Exhibit 10.6 Security Agreement.
FIRST AMENDED AND RESTATED SECURITY AGREEMENT
Borrower/Debtor: Lender/Secured Party:
Central Freight Lines, Inc., SunTrust Bank
a Texas Corporation 000 Xxxxxx Xxxxxx Xxxxx
0000 Xxxx Xxxx Xxxxx Xxxxxxxxx, XX 00000
Xxxx, Xxxxx 00000
THIS FIRST AMENDED AND RESTATED SECURITY AGREEMENT is entered into this
28th day of July, 2004, by and between Central Freight Lines, Inc., a Texas
corporation with its principal offices located at the address set forth above
("Borrower"), and SunTrust Bank, a Georgia state banking corporation with
offices located at the address set forth above ("Lender"). Intending to be
legally bound, Borrower and Lender agree that the Security Agreement by and
between Borrower and Lender, dated April 30, 2002 is amended and restated in its
entirety as follows:
0.Xxxxxxxx Interest and Indebtedness. Borrower hereby grants Lender a
security interest in the property described on Exhibit A hereto, and all
proceeds thereof, and all substitutions (including additional collateral
described in Section 4), replacements, attachments and accessions thereto
(collectively, the "Collateral"), to secure prompt and full performance and
payment of (a) all amounts due under that certain First Amended and Restated
Revolving Credit Loan Agreement of even date herewith, executed by Borrower and
Lender (as amended and/or restated from time to time, the "Loan Agreement"),
that certain First Amended and Restated Revolving Credit Note in the principal
amount of up to Thirty Million Dollars ($30,000,000), of even date herewith,
issued by Borrower to the order of Lender (as amended and/or restated from time
to time, the "Note"), and all amounts that Borrower may at any time owe Lender
in connection with the Loan Agreement or the Note or any other Loan Document (as
defined in the Loan Agreement); (b) all amounts due under any Hedging Agreement;
(c) all amounts under any LC Documents or any LC Disbursement; (d) all amounts
that Lender may now or hereafter pay or advance at any time for taxes,
insurance, repairs, maintenance or other protection with respect to the
Collateral; and (e) all costs and expenses that Lender may incur in enforcing or
protecting its rights with respect to the Collateral or the indebtedness secured
by the Collateral, including attorneys' fees (collectively, the "Indebtedness").
2. Representations and Warranties. Borrower hereby represents and warrants
to Lender, as of the date that any Collateral is pledged to Lender by Borrower
and thereafter, that (a) Borrower is the sole, true and lawful owner of the
Collateral; (b) Borrower has a good unrestricted right to grant a security
interest in the Collateral; (c) there are no advances, claims, liens, security
interests or encumbrances against the Collateral except as granted to Lender;
and (d) all descriptions of Collateral provided to Lender are true and accurate.
3. Borrower's General Covenants. Borrower hereby covenants and agrees that,
until the Indebtedness has been paid in full, unless Borrower receives the prior
written consent of Lender: (a) Borrower shall keep the Collateral free from any
other lien, security interest or encumbrance, shall maintain the Collateral in
good order and repair, shall use the Collateral in accordance with all laws,
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regulations and orders, and shall not sell, transfer, or dispose of any of the
Collateral; (b) Borrower shall promptly advise Lender of any event or
circumstance materially and adversely affecting the Collateral; (c) Borrower
shall pay when due all taxes and similar obligations that might result in a lien
on the Collateral if not paid. Borrower agrees to execute additional documents
and take such other actions (at its expense) as Lender may reasonably request
from time to time to implement or evidence the terms of this Agreement.
4. Limitation on Revolving Loans. At all times the book value of tractors
constituting Collateral hereunder shall equal or exceed 200% of the outstanding
Revolving Loans under the Loan Agreement. Borrower shall not request an Advance
constituting a Revolving Loan until and unless such Collateral in the form of
tractors has been delivered to Lender.
5. Cash Collateral for Letters of Credit. Concurrently with the execution
of this Agreement, the Borrower shall deposit with the Lender sufficient cash
equal to the LC Exposure under the Loan Agreement and shall thereafter maintain
cash in a deposit account with Lender in amounts equal to or greater than such
LC Exposure (the "Cash Collateral"). Such depository account(s) shall be
maintained with Lender, in the name of the Borrower but under the exclusive
dominion and control of Lender as collateral for the payment and performance of
the obligations of the Borrower under the Loan Agreement. If no Event of Default
exists under the Loan Agreement, any interest earned on the investment of such
deposits, shall be paid to Borrower on the first business day of each calendar
quarter. Moneys in such deposit accounts shall be applied by the Lender to
reimburse itself for any LC Disbursements and upon the occurrence of an Event of
Default, shall be applied to the satisfaction of any Obligations of the
Borrower, under the Loan Agreement.
