Exhibit 10.50
SECURITY AGREEMENT
This Security Agreement ("Agreement") is made and entered into as of December
___, 2001, by and between U.S. XPRESS LEASING, INC., a Tennessee corporation
("Debtor"), and DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC, 0000 Xxxxxxxxxxx
Xxxx, Xxxxx, Xxxxxxxx 00000 ("Secured Party").
Article One - SECURITY INTEREST
For value received, Debtor grants to Secured Party a security interest in all of
Debtor's right, title, and interest on, to and under the following property and
interests in property of Debtor, whether presently in existence or whether now
owned or hereafter arising, acquired or created by Debtor at any time hereafter,
wherever located, and any replacements, additions, accessions or substitutions
thereto (collectively, the "Collateral"):
1.1 the eight hundred eighty-six (886) tractors of Borrower described
on Exhibit A attached hereto and made a part hereof (collectively
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referred to as the "Equipment" and individually referred to as a
"Unit of Equipment"), together with;
1.2 all proceeds and products of any and all of the foregoing,
including but not limited to all chattel paper, electronic chattel
paper, goods (including, without limitation, motor vehicles,
tractors, trailers, chassis and equipment taken in trade), contract
rights, leases, accounts, documents, instruments, promissory notes,
general intangibles, payment intangibles, supporting obligations,
claims and tort recoveries, money, insurance proceeds and refunds
of insurance premiums, in each case, relating to or arising out of
any of the types of collateral described in Section 1.1 above, and
all proceeds of such proceeds and products; and
1.3 all books, records, computer records, computer disks, ledger cards,
programs and other computer materials, customer and supplier lists,
invoices, orders and other property and general intangibles at any
time evidencing or relating to any of the Collateral.
The definitions of the types of Collateral described in paragraph 1.2 are
intended to expand as the definitions and descriptions of such types of
Collateral that are set forth in the Code expand. The term "Code" means the
Uniform Commercial Code, as enacted in the State of Tennessee, as amended and
replaced from time to time.
To secure: (1) Debtor's Promissory Note to the Secured Party, of even date
herewith, in the principal amount of $53,310,901.58 (as the same may from
time to time be amended, modified, extended, renewed or restated, the
"Note"), principal and interest payable as provided in said Note;
(2) the Loan (as defined in the Loan Agreement) and all obligations of Debtor
to Secured Party under the Loan Agreement, of even date herewith, between
the parties (as the same may from time to time be amended, modified,
extended, renewed or restated, the "Loan Agreement");
(3) all expenditures by Secured Party for taxes, insurance, repairs to, and
maintenance and preservation of the Collateral, and all costs and expenses
incurred by Secured Party in the collection and enforcement of the Note,
the Loan and the other Obligations (as defined in the Loan Agreement) or
in representation of Secured Party in connection with bankruptcy or
insolvency proceedings, including, without limitation, legal fees and
expenses of both in-house and outside counsel; and
(4) all of the Obligations (as defined in the Loan Agreement) of Debtor to
Secured Party now existing or incurred in the future, matured or
unmatured, direct or contingent, and any renewals and extensions of, and
substitutions for such Obligations.
The security rights and interests of Secured Party in the Collateral will
continue until the Loan and all of the other Obligations, including possible
contingent Obligations, are fully paid and satisfied and Secured Party elects to
cancel and terminate its security interests in writing. This is a continuing
security agreement, which will continue in effect until canceled by Secured
Party even though all or any part of the Loan and the other Obligations may be
paid in full, and even though for a period of time Debtor may not be then
obligated to Secured Party.
Article Two - USE AND LOCATION OF COLLATERAL
Debtor warrants and covenants that:
2.1 The Collateral is to be used in Debtor's business as a truck
transportation company and shall not be used for personal, family,
household or agricultural uses or purposes.
2.2 Debtor's headquarters and principal place of business is located at
0000 Xxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000.
2.3 The Collateral will be kept in Debtor's control and possession
(except in accordance with and subject to the terms and conditions
of Section 2.4) and will be used only in the continental United
States of America, Canada, and Mexico.
2.4 Debtor shall be permitted to enter into lease agreements covering
Items of Equipment in the ordinary course of its business, provided
that the following conditions are met (such leases are referred to
as "Permitted Leases"): (a) all leases must be in writing using the
term of lease delivered by Debtor to Secured Party, (b) the term of
each lease shall not extend beyond the maturity date of the Note,
and (c) the number of Units of Equipment subject to leases shall
not exceed the lesser of (i) eighty (80) Units of Equipment and
(ii) ten percent (10%) of the total number of Units of Equipment
then subject to this Security Agreement in
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each case reduced by the number of vehicles financed by Secured
Party after the date hereof which are leased.
