SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered
into as of September 24, 1997, between ELXSI, a California corporation (the
"Debtor"), 0000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000, and Orange County
Industrial Development Authority, a public body corporate and politic and a
public instrumentality of the State of Florida (the "Secured Party") with
offices at 000 X. Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000.
PREMISES:
The Secured Party proposes to enter into a Loan Agreement dated as of
September 24, 1997 (the "Loan Agreement") with Debtor pursuant to the terms of
which the Debtor agrees to make loan payments (the "Loan Payments") to the
Secured Party equal to the principal of, premium, if any, and interest on the
$2,500,000 Orange County Industrial Development Authority, Industrial
Development Revenue Bonds (ELXSI Project), Series 1997 (the "Bonds" or the
"Obligations") issued in accordance with Chapter 159, Part II, of the Florida
Statutes (the "Act").
The Bonds are being issued to provide funds which, together with
interest earnings thereon and certain other amounts, will be used to provide
funds to the Debtor in order (i) to acquire, construct, install and equip the
Debtor's new facility to be constructed at 0000 Xxx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx, for the manufacture of video inspection and rehabilitation equipment
for wastewater and drainage systems, and to provide funds to finance
improvements at the Debtor's existing facility at 0000 Xxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx (the "Project"); and (ii) to pay certain costs of issuance.
The Bonds will be secured under the Secured Party's Trust Indenture
dated as of September 24, 1997 (the "Indenture") with Sun Trust Bank, Central
Florida, National Association as trustee (the "Trustee"). The Bonds will be
payable solely out of the Debtor's Loan Payments under the Loan Agreement and
other monies paid by the Debtor thereunder. To evidence and to secure its
obligation to make Loan Payments, the Debtor will, under the Loan Agreement,
deliver a promissory note (the "Note") to the Secured Party, which Note will be
assigned by the Secured Party to the Trustee.
The Debtor will enter into a Mortgage and Security Agreement (the
"Mortgage") in addition to this Security Agreement pursuant to which the Debtor
shall grant solely to the Secured Party a lien and security interest in the
land, buildings and fixtures comprising the Project as security for the
performance and observance of the Borrower's obligations under the Loan
Agreement and ultimately the Bonds.
The Debtor desires to secure the payment and performance of the
Obligations by granting to the Secured Party a security interest in the
Collateral, as hereinafter defined.
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NOW, THEREFORE, the Debtor and the Secured Party agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Loan Agreement are used herein as therein defined, and the following terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural forms of the terms defined):
"Collateral" shall have the meaning assigned to such term in Section 2
of this Security Agreement.
"Equipment" means all equipment of Debtor of every description,
including, without limitation fixtures, furniture, vehicles, trucks, trailers,
vans, cars, and trade fixtures, together with any and all accessions, parts and
equipment attached thereto or used in connection therewith, and any
substitutions therefor and replacements thereof.
"hereby," "herein," "hereof," "hereunder" and words of similar import
refer to this Security Agreement as a whole (including, without limitation, any
schedules hereto) and not merely to the specific section, paragraph or clause in
which the respective word appears.
"Proceeds" shall mean "proceeds," as such term is defined in the UCC
and, in any event, shall include, without limitation, (i) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to Debtor from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority), and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Secured Obligations" shall mean (i) the obligations of the Debtor
under the Loan Agreement and the Note, and (ii) all other indebtedness,
liabilities and obligations of Debtor to the Secured Party, whether now existing
or hereafter incurred, and as created under, arising out of or in connection
with the Loan Agreement, the Note, this Security Agreement and any other
agreement or instrument in favor of the Secured Party.
"Security Agreement" shall mean this Security Agreement, as the same
may from time to time be amended, modified or supplemented and shall refer to
this Security Agreement as in effect on the date such reference becomes
operative.
"UCC" shall mean the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of Florida; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Secured Party's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Florida, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof
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relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
2. Grant of Security Interest.
(a) To secure the prompt and complete payment, performance and
observance of all of the Secured Obligations, and to induce the Secured Party to
issue the Bonds and to enter into the Loan Agreement and to make the loans and
other extensions of credit provided for therein in accordance with the
respective terms thereof, Debtor hereby grants to the Secured Party a security
interest in all of Debtor's right, title and interest in, to and under the
following whether now owned by or owing to, or hereafter acquired by or arising
in favor of Debtor (including, without limitation, under any trade names, styles
or divisions thereof), and whether owned or consigned by, or leased to Debtor,
and regardless of where located, (all of which being hereinafter collectively
referred to as the "Collateral"):
(i) all Equipment of Debtor;
(ii) to the extent not otherwise included, all Proceeds of the
foregoing and all accessions to, substitutions and replacements for,
and rents, profits and products of, each of the foregoing.
