Document:

EXHIBIT 10.1

 

WHOLESALE SECURITY AGREEMENT

 

A.            INVENTORY:   The
undersigned dealers
(individually a “Debtor” and collectively the “Debtors”) are now or may
hereafter be engaged in the business of selling at retail the following
described types of property and such other property as may be described from
time to time in any agreement which is supplemental hereto (all of which
property, with all attachments, accessories, exchanges, replacement parts,
repairs and additions thereto, are herein collectively called “Inventory”):

 

Description of Inventory:
All present and future inventory, including trucks, trailers, chassis and
glider kits, financed by Secured Party. 
For purposes hereof, inventory financed by Secured Party shall mean (i) any
inventory for which Secured Party has made an advance to or on behalf of a
Debtor to allow a Debtor to acquire or retain any rights therein (including
payments to the seller thereof) or (ii) for which Secured Party has made
an advance to, and at the request of, a Debtor secured by specific items of
inventory, and for which there is any money owing to Secured Party in respect
thereof.

 

B.            ADVANCES:   Debtors hereby request the below named
secured party (“Secured Party”) to make loans (herein individually called an “Advance”
and collectively called “Advances”) from time to time to Debtor, the proceeds
of which will be used by a Debtor for the purpose of acquiring Inventory from
any manufacturer or distributor of such Inventory (each of such manufacturers
and distributors, and their successors and assigns, is herein called a “Manufacturer”)
and for other good and valid business purposes. 
Each Debtor hereby directs Secured Party to pay on Debtor’s behalf any
invoices, or electronic remittance advises, presented to Secured Party from
time to time which evidence the sale by a Manufacturer to a Debtor of one or
more items of Inventory. Debtors hereby agree that any such payment by Secured
Party to a Manufacturer shall be deemed an Advance hereunder for all purposes
of this Agreement.  Debtors acknowledge
and agree that any Advance made pursuant hereto shall be at Secured Party’s
sole discretion and that no Advance made will obligate Secured Party to make
any additional Advance. All Advances made by Secured Party to Debtors under
this Agreement shall constitute one loan.

 

In
addition, Secured Party has established an aggregate internal credit limit for
all the Debtors in the amounts set forth on Schedule A hereto (the “Internal
Credit Limit”). In the event any of the Debtors (i) terminate requesting
Advances from Secured Party under the Internal Credit Limit established for a
particular manufacturer or for used Inventory (ii) allows another finance
source to commence financing Inventory for which an Internal Credit Limit has
been established by Secured Party or (iii) is in default under this
Agreement and Secured Party terminates this Agreement (each such event shall be
referred to herein as a “Termination Event”) the Debtors shall pay to Secured
Party an amount equal to:

 

(a) 
3% of the original Internal Credit Limit established for such manufacturer or
used Inventory, if the Termination Event occurs on or before the first annual
anniversary of the date of this Agreement (“Months 1-12”); and

 

(b)  2%
of the original Internal Credit Limit established for such manufacturer or used
Inventory, if the Termination Event occurs on or before the second anniversary
of this Agreement (“Months 13-24”); and

 

(c)  1%
of the original Internal Credit Limit established for such manufacturer or used
Inventory, if the Termination Event occurs on or before the third annual
anniversary of the date of this Agreement (“Months 25-36”); and

 

With no payment due
following a Termination Event after Month 36.

 

Notwithstanding the
foregoing, any delayed payment program, privileges or concessions afforded or
provided Debtors by the manufacturers and/or distributors of any items of
Inventory, which allows Debtors to delay the payment for such items of
Inventory after receipt of the same from such manufacturers and/or distributors
of such items of Inventory, shall not be considered financing from another
financing source, which would require the payment of the percentage amounts
specified above by Debtors.

 

C.            STATEMENT OF ACCOUNT:  Secured Party will furnish to a Debtor
from time to time a statement of Debtor’s individual account with Secured
Party, prepared from Secured Party’s records showing all applicable credits and
debits, including all Advances, other charges and payments with respect to each
item of Inventory against which an Advance has been made hereunder (any error
in the identification of one or more items of Inventory on such statement shall
not prejudice Secured Party’s security interest therein).   Each such statement shall be considered
prima facie evidence of each Debtor’s account.

 

D.            SECURITY INTEREST:  To secure payment of all Advances which
Secured Party may elect to make pursuant hereto from time to time and all other
obligations of Debtors owing hereunder, Debtors hereby grants to Secured Party
a security interest in the following described collateral (all herein
collectively called “Collateral”):  all
present and future Inventory and all chattel paper, documents, certificates of
title, certificates of origin, general intangibles, instruments, accounts and
contract rights now existing or hereafter arising with respect thereto, and all
cash and non-cash proceeds of any of the foregoing.  Debtors agree that at any time and from time
to time, upon the request of Secured Party, Debtors will promptly (i) deliver
to Secured Party all Collateral other than Inventory, (ii) mark all
chattel paper, documents and instruments and Debtors’ books of account, ledger
cards and other records relative to the Collateral with a notation satisfactory
to Secured Party disclosing that they are subject to Secured Party’s security
interest, (iii) execute and deliver to Secured Party such instruments,
statements and agreements as Secured Party may request to evidence further each
Advance and the security interests granted hereunder, provided, however, a
Debtor’s failure to comply with such request shall not affect or limit Secured
Party’s security interest or other rights in and to the Collateral, and (iv) permit
Secured Party or its representatives to examine the Collateral and Debtors’
books and records and Debtors agree to pay to Secured Party the greater of
Secured Party’s standard fee or actual costs relating to such examinations
immediately upon receipt of Secured Party’s invoice therefore.   Debtors agrees that Secured Party may directly
collect any amount owed to Debtors with respect to the Collateral (hereafter
referred to as an “Account”) and credit Debtors with all sums received by
Secured Party.  Debtors agree that
Secured Party may from time to time at its discretion contact any account
debtor to confirm and verify the terms of sale, payments made on an Account,
and any modifications claimed to be made by the Debtors with such account
debtor.  Debtors agree that Secured Party
may at any time notify an account debtor of the assignment of said Account and
revoke the authority of the undersigned to collect the same and should the
Secured Party at any time receive any checks, drafts, money orders or other
instruments or orders for money payable to a Debtor to apply to an Account, Secured
Party is irrevocably appointed attorney-in-fact for each such Debtor to endorse
each such instrument with the name of the Debtor and collect the same.

