SECURITY AGREEMENT INVENTORY
Exhibit
10.4
INVENTORY
This
Security Agreement is entered into this 30th day of September, 2009, between
XXXXXXXX X. XXXXX, as Trustee
of the Pak-It Members’ Trust, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000,
hereinafter referred to as "Secured Party", and PAK-IT, LLC and XXXXXXX CHEMICAL LABORATORIES,
INC., both of 000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 hereinafter referred to, individually
and collectively, as "Debtor". The parties agree as
follows:
Security
Interest. The Debtor gives the Secured Party security an
unconditional security interest (the “Security Interest”) in the following
described inventory and in all proceeds and products thereof in any form
together with all records relating thereto (the “Collateral”):
All
inventory now owned or hereafter owned or acquired by the Debtor, including
without limitation goods held for sale or lease or to be furnished under
contracts of service, raw materials, work in process and materials to be used or
consumed in the Debtor's business.
1. Indebtedness
Secured. The borrowing relationship between the Debtor, 310 Holdings, Inc. and the
Secured Party is to be a continuing one and is intended to cover numerous types
of extensions of credit, loans, overdraft payments, or advances made directly or
indirectly to the Debtor or 310
Holdings, Inc. Accordingly, this Agreement and the Security
Interest created by it secures payment of all obligations of any kind owing by
the Debtor or 310 Holdings,
Inc. to the Secured Party whether now existing or hereafter incurred,
direct or indirect, arising from loans, guaranties, endorsements or under a Unit
Purchase and Share Exchange Agreement or otherwise, whether related or unrelated
to the purpose of the original extension of credit, whether of the same or a
different class as the primary obligation, and whether the obligations are from
time to time reduced and thereafter increased or entirely extinguished and new
obligations thereafter incurred, including without limitation, any sums advanced
and any expenses or obligations incurred by the Secured Party pursuant to this
Agreement or any other agreement concerning, evidencing or securing obligations
of the Debtor to the Secured Party, and any liabilities of the Debtor or 310 Holdings, Inc. to the
Secured Party, and any liabilities of the Debtor to the Secured Party arising
from any source whatsoever (the "Indebtedness").
2. Representations and Warranties of
Debtor. The Debtor represents and warrants and so long as the
Indebtedness remains unpaid shall be deemed continuously to represent and
warrant that:
(a) the Debtor
is the owner of the Collateral free of all security interests or other
encumbrances;
(b) The
Debtor is authorized to enter into this Security Agreement and into the
transactions evidenced by the Collateral; the Debtor is engaged in business
operations which are carried on at the address specified above. If
Debtor has a place of business in more than one state, the chief executive
office of Debtor is 000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000;
(c) That
part of the collateral constituting inventory is located at the address
specified above;
(d) The
Debtor operates under no trade names except the name(s) set forth above and the
following names, if any: .
