SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this August 26, 2005, by SOUTHEAST POWER
CORPORATION, a Florida corporation (herein called "Debtor"), having an address
of 1684 West Hibiscus Blvd., Melbourne, Florida 32901-2631, in favor of BRANCH
BANKING AND TRUST COMPANY (herein, together with its successors and assigns,
called "Secured Party"), having an address of 6430 N. Wickham Road, Melbourne,
Florida 32940.
In consideration of loans, advances or other financial accommodations made
or to be made by Secured Party to Debtor and for other value received by Debtor,
the parties hereto, intending to be legally bound, agree as follows:
l. Security Interest. Debtor grants to Secured Party a continuing security
interest (the "Security Interest") in all equipment described on Schedule One
attached hereto and hereby incorporated herein (the "Collateral").
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. Accordingly, this Security Agreement and the Security
Interest created hereby secures payment of that certain: (i) revolving line of
credit promissory note of Debtor to Secured Party, dated of even date herewith
in the original principal amount of $2,000,000.00 and all obligations of any
kind owing by Debtor to Secured Party whether now existing or hereafter
incurred, direct or indirect, primary or secondary, sole or joint and several,
contingent or non-contingent, liquidated or non-liquidated, or otherwise,
arising from loans, advances, 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 or entirely
extinguished and new obligations thereafter incurred, including, without
limitation, any sums advanced and any expenses or obligations incurred by
Secured Party pursuant to this Security Agreement (including attorneys' fees and
costs as provided herein) 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 source whatsoever and all extensions, renewals
and modifications thereof (collectively, the "Indebtedness").
3. Representations and Warranties of Debtor. Debtor represents and warrants
and so long as this Security Agreement continues in force as provided in
paragraph 7 hereof shall be deemed continuously to represent and warrant that:
(a) Debtor is the sole and absolute owner of the Collateral free of
all security interests and other encumbrances or claims whatsoever except the
Security Interest.
(b) Debtor is authorized to enter into this Security Agreement and
into the transactions evidenced by the Collateral.
(c) The Collateral is used or bought for use primarily for business
purposes.
(d) If the Collateral is or will become a fixture, it will be affixed
to real property located at 1684 West Hibiscus Blvd., Melbourne, Florida
32901-2631.
(e) By virtue of this Security Agreement and the perfection of the
Security Interest as provided in paragraph 1 hereof, Secured Party has a valid,
enforceable, perfected and first priority security interest in the Collateral.
4. General Covenants of Debtor. So long as this Security Agreement
continues in force as provided in paragraph 7 hereof, Debtor: (a) will defend
the Collateral against the claims and demands of all other persons at any time
claiming the same; keep the Collateral free from all security interests or other
encumbrances or claims whatsoever except the Security Interest and will not
sell, transfer, assign, deliver or otherwise dispose of any of the Collateral or
any interest therein without the prior written consent of Secured Party; (b)
will not without the prior written consent of Secured Party create in favor of
anyone other than Secured Party a security interest in any of the Collateral;
(c) will keep the Collateral at the addresses specified in 3(d) above until
Secured Party is notified in writing of any change in its location within the
State of Florida but Debtor will not remove the Collateral from the State of
Florida or change the location of Debtor's chief executive offices without the
prior 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 at
any time, wherever located; (d) will keep the Collateral in good condition and
repair and will not use the Collateral in violation of any provisions of this
Security Agreement, of any applicable statute, regulation or ordinance or of any
policy of insurance insuring the Collateral; (e) will notify Secured Party
promptly in writing of any change in Debtor's address, name or identity
specified above, of any change in the location or of any additional locations at
which the Collateral is kept and of any change in the address at which records
concerning the Collateral are kept; (f) in connection herewith will execute and
deliver to Secured Party such financing statements and other documents, pay all
costs of title searches and filing financing statements and other documents in
all public offices requested by Secured Party and take such other action as
Secured Party may deem necessary
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or advisable to perfect the Security Interest created by this Security
Agreement; (g) will pay or cause to be paid all taxes, assessments and other
charges of every nature which may be levied or assessed against the Collateral
or against any note or other instrument evidencing the Indebtedness; (h) will
keep the Collateral insured in amounts not less than the full insurable value
thereof for the benefit of Secured Party (to whom loss shall be payable by New
York Standard or Union Standard endorsements), in such companies and against
such risks as may be satisfactory to or required by Secured Party (and each
policy shall specifically provide that it may not be cancelled or modified
adversely to the interests of Secured Party without 30 days prior written notice
to Secured Party), pay the cost of all such insurance, and deliver certificates
evidencing such insurance to Secured Party, and Debtor assign to Secured Party
all right to receive proceeds of such insurance; (i) will prevent the Collateral
or any part thereof from being or becoming an accession to other goods not
covered by this Security Agreement; (j) unless the Collateral is specified in
paragraph 3(d) as a fixture, will prevent the Collateral or any part of the
Collateral from being or becoming a fixture; and (k) if any certificate of title
may be issued with respect to any of the Collateral, Debtor will cause the
Security Interest granted hereunder to Secured Party to be properly noted on the
certificate and will deliver the original certificate to Secured Party.