 

E.             PAYMENT:   Debtors agrees to pay to Secured Party,
promptly as billed, interest and charges on the unpaid balance of all Advances
outstanding from time to time, computed in accordance with the terms
hereof.   Upon the sale of any item of
Inventory the amount of the Advance applicable thereto shall become immediately
due and payable without notice or demand. 
Except as otherwise provided herein, all Advances will be immediately
due and payable one hundred twenty (120) days following written notice by
Secured Party to Debtors that no additional Advances will be made to Debtors
under the terms of this Agreement (a “Notice of Intent to Discontinue Advances”).
Further, except following an Event of Default, as provided for herein, and
notwithstanding the giving of a Notice of Intent to Discontinue Advances,
Secured Party shall not discontinue advances to the extent of its existing
Internal Credit Limit, for a period of 120 days from the date of its Notice of
Intent to Discontinue Advances. Upon the suspension and/or termination of any
Peterbilt franchise or any license to sell Class 8 trucks by a governmental
authority relating to a particular dealership location, Secured Party may
demand payment within thirty (30) days of all Advances, which relate to the
dealership location covered by such franchise or license termination. Should
the Peterbilt franchises and/or licenses representing more than twenty-five
percent (25.0%) of the Advances to Debtors by dollar volume be suspended and/or
terminated, Secured Party may 

 

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demand payment
of all Advances then outstanding to Debtors, in which event such Advances, as
well as all accrued but unpaid interest, shall be paid by Debtors within thirty
(30) days of such demand. Should there be a material change in the management
or control of Debtors, Secured Party may demand payment of all Advances then
outstanding, as well as all accrued but unpaid interest, in which event Debtors
shall pay such amounts within 120 days of such demand. All amounts payable
pursuant hereto are payable at Secured Party’s address set forth below or at
such other address as Secured Party may specify from time to time in
writing.   Any instrument or agreement,
which is executed by Debtors and specifies an amount payable shall evidence
indebtedness and not payment.  All
payments made by Debtors to Secured Party with reference to this Agreement
shall be applied first to an indebtedness which is not secured, then to
delinquency charges, then to interest, then to insurance payments, then to any
other fees or other amount payable hereunder other than the indebtedness
secured by a purchase money security interest in the Collateral, until all of
such indebtedness is paid in full, and then to the indebtedness secured by a
purchase money security interest in the Collateral in the order in which that
indebtedness was incurred.  This
provision controls over any conflicting provision or language in this Agreement
or in any other agreement between Debtors and Secured Party unless the parties
mutually agree in writing in a subsequent agreement to override this provision.
Secured Party’s application of any payment is conditional and subject to review
and reapplication until all of Debtors’ obligations under this Agreement are
paid in full.

 

F.             INTEREST AND CHARGES:  Debtors agrees to pay Secured Party interest,
curtailments and other charges in accordance with the terms and conditions of
Rider A, attached hereto and incorporated herein by reference, on or before the
15th of each month.  Curtailments and
other charges may be subject to change from time to time and will be effective
30 days following written notice to Debtors. If any manufacturer, distributor
or other third party fails to provide an interest or other subsidy for Debtors,
Debtors will be responsible for and pay to Secured Party all such charges.  For any such charges, or other amounts due
hereunder, not paid within 10 days of its due date, Debtors agrees to pay to
Secured Party a delinquency charge calculated thereon at the rate of 11⁄2 % per
month for the period of delinquency or, at Secured Party’s option, 5% of such
past due amounts, provided that such delinquency charge is not prohibited by
law, otherwise at the highest rate the Debtors can legally obligate themselves
to pay and/or Secured Party can legally collect (provided such delinquency
charges may not exceed those set out herein).

 

G.            LOCATION/NAME OF DEBTORS:   (i) If a Debtor is a corporation,
limited liability company, limited partnership or other registered
organization, its state of organization is in the state set forth immediately
below its signature on the last page of this Agreement; (ii) if a
Debtor is an individual, his/her principal place of residence is at the address
set forth immediately below his/her signature on the last page of this
Agreement; (iii) if a Debtor is an organization, its place of business or
if it has more than one place of business its chief executive office, is
located at the address set forth immediately below its signature on the last page of
this Agreement.   Each Debtor agrees that
it will not without the prior written consent of Secured Party change its state
of organization if it is a corporation, limited liability company, limited
partnership or other registered organization.  
Debtors will notify Secured Party in writing of a change in its chief
executive office or its place of business 30 days prior to such change. Each
Debtor shall notify Secured Party in writing of a change in its name 30 days
prior to such change.   The Debtors
further represent and warrant that the Debtors identified on Schedule B
hereto own the premises identified on Schedule B where they operate the
dealerships.

