EXHIBIT 99.3
SECURITY AGREEMENT
THIS AGREEMENT, entered into as of the 18th day of December, 1997, by
and between CARROLL FULMER & COMPANY, INC., a Florida corporation, whose address
is P. O. Box 5000, Groveland, Florida 34736-5000, ("Carroll Fulmer") and
CAROLINA PACIFIC DISTRIBUTORS, INC., a North Carolina corporation, whose address
is 517 Townsend Avenue, High Point, North Carolina 27263 ("Carolina Pacific")
and CAPITOL WAREHOUSE, INC., a Kentucky corporation, whose address is 403 W.
Main Street, Frankfurt, Kentucky 40601 ("Capitol Warehouse") and SERVICE
EXPRESS, INC., an Alabama corporation, whose address is P.O. Box 1009,
Tuscaloosa, Alabama 35403 ("Service Express") (Carroll Fulmer, Carolina Pacific,
Capitol Warehouse and Service Express are together hereinafter referred to as
the "Debtor") and AMSOUTH BANK, a bank organized under the laws of Alabama
("Secured Party"), whose address is Post Office Box 588001, Orlando, Florida
32858.
1. Security Interest. In consideration of and as an inducement for
Secured Party's extending credit to Debtor, Debtor hereby gives Secured Party a
continuing and unconditional security interest (the "Security Interest") in the
assets described below, wherever located, and in all parts, accessories,
attachments, additions, replacements, accessions, substitutions, increases,
profits, proceeds (including insurance proceeds) and products thereof in any
form, together with all records relating thereto (the "Collateral"):
All of the Debtors' receivables, including, but not limited to, all
present and future accounts, commissions, contract rights, lease
payment, chattel paper, instruments, documents, tax refunds payable to
Debtors, license fees and proceeds, royalties, insurance proceeds and
general intangibles and all forms of obligations owing, together with
all documents or instruments of title representing the same and rights
in any merchandise or goods which the same represent, together with all
right, title, security and guarantees, with respect to each of the
receivables, including any right of stoppage in transit, whether the
same are now or hereafter owned, and shall include all rights of
Debtors under any patent license agreement, technical assistance
contract, product supply contract, or similar agreement and includes
all trade names, tradmarks, license agreements and all records
pertaining to the accounts, debtors, and collateral and all computer
software relating to the Receivables of Debtors ("Receivables").
The Collateral also includes other assets of the same class or classes
hereafter owned or acquired by Debtor, and Secured Party shall have a security
interest in all such after-acquired property and all parts, accessories,
attachments, additions, replacements, accessions, substitutions, increases,
profits, proceeds and products thereof in any form.
2. Indebtedness Secured. The borrowing relationship between Debtor and
Secured Party is to be a continuing one and is intended to cover numerous types
of extensions of credit, loans, overdraft payments or advances made directly or
indirectly to Debtor, including but not limited to those made under the
Revolving Credit Note. Accordingly, this Agreement and the Security Interest
created by it secures payment of all obligations of any kind owing by Debtor to
Secured Party
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whether now existing or hereafter incurred, direct or indirect, arising from
loans, guaranties, endorsements or otherwise, whether related or unrelated to
the purpose of the original extension of credit, whether of the same or a
different class as the primary obligation, and whether the obligations are from
time to time reduced and thereafter increased; including, without limitation,
any sums advanced and any expenses or obligations incurred by Secured Party
pursuant to this Agreement or any other agreement concerning, evidencing or
securing obligations of Debtor to Secured Party, and any liabilities of Debtor
to Secured Party arising from any sources whatsoever (the "Indebtedness").
3. Revolving Loans. Until such time as Debtor receives notice to the
contrary from Secured Party, Debtor may obtain revolving loans, such loans to be
evidenced by a revolving credit note (the "Revolving Credit Note"). The
outstanding principal balance under the Revolving Credit Note may fluctuate up
and down from time to time, but shall not exceed in aggregate principal amount
outstanding at any one time the aggregate face amount of the Revolving Credit
Note.
4. Warranties of Debtor. Debtor warrants and so long as this Agreement
continues in force shall be deemed continuously to warrant that:
(a) Debtor is the owner of its respective Collateral free
of all security interests or other encumbrances;
(b) Debtor is authorized to enter into the Security
Agreement;
(c) The respective Collateral owned by the Debtor
(including Debtor's books and records) is located at
the applicable address of the Debtor first written
above.
