EXHIBIT 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is entered into this 24th day
of June, 2004 by and between ODYSSEY MARINE EXPLORATION, INC., a Nevada
corporation ("Debtor"), and THE BANK OF TAMPA ("Secured Party").
1. SECURITY INTEREST
To secure payment and performance of the Obligations (as defined below),
Debtor grants Secured Party a security interest in all of the property
described below in which Debtor has or acquires an interest, wherever located,
whether now owned or hereafter acquired, ("Collateral"):
(a) All of the numismatic quality gold coins now or hereafter recovered
by Debtor from the shipwreck known as "SS Republic" (the "Coins"), as
specifically listed on Schedule 1 attached hereto, together with additions;
(b) All accounts, contract rights, documents, chattel paper (including
electronic chattel paper), instruments, and general intangibles, and all
returned or repossessed goods arising from sales of the Coins (the
"Accounts");
(c) All supporting obligations that support the payment or performance
of any of the Coins or Accounts ("Supporting Obligations");
(d) All proceeds of insurance policies insuring any of the Coins against
loss (whether or not the Secured Party is a loss payee or additional insured
thereof) and any indemnity, warranty or guaranty payable by reason of loss or
damage to or otherwise with respect to the Coins;
(e) All salvage rights of the Debtor with respect to its services in
recovering the Coins; and
(f) All proceeds of the foregoing and all rights and privileges incident
to, any of the foregoing.
The term "Obligations" is used herein in its most comprehensive sense and
includes (without limitation) any and all present and future debts,
obligations and liabilities of Debtor to Secured Party pursuant to that
certain Revolving Credit Agreement of even date herewith (the "Loan
Agreement") between Debtor and Secured Party, as the same may be amended,
renewed, modified or extended from time to time, and any and all other debts,
obligations, and liabilities of Debtor to Secured Party, heretofore, now or
hereafter made, incurred, or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, secured or unsecured, whether Debtor
is liable individually or jointly with others, whether for principal, interest
or other debts, obligations or liabilities, and whether or not any or all such
debts, obligations and liabilities are or become barred by any statute of
limitations or otherwise unenforceable, including (without limitation) all
obligations of Debtor under this Agreement, all obligations with respect to
overdrafts in deposit accounts, letters of credit and bankers' acceptances,
and interest rate swap, cap, floor, collar, option and other derivative
transactions, and including any of the foregoing that arise after the filing
of a petition by or against Debtor under the United States Bankruptcy Code.
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2. DEBTOR'S WARRANTIES
Debtor warrants to Secured Party that while any of the Obligations are
unpaid:
(a) Ownership. Debtor is the owner of the Collateral free of all
encumbrances and security interests except Secured Party's security interest
and Permitted Liens, as defined in the Loan Agreement.
(b) Other Financing. Unless waived by Secured Party in writing, no
financing statement (other than Secured Party's) is on file covering the
Collateral or its products or proceeds.
(c) Documents. If Collateral is represented or covered by documents of
title, Debtor is the owner of the documents, free of all encumbrances and
security interests other than Secured Party's security interest.
(d) Sale of Goods. Each account and chattel paper constituting
Collateral arose from a bona fide sale of goods, which have been delivered or
shipped to the account debtor and for which Debtor has genuine invoices,
shipping documents or receipts.
(e) Enforceability. Each account, contract right and chattel paper
constituting Collateral is genuine and (except as disclosed to Secured Party
in writing) enforceable against the account debtor according to its terms. It
and the transaction out of which it arose comply with all applicable laws and
regulations. The amount represented by Debtor to Secured Party as owing by
each account debtor is the amount actually owing and is not subject to setoff,
credit, allowance or adjustment, except discount for prompt payment, nor
(except as disclosed to Secured Party in writing) has any account debtor
returned the goods or disputed its liability. There has been no default as of
the date of this Agreement according to the terms of any Accounts or
Supporting Obligation and no step has been taken to foreclose the security
interest it evidences or otherwise enforce its payment. As of the date of
this Agreement Debtor has no notice or knowledge of anything which might
impair the credit standing of any account debtor.
(f) Authority to Contract. The execution and delivery of this Agreement
and any instruments evidencing Obligations will not violate or constitute a
breach of Debtor's articles of incorporation or bylaws or any agreement or
restriction to which Debtor is a party or is subject.
(g) Accuracy of Information. All information, certificates or
statements given to Secured Party pursuant to this Agreement shall be true and
complete in all material respects when given, except to the extent that such
information, certificate or statement is expressly given as of an earlier
date.