 

H.            ADDITIONAL WARRANTIES AND AGREEMENTS: Each Debtor warrants and agrees that: the Collateral is free
from and will be kept free from all liens, claims, security interests and encumbrances
other than those created hereby; that except as herein specifically permitted,
no financing statement covering the Collateral is now or will hereafter be on
file in favor of anyone other than Secured Party; the Inventory will be
maintained in good operating condition, repair and appearance and, absent the
written consent of Secured Party, will not be used for any purpose other than
demonstration at or in reasonable proximity to a Debtor’s place(s) of business
or at industry trade shows, and any such demonstration will be in conformity
with all applicable governmental laws and regulations; other than in the
ordinary course of business, the Inventory will not otherwise be removed from
such places of business without the prior written consent of Secured Party;
Debtor shall use and maintain the Collateral in compliance with any, insurance
policies and all applicable laws; and, notwithstanding Secured Party’s claim to
proceeds, Debtors will not sell, rent, lend, encumber, pledge, transfer,
secrete or otherwise dispose of any of the Collateral, nor will Debtors permit
any such act; provided, however, as long as an event of default has not
occurred and is not then continuing hereunder, Debtors may sell any (i) item
of Inventory or (ii) chattel paper or accounts in the regular course of a
Debtor’s business and any purchaser thereof may acquire such priority to
Secured Party’s interest therein as prescribed under applicable law. Upon the
sale of an item of Inventory the amount of the Advance applicable thereto shall
become immediately due and payable and Debtors shall promptly pay such amount
in cash to Secured Party without notice or demand.   An item of Collateral will not be considered
as “sold” until the earlier of the date a Debtor receives payment therefor or
the date possession of such item of Collateral is delivered to the purchaser
thereof pursuant to a Retail Sales Order, notwithstanding the Retail Sales
Order may list an earlier date of sale.

 

Each Debtor
further agrees, at its own cost and expense, to do everything necessary or
expedient to perfect and preserve the security interests of Secured Party
obtained hereunder; to defend any action, proceeding or claim affecting the
Collateral; to furnish Secured Party promptly with copies of its (i) balance
sheet, profit and loss statement and other fiscal year-end financial reports
within one hundred twenty (120) days of the close of each fiscal year of each
Debtor and (ii) month-end balance sheet and profit and loss statement
within 30 days of the last day of each month, and with such other financial
statements and other information as Secured Party may reasonably request from
time to time; to pay all expenses incurred by Secured Party in enforcing its
rights after the occurrence of an event of default hereunder, including the
reasonable fees of any attorneys retained by Secured Party ; and to pay
promptly all taxes, assessments, license fees and other public or private
charges when levied or assessed against the Collateral, this Agreement, any
supplemental agreements or any accompanying notes.

 

Each Debtor
represents, warrants and covenants as of the date of this Agreement and as of
the date of each Advance and request for an Advance that:

 

(a)   Debtor’s
exact legal name is as set forth in the preamble of this Agreement and Debtor
is, and will remain, duly organized, existing and in good standing under the
laws of the State set forth in the preamble of this Agreement, has its chief
executive offices at the location specified herein, and is, and will remain,
duly qualified and licensed in every jurisdiction wherever necessary to carry
on its business and operations;

 

(b)   Debtor
has adequate power and capacity to enter into, and to perform its obligations
under this Agreement, each Note and any other documents evidencing, or given in
connection with, any of the Indebtedness (all of the foregoing are called the “Debt Documents”);

 

(c)   This
Agreement and the other Debt Documents have been duly authorized, executed and
delivered by Debtor and constitute legal, valid and binding agreements
enforceable in accordance with their terms, except to the extent that the
enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws;

 

(d)   No
approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already
obtained;

 

(e)   The
entry into, and performance by, Debtor of the Debt Documents will not (i) violate
any of the organizational documents of Debtor or any judgment, order, law or
regulation applicable to Debtor, or (ii) result in any breach of or
constitute a default under any contract to which Debtor is a party, or result
in the creation of any lien, claim or encumbrance on any of Debtor’s property
(except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

 

(f)    There
are no suits or proceedings pending in court or before any commission, board or
other administrative agency against or affecting Debtor which could, in the
aggregate, have a material adverse effect on Debtor, its business or
operations, or its ability to perform its obligations under the Debt Documents,
nor does Debtor have reason to believe that any such suits or proceedings are
threatened;

 

(g)   All
financial statements delivered to Secured Party in connection with the
Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtor’s financial
condition;

 

(h)   The
Collateral is not, and will not be, used by Debtor for personal, family or household
purposes;

 

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(i)    The
Collateral is, and will remain, in good condition and repair;

 

(j)    Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and

 

(k)   The
Collateral is, and will remain, free and clear of all liens, claims and
encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party,  (ii) liens for taxes
not yet due or for taxes being contested in good faith and which do not
involve, in the judgment of Secured Party, any risk of the sale, forfeiture or
loss of any of the Collateral, and (iii) inchoate materialmen’s, mechanic’s,
repairmen’s and similar liens arising by operation of law in the normal course
of business for amounts which are not delinquent (all of such liens are called “Permitted Liens”).

 

(l) Debtor is
and will remain in material compliance with all laws and regulations applicable
to it including, without limitation, (i) ensuring that no person who owns
a controlling interest in or otherwise controls Debtor is or shall be (Y)
listed on the Specially Designated Nationals and Blocked Person List maintained
by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury,
and/or any other similar lists maintained by OFAC pursuant to any authorizing
statute, Executive Order or regulation or (Z) a person designated under Section 1(b),
(c) or (d) of Executive Order No. 13224 (September 23,
2001), any related enabling legislation or any other similar Executive Orders,
and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws,
regulations and government guidance on BSA compliance and on the prevention and
detection of money laundering violations. As used herein, “material compliance”
means compliance that will not result in a material adverse effect on the
Guarantor, its business or operations, or its ability to perform its
obligations under this Guaranty.

 

I.              FINANCING STATEMENTS: If permitted by law, Debtors agrees
that a carbon, photographic or other reproduction of this Agreement or of a
financing statement may be filed as a financing statement. Each Debtor
authorizes Secured Party to file a financing statement describing the
Collateral.