5. Default. (a) Any of the following events or conditions shall constitute
an event of default ("Event of Default") hereunder: (i) non-payment when due
whether by acceleration or otherwise of the principal of, or interest on any
Indebtedness, time being of the essence, or failure of any Obligor (which term
shall mean and include each Debtor and any endorser, surety, guarantor or other
party liable for payment of, or pledging collateral as security for, any
Indebtedness) to pay any sum due under any note or other instrument evidencing
the Indebtedness; (ii) failure by any Obligor to perform any obligations under
this Security Agreement or any other agreement between any Obligor and Secured
Party; (iii) filing of any petition under the Bankruptcy Code, or any similar
federal or state statute, by or against any Obligor, or the insolvency of any
Obligor; (iv) making a general assignment by any Obligor for the benefit of
creditors, appointment of or taking possession by a receiver, trustee, custodian
or similar official for any Obligor or for any assets of any such Obligor, or
institution by or against any Obligor of any kind of insolvency proceedings or
any proceeding for the dissolution or liquidation of any Obligor or transfer of
a substantial part of the property of any Obligor; (v) material falsity in any
certificate, statement, representation, warranty or audit at any time furnished
to Secured Party by or on behalf of any Obligor, pursuant to or in connection
with this Security Agreement or otherwise (including warranties in this Security
Agreement) and including any omission to disclose any substantial contingent or
liquidated liabilities or any material adverse change in any facts disclosed by
any certificate, statement, representation, warranty, or audit furnished to
Secured Party; (vi) issuing of any writ of attachment or writ of garnishment, or
filing of any lien, against the Collateral or the property of any Obligor; (vii)
taking of possession of the Collateral or of any substantial part of the
property of any Obligor at the instance of any governmental authority; (viii)
dissolution, merger, consolidation or reorganization of any Obligor; (ix)
assignment or sale by Debtor of any equity in any of the Collateral without the
prior written consent of Secured Party; (x) cancellation of any guaranty with
respect to any Indebtedness without the prior written consent of Secured Party.
(b) Secured Party may declare all or part of the Indebtedness to be
immediately due and payable without notice or demand upon the happening of any
Event of Default or if the Secured Party deems itself insecure. This paragraph
is not intended to affect any rights of Secured Party with respect to any
Indebtedness which may now or hereafter be payable on demand.
(c) Upon the happening of any Event of Default, Secured Party's rights and
remedies with respect to the Collateral shall be those of a secured party under
the Uniform Commercial Code and any other applicable law from time to time in
effect. 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, the Debtor, at its expense, will assemble
the Collateral and make it available to Secured Party at a place to be
designated by Secured Party.
(d) Debtor agree 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 five days before the action to Debtor's address
as specified in this Security 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.
