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EXHIBIT 1.1
LOAN AGREEMENT
This Loan Agreement ("Agreement") is entered into as of this 12th day of
September, 1997, by and between Professional Transportation Group Ltd., Inc.
("Lender") and Carpet Transport, Inc., Blue ▇▇▇▇ Transport, Inc., Chase
Brokerage, Inc. and CTI Properties, Inc. (individually and collectively
"Borrower").
Borrower has agreed with Lender for a loan or loans (individually and
collectively, the "Loan") evidenced by one or more promissory notes (whether one
or more, the "Note").
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As used
in this Agreement as to Borrower, "Subsidiary" shall mean any corporation of
which more than 50% of the issued and outstanding voting stock is owned directly
or indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C. ss. 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Lender is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Lender and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Lender is and will be true, correct
and complete. Any such information relating to Borrower's financial condition
will accurately reflect Borrower's financial condition as of the date(s)
thereof, (including all contingent liabilities of every type), and Borrower
further represents that its financial condition has not changed materially or
adversely since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION.
The execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized by all necessary action taken by
the duly authorized officers of Borrower and any guarantors and, if necessary,
by making appropriate filings with any governmental agency or unit and are the
legal, binding, valid and enforceable obligations of Borrower and any
guarantors; and do not (i) contravene, or constitute (with or without the giving
of notice or lapse of time or both) a violation of any provision of applicable
law, a violation of the organizational documents of Borrower or any guarantor,
or a default under any agreement, judgment, injunction, order, decree or other
instrument binding upon or affecting Borrower or any guarantor, (ii) result in
the creation or imposition of any lien (other than the lien(s) created by the
Loan Documents) on any of Borrower's or guarantor's assets, or (iii) give cause
for the acceleration of any obligations of Borrower or any guarantor to any
other creditor. ASSET OWNERSHIP. Borrower has good and marketable title to all
of the properties and assets reflected on the balance sheets and financial
statements supplied Lender by Borrower, and all such properties and assets are
free and clear of mortgages, security deeds, pledges, lions, charges, and all
other encumbrances, except as otherwise disclosed to Lender by Borrower in
writing ("Permitted Liens"). To Borrower's knowledge, no default has occurred
under any Permitted Liens and no claims or interests adverse to Borrower's
present rights in its properties and assets have arisen. DISCHARGE OF LIENS AND
TAXES. Borrower has duly filed, paid and/or discharged all taxes or other claims
which may become a lien on any of its property or assets, except to the extent
that such items are being appropriately contested in good faith and an adequate
reserve for the payment thereof is being maintained. SUFFICIENCY OF CAPITAL.
Borrower is not, and after consummation of this Agreement and after giving
effect to all indebtedness incurred and
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liens created by Borrower in connection with the Loan, will not be, insolvent
within the meaning of 11 U.S.C. ss. 101 (32). COMPLIANCE WITH LAWS. Borrower
is in compliance in all respects with all federal, state and local laws, rules
and regulations applicable to its properties, operations, business, and
finances, including, without limitation, any federal or state laws relating to
liquor (including 18 U.S.C. ss. 3617, et seq.) or narcotics (including 21
▇.▇.▇.▇▇. 801, et seq.) and/or any commercial crimes; all applicable federal,
state and local laws and regulations intended to protect the environment; and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), if
applicable. ORGANIZATION AND AUTHORITY. Each corporate or limited liability
company Borrower and any guarantor, as applicable, is duly created, validly
existing and in good standing under the laws of the state of its organization,
and has all powers, governmental licenses, authorizations, consents and
approvals required to operate its business as now conducted. Each corporate or
limited liability company Borrower and any guarantor, if any, is duly qualified,
licensed and in good standing in each jurisdiction where qualification or
licensing is required by the nature of its business or the character and
location of its property, business or customers, and in which the failure to so
qualify or be licensed, as the case may be, in the aggregate, could have a
material adverse effect on the business, financial position, results of
operations, properties or prospects of Borrower or any such guarantor. NO
LITIGATION. There are no pending or threatened suits, claims or demands against
Borrower or any guarantor that have not been disclosed to Lender by Borrower in
writing. COMMISSIONS. Except for any commissions, fees or expenses payable to
▇▇▇▇▇ Enterprise, Inc. and or ▇▇▇▇▇▇▇ ▇▇▇▇▇ (which will be paid by Borrower),
there are no other commissions, fees or expenses of any broker or finder with
respect to the transactions contemplated hereby.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Lender shall otherwise
consent in writing, Borrower will: BUSINESS CONTINUITY. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. MAINTAIN PROPERTIES. Maintain, preserve and keep its
property in good repair, working order and condition, making all needed
replacements, additions and improvements thereto, to the extent allowed by this
Agreement. ACCESS TO BOOKS & RECORDS. Allow Lender, or its agents, during normal
business hours, access to the books, records and such other documents of
Borrower as Lender shall reasonably require, and allow Lender to make copies
thereof at Lender's expense. INSURANCE. Maintain adequate insurance coverage
with respect to its properties and business against loss or damage of the kinds
and in the amounts customarily insured against by companies of established
reputation engaged in the same or similar businesses including, without
limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Lender may reasonably require. NOTICE OF DEFAULT AND
OTHER NOTICES. (a) Notice of Default. Furnish to Lender immediately upon
becoming aware of the existence of any condition or event which constitutes a
Default (as defined in the Loan Documents) or any event which, upon the giving
of notice or lapse of time or both, may become a Default, written notice
specifying the nature and period of existence thereof and the action which
Borrower is taking or proposes to take with respect thereto. (b) Other Notices.
