Exhibit 10.2
SECURITY
AGREEMENT
July 20, 2007
Force Protection,
Inc.
9801 Highway
78
Ladson, South Carolina
29456
Force Protection
Industries, Inc.
9801 Highway
78
Ladson, South Carolina
29456
Force Protection
Technologies, Inc.
9801 Highway
78
Ladson, South Carolina
29456
(Individually and
collectively, “Debtor”)
Wachovia Bank, National
Association
177 Meeting Street,
Suite 450
Charleston, South
Carolina 29401
(Hereinafter referred to as
the “Bank”)
For value received and
to secure payment and performance of any and all obligations of
Debtor (also referred to collectively herein as
“Borrower”) to Bank however created, arising or
evidenced, whether direct or indirect, absolute or contingent, now
existing or hereafter arising or acquired, including swap
agreements (as defined in 11 U.S.C. § 101, as in effect from
time to time), future advances, and all costs and expenses incurred
by Bank to obtain, preserve, perfect and enforce the security
interest granted herein and to maintain, preserve and collect the
property subject to the security interest (collectively,
“Secured Obligations”), Debtor hereby grants to Bank a
continuing security interest in and lien upon the following
described property, whether now owned or hereafter acquired, and
any additions, replacements, accessions, or substitutions thereof
and all cash and non-cash proceeds and products thereof
(collectively, “Collateral”):
All of the personal
property and fixtures of Debtor of every kind and nature including,
without limitation, all accounts, equipment, accessions, fixtures,
inventory, chattel paper, instruments, investment property,
documents, letter-of-credit rights, deposit accounts and general
intangibles, wherever located. The foregoing fixture
Collateral is located at or affixed to real property known as 9801
Highway 78, Ladson, South Carolina 29456 as recorded at Book S174,
Page 210, in the real property records of Charleston County, of the
State of South Carolina, wherein the record owner is
Aerospance/Defense, Inc. (a/k/a RM Aerospace/Defense,
Inc.).
Debtor hereby
represents and agrees that:
OWNERSHIP.
Debtor owns the Collateral or Debtor will purchase and acquire
rights in the Collateral within ten days of the date advances are
made under the Loan Documents. If Collateral is being
acquired with the proceeds of an advance under the Loan Documents,
Debtor authorizes Bank to disburse proceeds directly to the seller
of the Collateral. The Collateral is free and clear of all
liens, security interests, and claims except those previously
reported in writing to and approved by Bank, and Debtor will keep
the Collateral free and clear from all liens, security interests
and claims, other than those granted to or approved by Bank.
NAME AND OFFICES; JURISDICTION
OF ORGANIZATION. The name and address of Debtor
appearing at the beginning of this Agreement are Debtor’s
exact legal name and the address of its chief executive
office. There has been no change in the name of Debtor, or
the name under which Debtor conducts business, within the five
years preceding the date
hereof except as
previously reported in writing to Bank. Debtor has not moved
its chief executive office within the five years preceding the date
hereof except as previously reported in writing to Bank.
Debtor is organized under the laws of the State of Nevada and has
not changed the jurisdiction of its organization within the five
years preceding the date hereof except as previously reported in
writing to Bank.
TITLE/TAXES.
Debtor has good and marketable title to the Collateral and will
warrant and defend same against all claims. Debtor will not
transfer, sell, or lease Collateral (except as permitted
herein). Debtor agrees to pay promptly all taxes and
assessments when due unless contested in good faith through
appropriate procedures upon or for the use of Collateral and on
this Security Agreement. At its option, Bank may discharge
taxes, liens, security interests or other encumbrances at any time
levied or placed on Collateral no sooner than ten days after the
Borrowers failure to do so. Debtor agrees to reimburse Bank,
on demand, for any such payment made by Bank. Any amounts so
paid shall be added to the Secured Obligations.
WAIVERS.