Article Three - TITLE TO AND MAINTENANCE OF COLLATERAL
Debtor warrants, covenants, and agrees as follows:
3.1 Title. Except for the security interest granted by this Agreement,
Debtor has full title to, rights in and the power to transfer the
Collateral free from any lien, security interest, encumbrance,
lease, other than those listed in Schedule 3.1 hereto and leases
permitted by Section 2.4, restriction, pledge, or transfer or other
claim and the Debtor will, at Debtor's cost and expense, defend any
action that may affect Secured Party's security interest in, or
Debtor's title to, the Collateral.
3.2 Perfection of Security Interests. Secured Party may file whatever
financing and continuation statements, amendments, and other
documents, and may take whatever additional actions, it deems to be
necessary and proper to perfect and continue the perfection of
Secured Party's security interests in the Collateral. To the extent
that Secured Party may have previously filed financing statements
affecting any of the Collateral, Debtor ratifies and confirms
Secured Party's authority to do so and the contents and binding
effectiveness of such financing statements. Secured Party may file
a carbon, photographic, facsimile, other reproduction or
electronically authenticated or maintained copy of any financing
statement or of this Agreement for use as a financing statement.
Secured Party may make electronic filings of financing and other
statements. All filings under this Section, including, without
limitation, electronic filings, will be deemed to be complete and
perfected for all purposes when made by Secured Party and may be
made by Secured Party without the necessity that Debtor (or Secured
Party on Debtor's behalf) sign any such financing statements or
other perfection documents. Debtor shall reimburse Secured Party
for all expenses incurred with respect to the perfection and
continuation of the perfection of its security interests in the
Collateral. Without limitation of the generality of the foregoing:
(a) to the extent that any of the Collateral is held by a third
party (such as consignee or bailee) (i) notice of the security
interests created by this Agreement in such Collateral shall be
given to each such third party and (ii) Debtor shall, upon the
request of Secured Party, obtain and deliver to Secured Party a
written and signed acknowledgment from each such third party that
it is holding the Collateral for the benefit of Secured Party; (b)
to the extent that any of the Collateral is comprised of electronic
chattel paper, Debtor will ensure that (i) there is only one
identifiable authoritative copy of the electronic chattel paper
record, (ii) the authoritative electronic chattel paper record for
all electronic chattel paper in which Secured Party has a security
interest will identify Secured Party as the first lien-holder,
(iii) the authoritative electronic chattel paper record for all
electronic chattel paper in which Secured Party has a security
interest will be transferred to and maintained by Secured Party or
a third party custodian designated by Secured Party and (iv)
changes or additions to the electronic chattel paper may not be
made without the consent of Secured Party; (c) to the extent that
any of the
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Collateral is comprised of types of Collateral that can be
perfected by possession or by either possession or filing, all such
Collateral shall be delivered to Secured Party; and (d) Debtor
agrees to execute any further documents, and to take any further
actions, reasonably requested by Secured Party to evidence, perfect
or protect the security interests granted herein or to effectuate
the rights granted to Secured Party herein. Secured Party is also
authorized, at Debtor's cost and expense, to obtain all post-filing
searches from all jurisdictions that Secured Party deems advisable
to confirm the proper priority of all filings made by Secured Party
under this Agreement. Debtor appoints Secured Party its true and
lawful attorney-in-fact, coupled with an interest, for Debtor and
in its name, to execute and sign on Debtor's behalf, and to take
all acts on Debtor's behalf, that are required under this Section
or that may otherwise be required to perfect, maintain and protect
Secured Party's security interests in the Collateral, including the
execution of financing statements and other documents on Debtor's
behalf. Such power of attorney may not be revoked.
3.3 Titled Collateral. A certificate of title or similar titling or
registration document has been issued by the state of Tennessee for
each item of Equipment. Such Equipment shall be titled/registered
in the name of Debtor and Secured Party shall be shown as the first
priority and only lienholder on the certificate of
title/registration for each such item of Equipment. A copy of the
certificate of origin, application for certificate of title or
registration and/or any other forms required to satisfy the
foregoing titling/registration requirements and to perfect Secured
Party's first priority security interests in such Collateral shall
be delivered to Secured Party, (a) immediately and (b) immediately
upon Debtor's acquisition of any such Collateral in the future. In
addition, a copy or the original, as required by Secured Party, of
the issued certificate of title/registration for each such item of
Collateral shall be delivered to Secured Party as soon as it is
issued. Secured Party may retain physical possession of those
certificates. Debtor shall not change the state in which any of the
Equipment covered by this Section is titled/registered to other
than the state of Tennessee without the prior written consent of
Secured Party.
