DATE AND PARTIES. The date of this
Security Agreement (Agreement) is August 16, 2007. The parties and their addresses are:
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CARDINAL
BANK
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000 |
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WIDEPOINT
CORPORATION
a
Delaware Corporation
One Lincoln Centre
18W140 Xxxxxxxxxxx Road, Suite 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
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The pronouns “you” and
“your” refer to the Secured Party. The pronouns “I,” “me” and
“my” refer to each person or entity signing this Agreement as Debtor and
agreeing to give the Property described in this Agreement as security for the Secured
Debts.
Where the owner of the Property is
different from the borrower or guarantor whose obligation this Agreement secures, “Debtor” refers
to each person or entity who is an owner of the Property and “Borrower” or
“Guarantor,” as applicable, refer to such parties as designated in the SECURED
DEBTS section.
1. SECURED
DEBTS. This Agreement will secure the following Secured Debts:
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A.
Specific
Debts. The following debts and all extensions, renewals,
refinancings, modifications and replacements. A promissory note or
other agreement, dated August 16, 2007, from WidePoint Corporation,
Widepoint IL, Inc., WP NBIL, Inc., Chesapeake Government
Technologies, Inc. and Operational Research Consultants, Inc.
(Borrower) to you, in the amount of $2,000,000.00. |
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B.
All
Debts. All present and future debts from Borrower to you, even if this
Agreement is not specifically referenced, the future debts are also
secured by other collateral, or if the future debt is unrelated to or
of a different type than this debt. If more than one person signs
this Agreement, each agrees that it will secure debts incurred either
individually or with others who may not sign this Agreement. Nothing
in this Agreement constitutes a commitment to make additional or
future loans or advances. Any such commitment must be in writing. |
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This
Agreement will not secure any debt for which you fail to give any required notice of the
right of rescission. This Agreement will not secure any debt for which a non-possessory,
non-purchase money security interest is created in “household goods” in
connection with a “consumer loan,” as those terms are defined by federal law
governing unfair and deceptive credit practices. |
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C. Sums
Advanced. All sums advanced and expenses incurred by you under the terms of
this Agreement. |
2. SECURITY
INTEREST. To secure the payment and performance of the Secured
Debts, I give you a security interest in all of the Property
described in this Agreement that I own or have sufficient rights in
which to transfer an interest, now or in the future, wherever the
Property is or will be located, and all proceeds and products from
the Property (including, but not limited to, all parts, accessories,
repairs, replacements, improvements, and accessions to the Property).
Property is all the collateral given as security for the Secured
Debts and described in this Agreement, and includes all obligations
that support the payment or performance of the Property. “Proceeds” includes
anything acquired upon the sale, lease, license, exchange, or other
disposition of the Property; any rights and claims arising from the
Property; and any collections and distributions on account of the
Property.
This Agreement remains in effect
until terminated in writing, even if the Secured Debts are paid and you are no longer
obligated to advance funds to me under any loan or credit agreement.
3. PROPERTY
DESCRIPTION. The Property is described as follows:
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A.
Inventory.
All inventory which I hold for ultimate sale or lease, or which
has been or will be supplied under contracts of service, or which are
raw materials, work in process, or materials used or consumed in my
business. |
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B.
Accounts
and Other Rights to Payment. All rights I have now or in the
future to payments including, but not limited to, payment for
property or services sold, leased, rented, licensed, or assigned,
whether or not I have earned such payment by performance. This
includes any rights and interests (including all liens and security
interests) which I may have by law or agreement against any Account
Debtor or obligor of mine. |
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C.
General
Intangibles. All general intangibles including, but not limited to,
tax refunds, applications for patents, patents, copyrights,
trademarks, trade secrets, good will, trade names, customer lists,
permits and franchises, payment intangibles, computer programs and
all supporting information provided in connection with a transaction
relating to computer programs, and the right to use my name. |
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D.
Equipment.
