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EXHIBIT 10.31
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made effective as of the 5th of
February, 1999, by and between DIGITAL TRANSMISSION SYSTEMS, INC., a Delaware
corporation, (the "Secured Party"), and SOUTHTECH, INC., a Georgia corporation
(the "Debtor"), collectively referred to as the "parties', who agree as follows:
DEBT AND COLLATERAL. The Debtor grants to the Secured Party a security interest
in the Collateral as described on the attached Exhibit "A", which are
collectively described as the "Assets" in the Promissory Note, dated on the even
date herewith with SOUTHTECH, INC, as MAKER, ("the Note"), together with all
proceeds thereof, until full payment of the Promissory Note is made to the order
of the Secured Party. The Obligation for payment as described herein shall be
secured by the Collateral held by the Debtor or its licensee at any of its
places of business. Debtor agrees to execute any and all documents requested by
Secured Party to perfect its secured interest, including financing statements
and UCC-I filings, and in default thereof appoints Secured Party
Attorney-in-Fact to execute such documents.
RISK OF LOSS. The Collateral is to remain in the possession of the Debtor or its
licensee, at all times, at the Debtor's risk of loss or destruction. The
possession by the Debtor or its licensee shall continue as long as the
provisions of this Security Agreement are observed.
RELEASE OF DEBTOR. No transfer, renewal, extension, or assignment of this
Security Agreement or any interest hereunder, and no loss, damage or destruction
of the Collateral, shall release the Debtor from the Obligations described
herein. Debtor shall be released from all security interests and corresponding
lien of the Secured Party upon complete satisfaction of the Obligation.
USE OF COLLATERAL. The Debtor or its licensee shall at all times keep the
Collateral free of all taxes, liens and encumbrances, and any sums of money that
may be paid by the Secured Party in release or discharge thereof shall be
payable on demand as an additional part of the Obligation secured hereby. The
Debtor or its licensee shall not use the collateral in any manner other than in
the ordinary course of business. The Debtor or its licensee shall not pledge,
loan, grant or create any other additional security interest in the Collateral
until the Obligations described herein have been discharged, and shall not
transfer or otherwise dispose of the Collateral except as provided in this
Agreement. The Secured Party shall have the right to inspect the Collateral at
any reasonable time or times during the continuance of this Agreement.
SALE OR LICENSING OF COLLATERAL IN ORDINARY COURSE OF BUSINESS. Debtor may sell
or license the Collateral in the ordinary course of business; provided, however
that any and all proceeds generated by the sale or licensing of the Collateral,
in whatever form, shall be fully and faithfully accounted for.
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DEFAULT. (a) Should Debtor default in the prompt payment of any Obligation or
in the due performance of or compliance with any of the terms, provisions or
conditions of this Agreement, the Note, or any other document executed in
connection therewith (collectively "Security Documents") or a proceeding in
bankruptcy, insolvency, receivership or reorganization is instituted by or
against the Debtor or its property or the business of the Debtor is in any way
liquidated, or the Secured Party reasonably deems itself insecure of the
Collateral or any part thereof is in danger of loss, misuse, seizure, or
confiscation, the Secured Party shall have all the rights and remedies provided
in the Uniform Commercial Code in force in the State of Georgia at the date of
execution of this Security Agreement. The Secured Party or any Sheriff or other
officer of the law may take immediate possession of the Collateral, including
any attachments or accessories thereto, without demand or further notice and
without legal process. (b) Notwithstanding anything contained herein to the
contrary, payment for any principal and interest shall be due and payable in
accordance with the terms of the Note. Failure of Debtor to pay after the
applicable cure period to pay expires, pursuant to said terms, shall constitute
a material default hereunder and all rights and remedies accorded Secured Party
within this Agreement, at law and in equity shall be available.
ATTORNEYS FEES. In the event of repossession of the Collateral, the Secured
Party shall have such rights and remedies as provided and permitted by law for
the purpose of recovering and disposing of the Collateral. The Debtor shall pay
all attorneys fees and legal expenses incurred by the Secured Party in the
event repossession of the Collateral is required.
GOVERNING LAW/VENUE. This Agreement shall be construed and governed in
accordance with the laws of the State of Georgia and venue shall be in Gwinnett
County, Georgia.
BINDING EFFECT This Agreement shall be binding upon the parties, their heirs,
executors, personal representatives, successors or assigns, where permitted.
ENTIRE AGREEMENT. This Agreement is the entire agreement between Debtor and
Secured Party. No addition, alteration, modification hereto and no waiver of
any of the provisions hereof shall be valid unless made in writing and executed
by Debtor and Secured Party.
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IN WITNESS WHEREOF, this Security Agreement was signed and executed on this
12th day of February, 1999.
Attest: DIGITAL TRANSMISSION SYSTEMS, INC
A Delaware corporation
/s/
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Secretary (Seal)
/s/
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President & CEO
Attest: SOUTHTECH, INC,
A Georgia corporation
/s/
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Secretary( (Seal)
/s/
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President
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EXHIBIT "A"
The term "Assets" shall include:
Assets.
(a) All furniture, fixtures, equipment, inventory, stock in trade, accounts
receivable, contract rights and any other personal property owned by
Debtor, tangible or intangible.
(b) All accessions to, substitutions for, and all replacement of, products and
cash and non-cash proceeds of (a) above.
