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EXHIBIT 4.2
SECURITY AGREEMENT
This SECURITY AGREEMENT (hereinafter called this "Agreement") is made
_______________, 199__, by and between FACT OF WEST FLORIDA, INC., a Florida
corporation, located at Two Prestige Place, 0000 XxXxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 34619(hereinafter called "Debtor") and _________________,
as Trustee on behalf of those persons listed on Schedule A (hereinafter
collectively called "Secured Party").
In consideration of the covenants and conditions stated in this
Agreement, the parties agree as follows:
1. Indebtedness Secured.
This Agreement and the Security Interest secure the payment of
certain Secured Notes issued and executed by Debtor, pursuant to the Indenture
of Trust (the "Indenture") dated ________________, by and between Debtor and
_______________________ and made payable to the holders of such Secured Notes
in the aggregate principal sum of up to $9,900,000 (hereinafter collectively
called the "Note"), together with all other indebtedness of every kind or
nature owing by Debtor to Secured Party, whether now existing or hereafter
incurred, direct or indirect, absolute or contingent, and whether the
indebtedness is from time to time reduced and thereafter increased or entirely
extinguished and thereafter reincurred, and including any sums advanced and any
costs and expenses incurred by Secured Party pursuant to this Agreement, the
Note or any other note or evidence of indebtedness (all of such is herein
sometimes referred to as the "Indebtedness").
2. Security Interest.
For value received, Debtor hereby grants to Secured Party a
security interest (the "Security Interest") in and to all of the following:
any and all retail motor vehicle installment sale contracts (the "Contracts")
acquired with the funds constituting the Indebtedness or with funds received
from the repayment of said Contracts (the "Replacement Contracts") or the
Replacement Contracts, which Contracts or Replacement Contracts are originated
in connection with the financing of new and used automobiles and light-duty
trucks (the "Vehicles"), including all rights to receive payments thereunder
and security interests in and instruments of title to the Vehicles, whether now
owned or hereafter acquired, all funds in the following bank account
__________________; all proceeds of the offering pursuant to the Registration
Statement of Debtor declared effective by the Securities and Exchange
Commission on _______________, 1994 (the "Registration Statement"); and in all
products thereof and all cash and non-cash proceeds of any of the foregoing, in
any form, including, without limitation, proceeds of insurance policies from
the loss thereof, all titles to the Vehicles and all assignment of liens, all
Contracts, Vehicle Titles, assignments or other documents and instruments
located in a segregated, locked fireproof file cabinet marked "Cabinet
#_____________ -__________________________. - Secured Notes - Series ___" in
the possession, custody and control of the Custodian as described in paragraph
4.5 hereof (all of the foregoing hereinafter called the "Collateral");
provided, however, that the security interest granted hereunder is subject to
the conditions and limitations set forth in the Registration Statement and the
Collateral may be released to Debtor as set forth in the Custodian Agreement.
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3. Representation and Warranties of Debtor.
Debtor represents and warrants and, so long as any portion of
the Indebtedness remains unpaid, shall be deemed continuously to represent and
warrant that:
3.1. Debtor is the owner of the Collateral free and clear of
all security interests or other encumbrances and claims of any kind or nature
in favor of any third persons, and Secured Party has a first, perfected
security interest in all of the Collateral;
3.2. Debtor is authorized to enter into this Agreement and
into the transactions contemplated hereby and evidenced by the Note;
3.3. The Collateral is used or bought for use solely in
business operations, and all of the relevant Collateral will remain personal
property regardless of the manner in which any of it may be affixed to real
property.
