EXHIBIT 10.17
Security Agreement
This Security Agreement, dated as of June 28, 1996, by and between JEVIC
TRANSPORTATION INC., a New Jersey corporation, with its main business office
located at 600 Creek Road, Delanco, New Jersey 08075 (the "Debtor") and
CORESTATES BANK, N.A., a national banking association (the "Secured Party").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned in the Credit Agreement.
Preliminary Statement
This Security Agreement is entered into in accordance with and is a
condition precedent to any Loan under the Credit Agreement.
Agreement
The Debtor and the Secured Party, intending to be legally bound, agree as
follows
1. Definitions.
As used herein the following terms shall have the meanings indicated:
(a) "Collateral" means the Revenue Equipment and such other assets as are
set forth in Schedule A hereto, and all supplemental Schedules A delivered by
the Debtor to the Secured Party from time to time after the date hereof,
together with products and Proceeds (including insurance Proceeds) of any of the
foregoing.
(b) "Credit Agreement" means that certain Credit Agreement, dated as of the
date hereof (as such agreement may be amended, restated, modified, replaced or
substituted hereafter) between the Debtor and CoreStates Bank, N.A.
(c) "Accounts", "Chattel Paper", "Documents of Title", "Equipment",
"General Intangibles", "Instruments", and "Proceeds" shall have the meanings
assigned to them under the Uniform Commercial Code as in effect in the
Commonwealth of Pennsylvania and shall be applicable solely for purposes of the
Collateral.
(d) "Liabilities" means all existing and future indebtedness and other
liabilities, absolute or contingent, direct or indirect, primary or secondary,
of the Debtor to the Bank arising hereunder or in respect of the Revolving
Credit Note or the Term Notes or otherwise in connection with the Credit
Agreement or any Loan Document.
(e) "Prevailing Interest Rate" as of any date means the highest rate of
interest then payable by the Debtor under any Loan (as defined in the Credit
Agreement).
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2. Grant of Security. To secure the payment, promptly when due, and the
punctual performance of all of the Liabilities, the Debtor hereby pledges and
assigns to the Secured Party, and grants to the Secured Party and agrees that
the Secured Party shall have, a general continuing lien upon and security
interest in all the Collateral, which lien and security interest shall be a
general continuing first priority lien upon and security interest in all the
Collateral.
3. Substitution or Release of Collateral. The Debtor may, from time to time
provided there shall not be any Event of Default or Potential Default (as
defined in the Credit Agreement) in existence and no Event of Default or
Potential Default would exist as a result thereof, withdraw assets from the
Collateral provided that the reason for the withdrawal is the sale of the asset
in question or damage to it by reason of accident or otherwise and provided
further that simultaneously therewith a new asset of fair market value at least
equal to the asset withdrawn is made the subject of a supplemental Schedule A
hereto. The fair market value of the asset shall be determined by reference to
the McLean Hunter National Market Reports, Inc. Truck Blue Book and Commercial
Trailer Blue Book, where such reports contain an adequate reference to the asset
being valued. In addition, upon partial prepayment of any Term Loan in
accordance with the Credit Agreement, the Debtor may, provided there shall not
be any Event of Default or Potential Default in existence and no Event of
Default or Potential Default would exist as a result thereof, withdraw assets
from the Collateral in an aggregate fair market value which is not greater than
the aggregate principal amount of the Term Loan prepaid.
4. Books and Records. The Debtor shall faithfully keep complete and
accurate books and records and make all necessary entries therein to reflect the
quantities, costs, current values and locations of all Collateral, the events
and transactions giving rise thereto and all payments, credits and adjustments
applicable thereto, shall keep the Secured Party fully and accurately informed
as to the locations of all such books and records and shall permit the Secured
Party's agents to have such access to them and to any other records pertaining
to the Debtor's business as the Secured Party may request from time to time.
5. Control of and Access to Collateral.
(a) Upon the occurrence of an Event of Default, the Secured Party shall
have the right at any time to take possession of the Collateral or any part
thereof. Notwithstanding any such taking of possession, the Collateral shall
remain at all times at the Debtor's sole risk, and to the full extent permitted
by law the Secured Party shall not be responsible for any loss, damage or
diminution in the value thereof. All costs of transportation, packaging,
custody, processing, storage, and insurance of any unit or item of Collateral
which may be incurred by the Secured Party shall be promptly repaid to the
Secured Party by the Debtor together with interest thereon at the Prevailing
Interest Rate, and the Debtor's liability to the Secured Party for such
repayment with interest shall be included in the Liabilities.
