EXHIBIT 10.7
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (the "Security Agreement") is entered into
as of February 15, 2002 by and between Xxxxxxx X. Xxxxxxxx, ("Debtor"), and
SmartPros Ltd. a Delaware corporation ("Secured Party")
This security interest is granted to secure payment and performance
on the following obligations owed Secured Party from Debtor: Debtor has borrowed
funds from Secured Party pursuant to a $200,000 Secured Promissory Note of even
date herewith (the "Note").
The collateral is comprised of SmartPros Ltd. certificate No. C250
registered in the name of Xx. Xxxxxxx X. Xxxxxxxx for 80,000 shares of Common
Stock and SmartPros Ltd. certificate No. PA42 registered in the name of Xx.
Xxxxxxx X. Xxxxxxxx for 2,000 shares of series A Preferred Stock.
Debtor hereby acknowledges to Secured Party, each of the following:
1. The Debtor owns the collateral and it is free from any other
lien, encumbrance and security interest and the Debtor has full
authority to grant this security interest.
2. Debtor agrees to execute such financing statements as are
reasonably required by Secured Party.
3. Upon default in payment or performance of any obligation for
which this security interest is granted, or breach of any provision
of this agreement, then in such instance secured party may declare
all obligations immediately due and payable and shall have all
remedies of a secured party under the Uniform Commercial Code.
DEFAULT: A default hereunder will occur if any of the following
events occur:
(1) Debtor fails to pay any portion of the Obligation when
due;
(2) Debtor fails to perform any undertaking or materially
breaches any warranty or covenant in this Security
Agreement or the Note;
(3) Any statement, representation or warranty of Debtor under
this Security Agreement or the note is untrue in any
material respect when made;
(4) Debtor becomes insolvent or unable to pay debts as they
mature or makes an assignment for the benefit of creditors
or any proceeding is instituted by or against him alleging
that he is insolvent or unable to pay his debts as they
mature;
(5) An attachment, garnishment, execution or other process is
issued or a lien filed against any property of his, which
is not removed within a reasonable period of time; and
Waiver of any default will not constitute a waiver of any other or subsequent
default.
Signed:
Debtor: s/s Xxxxxxx X. Xxxxxxxx Secured Party: SmartPros Ltd.
SECURED PROMISSORY NOTE
$200,000.00 Date: February 15, 2002
For value received, the undersigned Xxxxxxx X. Xxxxxxxx (the "Borrower"), at 000
Xxxxxx Xxxx, Xxxxxxxxx, XX 00000, promises to pay to the order of SmartPros
Ltd., (the "Lender"), at 00 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000, (or at
such other place as the Lender may designate in writing) the sum of $200,000.00
with interest from February 15, 2002, on the unpaid principal at the rate of
5.50% per annum.
The unpaid principal and accrued interest shall be payable in full on February
14, 2007 (the "Due Date").
All payments on this Note shall be applied first in payment of accrued interest
and any remainder in payment of principal.
If any payment obligation under this Note is not paid when due, the remaining
unpaid principal balance and any accrued interest shall become due immediately
at the option of the Lender.
The Borrower reserves the right to prepay this Note (in whole or in part) prior
to the Due Date with no prepayment penalty.
If any payment obligation under this Note is not paid when due, the Borrower
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
This Note is secured by a pledge of 2,000 shares of SmartPros Ltd. preferred
stock and 80,000 shares of SmartPros Ltd common stock. The Lender is not
required to rely on the above security instrument and the assets secured therein
for the payment of this Note in the case of default, but may proceed directly
against the Borrower.
If any of the following events of default occur, this Note and any other
obligations of the Borrower to the Lender, shall become due immediately, without
demand or notice:
1) the failure of the Borrower to pay the principal and any accrued
interest in full on or before the Due Date;
2) the death of the Borrower or Lender;
3) the filing of bankruptcy proceedings involving the Borrower as a debtor;
4) the application for the appointment of a receiver for the Borrower;
5) the making of a general assignment for the benefit of the Borrower's
creditors;
6) the insolvency of the Borrower;
7) a misrepresentation by the Borrower to the Lender for the purpose of
obtaining or extending credit.
In addition, the Borrower shall be in default if there is a sale, transfer,
assignment, or any other disposition of any assets pledged as security for the
payment of this Note, or if there is a default in any security agreement which
secures this Note.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principal and interest on this Note shall be paid in the legal
currency of the United States. The Borrower waives presentment for payment,
protest, and notice of protest and nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of the Lender
under this Note, or assignment by Lender of this Note shall affect the liability
or the obligations of the Borrower. All rights of the Lender under this Note are
cumulative and may be exercised concurrently or consecutively at the Lender's
option.
This Note shall be construed in accordance with the laws of the State of New
York.
Signed this 15th day of February, 2202, at Hawthorne, New York.
Borrower:
Xxxxxxx X. Xxxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
ASSIGNMENT
[ONLY COMPLETE THE FOLLOWING INFORMATION TO ASSIGN PAYMENTS TO A NEW PARTY.]
For value received, the above Note is assigned and transferred to
____________________________________________, ("Assignee") of
_________________________,_________________________,
(City)(State/province)
________________________.
(Country)
Dated: _________________________
By:____________________________________________________
SmartPros Ltd.