4. Covenants of Debtor.
Debtor covenants that so long as any Indebtedness remains
unpaid, Debtor:
4.1. Will defend the Collateral against the claims and
demands of all other parties, except purchasers of inventory in the ordinary
course of business;
4.2. Will keep the Collateral free and clear from all
security interests, liens and other encumbrances and claims of any kind or
nature in favor of any third persons, except the Security Interest; and Debtor
will not pledge the Collateral as security for any debts or obligations other
than the Notes;
4.3. Will not sell, pledge, transfer, assign, deliver, or
otherwise dispose of any Collateral or any interest therein, except that until
the occurrence of an Event of Default (as defined in paragraph 7.1 of this
Agreement) it may deal with the Collateral, including taking any aforementioned
action, as described in the Registration Statement;
4.4. Will keep in accordance with generally accepted
accounting principles, consistently applied, accurate and complete records
concerning the Collateral; will xxxx such records and, upon request of the
Secured Party made from time to time, the Collateral to give notice of the
Security Interest; and will, upon request made from time to time, permit the
Secured Party or its agents to inspect the Collateral and the Debtor's records
concerning the Collateral and to audit and make abstracts of such records or
any of the Debtor's books, ledgers, reports, correspondence and other records;
4.5. Upon demand will deliver to the Custodian for the
Secured Party any instruments, documents of title and chattel paper
representing or relating to the Collateral or any part thereof, and all
schedules, invoices, shipping, or delivery receipts, together with the
endorsement or assignment described in the Registration Statement and all other
documents representing or relating to purchases or other acquisitions or sales
described in the Registration Statement or other dispositions of the Collateral
and the proceeds thereof and any and all other schedules, documents, and
statements in accordance with the terms of that certain Custodian Agreement
between the Debtor, Custodian and Trustee on behalf of the Secured Party of
even date herewith;
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4.6. Will notify the Secured Party in writing at least
thirty (30) days in advance of any change in the Debtor's address specified on
the first page of this Agreement, of any change in the location or of any
additional locations at which the Collateral is kept, of any change in the
address at which records concerning the Collateral are kept and of any change
in the location of the Debtor's residence, chief executive office or principal
place of business;
4.7. Will make any amendment, alteration, modification or
cancellation of or substitution for or credits, adjustments or allowances on
any Collateral only as described in the Registration Statement;
4.8. Will execute and deliver to the Secured Party such
financing statements and other documents requested by the Secured Party and
take such other action as described in the Registration Statement and subject
to the limitations set forth herein, to perfect, protect or continue the
perfection of the Security Interest and effect the purposes of this Agreement;
4.9. Will pay or cause to be paid when due all taxes,
assessments and other charges of every kind and nature which may be levied or
assessed upon or against the transaction contemplated hereby or the Collateral;
4.10. Will deliver the Collateral to the Custodian pursuant
to that certain Custodian Agreement between the Corporation, Custodian and
Trustee on behalf of the Secured Party of even date herewith;
4.11. Will not make any distributions to shareholders or
payments to affiliates except as set forth in the Registration Statement
related to the issuance of the Notes;
4.12. Will use the Collateral only for the purposes set forth
in the Registration Statement and will not commingle the Collateral
constituting cash with funds of any person or entity other than Debtor;
4.13. Upon an Event of Default, will deliver any Collateral
in the form of funds in Debtor's bank account to the Trustee and will surrender
control of said accounts to the Trustee;
4.14. Will keep all funds which constitute the Collateral in
the following segregated Bank Account , and will not
commingle any other funds with funds in said account;
4.15. Will execute and deliver to the Custodian the
Assignments under the Agency Agreement which is an exhibit to the Registration
Statement and the Collateral Assignments attached hereto as Exhibits A and B as
required by the Secured Party.
5. Verification of Collateral.
Secured Party shall have the right to verify the existence and
value of the Collateral in any manner and through any medium which Secured
Party may consider appropriate, and Debtor shall furnish such assistance and
information and perform such acts as Secured Party may require in connection
therewith.
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6. Future Advances.
It is agreed that any additional loans or advances by the
Secured Party secured hereby to or for the benefit of Debtor, whether such
loans or advances are obligatory or are made at the option of Secured Party or
otherwise, at any time within twenty (20) years from the date of this
Agreement, with interest thereon at the rate agreed upon at the time of each
such loan or advance, shall be equally secured with and have the same priority
as the original indebtedness and be subject to all of the terms and provisions
of this Agreement, whether or not such additional loan or advance is evidenced
by the Note or any other promissory note of Debtor and whether or not
identified by a recital that it is secured by this Agreement; provided,
however, that Debtor hereby understands and agrees that this future advance
provision does not in any way obligate Secured Party or any other person to
make any additional loans or advances to Debtor.
7. Default.
7.1. Events of Default. Subject to the following
limitations, an Event of Default occurs if:
a. the Debtor receives written notice from a
Secured Party of a default in the payment of interest on any Note when the same
becomes due and payable and the default continues for a period of 30 days after
receipt of such notice;
b. the Debtor receives written notice from a
Secured Party of a default in the payment of the principal of any Note when the
same becomes due and payable at maturity or otherwise after receipt of such
notice;
c. the Debtor fails to comply with any of its
other agreements in the Notes, this Agreement or the Indenture of Trust and the
default continues for the period and after the notice specified below;
d. the Debtor pursuant to or within the meaning of
any Bankruptcy Law:
(1) commences a voluntary case,
(2) consents to the entry of an order for
relief against it in any involuntary case,
(3) consents to the appointment of a
Receiver of it or for any substantial part of its property,
(4) makes a general assignment for the
benefit of its creditors, or
(5) fails generally to pay its debts as
they become due; or
e. a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
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(1) is for relief against the Debtor in an
involuntary case,
(2) appoints a Receiver of the Debtor or
for any substantial part of its property, or
(3) orders the liquidation of the Debtor,
and the order or decree remains unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, or any
similar federal or state law for the relief of debtors. The term "Receiver"
means any receiver, trustee, assignee, liquidator, or similar official under
any Bankruptcy Law.
