Exhibit 10.37
SECURITY AGREEMENT
THIS AGREEMENT, entered into as of the 5th day of November, 1998, by
and between XXXXXXX XXXXXX & COMPANY, INC., a Florida corporation, whose
address is P. O. Xxx 0000, Xxxxxxxxx, Xxxxxxx 00000-0000 ("Xxxxxxx Xxxxxx") and
CAROLINA PACIFIC DISTRIBUTORS, INC., a North Carolina corporation, whose
address is 0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000
("Carolina Pacific") and TRANSIT LEASING, INC., an Indiana corporation f/k/a
CAPITOL WAREHOUSE, INC., a Kentucky corporation, whose address is 000 X. Xxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("Transit Leasing") and SERVICE EXPRESS,
INC., an Alabama corporation, whose address is X.X. Xxx 0000, Xxxxxxxxxx,
Xxxxxxx 00000 ("Service Express") and RAINBOW TRUCKING SERVICES, INC., an
Indiana corporation, whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxxxx,
Xxxxxxx 00000 ("Rainbow Trucking") and TRANSPORTATION RESOURCES AND MANAGEMENT,
INC., an Indiana corporation, whose address is 0000 XX Xxxxxxx 00 X, Xxxxx 0,
Xxxx Xxxxx, Xxxxxxx 00000 ("Transportation Resources") and VENTURE LOGISTICS,
LLC., an Indiana limited liability company, whose address is 0000 X. Xxxxxxxx
Xxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 ("Venture Logistics") and CERTIFIED
TRANSPORT, LLC., an Indiana limited liability company, whose address is 0000 X.
Xxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 ("Certified Transport") and K.J.
TRANSPORTATION, INC., a New York corporation, whose address is 0000 Xxxxxxx
Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000 ("K.J. Transportation") and DIVERSIFIED
TRUCKING CORP., an Alabama corporation, whose address is 000 Xxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000 ("Diversified Trucking") and NORTHSTAR TRANSPORTATION,
INC., an Alabama corporation, whose address is 000 Xxxxxxxxx Xxxx, Xxxxxx,
Xxxxxxx 00000 ("Northstar Transportation") (Xxxxxxx Xxxxxx, Carolina Pacific,
Transit Leasing, Service Express, Rainbow Trucking, Transportation Resources,
Venture Logistics, Certified Transport, K.J. Transportation, Diversified
Trucking, Northstar Transportation and Subsidiaries are together hereinafter
referred to as the "Debtor") and AMSOUTH BANK, a bank organized under the laws
of Alabama ("Secured Party"), whose address is Xxxx Xxxxxx Xxx 000000, Xxxxxxx,
Xxxxxxx 00000.
1. Security Interest. In consideration of and as an inducement for
Secured Party's extending credit to Debtor, Debtor hereby gives Secured Party a
continuing and unconditional security interest (the "Security Interest") in the
assets described below, wherever located, and in all parts, accessories,
attachments, additions, replacements, accessions, substitutions, increases,
profits, proceeds (including insurance proceeds) and products thereof in any
form, together with all records relating thereto (the "Collateral"):
All of the Debtor's receivables, including, but not limited to, all
present and future accounts, commissions, contract rights, lease
payment, chattel paper, instruments, cash, deposits, accounts,
documents, tax refunds payable to Debtor, license fees and proceeds,
royalties, insurance proceeds and general intangibles and all forms of
obligations owing, together with all documents or instruments of title
representing the same and rights in any merchandise or goods which the
same represent, together with all right, title, security and
guarantees, with respect to each of the receivables, including any
right of stoppage in transit, whether the same are now or hereafter
owned, and shall include all rights of Debtor under any patent license
agreement, technical assistance contract, product supply contract, or
similar agreement and includes all trade names, tradmarks, license
agreements and all records pertaining to the accounts, debtors, and
collateral and all computer software relating to the Receivables of
Debtor (together herein referred to as the "Receivables").
The Collateral also includes other assets of the same class or classes
hereafter owned or acquired by Debtor, and Secured Party shall have a security
interest in all such after-acquired property and all parts, accessories,
attachments, additions, replacements, accessions, substitutions, increases,
profits, proceeds and products thereof in any form.