(e) Debtor jointly and severally, shall pay all costs and expenses incurred
by the Secured Party in enforcing this Security Agreement, realizing upon any
Collateral and collecting any Indebtedness, including reasonable attorneys' fees
whether suit is brought or not and whether incurred in connection with
collection, trial, appeal, Bankruptcy or otherwise, all of which costs and
expenses shall be secured hereby, and shall be liable for any deficiencies in
the event the proceeds of disposition of the Collateral do not satisfy the
Indebtedness in full. All such proceeds shall be applied without marshalling of
assets (i) first to the expenses of retaking and preparing the Collateral for
sale, including expenses of sale, (ii) next to other costs and attorneys' fees
incurred by Secured Party in exercising its rights and remedies under this
Security
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Agreement, and (iii) finally to the payment of interest and/or principal due on
the Indebtedness, in such order and to such Indebtedness as Secured Party may
determine.
6. Miscellaneous. (a) Debtor authorizes Secured Party without notice to
Debtor and without affecting Debtor's obligations hereunder from time to time
(i) to renew, extend, increase, accelerate or otherwise change the time for
payment of the principal of or the interest on the Indebtedness or any part
thereof; (ii) 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 the Collateral or any part
thereof; (iii) to accept and hold any 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 or any party
in any way obligated to pay the Indebtedness or any part thereof; and (iv) to
waive or fail to enforce any of Secured Party's rights against Debtor or any
such collateral or the Collateral; and (v) upon the occurrence of any Event of
Default to direct the order or manner of the disposition of the Collateral and
any other collateral and the enforcement of any endorsements and guaranties
relating to the Indebtedness or any part thereof as Secured Party in its sole
discretion may determine.
(b) Debtor authorize Secured Party at Debtor's expense to file any
financing statement or statements relating to the Collateral (without Debtor's
signature thereon) which Secured Party deems appropriate, and Debtor irrevocably
appoint Secured Party as Debtor's attorney-in-fact to execute any such financing
statement or 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. At the option of Secured Party, this Security Agreement, or a
photocopy thereof, shall be deemed to be a financing statement authorized to be
filed in such jurisdictions where such filing will be given effect.
(c) Debtor hereby irrevocably consent to any act by Secured Party or its
agents in entering upon any premises for the purpose of either (1) inspecting
the Collateral or (2) 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.
(d) Before or after any Event of Default Secured Party may notify any party
obligated to pay proceeds of the existence of the Security Interest and may also
direct them to make payments of all proceeds to Secured Party.
(e) 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.
(f) Debtor authorize 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 irrevocably
appoints Secured Party as Debtor's attorney-in-fact to adjust and settle any
insurance claim relating to the Collateral and to endorse any check or draft
representing insurance proceeds.
(g) (i) As further security for the Indebtedness, Debtor grants to Secured
Party a security interest in all property of the Debtor now or at any time
hereafter in the possession of Secured Party in any capacity whatsoever,
including, but not limited to, any balance or share of any deposit, trust or
agency account; and with respect to all of such property, Secured Party shall
have the same rights as it has with respect to the Collateral. (ii) Without
limiting any other right of Secured Party, whenever Secured Party has the right
to declare any Indebtedness to be immediately due and payable (whether or not it
has so declared), Secured Party may set off against the Indebtedness all monies
then owed to Debtor by Secured Party in any capacity whether due or not and
Secured Party shall be deemed to have exercised its right of set off immediately
at the time its right to such election accrues.
(h) 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 jointly and severally, shall forthwith upon demand reimburse Secured
Party for any expense incurred by Secured Party in doing so, together with
interest thereon at the highest rate permitted by applicable law.
(i) 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 future 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 Security Agreement and under the
Uniform Commercial Code shall be deemed cumulative.
(j) 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
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chattel paper in Secured Party's possession 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 the Debtor is in any way
liable and waives notice of any other action by Secured Party.
