FIFTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
This Fifth Amendment to Amended and Restated Loan Agreement
("Amendment"), dated as of December ____, 2008 is between GULF
LINE TRANSPORT LLC., an Indiana limited liability company, formerly
known as Gulf Line Transport, Inc. ("Gulf Line"); FIVE STAR
TRANSPORT, LLC., an Indiana limited liability company, formerly
known as Five Star Transport, Inc. ("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, LLC, an Indiana limited liability
company, formerly known as Friendly Transport, Inc. ("Friendly");
TRANSPORT LEASING, INC., an Arkansas corporation ("Transport
Leasing"); KEYSTONE LINES, a California corporation ("Keystone
Lines"); HARBOR BRIDGE INTERMODAL, INC., an Indiana corporation
("Harbor"); PATRIOT LOGISTICS, INC., an Indiana corporation
("Patriot"); LIBERTY TRANSPORT, INC., an Indiana corporation
("Liberty"); KEYSTONE LINES CORP., an Indiana corporation, formerly
known as Keystone Lines Corporation ("Keystone"), TC SERVICES, INC.,
an Indiana corporation ("TC Services"); KEYSTONE LOGISTICS, INC., an
Indiana corporation ("Keystone Logistics"); CAROLINA NATIONAL
TRANSPORTATION LLC, an Indiana limited liability company ("Carolina
National"); CAROLINA NATIONAL LOGISTICS, INC., an Indiana corporation
("Carolina Logistics"); FREEDOM 1 LLC, an Indiana limited liability
company, formerly known as Freedom Logistics, LLC ("Freedom");
THUNDERBIRD LOGISTICS, LLC, an Indiana limited liability company
("Thunderbird Logistics"); THUNDERBIRD MOTOR EXPRESS, LLC, an
Indiana limited liability company ("Thunderbird Motor"); US 1
LOGISTICS, LLC, an Indiana limited liability company ("US 1
Logistics") and US 1 INDUSTRIES, INC., an Indiana corporation
("Industries"). (Gulf Line, Five Star, CAM, Unity, ERX, Friendly,
Transport Leasing, Keystone Lines, Harbor, Patriot, Liberty,
Keystone, TC Services, Keystone Logistics, Carolina National,
Carolina Logistics, Freedom, Thunderbird Logistics, Thunderbird
Motor, US 1 Logistics, and Industries are hereinafter each
referred to each as a "Borrower Entity", and collectively as the
"Borrower"); and U.S. BANK, a national banking association
("Lender"). Capitalized terms not defined herein have the
meanings ascribed to them in the Existing Loan Agreement, as
that term is defined herein.
PRELIMINARY STATEMENT:
All Borrower Entities have previously entered into an
Amended and Restated Loan Agreement with Lender dated as of
March 10, 2005, as amended by (i) that certain Amendment to
Amended and Restated Loan Agreement dated as of May 5, 2005,
(ii) that certain Second Amendment to Amended and Restated
Loan Agreement dated as of September 30, 2005, (iii) that
certain Third Amendment to Amended and Restated Loan Agreement
dated July 12, 2007, and (iv) that certain Fourth Amendment to
Amended and Restated Loan Agreement dated March 25, 2008 (the
Amended and Restated Loan Agreement as so amended, the "Existing
Loan Agreement," and, as amended by this Amendment, the "Loan
Agreement").
Lender has agreed to loan an additional $7,000,000 under
the existing Revolving Line of Credit provided the following
actions are taken and the following provisions are changed in
the Existing Loan Agreement:
(i) Borrower pays a closing fee of $35,000,
(ii) This interest rate is changed to a LIBOR rate from a Prime
Rate,
(iii) Harold Antonson and Michael Kibler provide Limited Personal
Guaranties as provided hereunder,
(iv) Certain additional entities are added as a Borrower Entity
under the Loan Agreement,
(v) The seller of membership interests of ARL Transport LLC, a
Delaware limited liability company, ("ARL") to Borrower
subordinates its right to any earn-outs or installment payments
to the security interest of Lender.
NOW, THEREFORE, it is hereby agreed as follows:
1. Each Borrower Entity and Guarantor represent and
warrant that no Event of Default or Incipient Default (as
defined in the Loan Agreement) exists or will occur as a result
of the execution of and performance under this Amendment 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 definitions in Section 1.1 of the Existing Loan
Agreement are added or amended and restated in their entirety to
read as follows:
"Borrower" means Carolina National Transportation LLC., an
Indiana limited liability company; Carolina National Logistics,
Inc., an Indiana corporation, Gulf Line Transport LLC, an Indiana
limited liability company; Five Star Transport, LLC, an Indiana
limited liability company, Cam Transport, Inc., an Indiana
corporation; Unity Logistic Services Inc., an Indiana limited
liability company, ERX, Inc., an Indiana corporation; Friendly
Transport, LLC., an Indiana limited liability company; Transport
Leasing, Inc., an Arkansas corporation; Keystone Lines, a
California corporation; Harbor Bridge Intermodal, Inc., an
Indiana corporation; Patriot Logistics, Inc., an Indiana
corporation; Liberty Transport, Inc., an Indiana corporation;
Keystone Lines Corp., an Indiana corporation, TC Services, Inc.,
an Indiana corporation, Keystone Logistics, Inc., an Indiana
corporation, Freedom 1 LLC, an Indiana limited liability company,
Thunderbird Logistics, LLC, an Indiana limited liability company,
Thunderbird Motor Express, LLC, an Indiana limited liability
company, Blue & Grey Transport Company, Inc., an Indiana
corporation, Freightmaster USA, LLC, an Indiana limited liability
company, US 1 Corp., an Indiana corporation, Antler Transport,
LLC, an Indiana limited liability company, Bruin Express Intermodal
LLC, an Indiana limited liability company, Risk Insurance Services
of Indiana, LLC, an Indiana limited liability company, TC
Administrative Services, Inc., a California corporation, ARL
Transport LLC, a Delaware limited liability company; AFT Transport,
LLC, a Delaware limited liability company; US1 Logistics, LLC, an
Indiana limited liability company, US 1 Industries, Inc., an Indiana
corporation, and such other entities or controlled by any of the
foregoing which elect to be designated as a Borrower hereunder in
writing on terms satisfactory to Lender, and to which Lender agrees
in writing to extend credit hereunder and to designate as an
additional Borrower.
"Borrower Entity" means each of the entities which comprise
Borrower.
"Collateral Assignment of Membership Interest Purchase
Agreement" means that certain Collateral Assignment of Membership
Interest Purchase Agreement executed by Industries in favor of Lender
and consented to by ARL, Inc. and others.
"Collateral and Pledge of Membership Interest" means that
certain Collateral and Pledge of Membership Interest executed by
Industries in favor of Lender and consented to by ARL, Inc. and
Aficionado Transfer, Inc.
"EBITDA" for any period, without duplication, the Net
Income of Borrower and Industries for such period:
(a) plus the sum of the following to the extent deducted in
determining such Net Income for such period:
(i) losses from sales, exchanges, and other dispositions of
Property not in the ordinary course of business;
(ii) interest paid or accrued on Indebtedness, including,
without limitation, interest on Capitalized Leases that is
imputed in accordance with GAAP;
(iii) depreciation and amortization of assets during such period;
(iv) charges against net income for taxes; and
(v) minority shareholder interest expense.
(b) minus gains from sales, exchanges and other dispositions of
Property or other extraordinary gains not in the ordinary course
of business.
"Industries"- US 1 Industries, Inc.
"Loan Instruments":
(i) Loan Agreement;
(ii) Revolving Loan Note;
(iii) Security Instruments;
(iv) Closing Certificate;
(v) Subordination Agreement;
(vi) Personal Guaranties;
(vii) Standby Letter of Credit;
(viii) Application and Agreement for Standby Letter of Credit;
(ix) Continuing Reimbursement Agreement for Standby Letters of
Credit;
(x) Collateral Assignment of Membership Interest Purchase
Agreement;
(xi) Collateral and Pledge of Membership Interest;
(xii) Any swap or other hedging agreements entered into by any of
Borrower and Lender or an affiliate of Lender; and
(xiii) 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.
"One Month LIBOR" means the one-month LIBOR rate quoted by Bank
from Reuters Screen LIBOR01 Page or any successor thereto, which shall
be that one-month LIBOR rate in effect and reset each New York Banking
Day, adjusted for any reserve requirement and any subsequent costs
arising from a change in government regulation, such rate rounded up to
the nearest one-sixteenth percent. The term "New York Banking Day" means
any day (other than a Saturday or Sunday) on which commercial banks are
open for business in New York, New York. Bank's internal records of
applicable interest rates shall be determinative in the absence of manifest
error
"Permitted Subordinated Indebtedness" means the indebtedness of
US 1 Industries, Inc. to ARL, Inc., which in no event shall be more than
$2,000,000 which the holder of such indebtedness has agreed to subordinate
to the senior rights of Lender, pursuant to a Subordination Agreement of
even date between Lender and the holders of such indebtedness.
"Revolving Loan Commitment": $22,000,000
"Revolving Loan Note" the promissory note executed by Borrower
payable to the order of Lender in the amount of the Revolving Loan
Commitment, dated as of April 18, 2000, and as amended and restated as
of June 12, 2000, December 7, 2000, October 15, 2001, May 1, 2002,
August 1, 2002, March 21, 2003, October 1, 2003, July 12, 2007,
March 25, 2008, and December ____, 2008.
"Unsubordinated Indebtedness": the sum of Borrower's Obligations
and the Permitted Senior Indebtedness.
3. Section 2.3.1 of the Existing Loan Agreement is hereby amended
and restated in its entirety to read as follows:
If the ratio of The interest rate charged
Unsubordinated effective the first day
Indebtedness to of the next quarter shall
EBITDA is: be equal to:
= 2.50 to 1 One Month LIBOR in effect from time to
time, plus 4.35% per annum
= 2.00 to 1, One Month LIBOR in effect from time to
< 2.50 to 1 time, plus 3.85% per annum
< 2.00 to 1 One Month LIBOR in effect from time to
time, plus 3.35% per annum
4. Section 2.3.4 is hereby amended and restated in its entir1.ety to
read as follows.
"2.3.4 Increased Costs.
If, after the Closing Date, either (i) any change in or in the
interpretation of any law or regulation is introduced (other than changes
in taxation of the net income of Lender), including, without limitation,
with respect to reserve requirements applicable to Lender, (ii) any stamp or
similar tax, levy or charges are imposed, assessed, levied or collected on or
in respect of the credit extended pursuant to this agreement, solely as a
result of the interest hereunder being determined by reference to the One-Month
LIBOR Rate ("LIBOR Rate Taxes"); provided, however, that LIBOR Rate Taxes shall
not include taxation of the net income of Lender; (iii) Lender complies with
any future guideline or request from any central bank or other Government Body
proposed or promulgated after the Closing Date; or (iv) Lender determines that
the adoption of any applicable law, rule or regulation (other than changes in
taxation of the net income of Lender) regarding capital adequacy or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof announced after the Closing Date has
or would have the effect described below, or Lender complies with any request
or direction regarding capital adequacy (whether or not having the force of
law) of any such Governmental Body, central bank or comparable agency announced
after the Closing Date and in case of any event set forth in this clause (iii),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any of Lender's capital as a
consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Lender's policies with respect to capital adequacy) by an amount
deemed by Lender to be material, and any of the foregoing events described in
clauses (i), (ii), (iii) or (iv) increases the cost to Lender of (A) funding
or maintaining the Revolving Loan or the Revolving Loan Commitment, or (B)
issuing, causing the issuance of making or maintaining any Letter of Credit,
or reduces the amount receivable in respect thereof by Lender, then Borrower
shall upon demand by Lender at any time within 180 days after the date on
which an officer of Lender responsible for overseeing this Loan Agreement
knows or has reason to know of its right to additional compensation under
this subsection 2.3.4, pay to Lender additional amounts sufficient to
reimburse Lender against such increase in cost or reduction in amount
receivable; provided, however, such entity shall only be entitled to
additional compensation for any such costs incurred from and after the
date that is thirty (30) days prior to the date Borrower receives such demand.
A certificate as to the amount of such increased cost, and setting forth in
reasonable detail the calculation thereof, shall be submitted to Borrower by
Lender, and shall be conclusive absent manifest error. Lender will promptly
notify Borrower of any event of which it has knowledge that would entitle
Lender to additional compensation under this subsection 2.3.4. Lender
shall not request any additional compensation under this subjection 2.3.4
unless it is generally making similar requests of other borrowers similarly
situated, and Lender agrees to use a reasonable basis for calculating
amounts allocable to the Revolving Loan Commitment."
5. Section 7.20 is hereby amended and restated in its entirety to read
as follows:
"Fail to maintain a minimum debt service ratio for US 1 Industries,
Inc. ("Industries") and its subsidiaries (on a consolidated basis) of 1.25:1
based on a rolling four (4) quarter average, to be calculated as follows:
(1) the sum of: (x) Net Income before (i) taxes, (ii) minority interest
expense, (iii) depreciation and (iv) amortization expense, (v) other
interest expense, and (vi) rent and lease expense, less (y) taxes paid,
distributions made, and cash dividends paid divided by (2) the sum of: (i)
current maturity of long term debt (including all payments with respect to
the Permitted Subordinated Indebtedness, but only to the extent actually
paid by Industries or any Borrowers), (ii) interest expense, and (iii) rent
and lease expense. For the purposes of testing the minimum debt service
ratio, "interest expense" in the denominator shall be defined as interest
expense of Unsubordinated Indebtedness plus interest actually paid on
Permitted Subordinated Indebtedness. For the purposes of testing the
minimum debt service ratio, "rent and lease expense" shall mean all
amounts payable to any landlords and lessors by any Borrower Entity for
the use of any real or personal property."
6. Each Borrower Entity, by execution of this Amendment, agrees and
confirms that "Borrower's Obligations" for purposes of the Security Agreements
it has entered into with Lender are Borrower's Obligations, as modified by this
Amendment and the amended Revolving Loan Note executed simultaneously
herewith. In the event that any Borrower Entity has not signed a Security
Agreement, such Borrower Entity hereby pledges all of such Borrower Entity's
goods, machinery, equipment, inventory, accounts and general tangibles and
intellectual property to secure Borrowers' Obligations as modified by this
Amendment and the amended Revolving Loan Note executed simultaneously
herewith.
7. Simultaneously with the execution hereof, Borrower shall deliver to
Lender the following, duly executed by the parties thereto other than Lender:
(i) The Revolving Loan Note, dated as of December 12, 2008, in the form
attached hereto as Exhibit A;
(ii) Personal Guaranties of Michael Kibler and Harold Antonson in the forms and
attached hereto as Exhibits B-1 and B-2;
(iii) Certified Resolutions of the Board of Directors of each Borrower Entity
and US1 Industries, Inc. authorizing the execution and delivery and performance
of this Amendment and other documents referred to herein;
(iv) An opinion letter from Borrower's legal counsel in a form reasonably
satisfactory to Lender's counsel regarding authorization, execution and
delivery of this Amendment and the documents referenced herein;
(v) Copies of the Articles of Incorporation or Organization, as the case may
be, of, and Certificates of Good Standing for, each Borrower Entity
certified by the Secretary of State for the state in which such Borrower
Entity is incorporated or organized; and
(vi) Security Agreements for Five Star, Friendly, Freedom, Gulf Line, Carolina
National Logistics, Inc., an Indiana corporation ("Carolina Logistics"), Blue &
Grey Transport Company, Inc., an Indiana corporation ("Blue & Grey"),
Freightmaster USA, LLC. an Indiana limited liability company ("Freightmaster"),
US 1 Corp., an Indiana corporation ("US 1 Corp"); Antler Transport, LLC, an
Indiana limited liability company ("Antler"), Bruin Express Intermodal, LLC, an
Indiana limited liability company ("Bruin"), Risk Insurance Services of
Indiana, LLC, an Indiana limited liability company ("Risk"), TC Administrative
Services, Inc., a California corporation ("TC"), and Industries in the forms
attached hereto as Exhibits C-1, C-2, C-3, C-4, C-5, C-6, C-7, C-8, C-9,
C-10, C-11, C-12, C-13 signed by the respective Borrower Entity.
Industries hereby designates each of the entities listed in paragraph
(vii) above as entities to be included as a Borrower Entity comprising, along
with other entities, Borrower under the Loan Agreement.
8. Notwithstanding the limitations set forth in Section 2.2 of the Loan
Agreement, Lender hereby consents to the use of the proceeds of the Revolving
Loan for the purpose of acquiring from ARL, Inc. ("Seller") 60% of the
membership interests in ARL, consistent with the terms of the Membership
Interest Purchase Agreement dated December 12, 2008, between Seller, Industries
and others (the "Purchase Agreement"), and hereby grants its consent to such
acquisition in accordance with the terms of Section 7.3 of the Loan Agreement,
subject to the satisfaction of the following prior to or simultaneously with
the Advance of the Revolving Loan for such purpose:
(a) Evidence satisfactory to Lender of (i) the acquisition of 60% of the
membership interests in ARL on terms and conditions acceptable to the Lender,
including copies of the fully-executed purchase agreement and closing documents
provided for therein, (ii) the contributions of the assets of Seller and
Aficionado Transport, Inc. to ARL and AFT Transport LLC ("AFT"), respectively,
and (iii) the contribution of all of the membership interests in AFT to ARL.
(b) Delivery of Security Agreements in the forms attached hereto as Exhibits
D-1 and D-2 executed by ARL and AFT;
(c) Execution and delivery of the Revolving Loan Note by ARL and AFT;
(d) Delivery of evidence including certified copies of board of directors'
resolutions showing authorization by ARL and AFT of the execution and delivery
of the Revolving Loan Note, and of the Security Agreements to be executed by
those said entities and Lender; and the pledge of collateral provided for
therein;
(e) Payoff letters from Marquette Transportation Finance, Inc. ("Marquette")
and Enterprise Bank ("Enterprise") in forms satisfactory to Lender;
(f) Execution and delivery of an Assumption Agreement by ARL, AFT, Five Star,
Friendly, Freedom, Gulf Line, Carolina Logistics, Blue & Grey, Freightmaster,
US1 Corp., Antler, Bruin, Risk, TC, and Industries in the form attached hereto
as Exhibit E;
(g) Execution and delivery of a Collateral Assignment of the Purchase Agreement
signed by Industries and Seller in the form attached hereto Exhibit F;
(h) Delivery of a Subordination Agreement signed by Seller in the form attached
hereto as Exhibit G;
(i) Delivery of a Collateral Assignment and Pledge of Membership Interest in
the form attached hereto as Exhibit H.
(j) Copies of Articles of Organization for ARL and AFT certified by the State
of Delaware dated as of a date no earlier than December 1, 2008;
(k) Good Standing Certificates from the State of Delaware for ARL and AFT
dated as of a date not earlier than December 1, 2008;
(l) An opinion letter from counsel for the owners of ARL and AFT in form and
substance satisfactory to the Lender covering such matters as Lender may
reasonably request regarding the contribution of assets to ARL and AFT and the
contribution of the membership interests in AFT and ARL, and the Industries'
purchase of the aforesaid membership interests;
(m) Satisfaction of all other conditions to Advances of the Revolving Loan as
provided in Section 2.1.4 of the Loan Agreement; and
(n) The amount of such Advance shall not exceed the amount required to pay off
old debt for borrowed money of ALR, Inc. and Aficionado Transport, Inc., plus
the cash portion of the purchase price payable at closing under the Purchase
Agreement and may be made directly to Marquette and Enterprise, and Seller.
Such payment shall constitute an Advance (as defined in the Loan Agreement)
of the Revolving Loan (as defined in the Loan Agreement). Industries hereby
directs that such Advance be made by such direct payment to Marquette,
Enterprise and Seller.
Industries hereby designates ARL, AFT, Five Star, Friendly, Freedom, Gulf
Line, Carolina Logistics, Blue & Grey, Freightmaster, US 1 Corp, Antler, Bruin,
Risk, TC and Industries as entities to be included as Borrower Entities
comprising Borrower under the Loan Agreement.