Debtor agrees not to assert against Bank as a defense (legal or
equitable), as a set-off, as a counterclaim, or otherwise, any
claims Debtor may have against any seller or lessor that provided
personal property or services relating to any part of the
Collateral or against any other party liable to Bank for all or any
part of the Secured Obligations. Debtor waives all exemptions
and homestead rights with regard to the Collateral. Debtor
waives any and all rights to any bond or security which might be
required by applicable law prior to the exercise of any of
Bank’s remedies against any Collateral. All rights of
Bank and security interests hereunder, and all obligations of
Debtor hereunder, shall be absolute and unconditional, not
discharged or impaired irrespective of (and regardless of whether
Debtor receives any notice of): (i) any lack of validity or
enforceability of any Loan Document; (ii) any change in the time,
manner or place of payment or performance, or in any term, of all
or any of the Secured Obligations or the Loan Documents or any
other amendment or waiver of or any consent to any departure from
any Loan Document unless agreed to in writing by the parties; or
(iii) any exchange, insufficiency, unenforceability, enforcement,
release, impairment or non-perfection of any collateral, or any
release of or modifications to or insufficiency, unenforceability
or enforcement of the obligations of any guarantor or other
obligor. To the extent permitted by law, Debtor hereby waives
any rights under any valuation, stay, appraisement, extension or
redemption laws now existing or which may hereafter exist and
which, but for this provision, might be applicable to any sale or
disposition of the Collateral by Bank; and any other circumstance
which might otherwise constitute a defense available to, or a
discharge of any party with respect to the Secured Obligations.
NOTIFICATIONS; LOCATION OF
COLLATERAL. Debtor will notify Bank in writing at
least 30 days prior to any change in: (i) Debtor’s
chief place of business and/or residence; (ii) Debtor’s name
or identity; (iii) Debtor’s corporate/organizational
structure; or (iv) the jurisdiction in which Debtor is
organized. In addition, Debtor shall promptly notify Bank of
any material claims or alleged claims of any other person or entity
to the Collateral or the institution of any litigation,
arbitration, governmental investigation or administrative
proceedings against or affecting the Collateral. Debtor will
keep Collateral at the location(s) previously provided to Bank
until such time as Bank provides written advance consent to a
change of location. Debtor will bear the cost of preparing
and filing any documents necessary to protect Bank’s
liens.
COLLATERAL CONDITION AND
LAWFUL USE. Debtor represents that the Collateral
is in good repair and condition and that Debtor shall use
reasonable care to prevent Collateral from being damaged or
depreciating, normal wear and tear excepted. Debtor shall
immediately notify Bank of any material loss or damage to
Collateral. Debtor shall not permit any item of Collateral to
become an accession to other property unless such property is also
Collateral hereunder. Debtor represents it is in compliance
in all material respects with all laws, rules and regulations
applicable to the Collateral and its properties, operations,
business, and finances.
RISK OF LOSS AND
INSURANCE. Debtor shall bear all risk of loss
with respect to the Collateral. The injury to or loss of
Collateral, either partial or total, shall not release Debtor from
payment or other performance hereof. Debtor agrees to obtain
and keep in force property insurance on the Collateral with a
Lender’s Loss Payable Endorsement in favor of Bank and
commercial general liability insurance naming Bank as Additional
Insured and such other insurance as Bank may require from time to
time.
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Such insurance is to be
in form and amounts satisfactory to Bank and issued by reputable
insurance carriers satisfactory to Bank with a Best Insurance
Report Key Rating of at least “A-”. All such
policies shall provide to Bank a minimum of 30 days written notice
of cancellation. Debtor shall furnish to Bank such policies,
or other evidence of such policies satisfactory to Bank. If
Debtor fails to obtain or maintain in force such insurance or fails
to furnish such evidence , Bank is authorized, but not
obligated, to purchase any or all insurance or “Single
Interest Insurance” protecting such interest as Bank deems
appropriate against such risks and for such coverage and for such
amounts, including either the loan amount or value of the
Collateral, all at its discretion, and at Debtor’s
expense. In such event, Debtor agrees to reimburse Bank for
the cost of such insurance and Bank may add such cost to the
Secured Obligations. Debtor shall bear the risk of loss to
the extent of any deficiency in the effective insurance coverage
with respect to loss or damage to any of the Collateral.