3.4 Sale, Lease or Disposition of Collateral. Except for Permitted
Leases, Secured Party does not authorize, and Debtor will not,
without the prior written consent of Secured Party, sell, contract
to sell, lease, license, encumber, grant any security interest in
or dispose of the Collateral or any interest in it until this
Agreement, the Loan and all of the other Obligations have been
fully satisfied; provided, however, that Debtor may sell, convert
or write down its inventory, in the ordinary course of business.
3.5 Insurance. Debtor will insure the Collateral on a replacement cost
basis with companies acceptable to Secured Party against the
casualties and in the amounts that Secured Party shall reasonably
require with a loss payable clause in favor of Secured Party.
Without limiting the foregoing, Debtor shall continuously maintain
physical damage insurance with Secured Party as sole loss payee
with a deductible of not more than $5,000 per item of Equipment and
liability insurance
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with Secured Party as additional insured with a combined single
limit coverage of not less than $750,000. Unless a Default shall
have occurred and be continuing, Debtor shall be permitted to
collect the proceeds of insurance and to use such proceeds to
repair the item of Equipment with respect to which the proceeds are
received or, with the prior consent of Secured Party, to obtain a
replacement item of Equipment. In all other cases, Secured Party is
authorized to collect proceeds from any of the insurance policies
and apply them to the Obligations, or to allow repairs or purchase
of a replacement item of Equipment at its sole discretion.
3.6 Assignment of Insurance. Debtor hereby assigns to the Lender, as
additional security for payment of the Note and other Obligations,
any and all moneys due or to become due under, and all other rights
of Debtor with respect to, any and all policies of insurance
covering the Collateral. Debtor hereby directs the issuer of any
such policy to pay any such moneys directly to Lender following the
occurrence and during the continuance of a Default, during which
Lender may (but need not), in its own name or in Debtor's name,
execute and deliver proofs of claim, receive such moneys, endorse
checks and other instruments representing such moneys and settle or
litigate any claim against the issuer of any such policy.
3.7 Protection of Collateral. Debtor will keep the Collateral in good
order and repair and will not waste or destroy the Collateral or
any part thereof. Debtor will not use the Collateral in violation
of any statute or ordinance and Secured Party will have the right
to examine and inspect the Collateral at any reasonable time.
3.8 Taxes. Debtor will pay promptly when due all fees, costs, taxes,
assessments or expenses on or in connection with the Collateral
and/or for its use, operation and titling.
Article Four - PROTECTION OF SECURITY
4.1 Attorney in Fact. Debtor hereby appoints and constitutes Secured
Party and its agents and designees, as Debtor's attorney-in-fact,
at Debtor's own cost and expense, to exercise at any time following
the occurrence and during the continuation of a Default under the
Loan Agreement all or any of the following powers, which, being
coupled with an interest, shall be irrevocable until all of the
Obligations have been paid in full: to receive, take, endorse,
assign, deliver, accept and deposit, in the name of Secured Party
and/or Debtor, any and all checks, notes, remittances, drafts and
other documents and instruments and documents relating to the
Collateral; to receive, open and dispose of all mail addressed to
Debtor relating to the Collateral and to notify postal authorities
to change the address for delivery of mail to such address as
Secured Party may designate; and to take or bring, in Secured
Party's and/or Debtor's name, all steps, actions or proceedings
deemed by Secured Party to be necessary or desirable to effect
collection of the Collateral or to preserve, protect or enforce
Secured Party's interests therein. Said attorney, agent or designee
shall not be liable for any acts or omissions, nor for any error of
judgment or mistake of fact or law.
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4.2 No Liability of Secured Party. Nothing herein contained shall be
construed to constitute Debtor as Secured Party's agent for any
purpose whatsoever. Secured Party shall not be responsible nor liable
for any shortage, discrepancy, damage, loss or destruction of any
Collateral wherever the same may be located and regardless of the
cause thereof. Secured Party shall not, under any circumstances, have
any liability for any error or omission or delay of any kind occurring
in the settlement, collection or payment of the Collateral or any
instrument received in payment thereof or for any damage resulting
therefrom. Secured Party may, without notice to or consent from
Debtor, xxx upon or otherwise collect, extend the time of payment of,
or compromise or settle for cash, credit or otherwise upon any terms,
any of the Collateral or any securities, instruments or insurance
applicable thereto and release any obligor thereon. Secured Party
shall not, by anything herein or in any assignment or otherwise,
assume any of Debtor's obligations under any contract or agreement
assigned to Secured Party, and Secured Party shall not be responsible
in any way for the performance by Debtor of any of the terms and
conditions thereof.