2. Indebtedness Secured. The borrowing relationship between Debtor and
Secured Party is to be a continuing one and is intended to cover numerous types
of extensions of credit, loans, overdraft payments or advances made directly or
indirectly to Debtor or guaranteed by Debtor, including but not limited to
those made under the Revolving Credit Note. Accordingly, this Agreement and the
Security Interest created by it secures payment of all obligations of any kind
owing by Debtor to Secured Party whether now existing or hereafter incurred,
direct or indirect, arising from loans, guaranties, endorsements or otherwise,
whether related or unrelated to the purpose of the original extension of
credit, whether of the same or a different class as the primary obligation, and
whether the obligations are from time to time reduced and thereafter increased;
including, without limitation, any sums advanced and any expenses or
obligations incurred by Secured Party pursuant to this Agreement or any other
agreement concerning, evidencing or securing obligations of Debtor to Secured
Party, and any liabilities of Debtor to Secured Party arising from any sources
whatsoever (the "Indebtedness").
3. Revolving Loans. Until such time as Debtor receives notice to the
contrary from Secured Party, Debtor may obtain revolving loans, such loans to
be evidenced by a revolving credit note (the "Revolving Credit Note"). The
outstanding principal balance under the Revolving Credit Note may fluctuate up
and down from time to time, but shall not exceed in aggregate principal amount
outstanding at any one time the aggregate face amount of the Revolving Credit
Note.
4. Warranties of Debtor. Debtor warrants and so long as this Agreement
continues in force shall be deemed continuously to warrant that:
(a) Debtor is the owner of its respective Collateral free
of all security interests or other encumbrances;
(b) Debtor is authorized to enter into the Security Agreement;
(c) The respective Collateral owned by the Debtor (including
Debtor's books and records) is located at the applicable
address of the Debtor first written above.
(d) Each instrument, account, and chattel paper constituting the
Collateral arises from goods sold or services rendered by
Debtor, is genuine and enforceable in accordance with its
terms against the party obligated to pay the same ("Account
Debtor"), and no Account Debtor has any defense, setoff,
claim or counterclaim against Debtor;
(e) The amount represented by Debtor to Secured Party as owing by
each Account Debtor or by all Account Debtors is the correct
amount actually and unconditionally owing by such Account
Debtor(s), except for normal cash discounts as shown on
invoices, contracts or other documents delivered to Secured
Party;
(f) All Receivables are posted currently to Debtor's books and
records; and
(g) Debtor holds in full force and effect all permits, licenses
and franchises necessary for it to carry on its operations in
conformity with all applicable laws and regulations.
5. Covenants of Debtor. So long as this Agreement has not been
terminated as provided hereafter, Debtor: (a) will defend the Collateral
against the claims of all other persons; will keep the Collateral free from all
security interests or other encumbrances, except the Security Interest; and
will not assign, deliver, sell, transfer, lease or otherwise dispose of any of
the Collateral or any interest therein without the prior written consent of
Secured Party, except that prior to an Event of Default, Debtor may sell
inventory in the ordinary course of Debtor's business; (b) will keep the
Collateral, including Debtor's books and records, at the address specified
above until Secured Party is notified in writing of any change in its location
within the State but Debtor will not remove the Collateral from the State nor
change the location of Debtor's chief executive office without the written
consent of Secured Party; will notify Secured Party promptly in writing of any
change in Debtor's address, name or identity from that specified above; and
will permit Secured Party or its agents to inspect the Collateral; (c) will
keep the Collateral in good condition and repair and will not use the
Collateral in violation of any provisions of this Agreement, any applicable
statute, regulation or ordinance or any policy of insurance insuring the
Collateral; (d) will execute and deliver to Secured Party such financing
statements and other documents, pay all costs including costs of title searches
and filing financing statements and other documents in any public offices
requested by Secured Party, and take such other action Secured Party may deem
advisable to perfect the Security Interest created by this Agreement, including
without limitation placing notations on Debtor's books of account to disclose
the Security Interest in the Receivables; (e) will pay all taxes, assessments
and other charges of every nature which may be levied or assessed against the
Collateral; (f) will immediately upon receipt deliver to Secured Party,
properly endorsed or assigned, all instruments and chattel paper constituting
Collateral, and any security for or guaranty of any of the Collateral; (g) will
post all Receivables to Debtor's books and records immediately upon the
creation thereof; (h) will not do business under any name or style other than
that indicated on the first page thereof; and (i) if any certificate of title
may be issued with respect to any of the Collateral, will cause Secured Party's
interest under this Agreement to be noted on the certificate and will deliver
the original certificate to Secured Party.