NOTICES. Promptly notify Lender in writing of (i) any material adverse change in
its financial condition or its business; (ii) any default under any material
agreement, contract or other instrument to which it is a party or by which any
of its properties are bound, or any acceleration of the maturity of any
indebtedness owing by Borrower; (iii) any material adverse claim against or
affecting Borrower or any part of its properties; (iv) the commencement of, and
any material determination in, any litigation with any third party or any
proceeding before any governmental agency or unit affecting Borrower; and (v) at
least 30 days prior thereto, any change in Borrower's name or address as shown
above, and/or any change in Borrower's structure. COMPLIANCE WITH OTHER
AGREEMENTS. Comply with all terms and conditions contained in this Agreement,
and any other Loan
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Documents, and swap agreements, if applicable, as defined in the Note. PAYMENT
OF DEBTS. Pay and discharge when due, and before subject to penalty or further
charge, and otherwise satisfy before maturity or delinquency, all obligations,
debts, taxes, and liabilities of whatever nature or amount, except those which
Borrower in good faith disputes. REPORTS AND PROXIES. Deliver to Lender,
promptly, a copy of all financial statements, reports, notices, and proxy
statements, sent by Borrower to stockholders, and all regular or periodic
reports required to be filed by Borrower with any governmental agency or
authority. OTHER FINANCIAL INFORMATION. Deliver promptly such other information
regarding the operation, business affairs, and financial condition of Borrower
which Lender may reasonably request. NON-DEFAULT CERTIFICATE FROM BORROWER.
Deliver to Lender, with the Financial Statements required herein, a certificate
signed by Borrower, if Borrower is an individual, or by a principal financial
officer of Borrower warranting that no "Default" as specified in the Loan
Documents nor any event which, upon the giving of notice or lapse of time or
both, would constitute such a Default, has occurred. ESTOPPEL CERTIFICATE.
Furnish, within 15 days after request by Lender, a written statement duly
acknowledged of the amount due under the Loan and whether offsets or defenses
exist against the Obligations. OWNERSHIP. Continental American Transportation,
Inc., a publicly held Colorado corporation, and owns one hundred percent (100%)
of the issued and outstanding common stock of each of Carpet Transport, Inc.,
Blue ▇▇▇▇ Transport, Inc., Chase Brokerage, Inc., and CTI Properties, Inc.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Lender shall otherwise
consent in writing, Borrower will not: NONPAYMENT; NONPERFORMANCE. Fail to pay
or perform the Obligations or Default (as defined in the Loan Documents) under
any of the Loan Documents. CROSS DEFAULT. Default in payment or performance of
any obligation under any other loans, contracts or agreements of Borrower, any
Subsidiary or Affiliate of Borrower ("Affiliate" shall have the meaning as
defined in 11 U.S.C. ss. 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein; "Subsidiary" shall mean any
corporation of which more than 50% of the issued and outstanding voting stock is
owned directly or indirectly by Borrower), any general partner of or the
holder(s) of the majority ownership interests of Borrower with Lender or its
affiliates; MATERIAL CAPITAL STRUCTURE OR BUSINESS ALTERATION. Materially alter
the type or kind of Borrower's business or that of its Subsidiaries or
Affiliates, if any; or suffer or permit the acquisition of substantially all of
Borrower's business or assets, or a material portion (10% or more) of such
business or assets if such a sale is outside Borrower's ordinary course of
business, or more than 50% of its outstanding stock or voting power in a single
transaction or a series of transactions; or acquire substantially all of the
business or assets or more than 50% of the outstanding stock or voting power of
any other entity; or enter into any merger or consolidation without prior
written consent of Lender. DEFAULT ON OTHER CONTRACTS OR OBLIGATIONS. Default on
any material contract with or obligation when due to a third party or default in
the performance of any obligation to a third party incurred for money borrowed
in an amount in excess of $25,000. JUDGMENT ENTERED. Permit the entry of any
monetary judgment or the assessment against, the filing of any tax lien against,
or the issuance of any writ of garnishment or attachment against any property of
or debts due Borrower in an amount in excess of $10,000.00 and that is not
discharged or execution is not stayed within thirty (30) days of entry.
