Document:

Exhibit
10.1

 

FORM OF

SHARE
SUBSCRIPTION AGREEMENT

by and
between

KKR
FINANCIAL HOLDINGS LLC

and

the Party
Signatory Hereto

Dated as of August 20, 2007

 

 

Table of
Contents

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I THE SHARES

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Purchase and Sale

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.2

  	
   

  	
  Payment of Purchase Price; Closing

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF
  THE COMPANY

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Existence and Power

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.2

  	
   

  	
  Capitalization

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.3

  	
   

  	
  Authorization

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.4

  	
   

  	
  Valid Issuance of Shares

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.5

  	
   

  	
  Non-Contravention/No Consents

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.6

  	
   

  	
  Registered Shares

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.7

  	
   

  	
  Periodic Filings; Financial Statements

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
  PURCHASER

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Existence and Power

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.2

  	
   

  	
  Authorization

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.3

  	
   

  	
  Governmental Authorization

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.4

  	
   

  	
  Non-Contravention

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.5

  	
   

  	
  No Brokers

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.6

  	
   

  	
  Reliance

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V CONDITIONS TO CLOSING

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Conditions to the Obligations of the Company

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.2

  	
   

  	
  Conditions to the Obligations of the Purchaser

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI MISCELLANEOUS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Transfers

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.2

  	
   

  	
  Notices

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.3

  	
   

  	
  Further Assurance

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.4

  	
   

  	
  Amendments and Waivers

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.5

  	
   

  	
  Fees and Expenses

  	
   

  	
  6

  

 

 i
 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.6

  	
   

  	
  Successors and Assigns

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.7

  	
   

  	
  Governing Law

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.8

  	
   

  	
  Jurisdiction

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.9

  	
   

  	
  Waiver Of Jury Trial

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.10

  	
   

  	
  Entire Agreement

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.11

  	
   

  	
  Effect of Headings and Table of Contents

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.12

  	
   

  	
  Severability

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.13

  	
   

  	
  Counterparts; Third Party Beneficiaries

  	
   

  	
  7

  

 

 ii

SHARE SUBSCRIPTION AGREEMENT dated as of August 20,
2007 (this “Agreement”) between KKR Financial Holdings LLC, a Delaware
limited liability company (the “Company”) and the party signatory hereto
(the “Purchaser”).

BACKGROUND

The Purchaser wishes to subscribe for and purchase,
and the Company, desires to issue and sell, certain Common Shares of the
Company (the “Shares”) on the terms and subject to the conditions set
forth herein.

In consideration of the mutual covenants and
agreements contained in this Agreement, the receipt and sufficiency of which
are herby acknowledged, the parties herby agree as follows:

ARTICLE I

THE SHARES

The
Shares shall be issued to the Purchaser pursuant to Article II hereof
and shall be subject to the terms and provisions of the Amended and Restated
Operating Agreement of the Company, dated as of May 3, 2007.  

ARTICLE II

PURCHASE AND SALE

Section 2.1             Purchase and Sale.  Upon the terms and subject to the conditions
of this Agreement the Company agrees to issue and sell to the Purchaser and the
Purchaser agrees to purchase from the Company                      
Shares at a purchase price equal to $14.40 per share (the “Purchase Price”).

Section 2.2             Payment of Purchase Price;
Closing.  The Company will deliver
the Shares to the Purchaser, against payment by or on behalf of the Purchaser
of the purchase price therefor (as set forth above in Section 2.1) by
wire transfer in immediately available funds to the account designated by the
Company on Annex A.  The time and
date of such delivery and payment shall be 9:30 a.m., New York City time, on
the later of August 20, 2007 and the New York Business Day (as defined below)
following the date on which the listing of the Shares is approved by the New
York Stock Exchange, or such other time and place as mutually agreed by the
parties hereto (such time being referred to herein as the “Closing”).

