Exhibit 10.16
Prepared by and return to:
James S. Groh, Esq.
HOLLAND & KNIGHT LLP
50 North Laura Street
Suite 3900
Jacksonville, Florida 32202
SECOND MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
     THIS SECOND MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE
FILING (the “Mortgage”) is executed as of June 13, 2008, by SPECTRUM SCIENCES &
SOFTWARE, INC., a Florida corporation, whose address is 2677 Prosperity Avenue,
Suite 300, Fairfax, Virginia 22031 (the “Mortgagor”), which term as used herein
in every instance shall include the Mortgagor’s successors, legal
representatives and assigns, including all subsequent grantees, either voluntary
by act of the parties or involuntary by operation of law, to DARRYL K. HORNE, an
individual, whose address is 1732 Brookside Lane, Vienna, VA 22182 (the
“Mortgagee”), which term as used herein in every instance shall include the
Mortgagee’s successors, legal representatives and assigns, including all
subsequent assignees, either voluntary by act of the parties or involuntary by
operation of law.
WITNESSETH:
     THAT for diverse good and valuable considerations, and also to secure the
payment of the aggregate sum of money named in the Note as hereinafter defined,
together with interest thereon, and all other sums of money secured hereby as
hereinafter provided, the Mortgagor does hereby mortgage, encumber and lien unto
the Mortgagee the land of which the Mortgagor is now seized and in actual
possession, in the County of Okaloosa County, State of Florida, described in
Exhibit A attached hereto and made a part hereof (hereinafter referred to as the
“Land”), together with all and singular the improvements, tenements,
hereditaments, easements and appurtenances thereunto belonging, or in anyway
appertaining, and the rents, issues, and profits thereof, and also all the
estate, right, title, interest and all claims and demands whatsoever, as well in
law as in equity, of said Mortgagor in and to the same, and every part and
parcel thereof, and also specifically but not by way of limitation all gas and
electric fixtures, water and drainage pumps, pipes, component parts and
materials located upon the Land, and which are now or may hereafter pertain to
or be used with, in or on said premises, even though they be detached or
detachable, are and shall be deemed to be fixtures and accessories to the
freehold and a part of the realty (the Land and all other property described in
this paragraph is hereinafter collectively referred to as the “Mortgaged
Property”).
     The said Mortgagor hereby covenants with the said Mortgagee that the said
Mortgagor is indefeasibly seized with the absolute and fee simple title to the
Mortgaged Property, and has full power and lawful authority to mortgage,
encumber and lien the same; that the Mortgaged Property is free and discharged
from all liens, encumbrances and claims of any kind, including taxes and
assessments, except for the senior lien of the First Mortgage, as such term is
defined in Section 6 herein; that the Mortgagor will make at Mortgagor’s expense
and at no expense to Mortgagee, such other and further assurances to perfect the
lien on said Mortgaged Property, fixtures and personal property in the Mortgage
as may

 

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hereafter be required; and that the Mortgagor hereby fully warrants unto the
Mortgagee the title to said Mortgaged Property and will defend the same against
the lawful claims and demands of all persons whomsoever.
     NOW, THEREFORE, the conditions of this Mortgage are such that if the
Mortgagor shall well and truly pay unto the Mortgagee the indebtedness evidenced
by that certain Working Capital Commercial Note (the “Note”) of even date
herewith, made by the Mortgagor and payable to the Mortgagee in the principal
sum of FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00), the final payment
of which is due upon the earlier of (i) June 13, 2009, subject to one (1) six
(6) month extension option pursuant to the Note, or (ii) the sale of the
Mortgaged Property, together with any note or notes hereafter executed by the
Mortgagor herein by and in accordance with Section 14 of this Mortgage as
hereinafter set forth and secured by the lien of this Mortgage, together with
interest as therein stated, and shall perform, comply with and abide by each and
every one of the stipulations, agreements, conditions and covenants contained
and set forth in this Mortgage and in the Note secured hereby, then this
Mortgage and the estate hereby created shall cease and be null and void.
     AND the Mortgagor does hereby covenant and agree:
     1. To perform, comply with and abide by each and very one of the
stipulations, agreements, conditions and covenants contained and set forth in
said Note or Notes and this Mortgage.
     2. To pay the indebtedness secured by this Mortgage and according to the
true tenor and effect of the Note or of any renewal thereof, promptly on the day
or days the same become due.
     3. To pay, before becoming delinquent, all obligations, encumbrances,
taxes, assessments, sidewalk paying, sanitary and other assessments, levies or
liens, now or hereafter levied or imposed upon or against the Mortgaged
Property, and to exhibit to the Mortgagee before such taxes, assessments, liens
and encumbrances become delinquent the official receipt for payment thereof, and
if the same or any part thereof be not paid before becoming delinquent the
Mortgagee may at any time pay the same with accrued interest and charges, if
any, without waiving or affecting Mortgagee’s option to foreclosure this
Mortgage, or any right hereunder, and every payment so made shall bear interest
from the date thereof at the maximum rate permitted by law, and all such
payments with interest shall be secured by the lien hereof.
     4. That in the event a suit is instituted to foreclose this Mortgage, the
Mortgagee shall be entitled to apply at any time during such foreclosure suit to
the court having jurisdiction thereof for the appointment of a receiver of all
and singular the Mortgaged Property, and of all rents, income, profits, issues
and revenues thereof, from whatsoever source derived; and thereupon it is hereby
expressly covenanted and agreed that the court shall forthwith appoint such
receiver with the usual powers and duties of receivers in like cases; and said
appointment shall be made by the court as a matter of strict right to the
Mortgagee, and without reference to the adequacy or inadequacy of the value of
the Mortgaged Property, or to the solvency or insolvency of the Mortgagor or any
other party defendant to such suit. The Mortgagor hereby specifically waives the
right to object to the appointment of a receiver as aforesaid and hereby
expressly consents that such appointment shall be made as a admitted equity and
as a matter of absolute right to the Mortgagee.
     5. That if any proceedings should be instituted against the Mortgaged
Property, upon any other lien or claim whether superior or junior (if permitted)
to the lien of this Mortgage, then the Mortgagee may declare the Note and the
indebtedness secured hereby due and payable forthwith and may at its option
proceed to foreclose this Mortgage.

