COMMERCIAL SECURITY AGREEMENT
THIS COMMERCIAL SECURITY AGREEMENT is entered into between TECHDYNE, INC.,
a Florida corporation ("Grantor") in favor of ▇▇▇▇▇▇▇ BANK, N.A. (referred
to below as "Lender").
For valuable consideration, Grantor grants to Lender a security interest
in the Collateral to secure the Indebtedness and agrees that Lender shall
have the rights stated in this Agreement with respect to the Collateral,
in addition to all other rights which Lender may have by law.
1. DEFINITIONS. The following words shall have the following meanings when
used in this Agreement. Terms not otherwise defined in this Agreement shall
have the meanings attributed to such terms in the Uniform Commercial Code.
All references to dollar amounts shall mean amounts in lawful money of the
United States of America.
(a) Agreement. The word "Agreement" means this Commercial Security
Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules
attached to this Commercial Security Agreement from time to time.
(b) Collateral. The word "Collateral" means any and all property
which is now or hereafter owned by the Grantor or in which the Grantor
now has or hereafter acquires an interest, whether such property is
now existing or hereafter made, constructed, created or arising, in-
cluding, without limitation: (i) all tangible property wherever
located, including, without limitation, all goods, inventory, equip-
ment, fixtures and personal property, and (ii) all intangible personal
property, including without limitation, (A) any and all accounts,
contract rights, book debts, checks, notes, drafts, acceptances, and
any and all amounts due to Grantor from a factor or other forms of
obligations and receivables, now existing or hereafter arising, (B)
any and all of Grantor's instruments, documents, and other writings
of any type, (C) any and all of the Grantor's general intangibles,
(D) any and all chattel paper, and (E) any and all tradenames, trade-
marks, and logos. Without limiting the generality of the foregoing,
the word "Collateral" includes all the following, whether now owned
or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(1) All attachments, accessions, accessories, tools, parts, sup-
plies, increases, and additions to and all replacements of and
substitutions for any property described above;
(2) All products and produce of any of the property described
in this Collateral section;
(3) All accounts, contract rights, general intangibles, instru-
ments, rents, monies, revenues, issues, profits, payments, and
all other rights, arising out of a sale, lease, trade, exchange
or other disposition of any of the property described in this
Collateral section;
(4) All proceeds (including insurance proceeds) from the sale,
destruction, loss, condemnation or other disposition of any of
the property described in this Collateral section;
(5) All proceeds, refunds or rebates from the cancellation of
any insurance policies or any of the property described in this
Collateral section or from any warranty, service, disability or
credit insurance product or policy for Grantor, for the benefit
of Grantor or for any of the property described in this Collateral
section; and
(6) All records and data relating to any of the property de-
scribed in this Collateral section, whether in the form of a
writing, photograph, microfilm, microfiche, or electronic media,
together with all of Grantor's right, title, and interest in and
to all computer software required to utilize, create, maintain,
and process any such records or data on electronic media.
(c) Accounts. The word "accounts" means all accounts, instruments,
documents, chattel paper, reimbursements and obligations in any form
owing to Grantor arising out of the sale or lease of goods or the
rendition of services by Grantor whether or not earned by performance;
all credit insurance, guaranties, letters of credit, advice of credit,
and other security for any of the foregoing; all merchandise returned
to or reclaimed by Grantor; and Grantor's books relating to any of the
foregoing. For purposes of this Agreement, Grantor's grant of accounts
to Lender as Collateral includes an assignment of all accounts to
Lender.
(d) Equipment. The word "equipment" means all equipment, fixtures,
machinery, machine tools, office equipment, furniture, furnishings,
motors, motor vehicles, tools, dies, parts, jigs, goods, and all
improvements thereto, and all supplies used or to be used in connec-
tion therewith, including, without limitation, each of the items of
equipment set forth on any schedule of equipment that is either now
or in the future delivered by Grantor to Lender.
(e) General Intangibles. The words "general intangibles" mean all
general intangibles, choses in action, causes of action, and all other
personal property of every kind and nature (other than goods and ac-
counts) including, without limitation, patents, trademarks, trade
names, service marks, copyrights, and applications for any of the
above; and goodwill, trade secrets, licenses, franchises, rights
under agreements, deposit accounts, tax refunds, tax refund claims,
moneys due from pension funds, governmental reimbursements and
Grantor's books relating to any of the foregoing.
(f) Inventory. The word "inventory" means any and all goods, wares,
merchandise, and other tangible personal property, including raw
materials, work in process, supplies and components, and finished
goods, packing and shipping materials, and all documents of title,
whether negotiable or nonnegotiable, representing any of the foregoing.
(g) Event of Default. The words '"Event of Default" mean and include
without limitation any of the Events of Default set forth below in the
section titled "Events of Default."
(h) Grantor. The word "Grantor" means TECHDYNE, INC., and its suc-
cessors and assigns.
(i) Guarantor. The word "Guarantor" means MEDICORE, INC., a Florida
corporation, and all other guarantors, sureties, and accommodation
parties in connection with the Indebtedness.
