EXHIBIT 10.14
SECURITY AGREEMENT
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1. Identification.
This Security Agreement (the "Agreement"), dated April 23, 2002, is entered
into by and between ARMITEC INC., a Delaware corporation ("Debtor"), ▇▇▇▇▇▇▇▇▇▇▇
Limited Partnership, and GALT CAPITAL CORPORATION ("Shareholder") and ▇▇▇▇
▇▇▇▇▇▇▇▇▇, Esq., as collateral agent [acting in the manner and to the extent
described in the Collateral Agent Agreement defined below] (the "Collateral
Agent"), for the benefit of the parties identified on Schedule A hereto being
collectively, the "Lender" and each a "Lender".
2. Recitals.
2.1 The Lender have made or are making loan to Debtor (the "Loan").
2.2 The Loan is evidenced by a certain 7% Secured Convertible Note dated
at, about or after April 23, 2002, described on Schedule A hereto (collectively
"Note") and executed by Debtor as the "Borrower" thereof, for the benefit of the
Lender as the "Holder" thereof which were issued pursuant to Convertible Note
Purchase Agreement entered into between Debtor and the holder of the Note.
2.3 In order to induce the Lender to make the Loan, and as security for
Debtor's performance of its obligations under the Note and as security for the
repayment of the Loan and any and all other sums due from Debtor to Lender
arising under the Note issued pursuant to the Convertible Note Purchase
Agreement, including all of the Debtor's obligations arising under the Note and
the Convertible Note Purchase Agreement relating thereto (collectively, the
"Obligations"), The Shareholder, for good and valuable consideration, receipt of
which is acknowledged, has agreed to and hereby grants to the Collateral Agent,
for the benefit of the Lender, a security interest in the Collateral (as such
term is hereinafter defined), on the terms and conditions hereinafter set forth.
2.4 The Lender has appointed ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as Collateral Agent pursuant
to that certain Collateral Agent Agreement dated as of April 23, 2002
("Collateral Agent Agreement"), among the Lender and Collateral Agent.
Defined Terms. The following defined terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Proceeds.
3. Grant of General Security Interest in Collateral.
3.1 As security for the Obligations, the Shareholder hereby grants the
Collateral Agent, for the benefit of the Lender, a security interest in the
Collateral.
3.2 "Collateral" shall mean all of the following property of the
Shareholder: the common stock of the Debtor as set forth on Schedule B hereto,
together with medallion signature guaranteed stock powers ("Security Shares").
Collateral shall also include all the Shareholder right, title and interest in
and to the Security Shares, together with the proceeds of any sale, exchange,
liquidation or other disposition, whether voluntary or involuntary, and
including but not limited to any securities, Instruments, and all benefits and
entitlements evidenced by or arising out of the Security Shares and all other
securities, Instruments and other property (whether real or personal, tangible
or intangible) issued or accepted in substitution for, or in addition to, the
foregoing, and all dividends, interest, cash, instruments, distributions,
income, securities and any other property (whether real or personal, tangible or
intangible) at any time received, receivable or otherwise distributed in respect
of, or in exchange for, the foregoing, whether now owned or hereafter acquired,
and any and all improvements, additions, replacements, substitutions and any and
all Proceeds arising out of or derived from the foregoing.
3.3 Following the occurrence and during the continuance of an Event of
Default (as defined herein), the Collateral Agent is hereby specifically
authorized to transfer any Collateral into the name of the Collateral Agent and
to take any and all action deemed advisable to the Collateral Agent to remove
any transfer restrictions affecting the Collateral.
4. Perfection of Security Interest. The Collateral shall be delivered to the
Collateral Agent as security for the Obligations. The Collateral Agent shall
have a perfected security interest in the Collateral.
5. Distribution on Liquidation.
5.1 If any sum is paid as a liquidating distribution on or with respect to
the Collateral, The Shareholder shall accept same in trust for the Lender and
shall deliver same to the Collateral Agent to be applied to the Obligations then
due, in accordance with the terms of the Note.