(b) In addition, to secure the prompt and complete payment, performance
and observance of the Secured Obligations and in order to induce the Secured
Party as aforesaid, Debtor hereby grants to the Secured Party, a security
interest in all property of Debtor held by the Secured Party, including, without
limitation, all property of every description, now or hereafter in the
possession or custody of or in transit to the Secured Party for any purpose,
including safekeeping, collection or pledge, for the account of Debtor, or as to
which Debtor may have any right or power.
3. Obligations Secured. The security interest created hereby secures
payment and performance of all of the Obligations and all other obligations of
the Debtor to the Secured Party, as well as all amendments, renewals,
extensions, modifications and changes in form thereof, whether or not, either
now or hereafter, evidenced by any note, instrument or other writing (the
"Secured Obligations").
4. Representations and Warranties. To induce the Secured Party to enter
into this Security Agreement, the Debtor represents and warrants as follows:
1. The Debtor has full power and authority to enter into and
perform this Security Agreement; this Security Agreement has been duly entered
into and delivered and constitutes a legal, valid and binding obligation of the
Debtor enforceable in accordance with its terms except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or other laws of general application relating to or affecting the
enforcement of creditors' rights and by general equitable principles (regardless
of whether considered in a proceeding in equity or at law).
2. The Debtor has good and marketable title to the Collateral and
the Collateral is not subject to any liens, encumbrances or security interests
except as provided herein and in the Mortgage.
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3. The Debtor is keeping the Collateral at the locations listed on
Schedule A hereto.
4. The Debtor's chief executive office is at 0000 Xxx Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000. The Debtor also maintains an office at 0000 Xxx
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000.
5. The Collateral will be used for commercial or business purposes
only.
5. Covenants of the Debtor. The Debtor agrees that it shall:
1. not secrete or abandon any of the Collateral and shall not
remove any of the Collateral or the records concerning the Collateral from their
present location or change the location of its registered office or chief
executive office without prior written notice to the Secured Party given at
least thirty (30) days prior to such removal or change and then only if the
Debtor assists the Secured Party in filing or recording any financing statements
or other notices deemed necessary by the Secured Party to maintain the continued
perfection of its security interest in the Collateral;
2. promptly send notice to the Secured Party of any damage or loss
of any of the Collateral having a value of more than $25,000;
3. allow the Secured Party full access to the Collateral and the
records pertaining thereto as provided in the Loan Agreement;
4. reimburse the Secured Party upon demand for all expenses,
including without limitation, reasonable attorneys' fees and expenses incurred
by the Secured Party in connection with perfecting the security interest granted
herein or the satisfaction thereof;
5. unless waived by the Secured Party, obtain and furnish to the
Secured Party a landlord waiver and/or mortgagee waiver, if any of the
Collateral is maintained in leased, rented or mortgaged facilities;
6. keep the Collateral insured against loss or damage by fire and
extended coverage naming Secured Party as mortgagee and loss payee under all
policies of insurance insuring the Collateral, and shall assign and deliver the
policies and/or certificates thereof (including without limitation any renewals
and/or changes) to Secured Party. If the Debtor fails to obtain any insurance
required by this subsection (f), it shall be lawful for Secured Party to effect
such insurance, and any amounts paid by Secured Party in respect thereof shall
become an addition to the Debtor's Obligations secured hereby. Each insurance
policy issued with respect to the Collateral shall provide that no termination,
cancellation, expiration, material modification or lapse of any such insurance
policy or policies shall occur without at least thirty (30) days advance written
notice to the Debtor and to the Secured Party. In the event that any of the
aforesaid policies procured by the Debtor shall fail to provide that all losses
thereunder shall be payable to the Secured Party, the Debtor hereby assigns to
said Secured Party all of the proceeds of any and all of said policies as
security for the Secured Obligations and agrees to accept said proceeds in trust
for Secured Party, and to forthwith deliver the same to the Secured Party in the
exact form received (with the endorsement of the Debtor where necessary),
provided, however, that so long as no Event of Default or Potential Default has
occurred and is continuing, the Secured Party shall promptly remit proceeds
received by it to the Debtor. Secured Party is irrevocably appointed
attorney-in-fact for the Debtor, with full power of substitution and revocation,
to compromise, settle or release any claims pertaining to or arising out of said
policies, and to take possession of and endorse in the name of the Debtor any
check or other instrument for the payment of money representing the proceeds of