A default under section (c) is not an Event of Default until the
Secured Party holding at least a majority in principal amount of the Notes
notifies the Debtor of the default and the Debtor does not cure the default
within 90 days after receipt of the notice. The notice must specify the
default, demand that it be remedied, and state that the notice is a "Notice of
Default."
7.2. Rights and Remedies Upon Default. If an Event of
Default occurs and is continuing either: (a) the Secured Party, by written
notice to the Debtor or (b) the Secured Party holding at least 25% in principal
amount of the Notes, by written notice to the Debtor and the Trustee, may
declare the principal of and accrued interest on all the Notes to be due and
payable immediately. After a declaration such principal and interest shall be
due and payable immediately. An acceleration and its consequences shall be
rescinded if all existing Events of Default have been cured or waived prior to
the entry of a judgment against the Debtor and if the rescission would not
conflict with any judgment or decree.
Subject to the provisions of the preceding paragraph,
if an Event of Default occurs and is continuing, the Secured Party may pursue
any available remedy by proceeding at law or in equity to collect the payment
of principal and interest on the Notes or to enforce the performance of any
provision of the Notes or this Agreement.
Subject to the foregoing, the Secured Party holding a
majority in principal amount of the Notes by notice to the Debtor may waive an
existing Default or Event of Default and its consequences. When a Default or
Event of Default is waived, it is cured and stops continuing and no rights and
remedies thereon may continue to be enforced.
Notwithstanding anything to the contrary in this
Agreement, Secured Party is required to proceed against and liquidate all
Collateral before looking to any other assets of the Debtor.
7.3. Notice. Debtor agrees that any notice by Secured Party
of the sale, lease or other disposition of the Collateral or any other intended
action hereunder, whether required by the Uniform Commercial Code or otherwise,
shall constitute reasonable notice to Debtor if the notice is mailed by regular
or certified mail, postage prepaid, at least ten (10) days before the date of
any public sale, lease or other disposition of the Collateral, or the time
after which any private sale, lease or other disposition of the Collateral is
to take place, to Debtor's address as specified in this Agreement or to any
other address which Debtor has notified Secured Party in writing as the address
to which notices shall be given to Debtor.
7.4. Costs. Debtor shall pay all costs and expenses
incurred by Secured Party in enforcing this Agreement, realizing upon any
Collateral and collecting any Indebtedness. Costs and expenses will include
but not be limited to all reasonable attorneys' and paralegals' fees and
expenses.
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7.5. Deficiency. In the event that the proceeds of the
Collateral are insufficient to satisfy the entire unpaid Indebtedness, Debtor
will be responsible for the deficiency and shall pay the same upon demand.
Secured Party will account to Debtor for any proceeds of the Collateral in
excess of the Indebtedness and the costs and expenses referred to in Section
7.4.
8. Miscellaneous.
8.1. Perfection of Security Interest. Debtor authorizes
Secured Party at Debtor's expense to file any financing statement or statements
relating to the Collateral (with or without Debtor's signature thereon), and to
take any other action deemed necessary or appropriate by Secured Party to
perfect and to continue perfection of the Security Interest. Debtor hereby
irrevocably appoints Secured Party as its attorney-in-fact to execute financing
statements in Debtor's name and to perform all other acts which Secured Party
deems necessary or appropriate to perfect and protect the Security Interest.
Such appointment is binding and coupled with an interest. Upon request of
Secured Party before or after the occurrence of an Event of Default, Debtor
agrees to give Secured Party possession of any Collateral, possession of which
is, in Secured Party's opinion, necessary or desirable to perfect or continue
perfection or priority of the Security Interest. A photocopy of this Agreement
is sufficient as a financing statement and may be filed as such if Secured
Party so elects.
8.2. Continuing Agreement. This Agreement is a continuing
agreement with respect to the subject matter hereof and shall remain in full
force and effect until all of the Indebtedness now or hereafter contracted for
or created or existing and any extensions or renewals of the Indebtedness
together with all interest thereon has been paid in full.
8.3. Right to Proceeds. Secured Party may demand, collect,
and xxx for all proceeds of the Collateral (either in Debtor's or Secured
Party's name at the latter's option) with the right to enforce, compromise,
settle, or satisfy any claim. Debtor hereby irrevocably appoints Secured Party
as Debtor's attorney-in-fact to endorse, by writing or stamp, Debtor's name on
all checks, commercial paper, and other instruments pertaining to the proceeds.