3. Covenants of
Debtor. So long as this Agreement has not been terminated as
provided in paragraph 8, the Debtor: (a) will defend the Collateral
against the claims and demands of all other parties except purchaser and lessees
of inventory in the ordinary course of the Debtor's business, including without
limitation defenses, set-offs, claims and counterclaims asserted by any Account
Debtor against the Debtor or the Secured Party; will keep the collateral free
from all security interests or other encumbrances and will not sell, transfer,
assign, deliver or otherwise dispose of any of the Collateral or any interest
therein without the prior written consent of the Secured Party except that until
the occurrence of an Event of Default the Debtor may sell or lease inventory in
the ordinary course of the Debtor's business; (b) will not without the written
consent of the Secured Party create in favor of anyone other than the Secured
Party a security interest in any of its inventory, accounts receivable or
general intangibles nor will it sell or assign, with or without recourse to
anyone other than the Secured Party any of its accounts, chattel paper or
general intangibles; (c) will keep in accordance with generally accepted
accounting principles consistently applied, accurate and complete records
concerning the Collateral; upon the Secured Party's request will xxxx any of
such records and all or any of the Collateral to give notice of the Security
Interest; and will permit the Secured Party or its agents to inspect the
Collateral and to audit and make abstracts of such records or any of the
Debtor's book, ledgers, reports, correspondence and other records; (d) upon
demand will deliver to Secured Party any documents of title and any chattel
paper representing or relating to the Collateral or any part thereof, schedules,
invoices, shipping or delivery receipts, purchase orders, contracts or other
documents representing or relating to purchases or other acquisitions or sales,
or leases or other dispositions of the Collateral and proceeds thereof and any
and all other schedules, documents, statements which the Secured Party may from
time to time request; (e) will notify the Secured Party promptly in
writing of any change in the Debtor's address, name or identity specified above,
of any change in the location or of any additional locations at which the
Collateral is kept and of any change in the address at which records concerning
the Collateral are kept; (f) in connection herewith will execute and deliver to
the Secured Party such financing statements and other documents and do such
other things as the Secured Party may reasonably request; (g) will pay or cause
to be paid all taxes, assessments and other charges of every nature which may be
levied or assessed against the Collateral; (h) will insure the Collateral
against risks by obtaining policies (none of which shall be cancellable without
the written consent of the Secured Party) in coverage, form and amount and with
companies satisfactory to the Secured Party such policies to contain a loss
payee provision exercised in favor of the Secured Party and at the Secured
Party's request will deliver each policy or certificate of insurance therefor to
the Secured Party; and (i) will not remove the Collateral from the state nor
change the location of its chief executive office without the written consent of
Secured Party.
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4. Verification of
Collateral. The Secured Party shall have the right to verify
any Collateral in any manner and through any medium which the Secured Party may
consider appropriate and the Debtor shall furnish such assistance and
information and perform such acts as the Secured Party may require in connection
therewith.
5. Default. (a) Any of
the following events or conditions shall constitute an event of default ("Event
of Default"): (i) non-payment when due whether by acceleration
or otherwise of the principal of or interest on any Indebtedness, time being of
the essence, or failure by the Debtor to perform any material obligations under
this Agreement or under any other material agreement between the Debtor and the
Secured Party; (ii) dissolution or other termination of the legal existence of
Debtor; (iii) filing by or against the Debtor of a petition in bankruptcy or for
reorganization under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or similar law of any
jurisdiction; (iv) making a general assignment by the Debtor for the benefit of
creditors; the appointment of or taking possession by a receiver, trustee,
custodian or similar official for the Debtor or for any of the Debtor's assets;
or the institution by or against the Debtor of any kind of insolvency
proceedings or any proceeding for the dissolution or liquidation of the Debtor;
(v) the occurrence of any event described in paragraph 6(a)(ii),(iii) or (iv)
hereof with respect to any endorser or guarantor or any party liable for payment
of any Indebtedness or (vi) material falsity in any certificate, statement,
representation, warranty or audit at any time furnished to the Secured Party by
or on behalf of the Debtor or any endorser or guarantor or any other party
liable for payment of any Indebtedness, pursuant to or in connection with the
Security Agreement or otherwise (including warranties in this Agreement) and
including any omission to disclose any substantial contingent or liquidated
liabilities or any material adverse change in facts disclosed by any
certificate, statement, representation, warranty or audit furnished to the
Secured Party; or (vii) any attachment or levy against the Collateral or any
other occurrence which inhibits the Secured Party's free access to the
Collateral.
(b) The
Secured Party may declare all or any part of the Indebtedness to be immediately
due without notice upon the happening of any Event of Default or if the Secured
Party in good faith believes that the prospect of payment of all or any part of
the Indebtedness or the performance of the Debtor's obligations under this
Agreement or any other agreement now or hereafter in effect between the Debtor
and the Secured Party is impaired. This paragraph is not intended to
affect any rights of the Secured Party with respect to any Indebtedness which
may now or hereafter be payable on demand.
