Exhibit 10.8
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made this 20th day of
December by and between INFOTOPIA, INC. ("INFOTOPIA") a Nevada corporation
having an address at 0000 Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxx, 00000 and
VITAQUEST INTERNATIONAL, INC. ("VITAQUEST") a Delaware corporation having an
address at 0 Xxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxxxx 00000.
1. GRANT OF SECURITY INTEREST. For value received and to secure the
obligations and performance of INFOTOPIA under that certain Unconditional
Guaranty (the "Guaranty") dated December __, 2001 as the same may be amended
from time to time in favor of VITAQUEST which secures certain payments and
obligations of Trendirect Marketing, Inc. ("TRENDIRECT"), a Delaware corporation
pursuant to a certain Promissory Note (the "Note") dated December __, 2001 and
any and all other obligations of INFOTOPIA to VITAQUEST however created, arising
or evidenced (including without limitation, any obligations of INFOTOPIA or
TRENDIRECT under that certain letter of intent dated November 6, 2001 between
the parties, as amended (the "LOI"), and any and all other documents executed
and/or delivered in connection with the transactions contemplated thereby)
whether direct or indirect, absolute or contingent, now existing or hereafter
arising or acquired, and whether or not evidenced by a loan document, future
advances, and all costs and expenses incurred by VITAQUEST to obtain, preserve,
perfect and enforce the security interest granted herein and to maintain,
preserve and collect the property subject to the security interest,
(collectively, the "Obligations"), INFOTOPIA hereby grants to VITAQUEST a
continuing security interest in and lien upon the following described property,
whether now owned or hereafter acquired or arising, wherever located and any
additions, replacements, accessions, or substitutions thereof and all cash and
non-cash proceeds and products thereof (collectively, the "Collateral"):
All of the personal property of INFOTOPIA of every kind and nature including,
without limitation, all accounts, accounts receivable, equipment, accessions,
inventory, chattel paper, instruments, documents, rights to proceeds under
letters of credit, letter-of-credit rights, deposit accounts and general
intangibles.
Any term used in this Agreement and in any financing statement filed in
connection herewith which is defined in the Uniform Commercial Code as in effect
in the State of New Jersey on the date this Agreement is signed by INFOTOPIA
(the "UCC") and not otherwise defined in this Agreement, the Guaranty, the Note,
or any other document executed or delivered in connection therewith or any of
the transactions contemplated thereby (collectively, the "Loan Documents") has
the meaning given to such term in the UCC.
2. CHANGE IN NAME OR LOCATIONS. INFOTOPIA represents and warrants that the
name and address of INFOTOPIA appearing at the beginning of this Agreement is
INFOTOPIA's exact legal name and address of its chief executive office, and that
INFOTOPIA is a corporation duly organized and existing under the laws of the
State of Nevada. INFOTOPIA has not changed its name, or the name under which it
does business, within the five years preceding the date hereof except as
previously reported in writing to VITAQUEST. INFOTOPIA has not moved its chief
executive office within the five years preceding the date hereof except as
previously reported in writing to VITAQUEST. INFOTOPIA has not changed the
jurisdiction of its organization within the five years preceding the date hereof
except as previously reported in writing to VITAQUEST. INFOTOPIA hereby agrees
that if the location of the Collateral changes from the locations listed on
Exhibit "A" hereto and made a part hereof, or if INFOTOPIA changes its name or
form of organization, or establishes a name in which it may do business that is
not listed as a tradename on Exhibit "A" hereto, INFOTOPIA will immediately
notify VITAQUEST in writing of the additions or changes.