The documents to
be delivered at the Closing by or on behalf of the parties hereto pursuant to
this Article II and any additional documents requested by the Purchaser
pursuant to this Article II, will be delivered at the Closing at the
offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York,
New York 10017 (the “Closing Location”). 
Final drafts of the documents to be delivered pursuant to the preceding
sentence will be provided to the parties hereto no later than 10:00 p.m., New
York City time, on the New York Business Day next preceding the Closing.  For the purposes of this Section 2.2, “New
York Business Day” shall

 1
 

mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in The City of New York are generally authorized or
obligated by law or executive order to close.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Purchaser
as of the date hereof and as of the Closing that:

Section 3.1             Existence and Power.  Each of the Company and its subsidiaries is
duly organized and validly existing under the laws of the state of its
organization and has all power and authority to own its property and assets and
to transact the business in which it is engaged and presently proposes to
engage.  The Company has all power and
authority to enter into and perform its obligations under this Agreement.

Section 3.2             Capitalization.  All of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable and were not issued in violation of any preemptive rights.

Section 3.3             Authorization.  This Agreement has been duly authorized,
executed and delivered by the Company. 
When executed and delivered by the Company and countersigned by the
Purchaser, this Agreement shall constitute the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights generally and by
general equitable principles.

Section 3.4             Valid Issuance of Shares.  The Shares have been duly authorized and
issued by the Company and, when delivered against payment therefor as provided
in this Agreement, (a) will be validly issued, fully paid and nonassessable,
(b) will not be subject to any encumbrances, preemptive rights or any other
similar contractual rights of the stockholders of the Company or any other
person, and (c) the Purchaser will obtain sole record and beneficial ownership
of such Shares and take good and marketable title thereto, free and clear of
any liens.

Section 3.5             Non-Contravention/No Consents.  The issue and sale of the Shares, the
execution, delivery and performance by the Company of this Agreement, and the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is
a party or by which the Company is bound or to which any of the property or
assets of the Company is subject, nor will such action result in any violation
of the provisions of any of the organizational or governing documents of the
Company or any statute, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its properties;
and no consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required for the
issue and sale the Shares or the consummation by the Company of the
transactions contemplated by this Agreement.

 2
 

Section 3.6             Registered Shares.  The Company has filed an “automatic shelf
registration statement” as defined in Rule 405 under the Securities Act of
1933, as amended (the “Securities Act”) relating to the Shares,
including a form of prospectus, with the U.S. Securities and Exchange
Commission (the “SEC”) on Form S-3 (No. 333-143451) (the “Registration
Statement”); the Registration Statement has been filed with the Commission
not earlier than three years prior to the date hereof.  The Company shall file the final prospectus
(the “Prospectus”) relating to the Shares, which has previously been
provided to you, pursuant to, and within the time period specified in, Rule
424(b) under the Securities Act. The Shares will be listed on the New York
Stock Exchange prior to issuance.

Section 3.7             Periodic Filings; Financial
Statements.  (a)     The Company has furnished or made
available to the Purchaser true and complete copies of all reports or
registration statements it has filed with the SEC under the Securities Act and
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC promulgated thereunder (the “Exchange Act”), for all periods
subsequent to December 31, 2006, all in the form so filed (collectively the “Company
SEC Documents”).  As of their
respective filing dates, the Company SEC Documents complied as to form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and none of the Company SEC Documents contained, when filed
with the SEC, and if amended, as of the date of such amendment, any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances in which they were made, not misleading, except to
the extent corrected by a subsequently filed document with the SEC.

(b)   The
Company’s financial statements, including the notes thereto, included in the
Company SEC Documents (the “Company Financial Statements”) comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP consistently applied (except as may be
indicated in the notes and schedules thereto) during the periods involved and
present fairly the Company’s consolidated financial position at the dates
thereof and of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal audit
adjustments).  Since the date of the most
recent balance sheet included in the Company Financial Statements, the Company
has not effected any change in any method of accounting or accounting practice,
except for any such change required because of a concurrent change in GAAP.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Company
as of the date hereof and as of the Closing that:

Section 4.1             Existence and Power.   The Purchaser is either (a) a natural person
or (b) duly organized and validly existing under the laws of the state of its
organization and has all power and authority to enter into and perform its
obligations under this Agreement, acting on behalf of the investment management
client accounts it represents, if applicable.

 3
 

Section 4.2             Authorization.   This Agreement has been duly authorized by
all necessary action on the part of the Purchaser.  When executed and delivered by the Purchaser
and countersigned by the Company, this Agreement shall constitute the legal, valid
and binding obligation of the Purchaser (acting on behalf of the investment
management client accounts it represents, if applicable) enforceable against
the Purchaser in accordance with its terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors’
rights generally and by general equitable principles.