 

J.             INSURANCE AND RISK OF LOSS: Debtors
shall at all times bear all risk of loss, damage to or destruction of the
Collateral.  Debtors agree to procure
forthwith and maintain insurance on the Inventory, for the full insurable value
thereof and for the life of this Agreement, in the form of Fire Insurance with
Extended Coverage or Combined Additional Coverage, as appropriate, and
Collision, Theft and/or Vandalism and Malicious Mischief Coverage when
appropriate, plus such other insurance as Secured Party may specify from time
to time, all in form and amount and with insurers satisfactory to Secured
Party.  Debtors agree to deliver promptly
to Secured Party certificates, or if requested, policies of insurance
satisfactory to Secured Party, each with a standard long-form loss-payable
endorsement naming Secured Party or assigns as loss-payee as their interests
may appear.  Each policy shall provide
that Secured Party’s interest therein will not be invalidated by the acts,
omissions or neglect of anyone other than Secured Party, and will contain
insurer’s agreement to give 30 days prior written notice to Secured Party
before the cancellation of or any material change in the policy will be
effective as to Secured Party, whether such cancellation or change is at the
direction of Debtors or insurer.  Secured
Party’s acceptance of policies in lesser amounts or risks will not be a waiver
of a Debtor’s foregoing obligation. 
Debtors assign to Secured Party all proceeds of such insurance,
including returned and unearned premiums, not to exceed the sum of all amounts
payable pursuant hereto. Debtors direct all insurers to pay such proceeds
directly to Secured Party.

 

K.            PERFORMANCE BY SECURED PARTY: If
any Debtor fails to perform any of its obligations hereunder, Secured Party may
perform the same, but shall not be obligated to do so, for the account of such
Debtor to protect the interest of Secured Party or Debtor or both, at Secured
Party’s option, and Debtors shall immediately repay to Secured Party any
amounts paid by Secured Party in such performance together with interest
thereon at five percent (5.0%) above the interest rate then being charged
Debtors by Secured Party on Advances made pursuant to this Agreement, not to
exceed the maximum amount or rate allowed by law.

 

L.             EVENTS OF DEFAULT:  Time is of the essence.  An event of default shall occur if: (a) any
Debtor fails to pay when due any amount owed by it to Secured Party or any
successor or assignee of Secured Party under this Agreement or under the terms
of any promissory note delivered in conjunction with this Agreement or under
any other agreement by and between any Debtor or guarantor and the
Transportation Finance division of Secured Party, within five Business Days of
Secured Party having made written demand of Debtors for the payment of the
same, or if any Debtor fails to pay when due any amount owed by it to Secured
Party or any affiliate (including without limitation, any direct or indirect
parent, subsidiary or sister entity), successor or assignee of Secured Party
under any other document, agreement or instrument related to, within five
Business Days of Secured Party having made written demand of Debtors for the
payment of the same; (b) an event of default occurs in the performance or
observance of any other term or provision to be performed or observed by any
Debtor, any affiliate of any Debtor or any guarantor of Debtors’ obligations
under this Agreement of any provision hereunder or under any other instrument
or agreement furnished to Secured Party or to any affiliate of Secured Party by
any Debtor, any affiliate of any Debtor or any guarantor of Debtors’
obligations under this Agreement; (c) any representation or warranty made
by Debtors herein or in any document or certificate furnished by any Debtor to
Secured Party or to any affiliate of Secured Party was incorrect in any
material respect when made; (d) any Debtor becomes insolvent or ceases to
do business as a going concern; (e) any of the Collateral is lost or
destroyed, no insurance is in force to cover such loss or destruction and
Debtors do not pay an amount to Secured Party equal to the value of the lost or
destroyed Collateral within thirty (30) Business Days of any Debtor’s notice of
such loss of destruction; (f) any Debtor or any guarantor of Debtors’
obligations under this Agreement makes an assignment for the benefit of
creditors or takes advantage of any law for the relief of debtors; (g) a
petition in bankruptcy, or for an arrangement, reorganization or similar relief
is filed by or against any Debtor or any guarantor of Debtors’ obligations
under this Agreement , which is not contested by such Debtor or guarantor and
thereafter dismissed within 90 days from the date a Debtor or guarantor
receives notice of the filing of the same; (h) any property of any Debtor
having a value in excess of one-percent of the Collateral is attached and such
attachment is not contested and or resolved within ninety (90) days thereof and
if part of the Collateral, paid off after such ninety(90) day period, or a
trustee or receiver is appointed for any Debtor or any guarantor of Debtors’
obligations under this Agreement or for a substantial part of its property, or
Debtor or any guarantor of Debtors’ obligations under this Agreement applies
for such appointment; (i) Debtor or any guarantor of Debtors’ obligations
under this Agreement take any action looking to its dissolution or liquidation;
(j) Any Debtor, or any guarantor of the Debtors’ obligations, ceases to exist
as a legal entity or a Debtor or any guarantor of Debtors’ obligations under
this Agreement or any party in control of a Debtor or any guarantor of Debtors’
obligations under this Agreement takes any action looking to a Debtor’s or such
guarantor’s dissolution as a legal entity; ( (m) there shall be a material
adverse change in any of the: (i) condition (financial or otherwise),
business, performance, prospects, operations or properties of any Debtor or any
guarantor of Debtors’ obligations under this Agreement, (ii) legality,
validity or enforceability of this Agreement or any guaranty, (iii) perfection
or priority of the lien granted in favor of to Secured Party pursuant to this
Agreement, (iv) ability of any Debtor or any guarantor of Debtors’
obligations under this Agreement to repay the indebtedness or perform its
obligations under this Agreement or guaranty (v) rights and remedies of
the Secured Party under the Agreement; (o) if there shall occur an (i) appropriation,
(ii) confiscation, (iii) retention, or (iv) seizure of Control
custody or possession of the Collateral by any governmental authority
including, without limitation, any municipal, state, federal or other
governmental entity or any governmental agency or instrumentality (all such
entities, agencies, and instrumentalities shall hereinafter be collectively
referred to as “Governmental Authority”); (p) if anyone in the control of a
Debtor is accused or alleged or charged (whether or not subsequently arraigned,
indicted or convicted) by any Governmental Authority to have used the
Collateral in connection with the commission of any crime (other than a
misdemeanor moving violation); (q) any guarantor or surety of any of the
Debtors’ obligations terminates such guaranty of suretyship agreement or
breaches, or repudiates its obligations; (r) there shall be a death of a
majority owner of any Debtor or a guarantor of the obligations of any Debtor
under this Agreement; or (s) Any Debtor fails to promptly pay any excise taxes,
sales taxes, payroll taxes, income or other taxes due and owing by a Debtor
within ten (10) days from the date Debtor is notified by Secured Party
that such taxes have not been paid, unless Debtor has taken lawful action to
protest and/or contest such taxes; or (t) except for the security interest, lien
or reservation of title in favor of Secured Party or as otherwise granted
herein, there shall be any lien, claim or encumbrance on any of the Collateral
securing the indebtedness hereunder of Debtors to Secured Party, which is not
contested by Debtors and regarding which, Debtors have not taken steps
acceptable to Secured Party to bond against such lien, claim or encumbrance or
not taken such other action as is acceptable to Secured Party, with respect to
such contest. Secured Party’s inaction with respect to an event of default
shall not be a waiver of such default and Secured Party’s waiver of any default
shall not be a waiver of any other default.