3. REPRESENTATIONS AND WARRANTIES REGARDING COLLATERAL. INFOTOPIA represents,
warrants and covenants to VITAQUEST that:
(a) Except as set forth on Schedule "B" annexed hereto, INFOTOPIA owns the
Collateral free of all liens, security interests and claims;
(b) Except as set forth on Schedule "B" annexed hereto, INFOTOPIA has not
made any prior sale, pledge, encumbrance, assignment or other disposition of any
of the Collateral and the same are free from all encumbrances and rights of
setoff of any kind;
(c) INFOTOPIA has good and marketable title to the Collateral and will
warrant and defend the same against all claims:
(d) except for the Permitted Liens, the security interest in and lien upon
the Collateral granted to VITAQUEST hereunder is a second security interest in
and lien upon such Collateral;
(e) except as herein provided, INFOTOPIA will not hereafter without the
prior written consent of VITAQUEST sell, pledge, encumber, assign or otherwise
dispose of any of the Collateral or permit any right of setoff, lien or security
interest to exist thereon except to VITAQUEST;
(f) INFOTOPIA will defend the Collateral against all claims and demands of
all persons at any time claiming the same or any interest therein;
(g) each account and general intangible, if included in the definition of
Collateral, is genuine and enforceable in accordance with its terms and
INFOTOPIA will defend the same against all claims, demands, setoffs and
counterclaims at any time asserted; and
(h) at the time any account or general intangible becomes subject to this
Agreement, such account or general intangible will be a good and valid account
representing a bona fide sale of goods or services by INFOTOPIA and such goods
will have been shipped to the respective account debtors or the services will
have been performed for the respective account debtors, and no such account or
general intangible will be subject to any claim for credit, allowance or
adjustment by any account debtor or any setoff, defense or counterclaim.
4. OTHER REPRESENTATIONS AND WARRANTIES. INFOTOPIA represents, warrants and
covenants to VITAQUEST that:
(a) all information now and hereafter furnished to VITAQUEST is and will
be true, correct and complete in all material respects;
(b) the execution, delivery and performance by INFOTOPIA of this Agreement
and any other Loan Document to which it is a party are within its power, have
been duly authorized as may be required and, if necessary, by making appropriate
filings with any governmental agency or unit and are the legal, binding, valid
and enforceable obligations of INFOTOPIA and do not (i) contravene, or
constitute (with or without the giving of notice or lapse of time or both) a
violation of any provision of applicable law, a violation of the organizational
documents of INFOTOPIA, or a default under any agreement, judgment, injunction,
order, decree or other instrument binding upon or affecting INFOTOPIA, (ii)
result in the creation or imposition of any lien (other than the lien(s) created
by the Loan Documents) on any of INFOTOPIA's assets, or (iii) give cause for the
acceleration of any obligations of INFOTOPIA to any other creditor;
(c) INFOTOPIA has good and marketable title to all of the properties and
assets reflected on the balance sheets and financial statements, if any,
supplied to VITAQUEST by INFOTOPIA, and all such properties and assets are free
and clear of mortgages, security deeds, pledges, liens, charges, and all other
encumbrances, except as those liens existing as of the date hereof that were
disclosed to VITAQUEST by INFOTOPIA in writing and approved by VITAQUEST as set
forth in Schedule "B" annexed hereto ("Permitted Liens");
(d) to INFOTOPIA's knowledge, no default has occurred under any Permitted
Liens and no claims or interests adverse to INFOTOPIA's present rights in its
properties and assets have arisen;
2
(e) INFOTOPIA has duly filed, paid and/or discharged all taxes or other
claims which may become a lien on any of its property or assets, except to the
extent that such items are being appropriately contested in good faith and an
adequate reserve for the payment thereof is being maintained;
(f) INFOTOPIA is not, and after consummation of this Agreement and after
giving effect to all indebtedness incurred and liens created by INFOTOPIA in
connection with this Agreement, the Guaranty, and/or any other Loan Document,
will not be, insolvent within the meaning of 11 U.S.C. Section 101(32);
(g) INFOTOPIA is in compliance in all material respects with all federal,
state and local laws, rules and regulations applicable to its properties,
operations, business, and finances, including, without limitation, any federal
or state laws relating to liquor (including 18 U.S.C. Section 3617, et seq.) or
narcotics (including 21 U.S.C. Section 801, et seq.) and/or any commercial
crimes; all applicable federal, state and local laws and regulations intended to
protect the environment; and the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), if applicable;
(h) INFOTOPIA is duly created, validly existing and in good standing under
the laws of the state of its organization, and have all powers, governmental
licenses, authorizations, consents and approvals required to operate its
business as now conducted;
(i) INFOTOPIA is duly qualified, licensed and in good standing in each