Section 4.3             Governmental Authorization.  As of the date hereof, no permit,
authorization, consent or approval of or by, or any notification of or filing
(including any filing under the United States Hart-Scott-Rodino Antitrust
Improvements act of 1976, as amended, and the rules and regulations promulgated
thereunder) with, any person (governmental or private) is required to be
obtained or made by it in connection with the execution, delivery and
performance by it of this Agreement, the consummation by it of the transactions
contemplated hereby or thereby, or the issuance, sale or delivery to it by the
Company of the Shares, other than a filing on a Form Schedule 13G (or 13G-A),
if applicable.

Section 4.4             Non-Contravention.  The execution, delivery and performance by
the Purchaser of this Agreement and the consummation by it of the transactions
contemplated hereby and thereby will not violate any statute, order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Purchaser or any of its properties.

Section 4.5             No Brokers.  The Purchaser has not employed any broker or
finder in connection with the transactions contemplated by this Agreement.

Section 4.6             Reliance.  The Purchaser acknowledges that the Company
and others will rely upon the truth and accuracy of the foregoing
acknowledgements, representations and agreements.

ARTICLE V

CONDITIONS TO CLOSING

Section 5.1             Conditions to the Obligations of
the Company.  The obligations of the
Company hereunder shall be subject to the following conditions:

(a)   All
representations and warranties and other statements of the Purchaser herein
are, at and as of the Closing, true and correct; and

(b)   The
Purchaser shall have performed all of its obligations hereunder theretofore to
be performed.

Section 5.2             Conditions to the Obligations of
the Purchaser.  The obligations of
the Purchaser hereunder shall be subject to the following conditions:

(a)   All
representations and warranties and other statements of the Company herein are,
at and as of the Closing, true and correct; and

 4
 

(b)   The
Company shall have performed all of its obligations hereunder theretofore to be
performed.

ARTICLE VI

MISCELLANEOUS

Section 6.1             Transfers.  (a)     If the Shares to be issued are not freely
transferable under the Securities Act by the Purchaser following the Closing,
the Company shall use its commercially reasonable efforts to cause to be
declared effective under the Securities Act by the Securities and Exchange
Commission, prior to the date which is one hundred eighty (180) days following
the Closing, one or more registration statements (the “Shelf Registration
Statement”) covering the registration of resale of such Shares by the
Purchaser.

(b)   Except
for customary blackout periods of no more than 120 days in any 360-day period,
the Company agrees to use its commercially reasonable efforts to keep the Shelf
Registration Statement continuously effective until the expiration of the
period that will terminate when all the Shares covered by the Shelf
Registration Statement have been sold (the “Shelf Effectiveness Period”).  The Company further agrees to supplement or
amend the Shelf Registration Statement and the related Prospectus if required
by the rules, regulations or instructions applicable to the registration form
used by the Company for such Shelf Registration Statement or by the Securities
Act or by any other rules and regulations thereunder or if reasonably requested
by the Purchaser of Shares with respect to information relating to such
Purchaser, and to use their reasonable best efforts to cause any such amendment
to become effective, if required, and such Shelf Registration Statement and
Prospectus to become usable as soon as thereafter practicable.

(c)   The
Company shall pay all customary registration expenses in connection with any
registration pursuant to Section 6.1(a) hereof.  Each Purchaser shall pay all underwriting
discounts and commissions, brokerage commissions and transfer taxes, if any,
relating to the sale or disposition of such Purchaser’s Shares pursuant to the
Shelf Registration Statement.

Section 6.2             Notices.  All notices and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or by facsimile or seven days
after having been sent by certified mail, return receipt requested, postage
prepaid, to the parties to this Agreement at the following address or to such
other address either party to this Agreement shall specify by notice to the
other party:

(i)                                     If
to the Company:

KKR Financial Holdings LLC

555 California Street, 50th Floor

San Francisco, CA 94104

Attention:  General Counsel

Facsimile:  (415) 391-3330

 5
 

with a copy to (which shall not constitute notice):

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Attention:  David Sorkin

   Sean
Rodgers

Facsimile: 
(212) 455-2502

(ii)                                  If
to the Purchaser:

                                                                    

Facsimile:                                                    

with a copy to (which shall not constitute notice):

                                                                    

Facsimile:                                                    

Section 6.3             Further Assurances.  Each party hereto shall do and perform or
cause to be done and performed all further acts and shall execute and deliver
all other agreements, certificates, instruments and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

Section 6.4             Amendments and Waivers.  (a) 
Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is duly executed and delivered
by the Company and the Purchaser; and

(b)   No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.