Debtor hereby assigns to Bank the proceeds of all property
insurance covering the Collateral up to the amount of the Secured
Obligations and directs any insurer to make payments directly to
Bank. During the continuance of a Default or the occurrence
of an event that will likely lead to a Default, Debtor hereby
appoints Bank its attorney-in-fact, which appointment shall be
irrevocable and coupled with an interest for so long as Secured
Obligations are unpaid, to file proof of loss and/or any other
forms required to collect from any insurer any amount due from any
damage or destruction of Collateral, to agree to and bind Debtor as
to the amount of said recovery, to designate payee(s) of such
recovery, to grant releases to insurer, to grant subrogation rights
to any insurer, and to endorse any settlement check or draft.
Debtor agrees not to exercise any of the foregoing powers granted
to Bank without Bank’s prior written consent.
FINANCING STATEMENTS,
CERTIFICATES OF TITLE, POWER OF ATTORNEY. No
financing statement (other than any filed or approved by Bank)
covering any Collateral is on file in any public filing office
other than Permitted Liens. Debtor authorizes the filing of
one or more financing statements covering the Collateral in form
satisfactory to Bank, and without Debtor’s signature where
authorized by law, agrees to deliver certificates of title on which
Bank’s lien has been indicated covering any Collateral
subject to a certificate of title statute, and will pay all costs
and expenses of filing or applying for the same or of filing this
Security Agreement in all public filing offices, where filing is
deemed by Bank to be desirable. Debtor hereby constitutes and
appoints Bank the true and lawful attorney of Debtor with full
power of substitution to take any and all appropriate action and to
execute any and all documents, instruments or applications that may
be necessary or desirable to accomplish the purpose and carry out
the terms of this Security Agreement, including, without
limitation, to complete, execute, and deliver any Control
Agreement(s) by Bank, Debtor and Third Party(ies) that may be or
become required in connection herewith (individually and
collectively the “Control Agreement”), and any
instructions to Third Party(ies) regarding, among other things,
control and disposition of any Collateral which is the subject of
such Control Agreement(s). The foregoing power of attorney is
coupled with an interest and shall be irrevocable until all of the
Secured Obligations have been paid in full. Neither Bank nor
anyone acting on its behalf shall be liable for acts, omissions,
errors in judgment, or mistakes in fact in such capacity as
attorney-in-fact. Debtor ratifies all acts of Bank as
attorney-in-fact. Debtor agrees to take such other actions,
at Debtor’s expense, as might be requested for the
perfection, continuation and assignment, in whole or in part, of
the security interests granted herein and to assure and preserve
Bank’s intended priority position. If certificates,
passbooks, or other documentation or evidence is/are issued or
outstanding as to any of the Collateral, Debtor will cause the
security interests of Bank to be properly protected, including
perfection by notation thereon or delivery thereof to Bank.
LANDLORD/MORTGAGEE
WAIVERS. If requested by Bank, Debtor shall cause
each mortgagee of real property owned by Debtor and each landlord
of real property leased by Debtor to execute and deliver
instruments satisfactory in form and substance to Bank by which
such mortgagee or landlord subordinates its rights, if any, in the
Collateral.
CONTROL.
Debtor will cooperate with Bank in obtaining control with respect
to Collateral consisting of electronic chattel paper.
Debtor authorizes and directs Third Party to comply with the terms
of this Security Agreement, to enter into a Control Agreement, to
mark its records to show the security interest of and/or the
transfer to Bank of the property pledged hereunder.
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CHATTEL PAPER, ACCOUNTS,
GENERAL INTANGIBLES. Debtor warrants that
Collateral consisting of chattel paper, accounts, or general
intangibles is (i) genuine and enforceable in accordance with its
terms; (ii) not subject to any defense, set-off, claim or
counterclaim of a material nature against Debtor except as to which
Debtor has notified Bank
