which in turn leads to an
increase in operating expenses such as rent. Other operating expenses
increased $0.6 million from $3.7 million in 2002 to $4.3 million in 2003.
The increase is primarily attributable to (1) a $0.40 million increase due
to new operations which began in the third quarter of 2002 and (2) an
overall increase in operating expenses at other locations as volume continued
to grow during 2003.
Based on the changes in revenue and expenses described above,
operating income decreased by $291,883. Operating income for the
nine months ended September 30, 2003 was $1,477,655 compared to
$1,769,538 for the nine months ended September 30, 2002.
Interest expense decreased by $42,330 in 2003. Interest
expense for the nine months ended September 30, 2003 was $388,737
compared to interest expense of $431,067 for the nine months
ended September 30, 2002. This decrease in interest expense is
attributable to a continued decrease in the prime rate. The rate
on the Company's loan with US Bank is currently based on certain
financial covenants and may range from prime to prime plus .5%.
At September 30, 2003, the interest rate charged on the loan with
US Bank was prime (4.00%).
Non-operating (income) expense, exclusive of interest
expense, includes income from rental property, storage, equipment
usage, fees, discounts and legal settlement costs. Non-operating
(income) expense, exclusive of interest expense, was ($277,449)
for the nine months ended September 30, 2003 versus $152,856 for
the nine months ended September 30, 2002. For the nine months
ended September 30, 2002 the Company incurred an expense of
$350,964 as a result of an increase in a reserve for certain
litigation against the Company. The company did not have any
such expense in the first nine months of 2003.
Minority interest expense of $100,746 and $76,231 for the
nine months ended September 30, 2003 and 2002, respectively, is
the result of an agreement with certain key employees of Carolina
National, a wholly owned subsidiary of the Company. Under the
terms of this agreement, these employees will earn up to a 40%
ownership interest in Carolina over a three-year period (see note
6 to condensed consolidated financial statements).
As a result of the factors described above, net income for
the nine months ended September 30, 2003 was $1,265,621 compared
with $1,109,378 for the same period in 2002.
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. As a result, the
difference between the fair value of the common stock issued and
the carrying value of the preferred shares redeemed totaling
$609,541 is reflected as an addition to net income available to
common shareholders for the nine month period ended September 30,
2002. The Company recorded this addition to net income available
to common shareholders by offsetting charges and credits to
common stock without any effect in total shareholders' equity.
Three months ended September 30, 2003 Compared to the three
months ended September 30, 2002
The following table sets forth the percentage relationships of
expense items to revenue for the three months ended September 30,
2003 and September 30, 2002:
2003 2002
------ ------
Revenue 100.0% 100.0%
Operating expenses:
Purchased transportation 73.8 73.8
Commissions 10.5 10.0
Insurance and claims 4.6 4.6
Salaries, wages and other 5.4 4.5
Other operating expenses 4.7 4.8
------- ------
Total operating expenses 99.0 97.7
------- ------
Operating income 1.0 2.3
The Company's operating revenues increased to $30.9 million
for the three months ended September 30,2003 from $28.7 million
for the same period in 2002. This is an increase of 7.8%. This
increase is attributable to the continued growth of Patriot
Logistics, Inc. (f/k/a Keystone Intermodal, Inc.) and
Keystone Lines, Inc. and the opening of Harbor Bridge
Transportation.
Purchased transportation represents the amount an independent
contractor is paid to haul freight and is primarily based on a
contractually agreed-upon percentage of revenue generated by the
haul for truck capacity provided by independent contractors.
Purchased transportation is the largest component of operating
expenses. Purchased transportation and commission expense
increase or decrease in proportion to the revenue generated through
independent contractors. Purchased transportation remained
constant at 73.8% of revenue. Many agents negotiate a combined
percentage payable for purchased transportation and commission.
The mix between the amounts of purchased transportation paid
versus commissions paid may vary slightly based on agent
negotiations with independent owner operators. However, in
total, commissions and purchased transportation would typically
be expected to remain relatively consistent as a percentage of
revenues.
Commissions to agents and brokers are primarily based on
contractually agreed-upon percentages of revenue. Commissions
increased to 10.5% of revenue for the three months ended
September 30, 2003 from 10.0% of revenue for the three months
ended September 30, 2002. This was due to one of the Company's
subsidiaries increasing commissions to their agents with the
expectation that other costs could be controlled. This
expectation did not materialize.
Insurance and claims remained constant at 4.6% of revenue for
the three months ended September 30, 2003 and 2002. A majority
of the insurance and claims expense is based on a percentage of
revenue and, as a result, will increase or decrease on a
consolidated basis with the Company's revenue. Potential
liability associated with accidents in the trucking industry is
severe and occurrences are unpredictable. A material increase in
the frequency or severity of accidents or the unfavorable
development of existing claims could adversely affect the
Company's operating income.
Salaries, wages, and fringe benefits were 5.4% of revenue
for the three months ended September 30, 2003 compared to 4.5% of
revenue for the three months ended September 30, 2002. This
increase of 0.9% can primarily be
Three months ended September 30, 2003 Compared to the three
months ended September 30, 2002 (Continued)
attributed to an increase in officer compensation during 2003 and
the Company's hiring of other sales and management personnel,
such as agent recruiters, whose work did not benefit the company
sufficiently to offset the cost of their compensation during the
third quarter 2003.
Other operating expenses as a percentage of revenue decreased
slightly to 4.7% of revenue for the three months ended September
30, 2003 from 4.8% for the three months ended September 30, 2002.
While not all operating expenses are directly variable with
revenues, several components of operating expenses such as bad
debt expense are directly impacted by the increased revenue. In
addition, the Company has expanded by adding new terminals and
operations resulting in the addition of new locations which in
turn leads to an increase in operating expenses such as rent.
Other operating expenses were $1.4 million for the three months
ended September 30, 2003 and $1.4 million for the three months
ended September 30, 2002.
Based on the changes in revenue and expenses described above,
operating income decreased by $328,014. Operating income for the
three months ended September 30, 2003 was $324,036 compared to
$652,050 for the three months ended September 30, 2002. This
decrease can be attributed to three of the Company's operations
that did not perform according to the Company's expectations
along with increased commissions and wages.
Interest expense decreased by $34,460 in 2003. Interest
expense for the three months ended September 30, 2003 was
$120,753 compared to interest expense of $155,213 for the three
months ended September 30, 2002. This decrease in interest
expense is attributable to a continued decrease in the
prime rate. The rate on the Company's loan with US Bank is
currently based on
certain financial covenants and may range from prime to prime
plus .5%. At September 30, 2003, the interest rate charged on
the loan with US Bank was prime (4.00%).