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     6. That this Mortgage is a second mortgage, subject and subordinate to that
certain First Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing of even date herewith, granted by Mortgagor to Susott Family Limited
Partnership, a California limited partnership, securing an original principal
indebtedness of $1,000,000.00 (the “First Mortgage”). Mortgagor covenants and
agrees to timely comply with and abide by all of the terms and conditions of the
First Mortgage and the promissory note(s) secured thereby. Mortgagor further
agrees that a default under the First Mortgage or the promissory note(s) secured
thereby shall constitute a default under this Mortgage, and if Mortgagor shall
fail to cure any default under the First Mortgage or the promissory note(s)
secured thereby within the time specified therein, such time being of the
essence with respect to this Mortgage, the Mortgagee may, at its sole option,
declare all sums secured by this Mortgage to be immediately due and payable,
without demand or notice. Mortgagor covenants and agrees that Mortgagor will not
enter into or accept any modification or extension of, or accept any future or
additional advance under, the First Mortgage without the prior written consent
of Mortgagee, and any breach of such covenant will constitute a default under
this Mortgage, whereupon Mortgagee may, at its sole option, declare all sums
secured by this Mortgage to be immediately due and payable, without demand or
notice.
     7. To pay all and singular the costs, fees, charges and expenses of every
kind found to be convenient or expedient in connection with any suit for the
foreclosure of this Mortgage, and also including, whether the Mortgagee is
obligated to pay same or not, reasonable attorney’s fees incurred or expended at
any time by the Mortgagee because of the failure of the Mortgagor to perform,
comply with and abide by all or any of the covenants, conditions and
stipulations of the Note, or this Mortgage, in the foreclosure of this Mortgage
and in collecting the amount secured hereby with or without legal proceedings,
and to reimburse the Mortgagee for every payment made or incurred for any such
purpose with interest from date of every such payment at the maximum rate
permitted by law; such payments and obligations, with interest thereon as
aforesaid, shall be secured by the lien hereof.
     8. To keep the improvements now or hereafter constructed on the Land
insured against loss or damage by fire, extended coverage and other perils, and
flood insurance if the Land is in a flood zone area, in a sum not less than
their full insurable value, at the cost and expense of the Mortgagor, by a
company or companies reasonably acceptable to the Mortgagee, and such policy or
policies of insurance shall name Mortgagee as the mortgage holder. The term
“full insurable value” means one hundred percent (100%) of the actual
replacement cost of the Property (excluding foundation and excavation costs and
costs of underground flues, pipes, drains and other uninsurable items).
     9. To permit, commit or suffer no waste and to maintain the improvements on
the Land at all times in a state of good repair and condition; and to do or
permit to be done to said premises nothing that will alter or change the use and
character of the Mortgaged Property or in any way impair or weaken the security
of this Mortgage.
     10. That no waiver of any covenant herein or in the obligation secured
hereby shall at any time hereafter be held to be a waiver of any of the other
terms hereof or of the note secured hereby and further no such waiver shall be
deemed to be a continuing waiver.
     11. That if the Mortgagor shall fail, neglect or refuse fully and promptly
to pay the amounts required to be paid by the Note hereby secured or the
interest therein specified or any of the sums of money herein referred to or
hereby secured, or otherwise duly, fully and promptly perform, execute, comply
with and abide by each, every or any of the covenants, conditions or
stipulations of this Mortgage or the Note hereby secured (each of the foregoing
being referred to as an “event of default”), then Mortgagee may at any time
thereafter provide Mortgagor with written notice of such default. If Mortgagor
fails to cure such default within fifteen (15) days after Mortgagee delivers
such notice, then the said aggregate sum mentioned in the Note, less previous
payments, if any, and any and all sums