(c) Upon
the happening of any Event of Default the Secured Party's rights with respect to
the Collateral shall be those of a secured party under the Uniform Commercial
Code and any other applicable law from time to time in effect. The
Secured Party shall also have any additional rights granted herein and in any
other agreement now or hereafter in effect between the Debtor and the Secured
Party. If requested by the Secured Party, the Debtor will assemble
the Collateral and make it available to the Secured Party at a place to be
designated by the Secured Party.
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(d) The
Debtor agrees that any notice by the Secured Party of the sale or disposition of
the Collateral or any other intended action hereunder, whether required by the
Uniform Commercial Code or otherwise, shall constitute reasonable notice to the
Debtor if the notice is mailed by regular or certified mail, postage prepaid, at
least ten days before the action to the Debtor's address as specified in this
Agreement or to any other address which the Debtor has specified in this
Agreement or to any other address which the Debtor has specified in writing to
the Secured Party as the address to which notices shall be given to the
Debtor.
(e) The
Debtor shall pay all reasonable costs and expenses incurred by the Secured Party
in enforcing this Security Agreement, realizing upon any Collateral and
collecting any Indebtedness (including a reasonable attorneys' fee) whether suit
is brought or not and whether incurred in connection with collection, trial,
appeal or otherwise, and shall be liable for any deficiencies in the event the
proceeds of disposition of the Collateral does not satisfy the Indebtedness in
full.
6. Miscellaneous: (a)
The Debtor authorizes the Secured Party at the to file any financing statement
or statements relating to the Collateral (without the Debtor's signature
thereon) which the Secured Party deems appropriate, and the Debtor irrevocably
appoints the Secured Party as the Debtor's attorney-in-fact to execute any such
financing statement or statements in the Debtor's name and to perform all other
acts which the Secured Party deems appropriate to perfect and to continue
perfection of the Security Interest.
(b) The
Debtor hereby irrevocably consents to an act by the Secured Party or its agents
in entering upon any premises for the purpose of either: (1)
inspecting the Collateral or (2) taking possession of the collateral after any
Event of Default; and the Debtor hereby waives his right to assert against the
Secured Party or its agents any claim based upon trespass or any similar cause
of action for entering upon any premises where the Collateral may be
located.
(c) Before
or after any default by the Debtor under this Security Agreement, the Secured
Party may notify any party obligated to pay proceeds of the existence of this
Security Interest and may also direct them to make payments of all proceeds to
the Secured Party.
(d) The
Secured Party may demand, collect and xxx for all proceeds with the right to
enforce, compromise, settle or discharge any proceeds. The Debtor
irrevocably appoints the Secured Party the Debtor's attorney-in-fact to endorse
the Debtor's name on all checks, commercial paper and other instruments
pertaining to the proceeds
(e) The
Debtor authorizes the Secured Party to collect and apply against the
Indebtedness any refund of insurance premiums or any insurance proceeds payable
on account of the loss or damage to any of the Collateral and irrevocably
appoints the Secured Party as the Debtor's attorney-in-fact to endorse any check
or draft representing such proceeds.
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(f) As
further security the Debtor grants to the Secured Party a security interest in
all property of the Debtor which is or may hereafter be in the Secured Party's
possession in any capacity including all monies owed or to be owed by the
Secured Party to the Debtor; and with respect to all of such property, the
Secured Party shall have the same rights as it has with respect to the
Collateral. Without limiting any other right of the Secured Party
whenever the Secured Party has the right to declare any Indebtedness to be
immediately due and payable (whether or not it has so declared), the Secured
Party may set off against the Indebtedness all monies then owed to the Debtor by
the Secured Party in any capacity whether due or not and the Secured Party shall
be deemed to have exercised its right to set off immediately at the time its
right to such election accrues.