Section 6.5             Fees and Expenses.  Each party hereto shall pay all of its own
fees and expenses (including attorneys’ fees) incurred in connection with this
Agreement and the transactions contemplated hereby.

Section 6.6             Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

 6
 

Section 6.7             Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 6.8             Jurisdiction.  The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby may only be brought in the United States District Court for
the Southern District of New York or any New York State court sitting in the
Borough of Manhattan in New York City, and each of the parties hereby consents
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which
is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court.

Section 6.9             Waiver Of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 6.10           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties and/or their affiliates with respect to the
subject matter of this Agreement.

Section 6.11           Effect of Headings and Table of
Contents.  The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.

Section 6.12           Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
deemed to be excluded from this Agreement and the balance of this Agreement
shall be interpreted as if such provision were so excluded and shall be
enforced in accordance with its terms to the maximum extent permitted by law.

Section 6.13           Counterparts; Third Party
Beneficiaries.  This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures were upon the same instrument.  No provision of this Agreement shall confer
upon any person other than the parties hereto any rights or remedies hereunder.

[Remainder of page intentionally left blank]

 7

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.

 

	
   

  	
   

  	
  KKR FINANCIAL HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (please print
  legibly)

  	
   

  
	
   

  	
   

  	
   

  
	
  TIN Number

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
										

 

[Share Subscription Agreement Signature Page]Exhibit
10.1

AMENDED AND RESTATED

WHOLESALE
SECURITY AGREEMENT

This Amended and Restated Wholesale Security Agreement
(“Agreement”) is entered into by and between General Electric Capital
Corporation (“Secured Party”) and each Debtor signing below (individually a “Debtor”
and collectively the “Debtors”)  and
shall be effective as of August 1, 2007.

WHEREAS,  Secured Party and the Debtors are parties to
that certain Wholesale Security Agreement dated September 20, 2005 (as amended,
together with all attachments, exhibits, riders and amendments thereto, the “Prior
Agreement”); and

WHEREAS,  the parties desire to amend and restate the
Prior Agreement effective as of August 1, 2007.

NOW, THEREFORE, in consideration of the mutual
promises contained herein, Secured Party and each Debtor hereby agree that the
Prior Agreement shall be restated in its entirety as follows:

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, 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.” 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)                                  Twelve
Million Dollars ($12,000,000), if the Termination Event occurs on or before the
first annual anniversary of the date of this Agreement (“Months 1-12”)

(b)                                 Eight
Million Dollars ($8,000,000) if the Termination Event occurs on or before the
second anniversary of this Agreement (“Months 13-24”)

(c)                                  Four
Million Dollars ($4,000,000) if the Termination Event occurs on or before the
third annual anniversary of the date of this Agreement (“Months 25-36”);and

with no such 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.

 1
 

 

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 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.

 2
 

 

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;

(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

 3
 

 

(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 

 4
 

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 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.

 5
 

 

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 EACHDEBTOR TO ENTER INTO THIS AGREEMENT.

 6
 

 

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 AGREETHAT 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.

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. An individual
request for a Working Capital Advance in an amount (i) less than  $20,000,000 will be honored no later than the
next Business Day following receipt by Secured Party and (ii) of  $20,000,000 or greater, will be
honored no later than the third Business Day following receipt by Secured
Party.

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:

·                     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 80 basis points. In no event shall
Debtors be entitled to receive any direct payments of, or carry forward, any
such interest credit adjustments.

 7
 

 

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 S 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 an amount not to exceed at any one time the sum of (i) 40% of the
first  $300,000,000 in outstanding
Priority Inventory Wholesale Advances and (ii) 50% of the outstanding  Priority Inventory Wholesale Advances in
excess of $300,000,000.  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.

