Exhibit 10.14
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and executed as of the 4th day of
September, 2001, by and between VITRIX, INC., a Nevada corporation (hereinafter
called "Debtor") and Xxxxxxx X. Xxxxx (hereinafter called "Secured Party").
Capitalized terms used but not otherwise defined herein shall have the meaning
assigned to such terms in that certain Note Purchase Agreement, dated as of
September 4, 2001 (the "Note Purchase Agreement").
WITNESSETH:
In order to secure the due and timely payment of all of the Secured
Indebtedness (as hereinafter defined), including the due and timely performance
by Debtor of all of the covenants, agreements and undertakings of Debtor made
herein, Debtor hereby grants to Secured Party a continuous and continuing
security interest in and to all of the following:
(a) All Accounts (as defined in Article 9 of the Arizona Uniform
Commercial Code), accounts receivable, reimbursements, notes receivable,
contracts, contract rights, chattel paper, documents and instruments
arising out of the sale of goods or services rendered and any and all
agreements for the sale of goods or products or furnishing of services by
Debtor;
(b) All Inventory (as defined in Article 9 of the Arizona Uniform
Commercial Code) presently owned and which may be hereafter acquired
(howsoever and whensoever acquired) by Debtor and wheresoever located;
(c) All Equipment (as defined in Article 9 of the Arizona Uniform
Commercial Code) presently owned and which may be hereafter acquired
(howsoever and whensoever acquired) by Debtor and wheresoever located,
together with any and all additions and accessions thereto and all
Equipment acquired by replacement or substitution;
(d) All General Intangibles and Contract Rights (as defined in Article
9 of the Arizona Uniform Commercial Code) howsoever and whensoever acquired
and including, without limitation, all books, records, ledgers, journals,
files and other memoranda relating in any manner to any of the Secured
Indebtedness (as hereinafter defined), all patents, copyrights, trademarks,
shoprights, manuals, warranties, literature of any sort relating to
maintenance, operation, repair or preservation of any Inventory or
Equipment, all rights of recovery of Debtor against others for or on
account of damage, destruction or injury to or conversion of any Inventory
or Equipment of Debtor;
(e) All Chattel Paper, Instruments (including but not limited to
securities), Documents of Title (as such terms are defined in Article 9 of
the Arizona Uniform Commercial Code) negotiable documents and securities
presently owned and which may be hereafter acquired (howsoever and
whensoever acquired) by Debtor and wheresoever located, provided, however,
that the securities held by Debtor and representing an equity interest in
Intelogistics Corp. shall be excluded from this Security Agreement; and
(f) All proceeds and products of the Collateral and all replacements,
additions, substitutions and appurtenances therefor.
(All of the foregoing being referred to herein collectively as the
"Collateral.")
ARTICLE I
SECURED INDEBTEDNESS
1.1 This Security Agreement is made to provide collateral and security for
the payment and performance by Debtor of all of the following:
(a) Debtor's Note, dated as of even date herewith, issued pursuant to
the Note Purchase Agreement, payable to the order of Secured Party with
interest and with a final maturity date of October 1, 2006, together with
any and all extensions, renewals, modifications, substitutions and changes
in form thereof (collectively, the "Note");
(b) The amount of all reasonable expenditures made and obligations
incurred by Secured Party in attempting to remedy any material default on
the part of Debtor in respect of this Security Agreement or the Note;
(c) The amount of all expenditures made and obligations incurred by
Secured Party in attempting to collect any Secured Indebtedness or to
enforce any right or remedy for realizing upon any Collateral for any
Secured Indebtedness; and
(d) Interest on all amounts expended by Secured Party for any of the
purposes specified in (b) and (c) next hereinabove at an annual rate of
interest equal to 18% per annum.
(All of the foregoing is referred to herein as the "Secured Indebtedness".)
ARTICLE II
REPRESENTATIONS
Debtor represents to Secured Party as follows:
2.1 Debtor is duly organized and existing under the laws of the State of
Nevada.
2.2 The execution, delivery and performance of this Security Agreement are
within Debtor's corporate powers, have been duly authorized and are not in
contravention of law applicable to Debtor or the powers of Debtor's charter,
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bylaws or other incorporation papers or of any indenture agreement or
undertaking to which Debtor is a party or by which it is bound.
2.3 Debtor is the owner of the Collateral and has good right and authority
to grant a security interest in the Collateral.
2.4 There are no presently outstanding liens, security interests or
encumbrances in or on the Collateral or the proceeds, nor any financing
statements covering the Collateral or the proceeds thereof, except for the
security interest granted in this Security Agreement and the financing
statements executed pursuant hereto.