jurisdiction where qualification or licensing is required by the nature of its
business or the character and location of its property, business or customers,
and in which the failure to so qualify or be licensed, as the case may be, in
the aggregate, could have a material adverse effect on the business, financial
position, results of operations, properties or prospects of INFOTOPIA;
(j) there are no pending or threatened suits, claims or demands against
INFOTOPIA that have not been disclosed directly to VITAQUEST by INFOTOPIA in
writing, and approved by VITAQUEST;
(k) none of the proceeds of the credit extended pursuant to this Agreement
shall be used directly or indirectly for the purpose of purchasing or carrying
any margin stock in violation of any of the provisions of Regulation U of the
Board of Governors of the Federal Reserve System ("Regulation U"), or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry margin stock or for any other purchase which might render
the Loan a "Purpose Credit" within the meaning of Regulation U;
(l) each employee pension benefit plan, as defined in ERISA, maintained by
INFOTOPIA meets, as of the date hereof, the minimum funding standards of ERISA
and all applicable regulations thereto and requirements thereof, and of the
Internal Revenue Code of 1986, as amended. No "Prohibited Transaction" or
"Reportable Event" (as both terms are defined by ERISA) has occurred with
respect to any such plan;
(m) the fair saleable value of Infotopia's assets exceeds its liabilities,
INFOTOPIA is meeting its current liabilities as they mature, and INFOTOPIA is
and shall remain solvent;
(n) all financial statements of INFOTOPIA furnished to VITAQUEST are
correct and accurately reflect the financial condition of INFOTOPIA as of the
respective dates thereof;
(o) since the date of such financial statements, there has not occurred a
material adverse change in the financial condition of INFOTOPIA; and
(p) there are not now pending any court or administrative proceedings or
undischarged judgments against INFOTOPIA, no federal or state tax liens have
been filed or threatened against INFOTOPIA, and INFOTOPIA is not in default or
claimed default under any agreement.
5. COVENANTS REGARDING COLLATERAL. INFOTOPIA covenants that it shall:
3
(a) from time to time and at all reasonable times allow VITAQUEST by or
through any of its officers, agents, attorneys, or accountants, to examine or
inspect the Collateral, notify account debtors of VITAQUEST's security interest
in accounts (if included in the definition of Collateral) and obtain valuations
and audits of the Collateral, at INFOTOPIA's expense, wherever located.
INFOTOPIA shall do, obtain, make, execute and deliver all such additional and
further acts, things, deeds, assurances and instruments as VITAQUEST may require
to vest in and assure to VITAQUEST its rights hereunder and in or to the
Collateral, and the proceeds thereof, including, but not limited to, waivers
from landlords, warehousemen and mortgagees;
(b) keep the Collateral in good order and repair at all times and
immediately notify VITAQUEST of any event causing a material loss or decline in
value of the Collateral whether or not covered by insurance and the amount of
such loss or depreciation;
(c) only use or permit the Collateral to be used in accordance with all
applicable federal, state, county and municipal laws and regulations;
(d) have and maintain insurance at all times with respect to all
Collateral against risks of fire (including so called extended coverage), theft,
sprinkler leakage, and other risks (including risk of flood if any Collateral is
maintained at a location in a flood hazard zone) as VITAQUEST may require, in
such form, in such amount, for such period and written by such companies as may
be satisfactory to VITAQUEST in its sole discretion. The policies of all such
casualty insurance shall contain a standard Lender's Loss Payable Clauses issued
in favor of VITAQUEST under which all losses thereunder shall be paid to
VITAQUEST as VITAQUEST's interest may appear. Such policies shall expressly
provide that the requisite insurance cannot be altered or canceled without at
least thirty (30) days prior written notice to VITAQUEST and shall insure
VITAQUEST notwithstanding the act or neglect of INFOTOPIA. Upon demand of
VITAQUEST, INFOTOPIA shall furnish VITAQUEST with duplicate original policies of
insurance or such other evidence of insurance as VITAQUEST may require. In the
event of failure to provide insurance as herein provided, VITAQUEST may, at its
option, obtain such insurance and INFOTOPIA shall pay to VITAQUEST, on demand,
the cost thereof. Proceeds of insurance may be applied by VITAQUEST to reduce
the Obligations or to repair or replace Collateral, all in VITAQUEST's sole
discretion; and
(e) at all times keep accurate and complete records covering each item
of Collateral, including the proceeds therefrom. VITAQUEST, or any of its
agents, shall have the right upon reasonable prior notice, at intervals to be
determined by VITAQUEST and without hindrance or delay, at INFOTOPIA's expense,
to inspect, audit, and examine the Collateral and to make extracts from the
books, records, journals, orders, receipts, correspondence and other data
relating to Collateral, INFOTOPIA's business or any other transaction between
the parties hereto. INFOTOPIA will at its expense furnish VITAQUEST copies
thereof upon request.