(b) If any item or unit of Collateral is now or hereafter the subject of a
certificate of title or is required by law so to be, the Debtor will promptly
procure the necessary certificate of title and take all steps necessary to cause
the Secured Party's lien or security interest therein to be noted on the face of
such certificate and undertake such other steps as may be necessary to assure
that the Secured Party has a first priority, perfected security interest in each
such item or unit of Collateral, and shall thereafter deposit the original of
such certificate of title with the Secured Party.
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(c) The Debtor shall immediately notify the Secured Party of any event
causing any deterioration, loss or depreciation in value of any substantial
portion of the Collateral and the Debtor's best estimate of the amount of such
deterioration, loss or depreciation.
(d) The Debtor shall afford the Secured Party's agents access to the
Collateral from time to time upon request for purposes of examination,
inspection and appraisal thereof and to verify the Debtor's books and records
pertaining thereto. After an Event of Default and upon the Secured Party's
demand therefor, the Debtor shall assemble the Collateral and make it available
to the Secured Party at such place reasonably convenient to both parties as the
Secured Party may designate, and the Secured Party's rights to such assemblage
shall be enforceable by injunction. If an Event of Default shall not exist, the
Secured Party shall furnish written prior notice to the Debtor reasonably in
advance of any intended examination, inspection, appraisal and verification and
such activity shall commence during the Debtor's normal business hours.
(e) From and after the occurrence of an Event of Default hereunder, the
Debtor shall pay to the Secured Party on demand any and all expenses of
conducting any and all periodic examinations or reviews or causing any periodic
examinations or reviews of Collateral determined to be appropriate by the
Secured Party (including but not limited to reasonable attorneys' fees and legal
expenses) which may be incurred by the Secured Party, with interest at the
Prevailing Interest Rate.
(f) Upon an Event of Default, the Secured Party is hereby granted a license
or other right to use, without charge, Debtor's labels, intellectual property,
or use of any name, trade secrets, tradenames, trademarks and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in advertising for sale, and selling any Collateral and Debtor's rights under
all licenses and all franchise agreements shall inure to the Secured Party's
benefit.
6. Maintenance of Collateral. Subject to the Debtor's business judgment and
reasonable commercial practice, the Debtor shall take good care of the
Collateral and shall afford it suitable preventative maintenance. The Debtor
shall pay the cost of all repairs to or maintenance of the Collateral and shall
not permit anything to be done that might in any way impair the value of any of
the Collateral or any of the security intended to be afforded by this Agreement.
The Debtor shall conscientiously adhere to a well designed internal control
system with respect to the Collateral, and such system shall be capable of
permitting the Debtor and the Secured Party to identify readily at any time the
location and condition of each and every item of Collateral. The Debtor will not
permit any of the Collateral to become or be a fixture.
7. Title to Collateral.
(a) The Debtor has acquired or shall acquire absolute and exclusive title
to each and every item or unit of the Collateral free and clear of all liens,
claims, security interests and other encumbrances, except as permitted under the
Credit Agreement, and the Debtor shall warrant and defend its title to the
Collateral, subject to the rights of the Secured Party, against the claims and
demands of all persons whomsoever. Without limiting the generality of the
foregoing, the Debtor shall not pledge, assign or otherwise encumber, or permit
any liens or security interests (other than those in favor of the Secured Party)
to attach to, any of the Collateral, nor permit any of the Collateral to be
levied upon under any legal process. Notwithstanding the foregoing, mechanics
liens may be created or exist from time to time
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and such mechanics liens shall not be deemed to constitute a breach of this
agreement provided the aggregate amount of such liens at any time does not
exceed $50,000.
(b) The Secured Party may, at its sole election but without obligation to
do so, discharge any unpermitted encumbrance pertaining to the Collateral and
all expenses incurred by the Secured Party in so doing, together with interest
thereon at the Prevailing Interest Rate, shall be added to the Liabilities and
shall be payable by the Debtor on demand.
8. Taxes and Liens. The Debtor shall promptly notify the Secured Party in
the event there ever arises against any of the Collateral any lien, assessment
or tax or other liability, whether or not entitled to priority over the Secured
Party's security interest hereunder. In any such event, whether or not such
notice is given, the Secured Party shall have the right (but shall be under no
obligation) to pay any tax or other liability of the Debtor deemed by the
Secured Party in good faith to affect the Secured Party's interests hereunder.
The Debtor shall repay to the Secured Party on demand all sums which the Secured
Party shall have paid under this section in respect of taxes or other
liabilities of the Debtor, with interest thereon at the Prevailing Interest
Rate, and the Debtor's liability to the Secured Party for such repayment with
interest shall be included in the Liabilities. The Secured Party shall be
subrogated to the extent of any such payment by it to all the rights and liens
of the payee against the Debtor's assets.