(h) Form of Organization; Names and Addresses. Debtor is a corporation
organized under the laws of the State of Nevada. The name of Debtor set forth
in this Agreement is the correct and exact name of Debtor as it appears in the
offices of the Nevada Secretary of State. Debtor does not do business under
any other name. The address appearing below Debtor's signature is Debtor's
chief executive office. Debtor shall advise Secured Party in writing at least
thirty (30) days before any change of name, identity, form of organization,
state of organization, or chief executive office. The address where the
Collateral will be kept is set forth in Exhibit A. No Collateral will be kept
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at any other location without the prior written consent of Secured Party, but
the parties intend that the Collateral, wherever located, is covered by this
Agreement.
(i) Environmental Laws. (i) To the knowledge of Debtor, no substances
or materials have been, are or will be stored, deposited, treated, recycled or
disposed of on, under or at any real estate now or at any time owned or
occupied by Debtor ("Property") which substances or materials, if known to be
present on, at or under the Property, would require cleanup, removal or some
other remedial action under any federal, state or local laws, regulations,
ordinances, codes or rules relating to the discharge of air pollutants, water
pollutants, or process wastewater or otherwise relating to hazardous or toxic
substances or materials ("Environmental Laws"), (ii) To the knowledge of
Debtor, there are no conditions existing currently or likely to exist during
the term of this Agreement which would subject Debtor to damages, penalties,
injunctive relief or cleanup costs under Environmental Laws, and (iii) Debtor
is not subject to any judgment, decree, order or citation relating to or
arising out of Environmental Laws.
3. SALE AND COLLECTIONS
(a) Proceeds of Collateral. So long as no default exists under any of
the Obligations or this Agreement, Debtor may sell the Coins in the ordinary
course of Debtor's business for cash or on terms approved by Secured Party
(which approval shall not be unreasonably withheld, conditioned or delayed),
at prices not less than the Release Prices set forth on Exhibit A. Unless
otherwise agreed by Secured Party, all proceeds of Collateral received by
Debtor shall be held by Debtor upon an express trust for Secured Party, shall
not be commingled with any other funds or property of Debtor, and shall be
turned over to Secured Party not later than the business day following the day
of their receipt. All proceeds received by Secured Party shall be applied
against the Obligations in accordance with the Loan Agreement.
(b) Verification and Notification. Secured Party may verify accounts,
chattel paper and contract rights in any manner, and Debtor shall assist
Secured Party in so doing. Secured Party may at any time and Debtor shall,
upon request of Secured Party, notify the account debtors to make payment
directly to Secured Party and Secured Party may enforce collection of, settle,
compromise, extend or renew the indebtedness of such account debtors. Until
account debtors are otherwise notified, Debtor, as agent of Secured Party,
shall make collections on the Collateral.
4. DEBTOR'S COVENANTS
Debtor agrees:
(a) Maintenance of Collateral. Debtor shall: maintain the Collateral
in salable condition and not permit its value to be materially impaired; keep
it free from all liens, encumbrances and security interests (other than
Secured Party's security interest and Permitted Liens (as defined in the Loan
Agreement)); defend it against all claims and legal proceedings by persons
other than Secured Party; pay and discharge when due all taxes, license fees,
levies and other charges upon it, other than for amounts contested in good
faith by appropriate proceedings; not sell, lease, license or otherwise
dispose of it or permit it to become a fixture or an accession to other goods,
except for sales of Coins authorized as provided in this Agreement; not permit
it to be used in violation of any applicable law, regulation or policy of
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insurance; and, as to Collateral consisting of instruments and chattel paper,
preserve rights in it against prior parties. Loss of or damage to the
Collateral shall not release Debtor from any of the Obligations.
(b) Insurance. Unless otherwise agreed in writing by Secured Party,
Debtor shall keep the Collateral and Secured Party's interest in it insured
under policies with such provisions, for such amounts and by such insurers as
shall satisfy the requirements of the Loan Agreement. Debtor assigns (and
directs any insurer to pay) to Secured Party the proceeds of all such
insurance and any premium refund, and authorizes Secured Party to endorse in
the name of Debtor any instrument for such proceeds or refunds and, at the
option of Secured Party, to apply such proceeds and refunds to any unpaid
balance of the Obligations whether or not due, and/or to restoration of the
Collateral, returning any excess to Debtor. Secured Party is authorized, in
the name of Debtor or otherwise, to make, adjust, settle claims under and/or
cancel any insurance on the Collateral.
(c) Maintenance of Security Interest. Where Collateral is in the
possession of a third party, Debtor will join with Secured Party in notifying
the third party of Secured Party's security interest and obtaining an
acknowledgement from the third party that it is holding the Collateral for the
benefit of Secured Party. Debtor will cooperate with Secured Party in
obtaining a Collateral Control Agreement in form and substance satisfactory to
Secured Party with respect to Collateral in the custody of any third party.
Debtor shall pay all expenses and, upon request, execute and deliver any
further documents and take any further actions reasonably deemed advisable by
Secured Party to preserve the Collateral or to establish, determine priority
of, perfect, continue perfected, terminate and/or enforce Secured Party's
interest in it or rights under this Agreement.