5.2 So long as no Event of Default (as defined herein) exists, the
Shareholder shall be entitled to exercise all voting power pertaining to any of
the Collateral, provided such exercise is not contrary to the interests of the
Lender or Collateral Agent and does not impair the Collateral.
6. Further Action By Debtor and Covenants and Warranties.
6.1 Collateral Agent at all times shall have a perfected security interest
in the Collateral which shall be prior to any other unperfected interest
therein. Subject to the security interest described herein, The Shareholder have
and will continue to have full title to the Collateral free from any liens,
leases, encumbrances, judgments or other claims. Collateral Agent's security
interest in the Collateral constitutes and will continue to constitute a first,
prior and indefeasible security interest in favor of Collateral Agent. The
Shareholder will do all acts and things, and will execute and file all
instruments (including but not limited to security Agreement, financing
statements, continuation statements, etc.) reasonably requested by Collateral
Agent to establish, maintain and continue the perfected security interest of
Collateral Agent in the Collateral, and will promptly on demand, pay all costs
and expenses of filing and recording, including the costs of any searches
reasonably deemed necessary by Collateral Agent from time to time to establish
and determine the validity and the continuing priority of the security interest
of Collateral Agent, and also pay all other claims and charges that in the
opinion of Collateral Agent might prejudice, imperil or otherwise adversely
affect the Collateral or its security interest therein.
6.2 The Shareholder will not sell, transfer, assign or pledge those items
of Collateral and Debtor and The Shareholder will not allow any such items to be
sold, transferred, assigned or pledged, without the prior written consent of
Collateral Agent. Although Proceeds of Collateral are covered by this Security
Agreement, this shall not be construed to mean that Collateral Agent consents to
any sale of the Collateral.
6.3 Debtor and The Shareholder will, at all reasonable times, allow
Collateral Agent or its representatives free and complete access to all of
Debtor 's and The Shareholder' records which in any way relate to the
Collateral, for such inspection and examination as Collateral Agent reasonably
deems necessary.
6.4 Debtor and the Shareholder, at their sole cost and expense, will
protect and defend this Security Agreement, all of the rights of Collateral
Agent hereunder, and the Collateral against the claims and demands of all other
parties.
6.5 Debtor and the Shareholder will promptly notify Collateral Agent of
any levy, distraint or other seizure by legal process or otherwise of any part
of the Collateral, and of any threatened or filed claims or proceedings that
might in any way adversely affect or impair any of the rights of Collateral
Agent under this Agreement.
6.6 Collateral Agent may, at its option, and without any obligation to do
so, pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Debtor or The Shareholder,
and all amounts expended by Collateral Agent in so doing shall become part of
the Obligations secured hereby, and shall be immediately due and payable by
Debtor and The Shareholder to Collateral Agent upon demand and shall bear
interest at 18% per annum from the dates of such expenditures until paid.
6.7 Upon the request of Collateral Agent, Debtor and the Shareholder will
furnish within five (5) days thereafter to Collateral Agent, or to any permitted
assignee of this Agreement, a written statement in form satisfactory to
Collateral Agent, duly acknowledged, certifying the amount of the principal and
interest then owing under the Obligations, whether any claims, offsets or
defenses exist against the Obligations or against this Agreement, or any of the
terms and provisions of any other agreement of Debtor securing the Obligations.
6.8 The Debtor and the Shareholder will, at their own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take further steps
relating to the Collateral and other property or rights covered by the security
interest hereby granted, as the Collateral Agent may reasonably require to
protect its security interest hereunder.
6.9 The Shareholder represents and warrants that he is the true and lawful
exclusive owner of the Collateral, free and clear of any liens and encumbrances
and acquired the Security Shares for purposes of calculating the holding period
for purposes of Rule 144 under the Securities Act of 1933 ("Rule 144") on the
dates set forth on Schedule B. the Shareholder represents that the holding
period of the Security Shares held by the Shareholder commenced for purposes of
resale under Rule 144 on the acquisition date set forth on Schedule B hereto.
