SECURITY AGREEMENT
Exhibit 3.1
page 1 of 8
THIS SECURITY AGREEMENT (this “Agreement"), is entered into as of November 12, 2018, by and among XxxXxxxxxx.xxx, Inc., a Delaware corporation (the "Guarantor"), and the Xxxxxxx Xxxxxx as Shareholder Representative (as defined in the Merger Agreement, (the "Secured Party”). All capitalized terms not otherwise defined herein shall the meanings ascribed to them in that certain Agreement and Plan of Merger (the “Merger Agreement”), that certain Secured Promissory Note (the “Note”), and that certain Secured Unconditional Guaranty (“Guaranty”), entered into by and between Guarantor, the Secured Party, and Incumaker of even date herewith.
WHEREAS, the Guarantor has guaranteed the Promissory Note owed by Incumaker, Inc., (“Incumaker”) a Delaware corporation, to the Shareholder Representative (as defined in the Merger Agreement), for $2,500,000 which was entered into as partial consideration pursuant to the Merger Agreement, each dated as of even date herewith; and
WHEREAS, this Agreement is being executed and delivered by Guarantor to secure the Guaranty.
a. | Collateral. Guarantor hereby grants, pledges, and assigns for the benefit of the Secured Party, and there is hereby created in favor of the Secured Party, a security interest in and to all of Guarantor' s right, title, and interest in, to, and under all of the collateral set forth on Exhibit A hereto (collectively, "Collateral"). |
b. | Effective Date. This grant of security shall be effective as of the date hereof. |
c. | Filings to Perfect Security. The Secured Party will (and is hereby authorized to) file with any filing office such financing statements, amendments, addenda, continuations, terminations, assignments and other records (whether or not executed by Guarantor) to perfect and to maintain perfected security interests in the Collateral by the Secured Party, whereby (a) promptly upon the execution of this Agreement, a Financing Statement on Form UCC-1 (the "Financing Statement'') shall be filed with the Delaware Secretary of State on behalf of the Secured Party with respect to the Collateral; The Financing Statement shall designate the Secured Party as a Secured Party and Guarantor as the debtor, shall identify the security interest in the Collateral, and contain any other items required by law. |
Exhibit 3.1 page 2 of 8 |
The Financing Statement shall contain a description of collateral consistent with the description set forth herein."
a. | Sell, transfer, assign, or dispose of (by operation of law or otherwise), any of the Collateral outside of the ordinary course of business; or |
b. | Permit any of the Collateral to be levied upon under any legal process. |
4. Representations and Warranties. Guarantor hereby represents and warrants to the Secured Party as follows: (a) to Guarantor' s knowledge, Guarantor will be the owner of the Collateral after the consummation of the merger with the Guarantor (or, in the case of after-acquired Collateral, at the time Guarantor acquires rights in the Collateral, will be the owner thereat) and that, except as expressly provided herein, no other person has (or, in the case of after-acquired Collateral, at the time Guarantor acquires rights therein, will have) any right, title, claim or interest (by way of Lien or otherwise) in, against or to the Collateral except as provided under the terms of the Agreement with respect to the Secured Party; (b) to Guarantor's knowledge, except as expressly provided herein, upon the filing of a Financing Statement with the Delaware Secretary of State, the Secured Party (or in the case of after-acquired Collateral, at the time Guarantor acquires rights therein, will have) will have a perfected security interest in the Collateral to the extent that a security interest in the Collateral can be perfected by such filing; (c) all Accounts Receivable (as defined in Exhibit A) are genuine and enforceable against the party obligated to pay the same; (d) Guarantor has full power and authority to enter into the transactions provided for in this Agreement and the Guaranty; (e) this Agreement and the Guaranty, when executed and delivered by Guarantor, will constitute the legal, valid and Exhibit 10.1 page obligations of Guarantor enforceable in accordance with their terms; (t) the execution and delivery by Guarantor of this Agreement and the Guaranty and the performance and consummation of the transactions contemplated hereby and thereby do not and will not violate Guarantor's Certificate of Incorporation or Bylaws or any material judgment, order, writ, decree, statute, rule or regulation applicable to Guarantor (g) there does not exist any default or violation by Guarantor of or under any of the terms, conditions or obligations of (i) any indenture, mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which Guarantor is a party or by which Guarantor is bound, or (ii) any law, ordinance, regulation, ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon Guarantor by any law, the action of any court or any governmental authority or agency; and the execution, delivery and performance of this Agreement will not result in any such default or violation; (h) there is no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand pending or, to the knowledge of Guarantor, threatened which adversely affects Guarantor' s business or financial condition and there is no basis known to Guarantor for any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand which could result in the same; and (i) this Agreement and the Guaranty do not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained in this Agreement and the Guaranty not misleading.