9. Locations of the Collateral; Name.
(a) If any of the Collateral or any of the Debtor's records concerning any
of the Collateral are at any time to be located on premises leased by the
Debtor, or any premises owned by the Debtor subject to a mortgage or other lien,
the Debtor shall obtain and deliver to the Secured Party, prior to the delivery
of any such Collateral or books or records to such premises, an agreement in
form satisfactory to the Secured Party waiving the landlord's, mortgagee's or
other lienholder's right to enforce against the Collateral or the Debtor's
records concerning the same and assuring the Secured Party's access to such
Collateral and books and records to facilitate the Secured Party's exercise of
its rights to take possession thereof. The location of Debtor's chief executive
office and all locations at which the Debtor maintains a place of business are
set forth in Schedule B, and the Debtor agrees to provide the Secured Party
annually with a list of each location of any such place of business or the
establishment of any additional place of business of the Debtor.
(b) The Debtor represents and warrants that at no time during the past five
(5) years has it been known by or used any other name, including any trade or
fictitious name, except as disclosed in Schedule B.
10. Further Assurances. The Debtor shall continue to conduct its business
in substantially the manner heretofore conducted and will make no material
changes therein which might impair the security of the Secured Party. The Debtor
shall execute and deliver to the Secured Party from time to time all such other
agreements, instruments and other documents (including without limitation all
requested financing and continuation statements) and do all such other and
further acts and things as the Secured Party may reasonably request in order
further to evidence or carry out the intent of this Agreement or to perfect the
liens and security interests created hereby or intended so to be.
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11. Default and Remedies.
(a) The Debtor shall be in default hereunder upon the occurrence of any one
of the following events (each an "Event of Default"):
(i) the Debtor shall fail to pay any amount payable in respect of any
Liability when due (including the expiration of any applicable grace periods).
(ii) any representation, warranty or information herein, heretofore or
hereafter furnished to the Secured Party by the Debtor in connection with any of
the Liabilities, including any warranty made by the Debtor through the
submission of any schedule, statement, certificate or other document pursuant to
or in connection with this Agreement, shall be false in any material respect.
(iii) there shall exist any Potential Default or Event of Default as
defined under the Credit Agreement.
(b) Upon the occurrence of any Event of Default which shall be continuing,
(i) unless the Secured Party elects otherwise, the entire unpaid amount of such
of the Liabilities as are not then otherwise due and payable shall become
immediately due and payable without notice to or demand on the Debtor, (ii) the
Secured Party or its agents may enter the Debtor's premises to exercise the
Secured Party's right to take possession of any Collateral, and (iii) the
Secured Party may at its option exercise from time to time any and all rights
and remedies available to it under the Uniform Commercial Code or otherwise,
including the right to assemble, receipt for, adjust, modify, repair, refurnish
or refurbish (but without any obligation to do so) or foreclose or otherwise
realize upon any of the Collateral and to dispose of any of the Collateral at
one or more public or private sales or other proceedings. The Debtor agrees that
the Secured Party or its nominee may become the purchaser at any such sale or
sales. The Debtor further agrees that ten (10) days shall be reasonable prior
notice of the date of any public sale or other disposition of all or any part of
the Collateral, or of the date on or after which any private sale or other
disposition of the same may be made.
(c) The exercise by the Secured Party of any one right or remedy shall not
be deemed a waiver or release of or any election against any other right or
remedy, and the Secured Party may proceed against the Debtor and the Collateral
and any other collateral granted by the Debtor to the Secured Party under any
other agreement, all in any order and through any available remedies. A waiver
on any one occasion shall not be construed as a waiver or bar on any future
occasion. All property of any kind held at any time by the Secured Party as
Collateral shall stand as one general continuing collateral security for all the
Liabilities and may be retained by the Secured Party as security until all the
Liabilities are fully satisfied. The Debtor shall pay to the Secured Party on
demand any and all expenses (including reasonably attorneys' fees and legal
expenses) which may have been incurred by the Secured Party with interest at the
Prevailing Interest Rate (i) in the prosecution or defense of any action growing
out of or connected with the subject matter of this Agreement, the Liabilities,
the Collateral or any of the Secured Party's rights therein or thereto; or (ii)
in connection with the custody, preservation, use, operation, preparation for
sale or sale of any of the Collateral, the incurring of all of which are hereby
authorized to the extent the Secured Party deems the same advisable. The
Debtor's liability to the Secured Party for any such payment with interest shall
be included in the Liabilities. The Proceeds of any Collateral received by the
Secured Party at any time before or after default, whether from a sale or other
disposition
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of Collateral or otherwise, or the Collateral itself, may be applied to the
payment in full or in part of such of the Liabilities and in such order and
manner as the Secured Party may elect. The Debtor to the extent of its rights in
the Collateral waives and releases any right to require the Secured Party to
collect any of the Liabilities from any other of the Collateral or any other
collateral then held by the Secured Party under any theory of marshalling of
assets or otherwise.