6. Sale and Replacement of Collateral. If an Event of Default does not
exist, the Borrower may sell or otherwise dispose of portions of the Collateral
(other than Cash Collateral) in the ordinary course of its business for fair
market value; provided, that once Borrower has sold or disposed of tractors
included in the Collateral, Borrower shall concurrently replace such Collateral
(and deliver titles therefor) with book values sufficient to comply with Section
4 hereof. The additional tractors shall become part of the Collateral and
subject to the terms and provisions of this Agreement.
7. Perfection and Protection of Collateral. Borrower shall ensure that
Lender's security interest in the Collateral is and will remain a perfected,
first priority security interest. Borrower shall (at its sole expense) execute,
obtain, deliver and (if applicable) file or record all financing statements,
title applications and other title documents, and take all other actions, that
Lender may deem reasonably necessary or advisable to perfect or protect Lender's
security interest in the Collateral against the interests of third parties.
Borrower hereby irrevocably appoints Lender as its attorney-in-fact, which
appointment is coupled with an interest, to take any action that Lender may deem
necessary to perfect and/or continue the perfection of its security interests
and to protect the Collateral, including without limitation the filing of any
financing statements without Borrower's signature as permitted by applicable
law. Borrower agrees to pay, on demand, all costs, taxes and fees payable in
connection with any such filings or recordings. Borrower shall give Lender at
least thirty (30) days prior written notice before retitling any Collateral from
its present jurisdiction, and in each case shall (at Borrower's expense)
promptly take all steps necessary or advisable to preserve continuously the
perfection and priority of Lender's security interests in the Collateral.
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8. Inspection. Borrower shall maintain adequate books and records
pertaining to the Collateral and shall permit Lender to visit and inspect any of
the Collateral, to examine Borrower's books of record and accounts with respect
to the Collateral, all at such reasonable times and as often as Lender may
reasonably desire.
9. Insurance. Borrower shall maintain casualty insurance policies on the
Collateral (other than the Cash Collateral) for its full insurable value,
subject to deductibles acceptable to Lender. Upon Lender's request, Borrower
will furnish evidence of such insurance coverage, as required. Borrower shall
cause (i) all insurance policies to name Lender as an additional insured and
loss payee, and (ii) all insurance policies to provide that no assignment,
cancellation, modification, reduction or adverse change in coverage shall be
effective until at least thirty (30) days after Lender's receipt of written
notice thereof. If Borrower fails to furnish said insurance as required
hereunder, the Lender may do so or may obtain insurance of its interest, adding
the amount of any such premium thereof to the Indebtedness, but Lender is not
and will not be under any obligation or duty to obtain or maintain such
insurance. Borrower hereby assigns to Lender any insurance proceeds payable
under any of its insurance policies for physical damage and directs all insurers
to pay Lender any amount so due unless the Indebtedness has been previously
satisfied. Notwithstanding any provisions of this Section to the contrary,
Lender shall give written direction to such insurance company that proceeds of
such policies may be paid to Borrower until the insurer has been notified that
an Event of Default exists under the Loan Agreement.
10. Borrower's Use of the Collateral. As long as no Event of Default has
occurred, Borrower may use the Collateral (consisting of tractors) in the
ordinary course of Borrower's business, subject to any conditions set forth in
this Agreement. Upon the occurrence of an Event of Default, Borrower's right to
so use the Collateral shall terminate until further written notice from Lender.
