SECURITY AGREEMENT
This Security Agreement (this "Agreement") is made as of
the 18th day of March, 1998 between XXXXX X.X. XXXXX, residing at
000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Pledgor"), and OBJECTSOFT CORPORATION, a Delaware corporation
with an address at Continental Plaza III, 000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000 (the "Secured Party").
WHEREAS, in order to secure the payment and performance of
the Pledgor's obligations under the promissory note issued by the
Pledgor to the Secured Party, dated January 2, 1997 (the "Note"),
such Note being in the principal amount of $440,000 (and accrued
interest at the rate of eight percent per annum on the
outstanding principal amount), and in consideration for the
Secured Party extending the date on which the Note was to become
due and payable from November 30, 1997 to May 31, 1998, the
Pledgor has agreed to pledge and xxxxx x xxxx and security
interest in the contract rights of Pledgor in and to the
agreement between the Pledgor and Xxxx X. Xxxxxxx, dated August
1, 1997(collectively, and whether constituting an instrument,
contract right, general intangible, investment property or
otherwise, and including the proceeds thereof, "the
"Collateral").
NOW, THEREFORE, in consideration of the foregoing, the
covenants and conditions herein contained and the mutual
agreements of the parties hereto, the Pledgor and the Secured
Party hereby agree as follows:
1. Collateral. To secure the prompt payment and
performance of the Pledgor's obligations and liabilities under
the Note (the "Secured Obligations"), the Pledgor hereby grants
unto the Secured Party a security interest in all of Pledgor's
right, title and interest in and to the Collateral.
2. Collateral Documentation and Representations.
2.1. The Pledgor shall deliver to the Secured Party
upon execution of this Agreement, such financing statements,
consents and other instruments, documents and agreements as the
Secured Party may reasonably deem necessary to perfect any
security interest granted or required to be granted under this
Agreement, each in such form and substance as may be reasonably
acceptable to the Secured Party.
2.2. The Pledgor hereby irrevocably authorizes the
Secured Party in its discretion: (i) to file without the
signature of the Pledgor any and all financing statements,
modifications and continuations in respect of the Collateral and
the transactions contemplated by this Agreement; (ii) to sign any
such statement, modification or continuation on behalf of the
Pledgor if the Secured Party deems such signature necessary or
desirable under applicable law; and (iii) to file a reproduction
of any financing statement or modification if the Secured Party
deems such filing necessary or desirable under applicable law.
2.3. The Pledgor makes no representations or
warranties other than as expressly set forth herein.
3. Affirmative Covenants. The Pledgor covenants and
agrees that, from the date hereof and until the Secured
Obligations have been fully paid and satisfied, unless the
Secured Party shall consent otherwise in writing:
3.1. The Pledgor shall give written notice to the
Secured Party of the institution of any action involving or
affecting the Secured Obligations, any part of the Collateral, or
any of the transactions contemplated by this Agreement.
3.2. The Pledgor shall comply with all current
applicable laws, the non-compliance with or violation of which
could have a material adverse effect on the Collateral.
3.3. The Pledgor shall defend and enforce its right,
title and interest in and to each and every part of the
Collateral, and the Pledgor shall defend the Secured Party's
right, title and interest in and to each and every part of the
Collateral, each against all manner of claims and demands on a
timely basis to the full extent permitted by applicable law.
3.4. The Pledgor will comply with the terms of the
Note in all material respects.
4. Negative Covenants. The Pledgor covenants and agrees
that, from the date hereof until the Secured Obligations have
been fully paid and satisfied, unless the Secured Party shall
consent otherwise in writing:
4.1. The Pledgor shall not directly or indirectly
(i) make, create or permit to exist any assignment, pledge,
security interest or other lien or encumbrance in, to or against
any part of the Collateral which is senior to the rights of the
Secured Party hereunder or (ii) assign, pledge or in any way
transfer, or otherwise encumber its right to receive proceeds
from any part of the Collateral which is senior to the rights of
the Secured Party hereunder.
4.2. The Pledgor shall not directly or indirectly
cause, suffer or permit any waiver of any term or provision
applicable to any of the Collateral, or offer or agree to do so,
if the result of such action would be materially adverse to the
Secured Party, without the prior consent of the Secured Party,
which consent shall not be unreasonably withheld.
5. Default and Remedies.
5.1. The occurrence of any of the following shall
constitute an "Event of Default" hereunder:
5.1.1. The Pledgor shall fail to duly observe
or perform any covenant or agreement made by him hereunder and
such failure is not cured within 15 days after the Pledgor
receives written notice of such breach from the Secured Party; or
5.1.2. A default under the Note shall occur
and is not cured within the period provided for such cure in the
Note.
5.2. If an Event of Default shall have occurred and
be continuing, the Secured Party may at its option:
5.2.1. Notify each of the obligors of the
Collateral of the Secured Party's interest therein or of any
action proposed to be taken with respect thereto, and direct one
or more of such parties to make all payments otherwise payable to
the Pledgor with respect thereto directly to the Secured Party
until notified by the Secured Party that all Secured Obligations
have been fully paid and satisfied;
5.2.2. Immediately exercise all enforcement
and other ownership rights pertaining to any or all of the
Collateral as though the Secured Party was the outright owner of
such Collateral;
5.2.3. Exercise any and all rights of
acceleration, collection, conversion or exchange, and any and all
other rights, privileges, options or powers of the Pledgor
pertaining or relating to any and all of the Collateral;
5.2.4. Sell, assign and deliver the whole or,
from time to time, any part of the Collateral at any broker's
board or at any private sale or at public auction, with or
without demand for performance, advertisement or notice of the
time or place of sale or adjournment thereof or otherwise, for
cash, for credit or for other property, for immediate or future
delivery, and for such price or prices and on such terms as the
Secured Party in its discretion may determine;
5.2.5. Act with or without judicial process
to take possession of the Collateral; and
5.2.6. Exercise any other remedy specifically
granted under this Agreement or the Note now or hereafter
existing in equity, at law, by virtue of statute (including,
without limitation, the Uniform Commercial Code), whether as a
secured party in possession of Collateral or otherwise.
