SECURITY AGREEMENT
(Chattel Mortgage)
AGREEMENT made on January 28, 1999 under the laws of the State of New
York, by and between X.X. XXXXXX, INC., a New York corporation (the "Debtor"),
whose business address is 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and NEW
YORK COMMUNITY INVESTMENT COMPANY L.L.C., a Delaware limited liability company
with its office at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Secured Party").
WITNESSETH:
To secure the payment of an indebtedness in the amount of $400,000.,
with interest at the rate of twelve (12%) percent per annum, for five (5) years,
due from Debtor and Internet Financial Services Inc. to Secured Party, payable
in the accordance with the terms of a certain promissory note executed in
connection therewith, and also to secure any other indebtedness or liability of
the Debtor to the Secured Party, direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, including all future
advances or loans which may be made at the option of the Secured Party (all
hereafter called the "obligations"), Debtor hereby grants and conveys to the
Secured Party a security interest in, and mortgages to the Secured Party: (a)
the property described in the schedule herein which the Debtor represents will
be used primarily in business or other use; (b) all property, goods and chattels
of the same classes as those scheduled, acquired by the Debtor subsequent to the
execution of this agreement and prior to its termination; (c) the proceeds
thereof, if any; (d) all increases, substitutions, replacements, additions, and
accessions thereto (the foregoing (a), (b), (c), and (d) hereinafter called the
"collateral").
1. Debtor warrants, covenants, and agrees as follows:
(a) To pay and perform all of the obligations secured by this
agreement according to their terms.
(b) To defend the title to the collateral against all persons
and against all claims and demands whatsoever, which collateral, except for the
security interest granted hereby, is lawfully owned by the Debtor and is now
free and clear of any and all liens, security interests, claims, charges,
encumbrances, taxes, and assessments, except for New York Small Business Venture
Fund LLC, G.E. Capital Corp. and the Debtor's clearing agents, Xxxxxx Financial
Services Inc, and Xxxxx, Xxxx & Xxxxx, L.L.C.
(c) On demand of the Secured Party to do the following:
furnish further assurance of title, execute any written agreement or do any
other acts necessary to effectuate the purposes and provisions of this
agreement, execute any instrument or statement required by law or otherwise in
order to perfect, continue or terminate the security interest of the Secured
Party in the collateral and pay all costs of filing in connection therewith.
(d) To retain possession of the collateral during the
existence of this agreement and not to sell, exchange, assign, loan, deliver,
lease, mortgage, or otherwise dispose of same without the written consent of the
Secured Party, except for purchase money security interests granted in the
ordinary course of business.
(e) To keep the collateral at the location specified in the
schedule and not to remove same (except in the usual course of business for
temporary periods) without the prior written consent of the Secured Party, which
shall not be unreasonably withheld.
(f) To keep the collateral free and clear of all liens,
charges, encumbrances, taxes, and assessments, except New York Small Business
Venture Fund LLC, G.E. Capital Corp. and the Debtor's clearing agents, Xxxxxx
Financial Services Inc. and Xxxxx, Xxxx & Xxxxx, L.L.C.
(g) To pay, when due, all taxes, assessments and license fees
relating to the collateral.
(h) To keep the collateral, at Debtor's own cost and expense,
in good repair and condition and available for inspection by the Secured Party
at all reasonable times upon prior notice.
(i) To keep the collateral fully insured against loss by fire,
theft, and other casualties, and to name Secured Party as a loss payee in the
event of any loss, and Debtor shall give immediate written notice to the Secured
Party and to insurers of loss or damage to the collateral and shall promptly
file proofs of loss with insurers.
2. The parties further agree:
(a) Waiver of or acquiescence in any default by the Debtor, or
failure of the Secured Party to insist upon strict performance by the Debtor of
any warranties or agreements in this agreement, shall not constitute a waiver of
any subsequent or other default or failure.
(b) The Uniform Commercial Code shall govern the rights,
duties, and remedies of the parties, and any provisions herein declared invalid
under any law shall not invalidate any other provision of this agreement.
(c) The following shall constitute a default by the Debtor:
Failure to pay any installment called for in the promissory note of even date in
the amount of $400,000. when due. Failure by Debtor to comply with or perform
any provision of this agreement or any other agreement executed between Debtor
and Secured Party. If any false or misleading representations or warranties are
made or given by Debtor in connection with this agreement. Subjection of the
collateral to levy or execution or other judicial process. Commencement of any
insolvency proceeding by or against the Debtor beyond any cure provisions
described in the Loan Agreement by and between Debtor and Secured Party of even
date. Any reduction in the value of the collateral or any act of the Debtor
which imperils the prospect of full performance or satisfaction of the Debtor's
obligations herein.