(j) Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note, including all principal and interest, together
with all other indebtedness and costs and expenses for which Grantor
is responsible under this Agreement, Swap Agreements or under any of
the Related Documents, together with all other obligations, debts and
liabilities, plus interest thereon, of Grantor, or any one or more of
them, to Lender, as well as all claims by Lender against Grantor,
whether existing now or later; whether they are voluntary or involun-
tary, due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated; whether Grantor may be liable individually
or jointly with others; whether Grantor may be obligated as guarantor,
surety, accommodation party or otherwise; whether recovery upon such
indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such indebtedness may be or hereafter may
become otherwise unenforceable.
(k) Lender. The word "Lender" means ▇▇▇▇▇▇▇ BANK, N.A., its suc-
cessors and assigns.
(l) Note. The word "Note" means the note of even date herewith in
the principal amount of $1,500,000 from Grantor to Lender, together
with all renewals of, extensions of, modifications of, refinancings
of, consolidations of and substitutions for the note.
(m) Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, agreements not to encumber, swap agreements,
and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
(n) Swap Agreements. The words "Swap Agreements" mean and include,
collectively, an ISDA Master Agreement dated as of December 29, 1997,
between Grantor and Lender, any other or additional swap agreements
(as defined in 11 U.S.C. 101) between Grantor and Lender or any of
its affiliates, and all other interest rate swap documents, whether
now or hereafter existing, between Grantor and Lender or any of its
affiliates.
2. OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as
follows:
(a) No Merger; Name Change, Etc. Except as disclosed in writing
delivered to Lender; (i) no entity has merged into Grantor or been
consolidated, with Grantor, and Grantor's business structure and
entity has not changed; (ii) no entity has sold substantially all of
its assets to Grantor or sold assets to Grantor outside the ordinary
course of such seller's business at anytime in the past; and (iii)
Grantor has not changed its name or identity or used any new trade
name or merged or consolidated with any other entity.
(b) Taxes. All assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against
Grantor or any of its property have been paid in full before delin-
quency or before the expiration of any extension period; and Grantor
has made due and timely payment or deposit of all federal, state, and
local taxes, assessments, or contributions required of it by law,
except only for items that Grantor is currently contesting diligently
and in good faith and that have been fully disclosed in writing to
Lender.
(c) Perfection of Security Interest. Grantor agrees to execute such
financing statements and to take whatever other actions are requested
by Lender to further grant, to perfect and to continue Lender's
security interest in the Collateral. Upon request of Lender, Grantor
will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Grantor will note Lender's interest
upon any and all chattel paper if not delivered to Lender for posses-
sion by Lender. Grantor hereby makes, constitutes and appoints Lender
as its irrevocable true and lawful attorney-in-fact for the purpose
of executing any documents necessary to perfect or to continue the
security interest granted in this Agreement. Any person dealing with
Grantor shall be entitled to rely conclusively on any written or oral
statement of Lender that this power of attorney is in effect. Lender
may at any time, and without further authorization from Grantor, file
a carbon, photographic or other reproduction of any financing statement
or of this Agreement for use as a financing statement. Grantor will
reimburse Lender for all expenses for the perfection and the continua-
tion of the perfection of Lender's security interest in the Collateral.
Grantor promptly will notify Lender of any change in Grantor's name
including any change to the assumed business names of Grantor. This
is a continuing Security Agreement and will continue in effect even
though all or any part of the Indebtedness is paid in full and even
though for a period of time Grantor may not be indebted to Lender.
(d) No Violation. The execution and delivery of this Agreement will
not violate any law or agreement governing Grantor or to which Grantor
is a party, and its certificate or articles of incorporation and
bylaws do not prohibit any term or condition of this Agreement.
(e) Enforceability of Collateral. To the extent the Collateral con-
sists of accounts, contract rights, chattel paper, or general intan-
gibles, the Collateral is enforceable in accordance with its terms,
is genuine, and complies with applicable laws concerning form, content
and manner of preparation and execution, and all persons appearing to
be obligated on the Collateral have authority and capacity to contract
and are in fact obligated as they appear to be on the Collateral. At
the time any account becomes subject to a security interest in favor
of Lender, the account shall be a good and valid account representing
an undisputed, bona fide indebtedness incurred by the account debtor,
for merchandise held subject to delivery instructions or theretofore
shipped or delivered pursuant to a contract of sale, or for services
theretofore performed by Grantor with or for the account debtor; there
shall be no setoffs or counterclaims against any such account; no
agreement under which any deductions or discounts may be claimed shall
have been made with the account debtor except those disclosed to Lender
in writing.
(f) Aging Reports. Unless otherwise waives or modified in writing by
Lender, Grantor shall from time to time hereafter, but not less
frequently than quarterly, execute and deliver to Lender, a detailed
aging of accounts by total, a summary aging of accounts by account
debtor, a reconciliation statement, and an accounts payable schedule.
