EXHIBIT 10.23
SECURITY AGREEMENT
SECURITY AGREEMENT made as of September 30, 2002, between STRONGHOLD
TECHNOLOGIES, INC., a New Jersey Corporation (the "Debtor") with its principal
office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and UNITEDTRUST BANK
(the "Bank"), with an office at ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
1. Grant of Security Interest. To induce the making and continuation of all the
Debtor's present and future liabilities to the Bank under any promissory note,
guaranty or other obligation to the Bank and to secure all of those obligations,
whether direct or indirect, absolute or contingent, joint or several, presently
existing or hereafter incurred (the "Obligations") the Debtor hereby grants to
the Bank a continuing first lien security interest in all of the Debtor's right,
title and interest in and to the following described property (together with all
accessions and additions thereto, substitutions therefore, and proceeds and
products thereof, being called the "Collateral"):
(a) all machinery, furniture, fixtures, equipment and other personal property of
the Debtor, now existing and hereafter acquired;
(b) all work in process, goods, materials and inventory of the Debtor, now
existing and hereafter acquired;
all accounts, claims for monies due and other accounts receivable of the Debtor,
now existing and hereafter arising;
all general intangibles, copyrights, trademarks, patents, licenses, and
franchises of the Debtor, now existing and hereafter arising;
(e) all documents, instruments, investment property, chattel paper, and
promissory notes of the Debtor, now existing and hereafter acquired; and
(f) all other tangible and intangible property and assets of the Debtor, now
existing and hereafter acquired.
All terms in this paragraph 1 shall include, but not be limited to, any
definitions thereof contained in the New Jersey Uniform Commercial Code, as the
same may be amended, from time to time.
2. Nature of Use. The Debtor represents and warrants that:
(c)
(d)
(a) it is the owner of the Collateral and has title thereto, free and clear of
all security interests, liens and encumbrances;
(b) the Collateral is used or bought for use primarily in business;
(c) if the Collateral is being acquired with the proceeds of a loan, the Bank is
authorized to disburse the proceeds of the loan directly to the seller of the
Collateral; and
(d) if the Collateral consists of goods which are or are to become fixtures, the
description of the real property to which the goods are attached or are to be
attached, and the name of the owner of such real property (if different from the
Debtor), are as follows:
3. Location of Collateral. The Debtor represents that the place where the
Collateral will be kept is the same place as stated at the head of this
agreement or the Borrower's offices in Virginia, located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.. The Debtor will notify the Bank promptly,
of any change in such location(s).
4. Covenants. So long as any of the Obligations remain unpaid, the Debtor agrees
to:
(a) keep the Collateral free from all security interests, liens, and
encumbrances other than those granted to the Bank;
(b) keep the Collateral insured, at its own cost and expense, naming the Bank as
an insured, under a lender's loss payable endorsement (or in any other manner
designated by the Bank) , in such amounts, with such insurers, under such
endorsements, and against such risks as may be acceptable to the Bank, and, on
request, to deliver the policies evidencing such insurance to the Bank;
(c) execute all documents requested by the Bank to perfect or preserve the
Bank's security interest in the Collateral (and authorizes the Bank to execute
any such documents as its attorney-in-fact) and pay the cost of filing such
documents;
(d) maintain such records and information with respect to the Collateral and its
financial condition and operations, as the Bank may, from time to time, require,
and allow the Bank to inspect such records and information and supply copies of
such records and information to the Bank; and
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(e) immediately inform the Bank of any change in its name, ownership, or
business structure.
If the Debtor fails to keep the Collateral insured as provided herein or fails
to pay any tax upon or other charge or claim against the Collateral, the Bank
may, in addition to any other remedy it may have (under this agreement or
otherwise) pay the cost of such insurance or the amount of such tax, other
charge or claim, and the amount so paid, together with interest at the highest
rate of interest then allowable on the Obligations secured hereby, shall be paid
to the Bank by the Debtor upon demand, and, until so paid, shall be a liability
of the Debtor secured by this Agreement.