All equipment including, but not limited to, all machinery,
vehicles, furniture, fixtures, manufacturing equipment, farm
machinery and equipment, shop equipment, office and recordkeeping
equipment, and parts and tools. All equipment described in a list or
schedule which I give to you will also be included in the Property,
but such a list is not necessary for a valid security interest in my
equipment. |
4.
WARRANTIES
AND REPRESENTATIONS. I make to you the following warranties and
representations which will continue as long as this Agreement is in
effect:
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A.
Power.
I am duly organized, and validly existing and in good standing in
all jurisdictions in which I operate. I have the power and authority
to enter into this transaction and to carry on my business or
activity as it is now being conducted and, as applicable, am
qualified to do so in each jurisdiction in which I operate. |
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B.
Authority.
The execution, delivery and performance of this Agreement and the
obligation evidenced by this Agreement are within my powers, have been duly
authorized, have received all necessary governmental approval, will
not violate any provision of law, or order of court or governmental
agency, and will not violate any agreement to which I am a party or
to which I am or any of my property is subject. |
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C.
Name
and Location. My name indicated in the DATE AND PARTIES section is my
exact legal name. I am an entity organized and registered under the
laws of Illinois. I will provide verification of registration and
location upon your request. I will provide you with at least 30 days
notice prior to any change in my name, address, or state of
organization or registration. |
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D.
Business
Name. Other than previously disclosed in writing to you I have not
changed my name or principal place of business within the last 10
years and have not used any other trade or fictitious name. Without
your prior written consent, I do not and will not use any other name
and will preserve my existing name, trade names and franchises. |
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E.
Ownership
of Property. I represent that I own all of the Property. Your
claim to the Property is ahead of the claims of any other creditor,
except as disclosed in writing to you prior to any advance on the
Secured Debts. I represent that I am the original owner of the
Property and, if I am not, that I have provided you with a list of
prior owners of the Property. |
5. DUTIES TOWARD PROPERTY.
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A.
Protection
of Secured Party’s Interest. I will defend the Property
against any other claim. I agree to do whatever you require to
protect your security interest and to keep your claim in the Property
ahead of the claims of other creditors. I will not do anything to
harm your position. |
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I
will keep books, records and accounts about the Property and my business in general. I
will let you examine these and make copies at any reasonable time. I will prepare any
report or accounting you request which deals with the Property. |
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B.
Use,
Location, and Protection of the Property. I will keep the Property in
my possession and in good repair. I will use it only for commercial
purposes. I will not change this specified use without your prior
written consent. You have the right of reasonable access to inspect
the Property and I will immediately inform you of any loss or damage
to the Property. I will not cause or permit waste to the Property. |
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I
will keep the Property at my address listed in the DATE AND PARTIES section unless we
agree I may keep it at another location. If the Property is to be used in other states, I
will give you a list of those states. The location of the Property is given to aid in the
identification of the Property. It does not in any way limit the scope of the security
interest granted to you. I will notify you in writing and obtain your prior written
consent to any change in location of any of the Property. I will not use the Property in
violation of any law. I will notify you in writing prior to any change in my address,
name or, if an organization, any change in my identity or structure. |
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Until
the Secured Debts are fully paid and this Agreement is terminated, I will not grant a
security interest in any of the Property without your prior written consent. I will pay
all taxes and assessments levied or assessed against me or the Property and provide
timely proof of payment of these taxes and assessments upon request. |
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C.
Selling,
Leasing or Encumbering the Property. With regard only to Accounts
Receivable, I will not sell, offer to sell, lease, or otherwise
transfer or encumber the Property without your prior written
permission. If I am in default under this Agreement, I may not sell
the Inventory portion of the Property even in the ordinary course of
business. Any disposition of the Property contrary to this Agreement
will violate your rights. Your permission to sell the Property may be
reasonably withheld without regard to the creditworthiness of any buyer
or transferee. I will not permit the Property to be the subject of
any court order affecting my rights to the Property in any action by
anyone other than you. If the Property includes chattel paper or
instruments, either as original collateral or as proceeds of the
Property, I will note your security interest on the face of the
chattel paper or instruments. |
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D.