(g) Records. Grantor will keep or will cause to be kept, accurate
and complete records of the accounts and will deliver such records and
other financial information to Lender as are requested, and that Lender
or its designee shall have the right at any time upon request to call
Grantors place(s) of business at intervals solely determined by Lender,
and without hindrance or delay, inspect, audit, make test verifica-
tions, send verification of an account to any account debtor and
otherwise check and make copies of books, records, journals, orders,
receipts, correspondence and other data related to the accounts or
the processing or collection thereof.
(h) Instruments. If any account shall be evidenced by a promissory
note, trade acceptance or any other instrument for the payment of
money, Grantor upon Lender's request, will promptly deliver same to
Lender, properly endorsed to Lender's order. Regardless of the form
of such endorsement, Grantor hereby waives presentment, demand,
notice of dishonor, protest and notice of protest and all other
notices to which Grantor might be entitled.
(i) Inventory Reports. To the extent the Collateral consists of in-
ventory, unless otherwise waived or modified in writing by Lender,
Grantor shall from time to time but not less than quarterly execute
and deliver to Lender no later than the 15th day of each quarter
during the term of this Agreement an inventory report, acceptable
to Lender specifying Grantor's cost and the resale price of Grantor's
raw materials, work in process, and finished goods and such other
information as Lender may reasonably request.
(j) Removal of Collateral. Grantor shall keep the Collateral (or to
the extent the Collateral consists of intangible property such as
accounts, the records concerning the Collateral) at the locations
identified in Exhibit "A" attached hereto or at such other locations
as are acceptable to Lender. Except in the ordinary course of its
business, including the sale of inventory, Grantor shall not remove
the Collateral from its existing locations without the prior written
consent of Lender. To the extent that the Collateral consists of
vehicles, or other titled property Grantor shall not take or permit
any action which would require application for certificates of title
for the vehicles outside the State of Florida, without the prior
written consent of Lender.
(k) Transactions Involving Collateral. Except for inventory sold or
accounts collected in the ordinary course of Grantor's business,
Grantor shall not sell, offer to sell, consign or otherwise transfer
or dispose of the Collateral. While Grantor is not in default under
this Agreement, Grantor may sell inventory, but only in the ordinary
course of its business and only to buyers who qualify as a buyer in
the ordinary course of business. A sale in the ordinary course of
Grantor's business does not include a transfer in partial or total
satisfaction of a debt or any bulk sale. Grantor shall not pledge,
mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than
the security interest provided for in this Agreement, without the
prior written consent of Lender. This includes security interests
even if junior in right to the security interests granted under this
Agreement. Unless waived by Lender, all proceeds from any disposition
of the Collateral (for whatever reason) shall be held in trust for
Lender and shall not be commingled with any other funds; provided
however, this requirement shall not constitute consent by Lender to
any sale or other disposition. Upon receipt, Grantor shall immediately
deliver any such proceeds to Lender.
(l) Title. Grantor represents and warrants to Lender that it holds
good and marketable title to the Collateral, free and clear of all
liens and encumbrances except for the lien of this Agreement. No
financing statement covering any of the Collateral is on file in any
public office other than those which reflect the security interest
created by this Agreement or to which Lender has specifically
consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons. Upon Lender's
request, if Grantor now or hereafter has any vehicle or equipment for
which a certificate of title has been or will be issued, Grantor shall
immediately deliver to Lender, properly endorsed, each certificate of
title for such vehicle or equipment for the lien of Lender to be
recorded.
(m) Maintenance and Inspection of Collateral. Grantor shall maintain
all tangible Collateral in good operating condition and make all
necessary repairs to preserve the Collateral's value. Grantor will
not commit or permit damage to or destruction of the Collateral or
any part of the Collateral. Lender and its designated representatives
and agents shall have the right at all reasonable times to examine,
inspect, test, and audit the Collateral wherever located.
(n) Notice. At least thirty (30) days prior to the occurrence of any
of the following events, Grantor will deliver to Lender written notice
of such impending events: (i) any addition, deletion or a change in
Grantor's place(s) of business and/or the location(s) of the Col-
lateral; or (ii) any addition, deletion or change in Grantor's name,
any doing business as name, trade name, fictitious name, identity or
legal structure.
(o) Taxes, Assessments and Liens. Grantor will pay when due all
taxes, assessments and liens upon it and the Collateral, its use or
operation, upon this Agreement, upon any promissory note or notes
evidencing the Indebtedness, or upon any of the other Related Docu-
ments. Grantor may withhold any such payment or may elect to contest
any lien if Grantor is in good faith conducting an appropriate pro-
ceeding to contest the obligation to pay and so long as Lender's
interest in the Collateral is not jeopardized in Lender's sole
opinion. If the Collateral is subjected to a lien which is not dis-
charged within thirty (30) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfac-
tory to Lender in an amount adequate to provide for the discharge of
the lien plus any interest, costs, reasonable attorneys' fees or
other charges that could accrue as a result of foreclosure or sale.