GOVERNMENT INTERVENTION. Permit the assertion or making of any seizure, vesting
or intervention by or under authority of any government by which the management
of Borrower or any guarantor is displaced of its authority in the conduct of its
respective business or such business is curtailed or materially impaired.
PREPAYMENT OF OTHER DEBT. Retire any long-term debt entered into prior to the
date of this Agreement at a date in advance of its legal obligation to do so.
RETIRE OR REPURCHASE CAPITAL STOCK. Retire or otherwise acquire any of its
capital stock.
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CHANGE OF CONTROL. Make or suffer a change of ownership that effectively changes
control of Carpet Transport, Inc., Blue ▇▇▇▇ Transport, Inc., Chase Brokerage,
Inc., or CTI Properties, Inc. from Continental American Transportation, Inc.
CHANGE IN FISCAL YEAR. Borrower or guarantor shall not change its fiscal year
without the consent of Lender.
GUARANTEES. Guarantee or otherwise become responsible for obligations of any
other person or persons in an aggregate amount in excess of $25,000.00 per
fiscal year, other than the endorsement of checks and drafts for collection in
the ordinary course of business.
ENCUMBRANCES. Create, assume, or permit to exist any mortgage, security deed,
deed of trust, pledge, lien, charge or other encumbrance on any of its assets,
whether now owned or hereafter acquired, other than: (1) security interests
required by the Loan Documents; (II) liens for taxes contested in good faith;
(iii) liens accruing by law for employee benefits; or (iv) Permitted Liens.
INVESTMENTS. Purchase any stock, securities, or evidence of indebtedness of any
other person or entity except investments in direct obligations of the United
States Government and certificates of deposit of United States commercial banks
having a tier 1 capital ratio of not less than 6% and then in an amount not
exceeding 10% of the issuing lender's unimpaired capital and surplus.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Lender such
information as Lender may reasonably request from time to time, including
without limitation, financial statements and information pertaining to
Borrower's financial condition. Such information shall be true, complete, and
accurate.
CONDITIONS PRECEDENT. The obligations of Lender to make the Loan and any
advances pursuant to this Agreement are subject to the following conditions
precedent: ADDITIONAL DOCUMENTS. Receipt by Lender of such additional supporting
documents as Lender or its counsel may reasonably request. OPINION OF COUNSEL.
On or prior to the date of any borrowing hereunder, Lender shall have received a
written opinion of the counsel of Borrower acceptable to Lender that includes
confirmation of the following: (a) The accuracy of the representations set forth
in this Agreement in the Representations Subparagraphs entitled "Authorization;
Non-Contravention"; "Compliance with Laws", and "Organization and Authority".
(b) This Agreement and other Loan Documents have been duly executed and
delivered by Borrower and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their terms. (c) No registration with,
consent of, approval of, or other action by, any federal, state or other
governmental authority or regulatory body to the execution and delivery of this
Agreement, the borrowing under this Agreement or other Loan Documents, is
required by law, or, if so required, such registration has been made, and
consent or approval given or such other appropriate action taken. (d) The Loan
is not usurious. (e) The Loan Documents create the priority of lien on or
security interest in the Collateral (as defined in the Loan Documents) that is
contemplated by the Loan Documents.
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IN WITNESS WHEREOF, Borrower and Lender, on the day and year first written
above, have caused this Agreement to be executed under seal.
LENDER:
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, its President
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BORROWER:
CARPET TRANSPORT, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, its President
BLUE ▇▇▇▇, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, its President
CHASE BROKERAGE, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, its President
CTI PROPERTIES, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, its President
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