Non-operating (income) expense, exclusive of interest
expense, remained relatively constant. For the three months
ended September 30, 2003, Non-operating (income) expense was
($74,149) versus $(77,125) for the three months ended September
30, 2002.
Minority interest expense of $39,056 and $31,393 for the
three months ended September 30, 2003 and 2002, respectively, is
the result of an agreement with certain key employees of Carolina
National, a wholly owned subsidiary of the Company.
Under the terms of this agreement, these employees will earn
up to a 40% ownership interest in Carolina over a three-year
period (see note 6 to condensed consolidated financial
statements).
As a result of the factors described above, net income for
the three months ended September 30, 2003 was $238,376 compared
with $542,569 for the same period in 2002.
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. The carrying value of the preferred
stock exceeded the fair value of the common stock issued. As a
result, the difference between the fair value of the
Three months ended September 30, 2003 Compared to the three
months ended September 30, 2002 (Continued)
common stock issued and the carrying value of the preferred
shares redeemed totaling $609,541 is reflected as an addition to
net income available to common shareholders for the three month
period ended September 30, 2002. The Company recorded this
addition to net income available to common shareholders by
offsetting charges and credits to common stock without any effect
in total shareholders' equity.
Liquidity and Capital Resources
Net cash provided by operating activities decreased $142,732
from $1,271,578 for the nine months ended September 30, 2002 to
$1,128,846 for the nine months ended September 30, 2003. Net
income increased to $1,265,628 for the nine months ended
September 30, 2003 from $1,109,381 for the nine months ended
September 30, 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 for the nine
months ended September 30, 2003, accounts receivable increased
$2,225,813 in 2003. This increase in accounts receivable was only
partially offset by a corresponding increase in accounts payable
of $1,167,731. 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. The Company has appealed this verdict and
is awaiting the Court's decision.
Net cash used in investing activities was $135,374 for the
nine months ended September 30, 2003 compared to net cash used in
investing activities of $177,117 for the nine months ended
September 30, 2002. Net cash used in investing activities for
both periods related primarily to the purchase of equipment such
as trailers.
Net cash used in financing activities decreased $423,049 from
$1,416,521 for the nine months ended September 30, 2002 to
$993,472 for the nine months ended September 30, 2003. The cash
used in financing activities for 2003 is primarily due to
repayments of shareholder and equipment loans in the amount of
$852,863. During the first nine months in 2003, the Company's
subsidiary Carolina National also distributed $117,553 to minority
shareholders.
Effective October 1, 2003, the Company's Lender agreed to
amend the existing bank agreement to increase the Company's
revolving line of credit from $8.5 million to $10.0 million. The
maturity date of the Company's revolving line of credit was also
extended from October 1, 2003 to October 1, 2005. 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 less 0.50%.
At September 30, 2003, the interest rate on this line of credit
was at prime (4.00%). The Company's accounts receivable,
property, and other assets collateralize advances under the
agreement. Borrowings of up to $1 million are guaranteed by the
Chief Executive Officer and Chief Financial Officer of the
Company. At September 30, 2003, the outstanding borrowings on
this line of credit were $6.1 million.
The Company is dependent upon the funds available under its
loan agreement for liquidity. As long as the Company can fund
25% of its accounts receivable from funds generated internally
from operations or otherwise, this facility
Liquidity and Capital Resources (continued)
provides the Company sufficient liquidity to meet its needs on an
ongoing basis.
The Company also has two additional equipment loans used to
fund equipment purchases. The outstanding balances on these
loans bear interest at the prime rate in effect plus 1% per annum
(5.00% at September 30, 2003). The principal balance of these
equipment loans is payable based on a five-year amortization
of the outstanding balances. The outstanding balances under
these equipment loans totaled $515,240 at September 30, 2003. The
loans are collateralized by the related equipment funded by these
borrowings. These loans were renewed in October 2003 and now
carry maturity dates of October 1, 2005. Interest rates with
this renewal will vary based on certain financial covenants. The
new interest rates will range from prime to prime less 0.50% per
annum.
In October 2003, the Company's lender granted them a new equipment
line of credit in the amount of $500,000. Although the Company has not
utilized this new line of credit, the interest rate will range from prime
to prime less 0.50% per annum based on certain financial covenants. This
new equipment line of credit carries a maturity date of October 1, 2005.
The line of credit and equipment loans are subject to termination
upon various events of default, including failure to remit timely payments
of interest, fees and principal, any adverse change in the business of the
Company or failure to meet certain financial covenants. Financial covenants
include: minimum net worth requirements, total debt service coverage ratio,
capital expenditure limitations, and prohibition of additional indebtedness
without prior authorization.
The Company also has approximately $2.9 million of debt payable to the
Chief Executive Officer and Chief Financial Officer or entities under their
control. This debt is subordinate to the lender of the revolving credit
facility and matures on October 10, 2006.
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.
Critical Accounting Policies and Estimates (continued)
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 uncollectible 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 September 30, 2003, the Company's
deferred tax asset consists principally of net operating loss carry forwards.
The Company's deferred tax asset has been reduced by a valuation allowance to
the extent such benefits are not expected to be fully utilized. The Company has
based its estimate of the future utilization of the net operating loss upon its
estimate of future taxable income. If actual future taxable income differs,
revisions to the valuation allowance and net deferred tax asset may be required.
Quantitative and Qualitative Disclosures About Market Risk
Inflation
Changes in freight rates charged by the Company to its customers are
generally reflected in the cost of purchased transportation and commissions
paid by the Company to independent contractors and agents, respectively.
Therefore, management believes that future-operating results of the Company
will be affected primarily by changes in volume of business. However, due to
the highly competitive nature of the truckload motor carrier industry, it is
Quantitative and Qualitative Disclosures About Market Risk (continued)
possible that future freight rates and cost of purchased transportation
may fluctuate, affecting the Company's profitability.
Interest Rate 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 (4.00% at September 30, 2003). The interest rate is based
on certain financial covenants and may range from prime to prime
less .5%. In addition, the company has certain equipment lines-
of-credit which bear interest at the prime rate less .5%annum (at
September 30, 2003 the rate was 5.00%). The Company also has
subordinated debt with related parties which bears interest at
rates ranging from prime + .75% to prime plus 1%.
Certain Relationships and Related Transactions.
The Company leases office space for its headquarters in Gary, Indiana,
for $3,000 monthly, from Michael E. Kibler, the president and Chief Executive
Officer and a director of the Company, and Harold E. Antonson, the Chief
Financial Officer, treasurer and a director of the Company.
One of the Company's subsidiaries provides safety, management, and
accounting services to companies controlled by the President and Chief
Financial Officer of the Company. These services are priced to cover the
cost of the employees providing the services and the overhead.