Grantor will, in the event of appropriation or taking of all or any
part of the Collateral, give Lender prompt written notice thereof.
Lender shall be entitled to receive directly, and Grantor shall
promptly pay over to Lender, any awards or other amounts payable with
respect to such condemnation, requisition or other taking and in its
sole discretion may apply the proceeds as it deems best without regard
to if an Event of Default has or has not occurred.
(p) Accounting System. Grantor at all times hereafter shall maintain
a consistent system of accounting, with ledger and account cards and/or
computer tapes, disks, printouts, and records that contain information
pertaining to the Collateral that may from time to time be requested
by Lender. Grantor shall not modify or change its method of accounting
or enter into any agreement hereafter with any third-party accounting
firm and/or service bureau for the preparation and/or storage of
Grantor's accounting records without said accounting firm's and/or
service bureau's agreeing to provide to Lender information regarding
the Collateral and Grantor's financial condition.
(q) Compliance With Governmental Requirements. Grantor shall comply
promptly with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to
the ownership, production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or regula-
tion and withhold compliance during any proceeding, including appro-
priate appeals, so long as Lender's interest in the Collateral, in
Lender's opinion, is not jeopardized.
(r) Collateral Value. If Lender deems the value of the Collateral to
be threatened by any out of the ordinary loss, dissipation, destruc-
tion, damage or other cause, or if the Collateral is decreasing in
value, thereupon, or at anytime thereafter, Grantor upon demand by
Lender agrees to forthwith deposit with Lender, additional collateral
to the satisfaction of Lender.
(s) Hazardous Substances. The terms "hazardous waste," "hazardous
substance," "disposal," release," and "threatened release," as used
in this Agreement, shall have the same meanings as set forth in the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No.
99099 (▇▇▇▇"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act,
49 U.S.C. Section 6901, et seq., or other applicable state or Federal
laws, rules, or regulations adopted pursuant to any of the foregoing.
Except as disclosed to and acknowledged by Lender in writing, Grantor
represents and warrants that: (i) During the period of Grantor's
ownership of Grantor's properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened
release of any hazardous waste or substance by any person on, under,
or about any of the properties. (ii) Grantor has no knowledge of, or
reason to believe that there has been (A) any use, generation, manu-
facture, storage, treatment, disposal, release, or threatened release
of any hazardous waste or substance by any prior owners or occupants
of any of the properties, or (B) any actual or threatened litigation
or claims of any kind by any person relating to such matters; (iii)
Neither Grantor nor any tenant, contractor, agent or other authorized
user of any of the properties shall use, generate, manufacture, store,
treat, dispose of, or release any hazardous waste or substance on,
under, or about any of the properties and any such activity shall be
conducted in compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without limitation those
laws, regulations and ordinances described above. Grantor authorizes
Lender and its agents to enter upon the properties to make such
inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be for Lender's purposes
only and shall not be construed to create any responsibility or liabil-
ity on the part of Lender to Grantor or to any other person. The
representations and warranties contained herein are based on Grantor's
due diligence in investigating the Collateral and the properties for
hazardous waste. Grantor hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event
Grantor becomes liable for cleanup or other costs under any such laws,
and (2) agrees to fully and promptly pay, perform, discharge and
defend, indemnify and hold harmless Lender against any and all claims,
orders, demands, causes of action, proceedings, judgments, losses,
liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of
this section of this Agreement or as a consequence
of any use, generation, manufacture, storage, disposal, release or
threatened release, whether occurring prior to or after Grantor's
ownership or interest in the properties, whether or not the same was
or should have been known to Grantor. The provisions of this section
of this Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the satisfaction of this
Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
(t) Environmental Compliance and Reports. Grantor shall comply in all
respects with all environmental protection federal, state and local
laws, statutes, regulations and ordinances; not cause or permit to
exist, as a result of an intentional or unintentional action or
omission on its part or on the part of any third party, on property
owned and/or occupied by Grantor, any environmental activity where
damage may result to the environment, unless such environmental
activity is pursuant to the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within thirty (30) days
after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter, or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional
action or omission on Grantor's part in connection with any environ-
mental activity whether or not there is damage to the environment
and/or other natural resources.
(u) Maintenance of Casualty Insurance. Grantor shall procure and
maintain all risks insurance, including without limitation fire, theft
and liability coverage of the kinds and in amounts customarily insured
against by businesses in the same or similar business, together with
business interruption insurance and such other insurance as Lender
may require with respect to the Collateral, in form, coverages and
basis reasonably acceptable to Lender and issued by a company or
companies reasonably acceptable to Lender. Grantor, upon request of
Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished
without at least thirty (30) days' prior written notice to Lender and
not including any disclaimer of the insurer's liability for failure
to give such a notice. In connection with all policies covering assets
in which Lender holds or is offered a security interest, Grantor will
provide Lender with such lender loss payable or other endorsements as
Lender may require. If Grantor at any time fails to obtain or maintain
any insurance as required under this Agreement, Lender may (but shall
not be obligated to) obtain such insurance as Lender deems appropriate,
including if it so chooses "single interest insurance," which will
cover only Lender's interest in the Collateral.