9. The parties hereto agree that by execution of the Assumption
Agreement (attached hereto as Exhibit F), ARL and AFT shall be deemed and
shall be made parties to the Loan Agreement as amended hereby and shall each
be an additional Borrower Entity (as that term is defined herein) and
included within Borrower (as that term is defined in the Loan Agreement).
10. Except as expressly amended hereby, the terms and conditions
of the Loan Agreement as originally set forth therein shall remain in full
force and effect.
11. All references to the "Loan Agreement" and other terms defined
in the Existing Loan Agreement shall be deemed to take account of the
Existing Loan Agreement, as amended by this Amendment.
12. Borrower 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 both prior
and subsequent to the closing of the transactions contemplated herein, as well
as 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. Borrower shall also pay a $35,000 loan closing fee to
Lender at the time of the funding of the loan contemplated herein.
13. From time to time, Borrowers 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.
14. 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 and Lender have
signed this Amendment to Amended and Restated Loan Agreement as of the date
first above written.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
CAROLINA NATIONAL LOGISTICS, INC.
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
GULF LINE TRANSPORT LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
FIVE STAR TRANSPORT, LLC,
an Indiana limited liability company
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, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: __________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: __________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
KEYSTONE LINES CORP.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
TC SERVICES, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
KEYSTONE LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
CAROLINA NATIONAL TRANSPORTATION LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
FREEDOM 1, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
THUNDERBIRD LOGISTICS, LLC.,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
THUNDERBIRD MOTOR EXPRESS, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
US 1 LOGISTICS, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
US 1 INDUSTRIES, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
U.S. BANK
a national banking association
By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
REVOLVING LOAN NOTE
$22,000,000.00 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
Further Amended and Restated as of July 12, 2007
Further Amended and Restated as of March 25, 2008
Further Amended and Restated as of December ___, 2008
FOR VALUE RECEIVED, the undersigned, GULF LINE TRANSPORT LLC, an
Indiana limited liability company, formerly known as Gulf Line Transport,
Inc. ("Gulf Line"); FIVE STAR TRANSPORT, LLC, an Indiana limited liability
company, formerly known as Five Star Transport, Inc. ("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, LLC, an Indiana limited liability company,
formerly known as 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. ("Harbor"); PATRIOT LOGISTICS, INC., an Indiana
corporation ("Patriot"); LIBERTY TRANSPORT, INC., an Indiana corporation
("Liberty"); KEYSTONE LINES CORP., an Indiana corporation, formerly known
as Keystone Lines Corporation ("Keystone"); TC SERVICES, INC., an Indiana
corporation ("TC Services"); KEYSTONE LOGISTICS, INC., an Indiana
corporation ("Keystone Logistics"); CAROLINA NATIONAL TRANSPORTATION LLC,
an Indiana limited liability company ("Carolina National"); CAROLINA
NATIONAL LOGISTICS, INC., an Indiana corporation ("Carolina Logistics"),
KEYSTONE LINES, a California corporation ("Keystone Lines") FREEDOM 1 LLC,
an Indiana limited liability company, formerly known as Freedom Logistics,
LLC ("Freedom"); THUNDERBIRD LOGISTICS, LLC, an Indiana limited liability
company ("Thunderbird Logistics"); THUNDERBIRD MOTOR EXPRESS, LLC, an
Indiana limited liability company ("Thunderbird Motor"); US 1 LOGISTICS,
LLC, an Indiana limited liability company ("US 1 Logistics"; BLUE & GREY
TRANSPORT COMPANY, INC., an Indiana corporation ("Blue & Grey");
FREIGHTMASTER USA, LLC, an Indiana limited liability company
("Freightmaster"); US 1 CORP., an Indiana corporation ("US 1 Corp");
ANTLER TRANSPORT, LLC, an Indiana limited liability company ("Antler");
BRUIN EXPRESS INTERMODAL, LLC, an Indiana limited liability company
("Bruin"); RISK INSURANCE SERVICES OF INDIANA, LLC, an Indiana limited
liability company ("Risk"); TC ADMINISTRATIVE SERVICES, INC., a
California corporation ("TC"); ARL TRANSPORT LLC, a Delaware limited
liability company ("ARL"); and AFT TRANSPORT, LLC, a Delaware limited
liability company ("AFT"); US 1 INDUSTRIES, INC. ("Industries");
(Gulf Line, Five Star, Cam, Unity, ERX, Friendly, Transport Leasing,
Transport Logistics, Harbor, Patriot, Liberty, Keystone, TC Services,
Keystone Logistics, Carolina National, Keystone Lines, Freedom,
Thunderbird Logistics, Thunderbird Motor, US 1 Logistics, Blue & Grey,
Freightmaster, US1 Corp., Antler, Bruin, Risk, TC, ARL, AFT and
Industries are hereinafter collectively referred to as "Maker"), hereby
promise, jointly and severally, to pay to the order of U.S. BANK, a
national banking association, formerly known as FIRSTAR BANK N.A.
("Lender"), the principal sum of TWENTY TWO MILLION AND NO/100ths
DOLLARS ($22,000,000.00), 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 Amended and Restated Loan
Agreement dated March 10, 2005, and amended as of May 5, 2005, September
30, 2005, July 12, 2007, March 25, 2008, and as of the date hereof (as
the same may be amended, modified, supplemented or restated from time to
time, the "Loan Agreement") between Maker, and Lender, at the office of
Lender at 209 S. LaSalle St., Suite 410, Chicago, Illinois 60604, 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 be due and
payable in full on the Revolving Loan Maturity Date and 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 10.1 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 and restates in its entirety, and
supercedes a Revolving Loan Note, dated March 25, 2008, which amended and
restated a Revolving Loan Note, dated July 12, 2007, in the principal face
amount of $15,000,000, which amended and restated Revolving Loan Note, dated
October 1, 2003, which amended and restated a Revolving Loan Note, dated
March 21, 2003, in the principal face amount of $10,000,000, 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.
This Revolving Loan Note may be executed by the parties hereto in
several counterparts and each such counterpart shall be deemed an original,
but all such counterparts together shall together constitute one and the same
agreement.
The remainder of this page left blank intentionally.
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.
GULF LINE TRANSPORT LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
FIVE STAR TRANSPORT, LLC,
an Indiana limited liability company
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, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
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: __________________________
TC SERVICES, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
KEYSTONE LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
CAROLINA NATIONAL TRANSPORTATION LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
KEYSTONE LINES,
a California corporation
By: _____________________________
Name: ___________________________
Title: __________________________
FREEDOM 1, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
THUNDERBIRD LOGISTICS, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
THUNDERBIRD MOTOR EXPRESS, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
US 1 LOGISTICS, LLC,
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
CAROLINA NATIONAL LOGISTICS, INC.
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
ARL TRANSPORT LLC,
a Delaware limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
AFT TRANSPORT LLC,
a Delaware limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
BLUE & GREY TRANSPORT COMPANY, INC.
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
FREIGHTMASTER USA, LLC
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
US 1 CORP.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: __________________________
ANTLER TRANSPORT, LLC
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
BRUIN EXPRESS INTERMODAL, LLC
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
RISK INSURANCE SERVICES OF INDIANA, LLC
an Indiana limited liability company
By: _____________________________
Name: ___________________________
Title: __________________________
TC ADMINISTRATIVE SERVICES, INC.
a California corporation
By: _____________________________
Name: ___________________________
Title: __________________________
US 1 INDUSTRIES, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
Date: December ____, 2008
EXHIBIT B-1
LIMITED PERSONAL GUARANTY
The undersigned, Harold Antonson ("Guarantor"), does hereby
absolutely and unconditionally, subject to the limitation as to
amount set forth below, guarantee to U.S. Bank, a national banking
association ("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, originally dated
April 18, 2000, and subsequently amended and restated from time to
time and further amended and restated as of December ____, 2008, in
the principal amount of $22,000,000, all executed by Carolina
National Transportation LLC, an Indiana limited liability company
("Carolina National"), Carolina National Logistics, Inc., an Indiana
corporation ("Carolina Logistics"), Keystone Lines Corp., an Indiana
corporation ("Keystone"), Gulf Line Transport LLC, an Indiana limited
liability company ("Gulf Line"), Five Star Transport, LLC, an Indiana
limited liability company ("Five Star"), CAM Transport, Inc., an
Indiana corporation, Unity Logistic Services Inc., an Indiana
corporation ("Unity"), ERX, Inc., an Indiana corporation ("ERX"),
Friendly Transport, LLC, an Indiana limited liability company
("Friendly"), Keystone Lines, a California corporation ("Keystone
Lines"), Harbor Bridge Intermodal, Inc., an Indiana corporation
("Harbor"), Patriot Logistics, Inc., an Indiana corporation
("Patriot"), Liberty Transport, Inc., an Indiana corporation
("Liberty"), TC Services, Inc., an Indiana corporation "TC
Services"), Keystone Logistics, Inc., an Indiana corporation
("Keystone Logistics"), Freedom 1, LLC, an Indiana limited liability
company, ("Freedom"), Thunderbird Logistics, LLC, an Indiana limited
liability company ("Thunderbird Logistics"), Thunderbird Motor
Express, LLC, an Indiana limited liability company ("Thunderbird
Motor"), US 1 Logistics, an Indiana limited liability company ("US 1"),
Blue & Grey Transport Company, Inc., an Indiana corporation ("Blue &
Grey"), Freightmaster USA, LLC, an Indiana limited liability company
("Freightmaster"), US 1 Corp., an Indiana corporation ("US 1 Corp");
Antler Transport, LLC, an Indiana limited liability company ("Antler"),
Bruin Express Intermodal, LLC, an Indiana limited liability company
("Bruin"), Risk Insurance Services of Indiana, LLC, an Indiana limited
liability company ("Risk"), TC Administrative Services, Inc., a
California corporation ("TC"), ARL Transport, LLC, a Delaware limited
liability company ("ARL"), AFT Transport, LLC, a Delaware limited
liability company ("AFT"), Transport Leasing, Inc., an Arkansas
corporation ("Transport Leasing"), US 1 Logistics, LLC, an Indiana
limited liability company ("US 1 Logistics"), and US 1 Industries,
Inc., an Indiana corporation ("Industries") (Carolina National,
Carolina Logistics, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly, Transport Leasing, US 1 Logistics, Harbor, Patriot, Liberty,
TC Services, Keystone Logistics, Freedom, Thunderbird Logistics,
Thunderbird Motor, US 1, Blue & Grey, Freightmaster, US 1 Corp., Antler,
Bruin, Risk, TC, ARL, AFT and Industries 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 hereinafter
referred to as the "Note") and (ii) prompt performance and payment of
all of Borrowers' Obligations (as defined in that certain Amended and
Restated Loan Agreement dated March 10, 2005, as amended as of May 5,
2005, further amended as of September 30, 2005, further amended as of
July 12, 2007, and further amended as on March 25, 2008, and further
amended as of the date hereof 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 Note in
favor of Lender and Borrower's 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.
Guarantor shall annually at Lender's request provide Lender with a
personal financial statement.
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: US Bank,
209 S. LaSalle Street
Suite 410
Chicago, IL 60604
Fax: (312) 325-8750
With a copy to
its attorneys: John A. Washburn
Gould & Ratner LLP
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 236-3241
Guarantor: Harold Antonson
336 W. US Highway 30
Valparaiso, Indiana 46385
Fax: (219) 476-1327
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
600 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other overnight
courier; or (iii) delivered by facsimile provided a hard copy of any such
notice delivered by facsimile is delivered to the addressee within one
business day thereafter by either of the methods listed in (i) or (ii) above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
Chicago, Illinois
_________________________
Harold Antonson
Date: December ____, 2008
EXHIBIT B-2
LIMITED PERSONAL GUARANTY
The undersigned, Harold Antonson ("Guarantor"), does hereby
absolutely and unconditionally, subject to the limitation as to
amount set forth below, guarantee to U.S. Bank, a national banking
association ("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, originally dated
April 18, 2000, and subsequently amended and restated from time to
time and further amended and restated as of December ____, 2008, in
the principal amount of $22,000,000, all executed by Carolina
National Transportation LLC, an Indiana limited liability company
("Carolina National"), Carolina National Logistics, Inc., an Indiana
corporation ("Carolina Logistics"), Keystone Lines Corp., an Indiana
corporation ("Keystone"), Gulf Line Transport LLC, an Indiana limited
liability company ("Gulf Line"), Five Star Transport, LLC, an Indiana
limited liability company ("Five Star"), CAM Transport, Inc., an
Indiana corporation, Unity Logistic Services Inc., an Indiana
corporation ("Unity"), ERX, Inc., an Indiana corporation ("ERX"),
Friendly Transport, LLC, an Indiana limited liability company
("Friendly"), Keystone Lines, a California corporation ("Keystone
Lines"), Harbor Bridge Intermodal, Inc., an Indiana corporation
("Harbor"), Patriot Logistics, Inc., an Indiana corporation
("Patriot"), Liberty Transport, Inc., an Indiana corporation
("Liberty"), TC Services, Inc., an Indiana corporation ("TC
Services"), Keystone Logistics, Inc., an Indiana corporation
("Keystone Logistics"), Freedom 1, LLC, an Indiana limited liability
company, ("Freedom"), Thunderbird Logistics, LLC, an Indiana limited
liability company ("Thunderbird Logistics"), Thunderbird Motor
Express, LLC, an Indiana limited liability company ("Thunderbird
Motor"), US 1 Logistics, an Indiana limited liability company ("US 1"),
Blue & Grey Transport Company, Inc., an Indiana corporation ("Blue &
Grey"), Freightmaster USA, LLC, an Indiana limited liability company
("Freightmaster"), US 1 Corp., an Indiana corporation ("US 1 Corp");
Antler Transport, LLC, an Indiana limited liability company ("Antler"),
Bruin Express Intermodal, LLC, an Indiana limited liability company
("Bruin"), Risk Insurance Services of Indiana, LLC, an Indiana limited
liability company ("Risk"), TC Administrative Services, Inc., a
California corporation ("TC"), ARL Transport, LLC, a Delaware limited
liability company ("ARL"), AFT Transport, LLC, a Delaware limited
liability company ("AFT"), Transport Leasing, Inc., an Arkansas
corporation ("Transport Leasing"), US 1 Logistics, LLC, an Indiana
limited liability company ("US 1 Logistics"), and US 1 Industries,
Inc., an Indiana corporation ("Industries") (Carolina National,
Carolina Logistics, Keystone, Gulf Line, Five Star, Unity, ERX,
Friendly, Transport Leasing, US 1 Logistics, Harbor, Patriot, Liberty,
TC Services, Keystone Logistics, Freedom, Thunderbird Logistics,
Thunderbird Motor, US 1, Blue & Grey, Freightmaster, US 1 Corp., Antler,
Bruin, Risk, TC, ARL, AFT and Industries 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 hereinafter
referred to as the "Note") and (ii) prompt performance and payment of
all of Borrowers' Obligations (as defined in that certain Amended and
Restated Loan Agreement dated March 10, 2005, as amended as of May 5,
2005, further amended as of September 30, 2005, further amended as of
July 12, 2007, and further amended as on March 25, 2008, and further
amended as of the date hereof 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 Note in
favor of Lender and Borrower's 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.
Guarantor shall annually at Lender's request provide Lender with a
personal financial statement.
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: US Bank,
209 S. LaSalle Street
Suite 410
Chicago, IL 60604
Fax: (312) 325-8750
With a copy to
its attorneys: John A. Washburn
Gould & Ratner LLP
222 N. LaSalle Street
Suite 800
Chicago, IL 60601
Fax: (312) 236-3241
Guarantor: Michael Kibler
336 W. US Highway 30
Valparaiso, IN 46385
Fax: (219) 476-1327
With a copy to W. Brinkley Dickerson, Jr.
his attorneys: Troutman Sanders, L.L.P.
600 Peachtree Street
Atlanta, Georgia 30342
Fax: (404) 885-3827
Notices shall be deemed properly delivered and received when and if
(i) personally delivered; (ii) delivered by Federal Express or other overnight
courier; or (iii) delivered by facsimile provided a hard copy of any such
notice delivered by facsimile is delivered to the addressee within one
business day thereafter by either of the methods listed in (i) or (ii) above.
This Guaranty shall (i) bind the undersigned and their successors and
assigns, (ii) inure to the benefit of Lender, its successors and assigns and
(iii) be governed by the internal laws of the State of Illinois.
Chicago, Illinois
_________________________
Michael Kibler
EXHIBIT C-1
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
FIVE STAR TRANSPORT, LLC, a Indiana limited liability company ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection
with which there is no default with respect to any material payment or
material performance on the part of Borrower, or, to the best of
Borrower's knowledge, any other party. With respect to any Intellectual
Property Collateral of Borrower the loss, impairment or infringement of
which singly or in the aggregate could reasonably be expected to have a
Material Adverse Effect: (i) such Intellectual Property Collateral is
subsisting and has not been adjudged invalid or unenforceable, in whole or
in part, (ii) such Intellectual Property Collateral is valid and
enforceable, (iii) Borrower has made all filings and recordations
necessary in the exercise of reasonable and prudent business judgment to
protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: FIVE STAR TRANSPORT, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: __________________________
Address: US BANK , a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-2
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
FRIENDLY TRANSPORT, LLC, an Indiana limited liability company ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: FRIENDLY TRANSPORT, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT B
1. Citicorp Vendor Finance, Inc. ("Citicorp") has a lien,
filed August 10, 2006, on phone equipment being leased by ARL pursuant
to Equipment Lease No. 200216192, by and among ARL, Patriarch Capital
Finance, LLC (as co-lessee), and Citicorp.
2. Van Dyk Business Systems has liens, filed on June 22,
2005 and March 13, 2007, with respect to various Sharp copiers and
facsimiles pursuant to equipment lease agreements between Van By
Business Systems and ARL.
3. Firstar Bank, N.A. has a lien, filed on August 20,
2000 (continued December 21, 2004), on all accounts, contract rights,
general intangibles, inventory, equipment, documents, instruments,
chattel paper, money and deposit accounts, and products and proceeds.
4. U.S. Bank National Association has a lien, filed on
October 18, 2004 on goods, machinery, equipment and inventory, accounts,
general intangibles, operating agreement, patent collateral, trademark
collateral, books, records and proceeds.
EXHIBIT C-3
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is
between FREEDOM 1, LLC, an Indiana limited liability company ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: FREEDOM 1, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-4
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
GULF LINE TRANSPORT LLC, an Indiana limited liability company ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: GULF LINE TRANSPORT, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: __________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-5
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
CAROLINA NATIONAL LOGISTICS, INC., an Indiana corporation ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: CAROLINA NATIONAL LOGISTICS, INC.,
336 W. US Highway 30 an Indiana corporation
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: __________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-6
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
BLUE & GREY TRANSPORT COMPANY, INC., an Indiana corporation ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.rth above.
Address: BLUE & GREY TRANSPORT COMPANY, INC.,
336 W. US Highway 30 an Indiana corporation
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-7
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
FREIGHTMASTER USA, LLC, an Indiana limited liability company ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: FREIGHTMASTER USA, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-8
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
US 1 CORP., an Indiana corporation ("Borrower"), and US BANK, a national
banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: US 1 CORP.,
336 W. US Highway 30 an Indiana corporation
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-9
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
ANTLER TRANSPORT, LLC, an Indiana limited liability company ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: ANTLER TRANSPORT, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-10
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
BRUIN EXPRESS INTERMODAL, LLC, an Indiana limited liability company
("Borrower"), and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: BRUIN EXPRESS INTERMODAL, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-11
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
RISK INSURANCE SERVICES OF INDIANA, LLC, an Indiana limited liability company
("Borrower"), and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: RISK INSURANCE SERVICES OF INDIANA, LLC,
336 W. US Highway 30 an Indiana limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-12
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
TC ADMINISTRATIVE SERVICES, INC., a California corporation ("Borrower"),
and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: TC ADMINISTRATIVE SERVICES, INC.,
336 W. US Highway 30 a California corporation
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT C-13
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is between
US 1 INDUSTRIES, a California corporation ("Borrower"), and US BANK, a
national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA NATIONAL
LOGISTICS, INC., GULF LINE TRANSPORT LLC, CAM TRANSPORT, INC., ERX, INC.,
FRIENDLY TRANSPORT, LLC, TRANSPORT LEASING, INC., UNITY LOGISTIC SERVICES,
INC., HARBOR BRIDGE INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY
TRANSPORT, INC., KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS,
INC., FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY, INC.,
FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN EXPRESS
INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC ADMINISTRATIVE
SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC, and US 1 INDUSTRIES,
INC. ("Other Borrowers"), and Lender have entered into a Fifth Amendment to
Amended and Restated Loan Agreement of even date herewith (as the same may
be amended, modified, supplemented or restated from time to time, the "Loan
Agreement"), pursuant and subject to the terms and conditions of which Lender
has agreed to make loans and other financial accommodations to Borrower and
Other Borrowers.