The Shareholder makes the foregoing representation to the Lender and any
transfer agent of the Company's common stock as if originally made to such
transfer agent.
6.10 The Shareholder hereby agrees not to divest himself of any right under
the Collateral absent prior written approval of the Collateral Agent.
6.11 Following the occurrence and during the existence of an Event of
Default, Debtor and the Shareholder will cooperate and provide such certificate,
resolutions, representations, legal opinions and all other matters necessary to
facilitate a transfer or sale of any part of the Collateral pursuant to Rule
144. Debtor and The Shareholder are unaware of any impediment to the resale of
the security by the Collateral Agent upon an Event of Default pursuant to Rule
144. Debtor and the Shareholder will take no action that would impede or limit
the Collateral Agent's ability to resell all the Security Shares upon an Event
of Default pursuant to Rule 144. For so long as any Security Shares are subject
to this Agreement, the Shareholder will not sell any security of the Debtor
which sale would be aggregated with sales by the Collateral Agent pursuant to
Rule 144. Debtor shall issue instructions to its transfer agent to comply with
the foregoing sentence. Debtor will not permit the transfer of any security of
the Debtor if such transfer would aggregate for purposes of Rule 144 with sales
of the Security Shares by the Collateral Agent or any sales of the Security
Shares. The Shareholder represents and warrants that ha has not sold any
security of the Debtor during the ninety (90) days prior to the date of this
Agreement. The Lender acknowledges that upon transfer of the Security Shares to
the Lender or Collateral Agent, the Lender' holding periods under subsection (d)
of Rule 144 may be "tacked" with the Shareholder' holding periods. The
Shareholder further represent that the Note was issued in a bona fide loan
transaction.
7. Power of Attorney.
Debtor and the Shareholder hereby irrevocably constitute and appoint the
Collateral Agent as the true and lawful attorney of Debtor and the Shareholder,
with full power of substitution, in the place and stead of Debtor and the
Shareholder and in the name of Debtor and the Shareholder or otherwise, at any
time or times, in the discretion of the Collateral Agent, to take any action and
to execute any instrument or document which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement which Debtor
or The Shareholder fail to take or fail to execute within five (5) business days
of the Collateral Agent's reasonable request therefor. This power of attorney is
coupled with an interest, is irrevocable and shall not be affected by any
subsequent disability or incapacity of Debtor or The Shareholder.
8. Performance By The Collateral Agent.
If Debtor or the Shareholder fail to perform any material covenant,
agreement, duty or obligation of Debtor or The Shareholder under this Agreement,
the Collateral Agent may, at any time or times in its discretion, take action to
effect performance of such obligation. All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Debtor and The Shareholder as provided in Paragraph 12.1 hereof. No
discretionary right, remedy or power granted to the Collateral Agent under any
part of this Agreement shall be deemed to impose any obligation whatsoever on
the Collateral Agent with respect thereto, such rights, remedies and powers
being solely for the protection of the Collateral Agent.
9. Event of Default/Waiver. An event of default ("Event of Default") shall be
deemed to have occurred hereunder upon the occurrence of any event of default as
defined in the Note or Convertible Note Purchase Agreement. Upon and after any
Event of Default, after the applicable cure period, if any, any or all of the
Obligations shall become immediately due and payable at the option of the
Collateral Agent, for the benefit of the Lender, or at the option of any Lender
for himself, and the Collateral Agent may dispose of Collateral as provided
below. A default by Debtor or The Shareholder of any of their obligations
pursuant to this Agreement including but not limited to the obligations set
forth in Section 6 of this Agreement, or a misrepresentation by Debtor or The
Shareholder of a material fact stated herein, shall be deemed an Event of
Default hereunder and an event of default as defined in the Obligations.
Notwithstanding the foregoing, it shall not be an Event of Default under this
Agreement if the Debtor is able to satisfy any obligations to the Lender with
authorized shares of the common stock of Debtor reserved by Debtor for such
purpose.