(v) Application of Insurance Proceeds. Grantor shall promptly notify
Lender of any loss or damage to the Collateral. Lender may make proof
of loss if Grantor fails to do so within fifteen (15) days of the
casualty. All proceeds of any insurance on the Collateral, including
accrued proceeds thereon, shall be held by Lender as part of the
Collateral. If Lender consents to repair or replacement of the
damaged or destroyed Collateral, Lender shall, upon satisfactory proof
of expenditure, pay or reimburse Grantor from the proceeds for the
reasonable cost of repair or restoration. If Lender does not consent
to repair or replacement of the Collateral, Lender shall retain a
sufficient amount of the proceeds to pay all of the Indebtedness, and
shall pay the balance to Grantor. Any proceeds which have not been
disbursed within six (6) months after their receipt and which Grantor
has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
(w) Insurance Reports. Grantor, upon request of Lender, shall furnish
to Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following:
(i) the name of the insurer; (ii) the risks insured; (iii) the amount
of the policy; (iv) the property insured; (v) the then current value
on the basis of which insurance has been obtained and the manner of
determining that value; and (vi) the expiration date of the policy.
In addition, Grantor shall upon request by Lender (however not more
often than annually) have an independent appraiser satisfactory to
Lender determine, as applicable, the cash value or replacement cost
of the Collateral.
3. GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have posses-
sion of the tangible personal property and beneficial use of all the Col-
lateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to
possession and beneficial use shall not apply to any Collateral where
possession of the Collateral by Lender is required by law to perfect
Lender's security interest in such Collateral. If Lender at any time has
possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose
as Grantor shall request or as Lender, in Lender's sole discretion, shall
deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise
reasonable care. Lender shall not be required to take any steps necessary
to preserve any rights in the Collateral against prior parties, nor to
protect, preserve or maintain any security interest given to secure the
Collateral.
4. LENDER'S DUTY OF CARE. Lender shall have no duty of care with respect
to the Collateral except that Lender shall exercise reasonable care with
respect to the Collateral in Lender's custody. Lender shall be deemed to
have exercised reasonable care if such property is accorded treatment
substantially equal to that which Lender accords its own property or if
Lender takes such action with respect to the Collateral as Grantor shall
request or agree to in writing, provided that no failure to comply with
any such request nor any omission to do any such act requested by Grantor
shall be deemed a failure to exercise reasonable care. Lender's failure to
take steps to preserve rights against any parties or property shall not be
deemed to be failure to exercise reasonable care with respect to the
Collateral in Lender's custody.
5. WAIVERS. Grantor waives demand, protest, notice of protest, notice
of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension
or renewal of any or all commercial paper,
accounts, documents, instruments, chattel paper, and guaranties at any
time held by Lender on which Grantor may in any way be liable.
6. ASSIGNMENT AND PLEDGE OF ADDITIONAL RIGHTS. Grantor, in order to
further secure the prompt and punctual payment and satisfaction of the
Indebtedness in favor of Lender in principal, interest, costs, expenses,
attorneys' fees and other fees and charges, hereby assigns, pledges and
grants to Lender a security interest in the following additional rights
(the "Rights"):
(a) Options and Agreements to Sell. Any and all of Grantor's present
and future options or agreements to sell the Collateral, or any part
or parts thereof, including without limitation, Grantor's rights to
exercise and/or enforce such options or agreements.
(b) Sale Proceeds. Any and all of Grantor's present and future rights,
title and interest in and to any and all cash, cash equivalent,
property and other proceeds derived or to be derived from the sale,
transfer, assignment and/or other distribution of the Collateral,
whether in cash, farm products, or otherwise, and whether from or
through any federal or state government agency or program or otherwise,
including without limitation all rights to payments by or through the
Commodity Credit Corporation or the ASCS; all rights to payments for
participation in the Agricultural Conservation Program, the Cropland
Adjustment Program, the Cropland Conversion Program, the National Wool
Act of 1954, the Wheat, Feed Grain and Cotton Programs of the Agricul-
tural Adjustment Act of 1938, and any other such programs of the
United States Department of Agriculture; and all payments in kind,
including without limitation PIK certificates and commodities redeemed
or acquired by PIK certificates, warehouse receipts, chemicals and
fertilizers, documents, letters of entitlement, and deficiency, ▇▇▇▇▇▇-
vation reserve, and diversion and storage payments, together with,
Grantor's rights to receive such proceeds and Grantor's rights to en-
force collection and payment thereof.
(c) Insurance Proceeds. Any and all of Grantor's present and future
rights, title and interest in and to any unearned insurance premiums
and proceeds of insurance affecting all or any part of the Collateral,
including the right to receive such unearned insurance premiums and
insurance proceeds directly from the insurer and, where applicable,
to enforce any rights that Grantor may have to collect such amounts.