B. One of the conditions precedent to Lender's obligations under the
Loan Agreement is that Borrower shall have executed and delivered this
Security Agreement to secure the payment and performance of Borrowers'
Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same meaning
herein as in the Code unless the context in which such terms are used herein
indicates otherwise. All capitalized terms used but not elsewhere defined in
this Security Agreement shall have the respective meanings ascribed to such
terms in the Loan Agreement. As used herein, the following terms shall have
the following meanings:
Corporate Changes: any change in Borrower's place of organization,
form of organization, or name, including but not limited to changes
resulting from mergers, acquisitions, divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for filing
anywhere in the world, (ii) patent licenses of Borrower, (iii) reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations of any Patent Collateral and (iv) all proceeds of, and
rights associated with, the foregoing (including licenses, royalties and
proceeds of infringement suits), the right of Borrower to sue third parties
for past, present and future infringements of any patent or patent
application, and for breach or enforcement of any patent license of
Borrower, and all rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade dress, service marks, certification marks, collective marks, logos,
other sources of business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of
a like nature of Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications
in the United States Patent and Trademark Office and any foreign country,
(ii) all Trademark licenses of Borrower, (iii) all reissues, extensions or
renewals of any of the items described in clauses (i) and (ii) above, (iv)
all of the goodwill of the business connected with the use of, and symbolized
by the items described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any claim by Borrower
against third parties for past, present or future infringement or dilution of
any Trademark, Trademark registration or Trademark license, or for any injury
to the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers' Obligations,
Borrower hereby grants to Lender a security interest in all Property of
Borrower, whether now owned or hereafter acquired, and all additions and
accessions thereto, including, without limitation, the Property described
below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all additions
and accessions thereto or replacements thereof, including, but not limited to,
all machinery, inventory and equipment of any and every kind and description
comprising, belonging to or used in connection with the operation of the
business of Borrower (collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts, contract
rights, chattel paper, instruments, investment property, deposit accounts,
documents, and general intangibles, and all additions and accessions thereto
and replacements thereof, including, but not limited to, all licenses,
franchises, permits and authorizations heretofore or hereafter granted or
issued to Borrower under federal, state or local laws (excluding, however,
any licenses, franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a security
interest in such licenses, franchises, permits and authorizations, but
including, without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale or assignment of such licenses,
franchises, permits and authorizations) which permit or pertain to the
operation of the business of Borrower, and all of Borrower's Intellectual
Property Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going concern value,
franchise, supply and distributorship agreements, non-competition agreements
and employment contracts (collectively, the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining to the
Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to collectively
as the "Collateral." The security interest of Lender in the Collateral shall
be superior and prior to all other Liens except Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents and
warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the Collateral
free from any Lien except for Permitted Liens, except the portion thereof
consisting of after acquired Property, and Borrower will be the owner of such
after acquired Property, free from any Lien except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the location
of the chief executive office of Borrower, all of the other places of business
of Borrower and all locations where the Tangible Collateral and the books and
records of Borrower are kept. Except as described in Exhibit A, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent
or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or assumed
names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of Lender
and the financing statements pertaining to the Permitted Senior Indebtedness
Liens, if any, no financing statement covering any Collateral or any portion
or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best of
Borrower's knowledge, as of the date of this Security Agreement, there is no
valid defense, set-off or counterclaim against Borrower and in connection with
which there is no default with respect to any material payment or material
performance on the part of Borrower, or, to the best of Borrower's knowledge,
any other party. With respect to any Intellectual Property Collateral of
Borrower the loss, impairment or infringement of which singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect: (i)
such Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, (ii) such Intellectual Property
Collateral is valid and enforceable, (iii) Borrower has made all filings and
recordations necessary in the exercise of reasonable and prudent business
judgment to protect its interest in such Intellectual Property Collateral in
the United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title and
interest in and to such Intellectual Property Collateral and no claim has
been made that the use of such Intellectual Property Collateral does or may
violate the asserted rights of any third party, and (v) Borrower has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of such Intellectual Property Collateral in full force and effect
throughout the world, as applicable. Borrower owns directly, or is
entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral
of Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to
pay the same. The amount represented by Borrower to Lender as owing by
each account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments
and governmental charges upon and relating to any of the Property, income
or receipts of Borrower or otherwise for which Borrower is or may be
liable, except to the extent that the failure to pay any of such taxes,
levies, assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such
form, with such companies and in such amounts as may be reasonably
satisfactory to Lender and otherwise comply with the provisions of
Section 6.6 of the Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i)
promptly deliver to Lender all certificates of title pertaining to
the Tangible Collateral and (ii) take all actions reasonably requested
by Lender to cause the Lien granted to Lender hereunder to be noted on
such certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees
applicable thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other
agreements as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after
the occurrence and during the continuation of an Event of Default, permit
Lender itself, at any time, in the name of Lender or Borrower, to verify
directly with the obligors the indebtedness due Borrower on any account or
other item of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any
default in payment or performance by Borrower or any other Person of any
obligation with respect to the Intangible Collateral or of claims made by
others in regard to the Intangible Collateral, if either of which could
have a Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Borrower's ownership of any of its
Intellectual Property Collateral, its right to register the same or to
keep and maintain and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any country or any political subdivision
thereof, to maintain and pursue any application (and to obtain the
relevant registration) filed with respect to, and to maintain any
registration of, its Intellectual Property Collateral, including the
filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts
to collect the proceeds of indebtedness owing to Borrower by any Person
under any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with
the execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security
Interests, to carry out the purposes of this Security Agreement and to
protect Lender's rights hereunder. Borrower, upon demand, shall pay the
cost of filing all such financing statements, continuation statements,
termination statements, amendments to any of the foregoing and other
documents.
5. Negative Covenants. Until all of Borrower's Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license
or otherwise dispose of any of the Collateral, except as may be permitted
by and in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at
least 30 days' advance written notice thereof and having taken any and all
action reasonably requested by Lender to maintain and preserve the first
perfected Lien in favor of Lender on all Property thereof free and clear
of any Lien whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or
control of any warehouseman, bailee or processor without Lender's prior
written consent and unless Lender has received warehouse receipts or
bailee letters satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or
grant any exclusive license with respect to the Intellectual Property
Collateral to an Affiliate of Borrower or otherwise take any action with
respect to its Intellectual Property Collateral in violation of any term
or provision of the Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees
to, unless Borrower shall either (i) reasonably and in good faith
determine that any of its Trademark Collateral is of negligible economic
value to Borrower or (ii) have a valid business purpose to do otherwise:
(A) fail to continue to use any of its Trademark Collateral in order to
maintain all of its Trademark Collateral in full force free from any claim
of abandonment for non-use, (B) fail to maintain as in the past the quality
of products and services offered under all of its Trademark Collateral,
(C) fail to employ all of its Trademark Collateral registered with any
federal, state or foreign authority with an appropriate notice of such
registration, (D) adopt or use any trademark which is confusingly similar
or a colorable imitation of any of its Trademark Collateral except in
compliance with applicable law, (E) use any of its Trademark Collateral
registered with any federal, state or foreign authority except for the
uses for which registration or application for registration of such
Trademark Collateral has been made except in compliance with applicable
law or (F) do or permit any act or knowingly omit to do any act whereby
any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i)
reasonably and in good faith determine that any of its Patent
Collateral is of negligible economic value to Borrower or (ii) have a
valid business purpose to do otherwise, do any act, or omit to do any
act, whereby any of Borrower's Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
6. Protection of Collateral. In the event of any failure of
Borrower to (i) maintain in force and pay for any insurance or bond
which Borrower is required to provide pursuant to this Security
Agreement or the other Loan Instruments, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay
when due all taxes, levies and assessments on or in respect of the
Collateral, except as permitted pursuant to the terms of Section 4.1
above, (v) make all payments and perform all acts on the part of
Borrower to be paid or performed with respect to any of the Collateral,
including, without limitation, all expenses of protecting, storing,
warehousing, insuring, handling and maintaining the Collateral or
(vi) keep fully and perform promptly any other of the obligations of
Borrower under this Security Agreement or the other Loan Instruments,
Lender, at its option, may (but shall not be required to) procure and
pay for such insurance, place such Collateral in good repair and
operating condition, pay or contest or settle such Liens or taxes or
any judgments based thereon or otherwise make good any other aforesaid
failure of Borrower. Borrower shall reimburse Lender immediately upon
demand for all sums paid or advanced on behalf of Borrower for any
such purpose, together with all costs, expenses and attorneys' fees
paid or incurred by Lender in connection therewith and interest at
the Default Rate on all sums so paid or advanced from the date of such
payment or advancement until repaid to Lender. All such sums paid or
advanced by Lender, with interest thereon, immediately upon payment or
advancement thereof, shall be deemed to be part of Borrower's
Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this
Security Agreement upon the occurrence of an Event of Default under
the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall
have the right, from time to time, at Lender's discretion, to contact
account debtors of Borrower to verify that Accounts are valid and
not subject to setoff or counterclaim and to verify the
creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and
remedies accorded to Lender at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Borrower and to
collect all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than ten (10) days prior to
such proposed action shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such sale from time
to time by announcement at the time and place of sale stated in the
notice of sale or by announcement of any adjourned sale, without
being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit
or installment terms as Lender shall determine. Borrower shall be
credited with the net proceeds of such sale only when such proceeds
actually are received by Lender in Good Funds. Despite the
consummation of any such sale, Borrower shall remain liable for any
deficiency on Borrow's Obligations which remains outstanding
following any such sale. All net proceeds received pursuant to a
sale shall be applied in the manner set forth in Section 8.4 of the
Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender,
Borrower shall assemble and make the Collateral available to Lender
at a place designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the
Collateral collected by Borrower in trust for Lender, and, after
Borrower receives notice from Lender, promptly after the receipt of
the proceeds of Collateral, turn over such proceeds to Lender in the
exact form in which they were received.
9.4 Other Rights. Lender, at its election, and without notice
to Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments
and the Account Debtors of any account, contract right, chattel paper
or general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or
receive, in the name of Borrower or Lender, any money or Property
payable or receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue
upon or otherwise enforce any item of Collateral as Lender may
determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose
of enforcing Lender's rights under this Security Agreement, receive
and open mail addressed to Borrower, and endorse notes, checks,
drafts, money orders, documents of title or other forms of payment
on behalf and in the name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be
applied by Lender in accordance with the applicable provisions of
Section 8.4 of the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies
of Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or
in the name of Lender, (i) to execute and file from time to time
financing statements, continuation statements, termination statements
and amendments thereto, covering the Collateral, in form satisfactory
to Lender and (ii) take all action and execute all documents referred
to in Section 9.4 above. The power of attorney granted pursuant to
this Section 10 is coupled with an interest and shall be irrevocable
until all of Borrower's Obligations have been paid and performed in
full and the Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and
the Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall
have no duty as to the collection or protection of the Collateral or
any income thereon, (ii) may exercise the rights and remedies of
Lender with respect to the Collateral without resort or regard to
other security or sources for payment and (iii) shall not be deemed
to have waived any of the rights or remedies granted to Lender
hereunder unless such waiver shall be in writing and shall be signed
by Lender. Borrower and Lender acknowledge their intent that, upon
the occurrence of an Event of Default, Lender shall receive, to the
fullest extent permitted by law and governmental policy, all rights
necessary or desirable to obtain, use or sell the Collateral, and to
exercise all remedies available to Lender under the Loan Instruments,
the Code or other applicable law. Borrower and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that
affect in any manner Lender's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Lender to obtain
such rights of access, use or sale, Lender and Borrower shall amend
the Loan Instruments, in such manner as Lender shall request, in order
to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay
or omission on the part of Lender in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. A
waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future
occasions, and no delay, omission, waiver or single or partial
exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties
hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly
agrees that, anything herein to the contrary notwithstanding,
Borrower shall remain liable under each contract, agreement,
interest or obligation assigned by Borrower to Lender hereunder to
observe and perform all of the conditions and obligations to be
observed and performed by Borrower thereunder, all in accordance
with and pursuant to the terms and provisions thereof. The exercise
by Lender of any of the rights assigned hereunder shall not release
Borrower from any of its duties or obligations under any such
contract, agreement, interest or obligation. Lender shall have no
duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising
out of the assignment thereof to Lender or the granting to Lender of
a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Borrower ther
eunder or pursuant thereto, or to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by
Lender or the sufficiency of any performance of any party under any
such contract, agreement, interest or obligation, or to present or
file any claim, or to take any action to collect or enforce any
performance of the payment of any amounts which may have been
assigned to Lender, in which Lender may have been granted a Security
Interest or to which Lender may be entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower,
and wherever the same may be located, including in such license
reasonable access as to all media in which any of the licensed items
may be recorded or stored and to all computer programs and used for
the compilation or printout thereof.
12. Rights Cumulative. All rights and remedies of Lender
pursuant to this Security Agreement, the Loan Agreement or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly
or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any
court or any other Governmental Body, this Security Agreement shall
be construed as not containing such provision and the invalidity of
such provision shall not affect the validity of any other provisions
hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
17. Counterparts. This Security Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall be one and the same
instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed
in accordance with and governed by the laws and decisions of the State
of Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in
either the Circuit Court of Cook County, Illinois or in the United
States District Court for the Northern District of Illinois, or, if
Lender initiates such action, in addition to the foregoing courts,
any other court in which Lender shall initiate or to which Lender
shall remove such action, to the extent such court has jurisdiction.
Borrower hereby expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced by Lender in or
removed by Lender to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or
papers issued therein may be served in the manner provided for
notices herein, and agrees that service of such summons and complaint
or other process or papers may be made by registered or certified mail
addressed to Borrower at the address to which notices are to be sent
pursuant to Section 11.1 of the Loan Agreement. Borrower waives any
claim that either the Circuit Court of Cook County, Illinois or the
United States District Court for the Northern District of Illinois is
an inconvenient forum or an improper forum based on lack of venue. To
the extent provided by law, should Borrower, after being so served,
fail to appear or answer to any summons, complaint, process or papers
so served within the number of days prescribed by law after the
mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as
demanded or prayed for in such summons, complaint, process or papers.
The exclusive choice of forum for Borrower set forth in this Section
19 shall not be deemed to preclude the enforcement by Lender of any
judgment obtained in any other forum or the taking by Lender of any
action to enforce the same in any other appropriate jurisdiction, and
Borrower hereby waives the right to collaterally attack any such
judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the
full and complete performance and payment and satisfaction of
Borrower's Obligations and the Loan Agreement shall have terminated,
whereupon Lender shall release all such Liens and security interests
in favor of Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: US 1 INDUSTRIES,
336 W. US Highway 30 a California corporation
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: ____________________________
Address: US BANK, a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT D-1
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is
between ARL TRANSPORT, LLC, a Delaware limited liability company
("Borrower"), and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA
NATIONAL LOGISTICS, INC., GULF LINE TRANSPORT, LLC, FIVE STAR TRANSPORT,
LLC, CAM TRANSPORT, INC., ERX, INC., FRIENDLY TRANSPORT, LLC, TRANSPORT
LEASING, INC., UNITY LOGISTICS SERVICES, INC., HARBOR BRIDGE
INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY TRANSPORT, INC.,
KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS, INC.,
FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY,
INC., FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN
EXPRESS INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC
ADMINISTRATIVE SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC,
and US 1 INDUSTRIES, INC. ("Other Borrowers"), and Lender have entered
into a Fifth Amendment to Amended and Restated Loan Agreement of even
date herewith (as the same may be amended, modified, supplemented or
restated from time to time, the "Loan Agreement"), pursuant and subject
to the terms and conditions of which Lender has agreed to make loans
and other financial accommodations to Borrower and Other Borrowers.
B. One of the conditions precedent to Lender's obligations under
the Loan Agreement is that Borrower shall have executed and delivered
this Security Agreement to secure the payment and performance of
Borrowers' Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and
for other good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same
meaning herein as in the Code unless the context in which such terms
are used herein indicates otherwise. All capitalized terms used but
not elsewhere defined in this Security Agreement shall have the
respective meanings ascribed to such terms in the Loan Agreement. As
used herein, the following terms shall have the following meanings:
Corporate Changes: any change in Borrower's place of
organization, form of organization, or name, including but not
limited to changes resulting from mergers, acquisitions,
divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for
filing anywhere in the world, (ii) patent licenses of Borrower,
(iii) reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any Patent Collateral
and (iv) all proceeds of, and rights associated with, the foregoing
(including licenses, royalties and proceeds of infringement suits),
the right of Borrower to sue third parties for past, present and
future infringements of any patent or patent application, and for
breach or enforcement of any patent license of Borrower, and all
rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade
names, corporate names, company names, business names, fictitious
business names, trade dress, service marks, certification marks,
collective marks, logos, other sources of business identifiers,
prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of a like nature of
Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter
adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for
filing, including registrations, recordings and applications in
the United States Patent and Trademark Office and any foreign
country, (ii) all Trademark licenses of Borrower, (iii) all
reissues, extensions or renewals of any of the items described
in clauses (i) and (ii) above, (iv) all of the goodwill of the
business connected with the use of, and symbolized by the items
described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any
claim by Borrower against third parties for past, present or
future infringement or dilution of any Trademark, Trademark
registration or Trademark license, or for any injury to the
goodwill associated with the use of any such Trademark or for
breach or enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers'
Obligations, Borrower hereby grants to Lender a security interest in
all Property of Borrower, whether now owned or hereafter acquired,
and all additions and accessions thereto, including, without
limitation, the Property described below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all
additions and accessions thereto or replacements thereof, including,
but not limited to, all machinery, inventory and equipment of any and
every kind and description comprising, belonging to or used in
connection with the operation of the business of Borrower
(collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts,
contract rights, chattel paper, instruments, investment property,
deposit accounts, documents, and general intangibles, and all
additions and accessions thereto and replacements thereof, including,
but not limited to, all licenses, franchises, permits and
authorizations heretofore or hereafter granted or issued to Borrower
under federal, state or local laws (excluding, however, any licenses,
franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a
security interest in such licenses, franchises, permits and
authorizations, but including, without limitation, the right to
receive all proceeds derived or arising from or in connection with
the sale or assignment of such licenses, franchises, permits and
authorizations) which permit or pertain to the operation of the
business of Borrower, and all of Borrower's Intellectual Property
Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going
concern value, franchise, supply and distributorship agreements,
non-competition agreements and employment contracts (collectively,
the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance,
eminent domain and other governmental taking and tort claims) and
products of the Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining
to the Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to
collectively as the "Collateral." The security interest of Lender in
the Collateral shall be superior and prior to all other Liens except
Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents
and warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the
Collateral free from any Lien except for Permitted Liens, except the
portion thereof consisting of after-acquired Property, and Borrower
will be the owner of such after-acquired Property, free from any Lien
except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the
location of the chief executive office of Borrower, all of the other
places of business of Borrower and all locations where the Tangible
Collateral and the books and records of Borrower are kept. Except as
described in Exhibit A, none of the Collateral is in the possession of
any consignee, bailee, warehouseman, agent or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or
assumed names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of
Lender and the financing statements pertaining to the Permitted Senior
Indebtedness Liens, if any, no financing statement covering any Collateral
or any portion or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best
of Borrower's knowledge, as of the date of this Security Agreement, there
is no valid defense, set-off or counterclaim against Borrower and in
connection with which there is no default with respect to any material
payment or material performance on the part of Borrower, or, to the best
of Borrower's knowledge, any other party. With respect to any Intellectual
Property Collateral of Borrower the loss, impairment or infringement of
which singly or in the aggregate could reasonably be expected to have a
Material Adverse Effect: (i) such Intellectual Property Collateral is
subsisting and has not been adjudged invalid or unenforceable, in whole
or in part, (ii) such Intellectual Property Collateral is valid and
enforceable, (iii) Borrower has made all filings and recordations
necessary in the exercise of reasonable and prudent business judgment to
protect its interest in such Intellectual Property Collateral in the
United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title
and interest in and to such Intellectual Property Collateral and no
claim has been made that the use of such Intellectual Property
Collateral does or may violate the asserted rights of any third party,
and (v) Borrower has performed and will continue to perform all acts and
has paid and will continue to pay all required fees and taxes to maintain
each and every item of such Intellectual Property Collateral in full force
and effect throughout the world, as applicable. Borrower owns directly, or
is entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral of
Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to pay
the same. The amount represented by Borrower to Lender as owing by each
account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments and
governmental charges upon and relating to any of the Property, income or
receipts of Borrower or otherwise for which Borrower is or may be liable,
except to the extent that the failure to pay any of such taxes, levies,
assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such form,
with such companies and in such amounts as may be reasonably satisfactory
to Lender and otherwise comply with the provisions of Section 6.6 of the
Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i) promptly
deliver to Lender all certificates of title pertaining to the Tangible
Collateral and (ii) take all actions reasonably requested by Lender to
cause the Lien granted to Lender hereunder to be noted on such
certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees applicable
thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other agreements
as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after the
occurrence and during the continuation of an Event of Default, permit Lender
itself, at any time, in the name of Lender or Borrower, to verify directly
with the obligors the indebtedness due Borrower on any account or other item
of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any default
in payment or performance by Borrower or any other Person of any obligation
with respect to the Intangible Collateral or of claims made by others in
regard to the Intangible Collateral, if either of which could have a
Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart thereof
or any court) regarding Borrower's ownership of any of its Intellectual
Property Collateral, its right to register the same or to keep and maintain
and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any country or any political subdivision thereof, to
maintain and pursue any application (and to obtain the relevant registration)
filed with respect to, and to maintain any registration of, its Intellectual
Property Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts to
collect the proceeds of indebtedness owing to Borrower by any Person under
any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with the
execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security Interests,
to carry out the purposes of this Security Agreement and to protect Lender's
rights hereunder. Borrower, upon demand, shall pay the cost of filing all
such financing statements, continuation statements, termination statements,
amendments to any of the foregoing and other documents.