10. Disposition of Collateral. Upon and after any Event of Default which is
then continuing,
10.1 The Collateral Agent may exercise its rights with respect to each and
every component of the Collateral, without regard to the existence of any other
security or source of payment for the Obligations or any other component of the
Collateral. In addition to other rights and remedies provided for herein or
otherwise available to it, the Collateral Agent shall have all of the rights and
remedies of a lender on default under the Uniform Commercial Code then in effect
in the State of New York.
10.2 If any notice to the Shareholder of the sale or other disposition of
Collateral is required by then applicable law, five (5) days' prior notice (or,
if longer, the shortest period of time permitted by then applicable law) to The
Shareholder of the time and place of any public sale of Collateral or of the
time after which any private sale or any other intended disposition is to be
made, shall constitute reasonable notification.
10.3 The Collateral Agent is authorized, at any such sale, if the
Collateral Agent deems it advisable to do so, in order to comply with any
applicable securities laws, to restrict the prospective bidders or purchasers to
persons who will represent and agree, among other things, that they are
purchasing the Collateral for their own account for investment, and not with a
view to the distribution or resale thereof, or otherwise to restrict such sale
in such other manner as the Collateral Agent deems advisable to ensure such
compliance. Sales made subject to such restrictions shall be deemed to have been
made in a commercially reasonable manner.
10.4 All cash proceeds received by the Collateral Agent for the benefit of
the Lender in respect of any sale, collection or other enforcement or
disposition of Collateral, shall be applied (after deduction of any amounts
payable to the Collateral Agent pursuant to Paragraph 12.1 hereof) against the
Obligations pro rata among the Lender in proportion to their respective interest
in the Obligations. Upon payment in full of all Obligations, The Shareholder
shall be entitled to the return of all Collateral, including cash, which has not
been used or applied toward the payment of Obligations or used or applied to any
and all costs or expenses of the Collateral Agent incurred in connection with
the liquidation of the Collateral (unless another person is legally entitled
thereto). Any assignment of Collateral by the Collateral Agent to The
Shareholder shall be without representation or warranty of any nature whatsoever
and wholly without recourse. Each Lender may purchase the Collateral and pay for
such purchase by offsetting any sums owed to such Lender by Debtor arising under
the Obligations or any other source.
10.5 No exercise by the Collateral Agent of any right hereby given it, no
dealing by the Collateral Agent with Debtor, the Shareholder or any other
person, and no change, impairment or suspension of any right or remedy of the
Collateral Agent shall in any way affect any of the obligations of Debtor or The
Shareholder hereunder or any Collateral furnished by the Shareholder or give
Debtor or the Shareholder any recourse against the Collateral Agent.
10.6 The Security Shares shall be released to the the Shareholder upon the
complete satisfaction of the Obligations. The Collateral Agent agrees to execute
all documents, instruments, UCC termination statements and releases reasonably
requested by the Shareholder at such Shareholder's expense, to effect the
termination of Collateral Agent's security interest hereunder.
10.7 Anything to the contrary herein notwithstanding, the Security Shares
may be released by the Collateral Agent directly to the Lender in proportion to
their interests as set forth on Schedule A hereto at any time after written
request, therefore to the Collateral Agent by any such Lender ("Request for
Release"), and provided such request is made after the receipt by the Collateral
Agent in writing, of a notice from a Lender of the occurrence of an Event of
Default and expiration of notice and cure period provisions, if any. The
Collateral Agent shall notify the Debtor and the Shareholder of any release of
the Security Shares in writing five business days after such release. The
attributed value of the Security Shares shall be equal to the Conversion Price
(as defined in the Note) in effect on the date Request for Release is given to
the Collateral Agent. The Request for Release must include a statement
supporting the determination of the Conversion Price being employed. The
Collateral Agent may not release at any one time an amount of Security Shares to
a Lender pursuant to any particular Request for Release that would be in excess
of the amount of Common Stock of the Debtor the Lender would be permitted to
receive under Section 9.3 of the Convertible Note Purchase Agreement upon
delivery of a Conversion Notice (as defined in the Note). The Debtor shall
receive a credit against the Obligations in an amount corresponding to the
Conversion Price employed multiplied by the number of Security Shares released
to a Lender.