(d) Collateral Records and Statements. Debtor shall keep accurate and
complete records respecting the Collateral in such form as Secured Party shall
reasonably request. At such times as Secured Party may require, Debtor shall
furnish to Secured Party a statement certified by Debtor and in such form and
containing such information as may be prescribed by Secured Party, showing the
current status and value of the Collateral.
(e) Inspection of Collateral. At reasonable times and in a manner that
will not unreasonably interfere with normal business operations, Secured Party
may examine the Collateral and Debtor's records pertaining to it, wherever
located, and make copies of records. Debtor shall assist Secured Party in so
doing.
(f) Chattel Paper. Chattel Paper constituting Collateral shall be on
forms approved by Secured Party. Debtor shall promptly ▇▇▇▇ all such chattel
paper, and all copies, to indicate conspicuously the Secured Party's interest
and, upon request, deliver them to Secured Party.
(g) Modifications. Without the prior written consent of Secured Party
(which consent will not be unreasonably withheld, conditioned or delayed),
Debtor shall not alter, modify, extend, renew or cancel any Collateral.
(h) Returns and Repossessions. Debtor shall promptly notify Secured
Party of the return to or repossession by Debtor of any Collateral and Debtor
shall hold and dispose of them only as Secured Party directs.
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(i) Taxes and Other Charges. Debtor shall pay and discharge all lawful
taxes, assessments and governmental charges upon Debtor or against its
properties prior to the date on which penalties attach, unless and to the
extent only that such taxes, assessments and charges are contested in good
faith and by appropriate proceedings by Debtor.
5. RIGHTS OF SECURED PARTY
(a) Authority to Perform for Debtor. If Debtor fails to act as required
by this Agreement or the Obligations, Secured Party is authorized, in Debtor's
name or otherwise, to take any such action including, without limitation,
signing Debtor's name or paying any amount so required, and the cost shall be
one of the Obligations secured hereby and shall be payable by Debtor upon
demand with interest from the date of payment by Secured Party at the highest
rate then payable on the Obligations.
(b) Charging Debtor's Credit Balance. Without limiting the generality
of Section 1 above, Debtor grants Secured Party, as security for the
Obligations, a security interest and lien in any credit balance and other
money now or hereafter owed Debtor by Secured Party, including deposit
accounts and certificates of deposit, and, in addition, agrees that Secured
Party may, without prior notice or demand, charge against any such credit
balance or other money any amount owing upon the Obligations, whether due or
not.
(c) Power of Attorney. Debtor irrevocably appoints any officer of
Secured Party as Debtor's attorney, with power (exercisable at any time after
default) to receive, open and dispose of all mail addressed to Debtor; to
notify the Post Office authorities to change the address for delivery of all
mail addressed to Debtor to such address as Secured Party may designate; and
to endorse the name of Debtor upon any instruments which may come into Secured
Party's possession.
The power of attorney created by this section 5(c) is coupled with an
interest and may not be revoked by Debtor. All acts of such attorney are
ratified and approved. Such attorney is not liable for any act or omission or
for any error of judgment or mistake of fact or law taken without willful
misconduct.
(d) Nonliability of Secured Party. Secured Party has no duty to
protect, insure, collect or realize upon the Collateral or preserve rights in
it against prior parties. Debtor releases Secured Party from any liability
for any act or omission relating to the Obligations, the Collateral or this
Agreement, except Secured Party's willful misconduct.
(e) Financing Statements. Debtor authorizes Secured Party to prepare
and file financing statements describing the Collateral in such jurisdictions
as Secured Party deems appropriate.
(f) No Waiver. No delay on the part of the Secured Party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege
hereunder preclude other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein specified are
cumulative and not exclusive of any rights or remedies which the Secured Party
would otherwise have.
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6. DEFAULT
Upon the occurrence of any Event of Default, as defined in Article 8 of
the Loan Agreement or any other default under any instrument, document or
agreement evidencing or governing any of the Obligations, all of the
Obligations shall, at the option of Secured Party and without notice or
demand, become immediately payable; and Secured Party shall have all rights
and remedies for default provided by the Uniform Commercial Code, as well as
any other applicable law and the Obligations. With respect to such rights and
remedies:
(a) Repossession. To the extent permitted by applicable law, Secured
Party may enter into premises where any Collateral may be located, and may
take possession of Collateral, all without notice or hearing.
(b) Assembling Collateral. Secured Party may require Debtor to assemble
the Collateral and to make it available to Secured Party at any convenient
place designated by Secured Party. It is agreed that Secured Party will not
have an adequate remedy at law if this obligation is breached, and accordingly
that Debtor's obligation to assemble Collateral shall be specifically
enforceable.