(f) not sell or offer to sell or otherwise transfer or grant or suffer
the imposition of a lien or security interest upon the Collateral (except for
sales of inventory and collections of accounts in INFOTOPIA's ordinary course of
business) or use any portion thereof in any manner inconsistent with this
Agreement or with the terms and conditions of any policy of insurance thereon.
6. COVENANTS FOR ACCOUNTS. If accounts are included in the definition of
Collateral:
(a) INFOTOPIA will, on demand of VITAQUEST, make notations on its books
and records showing the security interest of VITAQUEST and make available to
VITAQUEST shipping and delivery receipts evidencing the shipment of the goods
that gave rise to an account, completion certificates or other proof of the
satisfactory performance of services that gave rise to an account, a copy of the
invoice for each account and copies of any written contract or order from which
an account arose. INFOTOPIA shall promptly notify VITAQUEST if an account
becomes evidenced or secured by an instrument or chattel paper and upon request
of VITAQUEST, will promptly deliver any such instrument or chattel paper to
VITAQUEST, including without limitation, any letter of credit delivered to
INFOTOPIA to support a shipment of inventory by INFOTOPIA.
(b) INFOTOPIA will promptly advise VITAQUEST whenever an account debtor
refuses to retain or returns any goods from the sale of which an account arose
and will comply with any instructions that VITAQUEST may give regarding the sale
or other disposition of such returns. INFOTOPIA will, on at least a weekly
basis, report all credits given to account debtors on all accounts.
4
(c) INFOTOPIA will immediately notify VITAQUEST if any account arises
out of contracts with the United States or any department, agency or
instrumentality thereof, and will execute any instruments and take any steps
required by VITAQUEST so that all monies due and to become due under such
contract shall be assigned to VITAQUEST and notice thereof given to and
acknowledged by the appropriate government agency or authority under the Federal
Assignment of Claims Act.
(d) At any time upon 30 days prior written notice to INFOTOPIA,
VITAQUEST may notify any persons who are indebted to INFOTOPIA on any Collateral
consisting of accounts or general intangibles of the assignment thereof to
VITAQUEST and may direct such account debtors to make payment directly to
VITAQUEST of the amounts due. At the request of VITAQUEST, INFOTOPIA will direct
any persons who are indebted to INFOTOPIA on any Collateral consisting of
accounts or general intangibles to make payment directly to VITAQUEST. VITAQUEST
is authorized to give receipts to such account debtors for any such payments and
the account debtors will be protected in making such payments to VITAQUEST.
7. OTHER AFFIRMATIVE COVENANTS. INFOTOPIA agrees that from the date hereof
and until final payment in full of the Obligations, unless VITAQUEST shall
otherwise consent in writing, INFOTOPIA will:
(a) on reasonable prior notice, allow VITAQUEST, or its agents, during
normal business hours, access to the books, records and such other documents of
INFOTOPIA as VITAQUEST shall reasonably require, and allow VITAQUEST to make
copies thereof at VITAQUEST's expense;
(b) conduct its business in substantially the same manner and locations as
such business is now and has previously been conducted;
(c) deliver to VITAQUEST, with the annual financial statements required
herein, a certification by INFOTOPIA's independent certified public accountant
that INFOTOPIA is in full compliance with the Loan Document;
(d) comply with all terms and conditions contained in this Agreement, and
any other Loan Documents,
(e) maintain adequate insurance coverage with respect to its properties
and business against loss or damage of the kinds and in the amounts customarily
insured against by companies of established reputation engaged in the same or
similar businesses including, without limitation, commercial general liability
insurance, workers compensation insurance, and business interruption insurance;
all acquired in such amounts and from such companies as VITAQUEST may reasonably
require;
(f) maintain, preserve and keep its property in good repair, working order
and condition, making all needed replacements, additions and improvements
thereto, to the extent allowed by this Agreement;
(g) deliver to VITAQUEST, with any financial statements required below, a
certificate signed by INFOTOPIA, by a principal financial officer of INFOTOPIA
warranting that no "Event of Default" as specified in the Loan Documents nor any
event which, upon the giving of notice or lapse of time or both, would
constitute such Event of Default, has occurred and demonstrating INFOTOPIA's
compliance with the financial covenants contained herein;
(h) furnish to VITAQUEST immediately upon becoming aware of the existence
of any condition or event which constitutes an Event of Default (as defined in
the Loan Documents) or any event which, upon the giving of notice or lapse of
time or both, may become an Event of Default, written notice specifying the
nature and period of existence thereof and the action which INFOTOPIA is taking
