Exhibit 4.6
SECURITY AGREEMENT
1. Date. January 28, 2003
2. Parties. The parties to this Agreement are:
Debtors: PAC PRODUCTS, INC.
and
EARTHFIRST TECHNOLOGIES, INCORPORATED
Secured Party: FLORIDA ENGINEERED CONSTRUCTION
PRODUCTS CORPORATION
3. Grant of Security Interest. The Debtors hereby grant to the Secured Party a
security interest in the following Collateral to secure the payment and
performance of the obligations set out in this Agreement.
4. Collateral. The property serving as Collateral and subject to the above
security interest are all furniture, fixtures, machinery, equipment, accounts
receivable, causes of action, all stock, including stock in subsidiaries, all
interests in limited liability companies and partnerships, and all other
personal property and intangible assets of the Debtors.
5. Obligations of Debtors. The obligations of the Debtors that are subject to
this Security Agreement are the repayment of that certain Revolving Line of
Credit Promissory Note ("Promissory Note") of even date herewith, in the
principal amount of Three Million and 00/100 Dollars ($3,000,000.00) from the
Debtors in favor of Secured Party, the terms and conditions of such Promissory
Note being expressly incorporated herein.
6. Warranties and Commitments. Debtors hereby warrant and agree to the
following:
(a) Title. The Debtors are the owners with the full right and
interest in the Collateral that is subject to this Agreement,
which is free and clear of any and all liens, claims,
encumbrances, and the like, with the exception of any liens or
encumbrances which have been disclosed to Secured Party. The
Debtors have full authority to use the same as Collateral and
agree to defend the Collateral against all other persons who,
at any time, may claim an interest in it.
(b) Negative Pledge. The Debtors agree that during the course of
this Agreement and as long as any obligation that is subject to
this Agreement remains outstanding the Debtors will not grant a
security interest in the Collateral subject to this Agreement
to any person or entity without the prior written consent of
the Secured Party.
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(c) Liens and Encumbrances. The Debtors agree that during the
course of this Agreement and as long as any indebtedness or
other obligation that is subject to this Agreement remains
outstanding the Debtors will keep the Collateral free from any
and all liens, encumbrances, and the like.
(d) Assignment of Collateral. The Debtors will not assign,
transfer, discount, sell, offer for sale, or otherwise dispose
of the Collateral or any interest in the Collateral save as
provided in this Security Agreement without prior written
consent of the Secured Party.
(e) Taxes. The Debtors agree to pay all taxes and assessments on
the Collateral as required and when due. Should the Debtors
fail to do so, the Secured Party, although not required to do
so, may, at its sole option, pay or discharge the same. Any
such payment shall become an obligation of the Debtors which is
secured by the collateral to this Agreement.
(f) Corporate Authority. The Corporate Debtors, warrant that:
(i) They are duly authorized and existing under the laws of
the State of Florida.
(ii) They are qualified and in good standing in all states in
which they are doing business.
(iii) The execution and performance of this Agreement:
(1) Are within the Debtors' corporate powers;
(2) Have been duly authorized; and
(3) Are not in contravention of any law or the Debtors'
charter, or any agreement or undertaking of which
the Debtors are a party or by which it is bound.
7. Financing Statements and Other Documents. The Debtors agree to execute one
or more Financing Statements as determined by Secured Party and in a form
satisfactory to the Secured Party, and Secured Party is authorized to file
Financing Statements in any location deemed necessary or advisable to perfect
the Secured Party's security interest in the Collateral or proceeds. The Debtors
expressly agree to sign such Financing Statements on request of the Secured
Party.
The Debtors also agree to cooperate fully with the Secured Party in
executing additional instruments, documents, financing statements, amendments to
financing statements, and the like as may be deemed necessary or advisable by
the Secured Party in order to maintain and continue the security interest
created by this Security Agreement.
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The Debtors agree that a carbon, photographic or other reproduction of a
Financing Statement is sufficient as a financing statement under this Agreement.