6. Records, Reports and Documents. Debtor shall segregate its books
and records relating to the Collateral from all of Debtor's other books and
records in a manner satisfactory to Secured Party; and shall promptly deliver
to Secured Party upon request all invoices, original documents of title,
contracts, chattel paper, instruments and any other writings relating thereto,
and all other evidence of the performance of contracts, shipment or delivery of
merchandise, or the rendering of services; and Debtor will promptly deliver to
Secured Party at Secured Party's request such other information with respect to
any of the Collateral as Secured Party may in its sole discretion deem to be
necessary or desirable to evidence, confirm or protect Secured Party's interest
in the Collateral. Secured Party, or its representatives, at any time from time
to time, shall have the right, and Debtor will permit, or will instruct any
third party having possession or maintaining any of the following to permit,
Secured Party or its representatives: (a) to examine, check, make copies of or
extracts from, any of Debtor's books, records and files (including, without
limitation, orders and original correspondence); (b) to verify the Collateral
or any portion thereof or the Debtor's compliance with the provisions of this
Agreement. Debtor agrees to immediately notify Secured Party of a default in
payment by, or the insolvency or bankruptcy of, any Account Debtor from whom an
account receivable is included as an eligible receivable by Lender, or of the
occurrence of any event which would adversely affect the value of any
Collateral. Debtor further agrees to furnish to Secured Party at Debtor's own
cost and expense, at such intervals as Secured Party may establish from time to
time, copies of reports, financial data and analysis satisfactory to Secured
Party.
7. Default.
(a) Any of the following shall constitute in event of default
("Event of Default"): (i) the occurrence of any event of
default under that certain Advised Revolving Line of Credit
Agreement or Revolving Credit Note of even date herewith
between Debtor or Secured Party; (ii) any attachment or levy
against the Collateral or any other occurrence which inhibits
Secured Party's free access to the Collateral.
(b) Upon the happening of any Event of Default, Secured Party's
rights with respect to the Collateral shall be those of a
secured party under the Uniform Commercial Code and any other
applicable law in effect from time to time. Secured Party
shall also have any additional rights granted herein and in
any other agreement now or hereafter in effect between Debtor
and Secured Party. If requested by Secured Party, Debtor will
assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party.
(c) Debtor agrees that any notice by Secured Party of the sale or
disposition of the Collateral or any other intended action
hereunder, whether required by the Uniform Commercial Code or
otherwise, shall constitute reasonable notice to Debtor if the
notice is mailed by regular or certified mail, postage prepaid,
at least ten days before the action to Debtor's address as
specified in this Agreement or to any other address which Debtor
has specified in writing to Secured Party as the address to
which notices shall be given to Debtor. Debtor shall be liable
for any deficiencies in the event the proceeds of disposition of
the Collateral do not satisfy the Indebtedness in full.
8. Miscellaneous.
(a) Debtor authorizes Secured Party at Debtor's expense to file
any financing statements relating to the Collateral (without
Debtor's signature thereon) which Secured Party deems
appropriate and Debtor appoints Secured Party as Debtor's
attorney-in-fact to execute any such financing statements in
Debtor's name and to perform all other acts which Secured
Party deems appropriate to perfect and to continue perfection
of the Security Interest.
(b) Debtor agrees that in addition to the other rights of Secured
Party hereunder, Secured Party shall have a security interest
in any deposit accounts of Debtor with Lender, and in any
securities or other property of Debtor in the possession of
Secured Party or any of its affiliates, and Secured Party may
apply or set off the same against the Indebtedness in such
manner as Secured Party in its sole discretion shall
determine.
