[Fair Holdings]

SUBORDINATION AGREEMENT

 

WHEREAS, United ExpressLine, Inc. ("Borrower"), is indebted to the Undersigned,
as evidenced by a (i) Revolving Note in the amount of $3,000,000.00, (ii)
Security Agreement (Equipment, Inventory, Accounts Receivable and General
Intangibles), and (iii) Credit Agreement, (the "Junior Debt Instruments"), and
will or may from time to time hereafter be otherwise indebted to the Undersigned
in various sums;

 

WHEREAS, the Undersigned is desirous of having LaSalle Business Credit, LLC
("Lender") extend and/or continue the extension of credit to Borrower from time
to time as Lender in its sole discretion may determine, and Lender has refused
to consider the extension and/or continued extension of such credit until the
"Junior Debt" (as defined below) is subordinated to the "Senior Debt" (as
defined below) in the manner hereinafter set forth; and

 

WHEREAS, the extension and/or continued extension of credit, as aforesaid, by
Lender is necessary or desirable to the conduct and operation of the business of
Borrower, and will inure to the personal and financial benefit of the
Undersigned.

 

NOW, THEREFORE, in consideration of the extension and/or continued extension of
credit by Lender to Borrower, as Lender may, in its sole discretion, determine,
and for other good and valuable consideration to the Undersigned, the receipt
and sufficiency of which is hereby acknowledged, the Undersigned hereby:

 

(A)         subordinates the indebtedness evidenced by the Junior Debt
Instruments, as well as any and all other indebtedness now or at any time or
times hereafter owing by Borrower, or any successor or assign of Borrower,
including without limitation, a receiver, trustee or debtor-in-possession (the
term "Borrower" as used hereinafter shall include any such successor or assign)
to the Undersigned, whether such indebtedness is absolute or contingent, direct
or indirect and howsoever evidenced, including without limitation all interest
thereon, (collectively, the "Junior Debt") to any and all indebtedness now or at
any time or times hereafter owing by Borrower to Lender (whether absolute or
contingent, direct or indirect and howsoever evidenced, including without
limitation all interest thereon and fees, whether or not such interest or fees
are allowed in a bankruptcy or similar proceeding) and all other demands,
claims, liabilities or causes of action for which Borrower may now or at any
time or times hereafter in any way be liable to Lender, whether under any
agreement, instrument or document executed and delivered or made by Borrower to
Lender or otherwise (collectively, the "Senior Debt");

 

(B)         agrees not to ask for or receive from Borrower or any other person
or entity any security for the Junior Debt not specifically granted by the
Junior Debt Instruments; agrees to subordinate all security interests, liens,
encumbrances and

 

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claims, whether now existing or hereafter arising, which in any way secure the
payment of the Junior Debt (the "Undersigned's Collateral") to all security
interests, liens, encumbrances and claims, whether now existing or hereafter
arising, which in any way secure the payment of the Senior Debt (the "Lender's
Collateral"); agrees that it will not take any action to enforce any of its
liens on the Undersigned's Collateral; agrees that in the event Lender
forecloses or realizes upon or enforces any of its rights with respect to
Lender's Collateral, or Borrower sells any of Lender's Collateral in a
transaction consented to by Lender, the Undersigned shall, upon demand, execute
such terminations, partial releases and other documents as Lender requests in
its sole discretion to release the Undersigned's lien upon such Lender's
Collateral; and agrees that it shall have no right to possession of any assets
included in the Undersigned's Collateral or the Lender's Collateral, whether by
judicial action or otherwise, unless and until Lender has, in writing, notified
the Undersigned that all the Senior Debt has been paid in full and all
obligations arising in connection therewith have been discharged;

 

(C)         except as provided in Rider attached hereto and expressly made a
part hereof, agrees to instruct Borrower not to pay, and agrees not to accept
payment of, or assert, demand, sue for or seek to enforce against Borrower or
any other person or entity, by setoff or otherwise, all or any portion of the
Junior Debt unless and until Lender has, in writing, notified the Undersigned
that the Senior Debt has been paid in full and all obligations arising in
connection therewith have been discharged;