4.3 Debtor Responsible for Expenses. Any fees, costs and expenses, of
whatever kind and nature, including taxes of any kind, which Secured
Party may incur in filing public notices, as well as expenses incurred
by Secured Party (including all attorneys' fees of both in-house and
outside counsel), in protecting, maintaining, preserving or enforcing
the Obligations, the Collateral or the pledges, liens and security
interests granted to Secured Party hereunder, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions
or proceedings arising out of or related to any of the Obligations or
Secured Party's transactions with Debtor, including actions or
proceedings which may involve any person asserting a priority or claim
with respect to the Collateral, shall be paid for by Debtor on demand
and until paid by Debtor shall be added to and deemed part of the
Obligations.
4.4 Decrease in Value of Collateral. If in Secured Party's reasonable
judgment the Collateral has materially decreased in value or if
Secured Party shall deem that the Collateral at any time is not of
sufficient value to secure fully the total Obligations of Debtor to
Secured Party, Debtor shall, within ten (10) days following notice
from Secured Party, either provide enough additional Collateral or
reduce the total Obligations by a sufficient amount to satisfy Secured
Party that its security is adequate.
4.5 Reimbursement of Expenses. At its option, Secured Party may discharge
taxes, liens and interest, may perform or cause to be performed for
and on behalf of Debtor any actions and conditions, obligations, or
covenants that Debtor has failed or refused to perform, and may pay
for the repair, maintenance and preservation of the Collateral, and
all sums so expended, including but not limited to attorney's fees (of
both in-house and outside counsel), court costs, insurance premiums,
agent's fees, or commissions, or any other costs or expenses, shall
bear interest from the date of payment at the annual rate of eighteen
percent
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(18.00%) or, if lower, the maximum lawful rate and shall be payable at
the place designated in the Note and shall be secured by this
Agreement.
Article Five - DUTIES OF DEBTOR
5.1 Payment. Debtor will pay and/or perform the Obligations in accordance
with their terms and will repay immediately all sums expended by
Secured Party in accordance with the terms and provisions of this
Agreement.
5.2 Change of Place of Business. Debtor will promptly notify Secured Party
of any change of Debtor's places of business, or places where records
concerning the Collateral are kept.
5.3 Waiver. Secured Party's acceptance of partial or delinquent payments,
or the failure of Secured Party to exercise any right or remedy, shall
not be a waiver of any obligation of Debtor or right of Secured Party
or any other similar default subsequently occurring.
Article Six - DEFAULT AND REMEDIES
6.1 Default. Debtor shall be in "Default" under this Agreement on the
occurrence of any Default under Article 6 of the Loan Agreement.
6.2 Remedies. Upon the occurrence of any Default, Secured Party shall have
all of the legal remedies set forth in Article 7 of the Loan Agreement
and all other remedies created or existing under applicable law, under
the Code, in equity, under the Loan Documents or under any other
agreement between Debtor and Secured Party or from Debtor to Secured
Party.
Article Seven - MISCELLANEOUS
7.1 Time of Essence. Time is of the essence in this Agreement.
7.2 Tennessee Law to Apply. This Agreement shall be governed by the Code
and other applicable laws of the State of Tennessee, and the parties
hereby submit to the jurisdiction of the courts of that State;
provided, however, that Secured Party shall have the right, but not
the obligation, to litigate in any state or country in which Debtor,
any Guarantor, or any of their assets may be located.
7.3 Parties Bound. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective successors and
assigns. Notwithstanding the foregoing, Debtor may not assign its
rights or duties hereunder without the prior written consent of
Secured Party.
7.4 Notices. All notices and payments shall be mailed to the respective
addresses of the parties at the addresses set forth at the beginning
of this Agreement, or such other address as either party may provide
to the other from time to time in
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writing. Notices sent to Secured Party shall be sent to the attention
of Xxxxxx X. Xxxxxxxx.
7.5 Legal Construction. In case any one or more of the provisions
contained in this Agreement shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this
Agreement and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
7.6 Prior Agreements Superseded; Changes in Writing. This Agreement may
not be changed, waived, discharged or terminated without an instrument
in writing signed by the party against whom the change, waiver,
discharge or termination is sought.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
DEBTOR:
U.S. XPRESS LEASING, INC.
By:
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Signature
Title:____________________________________________
SECURED PARTY:
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC
By:
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Signature
Title:____________________________________________
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SCHEDULE 3.1
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TO
U.S. XPRESS LEASING, INC.
SECURITY AGREEMENT
Liens on the vehicles in favor of Wachovia Bank, N.A. which will be released in
connection with this transaction.