(c) Debtor hereby irrevocably consents to any act by Secured
Party or its agents in entering upon any premises for the
purposes of either (i) inspecting the Collateral or (ii)
taking possession of the Collateral after any Event of
Default; and Debtor hereby waives its right to assert against
Secured Party or its agents any claim based upon trespass or
any similar cause of action for entering upon any premises
where the Collateral may be located.
(d) Debtor agrees that Secured Party assumes no liability or
responsibility for the correctness, genuineness or validity
of any instruments, documents or chattel paper which may be
released or endorsed to Debtor by Secured Party, all of which
shall automatically be deemed to be without recourse to
Secured Party, nor for the existence, quantity, quality,
condition, value or delivery of any goods represented
thereby, and Debtor agrees to indemnify and hold Secured
Party harmless with respect to any claims or liabilities
arising in connection therewith.
(e) Debtor authorizes Secured Party to collect and apply against
the Indebtedness any refund of insurance premiums or any
insurance proceeds payable on account of the loss or damage
to any of the Collateral and appoints Secured Party as
Debtor's attorney-in-fact to endorse any check or draft
representing such proceeds or refunds.
(f) Upon Debtor's failure to perform any of its duties hereunder,
Secured Party may, but it shall not be obligated to, perform
any of such duties and Debtor shall forthwith upon demand
reimburse Secured Party for any expenses incurred by Secured
Party in so doing. Secured Party may at its option treat the
payment of such expenses as advances under the Revolving
Credit Note.
(g) No delay or omission by Secured Party in exercising any right
hereunder or with respect to any Indebtedness shall operate as a
waiver of that or any other right, and no single or partial
exercise of any right shall preclude Secured Party from any
other or further exercise of the right or the exercise of any
other right or remedy. Secured party may cure any Event of
Default by Debtor in any reasonable manner without waiving the
Event of Default so cured and without waiving any other prior or
subsequent Event of Default by Debtor. All rights and remedies
of Secured Party under this Agreement and under the Uniform
Commercial Code shall be deemed cumulative.
(h) Secured Party shall exercise reasonable care in the custody and
preservation of the Collateral to the extent required by law and
it shall be deemed to have exercised reasonable care if it takes
such action for that purpose as Debtor shall reasonably request
in writing; however, no omission to do any act not requested by
Debtor shall be deemed a failure to exercise reasonable care and
no omission to comply with any requests by Debtor shall of
itself be deemed a failure to exercise reasonable care. Secured
Party shall have no obligation to take and Debtor shall have the
sole responsibility for taking any steps to preserve rights
against all prior parties to any instrument or chattel paper in
Secured Party's possession as Collateral or as proceeds of the
Collateral. Debtor waives notice of dishonor and protest of any
instrument constituting Collateral at any time held by Secured
Party on which Debtor is in any way liable and waives notice of
any other action taken by Secured Party.
(i) Debtor authorizes Secured Party without affecting Debtor's
obligations hereunder from time to time (i) to take from any
party and hold collateral (other than the Collateral) for the
payment of the Indebtedness or any part thereof, and to
exchange, enforce or release such collateral or any part
thereof, (ii) to accept and hold the endorsement or guaranty of
payment of the Indebtedness or any part thereof and to release
or substitute any such endorser or guarantor or any party who
has given any security interest in any collateral as security
for the payment of the Indebtedness or any part thereof of any
party in any way obligated to pay the Indebtedness or any part
thereof; and (iii) upon the occurrence of any Event of Default
to direct the manner of the disposition of the Collateral and
any other collateral and the enforcement of any endorsements or
guaranties relating to the Indebtedness or any part thereof as
Secured Party in its sole discretion may determine.
(j) Upon an Event of Default by Debtor, Secured Party may demand,
collect and xxx for all proceeds (either in Debtor's name or
Secured Party's name at the latter's option), with the right to
enforce, compromise, settle or discharge any proceeds.