5. Negative Covenants. Until all of Borrower's Obligations are paid
and performed in full and the Loan Agreement shall have been terminated,
Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license or
otherwise dispose of any of the Collateral, except as may be permitted by and
in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at least
30 days' advance written notice thereof and having taken any and all action
reasonably requested by Lender to maintain and preserve the first perfected
Lien in favor of Lender on all Property thereof free and clear of any Lien
whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or control
of any warehouseman, bailee or processor without Lender's prior written
consent and unless Lender has received warehouse receipts or bailee letters
satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or grant
any exclusive license with respect to the Intellectual Property Collateral to
an Affiliate of Borrower or otherwise take any action with respect to its
Intellectual Property Collateral in violation of any term or provision of the
Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees to,
unless Borrower shall either (i) reasonably and in good faith determine that
any of its Trademark Collateral is of negligible economic value to Borrower
or (ii) have a valid business purpose to do otherwise: (A) fail to continue
to use any of its Trademark Collateral in order to maintain all of its
Trademark Collateral in full force free from any claim of abandonment for
non-use, (B) fail to maintain as in the past the quality of products and
services offered under all of its Trademark Collateral, (C) fail to employ
all of its Trademark Collateral registered with any federal, state or foreign
authority with an appropriate notice of such registration, (D) adopt or use
any trademark which is confusingly similar or a colorable imitation of any of
its Trademark Collateral except in compliance with applicable law, (E) use any
of its Trademark Collateral registered with any federal, state or foreign
authority except for the uses for which registration or application for
registration of such Trademark Collateral has been made except in compliance
with applicable law or (F) do or permit any act or knowingly omit to do any
act whereby any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i) reasonably and
in good faith determine that any of its Patent Collateral is of negligible
economic value to Borrower or (ii) have a valid business purpose to do
otherwise, do any act, or omit to do any act, whereby any of Borrower's
Patent Collateral may lapse or become abandoned or dedicated to the public or
unenforceable.
6. Protection of Collateral. In the event of any failure of Borrower to
(i) maintain in force and pay for any insurance or bond which Borrower is
required to provide pursuant to this Security Agreement or the other Loan
Instruments, (ii) keep the Tangible Collateral in good repair and operating
condition, (iii) keep the Collateral free from all Liens except for Permitted
Liens, (iv) pay when due all taxes, levies and assessments on or in respect of
the Collateral, except as permitted pursuant to the terms of Section 4.1 above,
(v) make all payments and perform all acts on the part of Borrower to be paid
or performed with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral or (vi) keep fully and perform
promptly any other of the obligations of Borrower under this Security
Agreement or the other Loan Instruments, Lender, at its option, may (but shall
not be required to) procure and pay for such insurance, place such Collateral
in good repair and operating condition, pay or contest or settle such Liens
or taxes or any judgments based thereon or otherwise make good any other
aforesaid failure of Borrower. Borrower shall reimburse Lender immediately
upon demand for all sums paid or advanced on behalf of Borrower for any such
purpose, together with all costs, expenses and attorneys' fees paid or
incurred by Lender in connection therewith and interest at the Default Rate on
all sums so paid or advanced from the date of such payment or advancement
until repaid to Lender. All such sums paid or advanced by Lender, with
interest thereon, immediately upon payment or advancement thereof, shall be
deemed to be part of Borrower's Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this Security
Agreement upon the occurrence of an Event of Default under the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall have the
right, from time to time, at Lender's discretion, to contact account debtors
of Borrower to verify that Accounts are valid and not subject to setoff or
counterclaim and to verify the creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and remedies
accorded to Lender at equity or law, including, without limitation, the
right to apply for and have a receiver appointed by a court of competent
jurisdiction to manage, protect and preserve the Collateral, to continue
operating the business of Borrower and to collect all revenues and profits
thereof. Any notice of sale or other disposition of Collateral given not
less than ten (10) days prior to such proposed action shall constitute
reasonable and fair notice of such action. Lender may postpone or adjourn
any such sale from time to time by announcement at the time and place of
sale stated in the notice of sale or by announcement of any adjourned sale,
without being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit or
installment terms as Lender shall determine. Borrower shall be credited
with the net proceeds of such sale only when such proceeds actually are
received by Lender in Good Funds. Despite the consummation of any such
sale, Borrower shall remain liable for any deficiency on Borrower's
Obligations which remains outstanding following any such sale. All net
proceeds received pursuant to a sale shall be applied in the manner set
forth in Section 8.4 of the Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender, Borrower
shall assemble and make the Collateral available to Lender at a place
designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the Collateral
collected by Borrower in trust for Lender, and, after Borrower receives
notice from Lender, promptly after the receipt of the proceeds of
Collateral, turn over such proceeds to Lender in the exact form in which
they were received.
9.4 Other Rights. Lender, at its election, and without notice to
Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments and
the Account Debtors of any account, contract right, chattel paper or
general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or receive,
in the name of Borrower or Lender, any money or Property payable or
receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue upon or
otherwise enforce any item of Collateral as Lender may determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose of
enforcing Lender's rights under this Security Agreement, receive and open
mail addressed to Borrower, and endorse notes, checks, drafts, money
orders, documents of title or other forms of payment on behalf and in the
name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be applied
by Lender in accordance with the applicable provisions of Section 8.4 of
the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies of
Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or in
the name of Lender, (i) to execute and file from time to time financing
statements, continuation statements, termination statements and
amendments thereto, covering the Collateral, in form satisfactory to
Lender and (ii) take all action and execute all documents referred to
in Section 9.4 above. The power of attorney granted pursuant to this
Section 10 is coupled with an interest and shall be irrevocable until all
of Borrower's Obligations have been paid and performed in full and the
Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and the
Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall have
no duty as to the collection or protection of the Collateral or any
income thereon, (ii) may exercise the rights and remedies of Lender with
respect to the Collateral without resort or regard to other security or
sources for payment and (iii) shall not be deemed to have waived any of
the rights or remedies granted to Lender hereunder unless such waiver
shall be in writing and shall be signed by Lender. Borrower and Lender
acknowledge their intent that, upon the occurrence of an Event of Default,
Lender shall receive, to the fullest extent permitted by law and
governmental policy, all rights necessary or desirable to obtain, use or
sell the Collateral, and to exercise all remedies available to Lender
under the Loan Instruments, the Code or other applicable law. Borrower
and Lender further acknowledge and agree that, in the event of changes
in law or governmental policy occurring subsequent to the date hereof
that affect in any manner Lender's rights of access to, or use or sale
of, the Collateral, or the procedures necessary to enable Lender to
obtain such rights of access, use or sale, Lender and Borrower shall
amend the Loan Instruments, in such manner as Lender shall request,
in order to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay or
omission on the part of Lender in exercising any rights or remedies
contained herein shall operate as a waiver of such right or remedy or
of any other right or remedy, and no single or partial exercise of any
right or remedy shall preclude any other or further exercise thereof, or
the exercise of any other right or remedy. A waiver of any right or
remedy on any one occasion shall not be construed as a bar or waiver of
any right or remedy on future occasions, and no delay, omission, waiver
or single or partial exercise of any right or remedy shall be deemed to
establish a custom or course of dealing or performance between the
parties hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly agrees
that, anything herein to the contrary notwithstanding, Borrower shall
remain liable under each contract, agreement, interest or obligation
assigned by Borrower to Lender hereunder to observe and perform all of
the conditions and obligations to be observed and performed by Borrower
thereunder, all in accordance with and pursuant to the terms and
provisions thereof. The exercise by Lender of any of the rights assigned
hereunder shall not release Borrower from any of its duties or
obligations under any such contract, agreement, interest or obligation.
Lender shall have no duty, responsibility, obligation or liability under
any such contract, agreement, interest or obligation by reason of or
arising out of the assignment thereof to Lender or the granting to Lender
of a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation pursuant
hereto, nor shall Lender be required or obligated in any manner to
perform or fulfill any of the obligations of Borrower thereunder or
pursuant thereto, or to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by Lender or the
sufficiency of any performance of any party under any such contract,
agreement, interest or obligation, or to present or file any claim, or
to take any action to collect or enforce any performance of the payment
of any amounts which may have been assigned to Lender, in which Lender
may have been granted a Security Interest or to which Lender may be
entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower, and
wherever the same may be located, including in such license reasonable
access as to all media in which any of the licensed items may be recorded
or stored and to all computer programs and used for the compilation or
printout thereof.
12. Rights Cumulative. All rights and remedies of Lender pursuant
to this Security Agreement, the Loan Agreement or otherwise, shall be
cumulative and non-exclusive, and may be exercised singularly or
concurrently.
13. Severability. In the event that any provision of this Security
Agreement is deemed to be invalid by reason of the operation of any law or
by reason of the interpretation placed thereon by any court or any other
Governmental Body, this Security Agreement shall be construed as not
containing such provision and the invalidity of such provision shall not
affect the validity of any other provisions hereof, and any and all other
provisions hereof which otherwise are lawful and valid shall remain in
full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect
the meaning hereof.
17. Counterparts. This Security Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original, but all of which, when taken together, shall be one and the
same instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed in
accordance with and governed by the laws and decisions of the State of
Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in either
the Circuit Court of Cook County, Illinois or in the United States
District Court for the Northern District of Illinois, or, if Lender
initiates such action, in addition to the foregoing courts, any other
court in which Lender shall initiate or to which Lender shall remove
such action, to the extent such court has jurisdiction. Borrower hereby
expressly submits and consents in advance to such jurisdiction in any
action or proceeding commenced by Lender in or removed by Lender to any
of such courts, and hereby agrees that personal service of the summons
and complaint, or other process or papers issued therein may be served
in the manner provided for notices herein, and agrees that service of
such summons and complaint or other process or papers may be made by
registered or certified mail addressed to Borrower at the address to
which notices are to be sent pursuant to Section 11.1 of the Loan
Agreement. Borrower waives any claim that either the Circuit Court of
Cook County, Illinois or the United States District Court for the
Northern District of Illinois is an inconvenient forum or an improper
forum based on lack of venue. To the extent provided by law, should
Borrower, after being so served, fail to appear or answer to any
summons, complaint, process or papers so served within the number of
days prescribed by law after the mailing thereof, Borrower shall be
deemed in default and an order and/or judgment may be entered by the
court against Borrower as demanded or prayed for in such summons,
complaint, process or papers. The exclusive choice of forum for
Borrower set forth in this Section 19 shall not be deemed to preclude
the enforcement by Lender of any judgment obtained in any other forum
or the taking by Lender of any action to enforce the same in any other
appropriate jurisdiction, and Borrower hereby waives the right to
collaterally attack any such judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the full
and complete performance and payment and satisfaction of Borrower's
Obligations and the Loan Agreement shall have terminated, whereupon
Lender shall release all such Liens and security interests in favor of
Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: ARL TRANSPORT, LLC,
336 W. US Highway 30 a Delaware limited liability company
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: __________________________
Address: US BANK , a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT D-2
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of December ____, 2008, is
between AFT TRANSPORT, LLC, a Delaware limited liability company
("Borrower"), and US BANK, a national banking association ("Lender").
Preliminary Statement:
A. Borrower, CAROLINA NATIONAL TRANSPORTATION LLC, CAROLINA
NATIONAL LOGISTICS, INC., GULF LINE TRANSPORT, LLC, FIVE STAR TRANSPORT,
LLC, CAM TRANSPORT, INC., ERX, INC., FRIENDLY TRANSPORT, LLC, TRANSPORT
LEASING, INC., UNITY LOGISTICS SERVICES, INC., HARBOR BRIDGE
INTERNATIONAL, INC., PATRIOT LOGISTICS, INC., LIBERTY TRANSPORT, INC.,
KEYSTONE LINES CORP., TC SERVICES, INC., KEYSTONE LOGISTICS, INC.,
FREEDOM 1, LLC, THUNDERBIRD LOGISTICS, LLC, THUNDERBIRD MOTOR EXPRESS,
LLC, US 1 LOGISTICS, LLC, KEYSTONE LINES, BLUE & GREY TRANSPORT COMPANY,
INC., FREIGHTMASTER USA, LLC, US 1 CORP., ANTLER TRANSPORT, LLC, BRUIN
EXPRESS INTERMODAL, LLC, RISK INSURANCE SERVICES OF INDIANA, LLC, TC
ADMINISTRATIVE SERVICES, INC., ARL TRANSPORT LLC, AFT TRANSPORT, LLC,
and US 1 INDUSTRIES, INC. ("Other Borrowers"), and Lender have entered
into a Fifth Amendment to Amended and Restated Loan Agreement of even
date herewith (as the same may be amended, modified, supplemented or
restated from time to time, the "Loan Agreement"), pursuant and subject
to the terms and conditions of which Lender has agreed to make loans
and other financial accommodations to Borrower and Other Borrowers.
B. One of the conditions precedent to Lender's obligations under
the Loan Agreement is that Borrower shall have executed and delivered
this Security Agreement to secure the payment and performance of
Borrowers' Obligations.
NOW, THEREFORE, in order to induce Lender to make Advances, and
for other good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All terms used herein which are defined in the
Illinois Uniform Commercial Code (the "Code") shall have the same
meaning herein as in the Code unless the context in which such terms
are used herein indicates otherwise. All capitalized terms used but
not elsewhere defined in this Security Agreement shall have the
respective meanings ascribed to such terms in the Loan Agreement. As
used herein, the following terms shall have the following meanings:
Corporate Changes: any change in Borrower's place of
organization, form of organization, or name, including but not
limited to changes resulting from mergers, acquisitions,
divestitures, and reorganizations.
Intellectual Property Collateral: collectively, the Patent
Collateral and the Trademark Collateral.
Patent Collateral: shall mean all (i) letters patent and
applications for letters patent of Borrower throughout the world,
including all patent applications of Borrower in preparation for
filing anywhere in the world, (ii) patent licenses of Borrower,
(iii) reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any Patent Collateral
and (iv) all proceeds of, and rights associated with, the foregoing
(including licenses, royalties and proceeds of infringement suits),
the right of Borrower to sue third parties for past, present and
future infringements of any patent or patent application, and for
breach or enforcement of any patent license of Borrower, and all
rights corresponding thereto throughout the world.
Trademark Collateral: shall mean all (i) trademarks, trade
names, corporate names, company names, business names, fictitious
business names, trade dress, service marks, certification marks,
collective marks, logos, other sources of business identifiers,
prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of a like nature of
Borrower (each of the foregoing items referred to as a
"Trademark"), now existing anywhere in the world or hereafter
adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for
filing, including registrations, recordings and applications in
the United States Patent and Trademark Office and any foreign
country, (ii) all Trademark licenses of Borrower, (iii) all
reissues, extensions or renewals of any of the items described
in clauses (i) and (ii) above, (iv) all of the goodwill of the
business connected with the use of, and symbolized by the items
described in clauses (i) and (ii) above, and (v) all proceeds
of, and rights associated with, the foregoing, including any
claim by Borrower against third parties for past, present or
future infringement or dilution of any Trademark, Trademark
registration or Trademark license, or for any injury to the
goodwill associated with the use of any such Trademark or for
breach or enforcement of any Trademark license.
2. Security Interests. In order to secure Borrowers'
Obligations, Borrower hereby grants to Lender a security interest in
all Property of Borrower, whether now owned or hereafter acquired,
and all additions and accessions thereto, including, without
limitation, the Property described below:
2.1 Goods, Machinery, Equipment and Inventory. All of Borrower's
goods, machinery, equipment and inventory, wherever located, and all
additions and accessions thereto or replacements thereof, including,
but not limited to, all machinery, inventory and equipment of any and
every kind and description comprising, belonging to or used in
connection with the operation of the business of Borrower
(collectively, the "Tangible Collateral");
2.2 Accounts, General Intangibles. All of Borrower's accounts,
contract rights, chattel paper, instruments, investment property,
deposit accounts, documents, and general intangibles, and all
additions and accessions thereto and replacements thereof, including,
but not limited to, all licenses, franchises, permits and
authorizations heretofore or hereafter granted or issued to Borrower
under federal, state or local laws (excluding, however, any licenses,
franchises, permits and authorizations issued by any Governmental
Body to the extent, and only to the extent, it is unlawful to grant a
security interest in such licenses, franchises, permits and
authorizations, but including, without limitation, the right to
receive all proceeds derived or arising from or in connection with
the sale or assignment of such licenses, franchises, permits and
authorizations) which permit or pertain to the operation of the
business of Borrower, and all of Borrower's Intellectual Property
Collateral, Operating Agreements, income tax refunds, copyrights,
patents, trademarks, trade names, trade styles, goodwill, going
concern value, franchise, supply and distributorship agreements,
non-competition agreements and employment contracts (collectively,
the "Intangible Collateral").
2.3 Proceeds. All proceeds (including proceeds of insurance,
eminent domain and other governmental taking and tort claims) and
products of the Property described in Sections 2.1 and 2.2 above; and
2.4 Books and Records. All of the books and records pertaining
to the Property described in Sections 2.1, 2.2 and 2.3 above.
All of the Property described above hereinafter is referred to
collectively as the "Collateral." The security interest of Lender in
the Collateral shall be superior and prior to all other Liens except
Permitted Prior Liens.
3. Representations and Warranties. Borrower hereby represents
and warrants to Lender as follows:
3.1 Ownership of Collateral. It is the owner of all of the
Collateral free from any Lien except for Permitted Liens, except the
portion thereof consisting of after-acquired Property, and Borrower
will be the owner of such after-acquired Property, free from any Lien
except for Permitted Liens.
3.2 Places of Business. There is listed on Exhibit A hereto the
location of the chief executive office of Borrower, all of the other
places of business of Borrower and all locations where the Tangible
Collateral and the books and records of Borrower are kept. Except as
described in Exhibit A, none of the Collateral is in the possession of
any consignee, bailee, warehouseman, agent or possessor.