5.3. At any sale made pursuant to Subsection 5.2, the
Secured Party may bid for and purchase, free from any right or
equity of redemption on the part of the Pledgor (the same being
hereby waived and released), any part of or all of the Collateral
that is offered for sale and may make payment on account thereof
by using any claim then due and payable to the Secured Party by
the Pledgor of such Collateral as a credit against the purchase
price.
5.4. The Secured Party shall apply the proceeds of
any sale of the whole or any part of the Collateral and any other
monies at the time held by the Secured Party under the provisions
of this Agreement, after deducting all reasonable costs and
expenses of collection, sale and delivery incurred by the Secured
Party in connection with such sale, towards the payment of the
Secured Obligations. After full and final payment to the Secured
Party in cash of all such obligations the Secured Party shall
remit any surplus to the Pledgor.
6. Power of Attorney. The Pledgor authorizes the
Secured Party and does hereby make, constitute and appoint the
Secured Party, and any agent of the Secured Party, with full
power of substitution, as the Pledgor's true and lawful attorney-
in-fact, with power, in its own name or in the name of the
Pledgor upon the occurrence and continuation of an Event of
Default: (a) to endorse any notes, checks, draft, money orders,
or other instruments of payment (including payments payable under
or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Secured Party;
(b) to sign and endorse any drafts against debtors, assignments,
verifications and notices in connection with accounts, and other
documents relating to the Collateral; (c) to pay or discharge any
liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (d) to
demand, collect, receipt for, compromise, settle and xxx for
monies due in respect of the Collateral; and (e) generally, to
do, at the Secured Party's option and at the Pledgor's expense,
all acts and things that the Secured Party deems necessary to
protect, preserve and realize upon the Collateral and the Secured
Party's security interest therein in order to effect the intent
of this Agreement and the Note all as fully and effectually as
the Pledgor might or could do; and the Pledgor hereby ratifies
all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney shall be irrevocable for
the term of this Agreement and thereafter as long as any of the
Secured Obligations shall be outstanding and an Event of Default
continuing.
7. Termination of Agreement. Upon the payment or
prepayment in full of all Secured Obligations or the cancellation
thereof, the security interests granted hereunder shall
terminate. Upon such complete payment and satisfaction or
cancellation, the Secured Party shall cause to be transferred to
the Pledgor all of the Collateral (less any portion of same sold,
transferred or disposed of pursuant to, and under the
circumstances specified in, Section 5 hereof) and, shall cause to
be delivered to the Pledgor, at the Pledgor's cost and expense,
in proper form for filing in each office in which a financing
statement relating to the Collateral shall have been filed, an
executed termination statement under the Uniform Commercial Code,
and this Agreement shall thereupon be terminated. The Pledgor
shall pay all reasonable costs of enforcement and collection
incurred by the Secured Party hereunder.
8. Miscellaneous.
8.1. The Pledgor further unconditionally agrees that
if an Event of Default under (and as defined in) the Note has
occurred and is continuing, the Secured Party may exercise its
rights and remedies hereunder prior to, concurrently with, or
subsequent to, the exercise by the Secured Party of its rights
and remedies under the Note or otherwise.
8.2. Any modification or waiver of any provision of
this Agreement, or any consent to any departure by any party
hereto therefrom, shall not be effective unless the same is in
writing and signed by that party and then such modification,
waiver or consent shall be effective only in the specific
instance and for the specific purpose given. Any notice to or
demand on the Pledgor not specifically required of the Secured
Party hereunder shall not entitle the Pledgor to any similar,
other or further notice or demand in the same, similar or other
circumstances unless specifically required hereunder.
8.3. Any notice, request, demand, consent, approval
or other communication provided or permitted hereunder shall be
in writing and be given by personal delivery or sent by United
States first-class mail, postage prepaid, addressed to the party
for whom it is intended, at such address as the party for whom it
is intended has specified in writing to the other party hereto.
8.4. This Agreement shall be deemed to have been made
under, and shall be governed by, the laws of the State of New
York in all respects, including matters of construction, validity
and performance.
8.5. If any provision of this Agreement is prohibited
by, or is unlawful or unenforceable under, any applicable law of
any jurisdiction, such provision shall, as to such jurisdiction,
be ineffective to the extent of such prohibition without
invalidating the remaining provisions hereof; provided, however,
that any such prohibition in any jurisdiction shall not
invalidate such provision in any other jurisdiction.
8.6. This Agreement may be executed in counterparts,
each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
IN WITNESS WHEREOF, the Pledgor and the Secured Party have
caused this Agreement to be executed as of the date first above
written.
/s /Xxxxx E. Y. Xxxxx
Xxxxx X. X. Xxxxx, Pledgor
OBJECTSOFT CORPORATION, Secured Party
By: /s /Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, President