2.5 The address of Debtor's place of business is correctly set forth at the
beginning of this Security Agreement.
ARTICLE III
COVENANTS
So long as the Secured Indebtedness or any part thereof remains unpaid,
Debtor, for itself, its successors and assigns, covenants and agrees with
Secured Party, its successors and assigns, as follows:
3.1 Debtor shall make prompt payment, as the same becomes due, of all the
Secured Indebtedness in accordance with the terms and provisions of the
agreements evidencing such Indebtedness.
3.2 Debtor shall maintain its corporate existence and pay all necessary
corporate franchise and license taxes, fees and charges.
3.3 Debtor shall pay all reasonable expenses and reimburse Secured Party
for any reasonable expenditures, including reasonable attorneys' fees and legal
expenses, in connection with Secured Party's exercise of any of its rights and
remedies under Article IV or Secured Party's protection of the Collateral and
its security interest therein.
3.4 Debtor shall at all times keep accurate and complete records of the
Collateral and its proceeds.
3.5 Debtor agrees to execute such documents and perform all acts and things
which Secured Party may deem necessary to perfect and continue to perfect the
security interest created by this Security Agreement, to protect the Collateral
and to enforce the security interest, including the execution and filing of
financing statements, which appointment as attorney-in-fact is irrevocable and
coupled with an interest.
3.6 Notwithstanding the security interest in proceeds granted herein,
Debtor shall not sell, lend, rent, lease or otherwise dispose of the equipment
forming a part of the Collateral, except for dispositions made in the ordinary
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course of business consistent with past practice, or any interest therein, and
Debtor shall keep such Collateral free from unpaid charges, including taxes, and
from liens, encumbrances and security interests other than that of Secured Party
and will warrant and defend the Collateral against the claims and demands of all
other persons, except the holders of the security interests described herein.
3.7 Debtor shall pay before delinquency all taxes and assessments upon the
Collateral or for its use or operation.
3.8 Debtor shall insure the Collateral constituting Goods (as defined in
Article 9 of the Arizona Uniform Commercial Code) with companies acceptable to
Secured Party against such casualties and in such amounts as Secured Party shall
require.
3.9 The Collateral constituting Goods will be properly maintained in good
condition and will not be misused or abused, wasted or allowed to deteriorate,
except for the ordinary wear and tear of its intended primary use.
3.10 If Debtor shall default in paying when due any tax, assessment or
charge levied upon the Collateral or any part thereof or if Debtor fails to
maintain the Collateral as above provided, Secured Party may at its option and
without waiver of any right hereunder, pay such tax, assessment or charge, or
take whatever action is necessary to maintain the Collateral and in each such
case the amount paid in respect thereof shall be payable to Secured Party
forthwith with interest at 18% per annum until paid and shall become part of the
indebtedness secured by this Security Agreement.
3.11 The equipment forming a part of the Collateral will be used in the
business of Debtor and shall remain in Debtor's possession or control at all
times.
3.12 Debtor shall provided notice to Secured Party within ten days after
changing the address of its principal place of business.
3.13 If the Collateral is evidenced by promissory notes, trade acceptances
or other instruments for the payment of money, Debtor will, at the request of
Secured Party, immediately deliver them to Secured Party, appropriately endorsed
to Secured Party's order, Debtor waives presentment, demand, notice of dishonor,
protest and notice of protest.
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ARTICLE IV
ASSIGNMENT OF PAYMENTS;
CERTAIN POWERS OF SECURED PARTY
Debtor hereby authorizes and directs each issuer and each account debtor
and each other person or entity obligated to make payment in respect of any of
the intangible property constituting Collateral (each issuer and each such
account debtor and other person or entity being herein called a "Collateral
Obligor") to pay over to Secured Party (on behalf of all of the holders of the
Notes), its officers, agents or assigns, upon demand by Secured Party, all or
any part of the Collateral without making any inquiries as to the status or
balance of the Secured Indebtedness and without any notice to or further consent
of Debtor. To facilitate the rights of Secured Party hereunder, Debtor hereby
authorizes Secured Party, its officers, employees, agents or assigns upon the
occurrence of a default hereunder, and at any time thereafter:
(a) to notify Collateral Obligors of the security interest in the
respective Collateral created hereunder and to collect all or any part of
the Collateral without further notice to or further consent by Debtor, and
Debtor hereby constitutes and appoints Secured Party the true and lawful
attorney of Debtor (such agency being coupled with an interest),
irrevocably, with power of substitution, in the name of Debtor or in its
own name or otherwise, to take any of the actions described in the
following clauses (b), (c), (d), (e) and (f);
(b) to ask, demand, collect, receive, receipt for, xxx for, compound
and give acquittance for any and all amounts which may be or become due or
payable under the Collateral and to settle and/or adjust all disputes
and/or claims directly with any Collateral Obligor and to compromise,
extend the time for payment arrange for payment in installments, otherwise
modify the terms of, or release, any of the Collateral, on such terms and
conditions as Secured Party may determine (without thereby incurring
responsibility to or discharging or otherwise affecting the liability of
Debtor to Secured Party under this Security Agreement or otherwise);
(c) to direct delivery of, receive, open and dispose of all mail
addressed to Debtor and to execute, sign, endorse, transfer and deliver (in
the name of Debtor or in its own name or otherwise) any and all receipts or
other orders for the payment of money drawn on the Collateral and all
notes, acceptances, commercial paper, drafts, checks, money orders and
other instruments given in payment or in part payment thereof and all
invoices, freight and express bills and bills of lading, storage receipts,
warehouse receipts and other instruments and documents in respect of any of
the Collateral and any other documents necessary to evidence, perfect and
realize upon the security interests and obligations of this Security
Agreement;
(d) in its discretion to file any claim or take any other action or
proceeding which Secured Party may deem necessary or appropriate to protect
and preserve the rights, titles and interests of Secured Party hereunder;
(e) to sign the name of Debtor to financing statements, drafts against
Collateral Obligors, assignments or verifications of any of the Collateral
and notices to Collateral Obligors.