(d) Each instrument, account, and chattel paper
constituting the Collateral arises from goods sold or
services rendered by Debtor, is genuine and
enforceable in accordance with its terms against the
party obligated to pay the same ("Account Debtor"),
and no Account Debtor has any defense, setoff, claim
or counterclaim against Debtor;
(e) The amount represented by Debtor to Secured Party as
owing by each Account Debtor or by all Account
Debtors is the correct amount actually and
unconditionally owing by such Account Debtor(s),
except for normal cash discounts as shown on
invoices, contracts or other documents delivered to
Secured Party;
(f) All Receivables are posted currently to Debtor's
books and records; and
(g) Debtor holds in full force and effect all permits,
licenses and franchises necessary for it to carry on
its operations in conformity with all applicable laws
and regulations.
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5. Covenants of Debtor. So long as this Agreement has not been
terminated as provided hereafter, Debtor: (a) will defend the Collateral against
the claims of all other persons; will keep the Collateral free from all security
interests or other encumbrances, except the Security Interest; and will not
assign, deliver, sell, transfer, lease or otherwise dispose of any of the
Collateral or any interest therein without the prior written consent of Secured
Party, except that prior to an Event of Default, Debtor may sell inventory in
the ordinary course of Debtor's business; (b) will keep the Collateral,
including Debtor's books and records, at the address specified above until
Secured Party is notified in writing of any change in its location within the
State but Debtor will not remove the Collateral from the State nor change the
location of Debtor's chief executive office without the written consent of
Secured Party; will notify Secured Party promptly in writing of any change in
Debtor's address, name or identity from that specified above; and will permit
Secured Party or its agents to inspect the Collateral; (c) will keep the
Collateral in good condition and repair and will not use the Collateral in
violation of any provisions of this Agreement, any applicable statute,
regulation or ordinance or any policy of insurance insuring the Collateral; (d)
will execute and deliver to Secured Party such financing statements and other
documents, pay all costs including costs of title searches and filing financing
statements and other documents in any public offices requested by Secured Party,
and take such other action Secured Party may deem advisable to perfect the
Security Interest created by this Agreement, including without limitation
placing notations on Debtor's books of account to disclose the Security Interest
in the Receivables; (e) will pay all taxes, assessments and other charges of
every nature which may be levied or assessed against the Collateral; (f) will
immediately upon receipt deliver to Secured Party, properly endorsed or
assigned, all instruments and chattel paper constituting Collateral, and any
security for or guaranty of any of the Collateral; (g) will post all Receivables
to Debtor's books and records immediately upon the creation thereof; (h) will
not do business under any name or style other than that indicated on the first
page thereof; and (i) if any certificate of title may be issued with respect to
any of the Collateral, will cause Secured Party's interest under this Agreement
to be noted on the certificate and will deliver the original certificate to
Secured Party.
6. Records, Reports and Documents. Debtor shall segregate its books and
records relating to the Collateral from all of Debtor's other books and records
in a manner satisfactory to Secured Party; and shall promptly deliver to Secured
Party upon request all invoices, original documents of title, contracts, chattel
paper, instruments and any other writings relating thereto, and all other
evidence of the performance of contracts, shipment or delivery of merchandise,
or the rendering of services; and Debtor will promptly deliver to Secured Party
at Secured Party's request such other information with respect to any of the
Collateral as Secured Party may in its sole discretion deem to be necessary or
desirable to evidence, confirm or protect Secured Party's interest in the
Collateral. Secured Party, or its representatives, at any time from time to
time, shall have the right, and Debtor will permit, or will instruct any third
party having possession or maintaining any of the following to permit, Secured
Party or its representatives: (a) to examine, check, make copies of or extracts
from, any of Debtor's books, records and files (including, without limitation,
orders and original correspondence); (b) to verify the Collateral or any portion
thereof or the Debtor's compliance with the provisions of this Agreement. Debtor
agrees to immediately notify Secured Party of a default in payment by, or the
insolvency or bankruptcy of, any Account Debtor from whom an account receivable
is included as an eligible receivable by Lender, or of the occurrence of any
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event which would adversely affect the value of any Collateral. Debtor further
agrees to furnish to Secured Party at Debtor's own cost and expense, at such
intervals as Secured Party may establish from time to time, copies of reports,
financial data and analysis satisfactory to Secured Party.