Furthermore, Debtor appoints Secured Party or any other person
designated by Secured Party as Debtor's attorney-in-fact, with
power: (i) to endorse Debtor's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or
security that may come into Secured Party's possession; (ii) to
sign Debtor's name on any invoice or xxxx of lading relating to
any Receivables, on drafts against Account Debtors, on schedules
and assignments of Receivables, on notices of assignment,
financing statements and other public records, on verifications
of accounts, and on notices to Account Debtors; (iii) to
receive, open and dispose of all mail addressed to Debtor that
may come into Secured Party's possession pursuant to the lockbox
arrangement; (iv) to send requests for verification of
Receivables to Account Debtors; and (v) to do all things
necessary to carry out this Agreement. Neither the Secured Party
nor its designee will be liable for any acts or omissions nor
for any error of judgment or mistake of fact or law in the
exercise of the power granted hereby. This power, being coupled
with an interest, is irrevocable so long as any Receivables
assigned to Secured Party or in which Secured Party has a
Security Interest remain unpaid or until the Indebtedness has
been paid in full.
(k) Debtor agrees, whether or not the transactions contemplated
hereby shall be consummated, to pay and hold Secured Party
harmless against liability for the payment of all out-of pocket
expenses arising in connection with this transaction, including
any state documentary stamp taxes or other taxes (together with
interest and penalties, if any) which may be determined to be
payable with respect to the execution and delivery of any
documents contemplated hereby, and the reasonable fees and
expenses of counsel for Secured Party. If an Event of Default
shall occur, Debtor shall also pay all of Secured Party's costs
of collection, including repossession, storage and disposition
costs, employee travel expenses, court costs and reasonable
attorney's fees, whether incurred in connection with collection,
trial, appeal or otherwise.
(l) The rights and benefits of Secured Party under this Agreement
shall, if Secured Party agrees, inure to any party acquiring
an interest in the Indebtedness or any part thereof.
(m) The terms "Secured Party" and "Debtor" as used in this
Agreement include the successors or assigns of those parties.
(n) If more than one Debtor executes this Agreement, the term
"Debtor" includes each of the Debtors as well as all of them,
and their obligations under this Agreement shall be joint and
several.
(o) This Agreement may not be modified or amended nor shall any
provision of it be waived except in writing signed by Debtor
and by an authorized officer of Secured Party.
(p) This Agreement shall be construed under the Florida Uniform
Commercial Code and any other applicable laws in effect from
time to time.
(q) Unless otherwise specified in this Agreement, communication
provided for herein shall be delivered or sent by first class
mail, postage prepaid, to the respective addresses set forth
on the first page hereof, or to such other address as either
party shall notify the other in writing, and shall be deemed
effective when deposited in the United States mails.
(r) Debtor has not, within the five-year period immediately
preceding the execution hereof, done business under any name
or style other than that designated in the first page of this
Agreement.
9. WAIVER. IF AN EVENT OF DEFAULT SHOULD OCCUR, DEBTOR WAIVES ANY
RIGHT DEBTOR MAY HAVE TO NOTICE AND A HEARING BEFORE SECURED PARTY TAKES
POSSESSION OF THE COLLATERAL BY SELF-HELP, REPLEVIN, ATTACHMENT, SETOFF OR
OTHERWISE.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered in the presence of:
XXXXXXX XXXXXX & COMPANY, INC., a Florida corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC., a North Carolina
corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
TRANSIT LEASING, INC., an Indiana corporation f/k/a CAPITOL
WAREHOUSE, INC., a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
SERVICE EXPRESS, INC., an Alabama corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
RAINBOW TRUCKING SERVICES, INC., an Indiana corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
TRANSPORTATION RESOURCES AND MANAGEMENT, INC., an Indiana
corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
VENTURE LOGISTICS, LLC, an Indiana limited liability company
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Manager
CERTIFIED TRANSPORT, LLC, an Indiana limited liability
company
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Manager
K.J. TRANSPORTATION, INC., a New York corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
DIVERSIFIED TRUCKING CORP, an Alabama corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
NORTHSTAR TRANSPORTATION, INC., an Alabama corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
RAINBOW TRUCKING SERVICES, INC., an Indiana corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman of the Board
"debtor"
AMSOUTH BANK, a bank organized under the laws of Alabama
By: /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx, Vice President
"Secured Party"