The Company has approximately $211,000 of other accounts
receivable due from entities that could be deemed to be under
common control as of September 30, 2003.
One of the Company's insurance providers, American Inter-
Fidelity Exchange (AIFE), is managed by a Director of the Company
and the Company has a deposit with the provider. In addition,
the Chief Executive Officer and Chief Financial Officer, as well
as a director of the Company, are shareholders of American Inter-
Fidelity Corporation ("AIFC"), which serves as the attorney in
fact of AIFE. AIFC is entitled to receive a management fee from
AIFE. During 2003, AIFE paid management fees of $282,000 to AIFC
which AIFC then paid as dividends totaling $282,000 to these
officers and directors of the Company.
The Company also pays a non-executive director of the Company
$2,000 per month for consulting services.
The Company has long-term notes payable due to its Chief
Executive Officer, Chief Financial Officer, and August Investment
Partnership, an entity affiliated through common ownership,
totaling approximately $2.9 million at September 30, 2003. In
addition, the Company has approximately $1 million of accrued
interest due under these notes payable.
The Company conducts business with freight companies under
the control of a director of the Company. Accounts receivable at
September 30, 2003 includes $746,430 due from or guaranteed by
these companies.
PART II. OTHER INFORMATION
Item 5. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Based on
their evaluations as of the end of the period covered by the
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
end of the period covered by the report, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
(c) Disclosure controls and procedures. Disclosure controls and
procedures are our controls and other procedures that are
designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's
rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure
that information required to be disclosed by us in the reports
that we file under the Exchange Act is accumulated and
communicated to our management, including our principal executive
officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.
Item 6 Exhibits and Reports on Form 8-K
(a) (1) List of Exhibits
The following exhibits, numbered in accordance with Item
601 of Regulation S-K, are filed as part of this report:
Exhibit 10.12 Eighth Amendment to Loan Agreement
Exhibit 31.1 Certification 302 of Chief Executive Officer
Exhibit 31.2 Certification 302 of Chief Financial Officer
Exhibit 32.1 Certification 906 of Chief Executive Officer
Exhibit 32.2 Certification 906 of Chief Financial Officer
(b)(1) Reports on Form 8-K
No Reports on Form 8-K have been filed during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned there unto duly authorized.
US 1 Industries, Inc.
Michael E. Kibler
President
Harold E. Antonson
Chief Financial Officer
November 13, 2003
Exhibit 10.12
EIGHTH AMENDMENT TO LOAN AGREEMENT
This Eighth Amendment to Loan Agreement ("Amendment"), dated
as of October 1, 2003, is between CAROLINA NATIONAL
TRANSPORTATION INC., an Indiana corporation ("Carolina");
KEYSTONE LINES, a California corporation ("Keystone"); GULF LINE
TRANSPORT INC., an Indiana corporation ("Gulf Line"); FIVE STAR
TRANSPORT, INC., an Indiana corporation ("Five Star"); CAM
TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an
Indiana corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana
corporation ("Friendly"); TRANSPORT LEASING, INC., an Arkansas
corporation ("Transport Leasing"); TRANSPORT LOGISTICS, LLC, an
Arkansas limited liability company ("Transport Logistics");
HARBOR BRIDGE INTERMODAL, INC., an Indiana corporation
("Harbor"); PATRIOT LOGISTICS, INC., an Indiana corporation
("Patriot"); LIBERTY TRANSPORT, INC., an Indiana corporation
("Liberty"); and KEYSTONE LINES CORPORATION, an Indiana
corporation ("Keystone-Indiana"), (Carolina, Keystone, Gulf
Line, Five Star, Cam, Unity, ERX, Friendly, Transport Leasing,
Transport Logistics, Harbor, Patriot, Liberty, and Keystone-
Indiana are hereinafter collectively referred to as "Borrowers"
or individually as a "Borrower"); US 1 INDUSTRIES, INC., an
Indiana corporation ("Guarantor"); and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, formerly known as
FIRSTAR BANK N.A. ("Lender"). Capitalized terms not defined
herein have the meanings ascribed to them in the Loan Agreement,
as that term is defined herein.
PRELIMINARY STATEMENT:
All Borrowers have previously entered into a Loan Agreement
with Lender dated as of April 18, 2000, and amended as of June 9,
2000, December 7, 2000, March 1, 2001, October 15, 2001, May 1,
2002, August 1, 2002, and March 21, 2003 (the April 18, 2000 Loan
Agreement, as so amended, is the "Existing Loan Agreement," and,
as amended by this Amendment, constitutes the "Loan Agreement").
Lender has agreed to amend the Existing Loan Agreement to do
the following: (i) increase the Revolving Loan Commitment to
$10,000,000, (ii) extend the maturity date of the Revolving Loan,
the Equipment Loan and the Guidance Loan, (iii) provide for grid
pricing of all loans under the Loan Agreement, (iv) modify
certain financial covenants of the Borrowers and the Guarantor,
(v) provide for a new $500,000 Second Guidance Loan, (vi) allow
for the payment of $220,000 towards certain Subordinated Debt
under the Subordination Agreements and modify the definition of
"Permitted Payments" thereunder, and (vii) provide for other
matters, as set forth herein.
NOW, THEREFORE, it is hereby agreed as follows:
1. Each of Borrowers and Guarantor represent and warrant that
no Event of Default or Incipient Default exists or will occur as
a result of the execution of and performance under this Eighth
Amendment to Loan Agreement and that each of their
representations and warranties set forth in the Loan Instruments
(as the definition of that term is amended by this Amendment) 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.
2. The parties hereby agree to amend and restate in their
entirety the following definitions in Section 1.1 of the Loan
Agreement as follows:
"Advance: any advance of the Revolving Loan (including,
without limitation, the payment of any sum pursuant to a
Standby Letter of Credit to the beneficiary named therein),
the Equipment Loan, the Guidance Loan or the Second Guidance
Loan."
"Certificated Collateral: any equipment purchased with
proceeds of the Equipment Loan, the Guidance Loan or the
Second Guidance Loan which is covered by title issued under
a statute of a state under the law of which indication of a
security interest on the certificate of title is required as
a condition of perfection."
"Equipment Loan Maturity Date: the earlier of (i)
October 1, 2005, or (ii) the date on which Borrowers'
obligations are accelerated pursuant to this Loan
Agreement."
"Equipment Loan Note: the promissory note executed by
Borrowers payable to the order of Lender in the amount of
the Equipment Loan Commitment, dated as of December 7, 2000,
as amended and restated as of October 15, 2001, May 1, 2002,
August 1, 2002, March 21, 2003, and October 1, 2003."
"Guidance Loan Maturity Date: the earlier of (i)
October 1, 2005, or (ii) the date on which Borrowers'
obligations are accelerated pursuant to this Loan
Agreement."