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mentioned herein or secured hereby shall become due and payable forthwith or
thereafter at the continuing option of the Mortgagee as fully and completely as
if said aggregate sums were originally stipulated to be paid at such time,
anything in the Notes or herein to the contrary notwithstanding, and the
Mortgagee shall be entitled thereupon or thereafter without notice or demand to
institute suit at law or in equity to enforce the rights of the Mortgagee
hereunder or under the Note.
     12. That in the event Mortgagor shall (a) consent to the appointment of a
receiver, trustee or liquidator of all or a substantial part of Mortgagor’s
assets, or (b) be adjudicated a bankrupt or insolvent, or file a voluntary
petition in bankruptcy, or admit in writing its inability to pay its debts as
they become due, or (c) make a general assignment for the benefit of creditors,
or (d) file a petition or answer seeking reorganization or arrangement with
creditors, or to take advantage of any insolvency law, or (e) file an answer
admitting the material allegations of a petition filed against the Mortgagor in
any bankruptcy, reorganization or insolvency proceeding, or (f) take action to
effect any of the foregoing, or (g) default under the terms and conditions of
the First Mortgage or the promissory note(s) secured thereby, or (h) any order,
judgment or decree shall be entered upon an application of a creditor of
Mortgagor by a court of competent jurisdiction approving a petition seeking
appointment of a receiver or trustee of all or a substantial part of the
Mortgagor’s assets and such order, judgment or decree shall continue unstayed
and in effect for any period of thirty (30) consecutive days, the Mortgagee may
declare the Note hereby secured forthwith due and payable, whereupon the
principal of and the interest accrued on the Note and all other sums hereby
secured shall become forthwith due and payable as if all of the said sums of
money were originally stipulated to be paid on such day; and thereupon the
Mortgagee without notice or demand may prosecute a suit at law and/or in equity
as if all monies secured hereby had matured prior to its institution.
     13. That the Mortgagee or any person authorized by the Mortgagee shall have
the right, upon at least one (1) business day’s notice to the Mortgagor, to
enter upon and inspect the Mortgaged Property.
     14. That any sum or sums which may be loaned or advanced by the Mortgagee
to the Mortgagor at any time within twenty (20) years from the date of this
Mortgage, together with interest thereon at the rate agreed upon at the time of
such loan or advance, shall be equally secured with and have the same priority
as the original indebtedness and be subject to all the terms and provisions of
this Mortgage; provided, that the aggregate amount of principal outstanding at
any time shall not exceed an amount equal to two hundred percent (200%) of the
principal amount originally secured hereby.
     15. That the Mortgagor will comply with all building, zoning,
environmental, fire and health regulations now or hereafter imposed by
governmental authority and will comply with all deed restrictions, declarations
of restrictions and plat restrictions which may be applicable to the premises.
     16. That Mortgagor will not permit any other liens or encumbrances
whatsoever, including but not limited to the lien of any mortgage (other than
the lien of the First Mortgage), to be filed against the Mortgaged Property, and
if any such liens are filed, whether paramount or subordinate to this Mortgage,
Mortgagor will have or cause to be had said liens or encumbrances to be
discharged immediately or else the entire principal sum secured hereby shall, at
the sole option of the Mortgagee, become immediately due and payable.
     17. If intangible tax, documentary stamps or any other tax shall be levied
or assessed upon this Mortgage and/or the Note secured hereby, the Mortgagor
agrees to promptly pay upon demand all such tax or taxes.
     18. Upon any sale, transfer or conveyance of the Mortgaged Property herein
described or any part thereof, or any interest therein, including any security
interest in the Mortgaged Property, whether

