SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (“Security Agreement”) is made as of August 18, 2009 by and
between Xxxxxxx X. Xxxxxxxx (“Secured Party”), and ecoSolutions, Intl.
(“Debtor”), having its principal place of business at 000 Xxxx Xxxx Xxxxxx,
Xxxxx 0, Xxxxxxx, Xxxxxx.
RECITALS
WHEREAS, Debtor is presently indebted to
Secured Party under the terms and conditions of the Prior Debt Documents (as
defined below);
WHEREAS, the Note (as defined below)
represents Debtor’s aggregate indebtedness to Secured Party as of the date
hereof, and replaces and is in lieu of any and all prior instruments,
promissory notes and agreements, written or otherwise, evidencing Debtor’s
indebtedness to Secured Party, including, without limitation, that certain
Convertible Promissory Note, dated as of December 31, 2008 (all such prior
instruments, promissory notes and agreements, if any, the “Prior Debt
Documents”); and
WHEREAS, in consideration of Secured
Party’s extension of the maturity date of Debtor’s obligations under the Prior
Debt Documents and Secured Party’s waiver of Debtor’s prior defaults thereunder,
Debtor has agreed to execute the Note and grant to Secured Party the security
interest contemplated by this Security Agreement.
NOW,
THEREFORE, in consideration of the mutual terms, covenants and conditions
herein, set forth, the parties agree as follows:
1. OBLIGATIONS
SECURED. The security interest granted by this Security
Agreement shall secure payment and performance of all indebtedness, obligations
and liabilities of Debtor to Secured Party (collectively the “Secured Debt”)
arising out of, connected with or related to each and all of the
following:
|
|
(a)
|
the
Secured Promissory Note for $3,608,457.38 of even date herewith (the
“Note”);
|
|
|
(b)
|
any
additional advances from Secured Party to
Debtor;
|
|
|
(c)
|
this
Security Agreement; and
|
|
|
(d)
|
any
instrument now or hereafter evidencing or securing the
foregoing;
|
whether
now existing or hereinafter arising, direct or indirect, joint or several,
absolute or contingent, liquidated or unliquidated, whether or not from time to
time decreased or extinguished and later increased, created or incurred (the
Note, this Security Agreement and any instrument, now or hereafter evidencing or
securing the foregoing are referred to collectively as the “Loan
Documents”).
2. GRANT OF SECURITY
INTEREST. Debtor does hereby grant to Secured Party a security
interest in the collateral described or referred to in Section 3 to secure
the Secured Debt.
3. COLLATERAL. Debtor’s
collateral (the “Collateral”) subject to the security interest shall consist
of: all right, title and interest of Debtor in and to all of Debtor’s
property, both real and personal, both tangible and intangible, whether now
owned or hereafter acquired, including, but not limited to,
all: (1) accounts; (2) general intangibles; (3) goods;
(4) documents; (5) instruments; (6) vehicles; (7) chattel
paper; (8) deposit accounts; (9) fixtures; (10) licenses;
(11) patents; (12) trademarks (including associated goodwill);
(13) tradenames; (14) franchises; (15) contract
rights; and (16) all rights under all insurance policies, together with all
products, proceeds, additions and accessions to the foregoing.
4. REPRESENTATIONS, WARRANTIES
OF THE DEBTOR.
(a) Debtor
has good title to the Collateral and has full power and authority to grant
security interests in the Collateral, and to execute, deliver, and perform in
accordance with the terms of this Security Agreement, without the consent or
approval of any other person or entity;
(b) The
Collateral is free and clear of all liens and adverse claims other than those
created hereunder, and the security interest created hereby shall be a first
lien on the Collateral; and
(c) This
Security Agreement constitutes the legal, valid and binding obligation of Debtor
enforceable against Debtor in accordance with its terms and constitutes a good,
valid and subsisting security interest in all of the Collateral for the full
amount of the Secured Debt.
5. COVENANTS OF THE
DEBTOR.