8. Reports, Inspections and the Like.
(a) The Debtors agree to the examination, auditing, and inspection
of their books and records from time to time by the Secured
Party, its assigns, or its agents as may be deemed necessary or
advisable by the Secured Party in the protection of its
interests under this Agreement. The Debtors agree to cooperate
fully in this matter and further agree to the making of
extracts and copies as well as to the verification of all
accounts by the Secured Party or its agents, which includes but
is not limited to the contracting of account debtors.
(b) The Debtors will furnish on request and from time to time to
the Secured Party or its assigns trial balances on aged
accounts; statements of accounts or commissions with customers
or insurance carriers; and certified financial statements,
including but not limited to, balance sheet and profit and loss
statements, together with accountant's comments.
(c) The Debtors will promptly inform the Secured Party or its
assigns of any change in directors, officers or key employees.
(d) The Debtors will cooperate fully with the Secured Party or its
assigns in the furnishing of such assignments, schedules,
documents and the like as they may deem necessary or advisable
to the creation, perfection, maintenance or protection of their
interest in the Collateral subject to this Agreement.
9. Collections.
(a) The Debtors shall collect the accounts and other obligations
serving as Collateral or proceeds under this Agreement and
shall do so at the Debtors' own expense until such right of
collection is expressly revoked by the Secured Party. Such
revocation may be either prior or subsequent to default.
(b) The Secured Party may at any time and from time to time,
whether prior or subsequent to default:
(i) Notify any account Debtors or obligor of the existence
of this Agreement; and
(ii) Direct such party to henceforth make payment directly to
the
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Secured Party of any and all sums then due to become due
to Debtors.
Upon such notice and demand, the Secured Party's receipt of any payment
shall operate as payment from the Debtors and release of any amount so paid.
(c) The Secured Party is authorized to endorse in the name of the
Debtors any item of Collateral or proceeds subject to this
Agreement, however received.
(d) The Secured party may, at the Debtors' expense, enforce
collection by suit or otherwise and may do so either in its own
name or in the names of the Debtors, of any item of Collateral
or proceeds subject to this Agreement. This shall include, but
not be limited to, the right to compromise, extend or renew any
indebtedness or to surrender, release, exchange, sell or
discount all or any part thereof.
10. Default. It is agreed that the following events shall constitute a default
under this Agreement:
(a) Non-Payment. Any failure of the Debtors to pay when due any
obligation secured by this Agreement shall constitute a
default. This includes, but is not limited to, any failure to
pay principal or interest when due, failure to pay taxes and
failure to timely pay any note or other document evidencing
obligations contained in this Agreement.
(b) Nonperformance. Any failure of the Debtors, or any one of them,
to perform or observe fully and in a satisfactory manner the
terms of this Agreement shall constitute a default.
(c) Warranties and Representations that Prove False. Any warranty
or representation made to the Secured Party in order to induce
the extension of credit to the Debtors, whether made by the
Debtors, or any one of them, or by others on behalf of the
Debtors, including agents, employees, sureties, guarantor,
consignors and the like and whether such representations are
contained in this Agreement or in related materials, such as
financial guaranties, or in any financial instrument,
including, without limitation, the Promissory Note executed in
conjunction with this Agreement, if incorrect in any material
respect shall operate as a default under this Agreement.
(d) Levy and Attachments. Seizure, attachment or levy on any
property of the Debtors, or any of them, whether or not such
property is covered by this Agreement, shall operate as a
default under this Agreement.
(e) Insolvency and the Like. It shall operate as a default under
this
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Agreement if for any reason:
(i) The Debtors become insolvent;
(ii) The Debtors become subject to any proceeding under the
bankruptcy or insolvency laws, including an assignment
for the benefit of creditors; or
(iii) The Debtors have their property placed under the custody
of a receiver or trustee.
(f) Alteration of Debtors' Operating Conditions. Dissolution or any
other termination of the existence of the Debtors or any
forfeiture of their right to do business, as well as merger,
consolidation, or the like with another, shall operate as a
default under this Agreement.
(g) Unauthorized Use of Collateral or Proceeds. The assignment,
sale, discount, transfer or use of the Collateral or its
proceeds, except as authorized in this Agreement shall operate
as a default under this Agreement.
11. Accelerate on Default. In the event of any default under this Agreement,
the entire indebtedness secured by the Agreement shall become immediately due
and payable.