Additional
Duties Specific to Accounts. I will not settle any Account for
less than its full value without your written permission, unless (a)
I provide Lender with a modified borrowing base calculation which
incorporates the proposed discounted Account settlement, and (b) if
such modified borrowing base shall indicate that the outstanding loan
balance exceeds the allowable advance limit, I will repay the loan
balance to such extent as to restore compliance with the borrowing
base. Until you tell me otherwise, I will collect all Accounts in the
ordinary course of business. I will not dispose of the Accounts by
assignment without your prior written consent. I will keep the proceeds from
all the Accounts and any goods which are returned to me or which I
take back. I will not commingle them with any of my other property. I
will deliver the Accounts to you at your request. If you ask me to
pay you the full price on any returned items or items retaken by me,
I will do so. I will make no material change in the terms of any
Account, and I will give you any statements, reports, certificates,
lists of Account Debtors (showing names, addresses and amounts
owing), invoices applicable to each Account, and other data in any
way pertaining to the Accounts as you may request. |
6. INSURANCE.
I agree to keep the Property insured against the risks reasonably
associated with the Property. I will maintain this insurance in the
amounts you require. This insurance will last until the Property is
released from this Agreement. I may choose the insurance company,
subject to your approval, which will not be unreasonably withheld.
I will have the insurance company
name you as loss payee on any insurance policy. I will give you and the insurance company
immediate notice of any loss. You may apply the insurance proceeds toward what is owed on
the Secured Debts. You may require added security as a condition of permitting any
insurance proceeds to be used to repair or replace the Property.
If you acquire the Property in
damaged condition, my right to any insurance policies and proceeds will pass to you to
the extent of the Secured Debts.
I will immediately notify you of
cancellation or termination of insurance. If I fail to keep the Property insured, you may
obtain insurance to protect your interest in the Property. This insurance may include
coverages not originally required of me, may be written by a company other than one I
would choose, and may be written at a higher rate than I could obtain if I purchased the
insurance.
7. COLLECTION
RIGHTS OF THE SECURED PARTY. Account Debtor means the person who
is obligated on an account, chattel paper, or general intangible. I
authorize you to notify my Account Debtors of your security interest
and to deal with the Account Debtors’ obligations at your
discretion. You may enforce the obligations of an Account Debtor,
exercising any of my rights with respect to the Account Debtors’ obligations
to make payment or otherwise render performance to me, including the
enforcement of any security interest that secures such obligations.
You may apply proceeds received from the Account Debtors to the
Secured Debts or you may release such proceeds to me.
I specifically and irrevocably
authorize you to exercise any of the following powers at my expense, without limitation,
until the Secured Debts are paid in full (it being understood between Borrower and Lender
however, that Lender would only exercise such powers after an event of default, and
subsequent to the observation of any defined response period.
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A.
demand payment and enforce collection from
any Account Debtor or Obligor by suit or otherwise. |
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B.
enforce any security interest, lien or
encumbrance given to secure the payment or performance of any Account
Debtor or any obligation constituting Property. |
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C.
file proofs of claim or similar documents
in the event of bankruptcy, insolvency or death of any person
obligated as an Account Debtor. |
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D.
compromise, release, extend, or exchange
any indebtedness of an Account Debtor. |
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E.
take control of any proceeds of the Account
Debtors’ obligations and any returned or repossessed goods. |
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F.
endorse all payments by any Account Debtor
which may come into your possession as payable to me. |
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G.
deal in all respects as the holder and
owner of the Account Debtors’ obligations. |
8. AUTHORITY
TO PERFORM. I authorize you to do anything you deem reasonably
necessary to protect the Property, and perfect and continue your
security interest in the Property. If I fail to perform any of my
duties under this Agreement or any other security interest, you are
authorized, without notice to me, to perform the duties or cause them
to be performed.