or proposes to take with respect thereto;
(i) promptly notify VITAQUEST in writing of (i) any material adverse
change in its financial condition or its business; (ii) any default under any
material agreement, contract or other instrument to which it is a party or by
which any of its properties are bound, or any acceleration of the maturity of
any
5
indebtedness owing by INFOTOPIA; (iii) any material adverse claim against or
affecting INFOTOPIA or any part of its properties; (iv) the commencement of, and
any material determination in, any litigation with any third party or any
proceeding before any governmental agency or unit affecting INFOTOPIA; and (v)
at least 30 days prior thereto, any change in INFOTOPIA's name or address as
shown above, and/or any change in INFOTOPIA's structure;
(j) deliver promptly such other information regarding the operation,
business affairs, and financial condition of INFOTOPIA which VITAQUEST may
reasonably request;
(k) pay and discharge when due, and before subject to penalty or further
charge, and otherwise satisfy before maturity or delinquency, all obligations,
debts, taxes, and liabilities of whatever nature or amount, except those which
INFOTOPIA in good faith disputes;
(l) deliver to VITAQUEST, promptly, a copy of all financial statements,
reports, notices, and proxy statements, sent by INFOTOPIA to stockholders, and
all regular or periodic reports required to be filed by INFOTOPIA with any
governmental agency or authority;
(m) deliver to VITAQUEST, within 90 days after the close of each fiscal
year, audited financial statements reflecting its operations during such fiscal
year, including, without limitation, a balance sheet, profit and loss statement
and statement of cash flows, with supporting schedules; all on a consolidated
and consolidating basis with respect to INFOTOPIA and its Subsidiaries,
Affiliates and parent or holding company, as applicable, and in reasonable
detail, prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year;
(n) deliver to VITAQUEST accountant reviewed quarterly financial
statements including, without limitation, a balance sheet, profit and loss
statement and statement of cash flows, with supporting schedules, and an
accounts receivable aging as soon as available and in any event within 30 days
after the close of each such period; all on a consolidated and consolidating
basis with respect to INFOTOPIA and its subsidiaries, affiliates and parent or
holding company, as applicable, all in reasonable detail and prepared in
conformity with generally accepted accounting principles, applied on a basis
consistent with that of the preceding year, and certified as to their
correctness by a principal financial officer of INFOTOPIA and in each case, if
audited statements are required, subject to audit and year-end adjustments; and
(o) deliver to VITAQUEST, within 30 days of filing, complete copies of
federal and state tax returns, as applicable, together with all schedules
thereto, each of which shall be signed and certified by INFOTOPIA to be true and
complete copies of such returns.
8. OTHER NEGATIVE COVENANTS. INFOTOPIA agrees that from the date of this
Agreement and until final payment in full of the Obligations, unless VITAQUEST
shall otherwise consent in writing, INFOTOPIA will not;
(a) affix any collateral to any real estate, unless INFOTOPIA has (i)
obtained the VITAQUEST's permission to do so; (ii) delivered to VITAQUEST a
landlord's waiver and/or mortgagee's waiver with respect to such collateral duly
executed by the landlord or mortgagee, as the case may be, of the real estate to
which the collateral is to be affixed, in form and substance satisfactory to
VITAQUEST, which waiver disclaims any interest in such assets; and (iii) deliver
to VITAQUEST a UCC-1 financing statement with respect to the collateral in the
form necessary or with all information required to be recorded in the real
estate records of the county in which the collateral is to be located.;
(b) change its fiscal year;
6
(c) guarantee or otherwise become responsible for obligations in excess of
$50,000.00 of any other person or persons, other than the endorsement of checks
and drafts for collection in the ordinary course of business;
(d) default on any material contract with or obligation when due to a
third party or default in the performance of any material obligation to a third
party incurred for money borrowed;
(e) Permit the assertion or making of any seizure, vesting or intervention
by or under authority of any government by which the management of INFOTOPIA is
displaced of its authority in the conduct of its respective business or such
business is curtailed or materially impaired;
(f) permit the entry of any monetary judgment or the assessment against,
the filing of any tax lien against, or the issuance of any writ of garnishment
or attachment against any property of or debts due, which monetary judgment,
assessment, tax lien or writ of garnishment or attachment exceeds $50,000 in the
aggregate;
(g) retire any long-term debt entered into prior to the date of this
Agreement at a date in advance of its legal obligation to do so; and
(h) retire or otherwise acquire any of its capital stock.
