SECURITY AGREEMENT
SECURITY AGREEMENT made this 14th day of September, 2001 by and between
Vizacom Inc. ( "Debtor"), a Delaware corporation with its principal place of
business located at 0000 Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxx Xxxx 00000, and
SpaceLogix, Inc. (the "Secured Party" and together with the Debtor, the
"Parties"), a Delaware corporation having its principal place of business at 000
Xxxxx Xxxxxx, 00xx Xxx, Xxx Xxxx, XX 00000.
WHEREAS, the Parties have executed a non-binding Letter of Intent (the
"LOI") which contemplates the merger of Secured Party into Debtor or one of
Debtor's subsidiaries (the "Merger") pursuant to the terms of a merger agreement
(the "Merger Agreement") to be negotiated by the Parties;
WHEREAS, in contemplation of the Merger, the Debtor has requested Secured
Party to provide a loan in the aggregate principal amount of up to $650,000 in
three separate installments (the "Loan," and each installment thereof, an
"Installment") pursuant to the terms and conditions of a Loan Agreement between
the Parties, dated of even date herewith (the "Loan Agreement"); and
WHEREAS, Debtor is willing to grant a security interest in certain of its
assets to secure payment of the Loan upon the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is hereby agreed as follows:
1. Security Interest. Debtor hereby grants to Secured Party a security
interest in the Collateral (as defined herein) to secure the payment of the Loan
evidenced by the promissory note issued to the Secured Party on the date hereof
in the aggregate principal amount of up to $650,000 (the "Note").
2. Description of Collateral. The collateral subject to this Security
Agreement is all of Debtor's right, title and interest in and to that certain
promissory note issued by Serif Inc. in favor of the Debtor, dated March 31,
2001, in the original aggregate principal amount of $987,500 (the "Collateral").
3. Obligations of Debtor. Debtor hereby covenants, represents, warrants
and agrees that:
(a) Upon the occurrence of an Event of Default (as defined below),
Debtor shall execute and deliver to Serif Inc. the irrevocable instruction
letter attached hereto as Exhibit A.
(b) Debtor shall, at no cost or expense to Secured Party, defend its
right, title and interest in and to the Collateral, and defend the
Collateral against all other claims or demands of any other party and all other
liabilities of any nature whatsoever;
(c) The Collateral is free and clear from, and is not subject to, any
assignment, security interest, mortgage, pledge, lien, levy for taxes
(other than for taxes not yet due and payable) or other assessments, interest,
charge, adverse claim or other encumbrance, including any financing statement or
other document filed in any public office ("Encumbrance"), and Debtor shall keep
and maintain the Collateral, and each part thereof, free and clear of any
Encumbrance which is not subordinate to the security interest granted hereunder,
and shall not create nor permit to remain any such Encumbrance;
(d) Debtor shall duly and promptly pay and discharge when due and
payable, or cause to be paid and discharged all taxes, assessments and
governmental charges or levies upon or against it or its profits, income,
properties or assets;
(e) Debtor, at its sole cost and expense, shall execute and deliver,
or cause to be duly executed and delivered, such instruments and documents,
and do and cause to be done such acts and things, as Secured Party may at any
time reasonably request to enforce, perfect and protect its security interest in
the Collateral as herein provided and its rights and remedies with respect to
the Collateral;
(f) The Collateral, or any part thereof, will not be sold, assigned,
conveyed, transferred or disposed of, or become subjected to any subsequent
interest of any party senior to the interest of Secured Party, except that the
Collateral may become subjected to a security interest junior to the interest of
Secured Party by Xxxxxxx & Xxxxxxxx, LLC ("K&M"), Xxxxxxx XxXxxxxx --- or Xxxxx
X. Xxxxx;
(g) Debtor shall keep and maintain at all times true and complete
books, records and accounts in accordance with normal business practices; and
(h) Debtor shall take any and all actions, including making any
necessary filings, required or requested by Secured Party to assure that
Secured Party's security interest in the Collateral is at all times senior to
any security interest of K&M, Xxxxxxx XxXxxxxx and Xxxxx X. Xxxxx in the
Collateral;
(i) Debtor shall pay and reimburse Secured Party for all costs and
expenses (including attorneys' fees, legal expenses, and advances and
expenditures for recording and filing fees, if any) in connection with
perfection and protection of Secured Party's security interest hereunder (other
than the recording and filing of UCC-1 financing statements, for removal of any
encumbrance from the Collateral, for curing, correcting or remedying any Event
of Default hereunder, or for protection, preservation, maintenance and repair of
the Collateral) incurred by Secured party in connection with the exercise by
Secured Party of any of its rights and remedies
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under this Security Agreement in enforcing, perfecting or protecting its
interests under this Security Agreement.