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Secured Party hereby agrees that any action taken by a Secured Party
hereunder shall be taken on behalf of all Holders of the Notes and any amounts
collected shall be paid over to each Holder in accordance with the terms of the
Note and the Note Purchase Agreement. Unless and until a default hereunder shall
have occurred, Debtor shall be entitled, except as herein provided and subject
to the terms of any other loan document, receive and retain all distributions on
the Collateral or any part thereof.
The powers conferred on Secured Party pursuant to this Article IV are
conferred solely to protect Secured Party's interest in the Collateral and shall
not impose any duty or obligation on Secured Party to perform any of the powers
herein conferred.
ARTICLE V
REMEDIES IN EVENT OF DEFAULT
5.1 The term "default" as used in this Security Agreement shall mean the
occurrence of any event of default as defined in the Note or the occurrence of
any of the following events:
(a) The failure of Debtor to make due and punctual payment of the
Secured Indebtedness secured hereby, principal or interest, or any part
thereof, as the same shall become due and payable, whether at the scheduled
due date, maturity or when accelerated pursuant to any power to accelerate
held by Secured Party.
(b) The failure of Debtor punctually and properly to observe, keep or
perform any covenant, agreement or condition relating to the Secured
Indebtedness or herein required to be observed, kept or performed, if such
failure continues for thirty (30) days after written notice and demand by
Secured Party for the performance of such covenant, agreement or condition.
(c) Any material representation made in this Security Agreement shall
prove to be untrue.
(d) Debtor declares itself insolvent or is determined to be insolvent
by a court of competent jurisdiction, or makes an assignment for the
benefit of creditors.
(e) A receiver is appointed for all or substantially all of the
properties of Debtor or of the Collateral or any part thereof.
(f) Debtor is adjudicated a bankrupt or requests, either by way of
petition or answer, that Debtor be adjudicated a bankrupt or that Debtor be
allowed or granted any composition, rearrangement, extension,
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reorganization or other relief under any bankruptcy law or under any other
law for the relief of debtors now or hereafter existing.
(g) The dissolution or other termination of Debtor.
5.2 Upon the occurrence of a default, Secured Party shall have the option,
with or without notice, of declaring all the Secured Indebtedness in its
entirety to be immediately due and payable.
5.3 Upon the occurrence of a default, Secured Party may exercise its right
of enforcement under the Uniform Commercial Code in force in the State of
Arizona at the date of this Security Agreement. In conjunction with, addition to
or substitution for those rights and remedies:
(a) Secured Party may enter upon Debtor's premises to take possession
of, assemble and collect the Collateral or to render it unusable; and
(b) Secured Party may require Debtor to assemble the Collateral and
make it available at a place Secured Party designates which is mutually
convenient to allow Secured Party to take possession or dispose of the
Collateral; and
(c) Secured Party may waive any default or remedy any default in any
reasonable manner without waiving the default remedied and without waiving
any other prior or subsequent default; and
(d) Written notice mailed to Debtor at its address set forth at the
beginning of this Security Agreement ten (10) days prior to the date of
public sale of the Collateral or prior to the date after which private sale
of the Collateral will be made shall constitute reasonable notice.