 

M.           REMEDIES UPON DEFAULT: Upon the
occurrence of an event of default, and at any time thereafter as long as the
default continues, Secured Party may, at its option, with or without notice to
Debtors (i) declare this Agreement to be in default, (ii) declare the
indebtedness hereunder to be immediately due and payable, (iii) declare
all other debts then owing by Debtors to Secured Party or any affiliates
(including, without limitation, any direct or indirect parent, subsidiary or
sister entity), successor or assignee of Secured Party to be immediately due
and payable, and from and after acceleration, Each Debtor agrees to pay
interest on all amounts then owing at the rate of 11⁄2 % per month, if not
prohibited by law, otherwise at the highest rate that a Debtor can legally
obligate itself to pay and/or Secured Party can legally collect, (iv) cancel
any insurance and credit any refund to the indebtedness, and (v) exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and any other 

 

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applicable
laws, including, without limitation, the right to require Debtors to assemble
the Collateral and deliver it to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties. Secured Party may
buy at any sale and become the owner of the Collateral.   Unless otherwise provided by law, any
requirement of reasonable notice regarding the sale or other disposition of
Collateral which Secured Party may be obligated to give will be met if such
notice is mailed to Debtors at its address shown herein at least ten days
before the time of sale or other disposition. 
Secured Party may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and compliance
will not be considered adversely to affect the commercial reasonableness of any
sale of the Collateral.   Secured Party
may sell the Collateral without giving any warranties as to the
Collateral.  Secured Party may
specifically disclaim any warranties of title, possession, quiet enjoyment, or
the like.  This procedure will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.   If Secured Party sells any
of the Collateral upon credit, Debtors will be credited only with payments
actually made by the purchaser, received by Secured Party and applied to the
indebtedness of the purchaser.  In the
event the purchaser fails to pay for the Collateral, Secured Party may resell
the Collateral and Debtors shall be credited with the proceeds of the
sale.   The inclusion of a trade name or
division name in the identification of any Debtor hereunder shall not limit
Secured Party’s right, after the occurrence of an event of default, to proceed
against all of Debtors’ assets, including those held by any Debtor individually
or under another trade or division name. 
Expenses of retaking, holding, preparing for sale, selling and the like
shall include (a) the reasonable fees of any attorneys retained by Secured
Party and (b) other legal expenses incurred by Secured Party.  Each Debtor agrees that it is liable for and
will promptly pay any deficiency resulting from any disposition of Collateral
after default.

 

N.            PERFECTION/POWER OF ATTORNEY: Each Debtor hereby appoints Secured Party or any duly authorized
officer or employee of Secured Party as such Debtor’s attorney-in-fact to, in
such Debtor’s or Secured Party’s name: (a) prepare, execute and submit any
notice or proof of loss in order to realize the benefits of any insurance
policy insuring the Collateral; (b) prepare, execute and file any
instrument which, in Secured Party’s opinion, is required by law to perfect and
give or modify public notice of Secured Party’s interest in the Collateral; and
(c) endorse such Debtor’s name on any remittance representing proceeds of
any insurance insuring the Collateral or the proceeds of the sale, or other
disposition of any of the Collateral (whether or not such disposition is a
default hereunder).  This power is
coupled with an interest and is irrevocable so long as any indebtedness secured
hereunder remains unpaid.

 