Exhibit 3.1 page 3 of 8 |
a. | Failure of Guarantor to perform or observe any covenant set forth in this Agreement, or to perform or observe any other term, condition, covenant, warranty, agreement or other provision contained in this Agreement, where such failure continues for five (5) days after receipt of written notice from Secured Party specifying such failure; |
b. | Any representation or warranty made or furnished by Guarantor in writing in connection with this Agreement and the Guaranty or any statement or representation made in any certificate, report or opinion delivered pursuant to this Agreement or in connection with this Agreement is false, incorrect or incomplete in any material respect at the time it is furnished; or |
c. | Occurrence of any other Event of Default as defined in the Guaranty. |
6. Remedies. Upon the occurrence and during the continuance of an Event of Default (subject to the notice and cure provisions provided for herein, if any), the Secured Party shall have the rights of a secured creditor under the Uniform Commercial Code of the applicable jurisdiction, all rights granted by the Guaranty, this Security Agreement and by law, including the right to require Guarantor to assemble the Collateral and make it available to the Secured Party at a place to be designated by Guarantor. The rights and remedies provided in this Agreement and the Guaranty are cumulative and may be exercised independently or concurrently and are not exclusive of any other right or remedy provided at law or in equity. No failure to exercise or delay by the Secured Party in exercising any right or remedy under this Agreement or the Guaranty shall impair or prohibit the exercise of any such rights or remedies in the future or be deemed to constitute a waiver or limitation of any such right or remedy or acquiescence therein. Every right and remedy granted to the Secured Party under this Agreement and the Guaranty or by law or in equity may be exercised by any Secured Party at any time and from time to time.
7. Further Assurances. Guarantor agrees that, from time to time, at its own expense, it will:
a. | Protect and defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein and preserve and protect Secured Party's security interest in the Collateral. |
b. | Promptly execute and deliver to Secured Party all instruments and documents, and take all further action necessary or desirable, as any Secured Party may reasonably request to (i) continue, perfect, or protect any security interest granted or purported to be granted hereby, and (ii) enable a Secured Party to exercise and enforce any of Secured Party's rights and remedies hereunder with respect to any Collateral. |
c. | Permit a Secured Party's representatives to inspect and make copies of all books and records relating to the Collateral, wherever such books and records are located, and to conduct an audit relating to the Collateral at any reasonable time or times. |
Exhibit 3.1 page 4 of 8 |
If to the Guarantor, to: | |||
Incumaker, Inc. | |||
000 Xxxxxxxxx Xxxx, Xxxxx 0000X | |||
Xxxxxxx, XX 00000 | |||
Attention: Xxxxx Xxxxxxx | |||
e-mail: xxxxx.xxxxxxx@xxxx.xxx | |||
With a copy by e-mail only to (which copy shall not constitute notice): | |||
Xxxxxxx Xxxxxxx PLLC | |||
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000 | |||
Xxxxxxxxxx, X.X. 00000 | |||
Attn: Xxxxxx Xxxxx, Esq. | |||
e-mail: xxxxxx@XxxxxxxXxxxxxx.xxx | |||
If to the Secured Party: | |||
Xxxxxxx Xxxxxx | |||
000 Xxxxxxxx Xxxxxx | |||
Xxxxxxxxx, XX 00000 | |||
With a copy by e-mail only to (which copy shall not constitute notice): | |||
Xxxx Xxx Law | |||
00 Xxxxx Xxxxxx, Xxxxx 000 | |||
Xxxxxxx, Xxx Xxxxxx 00000 | |||
Attn: Xxxx Xxx, Esq. | |||
e-mail: xxxx@xxxxxxxxxx.xxx |
or to such other address or telecopy number as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.
9. Shareholder Representative. As specified in the Merger Agreement, the Shareholder Representative shall have the authority to act on behalf of the Sky Shareholders (as defined in the Merger Agreement) and shall hold any such Collateral on behalf of the Sky Shareholders and shall distribute it accordingly as reasonably as practicable.
10. Amendments and Waivers. No modification, amendment or waiver of any provision of, or consent required by, this Agreement, nor any consent to any departure herefrom, shall be effective unless it is in writing and signed by each of the parties hereto. Such modification, amendment, waiver or consent shall be effective only in the specific instance and for the purpose for which given.
Exhibit 3.1 page 5 of 8 |
18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).
Exhibit 3.1 page 6 of 8 |
[SIGNATURE PAGE(S) FOLLOW]
Exhibit 3.1 page 7 of 8 |
IN WITNESS WHEREOF, this Security Agreement has been executed as of the date first set written above.
XXXXXXXXXX.XXX, Inc. | ||
By: | /s/ Xxxxxxxxx Xxxxxxxx |
|
Name: Xxxxxxxxx Xxxxxxxx | ||
Title: Chief Operating Officer and Secretary |
SHAREHOLDER REPRESENTATIVE | ||
By: | /s/ Xxxxxxx Xxxxxx | |
Name: Xxxxxxx Xxxxxx |
ACCEPTED AND AGREED TO BY: | ||
INCUMAKER, INC. | ||
By: | /s/ Xxxxx Xxxxxxx | |
Name: Xxxxx Xxxxxxx | ||
Title: Chief Executive Officer |
Exhibit 3.1 page 8 of 8 |
EXHIBIT A
COLLATERAL
Guarantor hereby grants, pledges, and assigns for the benefit of the Secured Party, and there is hereby created in favor of the Secured Party, a security interest in and to all of Guarantor's right, title, and interest in, to, and under all assets of Guarantor which shall include, but not be limited to:
· | Cash reserves and collateral held by Guarantor’s banks |
· | Customer deposits |
· | Gift certificates |
· | Inventory |
· | Accounts receivable |
· | Customer lists |
· | Software |
· | Hardware including laptops |
· | Desks and furniture |