Debtor
hereby covenants that:
(a) Debtor
shall, at its own cost and expense, (i) take any and all actions necessary
to preserve, protect and defend the security interest of the Secured Party in
the Collateral created hereunder and the priority thereof against any and all
adverse claims, and (ii) keep the Collateral free and clear of any and all
liens, security interests (except for any security created as part of this
Security Agreement) and/or adverse claims (including, without limitation all
taxes, assessments and other levies);
(b) Debtor
shall promptly reimburse the Secured Party for any and all sums, including
costs, expenses and attorneys’ fees, which the Secured Party may pay or incur in
defending, protecting or enforcing the security interest of this Security
Agreement or the priority thereof, or in enforcing or collecting the Secured
Debt, or in discharging any prior or subsequent lien or adverse claim against
the Collateral or any part thereof, or by reason of becoming or being made a
party to or intervening in any action or proceeding affecting the Collateral or
the rights of the Secured Party therein, all of which actions the Secured Party
shall have the right to take;
(c) Debtor
shall not, without the prior written consent of the Secured Party, sell, assign,
lease, or otherwise dispose of the Collateral, or any part thereof or any
interest therein;
-2-
(d) Debtor
shall not do, or permit or suffer to be done, anything that may impair the value
of the Collateral or the security intended to be effected hereby and shall use
its best efforts to preserve, protect and enhance the value of the
Collateral;
(e) Debtor
shall from time to time make, execute, acknowledge and deliver all such further
documents, instruments and assurances as may be requested by the Secured Party
to perfect or preserve the security interest created by and to carry out the
intent of this Security Agreement, and hereby authorizes Secured Party to file
financing statements and amendments thereto relating to all or any part of the
Collateral where desirable in Secured Party’s judgment to perfect the security
interest granted herein without the signature of Debtor (where permitted by
law);
(f) Debtor
will have and maintain, or cause to be in existence or maintained, at all times,
commercially reasonable insurance with respect to the Collateral against risks
of fire (including so-called extended coverage), theft, and other risks, such
insurance to be payable to Secured Party and Debtor as their interest may appear
with Secured Party being an additional named insured thereunder and to not be
cancelable except on at least 30 days’ written notice to Secured
Party. Secured Party may act as attorney for Debtor in obtaining,
adjusting, settling and cancelling such insurance and endorsing any drafts; and
any amounts collected or received under such policies may be applied by Secured
Party to the Secured Debt in such order and at such times as Secured Party may
determine, or at the option of Secured Party, released to Debtor, provided, no
such application or release shall cure or waive any default hereunder and no
amount released shall be deemed a payment of any Secured Debt; and
(g) Debtor
shall at all times keep the Collateral and its proceeds separate and distinct
from all other property of Debtor or any other person and marked in an
identifiable manner satisfactory to Secured Party as subject to the interest of
Secured Party under this Security Agreement and shall keep and cause to be kept
accurate and complete records of the Collateral and its proceeds, which
collateral and records will be made available for inspection upon the Debtor’s
premises by the Secured Party at any reasonable time. Debtor shall
cause the Collateral to be used solely in Debtor’s business at its principal
office in Oregon and the collateral shall not be moved therefrom without the
prior written consent of Secured Party.
6. PRESERVATION OF
COLLATERAL. In case of any failure of Debtor to keep the
Collateral free from liens or adverse claims, or to pay taxes on or in respect
thereof, or to fully and punctually keep and perform any other covenant hereof,
then Secured Party may (but shall not be required to) pay or contest or settle
such taxes, liens, or adverse claims, or any judgments based thereon, or
otherwise make good any other aforesaid failure of Debtor. Debtor
covenants to promptly reimburse to Secured Party (together with costs, expenses
and attorneys’ fees) any sums (1) paid or advanced for any such purpose,
(ii) disbursed to protect the Collateral or the security interest created
by this Security Agreement and/or (iii) which Debtor has herein covenanted
to reimburse to Secured Party. Such reimbursement shall be with
interest, at the maximum rate permitted by applicable state law on the date of
this Security Agreement, and the right to such reimbursement shall become
additional indebtedness secured by this Security Agreement.
-3-
7. EVENTS OF
DEFAULT. Each of the following shall constitute an Event of
Default by Debtor:
A. The
failure of Debtor to punctually and faithfully observe or perform any of the
covenants, conditions or obligations imposed upon the Debtor by the Loan
Documents.
B. The
falsity of any representation or warranty contained in the Loan
Documents;
C. The
termination of existence or cessation of business by the Debtor;
D. The
assignment for the benefit of creditors by Debtor, or the commencement of a case
under title 11 of the United States Code (Bankruptcy) by or against the
Debtor;
E. The
appointment of a receiver, trustee or custodian for or over the Debtor or any of
the Debtor’s property not vacated within 10 days thereafter;
F. The
levy of any writ of execution or other judicial process upon any of the property
of the Debtor not released within 10 days thereafter;
G. The
material loss, theft, damage or destruction of any of the Collateral unless
immediately replaced by Debtor.