O.            MISCELLANEOUS:   Waiver of any default shall not be a
waiver of any other default; all of Secured Party’s rights are cumulative and
not alternative.  No waiver or change in
this Agreement or in any related agreements shall bind Secured Party unless in
writing signed by one of its officers.  
The term “Secured Party” shall include any assignee of Secured Party who
is the holder of this Agreement.  Secured
Party or any assignee or successor of Secured Party shall have the right to
transfer, sell or assign all or any portion of this Agreement or the
indebtedness and/or obligations thereunder, without notice, acknowledgement or
consent from Debtors.  After assignment
of this Agreement by Secured Party, the assignor will not be the assignee’s
agent for any purpose. Each Debtor agrees that if Debtor receives written
notice of an assignment from Secured Party, Debtor will pay all amounts payable
under this Agreement to such assignee or as instructed by Secured Party.  Each Debtor also agrees to confirm in writing
receipt of the notice of assignment as may be reasonably requested by Secured
Party or assignee.  Each Debtor waives,
as to any non-affiliated third party assignee, for value, of Secured Party and
will not assert against any such non-affiliated third party assignee, for
value, of Secured Party, any claims in recoupment, abatement, reduction,
defenses or set-offs for breach of warranty, or for any other reason, which
Debtor could assert against Secured Party, except defenses, which cannot be
waived under the Uniform Commercial Code and the defense of payment by Debtor
in full or partial payment of all amounts owing to Secured Party. Upon request,
Debtors will execute a sworn statement verifying the then balance owing to
Secured Party. g. Upon full payment of all obligations secured by this
Agreement, the assignee may deliver all original papers to the assignor for
each Debtor.   Each Debtor waives all
exemptions to the extent permitted by law. 
Secured Party may correct patent errors herein and fill in blanks. Any
provision of this Agreement which is for any reason held to be invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent it is invalid, illegal or unenforceable without invalidating
the remaining provisions hereof.  Each
Debtor acknowledges receipt of a true copy and waives acceptance hereof.   If any Debtor is a corporation, this
Agreement is executed pursuant to authority of its Board of Directors.  All of the terms and provisions of this
Agreement shall apply to and be binding upon each Debtor, its heirs, personal
representatives, successors and permitted assigns and shall insure to the
benefit of Secured Party, its successors, and assigns and shall bind all
persons who become bound as a debtor to this Security Agreement.  If more than one party executes this
Agreement the term “Debtor” means and includes each such party, and the
indebtedness and other obligations hereunder herein specifically described is
the joint and several obligation of each such party. .  In the event any Debtor is deemed to be a
surety, each Debtor agrees that its obligations hereunder shall not be
discharged or affected by any circumstances which constitute a legal or
equitable discharge of a guarantor or surety. Secured Party may receive from
and disclose to any individual, corporation, business trust, association,
company, partnership, joint venture, or other entity (herein collectively, the “Entity”),
including, without limiting the generality of the foregoing, Secured Party’s
parent or any affiliate or any subsidiary of Secured Party and any credit
reporting agency or other entity whether or not related to Secured Party for
any purpose, information about any Debtor’s accounts, credit application and credit
experience with Secured Party and each Debtor authorizes any Entity to release
to Secured Party any information related to any Debtor’s accounts, credit
experience and account information regarding the Debtor. This shall be
continuing authorization for all present and future disclosures of each Debtor’s
account information, credit application and credit experience on Debtor made by
Secured Party, or any Entity requested to release such information to Secured
Party.

 

P.             NOTICES:   Any notice or demand contemplated under
this Agreement shall be sent: to Secured Party and Debtors at the address set
forth immediately below their signatures on the last page of this
Agreement or to such other address or party as either party hereto may from
time to time designate in writing. 
Notices shall be either personally delivered, telecopied or deposited in
the United States certified or registered mails, postage prepaid, addressed as
aforesaid with a return receipt requested and shall be deemed received when
delivered, if personally delivered, or on the delivery date noted on the return
receipt accompanying such notice or request, if mailed.

 

Q.            WAIVER OF JURY TRIAL: EACH DEBTOR
AND SECURED PARTY AGREE THAT ANY ACTION, SUIT OR PROCEEDING RELATING DIRECTLY
OR INDIRECTLY TO THIS AGREEMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES, WILL
BE TRIED TO A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY, AS
DEBTORS AND SECURED PARTY HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
ACTION, SUIT OR PROCEEDING.  THIS
PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY AND EACH DEBTOR TO ENTER
INTO THIS AGREEMENT.

 

R.            GOVERNING LAW, JURISDICTION AND VENUE:
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICT OF LAW RULES
OF SUCH STATE, AND SHALL NOT BE AN EFFECTIVE CONTRACT UNTIL IT HAS BEEN
ACCEPTED AND EXECUTED BY SECURED PARTY IN THE STATE OF TEXAS.  TO THE EXTENT PERMITTED BY LAW, THE PARTIES
HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT, ANY ACCOMPANYING PROMISSORY NOTES OR OTHER DOCUMENTS, SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
DALLAS, STATE OF TEXAS.  THE PARTIES
FURTHER AGREE THAT THE AFOREMENTIONED CHOICE OF VENUE SHALL BE CONSIDERED
MANDATORY AND NOT PERMISSIVE IN NATURE, THEREBY PRECLUDING THE POSSIBILITY OF
LITIGATION IN ANY JURISDICTION OTHER THAN THAT SPECIFIED BY THIS
PARAGRAPH.    SECURED PARTY AND DEBTORS,
TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY WAIVE ANY RIGHT EACH MAY HAVE
TO ASSERT THE DOCTRINE OF FORUM NON CONVENES OR TO OBJECT TO VENUE IN ANY
PROCEEDING BROUGHT IN ACCORDANCE WITH THIS PARAGRAPH.    SECURED PARTY AND DEBTORS HEREBY STIPULATE
THAT THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF DALLAS, STATE OF
TEXAS SHALL HAVE PERSONAL JURISDICTION AND VENUE OVER THEM FOR THE PURPOSE OF
LITIGATING ANY DISPUTE, CONTROVERSY OR PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT, ANY ACCOMPANYING PROMISSORY NOTES OR OTHER DOCUMENTS.  TO THE EXTENT PERMITTED BY LAW, SERVICE OF
PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST A DEBTOR
SHALL BE MADE UPON EACH SUCH DEBTOR BY SERVICE UPON THE REGISTERED AGENT OF EACH
SUCH DEBTOR, AT SUCH REGISTERED AGENT’S ADDRESS, AS REFLECTED IN THE RECORDS OF
THE SECRETARY OF STATE IN THE STATE OF SUCH DEBTOR’S ORGANIZATION. DEBTORS
AGREES THAT ANY FINAL JUDGMENT SHALL BE CONCLUSIVE AS TO THE SUBJECT OF SUCH
FINAL JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER
PROVIDED BY LAW.

 

As used
herein, the term “Business Day” shall mean any day other than: Saturday;
Sunday; or, any day the United States District Clerk’s Office for the Northern
District of Texas is closed.

