SECURITY AGREEMENT
EXHIBIT
10.12
Security
Agreement (the “Agreement”) dated October 5, 2007 made by Zealous Trading Group,
Inc., a Nevada corporation (“Debtor”), in favor of _______________ a ______
limited partnership (the “Secured Party”).
Debtor
hereby agrees in favor of Secured Party as follows:
1. In
consideration for loan made or to be made to Debtor by Secured Party evidenced
by the Senior Secured Promissory Note (the “Note”) dated the date hereof of
Debtor in the principal amount of One Hundred Thousand Dollars ($100,000.00),
payable to the order of Secured Party (such note, as amended, modified,
supplemented, replaced or substituted from time to time, being herein referred
to as the “Note”), Debtor hereby grants to Secured Party a continuing security
interest in, lien upon and a right of setoff against, and Debtor hereby assigns
to Secured Party, all of Debtor's right, title and interest in and to the
Collateral described in Section 2, to secure the full and prompt payment,
performance and observance of all present and future indebtedness, obligations,
liabilities and agreements of any kind of Debtor to Secured Party, now existing
under or in connection with the Note or this Security Agreement (all of the
foregoing being herein referred to as the “Obligations”).
2. “Collateral”
means all of Debtor’s personal property, including without limitation
all Accounts, Letter-of-Credit Rights, Supporting Obligations, Electronic
Chattel Paper, Tangible Chattel Paper and Instruments, as these terms are
defined in the Uniform Commercial Code, together with all Inventory,
Equipment, and Additional Collateral and all products and
proceeds of the foregoing including, without limitation, proceeds of any
insurance policies insuring any of the foregoing, all as more fully described
on
Schedule A annexed hereto.
3. Debtor
hereby
warrants, represents, covenants and agrees (as of the date hereof and so long
as
any Obligations remains outstanding) that: (a) the chief executive
office and other places of business of Debtor, the books and records relating
to
the Collateral (except for such records as are in the possession or control
of
Secured Party) and the Collateral are located at the address set forth below
and
Debtor will not change any of the same, or merge or consolidate, except the
current merger with Zealous Holdings, Inc., with any person or change its name
or conduct its business under any trade, assumed or fictitious name, without
prior written notice to and consent of Secured Party; (b) the Collateral is
and
will be used in the business of Debtor and not for personal, family, household
or farming use; (c) Debtor will not abandon or assign, or lease, other than
in
the ordinary course of Debtor's business, nor will Debtor suffer or permit
any
of the same to occur with respect to, any Collateral, without prior written
notice to and consent of Secured Party; (d) Debtor will make payment or will
provide for the payment, when due, of all taxes, assessments or contributions
or
other public or private charges which have been or may be levied or assessed
against Debtor, whether with respect to the Collateral, to any wages or salaries
paid by Debtor, or otherwise, will deliver to Secured Party, on demand,
certificates or other evidence satisfactory to Secured Party attesting thereto;
(e) Debtor will use the Collateral for lawful purposes only, with all reasonable
care and caution and in conformity in all material respects with all applicable
laws, ordinances and regulations; (f) Debtor will, at Debtor's sole cost and
expense, keep the Collateral in good order, repair, running condition and in
substantially the same condition as on the date hereof, reasonable wear and
tear
excepted, and Debtor will not, without the prior written consent of Secured
Party, alter or remove any identifying symbol or number upon any of the
Collateral; (g) Secured Party shall during the business hours of the Debtor
have
free access to and right of inspection of any Collateral and any papers,
instruments and records pertaining thereto (and the right to make extracts
from
and to receive from Debtor originals or true copies of such records, papers
and
instruments upon request therefor) and Debtor hereby grants to Secured Party
a
security interest in all such records, papers and instruments to secure the
payment, performance and observance of the Obligations;
(h) Debtor will, at its sole cost and expense, perform all
acts and execute all documents requested by Secured Party from time to time
to
evidence, perfect, maintain or enforce Secured Party's security interest granted
herein or otherwise in furtherance of the provisions of this Security Agreement;
(i) at any time and from time to time, Debtor shall, at its sole
cost
and
expense, execute and deliver to Secured Party such financing statements pursuant
to the Uniform Commercial Code (“UCC”), applications for certificate of title
and other papers, documents or instruments as may be requested by Secured
Party
in connection with this Security Agreement, and to the extent permitted by
applicable law, Debtor hereby authorizes Secured Party to execute and file
at
any time and from time to time one or more financing statements or copies