7. Default. (a) Any of the following shall constitute in event of
default ("Event of Default"): (i) the occurrence of any event of default under
that certain Advised Revolving Line of Credit Agreement or Revolving Credit Note
of even date herewith between Debtor or Secured Party; (ii) any attachment or
levy against the Collateral or any other occurrence which inhibits Secured
Party's free access to the Collateral.
(b) Upon the happening of any Event of Default, Secured
Party's rights with respect to the Collateral shall be those of a secured party
under the Uniform Commercial Code and any other applicable law in effect from
time to time. Secured Party shall also have any additional rights granted herein
and in any other agreement now or hereafter in effect between Debtor and Secured
Party. If requested by Secured Party, Debtor will assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party.
(c) Debtor agrees that any notice by Secured Party of the sale
or 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 days before the action to Debtor's address
as specified in this Agreement or to any other address which Debtor has
specified in writing to Secured Party as the address to which notices shall be
given to Debtor. Debtor shall be liable for any deficiencies in the event the
proceeds of disposition of the Collateral do not satisfy the Indebtedness in
full.
8. Miscellaneous. (a) Debtor authorizes Secured Party at Debtor's
expense to file any financing statements relating to the Collateral (without
Debtor's signature thereon) which Secured Party deems appropriate and Debtor
appoints Secured Party as Debtor's attorney-in-fact to execute any such
financing statements in Debtor's name and to perform all other acts which
Secured Party deems appropriate to perfect and to continue perfection of the
Security Interest.
(b) Debtor agrees that in addition to the other rights of
Secured Party hereunder, Secured Party shall have a security interest in any
deposit accounts of Debtor with Lender, and in any securities or other property
of Debtor in the possession of Secured Party or any of its affiliates, and
Secured Party may apply or set off the same against the Indebtedness in such
manner as Secured Party in its sole discretion shall determine.
(c) Debtor hereby irrevocably consents to any act by Secured
Party or its agents in entering upon any premises for the purposes of either (i)
inspecting the Collateral or (ii) taking possession of the Collateral after any
Event of Default; and Debtor hereby waives its right to assert against Secured
Party or its agents any claim based upon trespass or any similar cause of action
for entering upon any premises where the Collateral may be located.
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(d) Debtor agrees that Secured Party assumes no liability or
responsibility for the correctness, genuineness or validity of any instruments,
documents or chattel paper which may be released or endorsed to Debtor by
Secured Party, all of which shall automatically be deemed to be without recourse
to Secured Party, nor for the existence, quantity, quality, condition, value or
delivery of any goods represented thereby, and Debtor agrees to indemnify and
hold Secured Party harmless with respect to any claims or liabilities arising in
connection therewith.
(e) Debtor 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 or damage to any of the Collateral and
appoints Secured Party as Debtor's attorney-in-fact to endorse any check or
draft representing such proceeds or refunds.
(f) 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 expenses incurred by Secured Party in so doing. Secured Party may at its
option treat the payment of such expenses as advances under the Revolving Credit
Note.
(g) No delay or omission by Secured Party in exercising any
right hereunder or with respect to any Indebtedness shall operate as a waiver of
that or any other right, and no single or partial exercise of any right shall
preclude Secured Party from any other or further exercise of the right or the
exercise of any other right or remedy. Secured party may cure any Event of
Default by Debtor in any reasonable manner without waiving the Event of Default
so cured and without waiving any other prior or subsequent Event of Default by
Debtor. All rights and remedies of Secured Party under this Agreement and under
the Uniform Commercial Code shall be deemed cumulative.
(h) Secured Party shall exercise reasonable care in the
custody and preservation of the Collateral to the extent required by law and it
shall be deemed to have exercised reasonable care if it takes such action for
that purpose as Debtor shall reasonably request in writing; however, no omission
to do any act not requested by Debtor shall be deemed a failure to exercise
reasonable care and no omission to comply with any requests by Debtor shall of
itself be deemed a failure to exercise reasonable care. 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 instrument or
chattel paper in Secured Party's possession as Collateral or as proceeds of the
Collateral. Debtor waives notice of dishonor and protest of any instrument
constituting Collateral at any time held by Secured Party on which Debtor is in
any way liable and waives notice of any other action taken by Secured Party.