3.3 Trade or Assumed Names. Borrower has not used any trade or
assumed names during the six years preceding the date hereof.
3.4 Financing Statements. Except for the financing statements of
Lender and the financing statements pertaining to the Permitted Senior
Indebtedness Liens, if any, no financing statement covering any Collateral
or any portion or proceeds thereof is on file in any public office.
3.5 Intangible Collateral. The Intangible Collateral hereunder
represents bona fide and existing indebtedness, obligations, liabilities,
rights and privileges owed or belonging to Borrower to which, to the best
of Borrower's knowledge, as of the date of this Security Agreement, there
is no valid defense, set-off or counterclaim against Borrower and in
connection with which there is no default with respect to any material
payment or material performance on the part of Borrower, or, to the best
of Borrower's knowledge, any other party. With respect to any Intellectual
Property Collateral of Borrower the loss, impairment or infringement of
which singly or in the aggregate could reasonably be expected to have a
Material Adverse Effect: (i) such Intellectual Property Collateral is
subsisting and has not been adjudged invalid or unenforceable, in whole
or in part, (ii) such Intellectual Property Collateral is valid and
enforceable, (iii) Borrower has made all filings and recordations
necessary in the exercise of reasonable and prudent business judgment to
protect its interest in such Intellectual Property Collateral in the
United States Patent and Trademark Office, the United States Copyright
Office and in corresponding offices throughout the world, as appropriate,
(iv) Borrower is the owner of the entire and unencumbered right, title
and interest in and to such Intellectual Property Collateral and no
claim has been made that the use of such Intellectual Property
Collateral does or may violate the asserted rights of any third party,
and (v) Borrower has performed and will continue to perform all acts and
has paid and will continue to pay all required fees and taxes to maintain
each and every item of such Intellectual Property Collateral in full force
and effect throughout the world, as applicable. Borrower owns directly, or
is entitled to use by license or otherwise, all Intellectual Property
Collateral of any Person used in, necessary for or material to the conduct
of Borrower's businesses. Except as set forth in the Loan Agreement, no
litigation is pending or, to the best knowledge of Borrower, threatened
which contains allegations respecting the validity, enforceability,
infringement or ownership of any of the Intellectual Property Collateral of
Borrower.
3.6 Tangible Collateral-Personal Property. All Tangible Collateral
at all times shall be considered personal property.
3.7 Accounts. Each existing Account constitutes, and each hereafter
arising Account will constitute, to the best of Borrower's knowledge, the
legally valid and binding obligation of the account debtor obligated to pay
the same. The amount represented by Borrower to Lender as owing by each
account debtor is, or will be, the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances
where applicable. To the best of Borrower's knowledge, no account debtor
has any defense, set-off, claim or counterclaim against Borrower that can
be asserted against Lender, whether in any proceeding to enforce Lender's
rights in the Collateral or otherwise. None of the Accounts is, nor will
any hereafter arising Account be, evidenced by a promissory note or other
instrument other than a check, unless delivered to Lender with appropriate
endorsements.
3.8 Inventory. No Inventory is subject to any licensing, patent,
trademark, trade name or copyright agreement with any Person that restricts
Borrower's ability to manufacture and/or sell the Inventory other than
territorial restrictions not materially adverse to the Borrower or its
business.
4. Affirmative Covenants. Until all of Borrowers' Obligations are
paid and performed in full and the Loan Agreement shall have been
terminated, Borrower agrees that it will:
4.1 Corporate Changes. Inform Lender within ten (10) days of any
Corporate Change.
4.2 Taxes. Pay promptly when due all taxes, levies, assessments and
governmental charges upon and relating to any of the Property, income or
receipts of Borrower or otherwise for which Borrower is or may be liable,
except to the extent that the failure to pay any of such taxes, levies,
assessments or charges is permitted by the Loan Agreement.
4.3 Insurance. At its sole expense, keep the Collateral insured
against loss or damage by insurance policies which shall be in such form,
with such companies and in such amounts as may be reasonably satisfactory
to Lender and otherwise comply with the provisions of Section 6.6 of the
Loan Agreement.
4.4 Tangible Collateral.
4.4.1 Good Repair. Keep the Tangible Collateral in good working
order and repair and make all necessary replacements thereof and renewals
thereto so that the value and operating efficiency thereof at all times
shall be maintained and preserved.
4.4.2 Insurance Requirements. Maintain the Tangible Collateral at
all times in accordance with the requirements of all insurance carriers
which provide insurance with respect to such Tangible Collateral so that
such insurance shall remain in full force and effect.
4.4.3 Certificates of Title. Upon the request of Lender (i) promptly
deliver to Lender all certificates of title pertaining to the Tangible
Collateral and (ii) take all actions reasonably requested by Lender to
cause the Lien granted to Lender hereunder to be noted on such
certificates of title.
4.4.4 Use of Collateral. Use the Tangible Collateral in material
compliance with all statutes, regulations, ordinances, requirements and
regulations and all judgments, orders, injunctions and decrees applicable
thereto, and all other federal, state and local laws.
4.5 Intangible Collateral.
4.5.1 Payments. Make all payments and perform all acts reasonably
necessary to maintain and preserve the Intangible Collateral, including,
without limitation, filing of documents, renewals or other information
with any Governmental Body or any other Person.
4.5.2 Delivery of Instruments and Letters of Credit. Upon the request
of Lender, promptly deliver to Lender the original executed copies of all
instruments and letters of credit which constitute part of the Intangible
Collateral, together with such endorsements, assignments and other agreements
as Lender may request in order to perfect the Security Interests.
4.5.3 Accurate Records. At all times keep accurate and complete
records of payment and performance by Borrower and other Persons of their
respective obligations with respect to the Intangible Collateral and permit
Lender or any of its agents to call at Borrower's place of business without
hindrance or delay to inspect, audit, check or make extracts from the books,
records, correspondence or other data relating to the Intangible Collateral
in accordance with the provisions of the Loan Agreement.
4.5.4 Verification of Indebtedness. Upon request of Lender after the
occurrence and during the continuation of an Event of Default, permit Lender
itself, at any time, in the name of Lender or Borrower, to verify directly
with the obligors the indebtedness due Borrower on any account or other item
of Intangible Collateral.
4.5.5 Defaults, Other Claims. Immediately inform Lender of any default
in payment or performance by Borrower or any other Person of any obligation
with respect to the Intangible Collateral or of claims made by others in
regard to the Intangible Collateral, if either of which could have a
Material Adverse Effect.
4.5.6 Ownership of Intellectual Property Collateral. Notify Lender
immediately if it knows, or has reason to know, that any application or
registration relating to any material item of its Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in the
public domain or invalid or unenforceable, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart thereof
or any court) regarding Borrower's ownership of any of its Intellectual
Property Collateral, its right to register the same or to keep and maintain
and enforce the same.
4.5.7 Maintenance of Intellectual Property Collateral. Take all
necessary steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any country or any political subdivision thereof, to
maintain and pursue any application (and to obtain the relevant registration)
filed with respect to, and to maintain any registration of, its Intellectual
Property Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and taxes.
4.6 Collection of Proceeds. Use commercially reasonable efforts to
collect the proceeds of indebtedness owing to Borrower by any Person under
any instrument or by any Account Debtor with respect to any account,
contract right, chattel paper or general intangible.
4.7 Financing Statements, Further Assurances. Concurrently with the
execution of this Security Agreement, Lender will file such financing
statements, continuation statements, termination statements, amendments to
any of the foregoing and other documents as it deems appropriate, and as
Lender may require to perfect and continue in effect the Security Interests,
to carry out the purposes of this Security Agreement and to protect Lender's
rights hereunder. Borrower, upon demand, shall pay the cost of filing all
such financing statements, continuation statements, termination statements,
amendments to any of the foregoing and other documents.
5. Negative Covenants. Until all of Borrower's Obligations are paid
and performed in full and the Loan Agreement shall have been terminated,
Borrower agrees that it will not:
5.1 Sales and Transfer of Collateral. Sell, lease, assign, license or
otherwise dispose of any of the Collateral, except as may be permitted by and
in accordance with the applicable provisions the Loan Agreement.
5.2 Places of Business. Borrower shall not change the location of
(i) Borrower's (A) chief executive office or (B) books and records or (ii)
any Tangible Collateral, in each case without first giving Lender at least
30 days' advance written notice thereof and having taken any and all action
reasonably requested by Lender to maintain and preserve the first perfected
Lien in favor of Lender on all Property thereof free and clear of any Lien
whatsoever except for Permitted Liens.
5.3 Installation of Tangible Collateral. Permit any of the Tangible
Collateral to be installed, affixed or attached to the real estate of
Borrower or any other Person so as to become a part thereof or become in
any sense a fixture not otherwise pledged to Lender.
5.4 Bailees. Permit any Collateral to be in the possession or control
of any warehouseman, bailee or processor without Lender's prior written
consent and unless Lender has received warehouse receipts or bailee letters
satisfactory to Lender prior to such possession or control.
5.5 Licenses of Intellectual Property. Sell, transfer, assign or grant
any exclusive license with respect to the Intellectual Property Collateral to
an Affiliate of Borrower or otherwise take any action with respect to its
Intellectual Property Collateral in violation of any term or provision of the
Loan Agreement.
5.6 Trademark Collateral. Permit, and permit any of its licensees to,
unless Borrower shall either (i) reasonably and in good faith determine that
any of its Trademark Collateral is of negligible economic value to Borrower
or (ii) have a valid business purpose to do otherwise: (A) fail to continue
to use any of its Trademark Collateral in order to maintain all of its
Trademark Collateral in full force free from any claim of abandonment for
non-use, (B) fail to maintain as in the past the quality of products and
services offered under all of its Trademark Collateral, (C) fail to employ
all of its Trademark Collateral registered with any federal, state or foreign
authority with an appropriate notice of such registration, (D) adopt or use
any trademark which is confusingly similar or a colorable imitation of any of
its Trademark Collateral except in compliance with applicable law, (E) use any
of its Trademark Collateral registered with any federal, state or foreign
authority except for the uses for which registration or application for
registration of such Trademark Collateral has been made except in compliance
with applicable law or (F) do or permit any act or knowingly omit to do any
act whereby any of its Trademark Collateral may lapse or become invalid or
unenforceable.
5.7 Patent Collateral. Unless Borrower shall either (i) reasonably and
in good faith determine that any of its Patent Collateral is of negligible
economic value to Borrower or (ii) have a valid business purpose to do
otherwise, do any act, or omit to do any act, whereby any of Borrower's
Patent Collateral may lapse or become abandoned or dedicated to the public or
unenforceable.
6. Protection of Collateral. In the event of any failure of Borrower to
(i) maintain in force and pay for any insurance or bond which Borrower is
required to provide pursuant to this Security Agreement or the other Loan
Instruments, (ii) keep the Tangible Collateral in good repair and operating
condition, (iii) keep the Collateral free from all Liens except for Permitted
Liens, (iv) pay when due all taxes, levies and assessments on or in respect of
the Collateral, except as permitted pursuant to the terms of Section 4.1 above,
(v) make all payments and perform all acts on the part of Borrower to be paid
or performed with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral or (vi) keep fully and perform
promptly any other of the obligations of Borrower under this Security
Agreement or the other Loan Instruments, Lender, at its option, may (but shall
not be required to) procure and pay for such insurance, place such Collateral
in good repair and operating condition, pay or contest or settle such Liens
or taxes or any judgments based thereon or otherwise make good any other
aforesaid failure of Borrower. Borrower shall reimburse Lender immediately
upon demand for all sums paid or advanced on behalf of Borrower for any such
purpose, together with all costs, expenses and attorneys' fees paid or
incurred by Lender in connection therewith and interest at the Default Rate on
all sums so paid or advanced from the date of such payment or advancement
until repaid to Lender. All such sums paid or advanced by Lender, with
interest thereon, immediately upon payment or advancement thereof, shall be
deemed to be part of Borrower's Obligations secured hereby.
7. Event of Default. Borrower shall be in default under this Security
Agreement upon the occurrence of an Event of Default under the Loan Agreement.
8. Right of Lender to Contact Account Debtors. Lender shall have the
right, from time to time, at Lender's discretion, to contact account debtors
of Borrower to verify that Accounts are valid and not subject to setoff or
counterclaim and to verify the creditworthiness of the account debtor.
9. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default:
9.1 Rights of Lender. Lender shall have all of the rights and
remedies of a secured party under the Code and all other rights and remedies
accorded to Lender at equity or law, including, without limitation, the
right to apply for and have a receiver appointed by a court of competent
jurisdiction to manage, protect and preserve the Collateral, to continue
operating the business of Borrower and to collect all revenues and profits
thereof. Any notice of sale or other disposition of Collateral given not
less than ten (10) days prior to such proposed action shall constitute
reasonable and fair notice of such action. Lender may postpone or adjourn
any such sale from time to time by announcement at the time and place of
sale stated in the notice of sale or by announcement of any adjourned sale,
without being required to give a further notice of sale. Any such sale may
be for cash or, unless prohibited by applicable law, upon such credit or
installment terms as Lender shall determine. Borrower shall be credited
with the net proceeds of such sale only when such proceeds actually are
received by Lender in Good Funds. Despite the consummation of any such
sale, Borrower shall remain liable for any deficiency on Borrower's
Obligations which remains outstanding following any such sale. All net
proceeds received pursuant to a sale shall be applied in the manner set
forth in Section 8.4 of the Loan Agreement.
9.2 Assembly of Collateral. Upon the request of Lender, Borrower
shall assemble and make the Collateral available to Lender at a place
designated by Lender.
9.3 Proceeds. Borrower shall hold all proceeds of the Collateral
collected by Borrower in trust for Lender, and, after Borrower receives
notice from Lender, promptly after the receipt of the proceeds of
Collateral, turn over such proceeds to Lender in the exact form in which
they were received.
9.4 Other Rights. Lender, at its election, and without notice to
Borrower, may:
9.4.1 Terminate Right of Collection. Terminate the rights of
Borrower to collect the proceeds described in Section 8.3.
9.4.2 Notification. Notify the obligors under any instruments and
the Account Debtors of any account, contract right, chattel paper or
general intangible to make all payments directly to Lender.
9.4.3 Collection of Payments. Demand, sue for, collect or receive,
in the name of Borrower or Lender, any money or Property payable or
receivable on any item of Collateral.
9.4.4 Settlement. Settle, release, compromise, adjust, sue upon or
otherwise enforce any item of Collateral as Lender may determine.
9.4.5 Mail of Borrower; Endorsement of Checks. For the purpose of
enforcing Lender's rights under this Security Agreement, receive and open
mail addressed to Borrower, and endorse notes, checks, drafts, money
orders, documents of title or other forms of payment on behalf and in the
name of Borrower.
All monies received by Lender pursuant to this Section 9 shall be applied
by Lender in accordance with the applicable provisions of Section 8.4 of
the Loan Agreement.
10. Power of Attorney. To effectuate the rights and remedies of
Lender under this Security Agreement, Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, in the name of Borrower or in
the name of Lender, (i) to execute and file from time to time financing
statements, continuation statements, termination statements and
amendments thereto, covering the Collateral, in form satisfactory to
Lender and (ii) take all action and execute all documents referred to
in Section 9.4 above. The power of attorney granted pursuant to this
Section 10 is coupled with an interest and shall be irrevocable until all
of Borrower's Obligations have been paid and performed in full and the
Loan Agreement shall have been terminated.
11. Certain Agreements of Borrower.
11.1 Waiver of Notice. Borrower hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 and 9.3 above or in the Loan
Agreement, all other notices, demands or protests to which Borrower
otherwise might be entitled by law (and which lawfully may be waived)
with respect to this Security Agreement, Borrower's Obligations and the
Collateral.
11.2 Rights of Lender. Borrower agrees that Lender (i) shall have
no duty as to the collection or protection of the Collateral or any
income thereon, (ii) may exercise the rights and remedies of Lender with
respect to the Collateral without resort or regard to other security or
sources for payment and (iii) shall not be deemed to have waived any of
the rights or remedies granted to Lender hereunder unless such waiver
shall be in writing and shall be signed by Lender. Borrower and Lender
acknowledge their intent that, upon the occurrence of an Event of Default,
Lender shall receive, to the fullest extent permitted by law and
governmental policy, all rights necessary or desirable to obtain, use or
sell the Collateral, and to exercise all remedies available to Lender
under the Loan Instruments, the Code or other applicable law. Borrower
and Lender further acknowledge and agree that, in the event of changes
in law or governmental policy occurring subsequent to the date hereof
that affect in any manner Lender's rights of access to, or use or sale
of, the Collateral, or the procedures necessary to enable Lender to
obtain such rights of access, use or sale, Lender and Borrower shall
amend the Loan Instruments, in such manner as Lender shall request,
in order to provide Lender such rights to the greatest extent possible
consistent with then applicable law and governmental policy.
11.3 No Delay, Single or Partial Exercise Permitted. No delay or
omission on the part of Lender in exercising any rights or remedies
contained herein shall operate as a waiver of such right or remedy or
of any other right or remedy, and no single or partial exercise of any
right or remedy shall preclude any other or further exercise thereof, or
the exercise of any other right or remedy. A waiver of any right or
remedy on any one occasion shall not be construed as a bar or waiver of
any right or remedy on future occasions, and no delay, omission, waiver
or single or partial exercise of any right or remedy shall be deemed to
establish a custom or course of dealing or performance between the
parties hereto.
11.4 Borrower to Remain Liable. Borrower hereby expressly agrees
that, anything herein to the contrary notwithstanding, Borrower shall
remain liable under each contract, agreement, interest or obligation
assigned by Borrower to Lender hereunder to observe and perform all of
the conditions and obligations to be observed and performed by Borrower
thereunder, all in accordance with and pursuant to the terms and
provisions thereof. The exercise by Lender of any of the rights assigned
hereunder shall not release Borrower from any of its duties or
obligations under any such contract, agreement, interest or obligation.
Lender shall have no duty, responsibility, obligation or liability under
any such contract, agreement, interest or obligation by reason of or
arising out of the assignment thereof to Lender or the granting to Lender
of a Security Interest therein or the receipt by Lender of any payment
relating to any such contract, agreement, interest or obligation pursuant
hereto, nor shall Lender be required or obligated in any manner to
perform or fulfill any of the obligations of Borrower thereunder or
pursuant thereto, or to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by Lender or the
sufficiency of any performance of any party under any such contract,
agreement, interest or obligation, or to present or file any claim, or
to take any action to collect or enforce any performance of the payment
of any amounts which may have been assigned to Lender, in which Lender
may have been granted a Security Interest or to which Lender may be
entitled at any time or times.
11.5 Grant of License to Use Intellectual Property Collateral.
Borrower hereby grants to Lender, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation
to Borrower) to use, assign, license or sublicense any Intellectual
Property Collateral, now owned or hereafter acquired by Borrower, and
wherever the same may be located, including in such license reasonable
access as to all media in which any of the licensed items may be recorded
or stored and to all computer programs and used for the compilation or
printout thereof.
12. Rights Cumulative. All rights and remedies of Lender pursuant
to this Security Agreement, the Loan Agreement or otherwise, shall be
cumulative and non-exclusive, and may be exercised singularly or
concurrently.
13. Severability. In the event that any provision of this Security
Agreement is deemed to be invalid by reason of the operation of any law or
by reason of the interpretation placed thereon by any court or any other
Governmental Body, this Security Agreement shall be construed as not
containing such provision and the invalidity of such provision shall not
affect the validity of any other provisions hereof, and any and all other
provisions hereof which otherwise are lawful and valid shall remain in
full force and effect.
14. Notices. All notices and communications under this Security
Agreement shall be in writing and delivered in the manner set forth in
the Loan Agreement.
15. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Lender and Borrower.
16. Captions. The headings in this Security Agreement are for
purposes of reference only and shall not limit or otherwise affect
the meaning hereof.
17. Counterparts. This Security Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original, but all of which, when taken together, shall be one and the
same instrument.
18. Survival of Security Agreement; Termination. All covenants,
agreements, representations and warranties made herein shall survive
the execution and delivery of the Loan Agreement and shall continue in
fall force and effect until Borrower's Obligations are paid and
performed in full and the Loan Agreement shall have been terminated.