thereof or of this Security Agreement with respect to the Collateral signed
only
by Secured Party; (j) Debtor assumes all responsibility and liability arising
from the Collateral; (k) the Secured Party may, only upon giving Debtor forty
five calendar days’ notice, upon the occurrence and during the continuance of a
Default (as hereinafter defined), in its name or Debtor's or otherwise, notify
any account debtor or obligor of any Account, Contract, Document, Instrument,
Chattel paper or general intangible included in the Collateral to make payment
to Secured Party; (l) in its discretion, Secured Party may, only upon giving
Debtor twenty (20) calendar days’ notice, upon the occurrence and
during the continuance of a Default, demand, xxx for, collect or receive
any
money or property at any time payable or receivable on account of or in exchange
for, or make any compromise or settlement deemed desirable by Secured Party
with
respect to, any Collateral, and/or extend the time of payment, arrange for
payment in installments, or otherwise modify the terms of, or release, any
of
the Obligations and/or the Collateral, or any obligor, maker, endorser,
acceptor, surety or guarantor of, or any party to, any of the Obligations
or the
Collateral; (m) upon giving Debtor twenty (20) calendar days’
notice, Secured Party may, at any time and from time to
time, for the account of
Debtor, pay any amount or do any act required of Debtor hereunder and which
Debtor fails to do or pay, and any such payment shall be deemed an advance
by
Secured Party to Debtor payable on demand together with interest at the highest
rate then payable on any of the Obligations; (n) upon the occurrence and
during
the continuance of a Default, any proceeds of the Collateral received by
Debtor
shall not be commingled with other property of Debtor, but shall be segregated,
held by Debtor in trust for Secured Party, and immediately delivered to Secured
Party in the form received, duly endorsed in blank where appropriate to
effectuate the provisions hereof, the same to be held by Secured Party as
additional Collateral hereunder or, at Secured Party's option, to be applied
to
payment of the Obligations, whether or not due and in any order; and (o)
in its
sole discretion, Secured Party may, at any time and from time to time, assign,
transfer or deliver to any transferee of any Obligations, any Collateral,
whereupon Secured Party shall be fully discharged from all responsibility
and
the transferee shall be vested with all powers and rights of Secured Party
hereunder with respect thereto, but Secured Party shall retain all rights
and
powers with respect to any Collateral not assigned, transferred or
delivered.
4. The
term
Default as used in this Security Agreement shall mean any “Event of Default”, as
such term is defined in the Note.
5. Upon
the occurrence and during the continuance of any Default, Secured Party may,
upon giving ten (10) days’ notice or demand to Debtor,
declare any Obligations immediately due and payable and Secured Party shall
have
the following rights and remedies (to the extent permitted by applicable law)
in
addition to all rights and remedies of a Secured party under the UCC or of
Secured Party under the Obligations, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively or
concurrently:
Secured
Party may, only upon giving Debtor forty five (45) days’ notice, with or without
judicial process or the aid and assistance of others, (i) enter upon any
premises in which any Collateral may be located and, without resistance or
interference by Debtor, take possession of the Collateral, and (ii) sell,
resell, lease, assign and deliver, grant options for or otherwise dispose of
any
part or all of the Collateral in its then condition or following any
commercially reasonable preparation or processing, at public sale or proceedings
or otherwise, by one or more contracts, in one or more parcels, at the same
or
different times, with or without having the Collateral at the place of sale
or
other disposition, for cash and/or credit, and upon any terms, at reasonable
place(s) and time(s), and by otherwise complying with applicable statutes
requiring reasonable notice of sale or other disposition to Debtor. Debtor
hereby agrees that the sending of fifteen days' notice by ordinary mail, postage
prepaid, to any address of Debtor set forth in this Security Agreement shall
be
deemed reasonable notice thereof. If any Collateral is sold by Secured Party
upon credit or for future delivery, Secured Party shall not be liable for the
failure of the purchaser to pay for same and in such event Secured Party may
resell or otherwise dispose of such Collateral. Secured Party may buy
any part or all of the Collateral at any public sale. Secured Party may apply
the cash proceeds actually received from any sale or other disposition to the
Obligations in such order and as to principal or interest as Secured Party
may
desire; and Debtor shall remain liable and will pay Secured Party on demand
any
deficiency remaining, together with interest thereon at the highest rate then
payable on the Obligations, with any surplus to be paid to Debtor, subject
to
any duty of Secured Party imposed by law to the holder of any subordinate
security interest in the Collateral known to Secured Party.