12. Power of Attorney. The Debtor hereby irrevocably appoints any officer,
employee or agent of the Secured Party as the Debtor's true and lawful
attorney-in-fact with power to (i) endorse the Debtor's name upon any notes,
checks, drafts, money orders, or other instruments or payments or other
Collateral that may come into the Secured Party's possession; (ii) sign and
endorse the Debtor's name upon any Documents of Title, invoices, freight or
express bills, assignments, verifications and notices in connection with any of
the Collateral, and any instruments or documents relating thereto or to the
Debtor's rights therein; and (iii) execute in the Debtor's name and file one or
more financing, amendment and continuation statements covering the Collateral.
Any such attorney of the Debtor shall have full power to do any and all things
necessary to be done with respect to the above transactions as fully and
effectually as the Debtor might do, and the Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof.
13. Financing Statements. The Debtor shall execute all financing statements
and amendments thereto as the Secured Party may request from time to time to
evidence the security interest granted to the Secured Party hereunder and will
pay all filing fees and taxes, if any, necessary to effect the filing thereof.
Wherever permitted by law, the Debtor authorizes the Secured Party to file
financing statements with respect to the Collateral without the signature of the
Debtor. A copy of this Agreement or a copy of any financing statement prepared
in connection with this Agreement may itself be filed as a financing statement.
14. Miscellaneous.
(a) This Agreement shall commence on the date hereof and shall continue in
full force and effect so long as any of the Liabilities shall exist from time to
time.
(b) No modification or waiver of any provision hereof shall be effective
unless the same is in writing and signed by the party against whom its
enforcement is sought. This Agreement and any amendment hereto or waiver of any
provision hereof may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
(c) The representations, warranties, covenants and agreements contained
herein are all material and continuing, and any breach of them shall constitute
a material breach of this Agreement.
(d) All the rights and remedies of the Secured Party hereunder shall be
concurrent and cumulative with and not alternative to or in lieu of the Secured
Party's rights and remedies under any other agreement or agreements.
(e) This Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns, except that the Debtor shall not assign
any of the its rights hereunder without the Secured Party's prior written
consent.
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(f) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(g) No persons other than the Debtor and the Secured Party, and the
assignees of the Secured Party, are intended to be benefitted hereby or shall
have any rights hereunder, as third-party beneficiaries or otherwise.
(h) The Debtor acknowledges that this Agreement and the obligations of
the Debtor hereunder and the security created or intended to be created hereby
have constituted, and were intended by the Debtor to constitute, a material
inducement to the Secured Party to enter into the Credit Agreement and
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other agreements referred to therein, knowing that the Secured Party will rely
upon this Agreement. The Debtor intends to be legally bound hereby.
This Agreement shall be deemed to be a contract made under and shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to Pennsylvania or federal principles of the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed by their duly authorized representatives as of the date first
above written.
Debtor
JEVIC TRANSPORTATION, INC.
By /s/ Brian J. Fitzpatrick
---------------------------------
Name
Title
Notices To:
Mr. Brian J. Fitzpatrick
Senior Vice President and Chief Financial Officer
Jevic Transportation, Inc.
600 Creek Road
Delanco, NJ 08075
FAX No. (609) 764-7237
Secured Party
CORESTATES BANK, N.A
By /s/ Theresa M. Smith
---------------------------------
Theresa M. Smith
Vice President
Notices To:
Ms. Theresa M. Smith
Vice President
CoreStates Bank, N.A.
Transportation Leasing and Construction Industry Services
FC 1-8-11-24
1339 Chestnut Street
Philadelphia, PA 19107
FAX No (215) 786-7704
SCHEDULE A TO SECURITY AGREEMENT
[insert date]
This Schedule "A" is an integral part of the Security Agreement dated as of June
28, 1996 between Jevic Transportation, Inc. (the "Debtor") and CoreStates Bank,
N.A., Philadelphia, Pennsylvania 19101.
The Debtor hereby grants to CoreStates Bank a security interest in all
property described below, subject to the terms and conditions of the
Security Agreement referred to above, which property shall be included in
the Collateral.
JEVIC TRANSPORTATION, INC.
By
---------------------------------
Name
Title
SCHEDULE B TO SECURITY AGREEMENT
1. The location of the Debtor's chief executive office and all locations at
which the Debtor maintains a place of business are as follows:
Chief executive office: 600 Creek Road, Delanco, New Jersey 08075
Other locations: 4200 West 35th Place, Chicago, IL 65032
655 Goodman Road, Concord, NH 28025
476 Hartford Turnpike, Shrewsbury, MA 01545
48 Ironside Court, Willingboro, NJ 08046
3934 Thurmond Road, Conley, GA 39026
2. During the past five years the Debtor has not used or been known by any
other name, including any trade or fictitious name.