"Guidance Loan Note: the promissory note executed by
Borrowers payable to the order of Lender in the amount of
the Guidance Loan Commitment, dated as of October 15, 2001,
as amended and restated as of May 1, 2002, August 1, 2002,
March 21, 2003, and October 1, 2003."
"Loan Instruments:
(i) Loan Agreement;
(ii) Revolving Loan Note;
(iii) Equipment Loan Note;
(iv) Guidance Loan Note;
(v) Second Guidance Loan Note;
(vi) Corporate Guaranty;
(vii) Security Instruments;
(viii) Closing Certificate;
(ix) Subordination Agreements;
(x) Personal Guaranties;
(xi) Reaffirmations of Personal Guaranties;
(xii) Corporate Guaranty;
(xiii) Reaffirmation of Corporate Guaranty;
(xiv) Standby Letter of Credit;
(xv) Application and Agreement for Standby Letter of Credit;
(xvi) Continuing Reimbursement Agreement for Standby Letters
of Credit; and
(xvii) such other instruments and documents as Lender may
reasonably require in connection with the transactions
contemplated by this Loan Agreement;
as the same may be amended and/or restated from time to
time, including without limitation as amended by or pursuant
to that certain Loan Agreement dated April, 18, 2000, by and
between the parties hereto, as amended by that certain
Amendment to Loan Agreement dated June 9, 2000, that certain
Second Amendment to Loan Agreement dated December 7, 2000,
that certain Third Amendment to Loan Agreement dated March
1, 2001, that certain Fourth Amendment to Loan Agreement
dated October 15, 2001, that certain Fifth Amendment to Loan
Agreement dated May 1, 2002, that certain Sixth Amendment to
Loan Agreement dated August 1, 2002, that certain Seventh
Amendment to Loan Agreement dated March 21, 2003 and that
certain Eighth Amendment to Loan Agreement dated October 1,
2003."
"Principal Balance: the unpaid principal balances of
the Revolving Loan, the Equipment Loan, the Guidance Loan
and the Second Guidance Loan, as the case may be."
"Purchase Date: the date or dates of purchase of any
equipment purchased with one or more Advances from the
Equipment Loan under Section 2.1.A, from the Guidance Loan
under Section 2.1.B or from the Second Guidance Loan under
Section 2.1.C, as the case may be."
"Revolving Loan Commitment: $10,000,000"
"Revolving Loan Maturity Date: the earlier of (i)
October 1, 2005, or (ii) the date on which Borrowers'
obligations are accelerated pursuant to this Loan
Agreement."
"Revolving Loan Note: the promissory note executed by
Borrowers payable to the order of Lender in the amount of
the Revolving Loan Commitment, dated as of April 18, 2000,
and as further amended and restated as of June 9, 2000,
December 7, 2000, October 15, 2001, May 1, 2002, August 1,
2002, March 21, 2003, and October 1, 2003."
3. The parties hereby agree to add the following definitions to
Section 1.1 of the Loan Agreement:
"Second Guidance Loan: the Loan made by Lender to
Borrowers pursuant to Section 2.1.C hereof."
"Second Guidance Loan Commitment: $500,000."
"Second Guidance Loan Maturity Date: the earlier of (i)
October 1, 2005, or (ii) the date on which Borrowers'
obligations are accelerated pursuant to this Loan
Agreement."
"Second Guidance Loan Note: the promissory note
executed by Borrowers payable to the order of Lender in the
amount of the Second Guidance Loan Commitment, dated as of
October 1, 2003."
4. A new Section 2.1.C of the Loan Agreement is hereby added to
read as follows:
"2.1.C Second Guidance Loan.
2.1.C.1 Amount and Disbursement.
Upon the terms and subject to the conditions
herein set forth, Lender agrees to make Advances of the
Second Guidance Loan to Borrowers from time to time
from October 1, 2003 to December 31, 2004, in an
aggregate amount outstanding at any one time not in
excess of the Second Guidance Loan Commitment. Lender
may remit Advances of the Second Guidance Loan directly
to equipment sellers. Each of Borrowers shall remain
jointly and severally liable with the other Borrowers
for the repayment of all such Advances of the Second
Guidance Loan with interest.
2.1.C.2 Second Guidance Loan Note.
The Second Guidance Loan shall be evidenced by the
Second Guidance Loan Note.
2.1.C.3 Reborrowing.
Subject to the conditions set forth in this
Section 2.1.C, Borrowers may from time to time prior to
or on December 31, 2004, reborrow all or any portion of
any Advance of the Second Guidance Loan which is
repaid.
2.1.C.4 Conditions.
The obligation of Lender to disburse any Advance
of the Second Guidance Loan is subject to the
satisfaction of the following conditions precedent:
(a) no Event of Default or Incipient Default
shall exist or would be created by the making of any
such Advance;
(b) each such Advance shall be in a minimum
amount of $1,000;
(c) not less than ten (10) days prior to the
estimated Purchase Date, Lender shall have:
(i) received a written request in a
form satisfactory to Lender requesting an Advance
on the Second Guidance Loan;
(ii) received and approved of a copy of
the purchase agreement and all other agreements or
instruments relating to the purchase of any
equipment to be purchased with such Advance and
shall have received any other information which
Lender may request as to any such equipment,
including without limitation UCC, judgment and tax
lien searches, invoices, bills of sale,
certificates of title and other document reports
as Lender may request establishing good title in
the Seller of the equipment to be purchased free
and clear of all encumbrances and that Lender's
security interest therein when perfected will be a
first Lien; and
(iii) approved the purchase of such
equipment, which approval shall not be
unreasonably withheld;
(d) on the applicable Purchase Date, each of
Borrowers' and Guarantor's representations and
warranties set forth in the Loan Instruments shall be
true and correct in all material respects when made and
at and as of the time of the Purchase Date, except to
the extent that any such representations and warranties
speak expressly to an earlier date;
(e) delivery to Lender of the original
certificate(s) of title as to any Certificated
Collateral with the appropriate endorsements and
indications thereof of the security interest in favor
of Lender;
(f) Borrowers shall have paid or made
available in a manner satisfactory to Lender the
balance due for the purchase of the equipment to be
purchased; and
(g) the amount of any Advance of the Second
Guidance Loan shall be limited to eighty percent (80%)
of the purchase price for the equipment to be purchased
with the proceeds of such Advance."
5. Section 2.2 of the Loan Agreement is hereby restated in its
entirety to read as follows:
"The proceeds of the Revolving Loan shall be used to
(i) refinance Borrowers' and Guarantor's secured loan
obligations to Lender; (ii) for Borrowers' working capital;
and (iii) to pay related transaction costs, provided that,
with compliance with the Special Advance Conditions, the
Borrowers may obtain a Special Advance of up to $620,000 of
the proceeds of the Revolving Loan.