19. Governing Law. This Security Agreement shall be construed in
accordance with and governed by the laws and decisions of the State of
Illinois, without regard to conflict of laws principles.
20. Jurisdiction and Venue. Borrower hereby agrees that all
actions or proceedings initiated by Borrower and arising directly or
indirectly out of this Security Agreement shall be litigated in either
the Circuit Court of Cook County, Illinois or in the United States
District Court for the Northern District of Illinois, or, if Lender
initiates such action, in addition to the foregoing courts, any other
court in which Lender shall initiate or to which Lender shall remove
such action, to the extent such court has jurisdiction. Borrower hereby
expressly submits and consents in advance to such jurisdiction in any
action or proceeding commenced by Lender in or removed by Lender to any
of such courts, and hereby agrees that personal service of the summons
and complaint, or other process or papers issued therein may be served
in the manner provided for notices herein, and agrees that service of
such summons and complaint or other process or papers may be made by
registered or certified mail addressed to Borrower at the address to
which notices are to be sent pursuant to Section 11.1 of the Loan
Agreement. Borrower waives any claim that either the Circuit Court of
Cook County, Illinois or the United States District Court for the
Northern District of Illinois is an inconvenient forum or an improper
forum based on lack of venue. To the extent provided by law, should
Borrower, after being so served, fail to appear or answer to any
summons, complaint, process or papers so served within the number of
days prescribed by law after the mailing thereof, Borrower shall be
deemed in default and an order and/or judgment may be entered by the
court against Borrower as demanded or prayed for in such summons,
complaint, process or papers. The exclusive choice of forum for
Borrower set forth in this Section 19 shall not be deemed to preclude
the enforcement by Lender of any judgment obtained in any other forum
or the taking by Lender of any action to enforce the same in any other
appropriate jurisdiction, and Borrower hereby waives the right to
collaterally attack any such judgment or action.
21. Waiver of Right to Jury Trial. Borrower acknowledges and
agrees that any controversy which may arise under any of the Loan
Instruments or with respect to the transactions contemplated thereby
would be based upon difficult and complex issues and, therefore, the
parties agree that any lawsuit arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting
without a jury.
22. Time of the Essence. Time for the performance of Borrower's
Obligations under this Security Agreement is of the essence.
23. Termination. This Security Agreement and the Liens and
security interests granted hereunder shall not terminate until the full
and complete performance and payment and satisfaction of Borrower's
Obligations and the Loan Agreement shall have terminated, whereupon
Lender shall release all such Liens and security interests in favor of
Lender affecting the Collateral.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
Address: AFT TRANSPORT, LLC,
a Delaware limited liability company
336 W. US Highway 30
Valparaiso, IN 46385
By: _____________________________
Name: ___________________________
Title: __________________________
Address: US BANK , a national banking association
209 S. LaSalle Street
Suite 410
Chicago, IL 60604 By: _____________________________
Name: Craig B. Collinson
Title: Senior Vice President
EXHIBIT A
Location of Chief Executive Office,
Location of other Places of Business,
Location of Books and Records and
Locations of All Tangible Collateral
Location of Chief Executive Office
336 W. US Highway 30
Valparaiso, IN 46385
Location of Other Places of Business
NONE
Location of Books and Records
336 W. US Highway 30
Valparaiso, IN 46385
Locations of All Tangible Collateral
336 W. US Highway 30
Valparaiso, IN 46385
EXHIBIT E
ASSUMPTION AGREEMENT
The undersigned, ARL TRANSPORT LLC, a Delaware limited
liability company, and AFT TRANSPORT, LLC, a Delaware limited
liability company, BLUE & GREY TRANSPORT COMPANY, INC., an
Indiana corporation, CAROLINA NATIONAL LOGISTICS, INC., an
Indiana corporation, KEYSTONE LINES, a California corporation,
FREIGHTMASTER USA, LLC, an Indiana limited liability company,
US 1 CORP., an Indiana corporation, ANTLER TRANSPORT, LLC, an
Indiana limited liability company, BRUIN EXPRESS INTERMODAL,
LLC, an Indiana limited liability company, RISK INSURANCE
SERVICES OF INDIANA, LLC, an Indiana limited liability company,
TC ADMINISTRATIVE SERVICES, INC., a California corporation, and
US 1 INDUSTRIES, INC., and hereby agree to all of the terms and
conditions as set forth in the Amended and Restated Loan
Agreement dated as of March 10, 2005 and amended as of May 5,
2005, September 30, 2005, July 12, 2007, March 25, 2008, and
December __, 2008 ("Loan Agreement") by and between Carolina
National Transportation, LLC, Keystone Lines Corp., Gulf Line
Transport, LLC, Five Star Transport, LLC, CAM Transport, Inc.,
Unity Logistic Services Inc., ERX, Inc., Friendly Transport,
LLC, Transport Leasing, Inc., Harbor Bridge Intermodal, Inc.,
Patriot Logistics, Inc., Liberty Transport, Inc., Keystone
Logistics, Inc., TC Services, Inc., Freedom 1, LLC, Thunderbird
Logistics, LLC, Thunderbird Motor Express, LLC, US 1 Logistics,
LLC, US 1 Industries, Inc. and U.S. Bank N.A., including any
amendments subsequent hereto, and assumes the obligations of
"Borrower" (as defined in said Loan Agreement) thereunder
jointly and severally with each other "Borrower Entity" (as
defined in said Loan Agreement) and agrees to be bound by all
the terms, covenants, agreements or conditions, thereof, as
the same applied to each Borrower Entity.
ARL TRANSPORT LLC
By: ______________________________
Its: ________________________
AFT TRANSPORT LLC
By: ______________________________
Its: ________________________
BLUE & GREY TRANSPORT, COMPANY, INC.
By: ______________________________
Its: ________________________
CAROLINA NATIONAL LOGISTICS, INC.
By: ______________________________
Its: ________________________
KEYSTONE LINES
By: ______________________________
Its: ________________________
FREIGHTMASTER USA, LLC
By: ______________________________
Its: ________________________
US 1 CORP.
By: ______________________________
Its: ________________________
ANTLER TRANSPORT, LLC
By: ______________________________
Its: ________________________
BRUIN EXPRESS INTERMODAL, LLC
By: ______________________________
Its: ________________________
RISK INSURANCE SERVICES OF INDIANA, LLC
By: ______________________________
Its: ________________________
TC ADMINISTRATIVE SERVICES, INC.
By: ______________________________
Its: ________________________
US 1 INDUSTRIES, INC.
By: ______________________________
Its: ________________________
Dated: December ____, 2008
EXHIBIT F
COLLATERAL ASSIGNMENT OF
MEMBER INTEREST PURCHASE AGREEMENT
THIS AGREEMENT is made as of this __ day of ___________, 2008,
by US 1 INDUSTRIES, INC., an Indiana corporation, (the "Debtor"), and
which is the "Purchaser" under that certain Membership Interest
Purchase Agreement between ARL, INC. and others and the Debtor dated
December __, 2008 (the "Purchase Agreement"), in favor of U.S. BANK,
(the "Secured Party").
1. Grant of Security Interest; Assignment; Collateral. To
secure the Obligations hereinafter described, Debtor hereby grants a
security interest in and assigns to Secured Party all of the rights
and interests of Debtor under the Purchase Agreement.
2. Obligations. The obligations secured by this Security
Agreement (hereinafter referred to as the "Obligations") are the
Borrower's Obligations under that certain Amended and Restated Loan
Agreement dated March 10, 2005, as amended on May 5, 2005, September
30, 2005, July 12, 2007, March 25, 2008 and December ____, 2008 by and
between Secured Party and Gulf Line Transport, LLC, Five Star Transport,
LLC, CAM Transport, Inc., Unity Logistics Services, Inc., ERX, Inc.,
Friendly Transport, LLC, Transport Leasing, Inc., Harbor Bridge
Intermodal, Inc., Patriot Logistics, Inc., Liberty Transport, Inc.,
Keystone Lines Corporation, TC Services, Inc., Keystone Logistics, Inc.,
Carolina National Transportation, LLC, Freedom 1, LLC, Thunderbird
Logistics, LLC, Thunderbird Motor Express, LLC, US 1 Logistics, LLC,
Blue & Grey Transport Company, Carolina National Logistics, Inc.,
Keystone Lines, Freightmaster USA, LLC, US 1 Corp., Antler Transport,
LLC, Bruin Express Intermodal, LLC, Risk Insurance Services of Indiana,
LLC, TC Administrative Services, Inc., ARL Transport, LLC, AFT
Transport, LLC and US 1 Industries, Inc. (the "Loan Agreement").,
3. Representations, Warranties, Covenants and Agreements. Debtor
represents, warrants, covenants and agrees as follows:
(a) Except as provided for on Exhibit A hereto, there is no
financing statement now on file in any public office relating to all or
any portion of the Debtor's interest under the Purchase Agreement.
(b) Debtor shall not revoke or amend the Purchase Agreement until
the security interest secured by this Agreement shall have been released.
4. Rights and Obligations of the Secured Party.
(a) Notwithstanding anything to the contrary appearing in the
Purchase Agreement, the interest hereinabove described is granted and
assigned to Secured Party by way of collateral security only and,
accordingly, Secured Party by its acceptance hereof shall not be deemed
to have assumed or become liable for any of the obligations or
liabilities of Debtor under the Purchase Agreement, whether provided for
by the terms thereof, arising by operation of law or otherwise; Debtor
hereby acknowledging that Debtor remains liable thereunder to the same
extent as though this Agreement has not been made.
(b) The acceptance by Secured Party at any time and from time to
time of part payment on the Obligations shall not be deemed to be a
waiver of any default then existing. No waiver by Secured Party of any
default shall be deemed to be a waiver of any other then existing or
subsequent default, nor shall any such waiver by Secured Party be deemed
to be a continuing waiver. No delay or omission by Secured Party in
exercising any right, remedy or privilege hereunder shall impair any such
right, remedy or privilege or be construed as a waiver thereof or any
acquiescence in the default giving rise thereto, nor shall any single or
partial exercise of any such right, remedy or privilege preclude other or
further exercise thereof, or the exercise of any other right, remedy or
privilege of Secured Party hereunder.
(c) All rights, remedies and privileges available to Secured
Party hereunder shall be cumulative of and in addition to all other
rights, remedies and privileges granted to Secured Party at law or in
equity, and may be exercised from time to time, and as often as may be
deemed expedient by Secured Party.
5. Events of Default. The occurrence of any one or more of the
following shall constitute an "Event of Default" for purposes of this
Agreement:
(a) Failure of Debtor to pay or cause to be paid, when due, any
installment of principal or interest or other payment payable pursuant
to the Note, executed pursuant to the Loan Agreement.
(b) Any sale, transfer, lease, assignment, conveyance, pledge,
lien or encumbrance made in violation of the provisions of this
Agreement.
6. Rights of Parties Upon Default. Upon the occurrence of an
Event of Default, or at any time or times or from time to time
thereafter, Secured Party may, either before or after taking possession
of the Collateral: exercise any one or more or all the rights or remedies
set forth in the Loan Documents, and in addition thereto Secured Party
shall have full power and authority to exercise all or any one or more of
the remedies and shall have all the rights of a secured party under the
Uniform Commercial Code of Illinois (the "Code"). Any requirement of the
Code for reasonable notice shall be met if such notice is mailed, postage
prepaid, to Debtor at the address of Debtor as set forth in Paragraph 8
below at least fourteen (14) days prior to the time of the sale,
disposition or other event or thing giving rise to the requirement of
notice. The Secured Party shall have the unqualified right, in connection
with any such sale of collateral, to execute and deliver an assignment of
said beneficial interest to the purchaser at any such sale, free of any
right of redemption by Debtor, and upon the filing thereof with the
Trustee of the Trust, said Trustee shall recognize said assignee as the
absolute owner of said beneficial interest for any and all purposes
whatsoever and shall act on directions of said assignee without any
liability or obligation to Debtor whatsoever, without inquiry into the
validity or propriety of such sale or assignment, and irrespective of
any notice whatsoever from Debtor or any other person, unless and until
said Trustee is served with an order of court prohibiting further action
by the Trustee upon the direction of such assignee; and
7. Additional Provisions. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois. All
provisions of this Agreement shall be deemed valid and enforceable to the
extent permitted by law. Any provision or provisions of this Agreement
which are held unenforceable, invalid or contrary to law by a court of
competent jurisdiction, or the inclusion of which would affect the validity
or enforceability of this Agreement, shall be of no force or effect, and
in such event each and all of the remaining provisions of this Agreement
shall subsist and remain and be fully effective according to the tenor of
this Agreement as though such invalid, unenforceable or unlawful provision
or provisions had not been included in this Agreement. All rights, powers
and remedies of Secured Party under this Agreement shall inure to the
benefit of its successors and assigns, and all obligations and liabilities
of Debtor shall bind and be enforceable against Debtor and its successors
and assigns.
8. Notices. Any notice or demand required or permitted to be given
under this Agreement shall be in writing and shall be personally delivered
or mailed by United States registered or certified mail, return receipt
requested, addressed as follows or to such party's current address:
TO Debtor: US 1 INDUSTRIES, INC.
336 W. US Highway 30
Valparaiso, IN 46385
Attention: Michael Kibler and Harold Antonson
TO SECURED PARTY: U.S. BANK, N.A.
209 S. LaSalle Street
Suite 410
Chicago, IL 60604
Attention: Craig Collinson
AND TO: GOULD & RATNER
222 North LaSalle Street
Chicago, Illinois 60601
Attn: John Washburn, Esq.
Any notice or demand given by United States mail shall be deemed given
three (3) business days after the same is deposited in the United States
mail.
9. Release. When all of the Obligations hereby secured have been
fully and finally paid and performed, this Agreement shall terminate and
be of no further force and effect. After such termination, and upon
Debtor' request, Secured Party shall execute and deliver to Debtor for
filing with the Trust a release of the assignment of beneficial interest
herein contained.
Executed at Chicago, Illinois as of the day and year first above
written.
US 1 INDUSTRIES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
ACCEPTANCE
The undersigned accepts the foregoing assignment and agrees upon
payment of the above-described Obligations to execute and deliver a
reassignment to the Debtor.
SECURED PARTY: U.S. BANK,
By: ______________________________
Its: ______________________________
CONSENT
ARL, Inc., Aficionado Transport, Inc., and Ronald K. Faherty,
hereby acknowledge receipt of the foregoing assignment and consent to the
collateral assignment of Debtor's interest in, to and under the Purchase
Agreement to the Secured Party.
Date: ARL, INC.,
By: ______________________________
Its: ______________________________
AFICIONADO TRANSPORT, INC.
By: ______________________________
Its: ______________________________
______________________________________
RONALD K. FAHERTY
EXHIBIT A
1. UCC File No. 2006081100952, filed on August 10, 2006.
Secured Party is Citicorp Vendor Finance, Inc. ("Citicorp"), with
respect to certain leased phone equipment pursuant to Equipment Lease
No. 200216192, undated, by and among ARL, Patriarch Capital Finance,
LLC (as co-lessee), and Citicorp.
2. UCC File Nos. 2005062202167, filed on June 22, 2005 and
2007031305643, filed on March 13, 2007. Secured Party is Van Dyk
Business Systems with respect to certain leased Sharp copiers.
3. UCC File Nos. 2319220, filed on April 20, 2000, and
2364545, filed on December 31, 2004. Secured Party is FirstarBank,
N.A.
4. UCC File No. 200400009775993 filed on October 18, 2004.
Secured Party is U.S. Bank National Association.
EXHIBIT G
SUBORDINATION AGREEMENT
This Subordination Agreement ("Agreement") dated as of
December ____, 2008 is entered into by and between ARL, Inc. with
offices at 1155 Stoops Ferry Road, Moon Township, PA 15108 ("Junior
Creditor") and US Bank ("Lender") with offices at 209 South LaSalle
Street, Suite 410, Chicago, IL 60602.
W I T N E S S E T H:
WHEREAS, Junior Creditor may be owed monies by US 1 Industries,
Inc. ("US 1"), as evidenced by that certain Membership Interest Purchase
Agreement between, inter alia, Junior Creditor, as Seller, and Borrower,
as Purchaser ("Purchase Agreement") bearing dates and principal amounts
fully described on Exhibit A hereto;
WHEREAS, US 1 may hereafter be liable to Lender as a result of the
advance of monies and other extensions of credit by Lender to Carolina
National Transportation, LLC, Keystone Lines Corp., Gulf Line Transport
LLC, Five Star Transport, LLC, CAM Transport, Inc., Unity Logistics
Services, Inc., ERX, Inc., Friendly Transport, LLC, Transport Leasing,
Inc., Harbor Bridge Intermodal, Inc., Patriot Logistics, Inc., Liberty
Transport, Inc., TC Services, Inc., Keystone Logistics, Inc., Freedom 1,
LLC, Thunderbird Logistics, LLC, Thunderbird Motor Express, LLC, US 1
Logistics, Blue & Grey Transport Company, Carolina National Logistics,
Keystone Lines, Freightmaster USA, LLC, US 1 Corp., Antler Transport,
LLC, Bruin Express Intermodal, LLC, Risk Insurance Services of Indiana,
LLC, TC Administrative Services, Inc., LLC, ARL Transport, LLC, AFT
Transport, LLC, and US 1 Industries, Inc. ("Industries") ("Borrowers")
pursuant to that certain Amended and Restated Loan Agreement dated March
10, 2005, as amended by that certain Amendment to Amended and Restated
Loan Agreement dated as of May 5, 2005, by that certain Second Amendment
to Amended and Restated Loan Agreement dated September 30, 2005, by that
certain Third Amendment to Amended and Restated Loan Agreement dated
July 12, 2007, by that certain Fourth Amendment to Amended and Restated
Loan Agreement dated March 25, 2008, and by that certain Fifth Amendment
to Amended and Restated Loan Agreement dated as of December ____, 2008
(as so amended the "Loan Agreement") between Borrowers and Lender, as
amended from time to time (the "Loan Agreement");
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged by the Junior Creditor, and in order to
induce Lender to make loans or extend credit or any other financial
accommodation to or for the benefit of the Borrower pursuant to the Loan
Agreement; or to grant such renewals or extensions thereof as Lender may
deem advisable; and to better secure Lender in respect of the foregoing,
the Junior Creditor hereby agrees with Lender as hereinafter set forth.
1. Standby; Subordination. Except as provided in Section 2 hereof,
the "Subordinated Debt" (as defined below) is hereby subordinated to the
"Senior Debt" (as defined below), and the Junior Creditor will not ask,
demand, sue for, take or receive from US 1, by setoff or in any other
manner, the whole or any part of any monies which may now or hereafter be
owing by US 1, or any successor or assign of US 1, including, without
limitation, a receiver, trustee or debtor in possession (the term "US 1"
hereinafter shall include any such successor or assign of US 1), to the
Junior Creditor or be owing by any other person, firm, partnership or
corporation to the Junior Creditor for the benefit of the US 1 (whether
such amounts represent principal or interest, or obligations which are
due or not due, direct or indirect, absolute or contingent), including,
without limitation, the taking of any negotiable instruments evidencing
such amounts (all such indebtedness, obligations and liabilities being
hereinafter referred to as the "Subordinated Debt"), nor any security
for any of the foregoing (except to the extent such security is by its
express terms junior to all liens and security in favor of Lender
securing the Senior Debt), unless and until all obligations, liabilities,
and indebtedness of US 1 to the Lender, whether now existing or hereafter
arising, directly between US 1 and the Lender, or acquired outright,
conditionally or as collateral security from another, shall have been
fully paid and satisfied with interest (all such obligations, indebtedness
and liabilities of US 1 to Lender, are hereinafter referred to as the
"Senior Debt"), and all financing arrangements between Borrower and the
Lender have been terminated.