(d) Condemnation Proceeds. Any and all of Grantor's present and
future rights, title and interest in and to the proceeds of any award
or claim for direct or consequential damages relating to any condemna-
tion, expropriation, or any part of the Collateral by any governmental
authority, including the right to receive such condemnation proceeds
directly from such a governmental authority and, where applicable, to
enforce frights that Grantor may have to collect such condemnation
proceeds.
(e) Damages. Any and all of Grantor's rights, title and interest and
other claims or demands that Grantor now has or may hereafter acquire
against anyone with respect to any damage to all or any part of the
Collateral.
7. EXPENDITURES BY LENDER. If not discharged or paid when due, Lender
may (but shall not be obligated to) discharge or pay any amounts required
to be discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may
(but shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender
for such purposes will then bear interest at the rate charged under the
Note from the date incurred or paid by Lender to the date of repayment by
Grantor. All such expenses shall become a part of the Indebtedness and, at
Lender's option, will (a) be payable on demand, (b) be added to the balance
of the Note and be apportioned among and be payable with any installment
payments to become due during either (i) the term of any applicable insur-
ance policy or (ii) the remaining term of the Note, or (c) be treated as a
balloon payment which will be due and payable at the Note's maturity. This
Agreement also will secure payment of these amounts. Such right shall be
in addition to all other nights and remedies to which Lender may be entitled
upon the occurrence of an Event of Default.
8. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
(a) Default on Indebtedness. An event of default as defined in the
Note.
(b) Other Defaults. Failure of Grantor to comply with or to perform
any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or in any other agreement
between Lender and Grantor, or the occurrence of any default or event
of default under any of the Related Documents.
(c) False Statements. Any warranty, representation or statement made
or furnished to Lender by or on behalf of Grantor under this Agreement
is false or misleading in any material respect, either now or at the
time made or furnished.
(d) Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral documents to create a valid and perfected security
interest or lien) at any time.
(e) Insolvency. The dissolution or termination of Grantor's existence
as a going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the
benefit of creditors, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Grantor.
(f) Creditor Proceedings. Commencement of foreclosure, whether by
judicial proceeding, self-help, repossession or any other method, by
any creditor of Grantor or by any governmental agency against the
Collateral or any other collateral securing the Indebtedness. This
includes a garnishment of any of Grantor's deposit accounts with
Lender.
(g) Forfeiture. The filing of formal charges under any federal or
state law against Grantor or the Collateral which forfeiture is a
potential penalty. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the proceeding and
if Grantor gives Lender written notice of the proceeding and deposits
with Lender monies or a surety bond for the proceeding in an amount
determined in good faith by Lender as being an adequate reserve or
bond for the dispute.
(h) Events Affecting Guarantor. Any of the preceding events occurs
with respect to any Guarantor of any of the Indebtedness.
9. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under
this Agreement, at any time thereafter, Lender shall have all the rights of
a secured Party under the Florida Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following
rights and remedies:
(a) Accelerate Indebtedness. Lender may declare the entire Indebted-
ness, including any prepayment penalty which Grantor would be required
to pay, immediately due and payable, without presentment, demand,
protest, or notice, all of which are expressly waived by Grantor.
(b) Processing of Collateral. Grantor hereby agrees that Lender or
its designate may do whatever Lender in its sole discretion deems to
be commercially reasonable to prepare any Collateral for disposition
and to dispose of any Collateral, including without limitation
operating any manufacturing or other processes relating to the
Collateral. Lender may transfer Collateral into its name or that of
a nominee and receive the dividends, royalties or income thereof.
Lender shall have no duty as to the collection or protection of the
Collateral or any income therefrom, nor as to the preservation of
rights against prior parties, nor as to the preservation of any right
pertaining thereto.
(c) Actions regarding Collateral. Lender may dispose of the Col-
lateral in its then-existing condition or, at its election, may take
such measures as it deems necessary or advisable to refurbish, repair,
improve, process, finish, operate, demonstrate, and prepare for sale
the Collateral and may store, ship, reclaim, recover, protect, adver-
tise for sale or lease, and insure the Collateral. If any Collateral
consists of documents, Lender may proceed either as to the documents
or as to the goods represented thereby. Lender may pay, purchase,
contest, or compromise any encumbrance, charge, or lien that, in the
opinion of Lender, appears to be prior or superior to its lien and pay
all expenses incurred in connection therewith.
(d) Assemble Collateral. Lender may require Grantor to deliver to
Lender all or any portion of the Collateral and any and all certifi-
▇▇▇▇▇ of title and other documents relating to the Collateral. Lender
may require Grantor to assemble the Collateral and make it available
to Lender at a place to be designated by Lender. Lender also shall
have full power to enter upon the property of Grantor to take posses-
sion of and remove the Collateral and Lender may remain on such
premises and use the premises for the purpose of collecting, preparing,
and disposing of the Collateral, without any liability for rent or
occupancy charges. If the Collateral contains other goods not covered
by this Agreement at the time of repossession, Grantor agrees Lender
may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession.