Such appointment is binding and coupled with an interest. Debtor also
authorizes Secured Party to collect and apply against the Indebtedness any
refund of insurance premiums or any insurance proceeds payable on account of
the loss of or damage to any of the Collateral and hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact to endorse, by writing or stamp, any
check or draft representing such proceeds or refund. Such appointment is
binding and coupled with an interest. Before or after an Event of Default
Secured Party may notify any party obligated to pay proceeds of the Collateral
of the existence of the Security Interest and may also direct them to pay all
such proceeds to Secured Party.
8.4. Property in Secured Party's Possession. As further
security for the repayment of the Indebtedness, Debtor grants to Secured Party
a security interest in all property of Debtor which is or may hereafter be in
Secured Party's possession in any capacity, including all monies owed or to be
owed by Secured Party to Debtor; and with respect to all of such property,
Secured Party shall have the same rights as it has with respect to the
Collateral.
8.5. Set-Off. Without limiting any other right of Secured
Party, whenever Secured Party has the right to declare any Indebtedness to be
immediately due and payable, Secured Party may set off against the Indebtedness
all monies then owed to Debtor by Secured Party in any capacity whether due or
not.
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8.6. Failure to Perform; Reimbursement. Upon Debtor's
failure to perform any of its duties hereunder, Secured Party may, but it shall
not be obligated to, perform any of such duties and Debtor shall forthwith upon
demand reimburse Secured Party for any expense incurred by Secured Party in
doing so with interest thereof at a rate equal to the lesser of eighteen
percent (18%) per annum or the maximum rate permitted by applicable law.
8.7. Non-Waiver. No delay or omission by Secured Party in
exercising any right or remedy hereunder or with respect to any Indebtedness
shall operate as a waiver of that or any other right or remedy, and no single
or partial exercise of any right or remedy shall preclude Secured Party from
any other or future exercise of the right or remedy or the exercise of any
other right or remedy. Secured Party may agree to a cure of any default by
Debtor in any reasonable manner without waiving any other prior or subsequent
default by Debtor.
8.8. Third Parties. Secured Party shall have no obligation
to take, and Debtor shall have the sole responsibility for taking, any steps to
preserve rights against all prior parties to any document of title, general
intangible, instrument or chattel paper in Secured Party's possession as
Collateral or proceeds of the Collateral.
8.9. Waiver of Notice of Dishonor and Protest, etc. Debtor
waives dishonor, protest, presentment, demand for payment, notice of dishonor
and notice of protest of any instrument at any time held by Secured Party with
respect of which Debtor is in any way liable and waives notice of any other
action by Secured Party.
8.10. Assignments. Debtor's rights and obligations under
this Agreement are not assignable in whole or in part by operation of law or
otherwise. Secured Party may assign its rights and obligations under this
Agreement, in whole or in part, without notice to or consent of Debtor and all
of such rights shall be enforceable by Secured Party's successors and assigns.
8.11. Definitions; Multiple Parties; Section Headings. The
term "person" when referred to herein shall mean an individual, partnership,
corporation or any other legal entity. If more than one Debtor executes this
Agreement, the term "Debtor" includes each of the Debtors as well as all of
them, and their obligations under this Agreement shall be joint and several.
Whenever the context so requires, the neuter gender includes the feminine and
masculine and the singular number includes the plural. Unless otherwise
defined herein or the context requires otherwise, terms used herein shall have
the same meaning as defined in the Uniform Commercial Code as enacted by the
State of Florida. Section headings are used herein for convenience only and do
not alter or limit the meaning of the language contained in each section.
8.12. Amendment; Waiver. This Agreement may not be modified
or amended nor shall any provision of it be waived except by a written
instrument signed by Debtor and by Secured Party.
8.13. Choice of Law; Waiver of Jury Trial. This Agreement
has been delivered in the State of Florida and shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
internal laws (as opposed to the conflicts of law provisions) of the State of
Florida. Debtor and Secured Party hereby waive any right to a trial by jury in
any action to enforce or defend any matter arising from or related to (i) this
Agreement; (ii) any Note; or (iii) any documents or agreements evidencing or
relating to this Agreement or any Note. Debtor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or in any other manner provided by
law. Nothing in this paragraph shall affect or impair Secured Party's right to
serve legal process in any manner permitted by law, or Secured Party's right to
bring any action or proceeding against Debtor, or the property of Debtor, in
the courts of any other jurisdiction.