9. FURTHER ASSURANCES. At the request of VITAQUEST, INFOTOPIA will join with
VITAQUEST in executing one or more financing, continuation or amendment
statements pursuant to the UCC in form satisfactory to VITAQUEST and will pay
the cost of preparing and filing the same in all jurisdictions in which such
filing is deemed by VITAQUEST to be necessary or desirable. A carbon,
photographic or other copy of this Agreement or of a UCC-1 financing statement
may be filed as and in lieu of a UCC-1 financing statement.
10. EVENTS OF DEFAULT. INFOTOPIA shall, at the option of VITAQUEST, be in
default under this Agreement upon the happening of any of the following events
or conditions (each, an "Event of Default"): (a) the non-payment of any
principal, interest or other indebtedness under the Note when due and the lapse
of any notice or cure period provided in such Note with respect to such default;
(b) any Event of Default (as defined in any of the Obligations); (c) any default
under any of the Obligations that does not have a defined set of "Events of
Default" and the lapse of any notice or cure period provided in such Obligations
with respect to such default; (d) demand by VITAQUEST under any of the
Obligations that have a demand feature; (e) the failure by INFOTOPIA to perform
any of its obligations under this Agreement or any other Loan Document; (f)
falsity, inaccuracy or material breach by INFOTOPIA of any written warranty,
representation or statement made or furnished to VITAQUEST by or on behalf of
INFOTOPIA; (g) the filing by or against INFOTOPIA of any proceeding in
bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding,
such proceeding is not dismissed or stayed within thirty (30) days of the
commencement thereof); (h) any assignment by INFOTOPIA for the benefit of
creditors, or any levy, garnishment, attachment or similar proceeding is
instituted against any property of INFOTOPIA; (i) a default with respect to any
other indebtedness of INFOTOPIA if the effect of such default is to cause or
permit the acceleration of such debt; (j) the commencement of any foreclosure or
forfeiture proceeding, execution or attachment against any of the Collateral;
(k) the entry of any judgment against INFOTOPIA and the failure of INFOTOPIA to
discharge the judgment within ten (10) days of the entry thereof; (l) any
material adverse change in the business, assets, operations, financial
conditions or results of operations of INFOTOPIA; (m) INFOTOPIA ceases doing
business as a going concern; (n) an uninsured material loss, theft, damage, or
destruction to any of the Collateral, or any lien against or the making of any
levy, seizure or attachment of or on the Collateral; (o) the failure of
VITAQUEST to have a perfected first priority security interest in the
Collateral, subject only to the Permitted Liens set forth on Schedule C; or (p)
any indication or evidence received by VITAQUEST that INFOTOPIA may have
directly or indirectly been engaged in any type of activity which, in
VITAQUEST's discretion, might result in the forfeiture of any property of
INFOTOPIA to any governmental entity, federal, state or local.