2. Permitted Payments; Standstill. Any other terms and provisions
of this Agreement regarding payment of Subordinated Debt notwithstanding,
provided Lender has not given Junior Creditor notice that an "Event of
Default" (as such term is defined in the Loan Agreement) has occurred and
is continuing under the Loan Agreement, and provided that such payment
would not if made, create an Event of Default, the Junior Creditor shall
be entitled to accept from US 1 and retain for its own account, payments
due under the Purchase Agreement, when due on an unaccelerated basis
("Permitted Payments"). The Junior Creditor shall not accept prepayments
of the Subordinated Debt during the term of the Loan Agreement. From and
after the occurrence of an Event of Default and until Lender declares in
writing that an Event of Default no long exists, the Junior Creditor shall
take no steps, whether by suit or otherwise, to compel or enforce the
collection of the Subordinated Debt, nor will the Junior Creditor use the
Subordinated Notes by way of counterclaim, set off, recoupment or otherwise
so as to diminish, discharge or otherwise satisfy in whole or in part any
indebtedness or liability of the Junior Creditor to US 1, whether now
existing or hereafter arising and howsoever evidenced.
3. Security for Subordinated Debt. The Junior Creditor warrants
and represents that, as of the date hereof, the Junior Creditor has no lien
on or security interest in any of the assets of Borrower as security for the
repayment of the Subordinated Debt, and that the Junior Creditor shall take
no security interest in any of the assets of US 1 or any Borrower until the
Senior Debt shall have been fully discharged and all financing agreements
between US 1 and Borrowers and the Lender have been terminated, unless such
security interest is by its express terms junior to all liens and security in
favor of Lender securing the Senior Debt.
4. Subordinated Debt Owed Only to the Junior Creditor. The Junior
Creditor warrants and represents that, as of the date hereof, the Junior
Creditor has not previously assigned any interest in the Subordinated Debt
or any security interest in connection therewith, that no other party owns
an interest in the Subordinated Debt or security therefor (other than as an
unsecured trade creditor) other than the Junior Creditor (whether as joint
holders of the Subordinated Debt, participants or otherwise) and that the
entire Subordinated Debt is owing only to the Junior Creditor and covenants
that the entire Subordinated Debt shall continue to be owing only to the
Junior Creditor and all security therefor shall continue to be held solely
for the benefit of the Junior Creditor (except to the extent held for the
benefit of unsecured trade creditors) unless assigned expressly subject to
the terms of this Agreement. The Junior Creditor further warrants and
covenants to Lender that the Junior Creditor shall not make further loans,
advances or extensions of credit to US 1 or any Borrower or modify the terms
of the Subordinate Debt without the prior written consent of Lender.
5. Lender's Priority; Grant of Authority to Lender. In the event of
any distribution, division, or application, partial or complete, voluntary
or involuntary, by operation of law or otherwise, of all or any part of the
assets of US 1 or any Borrower or the proceeds thereof to the creditors of
US 1 or any Borrower or readjustment of the Senior Debt and Subordinated
Debt of US 1 or any Borrower, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any
other action or proceeding involving the readjustment of all or any part of
the Subordinated Debt, or the application of the assets of US 1 or any
Borrower thereof, or upon the dissolution or other winding up of US 1's or
any Borrower's business, or upon the sale of all or substantially all of
the US 1's or any Borrower's assets, then, and in such event, (i) Lender
shall be entitled to receive payment in full of any and all of the Senior
Debt then owing prior to the payment of all or any part of the Subordinated
Debt (other than Permitted Payments theretofore received) and (ii) any
payment or distribution of any kind or character, whether in cash,
securities or other property, which shall be payable or deliverable upon or
with respect to any or all of the Subordinated Debt shall be paid or
delivered directly to Lender for application on any of the Senior Debt, due
or not due, until such Senior Debt shall have first been fully paid and
satisfied, prior to the payment of the Subordinated Debt. In order to enable
Lender to enforce its rights hereunder in any of the aforesaid actions or
proceedings, Lender is hereby irrevocably authorized and empowered, in its
discretion, to make and present for and on behalf of the Junior Creditor
such proofs of claims against US 1 on account of the Subordinated Debt as
the Lender may deem expedient or proper and to vote such proofs of claims
in any such proceeding and to receive and collect any and all dividends or
other payments or disbursements made thereon in whatever form the same may
be paid or issued, and to apply the same on account of any of the Senior
Debt. The Junior Creditor irrevocably authorizes and empowers Lender to
demand, sue for, collect and receive each of the aforesaid payments and
distributions and give acquittance therefor and to file claims and take
such other actions, in Lender's own name or in the name of the Junior
Creditor or otherwise, as Lender may deem necessary or advisable for the
enforcement of this Agreement; and the Junior Creditor will execute and
deliver to Lender such powers of attorney, assignments and other
instruments or documents, including notes and stock certificates (together
with such assignments or endorsements as Lender shall deem necessary), as
may be requested by the Lender in order to enable Lender to enforce any
and all claims upon or with respect to any or all of the Subordinated Debt
and to collect and receive any and all payments and distributions which
may be payable or deliverable at any time upon or with respect to the
Subordinated Debt, all for Lender's own benefit.
6. Payments Received by the Junior Creditor. Should any payment or
distribution or security or instrument or proceeds thereof be received by
the Junior Creditor upon or with respect to the Subordinated Debt prior to
the satisfaction of all of the Senior Debt (other than Permitted Payments)
and termination of all financing arrangements between US 1 and Borrowers
and Lender, the Junior Creditor shall receive and hold the same in trust,
as trustee, for the benefit of Lender and shall forthwith deliver the same
to Lender in precisely the form received (except for the endorsement or
assignment of the Junior Creditor where necessary), for application on any
of the Senior Debt, due or not due, and, until so delivered, the same shall
be held in trust by the Junior Creditor as the property of Lender. In the
event of the failure of the Junior Creditor to make any such endorsement or
assignment to Lender, Lender, or any of its officers or employees, are
hereby irrevocably authorized to make the same.
7. Instrument Legend. Any instrument evidencing any of the
Subordinated Debt will, on the date hereof, be inscribed with a legend
conspicuously indicating that payment thereof is subordinated to the claims
of Lender pursuant to the terms of this Agreement. Any instrument evidencing
any of the Subordinated Debt, or any portion thereof, which is hereafter
executed by US 1, will, on the date thereof, be inscribed with the aforesaid
legend.
8. Assignment of Claims. The Junior Creditor agrees that until the
Senior Debt has been paid in full and satisfied and all financing arrangements
between US 1 and Borrowers and Lender have been terminated, the Junior
Creditor will not directly or indirectly, assign or transfer to others any
claim the Junior Creditor has or may have against US 1 or any Borrower unless
such assignment or transfer is made expressly subject to this Agreement.
9. Continuing Nature of Subordination. This Agreement shall be
effective and may not be terminated or otherwise revoked by the Junior
Creditor until the Senior Debt shall have been fully discharged and all
financing arrangements between the Borrowers and Lender have been terminated.
This is a continuing agreement of subordination and Lender may continue, at
any time and without notice to the Junior Creditor, to extend credit or other
financial accommodations and loan monies to or for the benefit of US 1 or any
Borrower on the faith hereof. No obligation of the Junior Creditor hereunder
shall be affected by the death, incapacity or written revocation of this
Agreement by the Junior Creditor or any other subordinator, pledgor,
endorser, or guarantor, if any.
10. Additional Agreements Between Lender and Borrower. Lender, at
any time and from time to time, may enter into such agreement or agreements
with the Borrowers and/or US 1 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 the security underlying any or all of the Senior
Debt, and may exchange, sell, release, surrender or otherwise deal with any
such security, without in any way thereby impairing or affecting this
Agreement.
11. Undersigned's Waivers. All of the Senior Debt shall be deemed to
have been made or incurred in reliance upon this Agreement. The Junior
Creditor expressly waives all notice of the acceptance by Lender of the
subordination and other provisions of this Agreement and all other notices
not specifically required pursuant to the terms of this Agreement whatsoever,
and the Junior Creditor expressly waives reliance by Lender upon the
subordination and other agreements as herein provided. The Junior Creditor
agrees that Lender has not made any warranties or representations with
respect to the due execution, legality, validity, completeness or
enforceability of the Loan Agreement, or the collectibility of the Senior
Debt, that Lender shall be entitled to manage and supervise its respective
loans to the Borrower in accordance with applicable law and its respective
usual practices, modified from time to time as it deems appropriate under
the circumstances, without regard to the existence of any rights that the
Junior Creditor may now or hereafter have in or to any of the assets of US 1
or any Borrower, and that Lender shall not have any liability to the Junior
Creditor for, and waives any claim which the Junior Creditor may now or
hereafter have against Lender arising out of (i) any and all actions which
Lender, in good faith, takes or omits to take including, without limitation,
actions with respect to the creation, perfection or continuation of liens or
security interests in the "Collateral" (as defined in the Loan Agreement)
and other security for the Senior Debt, actions with respect to the
occurrence of an Event of Default, actions with respect to the foreclosure
upon, sale, release, or depreciation of, or failure to realize upon, any of
the 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 any
other party with respect to the Loan Agreement or any other agreement related
thereto or to the collection of the Senior Debt or the valuation, use,
protection or release of the Collateral and/or other security for the
Obligations, (ii) Lender's election, in any proceeding instituted under
Chapter 11 of Title 11 of the United States Code (11 U.S.C. Section 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 to Borrower, as debtor
in possession.
12. Lender's Waivers. 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 waiver, if any, shall be a waiver
only with respect to the specific instance involved and shall in no way
impair the rights of Lender or the obligations of the Junior Creditor to
Lender in any other respect at any other time.
13. Information Concerning Financial Condition of Borrower. The
Junior Creditor hereby assumes responsibility for keeping itself informed of
the financial condition of US 1 and Borrowers, any and all endorsers and any
and all guarantors of the Senior Debt and of all other circumstances bearing
upon the risk of nonpayment of the Senior Debt and/or Subordinated Debt that
diligent inquiry would reveal, and the Junior Creditor hereby agrees that
Lender shall have no duty to advise the Junior Creditor of information known
to Lender regarding such condition or any such circumstances. In the event
Lender, in its sole discretion, undertakes, at any time or from time to time,
to provide any such information to the Junior Creditor, Lender shall not be
under any obligation (i) to provide any such information to the Junior Creditor
on any subsequent occasion or (ii) to undertake any investigation not a part of
its respective regular business routine and shall be under no obligation to
disclose any information which, pursuant to accepted or reasonable commercial
finance practices, Lender wishes to maintain confidential. The Junior Creditor
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, as Lender, in
its sole discretion, deems appropriate and assents to any extension or
postponement of the time of payment of the Senior Debt or to any other
indulgence with respect thereto, to any substitution, exchange or release of
collateral which may at any time secure the Senior Debt and to the addition or
release of any other party or person primarily or secondarily liable therefor.
14. CONSENT TO JURISDICTION; WAIVER. TO INDUCE LENDER TO ACCEPT THIS
AGREEMENT, THE JUNIOR CREDITOR, 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 AGREEMENT, SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS.
THE JUNIOR CREDITOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. THE JUNIOR
CREDITOR HEREBY WAIVES ANY RIGHT THE JUNIOR CREDITOR MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE JUNIOR CREDITOR BY
LENDER IN ACCORDANCE WITH THIS PARAGRAPH.
15. Governing Law. This Agreement has been delivered and accepted at
and shall be deemed to have been made at Chicago, Illinois, and shall be
interpreted, and the rights and Obligations of the parties hereto determined,
in accordance with the laws and decisions of the State of Illinois, shall be
immediately binding upon the Junior Creditor and its successors and assigns,
and shall insure to the benefit of the respective successors and assigns of
Lender.
16. Section Titles. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
17. Authority. The Junior Creditor hereby certifies that it has full
power and authority to grant the subordination evidenced hereby, and the
execution and delivery by the Junior Creditor of this Agreement has been duly
authorized by all necessary corporate action.
18. Notice. All notices under this Subordination Agreement shall be in
writing and shall be (i) delivered in person, (ii) sent by telecopy, or (iii)
mailed, postage prepaid, either by registered or certified mail, return receipt
requested, or by overnight express carrier, addressed in each case as follows:
To Junior Creditor: ARL, Inc.
1155 Stoops Ferry Road
Moon Township, PA 15108
Attn: _________________________
Telecopy: ( ) _________________
To Lender: US Bank N.A.
209 S. LaSalle Street, Suite 410
Chicago, IL 60602
Attn: Craig Collinson
Telecopy: (312) 325-8750
or to any other address or telecopy number, as to any of the parties
hereto, as such party shall designate in a written notice to the other
parties hereto. All notices sent pursuant to the terms of this Section 18
shall be deemed received (i) if personally delivered, then on the Business
Day of delivery, (ii) if sent by telecopy before 2:00 p.m. Chicago time, on
the day sent if a Business Day or if such day is not a Business Day or if
sent after 2:00 p.m. Chicago time, then on the next Business Day, (iii) if
sent by overnight, express carrier, on the next Business Day immediately
following the day sent, or (iv) if sent by registered or certified mail, on
the earlier of the fifth Business Day following the day sent or when actually
received. Any notice by telecopy shall be followed by delivery on the next
Business Day by overnight, express carrier or by hand. For purposes of,
"Business Day" shall mean any day other than a Saturday, Sunday or other day
on which banks in Chicago, Illinois are required or authorized to close.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, this instrument has been executed and delivered
as of this __ day of December, 2008.
ARL, INC.
By: ________________________________
Name: ______________________________
Title: ____________________________
Acknowledged and Accepted
in Chicago, Illinois as of this
__ day of December, 2008.
US BANK N.A.
By:________________________________
Craig B. Collinson
Title: Senior Vice President
The undersigned hereby accepts and acknowledges receipt of a copy of,
the foregoing Subordination Agreement as of this __ day of December, 2008,
and agrees that it will not pay any of the "Subordinated Debt" (as defined in
the foregoing Agreement) or grant any security therefor, except as the
foregoing Agreement provides. In the event of a breach by the Junior Creditor
of any of the provisions herein or of the foregoing Agreement, all of the
"Senior Debt" (as defined in the foregoing Agreement) shall, without
presentment, demand, protest or notice of any kind, become immediately due
and payable, unless Lender shall otherwise elect in writing. The undersigned
further agrees that the terms of this Agreement shall not give the
undersigned any substantive rights vis-a-vis Lender or the subordinating
creditor named above.
US 1 INDUSTRIES, INC.
By: _____________________________
Name: ___________________________
Title: ____________________________
EXHIBIT H
COLLATERAL ASSIGNMENT AND PLEDGE
OF MEMBERSHIP INTERESTS
THIS COLLATERAL ASSIGNMENT AND PLEDGE OF MEMBERSHIP INTEREST is made
as of the ____ day of December, 2008, by and among US 1 INDUSTRIES, INC.,
an Indiana corporation (the "Assignor"), ARL TRANSPORT LLC, a Delaware
limited liability company (the "Company"); U.S. BANK, a national banking
association (the "Assignee" or the "Lender"), ARL, INC., a Pennsylvania
corporation ("ARL") and AFICIONADO TRANSPORT, INC., a Pennsylvania
corporation ("Aficionado").
RECITALS
WHEREAS, Lender, and various other borrower entities have
previously entered into an Amended and Restated Loan Agreement with Lender
dated as of March 10, 2005, as amended by (i) that certain Amendment to
Amended and Restated Loan Agreement dated as of May 5, 2005, (ii) that
certain Second Amendment to Amended and Restated Loan Agreement dated as
of September 30, 2005, (iii) that certain Third Amendment to Amended and
Restated Loan Agreement dated July 12, 2007, and (iv) that certain Fourth
Amendment to Amended and Restated Loan Agreement dated March 25, 2008 (the
"Existing Loan Agreement")
WHEREAS, the Parties to the Existing Loan Agreement and the Assignor
have entered into that certain Fifth Amendment to Amended and Restated Loan
Agreement dated as of December ___, 2008 (the "Fifth Amendment" and with the
Existing Loan Agreement, the "Loan Agreement") pursuant to which Lender has
agreed to loan certain amounts to Assignee (for the purpose of acquiring 60%
of the Membership Interest in the Company and paying off existing debt
relating to the assets of the Company) in addition to all amounts previously
advanced under the Loan Agreement (collectively, the "Loans").
WHEREAS, the Assignor owns or holds in the aggregate 60% of the
Membership Interest in the Company other than Assignee as indicated on Exhibit
A.
WHEREAS, ARL and Aficionado are the members of the Company other than
Assignee.
WHEREAS, in order to induce the Lender to make the Loans, Assignor, ARL
and Aficionado have agreed to enter into this Agreement.
WHEREAS, it is a condition to the Lender's willingness to enter into
the Loan Agreement and provide the financing contemplated thereby that the
Members execute this Agreement.
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meaning ascribed to such terms in the Loan Agreement.
A. COLLATERAL ASSIGNMENT AND PLEDGE OF MEMBERSHIP INTEREST
Section 1. Assignment and Securit Interest.
1.1. General Terms. As security for the payment and performance
of the Obligations (as defined herein), Assignor does hereby pledge, transfer,
assign, and deliver, severally, and not jointly, unto the Assignee, its
successors and assigns, and does hereby grant, severally, and not jointly, to
the Assignee, to have and to hold, the same unto the Assignee and its
successors and assigns, until such time as the Obligations shall have been
paid in full, a security interest in:
(a) all of the right, title, and interest of the Assignor, whether now
existing or hereafter arising, in and to the Company and as a member thereof
(collectively, the "Membership Interest"), including, without limitation, all
of his rights and interests in and to the Company and any successor limited
liability company or other business entity, and all of his rights, and
interests in, under and to, and all rights to receive any distributions or
payments due or, to become due, under the terms of, the Certificate of
Organization of the Company dated as of December 4, 2008 and the Limited
Liability Company Agreement of the Company dated as of December 5, 2008, as
the same have been and may hereafter be amended from time to time
(collectively, the "Constituent Documents"), and all proceeds of the
foregoing; and
(b) all tangible and intangible personal property of the Member, whether
now existing or hereafter arising, which is used or useful in the business and
operations of the Company, including all machinery, equipment, inventory,
accounts, contracts and general intangibles arising from, related to, or used
by, the Company and all proceeds thereof.
1.1.1. "Obligations" means: (i) all of the several obligations,
indebtedness, and liabilities of each Borrower under the Loan Agreement and
Revolving Loan Note of even date herewith in the face amount of $22,000,000
executed by Assignor and others in favor of Assignee (collectively, the
"Note"); (ii) all of the other several indebtedness, liabilities, and
obligations of each Member to the Lender, whether now existing or hereafter
arising, whether otherwise secured or unsecured and howsoever evidenced,
arising or created, and (iii) all of the several indebtedness, liabilities,
and obligations of each Assignor to the Lender, whether under this
Collateral Assignment or otherwise in respect of their several indebtedness
to the Lender, whether now existing or hereafter arising, in each case
including, without limitation, all such indebtedness incurred by Assignor
prior to, during, or following, any proceeding in respect of a bankruptcy,
reorganization, or insolvency (a "Reorganization") of the Company, and
all interest on such indebtedness according to the terms thereof,
regardless of the extent allowed as a claim against the Company or
Assignor in any Reorganization (all of the foregoing indebtedness,
obligations and liabilities of the Company and/or the Members described in
this Section 1.1.1.
1.2. Collateral Purposes Only. The assignments and security
interests described herein are for collateral purposes only, and the Assignee
shall not, by virtue of this Agreement or its receipt of distributions from the
Company, be deemed to be a member of the Company or any other limited liability
company or to have any liability for the debts, obligations, or liabilities of
the Company or of the Members.
1.3. Amounts Received on Account of the Membership Interest. So
long as no Event of Default (as defined in Section 2.1) shall exist under, or
in respect of, the Obligations, but only to the extent permitted under the
Loan Agreement or as the Assignee may otherwise, from time to time, consent to
in writing, Assignor shall be entitled to receive, and retain for their own
account, amounts received on account of the Membership Interest held by it.
1.4. Certification of Membership Interest. If the Membership
Interest is, at any time, evidenced by a certificate or instrument of any kind,
Assignor shall promptly pledge and deliver such certificates and instruments to
the Assignee, accompanied by duly executed instruments of transfer or
assignments in blank, and accompanied by any required transfer tax stamps, all
in form and substance acceptable to the Assignee. To the extent that the
Membership Interest is not represented by certificates or instruments,
Assignor, by sending a letter substantially in the form of Exhibit A hereto
to the Company shall, if requested by Assignee, cause the Company to register
the Assignee as the registered collateral assignee of the Assignor's interest
in such uncertificated interests.
Section 2. Lender's Rights in Event of Default.