T.                DELAYED PAYEMNT PRIVILEGE.

1.        Debtors have requested the privilege of delaying payment of
an Advance in the limited instances where Collateral is sold by a Debtor to a
purchaser for whom both a Debtor and Secured Party have agreed to a delayed
payment period (the “Delayed Payment Privilege”). Therefore, Notwithstanding
anything contained herein to the contrary, Debtors agree that Secured Party’s
security interest in any and all vehicles sold to a customer, and in which
event the full payment thereof by cash or on a the basis of a properly
perfected retail installment contract or other security agreement in favor of
Secured Party is not made contemporaneous with the delivery of such Collateral
by Debtors (the “Delayed Payment Collateral”), shall remain in full force and
effect in such Delayed Payment Collateral and shall not be relinquished,
extinguished, released or terminated as a consequence of such sale or delivery
unless and until the payment is thereafter made directly to Secured Party or
jointly to Debtors and Secured Party. Moreover, Debtors are expressly
prohibited and shall not have any express, implied or apparent authority to
sell, lease, transfer or otherwise dispose of any Delayed Payment Collateral
unless and until the express written permission of Secured Party is first
obtained, and then such authority shall be, in each and every instance, limited
to the terms and conditions of such written permission; it being further agreed
that the terms of this paragraph shall not be altered, modified, supplemented,
qualified, waived or amended by reason of any agreement (unless in writing
executed by Debtors and Secured Party), or by the course of performance, course
of dealing, or usage of trade by Debtors and Secured Party, of either of them.

2.             Any previously executed Agreement
for the Delayed Payment Privilege for New Floor Plan Units between Debtors and
Secured Party is superseded by the terms and conditions of this Agreement for
all Delayed Payment Privilege transactions arising on or after the effective
date thereof.

3.             Debtors shall advise
Secured Party of each and every potential transaction in which Debtors requests
Secured Party to grant the Delayed Payment Privilege, and the period of  time for which the Delayed Payment Privilege
is being requested. Such request shall be made of Secured Party in writing and
on a form of the type and kind provided by Secured Party from time to time.
Secured Party’s consent, if any, to the request must be obtained prior to the
sale, transfer or delivery of any vehicles proposed by Debtors to be disposed
by the Delayed Payment Privilege (the “Delayed Payment Privilege Collateral”).

4.        Secured
Party’s consent to Debtors’ request for disposition of Delayed Payment
Privilege Collateral shall be in Secured Party’s sole and exclusive discretion
and further subject and contingent upon the following additional terms and
conditions:

(a)         Secured Party may, in its sole and
exclusive discretion limit the number of items of Collateral, amount
outstanding and terms and conditions for which the      Delayed Payment Privilege requested by
Debtors is approved.

(b)        Secured Party may, in its sole and
exclusive discretion withdraw, cancel, or suspend the Delayed Payment Privilege
at anytime and for any reason upon a ten-day advance written notice and
immediately if a Debtor is in default of any agreement which Debtors have with
Secured Party; provided, however, that such withdrawal, cancellation or
suspension shall not affect the rights, interests and duties under this Agreement
prior thereto.

(c)         Debtors shall complete, execute and
deliver to Secured Party, immediately upon the delivery of Delayed Payment
Privilege Collateral, a form of the type and kind provided by Secured Party
from time to time (the “Delivery Schedule”).

 8
 

 

(d)        Debtors shall immediately pay Secured
Party the Collateral Amount Financed upon the earliest of (i) demand by Secured
Party; or (ii) receipt of the amount due from the disposition of each of the
Delayed Payment Privilege Collateral; or (iii) the “Purchaser Payment Date” set
forth on the applicable Delivery Schedule.

(e)         Upon Secured Party’s request, Debtors
shall obtain from the person acquiring the Delayed Payment Privilege Collateral
a duly authorized and executed acknowledgement from the Purchaser confirming
that the terms of sale including the continuation of Secured Party’s security
interest in the Delayed Payment Privilege Collateral. The acknowledgement shall
be in writing and on a form of the type and kind provided by Secured Party from
time to time, which shall be delivered to Secured Party prior to any sale,
transfer or delivery of any Delayed Payment Privilege Collateral to such person
(the “Acknowledgement of Purchaser”).

(f)         The grant and exercise of the Delayed
Payment Privilege by Debtors shall in no way extinguish, release or terminate
Secured Party’s security interest in the Delayed Payment Privilege Collateral
unless and until the conditions described in the amending paragraph set forth
in paragraph 1 of this Agreement and the aforesaid Acknowledgement of Purchaser
are first fulfilled, which shall then and thereafter continue in the proceeds
thereof.