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8.14. Expenses. Debtor shall pay all costs and expenses
relating to this Agreement and the Indebtedness, including but not limited to,
filing and recording fees, documentary stamps including, without limitation,
Florida documentary stamps in the amount of $ , intangible tax (if any),
and Secured Party's attorney's fees and expenses.
8.15. Notice. Except as otherwise provided herein, any
notice required hereunder shall be in writing and shall be deemed to have been
validly served, given or delivered upon deposit in the United States certified
or registered mails, with proper postage prepaid, addressed to the party to be
notified as follows:
a. If to Secured Party at:
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b. If to Debtor at:
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Two Prestige Place
0000 XxXxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
or to such other address as each party may designate for itself by like notice.
8.16. Severability. If any provision of this Agreement is
prohibited by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such prohibition without invalidating the remaining provisions
hereof; provided, however, that any such prohibition in any jurisdiction shall
not invalidate such provision in any other jurisdiction.
8.17. Reliance by Secured Party. All covenants, agreements,
representations and warranties made herein by Debtor shall, notwithstanding any
investigation by Secured Party, be deemed to be material to and to have been
relied upon by Secured Party.
8.18. Entire Agreement. This Agreement, the Note and the
other instruments, agreements and documents contemplated hereby contain the
entire agreement between Secured Party and Debtor with respect to the subject
matter hereof and supersedes and cancels any prior understanding and agreement
between Secured Party and Debtor with respect thereto.
8.19. Binding Effect. Subject to the provisions of paragraph
8.10, this Agreement shall be binding upon the heirs, personal representatives,
successors and assigns of Debtor and shall inure to the benefit of the
successors and assigns of Secured Party.
8.20. Time. Time is of the essence in this Agreement.
8.21. Attorney's Fees. The parties hereby agree that in the
event any of the terms and conditions contained in this Agreement, including
the indemnification provisions contained herein, must be enforced by reason of
any past, existing or future delinquency of payment, of failure of observance
or of
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performance by any of the parties hereto, in each such instance, the
defaulting party shall be liable for reasonable collection and/or legal fees,
trial and appellate levels, any expenses and legal fees incurred, including
time spent in supervision of paralegal work and paralegal time, and any other
expenses and costs incurred in connection with the enforcement of any available
remedy.
8.22. Capacity. The Secured Party is entering into this
Agreement solely in its capacity as Trustee under the Indenture and shall be
entitled to the privileges, immunities and protections afforded it thereunder
in any actions taken by it as Secured Party hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
FACT OF WEST FLORIDA, INC., a
Florida corporation
By:
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XXXXX X. XXXXXXXX, President
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EXHIBIT A
COLLATERAL ASSIGNMENT
FACT OF WEST FLORIDA, INC., a Florida corporation ("Assignor") hereby
collaterally assigns to _______________________, as Trustee for the Secured
Party ("Assignee") the Contract attached hereto (the "Contract"). This
Collateral Assignment shall become absolute upon the occurrence of an Event of
Default as defined in the Security Agreement, in which event Assignee shall
become the owner of the Contract and shall be entitled to exercise all of the
remedies provided in the Security Agreement with respect to such Contract.
This Collateral Assignment shall be governed and construed in
accordance with the laws of the State of Florida and the provisions of the
Security Agreement, which is incorporated herein.
As used herein, all capitalized terms shall have the same meaning as in
the Assignor's Registration Statement declared effective by the Securities and
Exchange Commission on _____________, 1996.
IN WITNESS WHEREOF, the Assignor has placed its hand and seal this
_____ day of _________________, 199_.
FACT OF WEST FLORIDA, INC., a Florida corporation
By:
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XXXXX X. XXXXXXXX, President
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EXHIBIT B
COLLATERAL ASSIGNMENT
FACT OF WEST FLORIDA, INC., a Florida corporation ("Assignor") hereby
collaterally assigns to _______________________, as Trustee ("Assignee") the
Collateral as set forth in the Security Agreement between Assignor and Assignee
of even date herewith (the "Collateral"). This Collateral Assignment shall
become absolute upon the occurrence of an Event of Default as defined in the
Security Agreement, in which event Assignee shall become the owner of the
Collateral and shall be entitled to exercise all of the remedies provided in
the Security Agreement with respect to such Collateral.
This Collateral Assignment shall be governed and construed in
accordance with the laws of the State of Florida and the provisions of the
Security Agreement, which is incorporated herein.
IN WITNESS WHEREOF, the Assignor has placed its hand and seal this
_____ day of _________________, 199_.
FACT OF WEST FLORIDA, INC., a Florida corporation
By:
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XXXXX X. XXXXXXXX, President
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