These authorizations
include, but are not limited to, permission to:
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A.
pay and discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the
Property. |
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B.
pay any rents or other charges under any
lease affecting the Property. |
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C.
order and pay for the repair, maintenance
and preservation of the Property. |
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D.
sign, when permitted by law, and file any
financing statements on my behalf and pay for filing and recording
fees pertaining to the Property. |
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E.
place a note on any chattel paper
indicating your interest in the Property. |
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F.
take any action you feel necessary to
realize on the Property, including performing any part of a contract
or endorsing it in my name. |
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G.
handle any suits or other proceedings
involving the Property in my name. |
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H.
prepare, file, and sign my name to any
necessary reports or accountings. |
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I.
make an entry on my books and records
showing the existence of this Agreement. |
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J.
notify any Account Debtor of your interest
in the Property and tell the Account Debtor to make payments to you
or someone else you name. |
If you perform for me, you will use
reasonable care. Reasonable care will not include: any steps necessary to preserve rights
against prior parties; the duty to send notices, perform services or take any other
action in connection with the management of the Property; or the duty to protect,
preserve or maintain any security interest given to others by me or other parties. Your
authorization to perform for me will not create an obligation to perform and your failure
to perform will not preclude you from exercising any other rights under the law or this
Agreement.
If you come into actual or
constructive possession of the Property, you will preserve and protect the Property. For
purposes of this paragraph, you will be in actual possession of the Property only when
you have physical, immediate and exclusive control over the Property and you have
affirmatively accepted that control. You will be in constructive possession of the
Property only when you have both the power and the intent to exercise control over the
Property.
9. DEFAULT.
I will be in default if any of the following occur (however, it is
understood that Lender will not exercise any of its allowed remedies
without first: (a) providing written notification to Borrower of the
event of default, and (b) observing any response period that it
allows for in said notification):
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A. Payments.
I fail or Guarantor fails to make a payment in full when due. |
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B.
Insolvency
or Bankruptcy. I make an assignment for the benefit of creditors
or become insolvent, either because my liabilities exceed my assets
or I am unable to pay my debts as they become due; or I petition for
protection under federal, state or local bankruptcy, insolvency or
debtor relief laws, or am the subject of a petition or action under
such laws and fail to have the petition or action dismissed within a
reasonable period of time not to exceed 60 days. |
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C.
Business
Termination. I merge, dissolve, reorganize, end my business or
existence, or a partner or majority owner dies or is declared legally
incompetent. |
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D.
Failure
to Perform. I fail to perform any condition or to keep any promise
or covenant of this Agreement. |
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E.
Other
Documents. A default occurs under the terms of any other transaction
document. |
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F.
Other
Agreements. I am in default on any other debt or agreement I have
with you. |
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G.
Misrepresentation.
I make any verbal or written statement or provide any financial
information that is untrue, inaccurate, or conceals a material fact at
the time it is made or provided. |
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H.
Judgment.
I fail to satisfy or appeal any judgment against me. |
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I.
Forfeiture.
The Property is used in a manner or for a purpose that threatens
confiscation by a legal authority. |
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J.
Name
Change. I change my name or assume an additional name without
notifying you before making such a change. |
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K.
Property
Transfer. I transfer all or a substantial part of my money or
property. |
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L.
Property
Value. The value of the Property declines or is impaired. |
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M.
Material
Change. Without first notifying you, there is a material change in
my business, including ownership, management, and financial
conditions. |
10. REMEDIES.
After I default, and after you give any legally required notice
and opportunity to cure the default, you may at your option do any
one or more of the following.
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A.
Acceleration.
You may make all or any part of the amount owing by the terms of
the Secured Debts immediately due. |
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B.
Sources.
You may use any and all remedies you have under state or federal
law or in any instrument evidencing or pertaining to the Secured
Debts. |
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C.
Insurance
Benefits. You may make a claim for any and all insurance benefits
or refunds that may be available on my default. |
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D.
Payments
Made On My Behalf. Amounts advanced on my behalf will be
immediately due and may be added to the Secured Debts. |
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E.
Assembly
of Property. You may require me to gather the Property and make it
available to you in a reasonable fashion. |
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F.
Repossession.