The proceeds of the Equipment Loan shall be used to
purchase equipment for use in Borrowers' trucking business.
The proceeds of the Guidance Loan shall be used to
purchase equipment for use in Borrowers' trucking business.
The proceeds of the Second Guidance Loan shall be used
to purchase equipment for use in Borrowers' trucking
business."
6. Section 2.3.1 of the Loan Agreement is amended and restated
in its entirety as follows:
"2.3.1 Interest Rate. The Principal Balances
of each of the Revolving Loan, the Equipment Loan, the
Guidance Loan and the Second Guidance Loan shall bear
interest from the date hereof at a rate determined as
follows:
If the ratio of The interest rate charged
Unsubordinated effective the first day of
Indebtedness to EBITDA the next quarter shall be
is: equal to:
> 2.51 to 1, =3.00 to The Prime Rate in effect
1 from time to time
> 2.00 to 1, = 2.51 to The Prime Rate in effect
1 from time to time, less
0.25% per annum
= 2.00 to 1 The Prime Rate in effect
from time to time, less
0.50% per annum
provided, however, that during a Default Rate Period,
Borrowers' Obligations shall bear interest at the applicable
Default Rate. For the purposes of this Section 2.3.1,
EBITDA shall be determined based on a rolling four (4)
quarter average.
7. A new subsection 2.4.1(d) of the Loan Agreement is hereby
added to read as follows:
"Interest on the Second Guidance Loan shall be payable
monthly in arrears commencing October 15, 2003, with a final
payment due on the Second Guidance Loan Maturity Date."
8. A new subsection 2.4.2(d) of the Loan Agreement is hereby
added to read as follows:
"The unpaid principal balance of the Second Guidance
Loan shall be due and payable as follows: beginning January
1, 2005, the amount of the then-unpaid principal balance
divided by sixty (60) shall be payable on the first Business
Day of the month commencing January 1, 2005, and on the 1st
of each month thereafter with payment of the remaining
principal balance of the Second Guidance Loan becoming due
and payable, if not sooner paid, on the Second Guidance Loan
Maturity Date."
9. The parties hereby agree to amend and restate in its
entirety Section 7.16 of the Loan Agreement as follows:
"7.16 Maximum Unsubordinated Indebtedness to EBITDA
Ratio. Permit the ratio of Unsubordinated Indebtedness to
EBITDA to exceed 3 to 1 at any time. For the purposes of
this Section 7.16, EBITDA shall be determined based on a
rolling four (4) quarter average."
10. The parties hereby agree to amend and restate in its
entirety Section 7.18 of the Loan Agreement as follows:
"7.18 Minimum Net Worth. Fail to maintain Tangible Net
Worth of at least $1,000,000."
11. A new Section 7.18A of the Loan Agreement is hereby added to
read as follows:
"7.18A Minimum Subordinated Indebtedness. Fail to
maintain Subordinated Indebtedness of at least $3,850,000."
12. 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 October 1, 2003, in the
form attached hereto as Exhibit A (the "Revolving Loan Note");
ii) The Second Guidance Loan Note, dated as of October 1, 2003,
in the form attached hereto as Exhibit B (the "Second Guidance
Loan Note");
iii) Personal Guaranties of Michael Kibler and Harold Antonson,
in the forms attached hereto as Exhibits C-1 and C-2;
iv) Corporate Guaranty of Guarantor, in the form attached hereto
as Exhibit D;
v) Acknowledgements of the holders of Subordinated Indebtedness
of, 1) the execution of the Eighth Amendment to Loan Agreement;
2) the continued effectiveness of those certain Subordination
Agreements by and between Lender and, a) Harold Antonson and
Michael Kibler, dated as of April 18, 2000, as amended pursuant
to that certain Amendment to Subordination Agreement dated as of
August 1, 2002, and b) August Investment Partnership, as amended
and restated pursuant to that certain Amended and Restated
Subordination Agreement dated as of August 1, 2002 (collectively,
as so amended, the "Subordination Agreements"); and 3) the
inclusion of any indebtedness incurred under the Loan Agreement
by any Borrower, including Patriot, Liberty, and Keystone-
Indiana, within the term "Senior Debt," as defined in the
Subordination Agreements, in the forms attached hereto as
Exhibits E-1 and E-2;
vi) Certified resolutions for Guarantor and each Borrower;
vii) Evidence of good standing for Guarantor and each Borrower;
and
viii) Opinion letters 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, dated as
of the date hereof, and the Seventh Amendment to Loan Agreement,
dated as of March 21, 2003, and the documents referenced in each
of the foregoing, and the incorporation or organization, as the
case may be, and the good standing, of each Borrower and of the
Guarantor as of each of March 21, 2003 and October 1, 2003.
13. All references therein to the "Loan Agreement" and other
terms defined in the Loan Agreement shall be deemed to take
account of the Loan Agreement, as amended by this Amendment.
14. Lender and two creditors of Guarantor whose claims for
repayment are junior to those of Lender, Harold Antonson
("Antonson") and Michael Kibler ("Kibler"), are parties to that
certain Subordination Agreement dated as of April 1, 2000, as
amended by that certain Amendment to Subordination Agreement
dated as of August 1, 2002, (as so amended, the "Antonson/Kibler
Subordination Documents"). Notwithstanding the terms of the
Antonson/Kibler Subordination Documents, Guarantor wishes to
make, and Lender will consent to, an unscheduled payment of
principal in the amount of $220,000 towards certain of the
Subordinated Debt (the "Unscheduled Payment"). Lender hereby
waives the Event of Default arising out of, and consents to, the
Unscheduled Payment, without waiving its right strictly to
enforce the terms of the Subordination Agreements in the future.
Lender, Borrowers, Antonson and Kibler hereby agree to the
amendment of the Antonson/Kibler Subordination Documents
effective as of the date hereof to the effect that from and after
the date hereof "Permitted Payments" (as defined in the
Antonson/Kibler Subordination Documents) shall mean and include
only the Unscheduled Payment and scheduled payments of interest
on the Subordinated Debt, when due on an unaccelerated basis, and
shall no longer include monthly payments of principal, it being
agreed that the right to receive monthly principal payments of
$20,000 with respect to the Subordinated Debt is terminated
effective as of the date hereof.
15. The parties hereto agree that the payment from Guarantor to
Antonson and Kibler, referred to in paragraph 14 hereof, shall
not constitute Net Income for the purposes of the Loan Agreement.
