SECURITY AGREEMENT
OWNER OF
COLLATERAL: Scientific Packaging Industries, Inc.
00 Xxxxxxx Xxxxx, Xxxxxxx, XX 00000
_______________________________________________________________________
DESCRIPTION OF COLLATERAL: The undersigned as guarantor ("Guarantor"),
to secure the debt of Scientific Industries, Inc. ("Borrower"), hereby
grants to Capital One, N.A. (the "Bank") a security interest (see Right
to Repossess Section below for explanation of "security interest") in
the following described collateral ("Collateral"): All Assets of the
Guarantor perfected through UCC-1 lien filings.
OBLIGATIONS: The obligations that this agreement is to secure are:
1. The amount of $500,000.00, which amount represents a loan made on
even date herewith by the Bank to Borrower, as evidenced by a certain
note dated as of even date herewith executed by Borrower promising,
among other things, to pay the Bank, together with interest due and
extensions and renewals thereof, plus all costs of collection
in the event of default, including attorney's fees. 2. Any and all
other liabilities of Borrower to the Bank under this agreement.
3. Any and all other liabilities of Borrower to the Bank, direct or
indirect, absolute or contingent, present or future, due or to
become due. Borrower agrees to promptly pay all obligations when due.
STATEMENT OF OWNER: Owner states and promises that:
1. The Collateral is bought or used primarily for: [ ]Personal,
family of household purposes; [ ]Farming operations; [ X ]Business,
and, if checked here, [ ]is being acquired with the proceeds of a
loan signed at the same time as this agreement and the Bank may pay
those proceeds directly to the seller of the Collateral. 2. The
Collateral is or is to be located at address shown above
(or at ____________________).
(Address if Collateral is to be kept elsewhere)
3. The Collateral will not be attached to real estate unless indicated
here:
_____________________________________
(Description of real estate by Street, Number,
_____________________________________
(Town or City, County & State)
_____________________________________
(Name and address of owner of real estate)
If the Collateral is to be attached to real estate and if the Bank
requests it, Guarantor agrees to furnish the Bank with statements
signed and notarized by everybody who has an interest in that real
estate stating that they claim no interest in the Collateral.
Guarantor gives the Bank permission to file a financing statement
(notice of the Bank 's security interest filed for public record)
covering the Bank's security interest without Guarantor's signature
on it. Upon request of the Bank, Guarantor or Borrower will pay all
filing fees to protect the Bank's security interest on the Collateral.
The Bank may charge those fees to any account Guarantor or Borrower
has with the Bank.
INSURANCE REQUIREMENTS: Guarantor will keep the Collateral insured
against fire, including so-called extended coverage, theft and if the
Collateral is a motor vehicle, Guarantor will also maintain $500
deductible collision insurance. The limits and terms of the coverage
and the insurance company must be satisfactory to the Bank. If the Bank
requires additional insurance on the Collateral, Guarantor will obtain
and maintain the additional coverage. The Bank shall be named as the
loss payee (the person who gets the money to pay for damages) on all
insurance policies. GUARANTOR SHALL HAVE THE RIGHT TO CHOOSE THE
PERSON THROUGH WHOM SUCH INSURANCE IS TO BE OBTAINED. Guarantor
authorizes the Bank to act in my behalf to make, adjust or settle
any insurance claim covering the Collateral. Guarantor also authorizes
the Bank to sign any checks on my behalf received as a result of an
insurance claim. EVENTS OF DEFAULT: Guarantor will have possession
and use of the Collateral unless one of the following events occurs:
1.If one of the "Secured Loans or Obligations" is not paid as required
or if one of the promises made in one of the "Secured Loans or
Obligations" or in this agreement is broken; or 2. If Borrower, or any
other person whose debt this secures, have made any false or misleading
statement(s) in connection with this agreement; or 3. If Borrower, or any
person whose debt this secures, files bankruptcy or if any proceeding is
instituted to seek relief from Borrower's debts; or 4. If Borrower, or
any other person whose debt this secures, dies or becomes legally unable
to manage its affairs; or 5. If any motor vehicle is used for collateral
and the Bank's name does not appear as the only "lienholder" on any
certificate of title issued now or in the future; or 6. If the Collateral
is lost or damaged without adequate insurance coverage, or sold,
or given away, or seized; or 7. If something else happens that the Bank
reasonably feels affects Borrower's ability to pay the unpaid balance.
RIGHT TO REPOSSESS: Guarantor gives the Bank a security interest in the
Collateral which means that after Borrower defaults (see Events of Default
section), the Bank can repossess (take) the Collateral, sell it and apply
the proceeds to the balance of what Borrower owes the Bank after deducting
the Bank's reasonable repossession, storage, repair, preparation for sale
and selling expenses. The Bank may enter, without demand or notice, upon
any premises where the Collateral may be found and take possession of and
remove the Collateral. The Bank will send 7 days notice by mail of any sale
of the Collateral. Guarantor can still recover the Collateral before the
Bank sells it by paying any amounts past due under this agreement and
any charges you are entitled to. To recover any articles Guarantor
claims are not part of the Collateral but were contained in the Collateral,
Guarantor must notify the Bank within 7 days after repossession. Failure
to claim and take possession of these items promptly will be an abandonment
of them. If the sale does not cover all that Borrower owes, Guarantor will
be responsible for the amount still owed. If there is any surplus money,
it will be refunded to Guarantor.
PROTECTING THE COLLATERAL: Guarantor promises that:
1. Guarantor is now the owner of the Collateral or will immediately
become the owner of the Collateral. 2. The Collateral is now and will be
maintained in good working order and repair. 3. The Collateral is now and
will be kept free from any other lien or legal claim against it.
4. Guarantor will not sell or offer to sell, transfer, lease, abandon or
encumber (use as collateral elsewhere) any of the Collateral. Guarantor
will not remove it from New York State for more than 30 days without the
Bank 's consent. Guarantor will not use it, or permit its use, in any
illegal act. 5. Guarantor will immediately notify the Bank in writing
of any loss or damage to the Collateral. 6. If the Collateral is a
motor vehicle, Guarantor will have the Bank's name listed as the
"Lienholder" on any certificate of title issued now or in the future.
7. Guarantor will promptly pay all taxes and assessments on the
Collateral. 8. If the owner is a corporation, owner and officer
executing this agreement certify that all necessary corporate action
has been taken to authorize this agreement to be signed.
WAIVERS AND RELEASES: The Bank can waive or delay enforcing any of its
rights without losing them. The Bank can waive or delay enforcing a right
as to Borrower or Guarantor or any other Borrower or Guarantor without
waiving it as to others. Also, the Bank can release any Collateral or
release one Borrower or Guarantor from its responsibility under this
agreement without releasing the others. The Bank need not give notice
of any waiver, delay, release, or default to anyone. If any provision
of this agreement is found invalid, the remaining provisions shall
remain in full force and effect. The Bank's failure to properly
file financing statements against the Collateral will not affect
Borrower's or Guarantor's obligations to the Bank.
Scientific Packaging Industries, Inc.
/s/ Xxxxxx X. Xxxxxx 10/30/08
__________________________Date: _________________
/s/ Xxxxxx X. Xxxxxxx 10/30/08
_________________________ Date: _________________
I/We acknowledge receipt of a copy of this Security
Agreement and agree with the terms.