(e) Sell the Collateral. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to
decline speedily in value or is of a type customarily sold on a
recognized market, Lender will give Grantor reasonable notice of the
time after which any private sale or any other intended disposition
of the Collateral is to be made. The requirements of reasonable notice
shall be met if such notice is given at least ten (10) days before
the time of the sale or disposition. Lender may adjourn any public or
private sale from time to time to a reasonably specified time and
place by announcement at the time and place of sale previously fixed,
without further notice by publication or otherwise of the time and
place of such adjourned sale, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
All expenses relating to the disposition of the Collateral, including
without limitation the expenses of retaking, holding, insuring, pre-
paring for sale and selling the Collateral, shall become a part of
the Indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note default rate from date of expendi-
ture until repaid.
(f) Appoint Receiver. To the extent permitted by applicable law,
Lender shall have the following rights and remedies regarding the
appointment of a receiver: (i) Lender may have a receiver appointed
as a matter of right, (ii) the receiver may be an employee of Lender
and may serve without bond, (iii) all fees of the receiver and his or
her attorney shall become a part of the Indebtedness secured by this
Agreement and shall be payable on demand, with interest at the Note
rate from date of expenditure until repaid, and (iv) Lender, any
affiliate of Lender or any other person or entity, shall upon any
public sale(s) and, to the extent permitted by law, upon any private
sale(s) have the right to purchase the whole or any part of the Col-
lateral so sold, free of any right or equity of redemption of Grantor.
(g) Disposition of Collateral. Without demand of performance or other
demand, advertisement or notice of any kind (except the notice(s)
specified herein regarding the time and place of public sale or dis-
position or time after which a private sale or disposition is to occur)
to Grantor (which all and each of demands, advertisements and/or
notices are hereby expressly waived), Lender may forthwith collect,
receive, appropriate and realize upon the Collateral, in full or in
any part thereof, may abandon, not claim or not take possession of any
Collateral, and/or may forthwith sell, lease, assign, give an option
or options to purchase or sell or otherwise dispose of and deliver
the Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale(s) at Lender's offices or
elsewhere at such price(s) as Lender may determine, for cash or on
credit or for future delivery without assumption of any credit risk.
(h) Collect Revenues, Apply Accounts. Lender, either itself or
through a receiver, may collect the payments, rents, income, and
revenues from the Collateral. Lender may at any time in its dis-
cretion transfer any Collateral into its own name or that of its
nominee and receive the payments, rents, income, and revenues there-
from and hold the same as security for the Indebtedness or apply it
to payment of the Indebtedness in such order of preference as Lender
may determine. Insofar as the Collateral consists of accounts,
general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect,
receipt for, settle, compromise, adjust, ▇▇▇ for, foreclose, or
realize on the Collateral for cash, credit or otherwise as Lender may
determine, whether or not Indebtedness or Collateral is then due. For
these purposes, Lender may, on behalf of and in the name of Grantor,
receive, open and dispose of mail addressed to Grantor; change any
address to which mail and payments are to be sent; endorse and/or
sign the name of Grantor on notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment,
shipment, or storage of any Collateral; grant credit extensions of
time or payment or performance or any other indulgences to anyone
with respect to any account; accept the return of the goods represented
by any account; or do anything else which Grantor would be legally
permitted to do. To facilitate collection, Lender may notify account
debtors and obligors on any Collateral to make payments directly to
Lender.
Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any or all of
the Collateral or in any way relating to the rights of Lender here-
under, including attorneys' fees and legal expenses, to the payment
in whole or in part of the Indebtedness, in such order as Lender may
elect, and only after applying such net proceeds and after the payment
by Lender of any other amount required by any provision of law, need
Lender account for the surplus, if any to Grantor.
(i) Obtain Deficiency. Grantor shall remain liable for any deficiency
if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled even if
the transaction described in this subsection is a sale of accounts or
chattel paper. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency
remaining on the Indebtedness due to Lender after application of all
amounts received from the exercise of the rights provided in this
Agreement.
(j) Waiver. To the extent permitted by applicable law, Grantor waives
all claims, damages and demands against Lender arising out of the
repossession, retention, sale or disposition of the Collateral.
(k) License. Lender is hereby granted a license or other right to use,
without charge, Grantor's patents, copyrights, trade secrets, technical
processes, rights of use of any name, trade names, trademarks, labels,
and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising
for sale, and selling any Collateral, and Grantor's rights under all
licenses and all franchise agreements shall inure to Lender's benefit.
(l) Other Rights and Remedies. Lender shall have all the rights and
remedies of a secured creditor under the provisions of the Uniform
Commercial Code, as may be amended from time to time. In addition,
Lender shall have and may exercise any or all other rights and
remedies it may have available at law, in equity, or otherwise.
(m) Cumulative Remedies. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or con-
currently. Election by Lender to pursue any right or remedy concurrent-
ly or in any sequence shall not exclude pursuit of any other right or
remedy concurrently or in any sequence, and an election to make ex-
penditures or to take action to perform an obligation of Grantor under
this Agreement, after Grantor's failure to perform, shall not affect
Lender's right to declare a default and to exercise its remedies.
10. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement:
(a) Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement and supersedes all prior
understandings and correspondence, oral or written, with respect to
the subject matter hereof. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration
or amendment.
(b) Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
(c) Attorneys' Fees; Expenses. In any action in connection with the
Indebtedness, this Agreement or the enforcement of this Agreement,
the non-prevailing party shall pay the costs and expenses of the pre-
vailing party. Lender may pay someone else to enforce this Agreement
and Grantor shall pay the costs and expenses incurred in connection
therewith. Lender need not commence a lawsuit in order to be eligible
to recover costs and expenses (for example, costs and expenses for
bankruptcy proceedings, including, without limitation, efforts to
modify or vacate any automatic stay or injunction would be recoverable
as would costs and expenses incurred in any appeals or any post-
judgment collection services). As used herein, costs and expenses
include, without limitation, reasonable attorneys' fees and legal
expenses.
(d) Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
(e) Extensions and Compromises. With respect to any Collateral or
the Indebtedness, Grantor assents to all extensions or postponements
to the time of payment thereof or any other indulgence in connection
therewith, to each substitution, exchange or release of Collateral,
to the release of any party primarily or secondarily liable, to the
acceptance of partial payment thereon or to the settlement or com-
promise thereof, all in such manner and such time or times as Lender
may deem advisable. No forbearance in exercising any right or remedy
on any one or more occasions shall operate as a waiver thereof on any
future occasion; and no single or partial exercise of any right or
remedy shall preclude any other exercise thereof or the exercise of
any other right or remedy.
(f) Notices. All notices required to be given under this Agreement
shall be given in writing and shall be effective when actually
delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States registered or certified
mail, first class, postage prepaid, return receipt requested,
addressed to the party to whom the notice is to be given at the
address shown below; notification by facsimile is specifically not
allowed. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's
address. To the extent permitted by applicable law, if there is
more than one Grantor, notice to any Grantor will constitute notice
to all Grantors. For notice purposes, Grantor agrees to keep Lender
informed at all times of Grantor's current address(es). The addresses
for the Grantor and Lender are as follows:
Grantor: Techdyne, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: ▇▇▇▇▇▇▇ Bank, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
(g) Power of Attorney. Grantor hereby appoints Lender as its true and
lawful attorney-in-fact, irrevocably, with full power of substitutions,
do the following: (i) to demand, collect, receive, receipt for, ▇▇▇
and recover all sums of money or other property which may now or
hereafter become due, owing or payable from the Collateral; (ii) to
execute, sign and endorse any and all claims, instruments, receipts,
checks, drafts or warrants issued in payment for the Collateral; (iii)
to settle or compromise any and all claims arising under the Collateral
and, in the place and stead of Grantor, to execute and deliver its
release and settlement for the claim; and (iv) to file any claim or
claims or to take any action or institute or take part in any pro-
ceedings, either in its own name or in the name of Grantor, or other-
wise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the Indebtedness, and
the authority hereby conferred is and shall be irrevocable and shall
remain in full force and effect until renounced by Lender.
(h) Severability. If a court of competent jurisdiction finds any pro-
vision of this Agreement to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision
invalid or unenforceable as to any other persons or circumstances. If
feasible, any such offending provision shall be deemed to be modified
to be within the limits of enforceability or validity; however, if the
offending provision cannot be so modified, it shall be stricken and
all other provisions of this Agreement in all other respects shall
remain valid and enforceable.
(i) Successor Interests. Subject to the limitations set forth above
on transfer of the Collateral, this Agreement shall be binding upon
and inure to the benefit of the parties, their successors and assigns.
(j) Time. Time is of the essence of all requirements of Grantor herein.
(k) Waiver. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed
by Lender. No delay or omission on the part of Lender in exercising
any right shall operate as a waiver of such right or any other right.
A waiver by Lender of a provision of this Agreement shall not
prejudice or constitute a waiver of Lender's right otherwise to demand
strict compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Grantor, shall constitute a waiver of any of
Lender's rights or of any of Grantor's obligations as to any future
transactions, circumstances or events. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by
Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of
Lender.
11. AUDITS. Lender reserves its right to conduct unannounced inventory
audits, at its sole discretion, with the assistance of its Asset Based
Lending Department. In addition, Lender shall make asset-based lending
audits upon reasonable notice to Grantor and at the Grantor's expense.
12. RELATED DOCUMENTS. The obligations of Grantor under this Agreement
are in addition to the obligations of Grantor under the Related Documents.
13. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE LENDER (BY ITS ACCEPTANCE
HEREOF) HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE RELATED DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER TO MAKE THE LOAN
EVIDENCED BY THE NOTE.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS, THIS AGREEMENT IS
DATED AS OF DECEMBER 29, 1997.
GRANTOR:
TECHDYNE, INC., a Florida corporation
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman of the Board
EXHIBIT "A"
LOCATION OF COLLATERAL
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