said policies. The Debtor shall not effect any settlement, compromise or release
of any insurance claim involving a loss of $25,000 or more without Secured
Party's prior written consent;
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7. keep the Collateral under conditions which preserve the value
thereof and maintain the Collateral in good repair, making all necessary repairs
and replacements, and whenever in the Secured Party's sole judgment the
Collateral or any part thereof shall require any repairs or replacements in
order to maintain it in a first class and marketable condition or to preserve it
from excessive depreciation or wear, the Debtor will within thirty (30) days
after having been so advised by the Secured Party make such repairs or
replacements or cause the same to be made;
8. not assign, transfer, dispose of, sell, encumber or grant a
security interest in the Collateral to any person or entity;
9. not use or permit the Collateral to be used for any unlawful
purpose or in violation of any federal, state or municipal law, statute or
ordinance or any rules, decrees, or regulations issued thereunder, or for hire,
unless the consent of the Secured Party is first obtained; and
10. not permit the Collateral to become a part of or to be affixed
to any real property of any person or entity (including, without limitation,
Debtor) without first making arrangements satisfactory to Secured Party to
protect its security interest.
6. Duration of Security Interest. The Secured Party, and its successors
and assigns, shall hold the security interest created hereby upon the terms of
this Security Agreement, and this Security Agreement shall continue, until all
the Secured Obligations have been paid in full or performed in full. The
foregoing sentence notwithstanding, if any payment by the Debtor is rescinded or
must otherwise be restored or returned by the Secured Party for any reason
(including without limitation (a) the invalidity or unenforceability of the
obligation paid, for any reason; (b) the failure or insufficiency of
consideration for the obligation paid; or (c) the insolvency, bankruptcy or
reorganization of the Debtor), then this Security Agreement and the security
interests arising hereunder shall continue to be effective, or be reinstated, as
the case may be, as though such payment had not been made.
7. Default. At the option of the Secured Party, the happening of any of
the following events shall constitute a default under this Security Agreement
(an "Event of Default"):
1. the occurrence of any default under the Loan Agreement or the
Indenture;
2. failure of the Debtor to keep or perform or observe any term,
obligation or provision of this Security Agreement;
3. the loss, theft, damage or destruction of the Collateral if not
covered by insurance, the encumbrance of the Collateral, or any part thereof or
the making of a levy, seizure or attachment thereof or thereon; or
4. if the Collateral should become the subject matter of
litigation which would, in the reasonable opinion of the Secured Party, result
in substantial impairment or loss of the security intended to be provided by
this Security Agreement.
8. Remedies. Upon the occurrence of any Event of Default, the Secured
Party may at its option declare any and all of the Secured Obligations to be
immediately due and payable; and, in addition to exercising all other rights or
remedies available under applicable law, this Security Agreement or any other
agreement between the parties, proceed to exercise with respect
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to the Collateral all rights, options and remedies of a secured party upon
default as provided for under the Uniform Commercial Code. The rights of the
Secured Party upon any Event of Default shall include, without limitation, the
following:
1. The right to enter any premises where any Collateral may be
located for the purpose of taking possession or removing the same;
2. The right to require the Debtor to assemble the Collateral and
make them available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to the Debtor and the Secured
Party;
3. The right to sell the Collateral at public or private sale in
one or more lots. The Secured Party may bid upon and purchase any or all of the
Collateral at any public sale thereof, and shall be entitled to apply the unpaid
portion of the Secured Obligations as a credit against the purchase price. The
Secured Party may bid or become a purchaser at any such sale, if public. The
Secured Party shall be entitled to apply the proceeds of any such sale to the
satisfaction of the Secured Obligations and to expenses incurred in realizing
upon the Collateral in accordance with the Uniform Commercial Code;
4. The right to recover the reasonable expenses of taking
possession of any of the part of Collateral that may be reduced to possession,
preparing the Collateral for sale, selling the Collateral, and other like
expenses, together with court costs and reasonable attorneys' fees incurred in
realizing upon the Collateral or enforcing any provision of this Security
Agreement;
5. The right to retain the Collateral and become the owner
thereof, in accordance with the provisions of the Uniform Commercial Code;
6. The right to proceed by appropriate legal process at law or in
equity to enforce any provision of this Security Agreement or in aid of the
execution of any power of sale, or for foreclosure of the security interest of
the Secured Party, or for the sale of the Collateral under the judgment or
decree of any court.