5.4 Also upon the occurrence of a default, Secured Party may at any time,
whether before or after any revocation of such power and authority or the
maturity of any of the Secured Indebtedness, (i) notify any parties obligated on
any of the Accounts, notes receivable, contracts or General Intangibles to make
payment to Secured Party of any amounts due or to become due thereunder and
enforce collection of any such Accounts, notes receivable, contracts or General
Intangibles by suit or otherwise and surrender, release or exchange all or any
part thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any obligations thereunder or evidenced
thereby; (ii) Debtor will, at its own expense, notify any parties obligated on
any of the Accounts, notes receivable, contracts or General Intangibles to make
payment to the Secured Party of any amounts due or to become due thereunder; and
(iii) Secured Party is authorized to endorse, in the name of Debtor, any item
howsoever received by Secured Party, representing any payment on or other
proceeds of any of the Collateral. In each instance in which Secured Party may
elect hereunder to effect direct collection of any one or more Accounts, notes
receivable, contracts or General Intangibles, Secured Party is also entitled to
take possession of all books and records of Debtor relating to the Debtor's
Accounts, notes receivable, contracts or General Intangibles and Debtor will not
in any manner take or suffer any action to be taken to hinder, delay or
interfere with the Secured Party's attempts to effect collection.
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5.5 In addition to the above, Secured Party shall have and may exercise all
other rights conferred by law or under this Security Agreement and may resort to
any remedy existing at law or in equity for the collection of the Secured
Indebtedness and for the enforcement of the covenants and agreements contained
herein and the resort to any remedy shall not prevent the concurrent or
subsequent employment of any other appropriate remedy or remedies.
5.6 The rights granted hereunder are cumulative of any and all other
security now or hereafter held by Secured Party or other holder for payment of
the Secured Indebtedness and Secured Party may resort to any security now or
hereafter existing for the payment of such indebtedness in such portions and in
such order as may seem best to Secured Party in its sole and uncontrolled
discretion. No failure on the part of Secured Party to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof nor shall any single or partial exercise by Secured Party of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy.
ARTICLE VI
MISCELLANEOUS
6.1 When all of the Secured Indebtedness has been paid in full and all
obligations and liabilities of Debtor hereunder shall have been performed and
discharged, then and in that case only the security interests evidenced hereby
or provided for herein shall terminate and shall be released at the expense of
Debtor and the Collateral then held as such by Secured Party shall become free
and clear of such security interests. In such event Secured Party shall execute
such instruments, including, but not limited to, Termination Statements,
necessary to give effect to this Section 6.1.
6.2 No modification or waiver of any provision of this Security Agreement
nor consent to any departure by Debtor therefrom shall in any event be effective
unless the same shall be in writing and signed by Secured Party and then such
waiver or consent shall be effective only in the specific instances, for the
purpose for which given and to the extent therein specified. No notice to nor
demand on Debtor in any case shall of itself entitle Debtor to any other or
further notice or demand in similar or other circumstances.
6.3 Secured Party may enter upon Debtor's premises at any reasonable time
to inspect the Collateral and Debtor's books and records pertaining to the
Collateral or its proceeds and Debtor shall assist Secured Party in whatever way
necessary to make any such inspection.
6.4 Secured Party may at any time notify the account debtors or obligors of
any accounts, chattel paper, negotiable instruments or other evidences of
indebtedness remitted by Debtor to Secured Party as proceeds to pay Secured
Party directly.
6.5 Secured Party may, by any employee or employees Secured Party may
designate, execute, sign, endorse, transfer or deliver in the name of Debtor,
notes, checks, drafts or other instruments, for the payment of money and
receipts, certificates of origin, applications for certificates of title or any
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other documents necessary to evidence, perfect and realize upon the security
interests and obligations of this Security Agreement.
6.6 Secured Party may assign this Security Agreement so that the assignee
shall be entitled to the rights and remedies of Secured Party hereunder and in
the event of such assignment, Debtor will assert no claims or defenses it may
have against the assignee except those granted in this Security Agreement.
6.7 All notices and communications provided for herein shall be delivered
or mailed, registered or certified, postage prepaid, addressed to the parties
hereto at their addresses set forth at the beginning of this Security Agreement,
or such other address as any party hereto shall hereafter designate by written
notice to the other party.
6.8 A determination that any provision of this Security Agreement is
unenforceable or invalid shall not affect the validity or enforceability of any
other provision.
6.9 Unless the context clearly indicates otherwise, "Debtor" and "Secured
Party" as used in this Security Agreement include the respective successors and
assigns of those parties.
6.10 The law governing this Security Agreement shall be that of the State
of Arizona in force at the date of this Security Agreement.
IN WITNESS WHEREOF, this Security Agreement has been duly executed as of
the date first above written.
VITRIX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Chief Executive Officer
INVESTOR
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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