7
11. REMEDIES. Upon the occurrence of any such Event of Default and at any time
thereafter, VITAQUEST may declare all Obligations immediately due and payable
and shall have, in addition to any remedies provided herein or by any applicable
law or in equity, all the remedies of a secured party under the Uniform
Commercial Code. As permitted by such Code, VITAQUEST may (a) peaceably by its
own means or with judicial assistance enter INFOTOPIA's premises and take
possession of the Collateral, (b) render the Collateral unusable, (c) dispose of
the Collateral on INFOTOPIA's premises, (d) require INFOTOPIA to assemble the
Collateral and make it available to VITAQUEST at a place designated by
VITAQUEST, and (e) notify the United States Postal Service to send INFOTOPIA's
mail to VITAQUEST. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
VITAQUEST will give INFOTOPIA reasonable notice of the time and place of any
public sale thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. The requirements of commercially
reasonable notice shall be met if such notice is sent to INFOTOPIA at least five
(5) days before the time of the intended sale or disposition. Expenses of
retaking, holding, preparing for sale, selling or the like shall include
VITAQUEST's reasonable attorney's fees and legal expenses, incurred or expended
by VITAQUEST to enforce any payment due it under the Note, the Guaranty, or any
other Loan Document either as against INFOTOPIA, or in the prosecution or
defense of any action, or concerning any matter growing out of or connection
with the subject matter of this Agreement or any other Loan Document and the
Collateral pledged hereunder.
12. POWER OF ATTORNEY. INFOTOPIA does hereby make, constitute and appoint any
officer or agent of VITAQUEST as INFOTOPIA's true and lawful attorney-in-fact,
with full power of substitution to endorse the name of INFOTOPIA or any of
INFOTOPIA's officers or agents upon any notes, checks, drafts, money orders, or
other instruments of payment or Collateral that may come into the possession of
VITAQUEST in full or part payment of any amounts owing to VITAQUEST; granting to
INFOTOPIA's said attorney full power to do any and all things necessary to be
done in and about the premises as fully and effectually as INFOTOPIA might or
could do, including the right to sign, for INFOTOPIA, UCC-1 financing statements
and UCC-3 Statements of Change and to xxx for, compromise, settle and release
all claims and disputes with respect to, the Collateral. INFOTOPIA hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest, and is irrevocable.
13. PAYMENT OF EXPENSES. At its option, VITAQUEST may discharge taxes, liens,
security interests or such other encumbrances as may attach to the Collateral,
may pay for required insurance on the Collateral and may pay for the
maintenance, appraisal or reappraisal, and preservation of the Collateral, as
determined by VITAQUEST to be necessary. INFOTOPIA will reimburse VITAQUEST on
demand for any payment so made or any expense incurred by VITAQUEST pursuant to
the foregoing authorization, and the Collateral also will secure any advances or
payments so made or expenses so incurred by VITAQUEST.
14. NOTICES. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing and will be
effective upon receipt if delivered personally to such party, or if sent by
facsimile transmission with confirmation of delivery, or by nationally
recognized overnight courier service, to the address set forth above or to such
other address as any party may give to the other in writing for such purpose.
15. PRESERVATION OF RIGHTS. No delay or omission on the part of VITAQUEST to
exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power or any acquiescence
therein, nor will the action or inaction of VITAQUEST impair any right or power
arising hereunder. VITAQUEST's rights and remedies hereunder are cumulative and
not exclusive of any other rights or remedies which VITAQUEST may have under
other agreements, at law or in equity.
16. ILLEGALITY. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
8
17. CHANGES IN WRITING. No modification, amendment or waiver of any provision
of this Agreement nor consent to any departure by INFOTOPIA therefrom, will in
any event be effective unless the same is in writing and signed by VITAQUEST,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice to or demand on INFOTOPIA in any
case will entitle INFOTOPIA to any other or further notice or demand in the
same, similar or other circumstance.
18. ENTIRE AGREEMENT. This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
19. COUNTERPARTS. This Agreement may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument.
20. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure to
the benefit of INFOTOPIA and VITAQUEST and their respective heirs, executors,
administrators, successors and assigns; provided, however, that INFOTOPIA may
not assign this Agreement in whole or in part without the prior written consent
of VITAQUEST and VITAQUEST at any time may assign this Agreement in whole or in
part.
21. INTERPRETATION. In this Agreement, unless VITAQUEST and INFOTOPIA
otherwise agree in writing, the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the word "or"
shall be deemed to include "and/or", the words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections) or exhibits are
to those of this Agreement unless otherwise indicated. Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. If this Agreement is
executed by more than one Grantor, the obligations of such persons or entities
will be joint and several.