(c) Notice of Disposition. Written notice, when required by law, sent
to any address of Debtor in this Agreement at least 10 calendar days (counting
the day of sending) before the date of a proposed disposition of the
Collateral is reasonable notice.
(d) Disposition. Secured Party may sell Collateral on credit (and
reduce the Obligations only when payment is actually received from the buyer)
at wholesale and with or without an agent or broker; and Secured Party may but
need not complete, process or repair any Collateral prior to disposition.
(e) Expenses and Application of Proceeds. Debtor shall reimburse
Secured Party for any expense incurred by Secured Party in protecting or
enforcing its rights under this Agreement before and after judgment including,
without limitation, reasonable attorneys' fees and legal expenses and all
expenses of taking possession, holding, preparing for disposition and
disposing of the Collateral. After deduction of such expenses, Secured Party
may apply the proceeds of disposition to the other Obligations in such order
and amounts as it elects, subject only to section 3(a) above.
(f) Waiver. Secured Party may permit Debtor to remedy any default
without waiving the default so remedied, and Secured Party may waive any
default without waiving any other subsequent or prior default by Debtor.
(g) No Obligation to Pursue Others. Secured Party has no obligation to
attempt to satisfy the Obligations by collecting them from any other person
liable for them and Secured Party may release, modify or waive any collateral
provided by any other person to secure any of the Obligations, all without
affecting Secured Party's rights against Debtor. Debtor waives any right it
may have to require Secured Party to pursue any third person for any of the
Obligations.
(h) Compliance with Other Laws. Secured Party may comply with any
applicable state or federal law requirements in connection with a disposition
of the Collateral, and such compliance will not be considered adversely to
affect the commercial reasonableness of any such disposition.
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(i) Warranties. Secured Party may sell or otherwise dispose of
Collateral without giving any warranties as to the Collateral and may
specifically disclaim any warranties of title or the like, all without being
deemed to have impaired the commercial reasonableness of any disposition of
Collateral.
(j) Sales on Credit. If Secured Party sells any of the Collateral on
credit, Debtor will be credited only with payments actually made by the
purchaser, received by Secured Party and applied to the indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral,
Secured Party may resell the Collateral and Debtor shall be credited with the
proceeds of such resale.
(k) No Marshalling. Secured Party shall have no obligation to marshal
any assets for the benefit of Debtor or any third party.
7. PERSONS BOUND
This Agreement benefits Secured Party, its successors and assigns,
including every holder or owner of any of the Obligations, binds the Debtor(s)
and their respective heirs, personal representatives and successors, and shall
bind all persons who become bound as a Debtor to this Agreement. Debtor may
not assign this Security Agreement without the prior written consent of
Secured Party.
8. INTERPRETATION
The validity, construction and enforcement of this Agreement are
determined and governed by the internal laws of the State of Florida. All
terms not otherwise defined have the meanings assigned to them by Articles 1
and 9 of the Uniform Commercial Code of the State of Florida, as it may be
amended, reenacted or otherwise in effect from time to time. Invalidity of
any provision of this Agreement shall not affect the validity of any other
provision. This Agreement supplements, and does not supersede or replace, any
previous security agreement between Debtor and Secured Party. In the event of
inconsistency, this Agreement shall control. Any amendment or modification of
this Security Agreement must be made in writing and signed by Secured Party
and Debtor.
9. CONSENT TO JURISDICTION
Debtor hereby consents to the exclusive jurisdiction of any state or
federal court situated in Hillsborough County, Florida, and waives any
objection based on lack of personal jurisdiction, improper venue or forum non
conveniens, with regard to any actions, claims, disputes or proceedings
relating to this Agreement, any Collateral, or any document delivered
hereunder or in connection herewith, or any transaction arising from or
connected to any of the foregoing. Debtor waives personal service of any and
all process, and consents to all such service of process made by mail or by
messenger directed to the address specified below. Nothing herein shall
affect the Secured Party's right to serve process in any manner permitted by
law, or limit the Secured Party's right to bring proceedings against Debtor or
its property or assets in the competent courts of any other jurisdiction or
jurisdictions.
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10. WAIVER OF JURY TRIAL
Debtor hereby waives any and all right to trial by jury in any action or
proceeding relating to this Agreement, any Collateral, or any document
delivered hereunder or in connection herewith, or any transaction arising from
or connected to any of the foregoing. Debtor represents that this waiver is
knowingly, willingly and voluntarily given.
11. LIMITATION OF LIABILITY
Debtor hereby waives any right it may now or hereafter have to claim or
recover from the Secured Party any consequential, exemplary or punitive
damages.
IN WITNESS WHEREOF, this Agreement is executed by the Debtor as of the
date first above written.
DEBTOR:
ODYSSEY MARINE EXPLORATION, INC.,
a Nevada corporation
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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