11. Waiver of Automatic Stay. The Debtor and the Shareholder acknowledge and
agree that should a proceeding under any bankruptcy or insolvency law be
commenced by or against the Debtor or The Shareholder, or if any of the
Collateral (as defined in the Security Agreement) should become the subject of
any bankruptcy or insolvency proceeding, then the Collateral Agent should be
entitled to, among other relief to which the Collateral Agent may be entitled
under the Note, Security Agreement, Convertible Note Purchase Agreement and any
other agreement to which the Debtor, the Shareholder, Lender or Collateral Agent
are parties, (collectively "Loan Documents") and/or applicable law, an order
from the court granting immediate relief from the automatic stay pursuant to 11
U.S.C. Section 362 to permit the Collateral Agent to exercise all of its rights
and remedies pursuant to the Loan Documents and/or applicable law. THE DEBTOR
AND THE SHAREHOLDER EXPRESSLY WAIVE THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY
11 U.S.C. SECTION 362 AS TO COLLATERAL AGENT. FURTHERMORE, THE DEBTOR AND THE
SHAREHOLDER EXPRESSLY ACKNOWLEDGE AND AGREE THAT NEITHER 11 U.S.C. SECTION 362
NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
(INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT,
CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE COLLATERAL AGENT TO
ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Debtor and the Shareholder hereby consent to any motion for
relief from stay which may be filed by the Collateral Agent in any bankruptcy or
insolvency proceeding initiated by or against the Debtor and The Shareholder,
and further agree not to file any opposition to any motion for relief from stay
filed by the Collateral Agent. The Debtor and the Shareholder represents,
acknowledge and agree that this provision is a specific and material aspect of
this Agreement, and that the Collateral Agent would not agree to the terms of
this Agreement if this waiver were not a part of this Agreement. The Debtor and
the Shareholder further represent, acknowledge and agree that this waiver is
knowingly, intelligently and voluntarily made, that neither the Collateral Agent
nor any person acting on behalf of the Collateral Agent has made any
representations to induce this waiver, that the Debtor and The Shareholder have
been represented (or has had the opportunity to be represented) in the signing
of this Agreement and in the making of this waiver by independent legal counsel
selected by the Debtor and The Shareholder and that the Debtor and The
Shareholder have had the opportunity to discuss this waiver with counsel. The
Debtor and the Shareholder further agree that any bankruptcy or insolvency
proceeding initiated by the Debtor or The Shareholder will only be brought in
courts within the geographic boundaries of New York State. Notwithstanding
anything to the contrary in this Section 11, the parties hereto agree that this
Section shall terminate and be of no further effect after the security interest
created hereby has terminated.
12. Miscellaneous.
12.1 Expenses. Debtor and the Shareholder shall severally pay to the
Collateral Agent, on demand, the amount of any and all reasonable expenses,
including, without limitation, attorneys' fees, legal expenses and brokers'
fees, which the Collateral Agent may incur in connection with (a) sale,
collection or other enforcement or disposition of Collateral; (b) exercise or
enforcement of any the rights, remedies or powers of the Collateral Agent
hereunder or with respect to any or all of the Obligations; or (c) failure by
Debtor or the Shareholder to perform and observe any Agreement of Debtor or the
Shareholder contained herein which are performed by the Collateral Agent.