22. INDEMNITY. INFOTOPIA agrees to indemnify each of VITAQUEST, its directors,
officers, employees and shareholders(the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, all reasonable fees of
counsel with whom any Indemnified Party may consult and all expenses of
litigation or preparation therefor) which any Indemnified Party may incur or
which may be asserted against any Indemnified Party as a result of the execution
of or performance under this Agreement or any other Loan Document; provided,
however, that the foregoing indemnity agreement shall not apply to claims,
damages, losses, liabilities and expenses solely attributable to an Indemnified
Party's gross negligence or willful misconduct. The indemnity agreement
contained in this Section shall survive the termination of this Agreement.
INFOTOPIA may participate at its expense in the defense of any such claim.
23. GOVERNING LAW AND JURISDICTION. This Agreement has been delivered to and
accepted by VITAQUEST and will be deemed to be made in the State of New Jersey.
THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, EXCEPT
THAT THE LAWS OF THE STATE WHERE ANY COLLATERAL IS LOCATED (IF OTHER THAN THE
STATE OF NEW JERSEY) SHALL GOVERN THE CREATION, PERFECTION AND FORECLOSURE OF
THE LIENS CREATED HEREUNDER ON SUCH PROPERTY OR ANY INTEREST THEREIN. INFOTOPIA
hereby irrevocably consents to the exclusive jurisdiction of any state or
federal court for the county or judicial district in the State of New Jersey,
and consents that all service of process be sent by nationally recognized
overnight courier service directed to INFOTOPIA at INFOTOPIA's address set forth
herein and service so made will be deemed to be completed on the business day
after deposit with such courier; provided that nothing contained in this
Agreement will prevent VITAQUEST from bringing any action, enforcing any award
or judgment or exercising any rights against INFOTOPIA individually, against any
security or against any property of INFOTOPIA within any other county, state or
other foreign or
9
domestic jurisdiction. VITAQUEST and INFOTOPIA agree that the venue provided
above is the most convenient forum for both VITAQUEST and INFOTOPIA. INFOTOPIA
waives any objection to venue and any objection based on a more convenient forum
in any action instituted under this Agreement.
24. SELF HELP REMEDIES. INFOTOPIA BEING FULLY AWARE OF THE RIGHT TO NOTICE AND
A HEARING ON THE QUESTION OF THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED
AGAINST INFOTOPIA BY VITAQUEST UNDER THIS AGREEMENT, AND ANY OTHER LOAN
DOCUMENTS, BEFORE INFOTOPIA CAN BE DEPRIVED OF ANY PROPERTY IN INFOTOPIA'S
POSSESSION, HEREBY WAIVES THESE RIGHTS AND AGREES THAT VITAQUEST MAY EMPLOY
SELF-HELP OR ANY LEGAL OR EQUITABLE PROCESS PROVIDED BY LAW TO TAKE POSSESSION
OF ANY SUCH PROPERTY WITHOUT FIRST OBTAINING A FINAL JUDGMENT OR WITHOUT FIRST
GIVING INFOTOPIA NOTICE AND THE OPPORTUNITY TO BE HEARD ON THE VALIDITY OF THE
CLAIM UPON WHICH SUCH TAKING IS MADE. INFOTOPIA WAIVES ALL RELIEF FROM ALL
APPRAISEMENT OR EXEMPTION LAWS NOW IN FORCE OR HEREAFTER ENACTED.
25. WAIVER OF JURY TRIAL. EACH OF INFOTOPIA AND VITAQUEST IRREVOCABLY WAIVES
ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
DOCUMENTS. INFOTOPIA AND VITAQUEST ACKNOWLEDGE THAT THE FOREGOING WAIVER IS
KNOWING AND VOLUNTARY.
IN WITNESS WHEREOF, INFOTOPIA, on the day and year first written above,
has caused this Agreement to be executed under seal.
INFOTOPIA, INC.
By: /s/ Xxxxxx Xxxxx
___________________________
Xxxxxx Xxxxx , CEO/Chairman
10
EXHIBIT "A"
TO SECURITY AGREEMENT
Address of Grantor's chief executive office, including the County:
0000 Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000
Address for books and records, if different:
N/A
Addresses of other Collateral locations, including Counties and name and address
of landlord or owner if location is not owned by INFOTOPIA:
Other names or tradenames now or formerly used by INFOTOPIA:
11