11. Remedies. Upon the occurrence and continuation of an Event of Default
(as defined in the Loan Agreement), Lender shall be entitled to exercise any or
all of the rights and remedies available at law or in equity, including the
rights and remedies of a secured party under the applicable Uniform Commercial
Code (the "Code"). Lender's rights and remedies include the right and power to
sell, at public or private sale or sales, or otherwise collect, dispose of or
use all or any portion of the Collateral and any part or parts thereof in any
manner authorized or permitted under the Code. Lender may apply the proceeds
thereof toward payment of the Indebtedness and toward payment of any costs and
expenses (including attorneys' fees and legal expenses) incurred by Lender in
connection with any collection, sale or disposition of Collateral, in such order
or manner as Lender may elect in its sole discretion. Additionally, and as an
essential part of the bargained-for consideration running to Lender and to the
extent permitted by applicable law, Borrower hereby expressly grants to Lender
the contractual right to purchase any or all of the Collateral at private sale
any time after ten (10) days' notice of such sale has been sent to Borrower by
Lender. Upon Lender's demand following an Event of Default, Borrower agrees to
assemble the Collateral at its usual place of business, or at such other
location as Lender may reasonably designate, and make it available to Lender. To
the extent that notice of sale is required by applicable law, Borrower agrees
that notice given as provided in Section 13(a) hereof, at least ten (10) days
before the date of the proposed public sale or disposition or the date after
which a private sale may be made shall be deemed reasonable and shall fully
satisfy any requirement of giving of notice. Lender may postpone and reschedule
any proposed sale at its option without the necessity of giving Borrower further
notice of such fact as long as the rescheduled sale occurs within sixty (60)
days of the originally scheduled sale. All recitals in any instrument of
assignment or any other document executed by Lender incident to sale, transfer,
assignment or other disposition or use of any Collateral hereunder shall be
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sufficient to establish full legal propriety of the sale or other action taken
by Lender or of any fact, condition or thing incident thereto, and all
prerequisites of such sale or other action shall be conclusively presumed to
have been performed or to have occurred.
12. Borrower Waivers. Except as expressly provided herein, and to the
fullest extent permitted by law, Borrower hereby waives (i) presentment, demand
and protest and notice of presentment, protest, default, non payment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Lender on which Borrower may in any way be liable
and hereby ratifies and confirms whatever Lender may do in this regard; (ii)
notice prior to taking possession or control of the Collateral or any bond or
security that might be required by any court before allowing Lender to exercise
any of Lender's remedies, including the issuance of an immediate writ of
possession, except as expressly required herein; (iii) any marshalling of
assets, or any right to compel Lender to resort first or in any particular order
to any other collateral or other entities before enforcing its rights as to the
Collateral or pursuing Borrower for payment of the Indebtedness; (iv) the
benefit of all valuation, appraisement and exemption laws; (v) notice of
acceptance hereof; (vi) any right to require Lender to terminate its security
interest in the Collateral before both termination of this Agreement and payment
in full of the Indebtedness; and (vi) any claims and defenses based on
principles of suretyship or impairment of collateral. Borrower acknowledges that
the foregoing waivers are a material inducement to Lender's entering into this
Agreement and that Lender is relying upon the foregoing waivers in its future
dealings with Borrower.
13. General Authority. Effective immediately but exercisable by Lender (or
its designee) only upon an Event of Default, Borrower hereby irrevocably
appoints Lender (or its designee) as Borrower's true and lawful
attorney-in-fact, which appointment is hereby coupled with an interest, with
full power of substitution, in Lender's name or Borrower's name or otherwise,
for Lender's sole use and benefit, but at Borrower's cost and expense, to
exercise at any time and from time to time all or any of the following powers
with respect to all or any of the Collateral: (a) to receive, take, endorse,
assign and/or deliver any documents relating to the Collateral; and (b) in
general, to do all things necessary to perform the terms of this Agreement and
to take any action or proceedings that Lender deems necessary or appropriate to
protect and preserve Lender's security interest in the Collateral. In any event,
however, Lender's exercise of or failure to exercise any such authority shall in
no manner affect Borrower's liability to Lender hereunder or in connection with
the Indebtedness; Lender shall be under no obligation or duty to exercise any of
the powers hereby conferred upon Lender; and Lender shall have no liability for
any act or failure to act in connection with any of the Collateral.
14. Lender's Powers and Limited Duties. Lender shall have no liability or
responsibility for any diminution in the value of the Collateral from any cause
whatsoever. Lender shall be under no duty to collect any amount that may be or
become due on any of the Collateral, to redeem or realize on Collateral, to make
any presentments, demands or notices of protest in connection with any of the
Collateral, to take any steps necessary to preserve rights in any instrument,
contract or lease against third parties or to preserve rights against prior
parties, to remove any liens or to do anything for the enforcement, collection
or protection of Collateral, except to the extent, if any, that the Code
requires Lender to use reasonable care with respect to Collateral while in its
possession. Borrower agrees to pay all taxes, charges, transfer fees and
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assessments against the Collateral and to do all things necessary to preserve
and maintain the value and collectibility thereof. On Borrower's failure to so
do, Lender may, after giving Borrower written notice of its intention to do so,
make such payments and advance such sums on account thereof as Lender, in its
sole discretion, deems desirable. Borrower agrees to reimburse Lender
immediately upon demand for all such payments and advances plus interest thereon
at the maximum rate allowed by applicable law. All such amounts shall be part of
the Indebtedness.
