EXHIBIT 10.17
SECURITY
AGREEMENT
THIS SECURITY
AGREEMENT (" Agreement ") is made as of the 6 th
day of October, 2008, by and between SigmaSYS Corp., a Delaware
corporation (" SigmaSYS "), Sandy L. Hoover, Trustee of the
Exemption Trust, a sub-trust of the Robert T. Stewart Separate
Property Trust dated March 17, 2003 (the " Exemption Trust
"), Sandy L. Hoover, Trustee of the Sandy L. Hoover Trust, a
sub-trust of the Robert T. Stewart Separate Property Trust dated
March 17, 2003 (the " Q-Tip Trust " and, together with the
Exemption Trust, each a " Secured Party "), and Sandy L.
Hoover (the " Secured Party Representative ").
For good and
valuable consideration, the receipt of which is hereby
acknowledged, and intending to be legally bound, the parties agree
as follows:
1.
SigmaSYS grants to the Secured Parties a
security interest in its Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter of Credit
Rights, Payment Intangibles and Supporting Obligations and all
Proceeds, all now owned and hereafter acquired and all proceeds
thereof, as well as all now existing and hereafter acquired books,
records, writings, information and other property relating to,
embodying, incorporating or referring to, any of the foregoing (the
" Collateral "). Capitalized terms used but not defined in
this Agreement have the respective meanings given them in the
Delaware Uniform Commercial Code as the same may be amended from
time to time.
2.
The security interest is granted to secure
the payment by inTEST Corporation, a Delaware corporation ("
Parent ") of (i) Parent's promissory note to the Exemption
Trust dated October 6, 2008 and (ii) Parent's promissory note to
the Q-Tip Trust dated October 6, 2008 (collectively, the "
Notes "), which Notes have an aggregate original principal
amount of $1,524,908.42 (the " Obligations "). Upon the
repayment of all of the Obligations, the security interest created
hereby shall terminate and all rights in and to the Collateral
shall revert to SigmaSYS and the Secured Parties will, at the
expense of SigmaSYS to the extent permitted by law, execute and
deliver to SigmaSYS such documents as SigmaSYS reasonably requests
to evidence the termination of such security interest and the
release of such Collateral.
3.
SigmaSYS hereby covenants, represents and
warrants as follows:
(a)
SigmaSYS is the sole owner of and has good and
marketable title to the Collateral (or, in the case of
after-acquired Collateral, at the time SigmaSYS acquires rights in
the Collateral) and, except as otherwise disclosed in writing to
Secured Party Representative, no person has (or, in the case of
after-acquired Collateral, at the time SigmaSYS acquires rights
therein, will have) any right, title, claim or interest (by way of
security interest, mortgage, pledge, lien, charge or other
encumbrances in), against or to the Collateral, except for:
(i)
any statutory lien for taxes not yet due,
any statutory lien of a landlord, carrier, warehouseman, mechanic
or materialman incurred for sums not yet due, purchase money claims
and claims securing retail payments under capital lease agreements,
and liens that are immaterial in character, amount and extend and
which do not materially detract from the value or interfere with
the present use of the properties they affect (the foregoing,
collectively, " Permitted Encumbrances "); and
(ii) liens
junior in priority to the Secured Parties' security interest in the
Collateral (" Junior Liens ").
(b)
The aggregate book value of the Collateral that
is not subject to Junior Liens shall, as of the last day of each
calendar quarter while either of the Notes remains outstanding, be
not less than One Hundred Ten Percent (110%) of the aggregate
outstanding principal amount of the Notes.
(c)
SigmaSYS hereby agrees to allow, at all
reasonable times, and from time to time, without the necessity of
any prior notice or demand, each Secured Party by or through any of
its officers, agents, attorneys, accountants, or other
representative, to examine or inspect the Collateral wherever the
same may be located and to examine, inspect, and make copies of
SigmaSYS's books and records respecting any or all of the
Collateral.
(d)
SigmaSYS shall pay all taxes and assessments upon
the Collateral promptly when due unless reasonably contested in
good faith.
(e)
To the knowledge of SigmaSYS after diligent
inquiry, all information heretofore, herein or hereafter supplied
to the Secured Party Representative or to either Secured Party by
or on behalf of SigmaSYS with respect to the Collateral is accurate
and complete in all material respects.
(f)
The execu