 

(D)         subrogates Lender to the Junior Debt and the Undersigned's
Collateral; irrevocably authorizes Lender (i) to collect, receive, enforce and
accept any and all sums or distributions of any kind that may become due,
payable or distributable on or in respect of the Junior Debt or the
Undersigned's Collateral, whether paid directly by Borrower or paid or
distributed in any liquidation, bankruptcy, arrangement, receivership,
assignment, reorganization or dissolution proceedings or otherwise, and (ii) in
Lender's sole discretion, to make and present claims therefor in, and take such
other actions as Lender deems necessary or advisable in connection with, any
such proceedings, either in Lender's name or in the name of the Undersigned; and
agrees that upon the written request of Lender, it will promptly assign, endorse
and deliver to and deposit with Lender all agreements, instruments and documents
evidencing the Junior Debt, including without limitation the Junior Debt
Instruments;

 

(E)         agrees to receive and hold in trust for and promptly turn over to
Lender, in the form received (except for the endorsement or assignment by the
Undersigned where necessary), any sums at any time paid to, or received by, the
Undersigned in violation of the terms of this Agreement and to reimburse Lender
for all costs, including reasonable attorney's fees, incurred by Lender in the
course of collecting said sums should the Undersigned fail to voluntarily turn
the same over to Lender as herein required. If the Undersigned fails to endorse
or assign to Lender

 

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any items of payment received by the Undersigned on account of the Junior Debt,
the Undersigned hereby irrevocably makes, constitutes and appoints Lender (and
all persons designated by Lender for that purpose) as the Undersigned's true and
lawful attorney and agent-in-fact, to make such endorsement or assignment in the
Undersigned's name; and

 

(F)         agrees that it shall not modify or amend any agreement, instrument
or document evidencing or securing the Junior Debt, including without limitation
the Junior Debt Instruments, without the prior written consent of Lender.

 

The Undersigned represents and warrants to Lender that the Undersigned has not
assigned or otherwise transferred the Junior Debt or the Undersigned's
Collateral, or any interest therein to any person or entity, that the
Undersigned will make no such assignment or other transfer thereof, and that all
agreements, instruments and documents evidencing the Junior Debt and the
Undersigned's Collateral will be endorsed with proper notice of this Agreement.
The Undersigned will promptly deliver to Lender a certified copy of the Junior
Debt Instruments, as well as certified copies of all other agreements,
instruments and documents hereafter evidencing any Junior Debt, in each case
showing such endorsement. The Undersigned represents and warrants to Lender that
the outstanding amount of Junior Debt evidenced by the Junior Debt Instruments
as of the date of this Agreement is $3,000,000.00.

 

The Undersigned expressly waives all notice of the acceptance by Lender of the
subordination and other provisions of this Agreement and all notices not
specifically required pursuant to the terms of this Agreement, and the
Undersigned expressly waives reliance by Lender upon the subordination and other
provisions of this Agreement as herein provided. The Undersigned consents and
agrees that all Senior Debt shall be deemed to have been made, incurred and/or
continued at the request of the Undersigned and in reliance upon this Agreement.
The Undersigned agrees that Lender has made no warranties or representations
with respect to the due execution, legality, validity, completeness or
enforceability of the documents, instruments and agreements evidencing the
Senior Debt, that Lender shall be entitled to manage and supervise its financial
arrangements with Borrower in accordance with its usual practices, without
impairing or affecting this Agreement, and that Lender shall have no liability
to the Undersigned, and the Undersigned hereby waives any claim which it may now
or hereafter have against Lender arising out of (i) any and all actions which
Lender takes or omits to take (including without limitation actions with respect
to the creation, perfection or continuation of liens or security interests in
any existing or future Lender's Collateral, actions with respect to the
occurrence of an event of default under any documents, instruments or agreements
evidencing the Senior Debt, actions with respect to the foreclosure upon, sale,
release, or depreciation of, or failure to realize upon, any of Lender's
Collateral and actions with respect to the collection of any claim for all or
any part of the Senior Debt from any account debtor, guarantor or other person
or entity) with respect to the documents, instruments and agreements evidencing
the Senior Debt or to the collection of the Senior Debt or the valuation, use,
protection or release of Lender's Collateral (ii) Lender's election in any
proceeding instituted under Chapter 11 of Title 11 of United States Code (11
U.S.C. § 101 et. seq.) (the "Bankruptcy Code"), of the application of Section
1111(b)(2) of the Bankruptcy Code, and/or (iii) any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code by