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6. Secured
Party's prior recourse to any Collateral shall not constitute a condition of
any
demand, suit or proceeding for payment or collection of the Obligations nor
shall any demand, suit or proceeding for payment or collection of the
Obligations constitute a condition of any recourse by Secured Party to the
Collateral. Any suit or proceeding by Secured Party to recover any of
the Obligations shall not be deemed a waiver of, or bar against, subsequent
proceedings by Secured Party with respect to any other Obligations and/or with
respect to the Collateral. No act, omission or delay by Secured Party
shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by Secured Party of any
covenant, warranty, representation, Default or right or remedy which he may
have
shall operate as a waiver of any other covenant, warranty, representation,
Default, right or remedy or of the same covenant, warranty, representation,
Default, right or remedy on a future occasion. Debtor hereby waives
presentment, notice of dishonor and protest of all instruments included in
or
evidencing any Obligations or Collateral, and all other notices and demands
whatsoever (except as expressly provided herein).
7. Secured
Party
may assign its rights and obligation hereunder to any Affiliate of Secured
Party
provided that such Affiliate assumes all of the liabilities or obligations
of
Secured Party hereunder and Debtor has consented in writing to such
assignment. For purposes of this section, “Affiliate” of any person
means any other person or entity which, directly or indirectly, controls or
is
controlled by that person, or is under common control with that person or
entity. “Control” (including, with correlative meaning, the terms “controlled
by” and “under common control with”), as used with respect to any person or
entity, means the possession, directly or indirectly, of the power to direct
or
cause the direction of the management and policies of such person or entity,
whether through the ownership of voting securities, by contract or
otherwise.
8. All
terms
herein shall have the meanings as defined in the UCC, unless the context
otherwise requires. No provision hereof shall be modified, altered,
waived, released, terminated or limited except by a written instrument expressly
referring to this Security Agreement and to such provision, and executed by
the
party to be charged. This Security Agreement and all Obligations
shall be binding upon the successors and assigns of Debtor and shall, together
with the rights and remedies of Secured Party hereunder, inure to the benefit
of
Secured Party, its executors, administrators, successors, endorsees and
assigns. This Security Agreement and the Obligations shall be
governed in all respects by the laws of the State of New York applicable to
contracts executed and to be performed in such state. If any term of
this Security Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall in no way be affected
thereby. Secured Party is authorized to annex hereto any schedules
referred to herein. Debtor acknowledges receipt of a copy of this
Security Agreement.
[Signature
page follows.]
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IN
WITNESS WHEREOF, the undersigned has executed or caused this security agreement
to be executed in the State of California on the date first above set
forth.
|
ZEALOUS
TRADING GROUP, INC.
By:________________________________
Name:
Xxxxxx X. Xxxx, III
Title:
Chief Executive Officer
BY:
By:________________________________
Name:
Title:
|
Location
of books and records relating to Collateral:
0000
Xxxx
Xxxxx Xxxxxxxxx, #000, Xxx Xxxxx, Xxxxxx, 00000
All
locations of Collateral:
0000
Xxxx
Xxxxx Xxxxxxxxx, #000, Xxx Xxxxx, Xxxxxx, 00000
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SCHEDULE
A
Accounts means
“Accounts” as defined in the Uniform Commercial Code.