(g) Upon
the Debtor's failure to perform any of its duties hereunder the Secured Party
may, but it shall not be obligated to, perform any of such duties and the Debtor
shall forthwith upon demand reimburse the Secured Party for any expense incurred
by the Secured Party in doing so. As further security the Debtor
hereby assigns and gives a security interest in accounts, chattel paper, and
general intangibles including factory credits or bonuses now or hereafter owned
by or due to the Debtor by any of its suppliers under any franchise or other
agreement currently or hereafter in effect, or any modification or replacement
thereof, or however otherwise due the Debtor. The Debtor will hold in
trust for the Secured Party and forthwith remit to the Secured Party all the
proceeds of such accounts, chattel paper, and general intangibles received by
the Debtor, or the Secured Party may make direct collection thereof and credit
the Debtor with all sums received.
(h) No
delay or omission by the Secured Party in exercising any right hereunder or with
respect to any Indebtedness shall operate as a waiver of that or any other
right, and no single or partial exercise of any right shall preclude the Secured
Party from any other or future exercise of the right or the exercise of any
other right or remedy. The Secured Party may cure any Event of
Default by the Debtor in any reasonable manner without waiving the Event of
Default so cured and without waiving any other prior or subsequent Event of
Default by the Debtor. All rights and remedies of the Secured Party
under this Agreement and under the Uniform Commercial Code shall be deemed
cumulative.
(i) The
Secured Party shall have no obligation to take and the Debtor shall have the
sole responsibility for taking any steps to preserve rights against all prior
parties to any instrument or chattel paper in the Secured Party's possession as
proceeds of the Collateral. The Debtor waives notice of dishonor and
protest of any instrument constituting Collateral at any time held by the
Secured Party on which the Debtor is in any way liable and waives notice of any
other action taken by the Secured Party.
(j) The
rights and benefits of the Secured Party under this Agreement shall, if the
Secured Party agrees, inure to any party acquiring an interest in the
Indebtedness or any part thereof. Secured Party may from time to time
honor drafts or otherwise advance funds to permit the Debtor to purchase
additional inventory. Any inventory purchased with such funds shall
become part of the Collateral. The Secured Party may from time to
time furnish the Debtor with memoranda or wholesale ledger sheets describing
inventory for which it has advanced funds. All inventory so described
shall conclusively be deemed part of the Collateral unless the Debtor notifies
the Secured Party within the five days of items which are not properly part of
the Collateral. Memoranda or wholesale ledger sheets may be furnished
to the Debtor in the same manner as other notices under paragraph 7(d) of this
Agreement.
(k) The
terms "Secured Party" and "Debtor" as used in this Agreement include the heirs,
personal representatives, and successors or assigns of those
parties.
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(l) If
more than one Debtor executes this Security Agreement, the term "Debtor"
includes each of the Debtors as well as all of them, and their obligations under
this Agreement shall be joint and several.
(m) This
Agreement may not be modified or amended nor shall any provision of it be waived
except by in writing signed by the Debtor and by an authorized officer of the
Secured Party.
(n) This
Agreement shall be construed under the Uniform Commercial Code and any other
applicable Florida laws in effect from time to time.
(o) This
Security Agreement is a continuing agreement which shall remain in force until
the Secured Party shall actually receive written notice of its termination and
thereafter until all of the Indebtedness contracted for or created before
receipt of the notice and any extensions or renewals of that Indebtedness
(whether made before or after receipt of the notice) together with all interest
thereon both before and after the notice shall be paid in full.
7. Waiver. The Debtor
hereby waives any rights Debtor may have to notice and a hearing before
possession or sale of collateral is effected by Secured Party by self-help,
replevin, attachment or otherwise.
Executed
at Clearwater, Florida, on the day of
September, 2009.
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Creditor:
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Debtor:
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/s/
Xxxxxxxx X.
Xxxxx
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Xxxxxxx Chemical Laboratories,
Inc., a Florida corporation
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Xxxxxxxx
X. Xxxxx, As Trustee of
the Pak-It Members’ Trust
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By:
/s/ Xxxxxx
Xxxxxxxxx
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Xxxxxx
Xxxxxxxxx, V.President
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Pak-It, LLC, a Florida
limited liability company
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By:
/s/Xxxxxx
Xxxxxxxxx,
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Xxxxxx
Xxxxxxxxx, Manager
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