5.        Secured Party shall have no duty or
obligation to examine, review or consider the creditworthiness of any proposed
or actual customer of Debtors for which Debtors seeks Secured Party’s consent
to the Delayed Payment Privilege and any such examination, review or
consideration by Secured Party shall be for its sole and exclusive use and
purposes; the Debtors expressly agreeing that any receipt or reliance on such
information from Secured Party would be gratuitous and unreasonable,
respectively.

6.        Debtors’ obligation to pay Secured Party
for the Collateral Amount Financed shall be absolute, unconditional and
primary, notwithstanding (a) Secured Party consenting to the Delayed Payment
Privilege; or (b) default in the payment or acquisition terms by the customer
of the Debtors for Delayed Payment Privilege Collateral, or that of any of
customer’s surety, guarantor, co-obligor or lender; or (c) rejection or
revocation of acceptance of any Delayed Payment Privilege Collateral by such
customer; or (d) the acceptance by Secured Party of any assignment or proceeds
from any Delayed Payment Privilege Collateral; provided, however, that nothing
in this paragraph 6 is intended to permit payment to Secured Party of any more
than the greater of (i) the Collateral Amounts Financed or (ii) the value of
Secured Party’s security interest in the Delayed Payment Privilege Collateral.

7.        Upon demand by Secured Party, Debtors
shall provide Secured Party with an assignment of all right, title, and
interest of the Debtors in and to the accounts, contract rights, sale proceeds
or any other interest Debtors may then or thereafter have in the Delayed
Payment Privilege Collateral. Said assignment shall be for the purpose of
additional security only and shall be on a form of the type and kind provided
by Secured Party from time to time.

8.             Secured Party may take such actions as it deems
appropriate to assure and enforce compliance with this Agreement, including
requesting, for audit purposes, verification from Debtors’ customers the fact
of delivery, possession, and amount, date and circumstances of payment of any
Delayed Payment Privilege Collateral, and the notification to appropriate
persons of any security interest, assignment or other claim in the Delayed
Payment Privilege Collateral of Secured Party.

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.

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.

 9
 

 

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.   In addition, any wholly owned subsidiary of
Rush Enterprises, Inc. or any wholly owned subsidiary of any Debtor now or
hereafter a party to this Agreement, may become a “Debtor” under this Agreement
upon its agreement to be bound by the terms thereof, in a form acceptable to
Secured Party, all without further action or consent of any of the Debtors.

	
  Rush Medium Duty Truck Centers of Colorado, Inc.

  
	
  State of Organization: Delaware

  
	
  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 Georgia, 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

  
	
  Rush GMC Truck Center of El Paso, Inc.

  
	
  State of Organization: Delaware

  
	
  Rush GMC Truck Center of Phoenix, Inc.

  
	
  State of Organization: Delaware

  
	
  Rush GMC Truck Center of San Diego, Inc.

  
	
  State of Organization: Delaware

  
	
  Rush GMC Truck Center of Tucson, Inc.

  
	
  State of Organization: Delaware

  

 

	
  By:

  	
  /s/ W. M. “Rusty” Rush

  	
   

  
	
  Name:

  	
  W. M. “Rusty” Rush

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
  Date:

  	
  August 15, 2007

  	
   

  

 

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: 

  	
  August 15, 2007

  	
   

  

 10
 

 

	
  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:

  	
  August 15, 2007

  
	
  Address:

  	
  300 E. Carpenter Frwy

  
	
   

  	
  Irving, TX 75062

  
	
   

  	
   

  
	
  Telecopy
  No:

  	
  469.586.2491      Attn:
  Legal Department

  

 