 

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Borrower, as debtor-in-possession. Without limiting the generality of the
foregoing, the Undersigned waives the right to assert the doctrine of
marshalling with respect to any of the Lender's Collateral, and consents and
agrees that Lender may proceed against any or all of the Lender's Collateral in
such order as Lender shall determine in its sole discretion.

 

The Undersigned agrees that Lender, at any time and from time to time hereafter,
may enter into such agreements with Borrower as Lender may deem proper extending
the time of payment of or renewing or otherwise altering the terms of all or any
of the Senior Debt or affecting any of Lender's Collateral, and may sell or
surrender or otherwise deal with any of Lender's Collateral, and may release any
balance of funds of Borrower with Lender, without notice to the Undersigned and
without in any way impairing or affecting this Agreement.

 

This Agreement shall be irrevocable and shall constitute a continuing agreement
of subordination and shall be binding on the Undersigned and its heirs, personal
representatives, successors and assigns, and shall inure to the benefit of
Lender, its successors and assigns until Lender has, in writing, notified the
Undersigned that all of the Senior Debt has been paid in full and all
obligations arising in connection therewith have been discharged. Lender may
continue, without notice to the Undersigned, to lend monies, extend credit and
make other accommodations to or for the account of Borrower on the faith hereof.
The Undersigned hereby agrees that all payments received by Lender may be
applied, reversed, and reapplied, in whole or in part, to any of the Senior
Debt, without impairing or affecting this Agreement.

 

The Undersigned hereby assumes responsibility for keeping itself informed of the
financial condition of Borrower, any and all endorsers and any and all
guarantors of the Senior Debt and the Junior Debt and of all other circumstances
bearing upon the risk of nonpayment of the Senior Debt and the Junior Debt that
diligent inquiry would reveal, and the Undersigned hereby agrees that Lender
shall have no duty to advise the Undersigned of information known to Lender
regarding such condition or any such circumstances or to undertake any
investigation not a part of its regular business routine. If Lender, in its sole
discretion, undertakes, at any time or from time to time, to provide any
information of the type described herein to the Undersigned, Lender shall be
under no obligation to subsequently update any such information or to provide
any such information to the Undersigned on any subsequent occasion.

 

No waiver shall be deemed to be made by Lender of any of its rights hereunder
unless the same shall be in writing signed on behalf of Lender and each such
waiver, if any, shall be a waiver only with respect to the specific matter or
matters to which the waiver relates and shall in no way impair the rights of
Lender or the obligations of the Undersigned to Lender in any other respect at
any other time.

 

THIS AGREEMENT SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS.

 

To induce Lender to accept this Agreement, the Undersigned irrevocably agrees
that, subject to Lender's sole and absolute election, ALL ACTIONS OR PROCEEDINGS
IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS

 

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AGREEMENT SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO,
STATE OF ILLINOIS. THE UNDERSIGNED HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND
STATE. The Undersigned hereby irrevocably appoints and designates the Secretary
of State of Illinois, whose address is Springfield, Illinois (or any other
person having and maintaining a place of business in such state whom the
Undersigned may from time to time hereafter designate upon ten (10) days written
notice to Lender and who Lender has agreed in its sole discretion in writing is
satisfactory and who has executed an agreement in form and substance
satisfactory to Lender agreeing to act as such attorney and agent), as the
Undersigned's true and lawful attorney and duly authorized agent for acceptance
of service of legal process. The Undersigned agrees that service of such process
upon such person shall constitute personal service of such process upon the
Undersigned. THE UNDERSIGNED HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE UNDERSIGNED BY LENDER IN
ACCORDANCE WITH THIS PARAGRAPH.