8. RIGHTS OF SECURED PARTY UPON
DEFAULT. Upon the occurrence of an Event of Default, Secured
Party shall have the following rights and remedies:
A. All
of the rights and remedies of a secured party under the Nevada law or other
applicable law then in effect.
B. Out
of the proceeds of any disposition the Secured Party shall:
(i) First,
pay all costs, expenses and charges for pursuing, searching for, taking,
removing, keeping, storing, advertising and selling such Collateral, including
without limitation, reasonable attorneys’ fees and costs;
(ii) Second,
retain out of the proceeds of sale the Secured Debt; and
(iii) Third,
pay the remaining funds, if any, to the Debtor or other party entitled
thereto.
C. If
there be a deficiency, Debtor shall forthwith pay it to the Secured
Party.
D. The
Secured Party may postpone or adjourn any such sale from time to time by
announcement at the time and place of sale stated in the notice of sale, without
being required to give a new notice of sale.
9. SUCCESSORS AND
ASSIGNS. The Security Agreement shall be binding upon
successors and assigns of Debtor.
-4-
10. REMEDIES NOT EXCLUSIVE; NO
WAIVERS; FORECLOSURES. No right or remedy herein is exclusive
of any other right or remedy. Each and every right and remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity, and may be exercised from time to
time as often as deemed expedient, separately or concurrently. The
failure or delay of the Secured Party to insist in any one or more instances
upon the performance of any of the terms, covenants or conditions of this
Security Agreement, or to exercise any right, remedy or privilege herein
conferred, shall not impair or be construed as thereafter waiving any such
covenants, remedies, conditions or provisions, but every such term, condition
and covenant shall continue and remain in full force and effect; nor shall the
giving, taking or enforcement of or execution against any other or additional
security, collateral, or guaranty for the payment of the Secured Debt operate to
prejudice, waive or affect any rights, powers or remedies hereunder; nor shall
the Secured Party be required to first look to, enforce, exhaust or execute
against such other or additional security, or guarantees prior to so acting
against the Collateral. The Secured Party may foreclose on or execute
against the items of Collateral in such order as the Secured Party may, in its
sole and unfettered discretion, determine.
11. SEVERABILITY. The
unenforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
12. NOTICE. All
notices, demands and communications hereunder shall be in writing and shall be
deemed to be duly given (i) upon personal delivery, (ii) immediately
upon transmission by fax, (iii) one (1) day after mailing by Federal
Express next day delivery (or other similar overnight courier), or
(iv) two (2) days after deposit in the United States mail by
registered or certified mail, postage prepaid, return receipt requested, in each
case addressed to the parties at the addresses herein set forth, or at such
other address as any party shall have furnished to the other parties in
writing:
|
If
to Debtor:
|
000
Xxxx Xxxx Xxxxxx, Xxxxx 0
Xxxxxxx,
Xxxxxx 00000
|
|
If
to Secured Party:
|
Xxxxxxx
X. Xxxxxxxx
000
X. Xxxx Xx., Xxxxx 0
Xxxxxxx,
Xxxxxx 00000
|
13. CHOICE OF
LAW. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada except laws
respecting conflicts of law.
14. ATTORNEYS’
FEES. Should either party hereto institute any action or
proceeding to enforce this Security Agreement or any provisions hereof or for a
declaration of rights under this Security Agreement, or for arbitration of any
dispute arising under this Security Agreement, the prevailing party in any such
action, proceeding or arbitration shall be entitled to receive from the other
party all costs and expenses, including without limitation reasonable attorneys’
fees, incurred by the prevailing party in connection with such action,
proceeding or arbitration.
-5-
15. TIME IS OF THE
ESSENCE. Time is of the essence in this Security
Agreement.
16. ASSIGNMENT BY SECURED
PARTY. The Secured Party and each assignee may assign this
Security Agreement and the obligations made under it without the consent of the
Debtor, and each assignee is to be entitled to all the rights and remedies of
the Secured Party.
IN
WITNESS WHEREOF, Debtor and Secured Party have caused this Security Agreement to
be duly signed and delivered as of the date first above written.
|
|
By:
|
/s/ XXXXXXX XXXXXXXX | |
|
Name: Xxxxxxx
Xxxxxxxx
|
|||
|
Title: Chief
Executive Officer
|
|||
|
|
By:
|
/s/ XXXXXXX XXXXXXXX | |
|
Xxxxxxx
Xxxxxxxx
|
-6-