4. Events of Default. The occurrence of any of the following events with
respect to Debtor shall constitute an event of default on the part of Debtor
hereunder (an "Event of Default"):
(a) failure by Debtor to pay the principal or interest of the Note or
any installment thereof when due, whether on the date fixed for payment or
by acceleration or otherwise; provided, however, that failure to pay any
principal or interest when due shall not be an Event of Default if such overdue
payment is paid within ten business days of such due date; or
(b) a final judgment for the payment of money in excess of $10,000
shall be rendered against Debtor, and such judgment shall remain
undischarged for a period of sixty days from the date of entry thereof unless
within such sixty day period such judgment shall be stayed, and appeal taken
therefrom and the execution thereon stayed during such appeal; or
(c) if Debtor shall default in respect of any evidence of indebtedness
or under any agreement under which any notes or other evidence of
indebtedness of Debtor are issued, if the effect thereof is to cause, or permit
the holder or holders thereof to cause, such obligation or obligations in an
amount in excess of $10,000 in the aggregate to become due prior to its or their
stated maturity or to permit the acceleration thereof; or
(d) if Debtor or any other authorized person or entity shall take any
action to effect a dissolution, liquidation or winding up of Debtor; or
(e) if Debtor shall make a general assignment for the benefit of
creditors or consent to the appointment of a receiver, liquidator,
custodian, or similar official of all or substantially all of its properties, or
any such official is placed in control of such properties, or Debtor shall
commence any action or proceeding or take advantage of or file under any federal
or state insolvency statute, including, without limitation, the United States
Bankruptcy Code or any political subdivision thereof, seeking to have an order
for relief entered with respect to it or seeking adjudication as a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution, administration, a voluntary arrangement, or other relief with
respect to it or its debts; or
(f) there shall be commenced against Debtor any action or proceeding
of the nature referred to in paragraph (e) above or seeking issuance of a
warrant of attachment, execution, distraint, or similar process against all or
any substantial part of the property of Debtor, which results in the entry of an
order for relief which remains undismissed, undischarged or unbonded for a
period of sixty days; or
(g) Borrower enters into an agreement to acquire a business other than
SpaceLogix without the consent of SpaceLogix.
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5. Secured Party's Rights and Remedies. Upon the occurrence of an Event of
Default, Secured Party shall have and may exercise all of the rights and
remedies provided by the Uniform Commercial Code at the date of execution of
this Security Agreement, and any other applicable law, and, in conjunction with,
in addition to, or in substitution therefor, Secured Party shall have and may
exercise the following rights and remedies:
(a) The Loan shall be immediately due and payable in payments of
$40,000 per month;
(b) Secured Party may (but shall not be required), alone or in
conjunction with Debtor, take any or all action necessary to collect or
receive any money or property at any time payable or receivable on account of or
in exchange for the Collateral; and
(c) Secured Party may require Debtor to pay and deliver to Secured
Party, immediately upon collection and receipt thereof by Debtor, all
proceeds arising from the Collateral, or may require Debtor to deposit all such
proceeds in a bank selected by Secured Party in a collateral account acceptable
to Secured Party. Until the proceeds from the Collateral have been paid and
delivered to Secured Party or deposited in the bank as hereinabove provided,
Debtor shall hold such proceeds for and on behalf of Secured Party separate and
apart from Debtor's other funds or property, and shall not mingle such proceeds
with any other such funds or property.
6. Termination.
Upon the earlier of (i) full payment and performance of
Debtor's obligations under the Note, or (ii) the closing of the Merger,
this Security Agreement shall automatically terminate and the Collateral shall
be immediately returned to Debtor.
7. Other Provisions.
(a) Secured Party may waive any default, or remedy any default in any
reasonable manner, without waiving such default remedied and without
waiving any other prior or subsequent default; and Secured Party may waive or
delay the exercise of any right or remedy under this Security Agreement without
waiving that right or remedy or any other right or remedy hereunder;
(b) This Security Agreement shall be binding upon, and shall inure to
the benefit of, the respective heirs, executors, administrators, successors and
assigns of the parties hereto;
(c) Each of the foregoing instruments, covenants and warranties on the
part of the Debtor shall be deemed and construed to be on a continuing basis and
shall survive the execution and delivery of this Security Agreement;
(d) All notices, demands, requests and other communications required
or otherwise given under this Security Agreement shall be in writing and shall
be deemed to have been duly given if:
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(i) delivered by hand against written receipt therefor, (ii) forwarded by a
third party company or governmental entity providing delivery services in the
ordinary course of business which guarantees delivery the following business
day, (iii) mailed by registered or certified mail, return receipt requested,
postage prepaid, or (iv) transmitted by facsimile transmission electronically
confirmed for receipt, in full, by the other party no later than 5:00 pm, local
time, on the date of transmission, addressed as follows:
If to Debtor to: 0000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx & Xxxxxxxx, LLC
00 Xxxxxxx Xxxxxxxxx Xxxxxxxxx - Xxxxx 000
Xxxxxxx Field, New York 11553
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Secured Party to: SpaceLogix, Inc.
000 Xxxxx Xxxxxx, 00xx Xxx.
Xxx Xxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxxx X'Xxxxxxx & Lougee
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
or at such other address as such party shall have furnished to each of the
other parties hereto in accordance with this Section 7(d). Each such notice,
demand, request or other communication shall be deemed given (i) on the date of
such delivery by hand, (ii) on the first business day following the date of such
delivery to the overnight delivery service or facsimile transmission, or (iii)
three business days following such mailing.
(e) The provisions of this Security Agreement shall be deemed severable,
so that if any provision hereof is declared invalid under the laws of any
state where it is in effect or of the United States, all other provisions of
this Security Agreement shall continue in full force and effect;
(f) This Security Agreement shall not be modified or amended or any
provision hereof waived except in writing executed by both parties hereto;
(g) This Security Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without regard to its conflicts
of law principles.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed and delivered this Security Agreement as of the day and
year first above written.
SPACELOGIX, INC.
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: President & CEO
VIZACOM INC.
By: /s/ Xxxxxxx XxXxxxxx
------------------------------------
Name: Xxxxxxx XxXxxxxx
Title: President
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EXHIBIT A
[Vizacom Letterhead]
[Date]
Serif Inc.
[address]
Gentlemen:
Vizacom Inc. ("Vizacom") hereby irrevocably instructs you to
pay the monthly amount due under the Promissory Note (the "Note"), dated March
31, 2001, issued by Serif Inc. in favor of Vizacom directly to SpaceLogix, Inc.
("SpaceLogix") commencing as of the date hereof and ending with your payment due
on ___________, unless or until otherwise instructed in writing by SpaceLogix,
as follows:
[Insert Wire Instructions]
VIZACOM INC.
By:
------------------------------
Name:
Title:
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