(i) Debtor authorizes Secured Party without affecting
Debtor's obligations hereunder from time to time (i) to take from any party and
hold collateral (other than the Collateral) for the payment of the Indebtedness
or any part thereof, and to exchange, enforce or release such collateral or any
part thereof, (ii) to accept and hold the endorsement or guaranty of payment of
the Indebtedness or any part thereof and to release or substitute any such
endorser or guarantor or any party who has given any security interest in any
collateral as security for the payment of the Indebtedness or any part thereof
of any party in any way obligated to pay the Indebtedness or any part
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thereof; and (iii) upon the occurrence of any Event of Default to direct the
manner of the disposition of the Collateral and any other collateral and the
enforcement of any endorsements or guaranties relating to the Indebtedness or
any part thereof as Secured Party in its sole discretion may determine.
(j) Upon an Event of Default by Debtor, Secured Party may
demand, collect and sue for all proceeds (either in Debtor's name or Secured
Party's name at the latter's option), with the right to enforce, compromise,
settle or discharge any proceeds. Furthermore, Debtor appoints Secured Party or
any other person designated by Secured Party as Debtor's attorney-in-fact, with
power: (i) to endorse Debtor's name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into Secured
Party's possession; (ii) to sign Debtor's name on any invoice or bill of lading
relating to any Receivables, on drafts against Account Debtors, on schedules and
assignments of Receivables, on notices of assignment, financing statements and
other public records, on verifications of accounts, and on notices to Account
Debtors; (iii) to receive, open and dispose of all mail addressed to Debtor that
may come into Secured Party's possession pursuant to the lockbox arrangement;
(iv) to send requests for verification of Receivables to Account Debtors; and
(v) to do all things necessary to carry out this Agreement. Neither the Secured
Party nor its designee will be liable for any acts or omissions nor for any
error of judgment or mistake of fact or law in the exercise of the power granted
hereby. This power, being coupled with an interest, is irrevocable so long as
any Receivables assigned to Secured Party or in which Secured Party has a
Security Interest remain unpaid or until the Indebtedness has been paid in full.
(k) Debtor agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay and hold Secured Party harmless
against liability for the payment of all out-of pocket expenses arising in
connection with this transaction, including any state documentary stamp taxes or
other taxes (together with interest and penalties, if any) which may be
determined to be payable with respect to the execution and delivery of any
documents contemplated hereby, and the reasonable fees and expenses of counsel
for Secured Party. If an Event of Default shall occur, Debtor shall also pay all
of Secured Party's costs of collection, including repossession, storage and
disposition costs, employee travel expenses, court costs and reasonable
attorney's fees, whether incurred in connection with collection, trial, appeal
or otherwise.
(l) The rights and benefits of Secured Party under this
Agreement shall, if Secured Party agrees, inure to any party acquiring an
interest in the Indebtedness or any part thereof.
(m) The terms "Secured Party" and "Debtor" as used in this
Agreement include the successors or assigns of those parties.
(n) 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.
(o) This Agreement may not be modified or amended nor shall
any provision of it be waived except in writing signed by Debtor and by an
authorized officer of Secured Party.
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(p) This Agreement shall be construed under the Florida
Uniform Commercial Code and any other applicable laws in effect from time to
time.
(q) Unless otherwise specified in this Agreement,
communication provided for herein shall be delivered or sent by first class
mail, postage prepaid, to the respective addresses set forth on the first page
hereof, or to such other address as either party shall notify the other in
writing, and shall be deemed effective when deposited in the United States
mails.
(r) Debtor has not, within the five-year period immediately
preceding the execution hereof, done business under any name or style other than
that designated in the first page of this Agreement.
9. WAIVER. IF AN EVENT OF DEFAULT SHOULD OCCUR, DEBTOR WAIVES ANY RIGHT
DEBTOR MAY HAVE TO NOTICE AND A HEARING BEFORE SECURED PARTY TAKES POSSESSION OF
THE COLLATERAL BY SELF-HELP, REPLEVIN, ATTACHMENT, SETOFF OR OTHERWISE.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered CARROLL FULMER & COMPANY, INC.,
in the presence of: a Florida corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC.
a North Carolina corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
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CAPITOL WAREHOUSE, INC.,
a Kentucky corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
SERVICE EXPRESS, INC.,
an Alabama corporation
By: /s/ Philip A. Belyew
Philip A. Belyew,
Chairman of the Board
"Debtor"
AMSOUTH BANK, a bank organized under
the laws of Alabama
By: /s/ Anthony Stiffler
Anthony Stiffler,
Vice President
"Secured Party"
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