 11
 

GUARANTOR
CONSENT

The undersigned
Guarantor hereby (i) consents to the foregoing Amended and Restated Wholesale
Security Agreement (“WSA”) and agrees that execution thereof shall not impair
or otherwise affect any of its obligations and duties owed to Secured Party per
the terms of its Continuing Guaranty dated September 20, 2005 (as amended the “Guaranty”)
and (ii) agrees that the “Indebtedness” guaranteed thereunder may not exceed
the total principal sum of Six Hundred Million Dollars ($600,000,000) in
principal outstanding at any given point in time, plus all unpaid interest,
which has or thereafter accrues thereon, plus all reasonable costs incurred by
General Electric Capital Corporation in the enforcement of its rights and
remedies or the collection of such principal and accrued interest and (iii)
agrees that any of its wholly owned subsidiaries, or any wholly owned
subsidiary of any Debtor under the WSA, may become a “Debtor” under the above
referenced WSA, and a Company subject to the Guaranty, upon such subsidiary’s
agreement to be bound by the terms of the WSA, in a form acceptable to Secured
Party, all without further action or consent of any of the Debtors subject to
the WSA  or the undersigned  Guarantor.

	
  RUSH ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ W. M. “Rusty” Rush

  	
   

  
	
  Name: 

  	
  W.M. “Rusty”
  Rush

  	
   

  
	
  Title:

  	
  Chief Executive Officer and President

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness: 

  	
  /s/ Derrek
  Weaver

  	
   

  
	
   

  	
  (signature)

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness: 

  	
  Derrek Weaver

  	
   

  
	
   

  	
  (printed name)

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness: 

  	
  /s/ Martin A.
  Naegelin, Jr.

  	
   

  
	
   

  	
  (signature)

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness: 

  	
  Martin A.
  Naegelin, Jr.

  	
   

  
	
   

  	
  (printed name)

  	
   

  

 

 12

AMENDED
AND RESTATED

RIDER A

(LIBOR/Fixed)

This Amended and Restated Rider
A is attached to and made a part of that certain Amended and Restated Wholesale
Security Agreement by and between General Electric Capital Corporation (“Secured
Party”) and each debtor signing below (individually a “Debtor” and collectively
the “Debtors”) dated August 15, 2007.

(Additional terms
and provisions of Security Agreement)

INTEREST
AND CHARGES

1.                                       Debtors
agree to pay Secured Party interest charges promptly as billed at the beginning
of each month for such charges which have accrued during the prior month.  Interest charges for each item of Inventory
for which an Advance was outstanding during the prior month shall be computed
and accrued at the lesser of (a) the Applicable Wholesale Rate (as defined
below) or (b) the Legal Maximum Rate as defined herein.  All Advances shall bear interest from the
date of Secured Party’s (a) payment of a Manufacturer’s invoice relating to an
item of Inventory or (b) disbursement of an Advance to or for the benefit of
a  Debtor.  If any Manufacturer fails to provide any
interest rate or other subsidy on a Debtor’s behalf, Debtors will be
responsible for and pay Secured Party all interest and other charges payable
under this Agreement.

i.                                          “Libor Rate” as used herein shall mean the highest of the
London Interbank Offered Rates published in the Money Rates section of The Wall Street Journal as the average of Interbank offered
rates for one month dollar deposits in the London market based upon quotations
from major banks effective as to contracts entered into two days prior to
publication by The Wall Street Journal.  In the event Libor as published in The Wall Street Journal ceases to exist or The Wall Street Journal ceases publishing a Libor Rate, the
holder hereof will substitute a comparable index which is outside the control
of the holder.  In the event of an error
by The Wall Street Journal, the “Libor Rate”
will be based upon the Libor Rate as corrected.

2.                                       The
“Applicable Wholesale Rate”, as defined herein shall be based on Libor Rate in
effect on the last business day of the prior month for interest charges
accruing during such month (as used herein “business day” shall mean any day
that is not a Saturday, Sunday or other day in which banking institutions in
Chicago, Illinois or Dallas, Texas are generally authorized or required by law
or executive order to close). The Applicable Wholesale Rate hereunder shall be
computed at the option of the Secured Party on the basis of a 360-day
year for the actual number of days elapsed.