15. Construction, Definitions and Usage.
(a) Defined Terms; UCC Terms. In addition to other words and terms
defined in this Agreement (including the Exhibits), the following terms
have the following meanings herein, unless the context expressly requires
otherwise. The term "business day" means any day other than a Saturday,
Sunday or day on which commercial banks are authorized to close under the
laws of the State of Tennessee. The term "entity" means any individual,
corporation, partnership, joint venture, association, limited liability
company, joint stock company, trust, unincorporated organization,
government, or any agency or political subdivision thereof, or any other
form of entity. The terms "includes" and "including" and words of similar
import are inclusive and not exclusive terms, and are not intended to
create any limitation. All defined terms apply to both singular and plural
forms, and all references to any gender include all other genders. Terms
used in this Agreement that are defined in the Uniform Commercial Code as
adopted in the State of Tennessee (the "Code") shall have the same meanings
herein, except as otherwise expressly provided or amplified (but not
limited) herein.
(b) Captions; Exhibits; Severability. The captions in this Agreement
are for convenience only, and in no way limit or amplify the provisions
hereof. All Exhibits and Schedules attached hereto are by reference made a
part hereof. This Agreement is severable, and the invalidity of any
provision shall not affect any other provision hereof.
(c) References to Documents and Laws. All defined terms and references
as to any agreements, notes, instruments, certificates or other documents
shall be deemed to refer to such documents as they may from time to time be
amended, modified, renewed, extended, replaced, restated, supplemented or
substituted. Unless otherwise provided, all references to statutes and
related regulations shall include any amendments thereof and any successor
statutes and regulations.
16. General Provisions.
(a) Notices. All notices and communications required under this
Agreement shall be given in accordance with the terms of the Loan
Agreement.
(b) Successors and Assigns. Borrower shall not assign its rights or
delegate its duties under this Agreement. Borrower's covenants and
agreements herein shall bind Borrower's successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Lender may,
at its option from time to time without notice to Borrower, assign the
Indebtedness and/or enter into participation or syndication agreements with
other lenders approved by Lender on such terms and conditions as Lender
shall deem advisable.
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(c) Amendments and Waivers. This Agreement may not be modified or
amended except in writing signed by Borrower and Lender, and none of its
provisions may be waived except in writing signed by Lender. All additional
and/or substitute Collateral shall be added pursuant to an amendment
executed by Borrower and Lender in substantially the form attached as
Exhibit C. No waivers shall be implied, whether from any custom or course
of dealing or any delay or failure in Lender's exercise of its rights and
remedies hereunder or otherwise. Any waiver granted by Lender shall not
obligate Lender to grant any further, similar, or other waivers.
(d) Remedies. All remedies provided to Lender herein are cumulative,
in addition to all other remedies available to Lender at law or in equity
or otherwise, and the exercise or partial exercise of any such right or
remedy shall not preclude the exercise of any other right or remedy.
(e) Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Tennessee (without regard to
its rules on conflicts of laws), except to the extent, if any, that the
location of the Borrower or the Collateral may require the application of
other law to govern the perfection of security interests in the Collateral.
(f) Counterparts. This Agreement may be executed in any number of
counterparts (by facsimile transmission or otherwise), and each shall be
deemed an original but all such counterparts shall constitute but one and
the same instrument.
(g) Entire Agreement; No Oral Representations. This Agreement,
together with the Guaranty, represents the entire agreement between the
parties hereto with respect to the subject matter hereof, superseding any
and all other agreements, promises or representations existing prior to or
made simultaneously with this Agreement.
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ENTERED INTO as of the date first written above.
BORROWER:
Address for Notices: Central Freight Lines, Inc.,
a Texas Corporation
Central Freight Lines, Inc.
0000 Xxxx Xxxx Xxxxx Xx:_________________________________
Xxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxx Title:______________________________
FAX: (000) 000-0000
LENDER:
Address for Notices: SunTrust Bank
SunTrust Bank
000 Xxxxxx Xxxxxx Xxxxx By__________________________________
Xxxxxxxxx, Xxxxxxxxx 00000
FAX: (000) 000-0000 Title:______________________________
Attn: Xxxx Xxxxxxxx
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