12. Accelerate on Insecurity. In the event the Secured Party shall deem itself
insecure, the Secured Party may, at its option, declare the entire indebtedness
secured by this Agreement immediately due and payable. Insecurity is defined to
mean a good faith belief that the prospect of payment or performance as called
for by this Agreement has become impaired.
13. Secured Party's Remedies. On default or acceleration, the Secured Party
shall have the following rights and remedies, which are cumulative in nature and
are immediately available to the Secured party:
(a) All rights and remedies provided by law, including but not
limited to, those provided by the Uniform Commercial Code,
especially those provided in Part 5 of Article 9;
(b) All rights and remedies provided in this Agreement;
(c) All rights and remedies provided in the Promissory Note secured
by this Agreement; and
(d) All rights and remedies provided in any other applicable
security agreement.
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Among those rights that are specifically included:
(i) Right of Direct Collection. The Secured Party may, at its
option, notify any account Debtors of the Debtors or any
obligor on any obligation payable to the Debtors and
serving as Collateral for this Agreement to make payment
directly to the Secured Party, and the Debtors agree to
cooperate fully in executing any instruments or
documentation deemed necessary by Secured Party in the
exercise of such right.
(ii) Right to Control Proceeds. The Secured Party may, at its
option, take control of any and all proceeds from such
Direct Collection and apply all "Net Proceeds" to any
outstanding obligations of Debtors hereunder or under the
Promissory Note. "Net Proceeds" shall mean all proceeds
collected and received from any account debtor of the
Debtors or any obligors on any obligations payable to the
Debtors, after deduction of all reasonable expenses
incurred in collection of such accounts including,
without limitation, all attorneys' fees and costs
incurred by Secured Party or on its behalf.
(iii) Deficiency. The exercise of the Secured Party of its
right of Direct Collection hereunder and in application
of any Net Proceeds to any obligation of Debtors
hereunder shall in no way operate to prejudice or affect
in any way Secured Party's right hereunder to at any time
proceed directly against Debtors.
14. Waiver of Rights.
(a) All rights and remedies of the Secured Party as provided in
this Agreement, or as found in the Promissory Note executed in
connection with this Agreement, or arising by operation of law
shall continue in full force and effect during the full course
of this Agreement unless specifically waived by the Secured
Party in a signed writing to that effect.
(b) Forbearance, failure, or delay on the part of the Secured Party
in the exercise of any such right or remedy shall not
constitute a waiver thereof and may only be effected by a
specific written agreement to that effect which is signed by
the Secured Party.
(c) The exercise or partial exercise of any right or remedy shall
not preclude the further exercise of such right or remedy.
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15. Choice of Law. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Florida.
16. Separate Agreement. This Agreement and the Promissory Note secured hereby
shall be construed together as an agreement separate and independent of any
agreements, obligations or undertakings between the Secured Party and the
Debtors, or any of them, and the existence of any claim related to such other
agreements, obligations or undertakings between or among them shall not
constitute a defense to the enforcement of this Agreement or the Promissory Note
secured hereby, such defense(s) being expressly hereby waived by Debtors.
17. Severability. In the event that any provision of this Agreement shall be
found to be unenforceable in any legal proceeding, the remaining provisions
shall remain in force and effect.
18. Execution. This Agreement becomes effective when signed by the Debtors.
WITNESSES: DEBTORS:
PAC PRODUCTS, INC.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx Xxxxxxx
------------------------------ --------------------------------------
Its: President
------------------------------
Xxxxxxx Xxxxxx
------------------------------
[Print name] Date: 1/28/03
------------------------------------
EARTHFIRST TECHNOLOGIES,
INCORPORATED
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx Xxxxxxx
------------------------------ -------------------------------------
Its: President
-----------------------------
Xxxxxxx Xxxxxx
------------------------------
[Print name] Date: 1/28/03
------------------------------------
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SECURED PARTY:
FLORIDA ENGINEERED CONSTRUCTION
PRODUCTS CORPORATION
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx Xxxxxxx
------------------------------ ----------------------------------------
Its: President
--------------------------------
Xxxxxxx Xxxxxx
------------------------------
[Print name] Date: 1/28/03
--------------------------------------
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