 

4

 

THIS WRITTEN
AGREEMENT, INCLUDING RIDER A, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. IF THE PARTIES HAVE PREVIOUSLY EXECUTED ANY SECURITY
AGREEMENTS RELATING TO THE SUBJECT MATTER HEREOF, THIS AGREEMENT, INCLUDING
RIDER A, IS INTENDED ONLY TO AMEND AND RESTATE SUCH WRITTEN AGREEMENTS, AND
WILL NOT BE DEEMED TO BE A NOVATION OR TERMINATION OF SUCH WRITTEN AGREEMENTS.
THIS AGREEMENT, INCLUDING RIDER A, SHALL APPLY TO ALL ADVANCES MADE UNDER ANY
SUCH PRIOR AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

UNLESS
PROHIBITED BY LAW, EACH DEBTOR AND SECURED PARTY HEREBY AGREE THAT THIS
AGREEMENT SHALL NOT BE SUBJECT TO THE PROVISIONS OF TEXAS FINANCE CODE TITLE 4,
SUBTITLE B, CHAPTER 346.

 

This Agreement, and the
Addendum and Amendment hereto of even date hereof, may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become
effective when one or more counterparts have been signed by each party hereto,
and any guarantor required thereunder, and delivered to the other party hereto.

 

Rush Truck
Centers of Alabama, Inc.

State of
Organization: Delaware

Rush Truck
Centers of Arizona, Inc.

State of
Organization: Delaware

Rush Truck
Centers of California, Inc.

State of
Organization: Delaware

Rush Truck
Centers of Colorado, Inc.

State of
Organization: Delaware

Rush Truck
Centers of Florida, Inc.

State of
Organization: Delaware

Rush Truck
Centers of New Mexico, Inc.

State of
Organization: Delaware

Rush Truck
Centers of Oklahoma, Inc.

State of
Organization: Delaware

Rush Truck
Centers of Tennessee, Inc.

State of
Organization: Delaware

 

 

	
  By:

  	
   

  	
  /s/ W.M.
  “Rusty” Rush

  	
   

  
	
   

  
	
  Name:

  	
  W. M. “Rusty” Rush

  
	
   

  	
   

  
	
  Title:

  	
  President

  
	
   

  	
   

  
	
  Date: 

  	
  September 20, 2005

  

 

 

	
  Rush Truck
  Centers of Texas, L.P., a

  
	
  Texas
  limited partnership

  
	
   

  
	
  By:

  	
  RUSHTEX,
  INC., a Delaware corporation

  	
   

  
	
   

  	
  General
  Partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.M. “Rusty” Rush

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  W. M. “Rusty” Rush

  
	
   

  	
   

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  Date: September 20, 2005

  
							

 

5

 

	
  Address
  for all Debtors: 

  	
  Rush Enterprises, Inc.

  
	
   

  	
  Attn: Legal Department

  
	
   

  	
  P. O. Box 34630

  
	
   

  	
  San Antonio, Texas 78265-4630

  
	
   

  	
  Telecopy:  830.626.5307

  

 

 

	
  Agreed and
  Accepted at Irving, Texas

  
	
   

  
	
  Secured
  Party:

  	
  General Electric Capital Corporation

  
	
   

  	
   

  
	
  By:

  	
  /s/ C.
  Daniel Clark

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  C. Daniel
  Clark

  
	
   

  	
   

  
	
  Title:

  	
  President
  and General Manager

  
	
   

  	
   

  
	
  Date:

  	
  September 20,
  2005

  
	
   

  	
   

  
	
  Address:

  	
  300 E.
  Carpenter Frwy

  
	
   

  	
   

  
	
   

  	
  Irving, TX
  75062

  
	
   

  	
   

  
	
  Telecopy No:

  	
  469.586.2491

  	
  Attn: Legal
  Department

  
				

 

6EXHIBIT 10.2

 

ADDENDUM TO WHOLESALE
SECURITY AGREEMENT

 

This
Addendum is by and between General Electric Capital Corporation (“Secured Party”)
and each of the below signed debtors (individually a “Debtor” and collectively
the “Debtors”) and shall modify, be attached to and specifically incorporated
into that certain Wholesale Security Agreement dated September 20, 2005
(as amended, the “Security Agreement”).

 

Effective
upon the date hereof, Secured Party and Debtors agree to amend the Security
Agreement as follows:

 

A.                              The period at the end of the first sentence
of paragraph B shall be deleted and the following terms shall be added to the
Security Agreement in its place:

 

“, including, without limitation, for working
capital purposes.  An Advance made hereunder
for working capital purposes shall be individually called a “Working Capital
Advance” and collectively called “Working Capital Advances” and all Advances
which are made for other than working capital purposes may herein sometimes be
called “Wholesale Advances”.

 

B.                                The following terms shall be added to the
Security Agreement:

 

“S.          PREPAYMENTS/WORKING CAPITAL LOANS.

 

1.             Prepayments. 
Debtors shall have the right to prepay any debt owing under this
Agreement. Debtors may, on any Business Day, make such prepayments by a
minimum of $100,000. Prepayments received by Secured Party in immediately
available funds at or prior to 12:00 p.m. will be applied on the same
Business Day. Prepayments received by Secured Party in immediately available
funds after 12:00 p.m. will be applied on the following Business Day.
Prepayments received in other than immediately available funds shall be
credited when good funds become available for use by Secured Party. The prepayments shall not be applied to
specific items of Inventory and shall not reduce any Wholesale Advances, as
defined herein, but instead shall be applied against the Adjusted Indebtedness,
as defined in subparagraph 6 of this 

Paragraph S.

 

2.             Working Capital Advances. 
Secured Party, subject to the terms and conditions of this Agreement,
from time to time, will make Working Capital Advances to Debtors.  Debtors may, upon written request,
request Secured Party to make a Working Capital Advance. The minimum Working
Capital Advance shall be $100,000. Requests received after 12:00 p.m. will
be honored on the next Business Day.