16. The 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), as of October 15, 2001 (in the case of Unity,
ERX, Friendly, Transport Leasing, and Transport Logistics), as of
May 1, 2002 (in the case of Harbor), as of March 21, 2003 (in the
case of Patriot, Liberty, and Keystone-Indiana), (collectively,
the "Existing Security Agreements"), with Lender, by which
certain assets of the Borrowers and the Guarantor were pledged to
secure Borrowers' Obligations (as that term is defined in the
Loan Agreement). The Borrowers and the Guarantor do hereby
acknowledge that Borrowers' Obligations, as that term is used in
the Loan Agreement and the Existing Security Agreements, means
Borrowers' Obligations under the Loan Agreement, and includes,
without limitation, the obligation to repay as and when due any
and all amounts advanced by Lender to the Borrowers (including
Borrowers other than the existing Borrowers), or any of them,
together with interest thereon, as provided in the Revolving Loan
Note in the face amount of $10,000,000, dated April 18, 2000, as
amended and restated as of June 12, 2000, December 7, 2000,
October 15, 2001, May 1, 2002, August 1, 2002, March 21, 2003 and
October 1, 2003; the Equipment Loan Note in the face amount of
$1,000,000, dated December 7, 2000, as amended and restated as of
March 1, October 15, 2001, May 1, 2002 and March 21, 2003; the
Guidance Loan in the face amount of $300,000, dated as of October
15, 2001, as amended and restated as of May 1, 2002 and March 21,
2003 and the Second Guidance Loan in the face amount of $500,000,
dated as of October 1, 2003, all made by the Borrowers and
payable to Lender, and do hereby reaffirm their obligations
thereunder.
17. Borrowers shall pay Lender a fee in the amount of $25,000,
being 0.25% of the increased Revolving Loan Commitment,
simultaneously with the execution of this Amendment, and 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.
18. 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.
19. Except as expressly amended hereby, the terms and conditions
of the Existing Loan Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the undersigned Borrowers, Lender, and
Guarantor have signed this Eighth Amendment to Loan Agreement as
of the date first above written.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
US 1 INDUSTRIES, INC., an Indiana
corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
____________________________
Harold Antonson, for the purposes of
Section 14 only
____________________________
Michael Kibler, for the purposes of
Section 14 only
U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
REVOLVING LOAN NOTE
$10,000,000.00 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
Further Amended and Restated as of August 1, 2002
Further Amended and Restated as of March 21, 2003
Further Amended and Restated as of October 1, 2003
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL
TRANSPORTATION INC., an Indiana corporation ("Carolina");
KEYSTONE LINES, a California corporation ("Keystone"); GULF LINE
TRANSPORT INC., an Indiana corporation ("Gulf Line"); FIVE STAR
TRANSPORT, INC., an Indiana corporation ("Five Star"); CAM
TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an
Indiana corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana
corporation ("Friendly"); TRANSPORT LEASING, INC., an Arkansas
corporation ("Transport Leasing"); TRANSPORT LOGISTICS, LLC, an
Arkansas limited liability company ("Transport Logistics");
HARBOR BRIDGE INTERMODAL, INC. ("Harbor"); PATRIOT LOGISTICS,
INC., an Indiana corporation ("Patriot"); LIBERTY TRANSPORT,
INC., an Indiana corporation ("Liberty"); and KEYSTONE LINES
CORPORATION, an Indiana corporation ("Keystone-Indiana");
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, Harbor,
Patriot, Liberty and Keystone-Indiana are hereinafter
collectively referred to as "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 TEN MILLION AND NO/100ths
DOLLARS ($10,000,000.00), 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, May 1, 2002, August 1, 2002,
March 21, 2003 and October 1, 2003 (as the same may be amended,
modified, supplemented or restated from time to time, the "Loan
Agreement") between Maker, US 1 INDUSTRIES, INC., an Indiana
corporation ("Guarantor"), and Lender, at the office of Lender at
30 N. Michigan Avenue, Chicago, Illinois 60602, or at such other
place as the holder hereof may appoint, plus interest thereon as
set forth below.
This Revolving Loan Note is delivered by Maker to Lender
pursuant to and in accordance with the applicable provisions of
the Loan Agreement. All capitalized terms used but not elsewhere
defined herein shall have the respective meanings ascribed to
such terms in the Loan Agreement.
The Principal Balance of this Revolving Loan Note shall bear
interest at the per annum rate of interest set forth in
subsection 2.3.1 of the Loan Agreement.
Accrued and unpaid interest on, and the Principal Balance
of, this Revolving Loan Note shall be paid in the manner set
forth in Section 2.4 of the Loan Agreement.
Interest shall be: (i) computed on the basis of a year
consisting of 360 days and (ii) charged for the actual number of
days during the period for which interest is being charged.
During a Default Rate Period, the Principal Balance of this
Revolving Loan Note shall bear interest at the Default Rate,
which interest at such Default Rate shall be paid by Maker to
Lender immediately upon demand.
Subject to the provisions of Section 8.2 of the Loan
Agreement, at the election of the holder hereof, upon the
occurrence of an Event of Default, without further notice or
demand, the Principal Balance of this Revolving Loan Note, and
all accrued and unpaid interest thereon, shall be and become
immediately due and payable in full. Failure to exercise this
option shall not constitute a waiver of the right to exercise the
same in the event of any subsequent Event of Default, and such
failure shall not be deemed to establish a custom or course of
dealing or performance between Maker and Lender.
This Revolving Loan Note may be prepaid, in whole or in
part, without penalty and in accordance with the terms and
conditions of the Loan Agreement applicable thereto.
All funds received by Lender during the existence of an
Event of Default shall be applied in the manner set forth in
Section 8.4 of the Loan Agreement.
All payments to be made by Maker pursuant to this Note shall
be made in accordance with the instructions 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, Eastern Division, is an
inconvenient forum or an improper forum based on lack of venue.
To the extent provided by law, should any Maker, after being so
served, fail to appear or answer to any summons, complaint,
process or papers so served within the number of days prescribed
by law after the mailing thereof, Maker shall be deemed in
default and an order and/or judgment may be entered by the court
against Maker as demanded or prayed for in such summons,
complaint, process or papers. The exclusive choice of forum for
Maker set forth in this paragraph shall not be deemed to preclude
the enforcement by Lender of any judgment obtained in any other
forum or the taking by Lender of any action to enforce the same
in any other appropriate jurisdiction, and Maker hereby waives
the right to collaterally attack any such judgment or action.
Maker acknowledges and agrees that any controversy which may
arise under this Revolving Loan Note would be based upon
difficult and complex issues and, therefore, Maker agrees that
any lawsuit arising out of any such controversy will be tried in
a court of competent jurisdiction by a judge sitting without a
jury.
This Revolving Loan Note may not be changed or amended
orally, but only by an instrument in writing signed by the party
against whom enforcement of the change or amendment is sought.