(k) The rights and benefits of Secured Party under this Security Agreement
shall, if Secured Party agrees, inure to any party acquiring an interest in the
Indebtedness or any part thereof. Secured Party may from time to time honor
drafts or otherwise advance funds to permit Debtor to purchase additional
equipment. Any equipment purchased with such funds shall become part of the
Collateral. Secured Party may from time to time furnish Debtor with memoranda or
wholesale ledger sheets describing equipment for which it has advanced funds.
All inventory so described shall conclusively be deemed part of the Collateral
unless Debtor notifies Secured Party within five days of items which are not
properly part of the Collateral. Memoranda or wholesale ledger sheets may be
furnished to Debtor in the same manner as other notices under paragraph 8(d) of
this Security Agreement.
(l) The terms "Secured Party" and "Debtor" as used in this Security
Agreement include the heirs, personal representatives, and successors or assigns
of those parties. The terms "inventory", "accounts", "general intangibles" and
"chattel paper" as used in this Security Agreement shall have the meanings given
to such terms in the Florida Uniform Commercial Code. Whenever used herein, the
singular number shall include the plural, the plural the singular, and the use
of any gender shall be applicable to all genders.
(m) If more than one Debtor executes this Security Agreement, the terms
"Debtor" includes each of the Debtors, as well as all of them, and their
obligations under this Security Agreement shall be joint and several.
(n) This Security Agreement is a continuing agreement which shall remain in
force until it is marked "Cancelled" and returned to Debtor by Secured Party
upon payment in full of all Indebtedness (and no further right on the part of
the Debtor to obtain any advances or other disbursements from Secured Party)
and, until such time, this Security Agreement shall continue to secure all of
the Indebtedness and any extensions, renewals or modifications of the
Indebtedness.
(o) This Security Agreement shall be construed under and governed by the
Florida Uniform Commercial Code and any other applicable Florida laws in effect
from time to time.
(p) This Security Agreement constitutes the complete agreement of the
parties in regard to the matters set forth herein and this Security Agreement
may not be modified or amended and no provision hereof shall be waived except by
a writing signed by the party to be charged with such modification, amendment or
waiver.
7. Waiver. The Debtor hereby waives any rights Debtor may have to notice
and a hearing before possession or sale of Collateral is effected by Secured
Party by self-help, replevin, attachment or otherwise. Debtor further waives any
right to a trial by jury in any civil action arising out of, or based upon, this
Security Agreement or the Collateral.
8. Waiver of Venue and Jurisdiction. Debtor, whether or not a Florida
resident, hereby waives any plea or claim of lack of personal jurisdiction or
improper venue in any action, suit or proceeding brought upon to enforce this
Security Agreement or the Debtor's obligations and liabilities hereunder. The
Debtor specifically authorize any such action to be instituted and prosecuted in
any Circuit Court in Florida, or United States District Court of Florida, at the
election of Secured Party, where venue would lie and be proper against any
Debtor.
9. Waiver of Jury Trial. SECURED PARTY AND DEBTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS HYPOTHECATION SECURITY AGREEMENT AND ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTY ENTERING
INTO THIS AGREEMENT.
Signatures on following page
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IN WITNESS WHEREOF, Debtor have duly executed this Security Agreement as of
the date first above written.
Signed, sealed and delivered
in the presence of: "BORROWER"
SOUTHEAST POWER CORPORATION,
a Florida corporation
/s/ BARRY FORBES By: /s/ STEPHEN R. WHERRY
- ------------------------------------ ----------------------
Print Name: BARRY FORBES STEPHEN R. WHERRY
------------------------
Witness Treasurer
/s/ KATHLEEN LOWRY
Print Name: KATHLEEN LOWRY
Witness
"LENDER"
BRANCH BANKING AND TRUST COMPANY
/s/ STEPHEN R. WHERRY By: /s/ BARRY FORBES
----------------------- -----------------
Print Name: STEPHEN R. WHERRY BARRY FORBES
-------------------------
Witness Senior Vice President
/s/ KATHLEEN LOWRY
- ------------------------------------
Print Name: KATHLEEN LOWRY
------------------------
Witness
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