Additional
Collateral means (a) all “Securities Entitlements,” “Investment
Property,” “Financial Assets,” Commercial Tort Claims and “Documents” as those
terms are defined in the Uniform Commercial Code as of the date hereof, (b)
all
securities, bills of lading, dock warrants, dock receipts, warehouse receipts
or
orders for the delivery of goods, and any other documents which in the regular
course of business or financing are treated as adequately evidencing that the
persons in possession of them are entitled to receive, hold, and dispose of
the
goods they cover; (c) all motor vehicles, and all accessions and additions
thereto, replacements therefor, and substitutions therefor; (d) all “General
Intangibles” as that term is defined in the Uniform Commercial Code as of the
date hereof, including, without limitation, Payment Intangibles and Software
(as
those terms are defined in the Uniform Commercial Code), all choses in action,
causes of action, and all other intangible personal property of the Debtor,
including, without limitation, corporate or other business records, inventions,
designs, patents, patent applications, trademarks, servicemarks, tradenames,
trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, credit files, computer programs, printouts
and other computer materials and records, guaranty claims, security interests
or
other property held by or granted to Debtor to secure payment of any obligation
of any obligor of Debtor and any and all of the rights of Debtor of whatever
nature under any and all contracts, agreements, or leases (whether of real
or
personal property) to which the Debtor is or may become a party, including
without limitation all of the rights of Debtor to enforce all of the provisions
of, and to obtain payments or other performance due under, all contracts,
agreements, or leases; (e) all of Debtor’s rights (including rights as licensee
and lessee) with respect to all patents, trademarks, copyrights and other
intellectual property rights, know-how, technology, computer hardware and
software and all rights with respect thereto including, any and all licenses,
options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements, additions or model
conversions of any of the foregoing, and further including (i) computer and
other electronic data processing hardware, including all integrated computer
systems, central processing units, memory units, display terminals,
printers, computer elements, card readers, tape drives, hard and soft disk
drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware, (ii) all
Software and all software programs designed for use on the computers and
electronic data processing hardware described in clause (i) above, including
all
operating system software, utilities and application programs in any form
(source code and object code in magnetic tape, disk or hard copy format or
any
other listings whatsoever (iii) any firmware associated with any of the
foregoing; and (iv) any documentation for hardware, Software and firmware
described in clauses (i), (ii) and (iii) above, including flow charts, logic
diagrams, manuals, specifications, training materials, charts and pseudo codes,
(f) all monies, securities and other property of the Debtor, and the proceeds
thereof, now or hereafter held or received by or in transit to the Investor
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and also in and to any and all deposits, general or special, and credits of
the
Debtor with, and any and all claims of the Debtor against, the Bank now or
at
any time hereafter existing, and (g) intellectual property rights.
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Electronic Chattel Paper means “Electronic Chattel Paper” as defined in the Uniform Commercial Code.
Equipment means
all Equipment, as that term is defined in the Uniform Commercial Code as of
the
date hereof, of Debtor, including, without limitation, machinery, furniture,
furnishings, and fixtures, and any and all goods used or bought for use in
or
being used or for use in the conduct of Debtor’s business and all goods used or
bought for use in Debtor’s business which are not included within the definition
of Inventory, and all accessions and additions thereto, replacements therefor,
and substitutions therefor, supplies and motor vehicles, by the Debtor of
whatsoever name, nature, kind or description, wherever located, and all
additions and accessions thereto and replacements or substitutions therefor,
and
all proceeds thereof and all proceeds of any insurance
thereon.
Inventory
means all “Inventory” as that term is defined in the Uniform Commercial Code as
of the date hereof, including, without limitation, any and all goods,
merchandise or other personal property, wherever located and whether or not
in
transit which is or may at any time be held for sale or lease, or furnished
or
to be furnished under any contract of service or held as raw materials, work
in
process, supplies or materials used or consumed in the Debtor’s business, and
all such property the sale or other disposition of which has given rise to
Accounts, Chattel Paper, Documents, or Instruments and which has been returned
to or repossessed or stopped in transit by the Debtor.
Letter-of-Credit
Rights means “Letter-of-Credit Rights” as defined in the Uniform
Commercial Code.
Supporting
Obligations means “Supporting Obligations” as defined in the
Uniform Commercial Code.
Tangible
Chattel Paper means “Tangible Chattel Paper” as defined in the
Uniform Commercial Code.
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