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voluntarily or involuntarily and covered by this Mortgage, to any person, firm,
or corporation, not previously approved in writing by the holder of this
Mortgage, the Mortgagee or holder shall have the right to accelerate the
maturity of this Mortgage as though it were due and payable on the day of such
transfer and to demand payment in full of the said Mortgage amount or any unpaid
balance thereof, and to exercise all the rights and remedies herein or by law
reserved to said Mortgagee the same as in any event of default hereunder,
anything in the Note or herein to the contrary notwithstanding. The granting of
the loan evidenced by the Note hereinabove described and secured hereby is given
by Mortgagee in reliance on the Mortgagor herein being and remaining fee simple
title holder of the property encumbered hereby.
     19. That in the event of foreclosure of this Mortgage or other transfer of
title to the Mortgaged Property, all right, title and interest of the Mortgagor
in and to any insurance policies then in force, including all premiums thereon
paid in advance, and, together with all deposits and advance payments for
utility service, in connection with the operation of the Mortgaged Property
together with any and all other deposits given or fees paid by Mortgagor, shall
pass to the purchaser or grantee.
     20. That Mortgagor hereby grants to Mortgagee, its successors and assigns,
a security interest in all fixtures, goods and chattels now or hereafter owned
by Mortgagor and now or hereafter located upon or used in connection with the
construction or operation of the Mortgaged Property or any improvements thereon,
including but not limited to all uninstalled materials, equipment or fixtures
and all stoves, refrigerators, dishwashers, disposals, water heaters, heating
and air conditioning units, incinerators, carpeting, drapes and all other goods
and articles of personal property of any kind or description and all
replacements thereof and additions thereto. This indenture constitutes a
Security Agreement and Fixture Filing with respect to said fixtures, goods and
chattels covered hereby, together with all proceeds thereof, in accordance with
the Uniform Commercial Code. The Mortgagor’s address is 2677 Prosperity Avenue,
Suite 300, Fairfax, Virginia 22031, and its corporate charter number is GO3833.
The Mortgagee’s address is 1732 Brookside Lane, Vienna, VA 22182.
     21. That all notices, demands and requests required or permitted to be
given hereunder or by law shall be deemed delivered when deposited in the United
States mail, the full postage prepaid thereon, addressed to Mortgagor or
Mortgagee at their respective addresses first shown above in this Mortgage. Any
change in address of either Mortgagor or Mortgagee for the giving of notice
hereunder shall not become effective against the other party until written
advice of such change shall have been received by the other party.
     22. Whenever and wherever the context so requires or admits herein, the use
of the singular shall also denote the plural, the use of the masculine shall
also denote the feminine, and reference to natural persons shall also refer to
artificial persons, and vice-versa.
     IN WITNESS WHEREOF, the Mortgagor has executed these presents under seal
the day and year first above written.
     [Mortgagor’s signature appears on the following page.]

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Signed, sealed and delivered
                   
in the presence of:
                   
 
                    /s/ Robert L. Suthard       Spectrum Sciences & Software,
Inc.,    
 
                    Name: Robert L. Suthard, Jr.       a Florida corporation    
 
                    /s/ Marcella J. Connors       By:   /s/ John Krobath        
             
Name: Marcella J. Connors
          Name:   John Krobath    
 
          Title:   CFO    

[SEAL]

         
State of VIRGINIA
  )  
 
  : ss.
County of FAIRFAX
  )  

     The foregoing instrument was acknowledged before me this 2nd DAY OF JULY,
2008, by JOHN KROBATH as CFO of Spectrum Sciences & Software, Inc., a Florida
corporation, on behalf of the corporation. He/she is personally known to me or
has produced VIRGINIA DRIVERS LICENSE as identification.
(NOTARY SEAL)

          [SEAL]   /s/ Natalie A. Fehervari              
 
  Name: NATALIE A. FEHERVARI
 
   
 
  Notary Public, State of Virginia
 
   
 
  Commission No. 344126
 
   
 
  My Commission expires: 3/31/2012
 
   