12.2 Waivers, Amendment and Remedies. No course of dealing by the
Collateral Agent and no failure by the Collateral Agent to exercise, or delay by
the Collateral Agent in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power of the Collateral Agent. No amendment, modification or
waiver of any provision of this Agreement and no consent to any departure by
Debtor or the Shareholder therefrom, shall, in any event, be effective unless
contained in a writing signed by the Collateral Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. The rights, remedies and powers of the Collateral
Agent, not only hereunder, but also under any instruments and Agreement
evidencing or securing the Obligations and under applicable law are cumulative,
and may be exercised by the Collateral Agent from time to time in such order as
the Collateral Agent may elect.
12.3 Notices. Any notice or other communications under the provisions of
this Agreement shall be given in writing and delivered to the recipient in
person, by reputable overnight courier or delivery service, by facsimile machine
(receipt conformed) with a copy sent by first class mail on the date of
transmission, or by registered or certified mail, return receipt requested,
directed to its address set forth below (or to any new address of which a party
hereto shall have informed the other by the giving of notice in the manner
provided herein):
To Debtor:
With a copy to:
To The Shareholder: To the addresses and telecopier numbers
Set forth on Schedule B hereto
To Lender: To the addresses and telecopier numbers
Set forth on Schedule A hereto
To the Collateral Agent: ▇▇▇▇▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party may change its address by written notice in accordance with this
paragraph.
12.4 Term; Binding Effect. This Agreement shall (a) remain in full force
and effect until the 14C Information Statement of Armitec, Inc., which increases
Armitec's common stock is declared effective by the Securities and Exchange
Commission, or payment and satisfaction in full of all of the Obligations; (b)
be binding upon Debtor and the Shareholder, and their successors and assigns;
and (c) inure to the benefit of the Collateral Agent, for the benefit of the
Lender and their heirs, legal representatives, successors in title and permitted
assigns.
12.5 Captions. The captions of Paragraphs, Articles and Sections in this
Agreement have been included for convenience of reference only, and shall not
define or limit the provisions hereof and have no legal or other significance
whatsoever.
12.6 Governing Law; Venue; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts or choice of law, except to the extent that
the perfection of the security interest granted hereby in respect of any item of
Collateral may be governed by the law of another jurisdiction. Any legal action
or proceeding against the Debtor and The Shareholder with respect to this
Agreement may be brought in the courts of the State of New York or of the United
States for the Southern District of New York, and, by execution and delivery of
this Agreement, each of the Debtor and The Shareholder hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Debtor and The
Shareholder hereby irrevocably waive any objection which they may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. If any provision of this
Agreement, or the application thereof to any person or circumstance, is held
invalid, such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions shall
remain of full force and effect.
12.7 Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Security Agreement, as of the date first written above.
"DEBTOR"
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: President
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"THE SHAREHOLDER"
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Authorized Agent
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/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - "Collateral Agent"
APPROVED:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ President
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▇▇▇▇▇▇▇▇▇▇▇ Limited Partnership
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This Security Agreement may be executed by facsimile signature and delivered by
confirmed facsimile transmission.
SCHEDULE A TO SECURITY AGREEMENT
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SUBSCRIBER PRINCIPAL AMOUNT OF 7% SECURED CONVERTIBLE
NOTE AND ESCROWED PAYMENT
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TOTAL
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SCHEDULE B TO SECURITY AGREEMENT
------------------------- ----------------------------- ----------- -----------------
DEPOSITOR DEPOSITED SECURITY SHARES STOCK ACQUISITION DATE*
CERTIFICATE
NUMBERS
------------------------- ----------------------------- ----------- -----------------
5,750,000 Common Shares AC89 Nov. 8, 2001
Galt Capital Corporation ($.00167
par value per share) of
Armitec, Inc.
------------------------- ----------------------------- ----------- -----------------
Galt Capital Corporation 11,890,785 Common Shares AC98 Dec. 29,2000
($.00167 par value per share)
of Armitec, Inc.
------------------------- ----------------------------- ----------- -----------------
______ Common Shares ($.0001
par value per share)
of _________________________
------------------------- ----------------------------- ----------- -----------------
* The Depositor represents that each of the deposited Security Shares was
initially issued on the Acquisition Date and fully paid for as of the
Acquisition Date.