2.1. Receipt of Amounts Received on Account of the Membership
Interest. The rights of the Assignor to receive any amounts payable in respect
of the Membership Interest shall, at the option of the Assignee, cease and
terminate: (a) following the occurrence of any failure by Assignor to pay, or
otherwise perform any of, its respective obligations hereunder at the time when
such payment or other performance is due, or (b) upon the occurrence of an
"Event of Default" (as defined in the Loan Agreement) that Assignor does not
cure or the Lender does not waive in writing (each, an E"vent of Default").
In the event that Assignee elects to exercise the foregoing remedy, the
Assignee is hereby expressly and irrevocably authorized to demand and receive
all amounts payable, or to become payable, on account of the Assignor's
Membership Interest, without further authorization, notice, or demand.
2.2. Appointment of Attorney. Assignor does hereby constitute
and irrevocably appoint the Assignee, upon such Event of Default, with full
power of substitution and revocation, his true and lawful attorney, for him and
in his name, place, and stead, to do and perform any and all of the following
on his behalf under the Constituent Documents, as fully as Assignor could do
if personally present, hereby ratifying and confirming all that his said
attorney or its substitute shall lawfully do, or cause to be done, by virtue
hereof, including, without limitation, the rights:
(a) to enforce, cancel, or modify the Constituent Documents, but only
to the extent that the Assignee, in its sole discretion, deems necessary or
advisable to protect or enforce its rights and remedies hereunder; and
(b) to demand, collect, sue for, recover, receive, compromise and
adjust, and make, execute, and deliver receipts and releases for all amounts
that may be, or may thereafter become, due, owing, or payable with respect
to the Membership Interest.
2.3. Rights Under Uniform Commercial Code.
(a) If an Event of Default shall occur, then thereupon, and at any time
or times thereafter, the Assignee shall have all rights and remedies provided
to a secured party under the Uniform Commercial Code as in effect in the State
of Illinois (the "Uniform Commercial Code") and shall act in accordance with
the Uniform Commercial Code in exercising its rights hereunder. More
specifically, but in no way in limitation of the rights and remedies of the
Assignee, the Lender may, upon twenty (20) days' written notice to the
Assignor (which notice shall be deemed to satisfy any requirement of
reasonable notice), and without liability for any diminution in price which
may have occurred, sell or otherwise dispose of all, or any part of, the
Membership Interest of the Assignor (or any rights comprising the
Membership Interest) or other collateral hereunder. Such sale or other
disposition may be by public or private proceedings and may be made by
way of one or more contracts, as a unit or in portions, at such time and
place, by such method, and in such manner and on such terms, as the
Assignee may determine. At any public sale, the Assignee or the Lender
shall be free to purchase all, or any part of, the Membership Interest or
other collateral of the Assignor (or any rights comprising his Membership
Interest).
(b) Assignor recognizes that the Assignee may be unable to effect a
public sale of the Membership Interest of the Assignor by the reason of
certain prohibitions contained in the Securities Act of 1933, as amended
(the "Securities Act") or other applicable state or federal laws, and the
Assignee may, therefore, resort to one or more private sales thereof to a
restricted group of purchasers. Assignee, ARL and Aficionado that any such
private sales may be at prices and on other terms less favorable to the
seller than if sold at public sales and that such private sales shall not,
by reason thereof, be deemed not to have been made in a commercially
reasonable manner. The Assignee shall be under no obligation to delay a
sale of any of the Membership Interest for the period of time necessary to
permit the issuer of such securities to register such securities for public
sale under the Securities Act, or such other applicable laws, even if the
issuer would agree to do so. Subject to the foregoing, the Assignee agrees
that any sale of the Membership Interest shall be made in a commercially
reasonable manner, and the Assignor agrees to use its best efforts to cause
the issuer or issuers of the Membership Interest contemplated to be sold (i)
to execute and deliver, all at the Members' expense, all such instruments
and documents, and to do or cause to be done all such other acts and things
as may be necessary or, in the reasonable opinion of the Assignee, advisable
to exempt the Membership Interest from registration under the provisions of
the Securities Act, and (ii) to make all amendments to such instruments and
documents which, in the opinion of the Assignee, are necessary or advisable,
all in conformity with the requirements of the Securities Act and the rules
and regulations of the Securities and Exchange Commission applicable thereto,
and other applicable law. Assignor further agrees to use its best efforts
to cause the Company to comply with the provisions of the securities or
"Blue Sky" laws of any jurisdiction which the Assignee shall reasonably
designate. Nothing contained herein shall limit or relieve the Lender of
its obligation under the Uniform Commercial Code to exercise its remedies
in a commercially reasonable manner.
2.4. The Assignee shall apply the net amount received by it
from the sale or other disposition of the Membership Interest and other
collateral, after payment of all proper expenses, costs, and charges, first
to the payment of the Obligations in full, and thereafter to the Assignor(s)
in accordance with the terms of the respective Constituent Documents as if
the Membership Interest had not been sold or otherwise disposed of, and in
accordance with applicable law.
Section 3. Payments by the Company. Assignor hereby irrevocably direct
the Company, upon demand and notice from the Assignee of any Event of Default
to pay the Assignee all amounts accruing or due under the Constituent Documents
on account of each of the Membership Interest. The Company shall be under no
obligation to inquire into, or determine the actual existence of, any such
Event of Default claimed by the Assignee.
Section 4. Covenants of the Members. Assignor hereby covenants, agrees
and warrants as follows:
(a) Ownership of Membership Interest. Assignor is the sole owner of
the respective Membership Interest as set forth in the Constituent Documents
and as described on Exhibit A, attached hereto and made a part hereof.
Assignor has not sold, assigned, transferred, mortgaged, encumbered, or
pledged the Membership Interest or any part thereof.
(b) Transfer of Membership Interest. Except pursuant to this
Agreement, Assignor will not transfer, assign, pledge, or otherwise encumber
the Membership Interest or any part thereof.
(c) Performance of Obligations. Assignor will perform and observe,
or cause to be performed and observed, all of Assignor's obligations under
the Constituent Documents.
(d) Modification of the Company's Documents or Members. Assignor
will not, without the prior written consent of the Assignee, amend or modify
the Constituent Documents in any material way. Assignor will not permit
the admission of additional members to the Company.
(e) No Restrictions; No Certification. Except as specifically set
forth in the Constituent Documents, none of the Assignor's Membership
Interest is subject to any restriction that would prohibit or restrict the
security interest, pledge, and assignment hereunder or the exercise of the
Assignee's remedies hereunder. Notwithstanding anything to the contrary
set forth in the Constituent Documents, Assignor, ARL and Aficionado hereby
waives compliance with all such restrictions or prohibitions set forth in
the Constituent Documents in order to permit the collateral assignment,
security interest, and pledge hereunder, and the exercise by the Assignee
of all of its rights and remedies hereunder, including, without limitation,
any reassignment of the Membership Interest by the Assignee upon the
exercise of the Assignee's rights hereunder and any request or demand by
the transferee to become a substitute Member in the Company. The
Membership Interest are not evidenced by any certificated security or
other instrument.
(f) Litigation. There is no action, suit, or proceeding, at law or
in equity, or by or before any governmental instrumentality or other agency,
now pending or threatened (nor is any basis therefor known) against or
affecting Assignor which, if adversely determined, either in any case or
in the aggregate, would have a material adverse effect on the business,
operations, properties, assets or condition, financial or otherwise, of
Assignor.
(g) Addresses. The respective chief executive offices or principal
residence addresses of the Company and the Members are set forth on the
signature pages hereof. Neither the Company nor any Member will change the
residence address or location of its chief executive office unless it has
given the Lender ten (10) days' prior written notice thereof.
(h) Unconditional Liability. Assignor's liability hereunder is
absolute and unconditional, irrespective of: (i) the genuineness,
legality, validity or enforceability of the Obligations; (ii) the
legality, validity, priority, or enforceability of any security interest
or pledge granted by Assignor as collateral for the Obligations, any
guarantee, suretyship, letter of credit, or reimbursement agreement
issued by any person secondarily or otherwise liable for any of the
Obligations, any right of set-off against any deposit account or credit
on the Lender's books in favor of Assignor or any person secondarily or
otherwise liable for any of the Obligations, or any other device
providing collateral security for payment of the Obligations (all of the
above referenced devices being referred to herein as the "Collateral
Security"); (iii) the failure by the Lender for any reason to resort to,
enforce, or exhaust its remedies under or against the Obligations or the
Collateral Security; (iv) the waiver or consent by the Lender with respect
to any term or condition of the Obligations or the Collateral Security; (v)
the recovery of any judgment against the Company or any action to enforce
such judgment; or (vi) any other circumstance which might, absent the
unconditional nature of this Agreement, constitute a legal or equitable
discharge or defense of a guarantor, a pledgor, or a debtor.
(i) Lender's Rights. The Lender may at any time, or from time to
time, in the Lender's sole discretion, (and with the Company's consent, to
the extent, if any, required by law, but without affecting the obligations
of Assignor hereunder: (i) change, alter, renew, continue, waive, terminate,
or extend or accelerate the time of payment of all or any of the Obligations,
or any part or parts thereof, or any renewal or renewals thereof; (ii) replace
any existing Obligation and the documentation therefor with an amended and
restated Obligation and the documentation therefor; (iii) after and during
the continuation of an Event of Default, sell, exchange, release, compromise,
or surrender all or any of the property which is the subject of the
Collateral Security, or any part or parts thereof, with respect to which
the Lender may now or hereafter have an interest (the "Collateral") in
accordance with Article 9 of the Uniform Commercial Code; (iv) after and
during the continuation of an Event of Default, sell or purchase any or
all of the Collateral at public or private sale, or at any broker's board,
and after deducting all costs and expenses of every kind for collection,
sale or delivery, apply the proceeds of any such sale or sales against any
of the Obligations in accordance with Article 9 of the Uniform Commercial
Code; (v) settle or compromise any or all of the Obligations with the
Company, or any other person or persons liable thereon, or subordinate the
payment of same or any part thereof to the payment of any other debts or
claims which may at any time be due or owing to the Lender or other person;
and (vi) make advances for the purpose of performing any term or condition
contained in the Loan Agreement or any agreement evidencing or securing any
of the Obligations; all in such manner and upon such terms as the Lender
may see fit and without notice to or the consent from the Members, who
hereby agree to be and remain bound upon this Agreement, irrespective of
the effect upon the existence or status of the Obligations or the
Collateral Security and extension, acceleration, sale, exchange, release,
compromise, surrender, application, settlement, subordination or any other
action hereinabove mentioned. As between the Company and the Lender,
nothing contained in the preceding sentence is intended to expand upon any
rights granted to the Lender under the Loan Agreement or applicable law.
Nothing contained in this paragraph is intended to adversely affect the
rights of the Company under or in respect to the Loan Documents.
Section 5. Consents. The Company, ARL and Aficionado hereby consent
to the execution of this Agreement by all other parties hereto and the
execution of any other similar collateral assignments hereafter executed by
any other member of the Company. The Company, Assignor, ARL and Aficionado
further hereby consent, pursuant to Article IX of the Company's Limited
Liability Company Agreement, to the assignment of Membership Interest hereby
and thereby. The Company, Assignor, ARL and Aficionado hereby waive all
provisions of the Constituent Documents to the extent such provisions impose
any restrictions, limitations, or prohibitions on the rights or remedies
intended to be granted to the Assignee by this Agreement, or upon the exercise
of any rights by the Assignee hereunder, and hereby covenant and agree that
the Constituent Documents shall be deemed contemporaneously herewith to have
been amended to the effect that any provisions thereof prohibiting or impeding
the rights and remedies of the Assignee hereunder are herewith amended to
permit the full enjoyment of such rights and remedies, including, without
limitation, transfers and assignments contemplated by this Agreement. The
Company hereby acknowledges receipt of notice of the pledge and collateral
assignment of the Membership Interest effected hereby, and hereby agrees to
register the Membership Interest as subject to the security interests and
collateral assignment effected hereby.
B. EXERCISE OF REMEDIES/NON-WAIVER.
Lender's failure to avail itself of any of the terms, covenants, and
conditions of this Agreement for any period of time, or at any time or times,
shall not waive any of its rights hereunder. Lender's rights and remedies
under this Agreement are cumulative and are not in lieu of, but are in addition
to, any other rights and remedies which Lender shall have under, or by virtue
of, any other of the Obligations. Lender may exercise any of its rights and
remedies hereunder from time to time, and as often, as Lender deems such
exercise to be expedient.
C. TERMINATION OF THIS AGREEMENT.
When all of the Obligations shall have been paid and discharged in full,
and the Lender shall have no further obligations to advance funds to the
Company, then this Agreement shall terminate. The Lender shall thereupon
forthwith execute and deliver to Assignor instruments effective to evidence the
termination of this instrument and/or the reassignment to Assignor of the
rights, power, and authority granted herein.
D. MISCELLANEOUS PROVISIONS.
1.1. Amendment. No change, amendment, modification,
cancellation or discharge hereof, or of any part hereof, shall be valid unless
Assignor, ARL and Aficionado and the Lender hereto shall have consented
thereto in writing.
1.2. Successors and Assigns. The terms, covenants, and
conditions contained herein shall inure to the benefit of, and bind the
Lender, Assignor, ARL and Aficionado and their respective successors and
assigns or legatees, heirs, executors, and administrators, as the case may
be.
1.3. Captions. The captions of this Agreement are for
convenience and reference only and neither in any way define, limit, or
describe the scope or interest herein nor in any way affect this instrument.
1.4. Custody of Certification. The Lender shall be under no duty
or liability with respect to the Membership Interest or other collateral
granted hereby, other than to use reasonable care in the custody of any
instrument representing the Membership Interest or of other collateral granted
hereunder while in its possession.
1.5. U.C.C. Financing Statements. Assignee may file such
financing statements under the Uniform Commercial Code as it deems
appropriate to evidence the pledge herein provided.
1.6. Attorney's Fees. All costs and expenses, including, without
limitation, legal costs and reasonable attorneys' fees, incurred by the Lender
in enforcing this Agreement (including, without limitation, all such costs,
charges and expenses incurred by the Lender in connection with any
Reorganization), shall be chargeable to and secured by the Membership Interest
and other collateral hereunder.
1.7. Priority of Lender's Rights. The rights of the Lender
hereunder shall not be affected by any extensions, renewals, indulgences,
settlements, or compromises respecting any Obligations; by the release of
any party primarily or secondarily liable respecting any Obligations; or by
the taking or release by the Lender of any security for any Obligations or for
the performance by any party primarily or secondarily liable respecting any
Obligations.
1.8. Cumulative Rights. All the Lender's rights and remedies,
whether evidenced hereby or by any other agreement or instrument, or whether
otherwise available, shall be cumulative.
1.9. Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing sent by nationally
recognized overnight courier or delivered to the applicable party at the
addresses indicated below.
If to the Lender:
U.S. Bank
209 South LaSalle Street
Suite 410
Chicago, IL 60604
Attention: Craig Collinson, Senior Vice President
and a copy (which shall not constitute notice) to:
John A. Washburn, Esq.
Gould & Ratner
222 North LaSalle, Suite 800
Chicago, Illinois 60601
If to Assignor:
US 1 Industries, Inc.
336 West U.S. 30
Valparaiso, IN 46385
Attn: Michael E. Kibler
If to the Company:
ARL TRANSPORT LLC
336 West U.S. 30
Valparaiso, IN 46385
If to ARL, Inc.:
ARL, Inc.
1155 Stoops Ferry Road
Moon Township, PA 15108
Attn: Ron Faherty, CEO
If to Aficionado:
Aficionado Transport, Inc.
238 Moon Clinton Road
Moon Township, PA 15108
Attn: Ron Faherty, CEO
or, as to each party, at such other address as shall be designated by such
parties in a written notice to the other party complying as to delivery
with the terms of this Section. All such notices, requests, demands and
other communication shall be deemed given upon the earlier to occur of (a)
the third day following deposit thereof in the United States mail, or (b)
receipt by the party to whom such notice is directed, or (c) twelve noon
local time on the first business day following timely deposit thereof with
a nationally recognized overnight courier service with effective
instructions to such courier to make delivery on the next business day.
1.10. Assignment by Lender. If, at any time or times, by
assignment or otherwise, the Lender transfers any Obligations and interest
in the Membership Interest or other collateral therefor, such transfer
shall carry with it the Lender's powers and rights under this Agreement
with respect to the Obligations and interest in the Membership Interest or
other collateral so transferred, and the transferee shall become vested
with said powers and rights whether or not they are specifically referred
to in any instrument of transfer. If and to the extent that the Lender
retains any portion of the Obligations, or interest in the Membership
Interest or other collateral, the Lender will continue to have the rights
and powers herein set forth with respect thereto.
1.11. Invalidity. If any provision hereof shall be invalid
or unenforceable in any respect or in any jurisdiction, the remaining
provisions hereof shall remain in full force and effect and shall be
enforceable to the maximum extent permitted by law.
1.12. Construction. Whenever the context so requires,
reference herein to the masculine gender shall include the feminine
gender and vice versa or in either case the neuter; and the singular
shall include the plural and vice versa.
1.13. Controlling Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SAID STATE.
1.14. Attorneys' Fees. Assignor agrees to pay all
expenses incurred by the Lender in connection with the enforcement
hereof, including without limitation, reasonable attorneys' fees. In
any action or proceeding between the Lender, on the one hand, and any
other party or parties hereto, on the other, arising out of this
Agreement, the prevailing party will be entitled to recover from the
other party its reasonable attorneys' fees and other costs and expenses
incurred, in addition to any relief to which it is entitled, whether or
not a lawsuit is filed.
1.15. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of the counterparts shall together constitute one and
the same instrument. This Agreement shall be binding against the Company
and all Members who sign a counterpart hereof, notwithstanding the failure
or refusal of any other Members to execute this Agreement.
1.16. Company's Obligations. The Company agrees to all of
the provisions of this Agreement and agrees to make all appropriate
notations in its records referred to the security interests granted
hereby. The Company further agrees to observe and comply with all of
the provisions hereof which require action or the withholding of action
by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
US 1 INDUSTRIES, INC.
By: _____________________________
Its: _____________________________
ARL TRANSPORT LLC
By: _____________________________
Its: _____________________________
ARL, INC.
By: _____________________________
Its: _____________________________
AFICIONADO TRANSPORT, INC.
By: _____________________________
Its: _____________________________
US BANK
By: _____________________________
Its: _____________________________
EXHIBIT A
Description of Membership Interest
Members Ownership Interests
US 1 Industries, Inc. 60%
ARL, Inc. ___%
Aficionado Transport, Inc. ___%
EXHIBIT B
_____________, 200_
Hand Delivery
ARL TRANSPORT LLC REGISTERED OWNER:
[Address] US 1 INDUSTRIES, INC.
ASSIGNMENT INSTRUCTION
You are hereby INSTRUCTED TO REGISTER A COLLATERAL ASSIGNMENT,
for value received, against the following uncertificated security in
the manner indicated:
1. Security. 60% of the Members interest (the "Member's
Interest") held by US 1 INDUSTRIES, INC. in the limited liability
company known as ARL TRANSPORT LLC, a Delaware limited liability
company (the "LLC").
2. Assignment Instructions. You are INSTRUCTED by the
undersigned REGISTERED OWNER of the Members Interest, taxpayer
identification number [Taxpayer Number], TO REGISTER THE ABOVE DESCRIBED
SECURITIES AS SUBJECT TO A COLLATERAL ASSIGNMENT in favor of the U.S.
BANK so that on registration of such assignment, Assignee shall become
the registered assignee of the Members Interest with all the rights
incident thereto.
You are further instructed to promptly so inform the Assignee
that the Collateral Assignment of the Members Interest has been
registered on the books of the LLC.
3. Warranties. The undersigned hereby warrants that
(a) It is an appropriate person to originate this
instruction; and
(b) It is entitled to effect the instruction here given.
EXECUTED EFFECTIVE AS OF ______________, 2008.
US 1 INDUSTRIES, INC.
By: ______________________________
Name: ____________________________
Its: ____________________________
Acknowledged and Received
as of the date first above written.
ARL TRANSPORT LLC
By:______________________________
Name:____________________________
Title:___________________________