This Revolving Loan Note shall be binding upon Maker and
upon Maker's successors and assigns, and shall inure to the
benefit of the successors and permitted assigns of Lender. If
more than one party shall sign this Revolving Loan Note as Maker,
their obligations hereunder as Maker shall be joint and several.
In the event that any provision hereof shall be deemed to be
invalid by reason of the operation of any law, or by reason of
the interpretation placed thereon by any court or any
Governmental Body, this Revolving Loan Note shall be construed as
not containing such provision and the invalidity of such
provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise
are lawful and valid shall remain in full force and effect.
Time for the performance of Maker's obligations under this
Revolving Loan Note is of the essence.
This Revolving Loan Note is entitled to the benefit of
certain collateral security, all as more fully set forth in the
Loan Agreement.
This Revolving Loan Note amends, restates in its entirety,
and supercedes a Revolving Loan Note dated March 21, 2003, which
amended and restated a Revolving Loan Note dated August 1, 2002
in the principal face amount of $8,500,000, which amended and
restated a Revolving Loan Note dated May 1, 2002, in the
principal face amount of $7,000,000, which amended and restated a
Revolving Loan Note dated October 15, 2001, in the principal face
amount of $7,000,000, which amended and restated a Revolving Loan
Note dated December 7, 2000, in the principal face amount of
$5,500,000, which amended and restated a Revolving Loan Note
dated June 12, 2000, in the principal face amount of $3,500,000,
which amended and restated a Revolving Loan Note dated April 18,
2000, in the principal face amount of $2,000,000, made by Maker
and payable to Lender.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Revolving Loan Note has been executed
and delivered by Maker by its duly authorized officer on the date
first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
SECOND GUIDANCE LOAN NOTE
$500,000.00 Dated as of October 1, 2003
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, CAROLINA NATIONAL
TRANSPORTATION INC., an Indiana corporation ("Carolina");
KEYSTONE LINES, a California corporation ("Keystone"); GULF LINE
TRANSPORT INC., an Indiana corporation ("Gulf Line"); FIVE STAR
TRANSPORT, INC., an Indiana corporation ("Five Star"); CAM
TRANSPORT, INC., an Indiana corporation ("Cam"); UNITY LOGISTIC
SERVICES INC., an Indiana corporation ("Unity"); ERX, INC., an
Indiana corporation ("ERX"); FRIENDLY TRANSPORT, INC., an Indiana
corporation ("Friendly"); TRANSPORT LEASING, INC., an Arkansas
corporation ("Transport Leasing"); TRANSPORT LOGISTICS, LLC, an
Arkansas limited liability company ("Transport Logistics");
HARBOR BRIDGE INTERMODAL, INC. ("Harbor"); PATRIOT LOGISTICS,
INC., an Indiana corporation ("Patriot"); LIBERTY TRANSPORT,
INC., an Indiana corporation ("Liberty"); and KEYSTONE LINES
CORPORATION, an Indiana corporation ("Keystone-Indiana");
(Carolina, Keystone, Gulf Line, Five Star, Cam, Unity, ERX,
Friendly, Transport Leasing, Transport Logistics, Harbor,
Patriot, Liberty and Keystone-Indiana are hereinafter
collectively referred to as "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 FIVE-HUNDRED THOUSAND AND
NO/100ths DOLLARS ($500,000.00), or, if less, the aggregate
unpaid amount of the Second Guidance Loan made by Lender pursuant
to and in accordance with the applicable provisions of that
certain Loan Agreement dated as of April 18, 2000, and amended as
of June 12, 2000, December 7, 2000, March 1, 2001, October 15,
2001, May 1, 2002, August 1, 2002, March 21, 2003 and October 1,
2003 (as the same may be amended, modified, supplemented or
restated from time to time, the "Loan Agreement") between Maker,
US 1 INDUSTRIES, INC., an Indiana corporation ("Guarantor") and
Lender, at the office of Lender at 30 N. Michigan Avenue,
Chicago, Illinois 60602, or at such other place as the holder
hereof may appoint, plus interest thereon as set forth below.
This Second 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 Second 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 Second 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 Second 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 Second Guidance
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 Second Guidance 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 Second 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 Second Guidance Loan Note, and expressly agrees that this
Second 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 Second 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 Second 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, Eastern
Division, 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 Second 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 Second 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 Second 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 Second Guidance 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 Second 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
Second Guidance Loan Note is of the essence.
This Second Guidance Loan Note is entitled to the benefit of
certain collateral security, as more fully set forth in the Loan
Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Second Guidance Loan Note has been
executed and delivered by Maker by its duly authorized officer on
the date first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: ______________________________
Name: ____________________________
Title: _____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _______________________________
Name: _____________________________
Title: ______________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ___________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LOGISTICS, LLC,
an Arkansas limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
Date: 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
Further Amended and Restated As of August 1, 2002
Reaffirmed as of March 1, 2003
Further Amended and Restated As of October 1, 2003
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, May 1, 2002, August 1,
2002, March 21, 2003 and October 1, 2003, in the principal amount
of $10,000,000; that certain Equipment Loan Note, dated December
7, 2000, as amended and restated as of March 1, 2001, October 15,
2001, May 1, 2002, March 21, 2003 and October 1, 2003, in the
principal amount of $1,000,000; that certain Guidance Loan Note
dated October 15, 2001, as amended and restated as of May 1,
2002, March 21, 2003, and October 1, 2003, in the principal
amount of $300,000; and that certain Second Guidance Loan Note
dated October 1, 2003, in the principal amount of $500,000, 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"); Harbor Bridge Intermodal, Inc., an Indiana
corporation ("Harbor"), Patriot Logistics, Inc., an Indiana
corporation ("Patriot"), Liberty Transport, Inc., an Indiana
corporation ("Liberty"), and Keystone Lines Corporation, an
Indiana Corporation ("Keystone-Indiana") (Carolina, Keystone,
Gulf Line, Five Star, Cam, Unity, ERX, Friendly, Transport
Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as
"Borrowers") (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, the Guidance Loan Note and the Second
Guidance Loan Note are collectively referred to herein as the
"Notes") and (ii) prompt performance and payment of all of
Borrowers' Obligations (as defined in that certain Loan Agreement
dated April 18, 2000, as amended and restated as of June 9, 2000,