5. Default. If:
(a) the Debtor or other obligor of any Obligation secured by this agreement
defaults in the payment of any Obligation or other liability now existing or
hereafter arising, to the Bank or any third party;
(b) a default shall occur under the terms of any note, guaranty, loan agreement
or any other document which evidences or secures any Obligation secured by this
agreement;
(c) a petition in bankruptcy is filed by or against the Debtor or other obligor
of any Obligation secured by this agreement;
(d) a receiver is appointed for the Debtor;
(e) the Debtor makes an assignment for the benefit of creditors;
(f) the Debtor becomes a party to any proceeding for an adjustment, settlement,
arrangement, extension or composition of, or other relief from, its debts;
(g) there is a breach of any representation, warranty, covenant or agreement
made herein by the Debtor;
(h) the Debtor has misrepresented any material fact herein or has made or
hereafter makes such misrepresentation in any statement to the Bank, or in any
writing supplemental or ancillary hereto; or
(i) any event occurs which, in the Bank's absolute discretion, impairs the
financial responsibility or condition of the Debtor or the value of the
Collateral or the Bank's security interest therein;
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then, in any such event (each, an "Event of Default"), the Bank may, at its
option, declare all Obligations secured hereby immediately due and payable, and
the Bank may require the Debtor to assemble the Collateral and make it available
to the Bank at a place which is reasonably convenient to the Bank and the
Debtor. In addition, the Bank shall have, and may exercise, all the rights and
remedies conferred upon secured parties by the Uniform Commercial Code and other
applicable laws. The Debtor hereby irrevocable appoints the Bank as Debtor's
attorney-in-fact, with full authority in the place and stead of Debtor and in
the name of Debtor or otherwise, upon the occurrence of an Event of Default, to
take any action and to execute any instrument that the Bank may deem necessary
or advisable to accomplish the purposes of this Agreement, including, without
limitation: (a) to assign, pledge, convey or otherwise transfer title in or
dispose of the Collateral to any third person, and (b) to file any claims, to
take any action or institute any proceedings which the Bank may deem necessary
or desirable to enforce the rights of the Bank with respect to any of the
Collateral.
6. Notification of Obligors. At any time, prior to or after default by the
Debtor, the Bank may notify the obligors on any of the Collateral of the
existence of its security interest and direct them to make payments directly to
the Bank. The Debtor, at the request of the Bank, shall also take such actions
and hold any sums received from such obligors in trust for the Bank. Until such
time as the Bank elects to exercise such rights, the Debtor is authorized, as
agent of the Bank, to collect and enforce those obligations.
7. Duties with respect to Collateral. The Bank shall have no duty to:
(a) collect, preserve, protect, insure or care for the Collateral or any
proceeds thereof;
(b) preserve rights of the Debtor or others;
(c) realize on the Collateral or any proceeds; or
(d) marshal the assets of the Debtor.
8. Costs of Enforcement. The Bank's reasonable expenses of realizing upon the
Collateral, including attorneys' fees, shall be paid by the Debtor. Any
notification of a sale or other disposition of the Collateral (or of other
action by the Bank) required to be given by the Bank, will be sufficient if
given personally or mailed by certified mail, not less than five (5) days prior
to the day on which such sale or other disposition will be made, and such
notification shall be deemed reasonable notice.
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9. Miscellaneous. The waiver by the Bank of any default hereunder or of any
provision hereof shall not discharge the Debtor from liability hereunder and
such waiver shall be limited to the particular event of default or to the
particular provision and shall not operate as a waiver of any subsequent default
or of any other provision.
If there is more than one person or entity executing this agreement as Debtor,
their obligations hereunder shall be joint and several.
This agreement and the rights of the parties hereto shall be governed by the
laws of the State of New Jersey and shall be binding upon and inure to the
benefit of the Bank, the Debtor, and their respective heirs, executors,
administrators, successors and assigns. This Security Agreement replaces and
supercedes the Commercial Security Agreement dated June 30, 2002 between the
Debtor and the Bank and the Commercial Security Agreement dated November 1, 2001
between the Debtor's predecessor entity and the Bank.
IN WITNESS WHEREOF, the undersigned have caused this agreement to be executed
the day and year first above written.
Attest: Stronghold Technologies, Inc., a
New Jersey corporation
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇, Asst. Secretary ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Witness: UnitedTrust Bank
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇, Vice President
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