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EXHIBIT A
The Land
VER-VAL PROPERTY:
COMMENCE AT 4X4” CONCRETE MONUMENT MARKER ON THE NORTHEAST CORNER SECTION 17 FOR
THE POINT OF REFERENCE; THENCE PROCEED NORTH 87° 27’ 20” WEST ALONG THE NORTH
LINE OF SAID SECTION A DISTANCE OF 425 FEET; THENCE SOUTH 2° 37’ 00” WEST A
DISTANCE OF 399.46 FEET TO POB OF LAND TO BE DESCRIBED, THENCE CONTINUE SOUTH 2°
37’ 00” WEST A DISTANCE OF 250 FEET, THENCE NORTH 87° 23’ 00” WEST A DISTANCE OF
390.71 FEET TO A POINT ON EAST RIGHT OF WAY LINE OF HILL AVENUE (100’ R/W) SAID
RIGHT OF WAY LINE BEING A CURVE OF RADIUS 4708.28 FEET CONCAVE TO WEST; THENCE
PROCEED ALONG SAID CURVE A DISTANCE OF 41.72 FEET WITH A CHORD BEARING OF NORTH
1° 30’ 08” EAST AND CHORD DISTANCE OF 41.72 FEET TO POINT OF CURVATURE OF SAID
CURVE; THENCE CONTINUE ALONG SAID RIGHT OF WAY LINE NORTH 1° 15’ 20” EAST A
DISTANCE OF 208.35 FEET; THENCE SOUTH 87° 23’ 00” EAST A DISTANCE OF 396.47 FEET
TO POB. BEARINGS AS SHOWN HAVE BEEN PROJECTED FROM A BEARING OF NORTH 87° 27’
20” WEST AS ESTABLISHED ALONG NORTH LINE OF SECTION 17, NORTHEAST QUARTER OF
SECTION 17, TOWNSHIP 2 SOUTH, RANGE 24 WEST, OKALOOSA COUNTY, FLORIDA.
PARCEL 1:
THAT PART OF THE NORTHEAST QUARTER OF SECTION 17, TOWNSHIP 2 SOUTH, RANGE 24
WEST IN THE CITY OF FORT WALTON BEACH INDUSTRIAL PARK, OKALOOSA COUNTY, FLORIDA,
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCE AT THE 4 INCH BY 4 INCH CONCRETE MONUMENT MARKING THE NORTHEAST CORNER
OF SAID SECTION 17 FOR THE POINT OF REFERENCE; THENCE PROCEED NORTH 87° 27’ 20”
WEST ALONG THE NORTH LINE OF SAID SECTION A DISTANCE OF 80.00 FEET TO A POINT ON
THE WEST RIGHT OF WAY OF BLAKE AVENUE (80’ R/W); THENCE SOUTH 02° 37’ 00” WEST
ALONG SAID WEST RIGHT OF WAY LINE A DISTANCE OF 399.90 FEET TO THE POINT OF
BEGINNING OF THE LAND TO BE DESCRIBED; THENCE CONTINUE SOUTH 02° 37’ 00” WEST
ALONG SAID WEST RIGHT OF WAY LINE A DISTANCE OF 250.00 FEET; THENCE NORTH 87°
23’ 00” WEST A DISTANCE OF 345.00 FEET; THENCE NORTH 02° 37’ 00” EAST A DISTANCE
OF 250.00 FEET; THENCE SOUTH 87° 23’ 00” EAST A DISTANCE OF 345.00 FEET TO THE
POINT OF BEGINNING.
PARCEL 2:
THAT PART OF THE NORTHEAST QUARTER OF SECTION 17, TOWNSHIP 2 SOUTH, RANGE 24
WEST IN THE CITY OF FORT WALTON BEACH INDUSTRIAL PARK, OKALOOSA COUNTY, FLORIDA,
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCE AT THE 4 INCH BY 4 INCH CONCRETE MONUMENT MARKING THE NORTHEAST CORNER
OF SAID SECTION 17 FOR THE POINT OF REFERENCE; THENCE PROCEED NORTH 87° 27’ 20”
WEST ALONG THE NORTH LINE OF SAID SECTION, A DISTANCE OF 80,00 FEET TO A POINT
ON THE WEST RIGHT OF WAY OF BLAKE AVENUE (80’ R/W) AND TO THE POINT OF BEGINNING
OF THE LAND TO BE DESCRIBED; THENCE CONTINUE NORTH 87° 27’ 20” WEST ALONG THE
NORTH LINE OF SAID SECTION A DISTANCE OF 345.00 FEET; THENCE SOUTH 02° 37’ 00”
WEST A DISTANCE OF 399.46 FEET; THENCE ‘ SOUTH 87° 23’ 00” EAST A DISTANCE OF
345.00 FEET TO A POINT ON THE WEST RIGHT OF WAY OF . BLAKE AVENUE; THENCE NORTH
02° 37’ 00” EAST ALONG SAID WEST RIGHT OF WAY A DISTANCE OF 399.90 FEET TO THE
POINT OF BEGINNING. SURVEYOR’S NOTE: THE BEARINGS AS SHOWN HEREIN

 

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EXHIBIT A
The Land
HAVE BEEN PROJECTED FROM A BEARING OF NORTH 87° 27’ 20” WEST AS ESTABLISHED
ALONG THE NORTH LINE OF SECTION 17.