December 7, 2000, March 1, 2001, October 15, 2001, May 1, 2002,
August 1, 2002, March 21, 2003 and October 1, 2003, 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, October 15, 2001, May 1, 2002, and August 1,
2002, and as reaffirmed as of March 21, 2003, 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
Further Amended and Restated As of August 1, 2002
Reaffirmed as of March 1, 2003
Further Amended and Restated As of October 1, 2003
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, May 1, 2002, August 1,
2002, March 21, 2003 and October 1, 2003, in the principal amount
of $10,000,000; that certain Equipment Loan Note, dated December
7, 2000, as amended and restated as of March 1, 2001, October 15,
2001, May 1, 2002, March 21, 2003 and October 1, 2003, in the
principal amount of $1,000,000; that certain Guidance Loan Note
dated October 15, 2001, as amended and restated as of May 1,
2002, March 21, 2003, and October 1, 2003, in the principal
amount of $300,000; and that certain Second Guidance Loan Note
dated October 1, 2003, in the principal amount of $500,000, 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"); Harbor Bridge Intermodal, Inc., an Indiana
corporation ("Harbor"), Patriot Logistics, Inc., an Indiana
corporation ("Patriot"), Liberty Transport, Inc., an Indiana
corporation ("Liberty"), and Keystone Lines Corporation, an
Indiana Corporation ("Keystone-Indiana") (Carolina, Keystone,
Gulf Line, Five Star, Cam, Unity, ERX, Friendly, Transport
Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as
"Borrowers") (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, the Guidance Loan Note and the Second
Guidance Loan Note are collectively referred to herein as the
"Notes") and (ii) prompt performance and payment of all of
Borrowers' Obligations (as defined in that certain Loan Agreement
dated April 18, 2000, as amended and restated as of June 9, 2000,
December 7, 2000, March 1, 2001, October 15, 2001, May 1, 2002,
August 1, 2002, March 21, 2003 and October 1, 2003, 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, October 15, 2001, May 1, 2002, and August 1,
2002, and as reaffirmed as of March 21, 2003, 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
Further Amended and Restated as of August 1, 2002
Reaffirmed as of March 21, 2003
Further Amended and Restated as of October 1, 2003
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"); Transport
Logistics, LLC, an Arkansas limited liability company ("Transport
Logistics"); Harbor Bridge Intermodal, Inc., an Indiana
corporation ("Harbor"), Patriot Logistics, Inc., an Indiana
corporation ("Patriot"), Liberty Transport, Inc., an Indiana
corporation ("Liberty"), and Keystone Lines Corporation, an
Indiana Corporation ("Keystone-Indiana") (Carolina, Keystone,
Gulf Line, Five Star, Cam, Unity, ERX, Friendly, Transport
Leasing, Transport Logistics, Harbor, Patriot, Liberty and
Keystone-Indiana are hereinafter collectively referred to as
"Borrowers") and to enter into a certain Eighth Amendment to Loan
Agreement of even date herewith between Borrowers and Lender
(which Eighth Amendment to Loan Agreement, together with the
original Loan Agreement dated April 18, 2000, and the amendments
thereto dated June 9, 2000, December 7, 2000, March 1, 2001,
October 15, 2001, May 1, 2002, August 1, 2003 and March 21, 2003
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, May 1, 2002, August 1, 2002,
March 21, 2003 and October 1, 2003 (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, May 1, 2002, August 1, 2003, March 21, 2003 and
October 1, 2003 (the "Equipment Loan Note"); the Guidance Loan
Note from Borrowers to Lender dated as of October 15, 2001 and as
amended and restated as of May 1, 2002, August 1, 2002 and
October 1, 2003 (the "Guidance Loan Note"); and the Second
Guidance Loan Note from Borrowers to Lender dated as of October
1, 2003 (the "Second Guidance Loan Note") (the Revolving Loan
Note, the Equipment Loan Note, the Guidance Loan Note and the
Second Guidance Loan Note are herein collectively referred to as
the "Notes"), or any document, instrument, mortgage, guaranty, or
security agreement given or delivered to evidence or secure the
indebtedness evidenced by the Notes, and all modifications,
amendments and supplements thereto including, but not limited to,
charges, interest and the principal, interest and other sums
payable pursuant to the Notes or the Loan Agreement or any of the
Loan Instruments (as defined in the Loan Agreement)
(collectively, the "Obligations"). 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 Guaranty made by the Guarantor dated
April 18, 2000, as amended and restated as of June 9, 2000,
December 7, 2000, March 1, 2001, October 15, 2001, May 1, 2002,
and August 1, 2002, and as reaffirmed as of March 21, 2003, in
favor of Lender.
[SIGNATURE PAGE FOLLOWS]
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 and agree, 1) that U.S.
Bank National Association, a national banking association
formerly known as Firstar Bank N.A. ("Lender"), has agreed to
enter into a certain Eighth Amendment to Loan Agreement dated as
of October 1, 2003 (the "Amendment") with the Borrowers
identified therein (the "Borrowers"); 2) that the Subordinated
Debt (as defined in that certain Subordination Agreement dated
April 18, 2000, as amended by that certain Amendment to
Subordination Agreement dated August 1, 2002, between Lender and
the undersigned (the "Subordination Agreement")) is and shall
continue to be subordinate, all as provided in the Subordination
Agreement, to any sums loaned to the Borrowers, or any of them,
in addition to being subordinate to any amounts otherwise
advanced to Borrowers, or any of them, by Lender prior to or
subsequent to the date hereof under the Loan Agreement (as that
term is defined in the Amendment); and 3) that any amounts
advanced to any of the Borrowers prior to or subsequent to the
date hereof under the Loan Agreement shall constitute Senior Debt
for purposes of the Subordination Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered as of October 1, 2003.
______________________________
Harold Antonson
______________________________
Michael Kibler
ACKNOWLEDGEMENT
(Subordination Agreement)
The undersigned hereby acknowledges and agrees, 1) that U.S.
Bank National Association, a national banking association
formerly known as Firstar Bank N.A. ("Lender"), has agreed to
enter into a certain Eighth Amendment to Loan Agreement dated as
of October 1, 2003 (the "Amendment") with the Borrowers
identified therein (the "Borrowers"); 2) that the Subordinated
Debt (as defined in that certain Amended and Restated
Subordination Agreement dated as of August 1, 2002, between
Lender and the undersigned (the "Subordination Agreement")) is
and shall continue to be subordinate, all as provided in the
Subordination Agreement, to any sums loaned to the Borrowers, or
any of them, in addition to being subordinate to any amounts
otherwise advanced to Borrowers, or any of them, by Lender prior
to or subsequent to the date hereof under the Loan Agreement (as
that term is defined in the Amendment); and 3) that any amounts
advanced to any of the Borrowers prior to or subsequent to the
date hereof under the Loan Agreement shall constitute Senior Debt
for purposes of the Subordination Agreement.
IN WITNESS WHEREOF, this Acknowledgement has been executed and
delivered as of October 1, 2003.
AUGUST INVESTMENT PARTNERSHIP
By: AUGUST INVESTMENT CORPORATION,
General Partner
By: ______________________________
Its: ______________________________