(d) Upon any default of the Debtor, and at the option of the
Secured Party, the obligations secured by this agreement shall immediately
become due and payable in full without notice or demand, and the Secured Party
shall have all the rights, remedies, and privileges with respect to
repossession, retention, and sale of the collateral, and disposition of the
proceeds accorded by the applicable sections of the Uniform Commercial Code
respecting "Default". Upon any default and upon written demand, Debtor shall
assemble the collateral and make it available to the Secured Party at the place
and at the time designated in the demand. Upon any default, the Secured Party's
reasonable attorneys' fees and the legal and other expenses for pursuing,
searching for, receiving, taking, keeping, storing, advertising, and selling the
collateral, and for any other efforts to collect the debt secured hereby shall
be chargeable to the Debtor. The Debtor shall remain liable for any deficiency
resulting from a sale of the collateral and shall pay any such deficiency
forthwith on written demand. If the Debtor shall default in the performance of
any of the provisions of this agreement on the Debtor's part to be performed,
Secured Party may perform same for the Debtor's account, and any monies expended
in so doing shall be chargeable with interest to the Debtor and added to the
indebtedness secured hereby.
(e) The Secured Party is hereby authorized to file a financing
statement and any amendments, continuation statements or termination statements
it may deem necessary, without the Debtor's signature, or by executing the
Debtor's name thereto and for such limited purpose Debtor grants Secured Party,
and its agents, a power of attorney to execute any such financing statements as
may be necessary to perfect Secured Party's interest in the collateral.
Notwithstanding the foregoing, the Secured Party shall have no obligation to
comply with any recording, re-recording, filing, refiling or other legal
requirements, necessary to establish or maintain the validity, priority, or
enforceability of, or the Secured Party's right in and to the collateral or any
part thereof.
(f) The terms, warranties, and agreements herein contained
shall bind and inure to the benefit of the respective parties hereto, and their
respective legal representatives, successors, and assigns. The gender and number
used in this agreement are used as a reference term only and shall apply with
the same effect whether the parties are of the masculine or feminine gender,
corporate or other form, and the singular shall likewise include the plural.
This agreement my not be changed orally.
(g) All communications and notices hereunder shall be in
writing and shall be deemed to have been duly given if sent by recognized
overnight mail, with a copy to Xxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attn: Xxxxxx X. Xxxxxxxxx, Esq. and Xxxxxxx, Xxxxxx & Xxxxxxxx,
P.C., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention Xxxxx X. Xxxxxx,
Esq., to the parties at the address first above written, or at such other place
or places as the party addressed may have designated by written notice to the
other.
(h) This agreement is being executed and delivered in the
State of New York and shall be construed and enforced in accordance with the
laws of that State.
(i) In the event that any word, sentence, paragraph or article
of this agreement is found to be void or voidable, the balance of this agreement
shall nevertheless be legal and binding with the same force and effect as though
the void or voidable parts were deleted.
IN WITNESS WHEREOF, the parties have respectively signed and sealed
these presents the day and year first above written.
DEBTOR:
X.X. XXXXXX, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx, President
SECURED PARTY:
NEW YORK COMMUNITY INVESTMENT
COMPANY L.L.C.
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx, President
SCHEDULE OF COLLATERAL TO SECURITY AGREEMENT
MADE BY X.X. XXXXXX, INC. IN FAVOR OF
NEW YORK COMMUNITY INVESTMENT COMPANY L.L.C.
(a) All Debtor's right, title and interest in and to all inventory, accounts
receivable, contract rights, instruments and all other obligations for the
payment of monies due Debtor, machinery and equipment, whether now owned or
existing, or hereafter created or acquired; (b) all property, goods and chattels
of the same classes as the foregoing, acquired by the Debtor subsequent to the
execution of the Security Agreement and prior to its termination; (c) the
proceeds of the foregoing, if any; and (d) all increases, substitutions,
replacements, additions and accessions to the foregoing. No security interest is
granted in any of Debtor's general intangibles. For purposes hereof, the term
"Security Agreement" refers to the Security Agreement dated January 28, 1999,
between the Debtor and the Secured Party.