With respect to new and used
Inventory,  the Applicable Wholesale Rate
shall be computed in accordance with the following, provided however, Secured
Party shall pay Debtor the sum of $59,458 as a one time interest adjustment for
the month of July, 2007:

	
  

  	
  IF DEBTORS’

  AVERAGE MONTH ENDING CALENDAR

  QUARTER WHOLESALE

  BALANCE IS:

  	
  THE APPLICABLE

  WHOLESALE RATE FOR THE

  FOLLOWING CALENDAR QUARTER

  SHALL BE:

  
	
   

  	
   

  	
   

  
	
   

  	
  $0 to
  $175,000,000

  	
  Libor Rate plus

  1.50% per annum

  
	
   

  	
   

  	
   

  
	
   

  	
  $175,000,001 to
  $200,000,000

  	
  Libor Rate plus

  1.25% per annum

  
	
   

  	
   

  	
   

  
	
   

  	
  Greater than
  $200,000,000

  	
  Libor Rate plus

  1.15% per annum

  

 

“Average Month Ending Calendar Quarter Wholesale
Balance” as used herein shall mean, for each calendar quarter, the average of
the month ending outstanding Advances of Debtors for each month of such
calendar quarter.

 1
 

 

ii.                                       If the Debtors fail to make any
curtailment payment as and when due as provided in paragraph 3 of this Rider A,
the Applicable Wholesale Rate on such item of Inventory shall be increased by
25 basis points (.25%) each time such curtailment payment is not made when due,
commencing in the month following the date the related curtailment payment was
due. If an Advance on an item of Inventory is not paid in full as specified in
paragraph 4 of this Rider A, the Applicable Wholesale Rate on such item of
Inventory shall be 100 basis points (1.00%) plus the original Applicable
Wholesale Rate for such item of Inventory.

3.             Curtailments:

i.                                          New
Inventory: Debtor shall pay to Secured Party, with respect to each
current outstanding and future Advance related to an item of New Inventory an
amount equal to (i) ten percent (10%) of the original Advance on any unpaid
Advance on an item of new Inventory twelve (12) months after the date of the
related Advance and (ii) five percent (5%) of the original Advance on any
unpaid Advance on an item of new Inventory eighteen (18) months and twenty-four
(24) months after the related date of each such Advance and (iii) five percent
(5%) of the original Advance on any unpaid Advance on an item of new Inventory
each month thereafter until paid in full.

ii.                                       Used
Inventory: Debtor shall pay to Secured Party, with respect to each current
outstanding and future Advance related to an item of used Inventory an amount
equal to (i) ten percent (10%) of the original Advance on any unpaid Advance on
an item of used Inventory twelve (12) months, fifteen (15) months and eighteen
(18) months after the related date of each such Advance and (ii) five percent
(5%) of the original Advance on any unpaid Advance on an item of used Inventory
each month thereafter until paid in full.

4.                                      In
no event shall the interest rate and charges provided hereunder exceed the
highest rate or charges that a Debtor can legally obligate itself to pay and/or
Secured Party can legally collect. 
Notwithstanding any other provision to the contrary set forth herein, if
at any time implementation of any provision hereof shall raise the interest
rate or other charges of Secured Party herein above the lawful maximum rate (“Legal
Maximum Rate”), if any, in effect from time to time in the applicable
jurisdiction for loans to borrowers of the type, in the amount, for the
purposes, and otherwise of the kind herein contemplated, then such interest
rate and charges shall be limited to the Legal Maximum Rate and any excess
interest and charges inadvertently collected shall be deemed to be a partial
prepayment of principal and so applied.

Debtors:

Rush Medium Duty Truck Centers of Colorado, Inc.

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 Georgia, Inc.

Rush
Truck Centers of New Mexico, Inc.

Rush
Truck Centers of Oklahoma, Inc.

Rush
Truck Centers of Tennessee, Inc.

Rush GMC
Truck Center of El Paso, Inc.

Rush GMC
Truck Center of Phoenix, Inc.

Rush GMC
Truck Center of San Diego, Inc.

Rush GMC Truck Center of Tucson, Inc.

	
  By:

  	
  /s/ W. M. “Rusty” Rush

  	
   

  
	
  Name:

  	
  W. M. “Rusty” Rush

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
  Date:

  	
  August 15, 2007

  	
   

  

 2
 

 

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:

  	
  August 15, 2007

  	
   

  

 

	
  

  	
   

  	
  Agreed and Accepted at Irving, Texas

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GENERAL ELECTRIC CAPITALCORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ C. Daniel Clark

  	
   

  
	
   

  	
   

  	
  Name:

  	
  C. Daniel Clark

  
	
   

  	
   

  	
  Title:

  	
  President and General Manager

  
	
   

  	
   

  	
  Date:

  	
  August 15, 2007

  

 

 3

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