9. Cumulative Remedies. The rights and remedies of the Secured Party
shall be deemed to be cumulative, and any exercise of any right or remedy shall
not be deemed to be an election of that right or remedy to the exclusion of any
other right or remedy. Notwithstanding the foregoing, the Secured Party shall be
entitled to recover by the cumulative exercise of all remedies no more than the
sum of (a) the Secured Obligations remaining outstanding at the time of exercise
of remedies, plus (b) the reasonable costs, fees and expenses the Secured Party
is otherwise entitled to recover.
10. Filing Fees. The Debtor shall pay all costs of filing any
financing, continuation or termination statement necessary to perfect or protect
or to maintain or terminate the perfection or protection of the Secured Party's
security interest created by this Security Agreement; or shall upon demand
reimburse the Secured Party for such costs, and until reimbursement such costs
shall be a part of the Secured Obligations secured by this Security Agreement.
11. Further Assurance and Acknowledgment. The Debtor shall sign from
time to time such other documents and instruments, and take such other action,
as the Secured Party may request to more fully create and maintain the security
interest in the Collateral intended to be created in this Security Agreement,
and to perfect any such interest. The Debtor acknowledges
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that the Secured Party does not assume any of the Debtor's obligations or duties
under any agreement containing rights to payment which are Collateral and does
not assume the Debtor's obligations connected with the acquisition, preparation
or holding (except to the extent required by the Uniform Commercial Code) of the
Collateral. The Debtor hereby authorizes the Secured Party to file financing
statements, signed only by the Secured Party, in all places where it is
necessary or appropriate to perfect the Secured Party's security interest in the
Collateral.
12. Other Provisions.
1. Failure by the Secured Party to exercise any right shall not be
deemed a waiver of that right, and any single or partial exercise of any right
shall not preclude the further exercise of that right. Every right of the
Secured Party shall continue in full force and effect until such right is
specifically waived in a writing signed by the Secured Party.
2. If any part, term or provision of this Security Agreement is
held by any court to be prohibited by any law applicable to this Security
Agreement, the rights and obligations of the parties shall be construed and
enforced with that part, term or provision enforced to the greatest extent
allowed by law, or if it is totally unenforceable, as if this Security Agreement
did not contain that particular part, term or provision.
3. The headings in this Security Agreement have been included for
ease of reference only, and shall not be considered in the construction or
interpretation of this Security Agreement.
4. This Security Agreement shall inure to the benefit of the
Secured Party, its successors and assigns, and all obligations of the Debtor
shall bind its successors and assigns.
5. To the extent allowed under the Uniform Commercial Code, this
Security Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of Florida.
6. The security interest granted by this Security Agreement shall
continue to be effective irrespective of any retaking of possession of
Collateral until all Secured Obligations have been paid or performed in full.
7. Any requirement of the Uniform Commercial Code or other
applicable law of reasonable notice shall be met if such notice is given at
least ten (10) Business Days before the time of sale, disposition or other event
or thing giving rise to the requirement of notice.
8. All notices and other communications hereunder shall be in
writing and shall be delivered by hand, sent by telex or telecopy, or mailed by
certified mail, return receipt requested, postage prepaid, addressed as
indicated below:
(i) If to the Debtor:
ELXSI
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: President
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(ii) If to the Secured Party:
Orange County Industrial Development Authority
c/o Economic Development
Commission of Mid-Florida, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
The address of any party for any purpose may be changed at any
time and from time to time in the manner provided for in this Section 12(h) and
shall be the most recent such address furnished in writing to the other party. A
notice shall be deemed to have been given when dispatched, if by telex or
telecopy, addressed as aforesaid (or to such other designated address), or if by
mail on the third Business Day after it is enclosed in an envelope, addressed to
the party to be notified at such address stated above (or to such other
designated address), properly stamped, sealed and deposited in the United States
mail.
9. The Debtor and the Secured Party may at any time, and from time
to time, change the address to which notice shall be mailed by written notice
setting forth the changed address.
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IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this
instrument to be effective as of the date first above written.
DEBTOR:
ELXSI
BY:
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TITLE:
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SECURED PARTY:
ORANGE COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY
BY:
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TITLE:
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SCHEDULE A
LOCATIONS OF COLLATERAL
0000 Xxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx, 00000
0000 Xxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx, 00000