 

The obligation of Secured Party to make Working
Capital Advances as provided herein is subject to the fulfillment on the date
such Working Capital Advance is to be made of each of the following conditions:

 

(i)                                     Debtors shall not be in default under this
Agreement; and

 

(ii)                                  the amount of the
Working Capital Advance shall not cause the Adjusted Indebtedness to exceed:

 

1

 

•                             the total amount of Wholesale Advances
relating to Inventory in which Secured Party maintains a perfected first
priority security interest (the “ Priority Inventory”) (such Wholesale Advances
are referred to as the “ Priority Inventory Wholesale Advances”), and

 

•                             less any reductions that are owed to Secured
Party on the Priority Inventory.

 

3.             Interest. 
Interest shall be charged monthly on the aggregate unpaid amount of all
Working Capital Advances that were outstanding during the prior month and shall
be computed and accrued at the lesser of (a) the Applicable Wholesale Rate
for Inventory in effect during the month in which charged or (b) the Legal
Maximum Rate as defined in Paragraph 4 of Rider A (the “Working Capital
Interest Rate”).

 

4.             Payment and Billing. 
Debtors agree to pay to Secured Party, promptly as billed, interest at
the Working Capital Interest Rate on the unpaid balance of all Working Capital
Advances outstanding from time to time. 
Debtor acknowledges that because of computer system limitations, Secured
Party’s billing statement will not specifically reflect the interest charged on
the Working Capital Advances.  Secured
Party will attach to its standard billing statement a schedule detailing
such charges. The schedule will itemize and total the interest that is not
being charged on the Advances as a result of Debtor’s prepayments. The total
outstanding debt will be adjusted accordingly. Accordingly, for purposes
hereof, for each monthly billing period for which interest payments are due
under this Agreement, Secured Party will credit the Debtors’ monthly interest
charges with an amount determined on a daily basis by multiplying the average
daily prepayments less Working Capital Advances by the sum of the Libor Rate
plus 133 basis points. In no event shall Debtors be entitled to receive any
direct payments of, or carry forward, any such interest credit adjustments.

 

5.             Sale of New Inventory. 
Notwithstanding Paragraphs E and J of this Agreement, upon the sale of
an item of Inventory, the amount of the Wholesale Advance applicable thereto
shall be immediately due and payable and Debtor shall immediately, without
notice or demand, pay such amount in cash to Secured Party; provided however,
if the conditions set forth in subparagraph 1 of this Paragraph T are
satisfied, then Debtor may pay Secured Party such amount with the proceeds of
an appropriate Working Capital Advance.

 

6.             Adjusted Indebtedness. 
Adjusted Indebtedness as of any date of determination means the sum of (i) the
aggregate outstanding Working Capital Advances, plus (ii) the aggregate
outstanding Priority Inventory Wholesale Advances, plus (iii) any other
amounts relating to the Priority Inventory which are due and owing under the
Security Agreement; provided however, any prepayments of any indebtedness by
Debtor under this Agreement shall, at the time of the prepayment, be applied
against and reduce the sum of the preceding items (i), (ii) and (iii).

 

7.             Reports. 
Debtors shall provide Secured Party with such inventory and financial
information of Debtors as Secured Party shall reasonably require, including
without limitation daily reports of Inventory sales.  Secured Party shall also have the right to
perform audits at each Debtor’s places of business.

 

8.             Miscellaneous. All prepayments and Working Capital Advances
will be made by, and to, Rush Administrative Services, Inc. as agent for
Debtors. Debtors, in the aggregate, may prepay up to 50% of the Internal
Credit Limits established by Secured 

 

2

 

Party, but not to exceed $100,000,000 at any
one time.  Prepayments and Working Capital Advances will
be limited to a total of six (6) per month for all Debtors. Secured Party
may apply prepayments and Working Capital Advances to individual Debtor’s
accounts in its sole discretion.

 

C.                                     Except as expressly modified herein, all the
terms and conditions in the Security Agreement shall remain in full force and
effect and any capitalized terms not defined herein shall have the same meaning
as set forth in the Security Agreement.

 

Date:      September 20, 2005

 

Rush Truck
Centers of Alabama, Inc.

Rush Truck
Centers of Arizona, Inc.

Rush Truck
Centers of California, Inc.

Rush Truck
Centers of Colorado, Inc.

Rush Truck
Centers of Florida, Inc.

Rush Truck
Centers of New Mexico, Inc.

Rush Truck
Centers of Oklahoma, Inc.

Rush Truck
Centers of Tennessee, Inc.

 

 

	
  By:

  	
   

  	
  /s/ W.M.
  “Rusty Rush

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  W. M.
  “Rusty” Rush

  	
   

  
	
   

  
	
  Title:
   President

  

 

	
  Rush Truck Centers of
  Texas, L.P., a

  
	
   

  	
  Texas limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RUSHTEX, INC., a Delaware corporation

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  W.M. “Rusty Rush

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  W. M. “Rusty” Rush

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  September 20, 2005

  
						

 

 

	
  General Electric Capital Corporation

  
	
   

  
	
  By:

  	
   

  	
  /s/ C. Daniel Clark

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  C. Daniel Clark

  
	
   

  	
   

  
	
  Title:

  	
  President and General Manager

  

 

3

 

GUARANTOR CONSENT

 

The
undersigned Guarantors consent to the Addendum to Security Agreement and agree
that it will not impair Guarantors’ obligations owed to General Electric
Capital Corporation.

 

	
  GUARANTOR: Rush
  Enterprises, Inc.

  
	
   

  
	
  By:

  	
   

  	
  /s/ W.M. “Rusty Rush

  	
   

  
	
   

  
	
  Name:

  	
  W. M. “Rusty” Rush

  
	
   

  
	
  Title:

  	
  President

  
						

 

4

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