You may repossess the Property so long as the repossession does
not involve a breach of the peace. You may sell the Property as provided by
law. You may apply what you receive from the sale of the Property to
your expenses, your reasonable attorneys’ fees and legal
expenses (where not prohibited by law), and any debt I owe you. If
what you receive from the sale of the Property does not satisfy the
debt, I will be liable for the deficiency (where permitted by law).
In some cases, you may keep the Property to satisfy the debt. |
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Where
a notice is required, I agree that ten days prior written notice sent by first class mail
to my address listed in this Agreement will be reasonable notice to me under the Virginia
Uniform Commercial Code. If the Property is perishable or threatens to decline speedily
in value, you may, without notice to me, dispose of any or all of the Property in a
commercially reasonable manner at my expense following any commercially reasonable
preparation or processing. |
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If
any items not otherwise subject to this Agreement are contained in the Property when you
take possession, you may hold these items for me at my risk and you will not be liable
for taking possession of them. |
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G.
Use and
Operation. You may enter upon my premises and take possession of
all or any part of my property for the purpose of preserving the
Property or its value, so long as you do not breach the peace. You
may use and operate my property for the length of time you feel is
necessary to protect your interest, all without payment or
compensation to me. |
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H.
Waiver.
By choosing any one or more of these remedies you do not give up
your right to use any other remedy. You do not waive a default if you
choose not to use a remedy. By electing not to use any remedy, you do
not waive your right to later consider the event a default and to use
any remedies if the default continues or occurs again. |
11. WAIVER
OF CLAIMS. I waive all claims for loss or damage caused by your acts
or omissions where you acted reasonably and in good faith.
12. PERFECTION
OF SECURITY INTEREST. I authorize you to file a financing
statement covering the Property. I will comply with, facilitate, and
otherwise assist you in connection with obtaining perfection or
control over the Property for purposes of perfecting your security
interest under the Uniform Commercial Code.
13. APPLICABLE
LAW. This Agreement is governed by the laws of Virginia, the
United States of America and to the extent required, by the laws of
the jurisdiction where the Property is located. In the event of a
dispute, the exclusive forum, venue and place of jurisdiction will be
in Virginia, unless otherwise required by law.
14. JOINT
AND INDIVIDUAL LIABILITY AND SUCCESSORS. Each Debtor’s
obligations under this Agreement are independent of the obligations
of any other Debtor. You may xxx each Debtor individually or together
with any other Debtor. You may release any part of the Property and I
will still be obligated under this Agreement for the remaining
Property. The duties and benefits of this Agreement will bind and
benefit the successors and assigns of you and me.
15. AMENDMENT,
INTEGRATION AND SEVERABILITY. This Agreement may not be amended
or modified by oral agreement. No amendment or modification of this
Agreement is effective unless made in writing and executed by you and
me. This Agreement is the complete and final expression of the
understanding between you and me. If any provision of this Agreement
is unenforceable, then the unenforceable provision will be severed
and the remaining provisions will still be enforceable.
16. INTERPRETATION.
Whenever used, the singular includes the plural and the plural
includes the singular. The section headings are for convenience only and
are not to be used to interpret or define the terms of this
Agreement.
17. NOTICE,
FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS. Unless otherwise
required by law, any notice will be given by delivering it or mailing
it by first class mail to the appropriate party’s address listed
in the DATE AND PARTIES section, or to any other address designated
in writing. Notice to one party will be deemed to be notice to all
parties. I will inform you in writing of any change in my name,
address or other application information. I will provide you any
financial statement or information you request. All financial
statements and information I give you will be correct and complete. I
agree to sign, deliver, and file any additional documents or
certifications that you may consider necessary to perfect, continue,
and preserve my obligations under this Agreement and to confirm your
lien status on any Property. Time is of the essence.
SIGNATURES. By
signing under seal, I agree to the terms contained in this Agreement. I also
acknowledge receipt of a copy of this Agreement.
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By_________________________________(Seal)
Xxxxx X. XxXxxxxx, CFO |