 

THE UNDERSIGNED HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT.

 

IN WITNESS WHEREOF, this Agreement has been executed as of this 19th day of
July, 2005.

 

 

Fair Holdings, Inc.

 

 

By_____________________________

 

Title__________________________

 

 

 

Address:

 

 

815 East Market

 

 

Akron, Ohio 44305

 

 

 

 

 

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Rider to that Certain Subordination Agreement

dated as of July 19, 2005, and executed by

Fair Holdings Inc. (Undersigned) in favor of

LaSalle Business Credit, LLC (Lender) and consented

to by United ExpressLine, Inc. (Borrower)

 

Notwithstanding anything contained in the Agreement to the contrary, Borrower
may make and the Undersigned may receive and retain regularly scheduled payments
of interest pursuant to the Junior Debt Instruments on an unaccelerated basis
and payments of principal not to exceed $1,000,000.00 in the aggregate, provided
that (i) immediately before and after giving effect to such payment, Borrower
shall have “Excess Availability” under and as defined in that certain Loan and
Security Agreement entered into by and between Borrower and Lender dated as of
July 19, 2005, as it may be amended from time to time (the “Loan Agreement”) of
at least $300,000.00 and (ii) no “Event of Default” under and as defined in the
Loan Agreement has occurred or would occur as a result of any such payment.

 

 

Fair Holdings, Inc.

United ExpressLine, Inc.

 

By____________________

By_____________________

 

Title________________

Title_________________

 

 

 

 

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ACKNOWLEDGMENT OF SIGNATURES

 

STATE OF _____________________}

 

} SS

COUNTY OF ___________________}

 

I, ___________________________, a Notary Public in and for the state and county
aforesaid, so hereby certify that before me this day personally appeared
_______________________, known to me to be the _____________________________
__________ of Fair Holdings, Inc. that executed the foregoing Agreement, and as
his free and voluntary act, for the uses set forth therein.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this _____ day
of July, 2005.

 

 

____________________________________

 

Notary Public

 

 

 

My Commissions Expires: ______________

 

 

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BORROWER'S CONSENT

 

Borrower hereby consents to the foregoing Agreement (and the terms thereof) and
agrees to abide thereby and to keep, observe and perform the several matters and
things therein intended to be kept, observed and performed by it, and
specifically agrees not to make any payments contrary to the terms of said
Agreement.

 

A breach of any of the terms and conditions of this consent shall constitute an
"Event of Default" under the Loan and Security Agreement dated as of July 19,
2005 between Borrower and Lender.

 

 

 

UNITED EXPRESSLINE, INC.

 

 

By_____________________________

 

 

Title__________________________

 

 

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ACKNOWLEDGMENT OF SIGNATURES

 

STATE OF ILLINOIS}

 

} SS

COUNTY OF COOK}

 

I, Debra Addison, a Notary Public in and for the state and county aforesaid, so
hereby certify that before me this day personally appeared Anthony P. Schlichte,
known to me to be the Vice President of United ExpressLine, Inc. that executed
the foregoing Agreement, and as his free and voluntary act, for the uses set
forth therein.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 19th day
of July, 2005.

 

 

____________________________________

 

Notary Public

 

 

 

My Commissions Expires: ______________

 

 

 

 

 

 

 

 

 

 

da(m:dept\lbci\legal\fenton group\lbci-llcl\United
Expressline\loandocs\Subordination Agreement Fair Holdings.

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